As filed with the Securities and Exchange Commission on
April
25, 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. 85 [ 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 filing become
effective on
April 30, 1996 pursuant to paragraph (b) 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. 85 IS BEING FILED IN
ORDER TO
UPDATE THE FINANCIAL INFORMATION FOR IVY MONEY MARKET
FUND AND
IVY SHORT-TERM BOND FUND. THE PROSPECTUSES AND
STATEMENTS OF
ADDITIONAL INFORMATION THAT ARE INCLUDED IN THIS
POST-EFFECTIVE
AMENDMENT NO. 85 ARE TO BE USED CONCURRENTLY WITH AND
SEPARATELY
FROM EACH PROSPECTUS AND STATEMENT OF ADDITIONAL
INFORMATION FOR
THE OTHER 11 SERIES OFFERED BY THE REGISTRANT, WHICH
ARE
INCORPORATED BY REFERENCE TO THIS FILING.
IVY FUND
CROSS REFERENCE SHEET
Post-Effective Amendment No. 85 contains the
Prospectus and
Statement of Additional Information to be used with Ivy
Money
Market Fund and Ivy Short-Term Bond Fund, two of the
thirteen
series of Ivy Fund (the "Trust").
Items Required by Form N-1A
PART A:
1 COVER PAGE: Cover Page
2 SYNOPSIS: Not Applicable
3 CONDENSED FINANCIAL INFORMATION: Schedule of
Fees; The
Funds' Financial Highlights
4 GENERAL DESCRIPTION OF REGISTRANT: Investment
Objectives
and Policies; Risk Factors and Investment
Techniques
5 MANAGEMENT OF THE FUND(S): Organization and
Management of
the Funds; Investment Manager
6 CAPITAL STOCK AND OTHER SECURITIES: Dividends and
Taxes
7 PURCHASE OF SECURITIES BEING OFFERED: How to Buy
Shares;
How Your Purchase Price is Determined; How Each
Fund Values
its Shares
8 REDEMPTION OR REPURCHASE: How to Redeem Shares;
Minimum
Account Balance Requirements; Tax Identification
Number;
Certificates; Exchange Privilege; Reinvestment
Privilege
9 PENDING LEGAL PROCEEDINGS: Not Applicable
PART B:
10 COVER PAGE: Cover Page
11 TABLE OF CONTENTS: Table of Contents
12 GENERAL INFORMATION AND HISTORY: Investment
Objectives and
Policies
13 INVESTMENT OBJECTIVES AND POLICIES: Investment
Objectives
and Policies; Investment Restrictions; Additional
Restrictions
14 MANAGEMENT OF THE FUND(S): Trustees and Officers;
Investment Advisory and Other Services
15 CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES:
Trustees and Officers; Capitalization and Voting
Rights
16 INVESTMENT ADVISORY AND OTHER SERVICES:
Investment Advisory
and Other Services
17 BROKERAGE ALLOCATION AND OTHER PRACTICES:
Brokerage
Allocation; Portfolio Turnover
18 CAPITAL STOCK AND OTHER SECURITIES:
Capitalization and
Voting Rights
19 PURCHASE, REDEMPTION AND PRICING OF SECURITIES
BEING
OFFERED: Net Asset Value; Redemptions
20 TAX STATUS: Taxation
21 UNDERWRITERS: Investment Advisory and Other
Services
22 CALCULATION OF PERFORMANCE DATA: Performance
Information
23 FINANCIAL STATEMENTS: Financial Statements
<PAGE>
April 30, 1996
Ivy
Money
Market
Fund
----------
Prospectus
----------
Ivy Management, Inc.
Via Mizner Financial
Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
IVY FUND (THE "TRUST") IS A REGISTERED INVESTMENT
COMPANY
CURRENTLY CONSISTING
OF THIRTEEN SEPARATE PORTFOLIOS. ONE PORTFOLIO OF THE
TRUST, IVY
MONEY MARKET
FUND (THE "FUND"), IS DESCRIBED IN THIS PROSPECTUS.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION
ABOUT THE
FUND THAT A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING.
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 APRIL
30, 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.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR
GUARANTEED BY
THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUND WILL BE
ABLE TO
MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Expense Information . . . . . . . . . . . . . . 2
The Fund's Financial Highlights . . . . . . . . 2
Investment Objective and Policies . . . . . . . 3
Risk Factors and Investment Techniques . . . . 3
Organization and Management of the Fund . . . . 4
Investment Manager . . . . . . . . . . . . . . 4
Fund Administration and Accounting . . . . . . 4
Transfer Agent . . . . . . . . . . . . . . . . 5
Dividends and Taxes . . . . . . . . . . . . . . 5
Performance Data . . . . . . . . . . . . . . . 5
How to Buy Shares . . . . . . . . . . . . . . . 5
How Your Purchase Price is Determined . . . . . 6
How the Fund Values its Shares . . . . . . . . 6
How to Redeem Shares . . . . . . . . . . . . . 6
Minimum Account Balance Requirements . . . . . 7
Signature Guarantees . . . . . . . . . . . . . 7
Choosing a Distribution Option . . . . . . . . 8
Tax Identification Number . . . . . . . . . . . 8
Certificates . . . . . . . . . . . . . . . . . 8
Exchange Privilege . . . . . . . . . . . . . . 8
Systematic Withdrawal Plan . . . . . . . . . . 9
Automatic Investment Method . . . . . . . . . . 9
Consolidated Account Statements . . . . . . . . 9
Retirement Plans . . . . . . . . . . . . . . . 10
Shareholder Inquiries . . . . . . . . . . . . . 10
</TABLE>
<TABLE>
<S> <C>
<C> <C>
BOARD OF TRUSTEES OFFICERS
TRANSFER AGENT INVESTMENT
MANAGER
John S. Anderegg, Jr. Michael G. Landry,
President
Ivy Mackenzie Ivy Management,
Inc.
Paul H. Broyhill Keith J. Carlson, Vice
President
Services Corp. Boca Raton,
FL
Stanley Channick C. William Ferris,
P.O. Box 3022
Frank W. DeFriece, Jr. Secretary/Treasurer
Boca Raton, FL 33431-0922 DISTRIBUTOR
Roy J. Glauber Michael R. Peers,
Chairman
1-800-777-6472 Ivy
Mackenzie
Michael G. Landry
Distributors,
Inc.
Michael R. Peers LEGAL COUNSEL
AUDITORS Via Mizner
Financial Plaza
Joseph G. Rosenthal Dechert Price &
Rhoads
Coopers & Lybrand L.L.P. 700 South Federal
Highway
Richard N. Silverman Boston, MA
Ft. Lauderdale, FL Boca Raton, FL
33432
J. Brendan Swan
1-800-456-5111
CUSTODIAN
Brown Brothers Harriman
& Co.
Boston, MA
</TABLE>
Throughout the
centuries,
the castle keep has
been a source
of long-range vision
and strategic
advantage.
<PAGE>
EXPENSE INFORMATION
The table and example 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.
SHAREHOLDER TRANSACTION
EXPENSES
<TABLE>
<CAPTION>
CLASS A,
CLASS B
AND
CLASS C
SHARES
-----------
<S>
<C>
Maximum sales load imposed on purchases (as a
percentage of
offering
price)*..........................................................
.. None
The Fund has no sales load on reinvested dividends,
no
deferred
sales load, no redemption fees and no exchange
fees.**
</TABLE>
* Exchanges from the Fund into any other Ivy or
Mackenzie fund
into which
exchanges are permitted may be subject to a sales
charge
unless previously
paid (see "Exchange Privilege").
** The Fund does not assess a contingent deferred sales
charge
("CDSC").
However, if the shares of another Ivy or Mackenzie
fund that
are subject to a
CDSC are exchanged for shares of the Fund, the CDSC
may carry
over to the
investment in the Fund and may be assessed upon
redemption
(see "How to
Redeem Shares" and "Exchange Privilege").
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)
<TABLE>
<CAPTION>
CLASS A,
CLASS B
AND
CLASS C
SHARES
-----------
<S>
<C>
Management Fees After Expense
Reimbursements*....................... 0.00%
12b-1 Service/Distribution
Fees..................................... N/A
Other
Expenses......................................................
0.85%
-----------
Total Fund Operating Expenses After Expense
Reimbursements**........ 0.85%
===========
</TABLE>
* Management Fees reflect expense reimbursements.
Without
expense
reimbursements, Management Fees would have been
0.40%.
** Ivy Management, Inc. ("IMI"), as investment adviser,
currently
limits the
Fund's Total Fund Operating Expenses After Expense
Reimbursements (excluding
taxes, interest, litigation and indemnification
expenses and
other
extraordinary expenses) to an annual rate of 0.85%
of the
Fund's average net
assets. Without the expense reimbursements, Total
Fund
Operating Expenses for
the year ended December 31, 1995 would have been
1.39%.
EXAMPLE*
(CLASS A, CLASS B AND CLASS C
SHARES)
The following table lists the expenses an investor
would pay
on a $1,000
investment in the Fund, assuming (1) 5% annual return
and (2)
redemption at the
end of each time period. The Example further assumes
reinvestment
of all
dividends and distributions, and that the percentage
amounts
under "Total Fund
Operating Expenses After Expense Reimbursements"
(above) remain
the same each
year. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF
PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN
THOSE
SHOWN.
<TABLE>
<CAPTION>
1 YEAR(1) 3 YEARS 5
YEARS
10 YEARS
----------- -----------
-----------
-----------
<S> <C> <C>
<C>
$9 $27
$47
$105
</TABLE>
* Net of expense reimbursements. See Annual Fund
Operating
Expenses, above.
The information in the table above does not
reflect the
charge of $10 per
transaction that would apply if a shareholder elects to
have
redemption proceeds
wired to his/her bank account. For a more detailed
discussion of
the Fund's fees
and expenses, see "Organization and Management of the
Fund" in
this Prospectus,
and "Investment Advisory and Other Services" in the
SAI.
THE FUND'S FINANCIAL HIGHLIGHTS
Unless otherwise noted, the following table is
for fiscal
periods ending
December 31 of each year. The accounting firm of
Coopers &
Lybrand L.L.P. has
audited the Fund since December 31, 1992. Their report
is
included in the Fund's
Annual Report, which is incorporated by reference into
the SAI.
The information
for fiscal periods prior to December 31, 1992 was
audited by
other independent
accountants. The Fund's Annual Report contains
additional
information about the
Fund's performance. For a copy of the Fund's Annual
Report, call
1-800-777-6472.
Expense and income ratios have been annualized
for periods
of
less than one
year. Total returns do not reflect sales charges, and
are not
annualized for
periods of less than one year. There were no Class B or
Class C
shares
outstanding as of December 31, 1995.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------
SELECTED PER SHARE DATA
1995 1994 1993 1992
------- ------- ------- -------
<S>
<C> <C> <C> <C>
Net asset value, beginning of
period................................... $ 1.00
$ 1.00
$ 1.00 $ 1.00
------- ------- ------- -------
Income from investment operations:
Net investment
income(a)..............................................
.05
.04 .02 .03
Less distributions:
From net investment
income:...........................................
(.05)
(.04) (.02) (.03)
------- ------- ------- -------
Net asset value, end of
period......................................... $
1.00 $
1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total
return(%)........................................................
4.80 4.21 2.42 2.81
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $24,609
$26,827
$25,782 $18,839
Ratio of expenses to average net assets:
With expense
reimbursement(%).........................................
.85 .85 .85 .85
Without expense
reimbursement(%)......................................
1.39
1.24 1.56 1.45
Ratio of net investment income to average net
assets(%)(a)............. 4.91 3.29
2.22
2.75
<CAPTION>
SELECTED PER SHARE DATA
1991 1990 1989 1988
------- ------- ------- -------
<S>
<C> <C>
Net asset value, beginning of
period................................... $ 1.00
$ 1.00
$ 1.00 $ 1.00
------- ------- ------- -------
Income from investment operations:
Net investment
income(a)..............................................
.05
.07 .09 .07
Less distributions:
From net investment
income:...........................................
(.05)
(.07) (.09) (.07)
------- ------- ------- -------
Net asset value, end of
period......................................... $
1.00 $
1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total
return(%)........................................................
5.16 7.69 8.87 6.89
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $21,675
$26,140
$19,708 $11,789
Ratio of expenses to average net assets:
With expense
reimbursement(%).........................................
.85 .67 .65 .68
Without expense
reimbursement(%)......................................
1.21
1.22 1.37 1.73
Ratio of net investment income to average net
assets(%)(a)............. 5.06 7.43
8.42
6.86
<CAPTION>
SELECTED PER SHARE DATA
1987(B)
-------
Net asset value, beginning of
period................................... $ 1.00
-------
Income from investment operations:
Net investment
income(a)..............................................
.01
Less distributions:
From net investment
income:...........................................
(.01)
-------
Net asset value, end of
period......................................... $ 1.00
=======
Total
return(%)........................................................
1.86
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $6,784
Ratio of expenses to average net assets:
With expense
reimbursement(%)......................................... .85
Without expense
reimbursement(%)......................................
1.94
Ratio of net investment income to average net
assets(%)(a)............. 6.77
</TABLE>
---------------
(a) Net investment income is net of expenses reimbursed
by IMI.
(b) From October 15, 1987 (commencement of operations)
to
December 31, 1987.
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to obtain as high a level of
current income
as
is consistent
with the preservation of capital and liquidity by
investing in
high-quality,
short-term securities. 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, although the Trustees may make
non-material
changes in the Fund's
objectives without shareholder approval. 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 not fundamental and therefore may be
changed
by the Trustees
without shareholder approval. There can be no assurance
that the
Fund will
achieve its investment objectives. 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 "Investment Techniques and Risk Factors," below,
and the
SAI.
Whenever an investment objective, policy or
restriction
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,
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.
The Fund invests in money market instruments
maturing
within
thirteen months
or less and maintains a portfolio with a
dollar-weighted average
maturity of 90
days or less. By purchasing such short-term securities,
the Fund
will attempt to
maintain a constant net asset value of $1.00 per share.
The
Fund's portfolio of
investments is actively monitored on a daily basis to
maintain
competitive
yields on investments.
The Fund will invest in the following categories of
money
market
instruments: (i) debt securities issued or guaranteed
by the U.S.
Government,
its agencies or instrumentalities; (ii) obligations
(including
certificates of
deposit and bankers' acceptances) of domestic banks and
savings
and loan
associations; (iii) high-quality commercial paper that
at the
time of purchase
is rated at least A-2 by Standard and Poor's
Corporation ("S&P")
or P-2 by
Moody's Investors Service, Inc. ("Moody's") or, if
unrated, is
issued or
guaranteed by a corporation with outstanding debt rated
AA or
higher by S&P or
Aa or higher by Moody's or which is judged by IMI to be
of at
least equivalent
quality; (iv) short-term corporate notes, bonds and
debentures
that at the time
of purchase are rated at least AA by S&P or Aa by
Moody's or that
are judged by
IMI to be of at least equivalent quality; and (v)
repurchase
agreements with
domestic banks for periods not exceeding seven days and
only with
respect to
U.S. Government securities that throughout the period
have a
value at least
equal to the amount of the loan (including accrued
interest).
The securities in which the Fund invests must
present minimal
credit risk
and be rated in one of the two highest rating
categories for
short-term debt
obligations by at least two major rating agencies
assigning a
rating to the
securities or issuer, or if only one rating agency has
assigned a
rating, by
that agency or determined to be of equivalent value by
IMI.
Purchases of
securities that are rated by only one rating agency
must be
previously approved
or ratified subsequently by the Trustees. Securities
that are
rated in the
highest category by at least two major rating agencies
(or that
have been issued
by an issuer that is rated with respect to a class of
short-term
debt
obligations, or any security within that class,
comparable in
priority and
quality with such securities) are designated "First
Tier
Securities." Securities
rated in the top two categories by at least two major
rating
agencies, but which
are not rated in the highest category by two or more
major rating
agencies, are
designated "Second Tier Securities." IMI shall
determine whether
a security
presents minimal credit risk under procedures adopted
by the
Board of Trustees.
The Fund may not invest more than 5% of its
total assets
in
the securities
of any one issuer, except this limitation shall not
apply to U.S.
Government
securities. Further, the Fund will not invest more than
the
greater of 1% of its
total assets or one million dollars in the securities
of a single
issuer that
were Second Tier Securities when acquired by the Fund.
In
addition, the Fund may
not invest more than 5% of its total assets in
securities that
are Second Tier
Securities when acquired by the Fund. As a fundamental
policy,
the Fund may not
borrow money, except for temporary purposes, and then
only in an
amount not
exceeding 10% of the value of the Fund's total
assets.
RISK FACTORS AND INVESTMENT TECHNIQUES
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. 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.
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).
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
3
<PAGE>
because prepayments are reinvested at current rates,
the market
value of
mortgage-backed securities may decline during periods
of
declining interest
rates.
BANK OBLIGATIONS: 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 such
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
of $1 billion
and whose deposits are insured by the FDIC.
COMMERCIAL PAPER: Commercial paper represents
short-term
unsecured
promissory notes issued in bearer form by bank holding
companies,
corporations
and finance companies. Investments in commercial paper
are
limited to
obligations rated Prime 1 by Moody's or A-1 by S&P or,
if not
rated by Moody's
or S&P, issued by companies having an outstanding debt
issue
currently rated Aaa
or Aa by Moody's or AAA or AA by S&P.
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
at an
agreed-upon yield. The Fund will not enter into a
repurchase
agreement with more
than seven days to maturity if, as a result, more than
10% of the
Fund's net
assets would be invested in illiquid securities
including such
repurchase
agreements. 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.
BORROWING: Borrowing may subject the Fund's share
price to
greater
fluctuation. Money borrowed will be subject to interest
costs
(which may include
commitment fees and/or the cost of maintaining minimum
average
balances).
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund is organized as a separate, diversified
portfolio
of
the Trust, an
open-end management investment company organized as a
Massachusetts business
trust on December 21, 1983. The business and affairs of
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
13 separate portfolios. The Fund has three classes of
shares,
designated as
Class A, Class B and Class C. The purpose of these
designations
is primarily to
enable the transfer agent for the Ivy and Mackenzie
funds to
track the
contingent deferred sales charge period that applies to
Class B
and Class C
shares of other Ivy and Mackenzie funds that are being
exchanged
for shares of
the Fund. In all other relevant respects, the Fund's
Class A,
Class B and Class
C shares are identical (i.e., having the same
arrangement for
shareholder
services and the distribution of securities). Shares of
each
class are entitled
to one vote per share (with proportionate voting for
fractional
shares), and
have equal rights as to voting, redemption, dividends
and
liquidation.
The Trust employs IMI to provide business
management and
investment advisory
services; Mackenzie Investment Management Inc. ("MIMI")
to
provide
administrative and accounting services; Ivy Mackenzie
Distributors, Inc.
("IMDI") to distribute the Fund's shares; and Ivy
Mackenzie
Services Corp.
("IMSC") to provide transfer agent and
shareholder-related
services for the
Fund. IMI, IMDI and IMSC are wholly-owned subsidiaries
of MIMI.
As of March 29,
1996, IMI and MIMI had approximately $1.39 billion and
$186
million,
respectively, in assets under management. MIMI is a
subsidiary of
Mackenzie
Financial Corporation ("MFC"), which has been an
investment
counsel and mutual
fund manager in Toronto, Ontario, Canada for more than
25 years.
INVESTMENT MANAGER
For IMI's business management and investment
advisory
services, the Fund
pays IMI a fee that is accrued daily and paid monthly,
based on
the Fund's daily
net assets. The fee is equal, on an annual basis, to
0.40% of the
Fund's average
net assets.
IMI pays all expenses it incurs in rendering
management
services to the
Fund. The Fund bears its cost of operations. 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 solely
by that
Fund (or class).
IMI will reimburse the Fund to the extent total
expenses exceed
required limits
imposed by state securities regulators.
IMI currently limits the Fund's total operating
expenses
(excluding
interest, taxes, litigation and indemnification
expenses, and
other
extraordinary expenses) to an annual rate of 0.85% of
the Fund's
average net
assets. As long as the Fund's expense limitation
continues, it
may lower the
Fund's expenses and increase its yield. The Fund's
expense
limitation may be
terminated or revised at any time, at which time the
Fund's
expenses may
increase and its yield may be reduced.
PORTFOLIO MANAGEMENT: The Fund is managed by a
team, with
each team member
having specific responsibilities. The following
individuals have
responsibilities related to the management of the Fund:
Leslie A.
Ferris, a
Senior Vice President of IMI and Managing Director --
Fixed
Income, has been a
portfolio manager for the Fund since 1995. Ms. Ferris
joined the
Ivy Mackenzie
fund complex (the "Fund Complex") in 1988 and has 14
years of
professional
investment experience. She is a Chartered Financial
Analyst and
holds an MBA
degree from The University of Chicago. Prior to joining
the Fund
Complex, Ms.
Ferris was a portfolio manager at Kemper Financial
Services Inc.
from 1982 to
1988. Michael Borowsky serves as a Portfolio Analyst
for the
Fund.
FUND ADMINISTRATION AND ACCOUNTING
MIMI provides various administrative services for
the Fund,
such as
maintaining the registration of Fund shares under state
"Blue
Sky" laws,
assisting in the preparation of Federal and state
income tax
returns and
preparing financial and other information for
prospectuses,
statements of
additional information, and periodic reports to
shareholders.
MIMI also assists
the Trust's legal counsel with SEC registration
statements,
proxies and other
required filings. Under the agreement, the Fund's net
assets are
subject to a
fee, accrued daily and paid monthly, at the annual rate
of 0.10%.
MIMI also provides certain accounting and
pricing services
for the Fund (see
"Fund Accounting Services" in the SAI for more
information).
4
<PAGE>
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).
DIVIDENDS AND TAXES
Distributions you receive from the Fund are
reinvested in
additional Fund
shares of the same class unless you elect to receive
them in
cash. If you elect
the cash option and the U.S. Postal Service cannot
deliver your
checks, your
election will be converted to the reinvestment option.
TAXATION: The following discussion is intended for
general
information
only. You should consult with your tax advisor as to
the tax
consequences of an
investment in the Fund, including the status of
distributions
from the Fund
under applicable state or local law.
The Fund intends to qualify annually 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 gain)
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 gain (the excess of net
long-term
capital gain over
net short-term capital loss), 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.
A distribution will be treated as paid on December
31 of the
current
calendar year if it is declared by the Fund in October,
November
or December
with a record date in such a month and paid by the Fund
during
January of the
following calendar year. Such distributions will be
taxable to
shareholders in
the calendar year in which the distributions are
declared, rather
than the
calendar year in which the distributions are received.
Each year the Fund will notify shareholders of the
tax status
of dividends
and distributions.
Investments in securities that are issued at a
discount will
result in
income to the Fund each year equal to a portion of the
excess of
the face value
of the securities over their issue price, even though
the Fund
receives no cash
interest payments from the securities.
Shareholders generally are not expected to realize
any gain
or loss upon a
disposition of shares of the Fund, as long as the Fund
maintains
a constant net
asset value per share. In the unlikely event that the
Fund were
unable to do so,
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 would be a capital gain or loss
which would
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. Fund
distributions that 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.
You should
consult with
your tax advisor regarding the particular tax
consequences of an
investment in
the Fund. Further information relating to tax
consequences is
contained in the
SAI.
PERFORMANCE DATA
Comparative performance information may be used
from time
to
time in
advertising or marketing the shares of the Fund,
including data
from Lipper
Analytical Services, Inc., Donoghue's Money Fund
Report, The Bank
Rate Monitor,
other industry publications, business periodicals,
rating
services and market
indices. ALL PERFORMANCE INFORMATION IS HISTORICAL AND
IS NOT
INTENDED TO
SUGGEST FUTURE RESULTS.
The yield of a Fund refers to the income
generated by an
investment in the
Fund over a seven-day period (which period will be
stated in the
advertisement).
This income is then annualized; that is, the amount of
income
generated by the
investment during that week is assumed to be generated
each week
over a 52 week
period and is shown as a percentage of the
investment.
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
Money
Market 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.
5
<PAGE>
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").
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
Ivy Money Market
Fund), 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
9 for more
information.
DIRECT PURCHASES OF CLASS B AND CLASS C SHARES:
Class B
and
Class C shares
may be purchased directly through your election of a
systematic
withdrawal plan
under which specified withdrawal amounts are used to
purchase
Class B or Class C
shares of a different Ivy or Mackenzie fund. This
arrangement is
designed to
take advantage of dollar-cost averaging as a method of
investment. To establish
this type of arrangement, complete section 6B of the
Account
Application.
HOW YOUR PURCHASE PRICE IS DETERMINED
Your purchase price is the net asset value per
share ("NAV").
Share
purchases will be made at the next determined price
after the
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 net
asset value. Any orders received after the time of the
determination of the net
asset value will be entered at the next calculated
price.
Orders placed with a securities dealer before the
net asset
value is
determined and 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 or
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 Fund offers three classes of shares in this
Prospectus,
designated as
Class A, Class B and Class C shares. The NAV per share
is the
value of one Class
A, Class B, or Class C 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.
For purposes of determining the aggregate net
assets of
the
Fund, cash and
receivables will be valued at their realizable amounts.
The Fund
values all of
its portfolio securities using the amortized cost
method, which
involves valuing
a security at cost on the date of acquisition and
thereafter
assuming a constant
rate of accretion of discount or amortization of
premium. While
this method
provides certainty in valuation, it may result in
periods during
which value, as
determined by amortized cost, is higher or lower than
the price
the Fund would
receive if it sold the instrument. During such periods,
the yield
to an investor
in the Fund may differ somewhat from that obtained in a
similar
investment
company which uses available market quotations to value
all of
its portfolio
securities.
HOW TO REDEEM SHARES
You may redeem your Fund shares through your
registered
securities
representative, by mail, by telephone or by check
writing. All
redemptions are
made at the NAV next determined after a redemption
request has
been received in
good order. Requests for redemptions must be received
by 4:00
p.m. Eastern time
to be processed at the NAV for that day. Any redemption
request
in good order
that is received after 4:00 p.m. Eastern time will be
processed
at the price
determined on the following business day. IF SHARES TO
BE
REDEEMED WERE
PURCHASED BY CHECK, PAYMENT OF THE REDEMPTION MAY BE
DELAYED
UNTIL THE CHECK HAS
CLEARED OR FOR UP TO 15 DAYS AFTER THE DATE OF
PURCHASE,
WHICHEVER IS LESS. The
Fund does not assess a CDSC. However, if the shares of
another
Ivy or Mackenzie
fund that are subject to a CDSC are exchanged for
shares (of the
same class) of
the Fund, the CDSC will carry over to the investment in
the Fund
and may be
assessed upon redemption.
When shares are redeemed, the Fund generally
sends you
payment on the next
business day. Unless otherwise requested, your
redemption
proceeds will be
mailed in the form of a check to your address of
record. 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: Your
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:
6
<PAGE>
- Any outstanding certificate(s) for shares being
redeemed.
- A letter of instruction, including the account
registration, the Fund
number, the account number, the address and the
dollar
amount or number of
shares to be redeemed.
- Signatures of all registered owners whose names
appear on
the account.
- Any required signature guarantees.
- Other supporting legal documentation, if required
(in the
case of estates,
trusts, guardianships, corporations, retirement
plans or
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 6
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 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 $10.00 fee 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.
BY CHECK WRITING: The check writing privilege
is only
available to Class A
shareholders and is not available for retirement
accounts. You
may write checks
against your Fund account. Checks written must be for a
minimum
of $100. You may
sign up for this option by completing Section 8 of the
Account
Application. IF
YOU ARE REDEEMING SHARES THAT HAVE BEEN PURCHASED BY
CHECK,
PAYMENT MAY BE
DELAYED UNTIL YOUR CHECK HAS CLEARED OR FOR UP TO 15
CALENDAR
DAYS AFTER THE
DATE OF PURCHASE. Please note that all registered
owners named on
the account
must sign the signature card, and only registered
owners may have
the check
writing privilege on an account.
In order to qualify for the check writing
privilege, Class A
shareholders
must maintain a minimum average account balance of
$1,000. Shares
must be
uncertificated (i.e., held by the Fund) for any account
requesting check writing
privileges. Checks can be reordered by calling IMSC at
1-800-777-6472. Checking
activity is reported on your statement, and canceled
check copies
are returned
to you each month. There is no limitation on the number
of checks
a shareholder
may write.
When a check is presented for payment, the Fund
redeems a
sufficient number
of shares to cover the amount of the check. Checks
written on
accounts with
insufficient shares will be returned to the payee
marked
"non-sufficient funds."
There may be a nominal charge for each supply of
checks, copies
of canceled
checks, stop payment orders, checks drawn for amounts
less than
the Fund minimum
(i.e., $100) and checks returned for "non-sufficient
funds." To
pay for these
charges, the Fund automatically redeems an appropriate
number of
the
shareholder's Fund shares after the charges are
incurred.
You may not close your Fund account by writing a
check,
because any earned
dividends will remain in your account. The Fund
reserves the
right to change,
modify or terminate the check writing service at any
time upon
notification
mailed to your address of record.
Your account will be charged a $10 fee each time
redemption
proceeds are
wired to your bank.
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 IRA's, 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.
7
<PAGE>
- 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 gain distributions and, in
the event
the Fund failed
to maintain a constant NAV per share, 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
under-reporting 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 the 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
Account
Application to claim
the exemption. If the registration is for a UGMA/UTMA
account,
please provide
the social security number of the minor. Non-U.S.
investors who
do not have a
TIN must provide, with the 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 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 at 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 order.
Class A shareholders of the Fund may exchange their
outstanding 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 sales
charge
payable with respect
to the new shares at the time of the exchange.
Incremental sales
charges are
waived for outstanding shares that have been invested
for 12
months or longer.
Shareholders who have purchased Class B (or Class C)
shares of
the Fund directly
may exchange their Class B (or Class C) shares for
Class B (or
Class C) shares
of another Ivy or Mackenzie fund on the basis of the
relative NAV
per Class B
(or Class C) share (see "Direct Purchases of Class B
and Class C
Shares" under
"How to Buy Shares"), subject to the CDSC schedule (or
period) of
the fund into
which the exchange is being made (beginning with the
date of the
exchange).
Class B and Class C shareholders of another Ivy
or
Mackenzie
fund may
exchange their shares for Class B and Class C shares of
the Fund.
Exchanges from
another Ivy or Mackenzie Fund will continue to be
subject to the
CDSC schedule
(or period) of the fund from which the exchange was
made, but
will reflect the
time the shares are held in the Fund.
Class A, Class B and Class C shares that have
been
acquired
as a result of
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 into which the exchange is being made. Shares
must be
uncertificated in
order to execute an exchange. Exchanges are available
only in
states where they
can be legally made. This privilege is not intended to
provide
shareholders a
8
<PAGE>
means by which to speculate on short-term movements in
the
market. Exchanges are
accepted only if the registrations of the two accounts
are
identical. Amounts to
be exchanged must meet minimum investment requirements
for the
Ivy or Mackenzie
fund into which the exchange is made.
With respect to Fund shares subject to a CDSC
(i.e., Class B
or Class C
shares acquired through an exchange from another Ivy or
Mackenzie
fund), 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 Ivy Fund 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 or
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.
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 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 into which you wish to
exchange your
existing shares.
- The number of shares or the dollar amount you
wish to
exchange.
The request must be signed by all registered
owners.
SYSTEMATIC WITHDRAWAL PLAN
You may elect the Systematic Withdrawal Plan at any
time by
completing
Section 6B of the Account Application. 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,
semi-annually, annually or on a selected monthly basis,
to
yourself or any other
designated payee. You may elect to have your systematic
withdrawal paid directly
to your bank account via EFT. Share certificates must
be unissued
(i.e., held by
the Fund) while the Systematic Withdrawal 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. 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 redemption. 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 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
tax 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.
9
<PAGE>
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, and various documents (available from
IMSC),
including IRS Form
W-4P, and information must be provided before the
distribution
may be made. 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, tax adviser or IMSC.
Please call IMSC at 1-800-777-6472 for complete
information
kits describing
the plans and their benefits, restrictions, provisions
and fees.
SHAREHOLDER INQUIRIES
Inquiries regarding the Fund should be directed to
IMSC at
1-800-777-6472.
10
<PAGE>
IVY MONEY MARKET FUND
________________________
ACCOUNT APPLICATION
ACCOUNT NUMBER
Please mail applications and checks to: Mackenzie Ivy
Investor
Services Corp.,
P.O. Box 3022, Boca Raton, FL
33431-0922.
(This application should not be used for retirement
accounts for
which Ivy is
custodian.)
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------
-----------------------------------------------------------------
--
IVY MONEY
MARKET
FUND ACCOUNT APPLICATION
-----------------------------------------------------------------
-----------------------------------------------------------------
--
FUND
USE
101/
1 / 2 1 / 2 0 / 1 0
/ X
ONLY ----------------------- --------- ---------
------------ -------- ---------- ---------
---------
------------
Dealer # Branch # Rep #
Acct
Type Soc Cd Div Cd CG Cd Exc Cd
Red Cd
-----------------------------------------------------------------
-----------------------------------------------------------------
--
REGISTRATION
1 [ ] Individual
_________________________________________________________________
_______________________
[ ] Joint Tenant Owner,
Custodian or
Trustee
[ ] Estate
_________________________________________________________________
_______________________
[ ] UGMA/UTMA Co-owner or
Minor
[ ] Corporation
_________________________________________________________________
_______________________
[ ] Partnership
Minor's State of
Residence
[ ] Sole Proprietor
_________________________________________________________________
_______________________
[ ] Trust Street
__________________
_________________________________________________________________
_______________________
Date of Trust
[ ] Other ____________
_________________________________________________________________
_______/__/__/__/__/__/
__________________ City
State Zip
Code
/__/__/__/-/__/__/__/-/__/__/__/__/
/__/__/__/-/__/__/__/-/__/__/__/__/
Phone Number
-- Day
Phone Number -- Evening
-----------------------------------------------------------------
-----------------------------------------------------------------
--
-----------------------------------------------------------------
-----------------------------------------------------------------
--
TAX ID #
2 /__/__/__/-/__/__/-/__/__/__/__/ of
/__/__/-/__/__/__/__/__/__/__/ Citizenship [ ] U.S. [
] Other
_______________
Social Security Number Tax
Identification
Number
Under penalties of perjury, I certify by
signing in
Section 9 below that: (1) the number shown in this
section is my
correct taxpayer identification number (TIN),
and (2) I
am not subject to backup withholding because: (a) I
have not
been notified by the Internal Revenue Service
(IRS)
that I am subject to backup withholding as a result of
a failure
to report all interest or dividends, or (b)
the IRS has
notified me that I am no longer subject to backup
withholding. (Cross out item (2) if you have
been
notified by the IRS that you are currently subject to
backup
withholding because of underreporting
interest or
dividends on your tax return.) Please see the "Tax
Identification
Number" section of the Prospectus for
additional
information on completing this section.
-----------------------------------------------------------------
-----------------------------------------------------------------
--
-----------------------------------------------------------------
-----------------------------------------------------------------
--
DEALER INFORMATION
3 The undersigned ("Dealer") agrees to all
applicable
provisions in this Application, guarantees the
signature and
legal
capacity of the Shareholder, and agrees to
notify MIISC
of any purchases made under a Letter of Intent or
Rights
of Accumulation.
__________________________________________________________
__________________________________________________________
Dealer Name
Representative's Name and Number
__________________________________________________________
__________________________________________________________
Branch Office Address
Representative's Phone Number
__________________________________________________________
__________________________________________________________
City State Zip
Code
Authorized Signature of Dealer
-----------------------------------------------------------------
-----------------------------------------------------------------
--
-----------------------------------------------------------------
-----------------------------------------------------------------
--
INVESTMENTS
4 A. Enclosed is my check ($1,000 minimum)
made payable
to Ivy Money Market Fund. Please invest it in [ ] Class
A
[ ] Class B(*) or [ ] Class C(*) shares.
$_____________________ (Amount Enclosed)
(*) Direct purchases of Class B and
Class C
shares
may be made in conjunction with a systematic withdrawal
plan into
the same Class of a different Ivy or
Mackenzie
fund. (See "Direct Purchase of Class B and Class C
Shares" under
"How To Buy Shares.")
-----------------------------------------------------------------
-----------------------------------------------------------------
--
-----------------------------------------------------------------
-----------------------------------------------------------------
--
DISTRIBUTION OPTIONS
5 A. I would like to reinvest dividends and
capital
gains into additional shares in this account at net
asset value
unless
a different option is checked below.
B. [ ] Reinvest all dividends and capital
gains into
additional shares of a different Ivy or Mackenzie fund.
_____________________________________
/__/__/__/__/__/__/__/__/__/__/ [ ] New Account
Fund Name
Account
Number
C. [ ] Pay all dividends in cash and
reinvest capital
gains into additional shares in this Fund or a
different Ivy or
Mackenzie fund.
_____________________________________
/__/__/__/__/__/__/__/__/__/__/ [ ] New Account
Fund Name
Account
Number
D. [ ] Pay all dividends and capital gains
in cash.
I REQUEST THE ABOVE CASH
DISTRIBUTION, SELECTED IN C OR D ABOVE, BE:
[ ] Sent to the address listed in the
registration.
[ ] Sent to the special payee listed in Section 7A [ ]
(By Mail)
7B [ ]
(By E.F.T.)
-----------------------------------------------------------------
-----------------------------------------------------------------
--
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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--
OPTIONAL SPECIAL FEATURES
6 A. [ ] AUTOMATIC INVESTMENT METHOD (AIM)
I wish to invest [ ] once per month.
My bank account will be debited on or about the
[ ] twice
______________ day of the month(*)
[ ] 3 times
______________ day of the month
[ ] 4 times
______________ day of the month
______________ day of the month
Please invest $_____________ each period
starting in
the month of _______ in Ivy Money Market Fund.
Dollar Amount
Month
[ ] I have attached a voided check to ensure
my
correct bank account will be debited.
B. [ ] SYSTEMATIC WITHDRAWAL PLANS(*)
Class: I wish to automatically withdraw
funds
from my account in Ivy Money Market Fund: [ ] Class A
Shares
[ ] Class B Shares [ ] Class C Shares
Frequency: [ ] Monthly If monthly,
withdraw
funds: [ ] One per month
[ ] Quarterly
[ ] Twice per month
[ ] Semi-Annually
[ ] 3 times per month
[ ] Annually
[ ] 4 times per month
Payment Method: I request the withdrawl
to be: [
] Sent to the address listed in the registration
[
] Sent to the special payee listed in Section 7A
[
] Invested as part of a dollar-cost averaging
program into additional shares of another
Ivy or Mackenzie fund (fill out information below)
If part of a dollar-cost averaging
program:
____________________________________
/__/__/__/__/__/__/__/__/__/__/
Ivy
or Mackenzie fund to be invested Account
Number
Amount/Start Date $ _______________, starting on or
about
the_______________day of the________________________
month(*)
_______________day of the________________________
month
_______________day of the________________________
month
_______________day of the________________________
month
C. [ ] FEDERAL FUNDS WIRE FOR REDEMPTION
PROCEEDS(**)
I authorize the Agent to honor telephone
instructions for the redemption of Fund shares up to
$50,000.
Proceeds may
be wire transferred to the bank account
designated
($1,000 minimum). Shares issued in certificate form may
not be
redeemed under this privilege. (COMPLETE
SECTION
7B)
D. [ ] TELEPHONE EXCHANGES(**) [ ] Yes [ ] No
I authorize exchanges by telephone among
the Ivy
and Mackenzie family of funds upon instructions from
any person
as
more fully described in the Prospectus.
To change
this option once established, written instructions must
be
received
from the shareholder of record or the
current
registered representative.
If neither box is checked, the telephone
exchange
privilege will be provided automatically.
E. [ ] TELEPHONE REDEMPTIONS(**) [ ] Yes [ ] No
The Fund or its agents are authorized to
honor
telephone instructions from any person as more fully
described in
the
Prospectus for the redemption of Fund
shares. The
amount of the redemption shall not exceed $50,000 and
the
proceeds
are to be payable to the shareholder of
record and
mailed to the address of record. To change this option
once
established, written instructions must be
received
from the shareholder of record or the current
registered
representative.
If neither box is checked, the telephone
exchange
privilege will be provided automatically.
(*) There must be a period of at least seven
calendar days
between each investment/withdrawal period.
(**) This option may not be selected if shares
are in
certificate form.
-----------------------------------------------------------------
-----------------------------------------------------------------
--
-----------------------------------------------------------------
-----------------------------------------------------------------
--
SPECIAL PAYEE
7 A. MAILING ADDRESS
B. FED WIRE / E.F.T. INFORMATION
-------------------------------------------------------
----------------------------------------------------
Please send all disbursements to this
special payee
-------------------------------------------------------
----------------------------------------------------
Name of Bank or Individual
Financial Institution
-------------------------------------------------------
---------------------------- ---------------------
Account Number (If Applicable)
ABA # Account #
-------------------------------------------------------
----------------------------------------------------
Street
Street
-------------------------------------------------------
----------------------------------------------------
City/State/Zip
City/State/Zip
(Please attach a voided check)
-----------------------------------------------------------------
-----------------------------------------------------------------
--
-----------------------------------------------------------------
-----------------------------------------------------------------
--
CHECK WRITING ENROLLMENT FORM
8 THIS FEATURE IS AVAILABLE TO CLASS A
SHAREHOLDERS ONLY.
CHECKS MUST BE WRITTEN FOR A MINIMUM OF $100. Shares
purchased in
the
Fund may be subject to a holding period of up to
15
calendar days before being redeemed by check. Please
see the
Prospectus
for details.
HOW TO ENROLL
1. ALL REGISTERED OWNERS MUST SIGN THIS FORM IN
THE SPACE
PROVIDED BELOW.
2. Check the appropriate Number of Signatures
Required box
to indicate the number of signatures required when
writing
checks.
NUMBER OF SIGNATURES REQUIRED
[ ] One signature is required [ ] More than
one
signature is required
-----------------------------
number of signatures required
[ ] All signatures are required
IF NONE OF THE ABOVE IS CHECKED THEN ALL
SIGNATURES WILL
BE REQUIRED
---------------------------------------------------------
------------------------------
Authorized Signature
Date
---------------------------------------------------------
------------------------------
Authorized Signature
Date
---------------------------------------------------------
------------------------------
Authorized Signature
Date
-----------------------------------------------------------------
-----------------------------------------------------------------
--
-----------------------------------------------------------------
-----------------------------------------------------------------
--
SIGNATURES
9 Investors should be aware that the failure to
check the
"No" under Section 6D and 6E above means that the
Telephone
Exchanges/Redemptions Privileges will be
provided. The
Funds employ reasonable procedures that require
personal
identification prior to acting on
exchange/redemption
instructions communicated by telephone to confirm that
such
instructions are genuine. In the absence of such
procedures, a Fund may be liable for any losses due to
unauthorized or
fraudulent telephone instructions. Please see
"Exchange
Privilege" and "How to Redeem Shares" in the Prospectus
for more
information on these privileges.
I certify to my legal capacity to purchase or
redeem
shares of the Fund for my own account or for the
account of the
organization named in Section 1. I have received
a current
Prospectus and understand its terms are incorporated in
this
application by reference. I am certifying my
taxpayer
information as stated in Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE
YOUR CONSENT
TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
-----------------------------------------------------------------
---------- ------------------
Signature of Owner, Custodian, Trustee or
Corporate
Officer Date
-----------------------------------------------------------------
---------- ------------------
Signature of Joint Owner, Co-Trustee or
Corporate Officer
Date
-----------------------------------------------------------------
-----------------------------------------------------------------
--
</TABLE>
(REMEMBER TO SIGN SECTION 9)
IMMF-1-496
<PAGE>
April 30, 1996
Ivy
Short-Term
Bond Fund
----------
Prospectus
----------
Ivy Management, Inc.
Via Mizner Financial
Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
Ivy Fund (the "Trust") is a registered investment
company
currently consisting
of thirteen separate portfolios. One portfolio of the
Trust, Ivy
Short-Term
Bond Fund (the "Fund"), is described in this
Prospectus.
This Prospectus sets forth concisely the information
about the
Fund that a
prospective investor should know before investing.
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 April
30, 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.
Investments in
the Fund are
neither insured nor guaranteed by the U.S. Government
or any
governmental
agency.
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>
<CAPTION>
TABLE OF CONTENTS
<S>
<C>
Expense Information . . . . . . . . . . . . . . . . .
2
The Fund's Financial Highlights . . . . . . . . . . .
3
Investment Objectives and Policies . . . . . . . . .
4
Risk Factors and Investment Techniques . . . . . . .
5
Organization and Management of the Fund . . . . . . .
8
Fund Administration and Accounting . . . . . . . . .
8
Transfer Agent . . . . . . . . . . . . . . . . . . .
9
Alternative Purchase Arrangements . . . . . . . . . .
9
Dividends and Taxes . . . . . . . . . . . . . . . . .
9
Performance Data . . . . . . . . . . . . . . . . . .
10
How to Buy Shares . . . . . . . . . . . . . . . . . .
10
How Your Purchase Price is Determined . . . . . . . .
11
How the Fund Values Its Shares . . . . . . . . . . .
11
Initial Sales Charge Alternative - Class A Shares . .
11
Contingent Deferred Sales Charge - Class A Shares . .
12
Qualifying for a Reduced Sales Charge . . . . . . . .
12
Contingent Deferred Sales Charge Alternative -
Class B Shares . . . . . . . . . . . . . . . . . .
13
How to Redeem Shares . . . . . . . . . . . . . . . .
14
Check Writing . . . . . . . . . . . . . . . . . . . .
15
Minimum Account Balance Requirements . . . . . . . .
15
Signature Guarantees . . . . . . . . . . . . . . . .
15
Choosing a Distribution Option . . . . . . . . . . .
15
Tax Identification Number . . . . . . . . . . . . . .
16
Certificates . . . . . . . . . . . . . . . . . . . .
16
Exchange Privilege . . . . . . . . . . . . . . . . .
16
Reinvestment Privilege . . . . . . . . . . . . . . .
17
Systematic Withdrawal Plan . . . . . . . . . . . . .
17
Automatic Investment Method . . . . . . . . . . . . .
17
Consolidated Account Statements . . . . . . . . . . .
17
Retirement Plans . . . . . . . . . . . . . . . . . .
17
Shareholder Inquiries . . . . . . . . . . . . . . . .
18
</TABLE>
<TABLE>
<S> <C>
<C> <C>
BOARD OF TRUSTEES OFFICERS
TRANSFER AGENT INVESTMENT
John S. Anderegg, Jr. Michael G. Landry,
President
Ivy Mackenzie MANAGER
Paul H. Broyhill Keith J. Carlson, Vice
President
Services Corp. Ivy Management,
Inc.
Stanley Channick C. William
Ferris,
P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece, Jr.
Secretary/Treasurer
Boca Raton, FL
Roy J. Glauber Michael R. Peers,
Chairman
33431-0922 DISTRIBUTOR;
Michael G. Landry
1-800-777-6472 Ivy Mackenzie
Michael R. Peers LEGAL COUNSEL
Distributors,
Inc.
Joseph G. Rosenthal Dechert Price &
Rhoads
AUDITORS Via Mizner Financial
Plaza
Richard N. Silverman Boston, MA
Coopers & Lybrand L.L.P. 700 South Federal
Highway
J. Brendan Swan
Ft. Lauderdale, FL Boca Raton, FL
33432
CUSTODIAN;
1-800-456-5111
Brown Brothers
Harriman & Co.
Boston, MA
</TABLE>
THROUGHOUT THE
CENTURIES,
THE CASTLE KEEP HAS
BEEN A SOURCE
OF LONG-RANGE VISION
AND STRATEGIC
ADVANTAGE.
<PAGE>
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION
EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS I
------- ------- -------
<S>
<C>
<C> <C>
Maximum sales load imposed on purchases (as a
percentage of
offering price at time of
purchase).......................
3.00%* None None
Maximum contingent deferred sales charge (as a
percentage
of original purchase
price)...............................
None** 3.00%*** None
The Fund has no sales load on reinvested dividends, no
redemption fees and no exchange fees.
</TABLE>
* Class A Shares of the Fund may be purchased under a
variety
of plans that
provide for the reduction or elimination of the
sales charge.
** A contingent deferred sales charge may apply to the
redemption of Class A
shares that are purchased without an initial sales
charge.
See "Purchases of
Class A Shares at Net Asset Value" and "Contingent
Deferred
Sales
Charge -- Class A Shares."
*** The maximum contingent deferred sales charge on
Class B
shares applies to
redemptions during the first year after purchase.
The charge
declines to
2 1/2% during the second year; 2% during the third
year; 1
1/2% during the
fourth year; 1% during the fifth year; and 0% in
the sixth
year and
thereafter.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)
<TABLE>
<CAPTION>
CLASS A
CLASS B CLASS I
-------
------- -------
<S>
<C>
<C> <C>
Management Fees After Expense Reimbursements(1).....
0.00%
0.00% 0.00%
12b-1 Service/Distribution Fees.....................
0.25%
0.75%(2) 0.00%
Other Expenses......................................
0.68%
0.68% 0.59%(3)
--
-- --
Total Fund Operating Expenses After Expense
Reimbursements(4)..................................
0.93%
1.43% 0.59%
=======
======= ======
</TABLE>
(1) Management Fees reflect expense reimbursements (see
note (4)
below). Without
expense reimbursements, Management Fees for all
classes would
have been
0.60%.
(2) Long-term investors may, as a result of the Fund's
12b-1
fees, pay more than
the economic equivalent of the maximum front-end
sales charge
permitted by
the Rules of Fair Practice of the National
Association of
Securities
Dealers, Inc.
(3) The "Other Expenses" of Class I of the Fund are
lower than
such expenses for
the Fund's other classes because Class I shares
bear lower
shareholder
services fees than Class A and Class B shares.
(4) The voluntary portion of the Fund's expense
reimbursement may
be terminated
or revised at any time, at which time the Fund's
expenses
would increase.
Total Fund Operating Expenses for all classes
(excluding
12b-1 fees) without
expense reimbursement would have been 3.02%.
EXAMPLE
CLASS A AND CLASS I SHARES*
You would pay the following expenses on a $1,000
investment
in the Fund,
assuming (1) 5% annual return and (2) redemption at the
end of
each time period:
<TABLE>
<CAPTION>
1 YEAR
3
YEARS 5 YEARS 10 YEARS
------
------- ------- --------
<S> <C>
<C>
<C> <C>
Class A(1)................................... $ 39
$59
$80 $141
Class I(2)................................... $ 7
$22
$38 $ 85
</TABLE>
* Net of expense reimbursements. See Note (4) in
the Annual
Fund Operating
Expense Table above.
(1) Assumes deduction of the maximum 3% initial sales
charge at
the time of
purchase and no deduction of a contingent deferred
sales
charge at the time
of redemption.
(2) Class I shares are not subject to initial sales
charges at
the time of
purchase, nor are they subject to the deduction of
a
contingent deferred
sales charge at the time of redemption.
EXAMPLE (1 OF 2)
CLASS B SHARES*
You would pay the following expenses on a $1,000
investment
in the Fund,
assuming (1) 5% annual return and (2) redemption at the
end of
each time period:
<TABLE>
<CAPTION>
1 YEAR(1) 3 YEARS(2) 5 YEARS(3) 10 YEARS(4)
--------- ---------- ---------- -----------
<S> <C> <C> <C>
$45 $ 65 $ 88 $ 158
</TABLE>
EXAMPLE (2 OF 2)
CLASS B SHARES*
You would pay the following expenses on a $1,000
investment
in the Fund,
assuming (1) 5% annual return and (2) no redemption:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(4)
------ ------- ------- -----------
<S> <C> <C> <C>
$ 15 $45 $78 $ 158
</TABLE>
* Net of expense reimbursements.
(1) Assumes deduction of a 3% contingent deferred sales
charge at
the time of
redemption.
(2) Assumes deduction of a 2% contingent deferred sales
charge at
the time of
redemption.
(3) Assumes deduction of a 1% contingent deferred sales
charge at
the time of
redemption.
(4) Ten-year figures assume conversion of Class B
shares to Class
A shares at
the end of the eighth year and, therefore, reflect
Class A
expenses for
years nine and ten.
The purpose of the foregoing tables is to provide
an investor
with an
understanding of the various costs and expenses that an
investor
in the Fund
will bear, directly or indirectly. The Examples assume
reinvestment of all
dividends and distributions and that the percentage
amounts under
"Total Fund
Operating Expenses After Expense Reimbursement" remain
the same
each year. The
assumed annual return of 5% is required by applicable
law to be
applied by all
investment companies and is used for illustrative
purposes only.
This assumption
is not a projection of future performance. The actual
expenses
for the Fund may
be higher or lower than the estimates given.
Except as set forth below, the percentages
expressing annual
fund operating
expenses are based on amounts incurred by the Fund
during the
year ended
December 31, 1995. The management fees for the Fund
have been
adjusted to
reflect the expected level of expense reimbursement for
the
current fiscal year.
The information in the table does not reflect the
charge of
$10.00 per
transaction if a shareholder makes a request 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 the
Prospectus:
"Organization and
Management of the Fund," "Initial Sales Charge
Alternative --
Class A Shares,"
"Contingent Deferred Sales Charge Alternative -- Class
B Shares,"
and "How to
Buy Shares," and the following section of the SAI:
"Investment
Advisory and
Other Services."
2
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The Fund results from a reorganization of
Mackenzie
Short-Term U.S.
Government Securities Fund (formerly Mackenzie
Adjustable U.S.
Government
Securities Trust), a series of The Mackenzie Funds
Inc., which
reorganization
was approved by shareholders in December, 1994. From
commencement
of operations
until September 20, 1994 (during which time the Fund
was known as
Mackenzie
Adjustable U.S. Government Securities Trust) the Fund
had an
investment
objective of seeking a high level of current income,
consistent
with lower
volatility of principal. From September 20, 1994 until
December
31, 1994 the
Fund was known as Mackenzie Short-Term U.S. Government
Securities
Fund (d/b/a
Ivy Short-Term U.S. Government Securities Fund), with
the same
investment
objective as that described in this Prospectus and the
SAI.
The following information through December 31, 1995
relating
to the Fund,
operating prior to the reorganization of Mackenzie
Short-Term
U.S. Government
Securities Fund (d/b/a Ivy Short-Term U.S. Government
Securities
Fund) into Ivy
Short-Term U.S. Government Securities Fund, has been
audited by
Coopers &
Lybrand L.L.P., independent accountants. The report of
Coopers &
Lybrand L.L.P.
on the Fund's financial statements appears in the
Fund's Annual
Report dated
December 31, 1995 which is incorporated by reference
into the
Fund's SAI. The
Annual Report contains further information about and
management's
discussion of
the Fund's performance, and is available to
shareholders upon
request and
without charge. The information presented below should
be read in
conjunction
with the financial statements and notes thereto.
Expense and income ratios and portfolio turnover
rates
have
been annualized
for periods of less than one year. Total returns do not
reflect
sales charges,
and are not annualized for periods of less than one
year.
Prior to December 31, 1994, Mackenzie Investment
Management
Inc. ("MIMI"),
of which IMI is a wholly owned subsidiary, served as
investment
adviser to the
Fund.
<TABLE>
<CAPTION>
CLASS A
-------------------------------
FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------ ------------
SELECTED PER SHARE DATA
1995 1994
------------ ------------
<S>
<C> <C>
Net asset value, beginning of
period.................................................... $
9.49 $ 9.71
----- -----
Income from investment operations:
Net investment
income(a)........................................................
....... .54 .23
Net loss on investments (both realized and
unrealized).................................
(.02)
(.22)
----- -----
Total from investment
operations..................................................
.52 .01
----- -----
Less distributions:
From net investment
income...........................................................
.. .54 .23
From capital
paid-in..........................................................
......... -- --
----- -----
Total
distributions....................................................
........... .54 .23
----- -----
Capital contributed by
manager.........................................................
.26 --
----- -----
Net asset value, end of
period..........................................................
$ 9.73 $ 9.49
============ ============
Total
return(%)........................................................
................. 8.56(c) .03
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)................................................
$6,027 $8,572
Ratio of total expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%).................................
.93
1.38
Without expense reimbursement and fees paid
indirectly(%).............................. 3.27
2.80
Ratio of net investment income to average net
assets(%)(a).............................. 5.53
4.65
Portfolio turnover
rate(%)..........................................................
.... 54 143
<CAPTION>
CLASS A
---------------------------------------
FOR THE YEAR ENDED JUNE 30,
---------------------------------------
SELECTED PER SHARE DATA
1994 1993
1992
------- -------
-------
<S>
<C>
Net asset value, beginning of
period.................................................... $
9.92 $ 9.96 $ 9.97
------- -------
-------
Income from investment operations:
Net investment
income(a)........................................................
....... .36 .46 .66
Net loss on investments (both realized and
unrealized)................................. (.21)
(.04) --
------- -------
-------
Total from investment
operations..................................................
.15 .42 .66
------- -------
-------
Less distributions:
From net investment
income...........................................................
.. .36 .46 .66
From capital
paid-in..........................................................
......... -- -- --
------- -------
-------
Total
distributions....................................................
........... .36 .46 .67
------- -------
-------
Capital contributed by
manager.........................................................
-- -- --
Net asset value, end of
period..........................................................
$ 9.71 $ 9.92 $ 9.96
======= =======
=======
Total
return(%)........................................................
................. 1.57 4.33
6.80
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)................................................
$12,267 $44,375 $25,259
Ratio of total expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)................................. .92
.82 .86
Without expense reimbursement and fees paid
indirectly(%).............................. 1.52
1.45 1.30
Ratio of net investment income to average net
assets(%)(a).............................. 3.73
4.54 6.43
Portfolio turnover
rate(%)..........................................................
.... 37 69 106
<CAPTION>
CLASS A
-------------------------------
FOR THE YEAR ENDED JUNE 30,
-------------------------------
SELECTED PER SHARE DATA
1991(B)
-------
Net asset value, beginning of
period....................................................
$10.00
-------
Income from investment operations:
Net investment
income(a)........................................................
....... .16
Net loss on investments (both realized and
unrealized)................................. (.03)
-------
Total from investment
operations..................................................
.13
-------
Less distributions:
From net investment
income...........................................................
.. .16
From capital
paid-in..........................................................
......... --
-------
Total
distributions....................................................
........... .16
-------
Capital contributed by
manager.........................................................
--
-------
Net asset value, end of
period..........................................................
$ 9.97
=======
Total
return(%)........................................................
................. 6.65
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)................................................
$13,708
Ratio of total expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)................................. .25
Without expense reimbursement and fees paid
indirectly(%).............................. 3.00
Ratio of net investment income to average net
assets(%)(a).............................. 8.70
Portfolio turnover
rate(%)..........................................................
.... 7
</TABLE>
---------------
<TABLE>
<S> <C>
(a) Net investment income is net of expenses
reimbursed by
the Fund's Manager.
(b) April 18, 1991 (commencement) to June 30,
1991.
(c) Without a capital contribution by the Manager,
total
return would have been 5.82%.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CLASS B
-----------------
JANUARY 12,
1995
(COMMENCEMENT)
TO
DECEMBER 31,
1995
-----------------
<S>
<C>
Net asset value, beginning of
period...........................................................
.......... $9.44
---
Income (loss) from investment operations:
Net investment
income(a)........................................................
........................ .49
Net income (loss) on investments (both realized and
unrealized).........................................
.03
---
Total from investment
operations.......................................................
............ .52
---
Less distributions:
From net investment
income...........................................................
................... .49
---
Capital contributed by
manager..........................................................
................ .26
---
Net asset value, end of
period...........................................................
................ $9.73
===================
Total
return(%)........................................................
.................................. 8.53(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).......................................................
.......... $ 27
Ratio of total expenses to average net assets:
With expense
reimbursement(%).................................................
.......................... 1.43
Without expense
reimbursement(%).................................................
....................... 3.77
Ratio of net investment income to average net
assets(%)(a)...............................................
5.03
Portfolio turnover
rate(%)..........................................................
..................... 54
<CAPTION>
CLASS I
------------
FOR THE YEAR
ENDED
DECEMBER 31,
1995*
------------
<S>
<C>
Net asset value, beginning of
period...........................................................
.......... $ --
---
Income (loss) from investment operations:
Net investment
income(a)........................................................
........................ --
Net income (loss) on investments (both realized and
unrealized).........................................
--
---
Total from investment
operations.......................................................
............ --
---
Less distributions:
From net investment
income...........................................................
................... --
---
Capital contributed by
manager..........................................................
................ --
---
Net asset value, end of
period...........................................................
................ $ --
============
Total
return(%)........................................................
.................................. --
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).......................................................
.......... $ --
Ratio of total expenses to average net assets:
With expense
reimbursement(%).................................................
.......................... --
Without expense
reimbursement(%).................................................
....................... --
Ratio of net investment income to average net
assets(%)(a)...............................................
--
Portfolio turnover
rate(%)..........................................................
..................... --
<CAPTION>
CLASS I
------------
FOR THE SIX
MONTHS ENDED
DECEMBER 31,
1994
------------
Net asset value, beginning of
period...........................................................
.......... $ 9.71
---
Income (loss) from investment operations:
Net investment
income(a)........................................................
........................ .14
Net income (loss) on investments (both realized and
unrealized).........................................
(.22)
---
Total from investment
operations.......................................................
............ (.08)
---
Less distributions:
From net investment
income...........................................................
................... .14
---
Capital contributed by
manager..........................................................
................ --
---
Net asset value, end of
period...........................................................
................ $ 9.49
============
Total
return(%)........................................................
.................................. (.99)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).......................................................
.......... $ --
Ratio of total expenses to average net assets:
With expense
reimbursement(%).................................................
.......................... 1.13
Without expense
reimbursement(%).................................................
....................... 2.55
Ratio of net investment income to average net
assets(%)(a)...............................................
4.90
Portfolio turnover
rate(%)..........................................................
..................... 143
<CAPTION>
CLASS I
-----------------
FOR THE PERIOD
JULY 3, 1993
(COMMENCEMENT)
TO
JUNE 30,
1994
-----------------
Net asset value, beginning of
period...........................................................
.......... $ 9.92
-----
Income (loss) from investment operations:
Net investment
income(a)........................................................
........................ .39
Net income (loss) on investments (both realized and
unrealized).........................................
(.21)
-----
Total from investment
operations.......................................................
............ .18
-----
Less distributions:
From net investment
income...........................................................
................... .39
-----
Capital contributed by
manager..........................................................
................ --
-----
Net asset value, end of
period...........................................................
................ $ 9.71
===================
Total
return(%)........................................................
.................................. 1.77
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).......................................................
.......... $ 1,495
Ratio of total expenses to average net assets:
With expense
reimbursement(%).................................................
.......................... .67
Without expense
reimbursement(%).................................................
....................... 1.27
Ratio of net investment income to average net
assets(%)(a)...............................................
3.98
Portfolio turnover
rate(%)..........................................................
..................... 37
</TABLE>
---------------
<TABLE>
<S> <C>
*
(a)
(b)
<CAPTION>
* There were no Class I shares outstanding
during the
period.
<S> <C>
(a) Net investment income is net of expenses
reimbursed by
the Fund's Manager.
(b) Without a capital contribution by the Manager,
total
return would have been 5.78%.
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund is a diversified company which offers
investors a
convenient way to
invest in a managed portfolio of government debt
securities. The
Fund seeks a
high level of current income consistent with a high
degree of
principal
stability. The Fund pursues this objective by investing
primarily
(at least 65%
of its total assets) in short-term U.S. Government
securities,
including bonds,
notes and bills issued by the U.S. Treasury, and
securities
issued by agencies
or instrumentalities of the U.S. Government.
Although the Fund may purchase individual
securities with a
greater
maturity, the dollar-weighted average maturity of the
Fund's
portfolio may not
exceed three years. In addition, whenever in IMI's
judgment
abnormal market or
economic conditions warrant, the Fund may, for
temporary
defensive purposes,
invest without limit in short-term U.S. Government
Securities
(maturing in 13
months or less), certificates of deposit, banker's
acceptances,
repurchase
agreements and commercial paper rated Prime-A by
Moody's
Investors Services,
Inc. ("Moody's") or A-1 by S&P, or, if not rated by
Moody's or
S&P, issued by
companies having an outstanding debt issue currently
rated Aa or
better by
Moody's or AA or better by S&P.
The Fund may invest up to 20% of its net assets in
debt
securities of
foreign issuers meeting the credit quality standards
described
above, including
non-U.S. dollar-denominated debt securities, American
Depository
Receipts
("ADRs"), Eurodollar securities, and debt securities
issued,
assumed or
guaranteed by foreign governments or political
subdivisions or
instrumentalities
thereof. The Fund may also enter into forward foreign
currency
contracts to
protect against the uncertainty in the level of future
foreign
exchange rates,
but not for speculative purposes.
The Fund may invest up to 5% of its net assets in
dividend
paying common
stocks (including adjustable rate preferred stocks);
zero coupon
bonds in
accordance with the Fund's credit quality standards;
and
securities sold on a
"when-issued" or firm-commitment basis. The Fund may
lend its
portfolio
securities to increase current income, and borrow from
banks as a
temporary
measure for emergency purposes. The Fund may also
invest in
mortgage-related
securities, including mortgage pass-through securities
(such as
adjustable rate
mortgage securities, or "ARMs") and collateralized
mortgage
obligations (CMOs).
The Fund may invest up to 35% of its assets in
corporate debt
securities
rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB
by S&P at
the time of
purchase. The Fund may invest less than 35% of its net
assets in
corporate debt
securities considered medium or lower grade (commonly
referred to
as "high
yield" or "junk" bonds). The Fund will not invest in
corporate
debt securities
that, at the time of investment, are rated less than C
by either
Moody's or S&P.
During the twelve months ended December 31, 1995,
based upon
the
dollar-weighted average ratings of the Fund's portfolio
holdings
at the end of
each month during such period, the Fund had the
following
percentages of its
total assets invested in securities rated in the
categories
indicated (all
ratings are by either S&P or Moody's, whichever rating
is
higher): 75.1% in
securities rated AAA/Aaa; 0% in securities rated AA/Aa;
0% in
securities rated
A/A; 0% in securities rated BBB/Baa; 7.3% in securities
rated
BB/Ba; 11.4% in
securities rated B/B; and 0% in securities which were
unrated.
These figures are
intended solely to provide disclosure about the Fund's
asset
composition during
the period specified above. The asset composition after
this time
may or may not
be approximately the same as represented by such
figures.
The Fund can use various techniques to increase or
decrease
its exposure to
changing security prices, interest rates, currency
exchange
rates, commodity
prices, or other factors that affect security values.
These
techniques may
involve derivative transactions such as selling call
options and
purchasing put
and call options on U.S. government securities,
interest rate
futures, foreign
currency futures and foreign currencies that are traded
on an
exchange or board
of trade. IMI can use these practices to adjust the
risk and
return
characteristics of the Fund's portfolio of investments.
If IMI
judges market
conditions incorrectly or employs a strategy that does
not
correlate well with
the Fund's investments, these techniques could result
in a loss.
These
techniques may increase the
4
<PAGE>
volatility of the Fund and may involve a small
investment of cash
relative to
the magnitude of the risk assumed. In addition, these
techniques
could result in
a loss if the counterparty to the transaction does not
perform as
promised. The
Fund may only engage in transactions in interest rate
futures,
currency rate
futures and options on interest rate futures and
currency futures
contracts for
hedging purposes.
The Fund's investment objectives are fundamental
and may not
be changed
without the approval of a majority of the outstanding
voting
shares of the Fund.
The Trustees may make non-material changes in the
Fund's
objectives without
shareholder approval. Except for the Fund's investment
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, therefore, may be changed by the
Trustees
without
shareholder approval. There can be no assurance that
the Fund's
objectives 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.
RISK FACTORS AND INVESTMENT TECHNIQUES
The following discussion describes in greater
detail the
different types of
securities and investment techniques used by the Fund,
as well as
the risks
associated with such securities and techniques.
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 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.
The Fund may invest up to 35% of its assets in
corporate debt
securities rated
Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by
S&P at the
time of
purchase.
U.S. GOVERNMENT SECURITIES: U.S. Government
securities are
obligations of,
or guaranteed by, the U.S. Government, its agencies or
instrumentalities. Such
securities include: (1) direct obligations of the U.S.
Treasury
(such as
Treasury bills, notes, and bonds) and (2) Federal
agency
obligations guaranteed
as to principal and interest by the U.S. Treasury (such
as GNMA
certificates,
which are mortgage-backed securities). When such
securities are
held to
maturity, the payment of principal and interest is
unconditionally guaranteed by
the U.S. Government, and thus they are of the highest
possible
credit quality.
U.S. Government securities that are not held to
maturity are
subject to
variations in market value caused by fluctuations in
interest
rates.
Mortgage-backed securities are securities
representing part
ownership of a
pool of mortgage loans. Although the mortgage loans in
the pool
will have
maturities of up to 30 years, the actual average life
of the
loans typically
will be substantially less because the mortgages will
be subject
to principal
amortization and may be prepaid prior to maturity. In
periods of
falling
interest rates, the rate of prepayment tends to
increase, thereby
shortening the
actual average life of the security. Conversely, rising
interest
rates tend to
decrease the rate of prepayment, thereby lengthening
the
security's actual
average life. Since it is not possible to predict
accurately the
average life of
a particular pool, and because prepayments are
reinvested at
current rates, the
market value of mortgage-backed securities may decline
during
periods of
declining interest rates.
INVESTMENT-GRADE DEBT SECURITIES: Bonds rated
Aaa by
Moody's
and AAA by S&P
are judged to be of the best quality (i.e., capacity to
pay
interest and repay
principal is extremely strong). Bonds rated Aa/AA are
considered
to be of high
quality (i.e., capacity to pay interest and repay
interest is
very strong and
differs from the highest rated issues only to a small
degree).
Bonds rated A are
viewed as having many favorable investment attributes,
but
elements may be
present that suggest a susceptibility to the adverse
effects of
changes in
circumstances and economic conditions than debt in
higher rated
categories.
Bonds rated Baa/BBB (considered by Moody's to be
"medium grade"
obligations) are
considered to have an adequate capacity to pay interest
and repay
principal, but
certain protective elements may be lacking (i.e., such
bonds lack
outstanding
investment characteristics and have some speculative
characteristics).
LOW-RATED DEBT SECURITIES: Securities rated lower
than Baa
or BBB (and
comparable unrated securities), commonly referred to as
"high
yield" or "junk"
bonds, are considered by major credit-rating
organizations to
have predominately
speculative characteristics with respect to the
issuer's capacity
to pay
interest and repay principal. While such debt
securities are
likely to have some
quality and protective characteristics, these are
largely
outweighed by the risk
of exposure to adverse conditions and other
uncertainties.
Accordingly,
investments in such securities, while generally
providing for
greater income and
potential opportunity for gain than investments in
higher-rated
securities, also
entail greater risk (including the possibility of
default or
bankruptcy of the
issuer of such securities) and generally involve
greater price
volatility than
securities in higher rating categories. Investors in
the Fund
should be willing
to accept the risks associated with high-yield
securities. IMI
seeks to reduce
risk through diversification (including investments in
foreign
securities),
credit analysis and attention to current developments
and trends
in both the
economy and financial markets.
Should the rating of a portfolio security be
downgraded, IMI
will determine
whether it is in the Fund's best interest to retain or
dispose of
the security.
However, should any individual bond held by the Fund be
downgraded below the
rating of C, IMI currently intends to dispose of it
based on then
existing
market conditions. See Appendix A to the SAI for a more
complete
description of
the ratings assigned by Moody's and S&P.
MORTGAGE-RELATED SECURITIES: The market value of
mortgage
securities, like
that of U.S. Government securities, will generally vary
inversely
with changes
in market interest rates, declining when interest rates
rise and
rising when
interest rates decline. However, mortgage securities,
while
having less risk of
a decline during periods of rapidly rising interest
rates, may
also have less
potential for capital appreciation than other
investments of
comparable
maturities due to the likelihood of increased
prepayments of
mortgages as
interest rates decline and the possibility of a lower
rate of
return upon
reinvestment. In addition, to the extent mortgage
securities are
purchased at a
premium,
5
<PAGE>
mortgage foreclosures and unscheduled principal
repayments may
result in some
loss of the holders' principal investment to the extent
of
premium paid. On the
other hand, if mortgage securities are purchased at a
discount,
both a scheduled
payment of principal and an unscheduled prepayment of
principal
will increase
current and total returns and will accelerate the
recognition of
income which
when distributed to shareholders will be taxable as
ordinary
income.
Mortgage pass-through securities are securities
representing
interests in
"pools" of mortgage loans secured by residential or
commercial
real property in
which payments of both interest and principal on the
securities
are generally
made monthly, in effect "passing through" monthly
payments made
by the
individual borrowers on the mortgage loans which
underlie the
securities (net of
fees paid to the issuer or guarantor of the
securities).
ARMs are pass-through mortgage securities which are
collateralized by
mortgages with adjustable rather than fixed interest
rates. The
ARMs in which
the Fund invests are issued primarily by GNMA, FNMA and
FHLMC and
are actively
traded in the secondary market. The Fund will not
benefit from
increases in
interest rates to the extent that interest rates rise
to the
point where they
cause the current coupon of adjustable rate mortgages
held as
investments to
exceed the maximum allowable annual or lifetime reset
limits (or
"cap rates")
for a particular mortgage. Also, the Fund's net asset
value could
vary to the
extent that current yields on mortgage securities are
different
than market
yields during interim periods between coupon reset
dates.
Payment of principal and interest on some mortgage
pass-through securities
(but not the market value of the securities themselves)
may be
guaranteed by the
full faith and credit of the U.S. Government (in the
case of
securities
guaranteed by GNMA); or guaranteed by agencies or
instrumentalities of the U.S.
Government (in the case of securities guaranteed by
FNMA or the
Federal Home
Loan Mortgage Corporation ("FHLMC"), which are
supported only by
the
discretionary authority of the U.S. Government to
purchase the
agency's
obligations). Mortgage-related securities created by
non-governmental issuers
(such as commercial banks, savings and loan
institutions, private
mortgage
insurance companies, mortgage bankers and other
secondary market
issuers) may be
supported by various forms of insurance or guarantees,
including
individual
loan, title, pool and hazard insurance and letters of
credit,
which may be
issued by governmental entities, private insurers or
the mortgage
poolers.
CMOs are bonds issued by single-purpose,
stand-alone finance
subsidiaries or
trusts of financial institutions, government agencies,
investment
bankers or
other similar institutions. CMOs purchased by the Fund
may be:
(1)
collateralized by pools of mortgages in which each
mortgage is
guaranteed as to
payment of principal and interest by an agency or
instrumentality
of the U.S.
Government; (2) collateralized by pools of mortgages in
which
payment of
principal and interest are guaranteed by the issuer and
the
guarantee is
collateralized by U.S. Government securities; or (3)
securities
in which the
proceeds of the issuance are invested in mortgage
securities and
payment of the
principal and interest are supported by the credit of
an agency
or
instrumentality of the U.S. Government. All CMOs
purchased by the
Fund will be
either issued by a U.S. Government agency or rated AAA
by S&P or
Aaa by Moody's.
BANKING INDUSTRY AND SAVING AND LOAN 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
such obligation is fully insured by the Federal Deposit
Insurance
Corporation
("FDIC"). Investments in certificates of deposit of
savings
associations are
limited to obligations of federally or state-chartered
institutions that have
total assets in excess of $1 billion and whose deposits
are
insured by the FDIC.
COMMERCIAL PAPER: Commercial paper represents
short-term
unsecured
promissory notes issued in bearer form by bank holding
companies,
corporations,
and finance companies. 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.
FOREIGN SECURITIES: The foreign securities in
which the Fund
may invest
include non-U.S. dollar-denominated debt securities,
Eurodollar
securities, and
debt securities issued, assumed or guaranteed by
foreign
governments or
political subdivisions or instrumentalities thereof.
The Fund may
also purchase
sponsored or unsponsored ADRs. Eurodollar securities
are
securities that are
issued offshore and which pay interest and principal in
U.S.
dollars. ADRs are
dollar-denominated receipts issued generally by U.S.
banks and
which represent a
deposit with the bank of a foreign company's
securities.
Unsponsored ADRs differ
from sponsored ADRs in that the establishment of
unsponsored ADRs
is not
approved by the issuer of the underlying foreign
securities.
Ownership of
unsponsored ADRs may not entitle the Fund to financial
or other
reports of the
issuer, to which it would be entitled as the owner of
sponsored
ADRs. ADRs are
publicly traded on exchanges or over the counter in the
United
States. See the
Fund's SAI. Investors should consider carefully the
substantial
risks involved
in investing in securities issued by companies and
governments of
foreign
nations, which are in addition to the usual risks
inherent in
domestic
investments.
The Fund may invest in debt securities issued by
governments,
government-related entities and corporations in foreign
countries
with emerging
or developing economies ("emerging markets"), including
the
developing countries
of Latin America and Eastern Europe. Securities of many
issuers
in emerging
markets may be less liquid and more volatile than
securities of
issuers
operating in developed economies, such as the United
States,
Canada and most of
Europe. The risks described above with respect to
investment in
foreign
countries are heightened when the foreign country is an
emerging
market.
Furthermore, throughout the last decade, 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.
Although the Fund intends to invest only in nations
that the
Investment
Manager considers to have relatively stable and
friendly
governments, there is
the possibility of expropriation, nationalization or
confiscatory
taxation,
taxation of income earned in a foreign country and
other foreign
taxes, foreign
exchange controls (which may include suspension of the
ability to
transfer
currency from a given country), default in foreign
government
securities,
political or social instability or diplomatic
developments which
could affect
investments in securities of issuers in those nations.
In
addition, in many
countries there is less publicly available information
about
issuers than is
available in reports about companies in the United
States.
Foreign companies are
not generally subject to uniform accounting, auditing
and
financial reporting
standards, and auditing practices and requirements may
not be
comparable to
those applicable to U.S. companies. In many foreign
countries,
there is less
government supervision and regulation of business and
industry
practices, stock
exchanges, brokers and listed companies than in the
United
States. Foreign
securities transactions may be subject to higher
brokerage costs
than domestic
securities transactions. In addition, the foreign
securities
markets of many of
the countries in which the
6
<PAGE>
Fund may invest may also be smaller, less liquid and
subject to
greater price
volatility than those in the United States. Further,
the Fund may
encounter
difficulties or be unable to pursue legal remedies and
obtain
judgments in
foreign courts.
OPTIONS AND FUTURES TRANSACTIONS: 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 of the option, in
return for a
premium, 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.
When the Fund
writes a put
or call option, the Fund will segregate assets, such as
cash,
U.S. Government
securities or other high-grade debt securities, or
"cover" its
position in
accordance with the Investment Company Act of 1940, as
amended
(the "1940 Act").
The Fund will not write puts with respect to more than
50% of the
value of its
net assets (calculated at market value at the time of
the
transaction). The Fund
will not write any call options if as a result it would
have more
than 20% of
its net assets (calculated at market value at the time
of the
writing of the
call) subject to being purchased upon the exercise of
calls. The
Fund may
purchase options provided the aggregate premium paid
for all
options held will
not exceed 10% (calculated at market value) of the
value of its
net assets at
the time of purchase.
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 foreign
currency futures contract is an agreement to buy or
sell a
specified amount of a
foreign currency for a set price on a future date. See
"Investment Objectives
and Policies -- Futures Contracts and Options on
Futures
Contracts" in the SAI.
When the Fund enters into a futures contract, it
must make an
initial
deposit known as an "initial margin," as a partial
guarantee of
its performance
under the contract. As the value of the security or
currency
fluctuates, either
party to the contract is required to make additional
margin
payments, known as
"variation margins," to cover any additional obligation
it may
have under the
contract. In addition, when the Fund enters into a
futures
contract, it will
segregate assets, such as cash, U.S. Government
securities or
other high-grade
debt securities, or "cover" its position in accordance
with the
1940 Act.
Use of option contracts, foreign currency
contracts, futures
contracts and
options on futures contracts is subject to special risk
considerations. The risk
of loss from the use of futures is potentially
unlimited. A
liquid secondary
market for any futures or related options contract may
not be
available when a
futures or options position is sought to be closed and
the Fund
would remain
obligated to meet margin requirements until the
position is
closed. In addition,
there may be an imperfect correlation between price
movements in
the securities
or currency on which the futures or options contract is
based and
in the Fund's
portfolio securities being hedged. Use of futures or
related
options contracts
is further dependent on the Investment Manager's
ability to
predict correctly
price movements in the securities or currency being
hedged, and
no assurance can
be given that its judgment will be correct. Currency
futures
contracts and
options thereon may be traded on foreign exchanges;
such
transactions may not be
regulated as effectively as similar transactions in the
United
States; may not
involve a clearing mechanism and related guarantees;
and are
subject to the risk
of governmental action affecting trading in, or the
prices of,
foreign
securities.
FORWARD FOREIGN CURRENCY CONTRACTS: A forward
foreign
currency contract
involves an obligation to purchase or sell a specific
currency at
a future date,
which may be any fixed number of days from the date of
the
contract agreed upon
by the parties, at a price set at the time of the
contract.
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.
Although 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. Such imperfect
correlation
may prevent the
Fund from achieving the intended hedge or expose the
Fund to the
risk of
currency exchange loss. The Fund will enter into such a
forward
contract only if
it is expected that there will be a liquid market in
which to
close out the
contract. However, there can be no assurance that a
liquid market
will exist in
which to close a forward contract, in which case the
Fund may
suffer a loss.
ZERO COUPON BONDS: Zero coupon bonds are debt
obligations
issued without
any requirement for the periodic payment of interest.
Zero coupon
bonds are
issued at a significant discount from face value.
Because
interest on zero
coupon obligations is not distributed to the Fund on a
current
basis but is in
effect compounded, the value of the securities of this
type is
subject to
greater fluctuations in response to changing interest
rates than
the value of
debt obligations which distribute income regularly.
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
at an
agreed-upon yield. The Fund will not enter into a
repurchase
agreement with more
than seven days to maturity if, as a result, more than
10% of the
Fund's net
assets would be invested in illiquid securities
including such
repurchase
agreements. The Fund may enter into repurchase
agreements with
banks or
broker-dealers deemed to be creditworthy by the
Investment
Manager under
guidelines approved by the Board of Trustees. 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.
BORROWING, LENDING, "WHEN-ISSUED" SECURITIES AND
FIRM
COMMITMENTS: The Fund
may borrow from a bank up to a limit of 10% of its
total assets,
but only for
temporary or emergency purposes. 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).
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. 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. As a non-fundamental policy, loans will
not be made
if, as a
result, the aggregate of all outstanding securities
loaned
exceeds 30% of the
value of the Fund's total assets.
The Fund may invest in securities issued on a
"when-issued"
or firm
commitment basis in order to secure an advantageous
price and
yield to the Fund
at the time of entering into the transaction.
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.
7
<PAGE>
RESTRICTED AND ILLIQUID SECURITIES: The Fund's
policy is
that restricted
and other illiquid securities (including repurchase
agreements of
more than
seven days' duration and other securities which are not
readily
marketable or
which have a limited trading market) may not constitute
more than
10% of the
value of the Fund's net assets. In addition, as a
matter of
nonfundamental
policy, the Fund may not invest more than 10% of its
net assets
in securities
which are not readily marketable, repurchase agreements
maturing
in more than
seven days, and restricted securities; in no event may
the Fund
invest more than
5% of its assets in restricted securities. Issuers of
restricted
securities may
not be subject to the disclosure and other investor
protection
requirements that
would be applicable if their securities were publicly
traded.
Restricted
securities may be sold only in privately negotiated
transactions
or in a public
offering with respect to which a registration statement
is in
effect under the
Securities Act of 1933. Where a registration statement
is
required, the Fund may
be required to bear all or part of the registration
expenses.
There may be a
lapse of time between the Fund's decision to sell a
restricted or
illiquid
security and the point at which the Fund is permitted
or able to
sell such
security. If, during such a period, adverse market
conditions
were to develop,
the Fund might obtain a price less favorable than the
price that
prevailed when
it decided to sell.
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund is organized as a separate, diversified
portfolio
of
the Trust, an
open-end management investment company organized as a
Massachusetts business
trust on December 21, 1983. The Fund results from a
reorganization of Mackenzie
Short-Term U.S. Government Securities Fund, a series of
The
Mackenzie Funds
Inc., into the Fund, a newly created series of the
Trust, which
reorganization
was approved by shareholders in December, 1994. 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 13 series of shares. The Trustees
have
authorized the issuance
of three classes of the Fund, designated as Class A,
Class B 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 investments of the Fund. Each
class of
shares has a
different 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. As of March 29,1996, M. Fraser, 184
Euclid
Avenue, Hamburg,
New York 14075, held 2,572.28 (43.23%) of the
outstanding Class B
shares of the
Fund, and is considered to hold a controlling interest
(as
defined under the
1940 Act) in Class B shares of the Fund.
The Trust employs IMI to provide business
management and
investment advisory
services; MIMI to provide administrative and accounting
services;
Ivy Mackenzie
Distributors, Inc. ("IMDI") to distribute the Fund's
shares and
Ivy Mackenzie
Services Corp. ("IMSC") to provide transfer agent and
shareholder-related
services. IMI, IMDI and IMSC are wholly-owned
subsidiaries of
MIMI. Until
December 31, 1994, MIMI served as investment adviser to
the Fund.
As of March
29, 1996, IMI and MIMI had approximately $1.39 billion
and $186
million,
respectively, in assets under management. MIMI is a
subsidiary of
Mackenzie
Financial Corporation ("MFC"), which has been an
investment
counsel and mutual
fund manager in Toronto, Ontario, Canada for more than
25
years.
PORTFOLIO MANAGEMENT: The Fund is managed by a
team, with
each team member
having specific responsibilities for management of the
Fund:
Leslie A. Ferris, a
Senior Vice President of IMI and Managing
Director-Fixed Income,
is portfolio
manager for the Fund. Ms. Ferris joined the
Ivy/Mackenzie fund
complex (the
"Fund Complex") in 1988 and has 14 years of
professional
investment experience.
She is a Chartered Financial Analyst and holds an MBA
degree from
The University
of Chicago. Prior to joining Ivy/Mackenzie, Ms. Ferris
was a
portfolio manager
at Kemper Financial Services Inc. from 1982 to 1988.
Michael G.
Landry, the
President and a Director of MIMI and IMI, and the
President and a
Trustee of the
Trust, is the investment strategist for the Fund. Mr.
Landry
joined the Fund
Complex in 1987 and has over 20 years of professional
invesment
experience.
INVESTMENT MANAGEMENT EXPENSES: For management
of its
investments and
business affairs, the Fund pays IMI a monthly fee
calculated on
the basis of the
Fund's average daily net assets at an annual rate of
0.60%.
Under the Fund's management agreement, IMI pays
all
expenses
incurred by it
in rendering management services to the Fund. The Fund
bears its
cost of
operations. See the SAI. If, however, the Fund's total
expenses
in any fiscal
year exceed the permissible limit applicable to the
Fund in any
state in which
the shares are then qualified for sale, IMI will bear
the excess
expenses. The
ratio of operating expenses after expense
reimbursements to
average net assets
for Class A and Class B shares for the period ended
December 31,
1995 was 0.93%
and 1.43% (annualized), respectively. Without expense
reimbursements, the ratio
of operating expenses to average net assets for Class A
and Class
B Shares for
the period ended December 31, 1995 was 3.27% and 3.77%
(annualized),
respectively. There were no Class I shares outstanding
during the
year ended
December 31, 1995.
The assets received by each class of the Fund for
the issue
or sale of its
shares and all income, earnings, profits, losses and
proceeds
therefrom, subject
only to the rights of creditors, are allocated to, and
constitute
the underlying
assets of that class of the Fund. The underlying assets
of each
class of the
Fund are allocated and are charged with the expenses
with respect
to that class
of the Fund and with a share of the general expenses of
the
Trust. General
expenses of the Trust (such as the costs of maintaining
the
Trust's existence,
legal fees, proxy and shareholders' meeting costs,
etc.) that are
not readily
identifiable as belonging to a particular fund or to a
particular
class of a
fund will be allocated among and charged to the assets
of that
fund on a fair
and equitable basis, which may be based on the relative
assets of
that fund or
the nature of the services performed and their relative
applicability to that
fund. Expenses that relate exclusively to the Fund,
such as
certain registration
fees, brokerage commissions and other portfolio
expenses, will be
borne directly
by the Fund.
FUND ADMINISTRATION AND ACCOUNTING
The Trust has entered into an Administrative
Services
Agreement with MIMI
pursuant to which MIMI provides various administrative
services
for the Fund,
including maintenance of registration or qualification
of Fund
shares under
state "Blue Sky" laws, assisting in the preparation of
Federal
and state income
tax returns and preparing financial statements of
additional
information, and
periodic reports to shareholders. In addition, MIMI
will assist
the Trust's
legal counsel with SEC registration statements, proxies
and other
required
filings. Under the agreement, the Fund pays MIMI a
monthly fee
based upon the
Fund's average daily net assets at the annual rate of
0.10%.
MIMI also provides certain accounting and
pricing services
for the Fund (see
"Fund Accounting Services" in the SAI for more
information).
8
<PAGE>
TRANSFER AGENT
IMSC is the transfer and dividend-paying agent
for the
Fund
and provides
certain shareholder and 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
You can purchase shares of the Fund at a price
equal to their
net asset
value per share, plus a sales charge. At your election,
this
charge may be
imposed either at the time of the purchase (see
"Initial Sales
Charge
Alternative -- Class A shares") or on a contingent
deferred basis
(see
"Contingent Deferred Sales Charge Alternative -- Class
B
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 A SHARES: If you elect to purchase Class
A shares,
you
will incur an
initial sales charge unless the amount you purchase is
$1,000,000
or more. If
you purchase $1,000,000 or more of Class A shares, you
will not
be subject to an
initial sales charge, but you will incur a contingent
deferred
sales charge
("CDSC") if you redeem your shares within 24 months of
purchase.
See "Contingent
Deferred Sales Charge -- Class A Shares". Class A
shares are
subject to ongoing
service fees at an annual rate of 0.25% of the Fund's
average
daily net assets
attributable to Class A shares. Certain purchases of
Class A
shares qualify for
a reduced initial sales charge. See "Qualifying for a
Reduced
Sales Charge." 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 SHARES: You will not incur a sales
charge when
you
purchase Class B
shares, but the shares are subject to a CDSC if you
redeem them
within five
years of purchase. Class B shares are subject to
ongoing service
and
distribution fees at a combined annual rate of 0.75% of
the
Fund's average daily
net assets attributable to Class B shares. The ongoing
distribution fee will
cause these shares to have a higher expense ratio than
that of
Class A shares.
To the extent that any dividends are paid by the Fund,
these
higher expenses
will also 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. They are not subject to an initial or a
contingent
deferred sales
charge nor to ongoing service/distribution fees.
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
amount of your purchase, the length of time you expect
to hold
your shares and
other circumstances. You should consider whether,
during the
anticipated life of
your Fund investment, the accumulated fees on Class B
shares
would be less than
the initial sales charge and accumulated fees on Class
A shares
purchased at the
same time, and to what extent this differential would
be offset
by the Class A
shares' potentially higher yield. Also, sales personnel
may
receive different
compensation depending on which class of shares they
are selling.
To help you
make this determination, the table under the caption
"Expense
Data Table" at the
beginning of this Prospectus gives examples of the
charges
applicable to each
class of shares. Class A shares will normally be more
beneficial
if you qualify
for a reduced sales charge. See "Qualifying for a
Reduced Sales
Charge."
DIVIDENDS AND TAXES
Dividends and capital gain distributions
received from the
fund are
reinvested in additional shares of your class unless
your elect
to receive them
in cash. If you elect the cash option and the U.S.
Postal Service
cannot deliver
your checks, your election will be converted to the
reinvestment
option. Because
of the higher expenses associated with Class B shares,
any
dividend on these
shares will be lower than on the Class A and Class I
shares.
In order to provide a steady cash flow to the
Fund's
shareholders, the Board
of Trustees intends normally to make monthly
distributions from
the Fund's net
investment income to the Fund's Class A, Class B and
Class I
shareholders based
on their relative net asset value. The Fund intends to
make a
final distribution
for each fiscal year of any remaining net investment
income and
net realized
short-term capital gain, as well as undistributed net
long-term
capital gain
realized during the year. An additional distribution
may be made
of net
investment income, net realized short-term capital
gains and net
realized
long-term capital gains to comply with the calendar
year
distribution
requirement under the excise tax provisions of Section
4982 of
the Internal
Revenue Code of 1986, as amended (the "Code").
If, for any year, the total distributions from the
Fund
exceed net
investment income and net realized capital gain for the
Fund, the
excess,
distributed from the assets of the Fund, will generally
be
treated as a return
of capital. The amount treated as a return of capital
will reduce
a
shareholder's adjusted basis in his or her shares
(thereby
increasing his or her
potential gain or reducing his or her potential loss on
the sale
of his or her
shares) and, to the extent that the amount exceeds this
basis,
will be treated
as a taxable gain. However, if the Fund has current or
accumulated earnings and
profits, so as to characterize all or a portion of such
excess as
a dividend for
federal income tax purposes, the distributions, to that
extent,
would normally
be taxable as ordinary income (or, if a capital gain
dividend, as
long-term
capital gain).
TAXATION: The following discussion is intended for
general
information
only. An investor should consult with his or her own
tax adviser
as to the tax
consequences of an investment in the Fund, including
the status
of distributions
from the Fund under applicable state or local law.
The Fund intends to qualify annually and elect to
be treated
as a regulated
investment company under the Code. To qualify, the Fund
must meet
certain
income, distribution and diversification requirements.
In any
year in which the
Fund qualifies as a regulated investment company and
timely
distributes all of
its taxable income, the Fund generally will not pay any
U.S.
Federal income or
excise tax.
Dividends paid out of the Fund's investment company
taxable
income
(including dividends, interest and net short-term
capital gain)
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, designated
as
capital gain
dividends are taxable as long-term capital gains,
regardless of
how long the
shareholder has held the Fund's shares. Dividends are
taxable to
shareholders in
the same manner whether received in cash or reinvested
in
additional Fund
shares.
A distribution will be treated as paid on December
31 of the
current
calendar year if it is declared by a Fund in October,
November or
December with
a record date in such a month and paid by the Fund
during January
of the
following calendar year. Such distributions will be
taxable to
shareholders in
the
9
<PAGE>
calendar year in which the distributions are declared,
rather
than the calendar
year in which the distributions are received.
Each year the Fund will notify shareholders of the
tax status
of dividends
and distributions.
Any gain or loss realized by a shareholder upon the
sale or
other
disposition of shares of the Fund, or upon receipt of a
distribution in complete
liquidation of the Fund, generally will be a capital
gain or loss
which will be
long-term or short-term, generally depending upon the
shareholder's holding
period for the shares.
The Fund may be required to withhold U.S. Federal
income tax
at the rate of
31% of all taxable distributions payable to
shareholders who fail
to provide the
Fund with their correct taxpayer identification number
or to make
required
certifications, or who have been notified by the IRS
that they
are subject to
backup withholding. Backup withholding is not an
additional tax.
Any amounts
withheld may be credited against the shareholder's U.S.
Federal
income tax
liability.
Further information relating to tax consequences is
contained
in the SAI.
Fund distributions may be subject to state, local
and foreign
taxes. Fund
distributions that 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.
Shareholders
should consult
their own tax advisers regarding the particular tax
consequences
of an
investment in the Fund.
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
The minimum initial investment is $1,000; the
minimum
additional investment
is $100. Initial or additional investment amounts for
retirement
accounts may be
less. See "Retirement Plans." Accounts in Class I of
the Fund can
be opened with
a minimum initial investment of $5,000,000; the minimum
additional investment is
$10,000. The minimum initial investment in Class I of
the Fund
may be spread
over the thirteen-month period after an Institution or
a high net
worth
individual opens an account and the Fund, at its
discretion, may
accept initial
and additional investments of small amounts. All
purchases must
be made in U.S.
dollars. Complete the Account Application attached to
this
Prospectus. Indicate
whether you are purchasing Class A, Class B or Class I
shares. If
you do not
specify which class of shares you are purchasing, IMSC
will
assume you are
investing in Class A shares. The Fund reserves the
right to
reject for any
reason any purchase order.
OPENING AN ACCOUNT
BY CHECK
1. Make your check payable to the fund in which you
are
investing.
2. Deliver the completed application and check to
your
registered
representative or selling broker, or mail it
directly to
IMSC.
3. Our address is:
IVY MACKENZIE SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
4. Our courier address is:
IVY MACKENZIE SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE
300
BOCA RATON, FL 33432
BY WIRE
1. Deliver a completed fund application to your
registered
representative or
selling broker, or mail it directly to IMSC.
Before wiring
any funds,
please contact IMSC at 1-800-777-6472 to verify
your
account number.
2. Instruct your bank to wire funds to:
FIRST UNION NATIONAL BANK OF
FLORIDA
JACKSONVILLE, FLORIDA
ABA #063000021
ACCOUNT #2090002063833
FOR FURTHER CREDIT TO:
YOUR IVY ACCOUNT REGISTRATION
YOUR FUND NUMBER AND ACCOUNT
NUMBER
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place
an order to
purchase shares through your Registered Securities
Dealer.
10
<PAGE>
BUYING ADDITIONAL CLASS A AND CLASS B SHARES
BY CHECK
1. Complete the investment stub attached to your
statement or
include a note
with your investment listing the name of the
Fund, the
class of shares to
purchase, your account number and the name(s) in
which the
account is
registered.
2. Make your check payable to the fund in which you
are
investing.
3. Mail the account information and check to:
IVY MACKENZIE SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
Our courier address is:
IVY MACKENZIE SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE
300
BOCA RATON, FL 33432
or deliver it to your registered representative or
selling
broker.
BY WIRE
Instruct your bank to wire funds to:
FIRST UNION NATIONAL BANK OF
FLORIDA
JACKSONVILLE, FLORIDA
ABA #063000021
ACCOUNT #2090002063833
FOR FURTHER CREDIT TO:
YOUR IVY ACCOUNT REGISTRATION
YOUR FUND NUMBER AND ACCOUNT
NUMBER
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER
You may also place an order to purchase shares
through your
Registered
Securities Dealer.
BY AUTOMATIC INVESTMENT METHOD ("AIM")
1. Complete the "Automatic Investment Method" and
"Wire/EFT
Information"
sections on the Account Application designating
a bank
account from which
funds may be drawn. Please note that in order to
invest
using this
method, your bank must be a member of the
Automated
Clearing House system
(ACH). The minimum investment under this plan is
$50 per
month ($25 per
month for retirement plans).
Please remember to attach a voided check to your
account
application.
2. At pre-specified intervals, your bank account
will be
debited and the
proceeds will be credited to your account.
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 and
Class I
shares of the Fund
is the net asset value per share.
Your purchase of shares will be made at the next
determined
price after the
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 net asset value. Any orders received after the
time of the
determination
of the net asset value will be entered at the next
calculated
price.
Orders placed with a securities dealer prior to the
time of
determination of
the net asset value and transmitted through the
facilities of the
National
Securities Clearing Corporation 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 a Fund's net
assets
attributable to a
class by the number of shares of that class that are
outstanding,
adjusted to
the nearest cent.
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,
whichever 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 market
value as
determined by IMI
and approved in good faith by the Board. Money market
instruments
are valued at
amortized cost, which approximates market value.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES
Shares are purchased at a public offering price
equal to
their NAV per share
plus a sales charge, as set forth below.
<TABLE>
<CAPTION>
SALES CHARGE
----------------------- PORTION OF
AS A
AS A PUBLIC
PERCENTAGE PERCENTAGE OFFERING
OF
PUBLIC OF NET PRICE
OFFERING AMOUNT RETAINED
AMOUNT INVESTED
PRICE
INVESTED BY DEALER
-------------------------------------------------------
---------- ---------- ----------
<S>
<C>
<C> <C>
Less than $25,000......................................
3.00%
3.09% 2.50%
$25,000 but less than $250,000.........................
2.50%
2.56% 2.00%
$250,000 but less than $500,000........................
2.00%
2.04% 1.65%
$500,000 and over*.....................................
0.00%
0.00% 0.00%
</TABLE>
* 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."
With respect to purchases of $1,000,000 or more
made on or
after September
20, 1994 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 at .75% of
the first
$3,000,000
invested; .50% of the next $2,000,000 invested; and
.25% of the
amount invested
in excess of $5,000,000. Dealers who receive 90% or
more of
11
<PAGE>
the sales charge may be deemed to be underwriters as
that term is
defined in the
Securities Act of 1933.
Sales charges are not applied to any dividends that
are
reinvested in
additional shares of the Fund. An investor may be
charged a
transaction fee for
Class A and Class I shares purchased or redeemed at net
asset
value through a
broker or agent other than IMDI.
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 and
Class B 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 distribution plans
applicable to its Class
A and Class B shares, 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 United States
or other
bonuses such as
gift certificates or the cash equivalent of such bonus
or
incentive.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES
Purchases of $1,000,000 or more of Class A shares
will be
made at net asset
value with no initial sales charge, but if the shares
are
redeemed within 24
months after the end of the calendar month in which the
purchase
was made (the
contingent deferred sales charge period), a contingent
deferred
sales charge of
.75% 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 contingent deferred sales charge of
.75% for
certain
redemptions within 24 months after the date of
purchase.
The charge will be assessed on an amount equal to
the lesser
of the current
market value or the original purchase cost of the Class
A shares
redeemed.
Accordingly, no CDSC will be imposed on increases in
account
value above the
initial purchase price, including any dividends which
have been
reinvested in
additional Class A shares.
In determining whether a CDSC applies to a
redemption, the
calculation will
be determined in a manner that results in the lowest
possible
rate being
charged. Therefore, it will be assumed that the
redemption is
first made from
any shares in your account not subject to the CDSC. The
CDSC is
waived in
certain circumstances. See the discussion below under
the caption
"Waiver of
Contingent Deferred Sales Charge."
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The
contingent
deferred sales
charge is waived for (i) redemptions in connection with
distributions not
exceeding 12% annually of the initial account balance
(i.e., the
value of the
shareholder's Class A Fund account at the time of the
initial
distribution) (a)
following retirement under a tax qualified retirement
plan, or
(b) upon
attaining age 59 1/2 in the case of an IRA, a custodial
account
pursuant to
section 403(b)(7) of the Code or a Keogh Plan; (ii)
redemption
resulting from
tax-free return of an excess contribution to an IRA; or
(iii) any
partial or
complete redemption following the death or disability
(as defined
in Section
72(m)(7) of the Code) of a shareholder from an account
in which
the deceased or
disabled is named, provided that the redemption is
requested
within one year of
death or disability. IMDI may require documentation
prior to
waiver of the
contingent deferred sales charge.
Class A shareholders may exchange their Class A
shares
subject to a
contingent deferred sales charge ("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
contingent deferred sales charge 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.
Officers and Trustees of the Trust (and their
relatives)
and
IMI, MIMI,
Mackenzie Financial Corporation (of which MIMI is a
subsidiary)
and their
officers, directors, employees and retired employees,
and legal
counsel and
independent accountants (and their relatives) may buy
Class A
shares of the Fund
without an initial sales charge or a contingent
deferred sales
charge.
12
<PAGE>
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
established for
the benefit of a person enumerated above, may buy Class
A shares
of the Fund
without an initial sales charge or a contingent
deferred sales
charge. In
addition, certain investment advisers 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
contingent
deferred sales
charge provided such purchases are placed through a
broker or
agent who
maintains an omnibus account with the Fund. Also,
clients of
these advisers and
planners may make purchases under the same conditions
if the
purchases are
through the master account of such adviser or planner
on the
books of such
broker or agent. THIS PROVISION APPLIES TO ASSETS OF
RETIREMENT
AND DEFERRED
COMPENSATION PLANS AND TRUSTS USED TO FUND THOSE PLANS
INCLUDING,
BUT NOT
LIMITED TO, THOSE DEFINED IN SECTION 401(A), 403(B) OR
457 OF THE
CODE AND
"RABBI TRUSTS" WHOSE ASSETS ARE USED TO PURCHASE SHARES
OF THE
FUND THROUGH THE
AFOREMENTIONED CHANNELS.
Class A shares of the Fund may be purchased at
net asset
value by retirement
plans qualified under section 401(a) or 403(b) of the
Code and
subject to the
Employee Retirement Income Security Act of 1974. A
contingent
deferred sales
charge of 0.75% will be imposed on such purchases in
the event of
certain
redemption transactions within 24 months following such
purchases.
If investments by retirement plans at NAV are
made through
a
dealer who has
executed a dealer agreement with respect to the Fund,
IMDI may,
at the time of
purchase, pay such dealer, out of IMDI's own resources,
a
commission to
compensate such dealer for its distribution assistance
in
connection with such
purchase. Commissions would be computed as 0.75% of the
first $3
million
invested; 0.50% of the next $2 million invested; and
0.25% of the
amount
invested in excess of $5 million. Please contact IMDI
for
additional
information.
Class A shares of the Fund may also be purchased at
net asset
value, without
an initial sales charge, but subject to a contingent
deferred
sales charge of
0.75% during the first 24 months after the date of
purchase (see
"Contingent
Deferred Sales Charge -- Class A Shares"), by any
state, county,
or city, or any
instrumentality, department, authority or agency
thereof, which
is prohibited by
applicable investment laws from paying a sales charge
or
commission in
connection with the purchase of shares of any
registered
management investment
company (an "Eligible Governmental Authority"). If an
investment
by an Eligible
Governmental Authority is made at net asset value
through a
dealer who has
executed a dealer agreement with respect to the Fund,
IMDI may,
at the time of
purchase, pay such dealers, from its own resources, a
commission
to compensate
such dealers for their distribution assistance in
connection with
such
purchases. The commission would be computed at .75% of
the first
$3,000,000
invested; .50% of the next $2,000,000 invested; and
.25% of the
amount invested
in excess of $5,000,000. Please contact IMDI for
additional
information.
Class A shares can also be purchased without an
initial sales
charge, but
subject to a contingent deferred sales charge of .75%
in the
first 24 months, by
trust companies, bank trust departments, credit unions,
savings
and loans and
other similar organizations in their fiduciary capacity
or for
their own
accounts subject to any minimum requirements set by
IMDI.
Currently, these
criteria require that the amount invested or to be
invested in
the subsequent
13-month period totals at least $250,000. IMDI may, at
the time
of any such
purchase, pay out of IMDI's own resources commissions
to dealers
which provided
distribution assistance in connection with the
purchase.
Commissions would be
computed at .75% of the first $3,000,000 invested, .50%
of the
next $2,000,000
invested, and .25% of the amount invested in excess of
$5,000,000.
Class A shares of the Fund may also be purchased
without a
sales charge in
connection with certain liquidation, merger or
acquisition
transactions
involving other investment companies or personal
holding
companies.
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
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
SHARES
Class B shares are offered at net asset value per
share
without a front end
sales charge. However, Class B shares redeemed within
five years
of purchase
will be subject to a CDSC at the rates set forth below.
This
charge will be
assessed on an amount equal to the lesser of the
current market
value or the
original purchase cost of the shares being redeemed.
Accordingly,
you will not
be assessed a CDSC on increases in account value above
the
initial purchase
price, including shares derived from dividend
reinvestment. In
determining
whether a CDSC applies to a redemption, the calculation
will be
determined in a
manner that results in the lowest possible rate being
charged. It
will be
assumed that your redemption comes first from shares
you have
held beyond the
5-year CDSC redemption period or those you acquire
through
reinvestment of
dividends or distributions, and next from the shares
you have
held the longest
during the 5-year period.
Proceeds from the contingent deferred sales
charge 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 shares, such as compensating selected dealers
and agents
for selling
these shares. The combination of the contingent
deferred sales
charge and the
distribution and service fees makes it possible for the
Fund to
sell Class B
shares without deducting a sales charge at the time of
the
purchase.
The amount of the contingent deferred sales charge,
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.
13
<PAGE>
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED SALES
CHARGE AS A
CLASS B
PERCENTAGE OF
DOLLAR AMOUNT
YEAR SINCE PURCHASE
SUBJECT TO CHARGE
-----------------------------------------------------------------
------ -----------------
<S>
<C>
First............................................................
...... 3%
Second...........................................................
...... 2 1/2%
Third............................................................
...... 2%
Fourth...........................................................
...... 1 1/2%
Fifth............................................................
...... 1%
Sixth and
thereafter...................................................
0%
</TABLE>
IMDI currently intends to pay dealers a sales
commission of
3% of the sale
price of Class B shares that they have sold. IMDI will
retain
0.50% of the
continuing 0.75% service/distribution fee assessed to
Class B
shareholders and
will receive the entire amount of the contingent
deferred sales
charge paid by
shareholders on the redemption of Class B shares to
finance the
3% commission
plus related marketing expenses.
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 no
annual distribution
fees. If you exchanged Class B shares into the Fund
from another
Ivy or
Mackenzie Class B shares fund, the calculation will be
based on
the time the
shares in the original fund were purchased.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The
contingent
deferred sales
charge 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 Fund account at the time of the
initial
distribution) (a)
following retirement under a tax qualified retirement
plan, or
(b) upon
attaining age 59 1/2 in the case of an IRA, a custodial
account
pursuant to
section 403(b)(7) of the Code or a Keogh Plan; (ii)
redemption
resulting from
tax-free return of an excess contribution to an IRA; or
(iii) any
partial or
complete redemption following the death or disability
(as defined
in Section
72(m)(7) of the Code) of a shareholder from an account
in which
the deceased or
disabled is named, provided that the redemption is
requested
within one year of
death or disability. The Distributor may require
documentation
prior to waiver
of the contingent deferred sales charge.
ARRANGEMENTS WITH BROKER/DEALERS AND OTHERS:
IMDI may, at
its own expense,
pay concessions in addition to those described above to
dealers
which satisfy
certain criteria established from time to time by 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 such dealer during a particular period,
and (ii)
0.10% of the
value of Fund shares held by the dealer's customers for
more than
one year,
calculated on an annual basis.
HOW TO REDEEM SHARES
You may redeem your Fund shares through your
registered
securities
representative, by mail, by telephone, or by Federal
Funds wire.
A contingent deferred sales charge may apply to
certain Class
A share
redemptions, and to Class B share redemptions prior to
conversion. All
redemptions are made at the net asset value next
determined after
a redemption
request has been received in good order. Requests for
redemptions
must be
received by 4:00 p.m. Eastern time to be processed at
the net
asset value for
that day. Any redemption request in good order that is
received
after 4:00 p.m.
Eastern time will be processed at the price determined
on the
following business
day. IF SHARES TO BE REDEEMED WERE PURCHASED BY CHECK,
PAYMENT OF
THE REDEMPTION
MAY BE DELAYED UNTIL THE CHECK HAS CLEARED OR FOR UP TO
15 DAYS
AFTER THE DATE
OF PURCHASE, WHICHEVER IS LESS. If you own shares of
more than
one class of the
Fund, the Fund will redeem first the shares having the
highest
12b-1 fees; any
shares subject to a contingent deferred sales charge
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 net asset value (less any applicable
contingent
deferred sales
charge) 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 fund name,
the
account number, the
account name(s), the address and the dollar
amount or
number of shares to
be redeemed.
- Signatures of all registered owners whose names
appear on
the account.
- Any required signature guarantees.
- Other supporting legal documentation, if required
(in the
case of estates,
trusts, guardianships, corporations, retirement
plans or
other
representative capacities).
The dollar amount or number of shares indicated for
redemption must not
exceed the available shares or net asset value of your
account at
the next-
determined prices. If your request exceeds these
limits, then the
trade will be
rejected in its entirety.
BY TELEPHONE: Individual and joint accounts may
redeem up to
$50,000 per
day over the telephone by contacting IMSC Corp. 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 during
such times, you may want to consider placing the order
in writing
and sending it
by mail or overnight courier.
Checks will be made payable to the current account
registration and sent to
the address of record. If there has been a change of
address in
the last 30
days, please use the instructions for redemption
requests by mail
described
above. A signature guarantee would be required.
14
<PAGE>
Requests for telephone redemptions will be accepted
from the
registered
owner of the account, the designated registered
representative or
his/her
assistant.
Shares held in certificate form cannot be redeemed
by
telephone.
If Section 6E of the Account Application is not
completed,
telephone
redemption privileges will be provided automatically.
Although
telephone
redemptions may be a convenient feature, you should
realize that
you may be
giving up a measure of security that you may otherwise
have if
you terminated
the privilege and redeemed your shares in writing. If
you do not
wish to make
telephone redemptions or let your registered
representative or
his/her assistant
do so on your behalf, you must notify 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.
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
that
redemption proceeds
are wired to your bank.
Neither IMSC nor the Fund can be responsible for
the
efficiency of the
Federal Funds wire system or the shareholder's bank.
CHECK WRITING
Check writing is only available on Class A shares.
Checks
must be written
for a minimum of $500. You may sign up for this option
by
completing the Check
Writing Enrollment Form on the last page of the Account
Application. IF THE
CLASS A SHARES TO BE REDEEMED HAVE BEEN PURCHASED BY
CHECK,
AVAILABILITY OF THE
SHARES FOR REDEMPTION BY CHECK MAY BE DELAYED UNTIL
YOUR CHECK
CLEARS OR FOR UP
TO 15 CALENDAR DAYS AFTER THE DATE OF PURCHASE,
WHICHEVER IS
LESS.
In order to qualify for check writing, Fund
shareholders must
maintain a
minimum average balance of $1,000. Class A shares must
be
unissued (held at the
Fund) for any account requesting checkwriting
privileges.
Checks can be reordered by calling IMSC at
1-800-777-6472.
Checking activity
is reported on your statement, and cancelled check
copies are
returned to you
each month. There is no limitation on the number of
checks a
shareholder may
write.
Checks written on the Fund are redemptions of
shares and
considered taxable
events by the IRS. As such, they must be reported on
your income
tax return.
When a check is presented for payment, the Fund
redeems a
sufficient number
of Class A shares to cover the amount of the check.
Checks
written on accounts
with insufficient shares will be returned to the payee
marked
"non-sufficient
funds". There is a nominal charge for each supply of
checks,
copies of cancelled
checks, stop payment orders, checks drawn for amounts
less than
the Fund minimum
(see above) and checks returned for "non-sufficient
funds". To
pay for these
charges, the Fund automatically redeems an appropriate
number of
the
shareholder's Class A shares after the charges are
incurred.
You may not close your Fund account by writing a
check
because any earned
dividends will remain in your account. Check writing is
not
available for
retirement accounts or accounts in Class B or Class I
of the
Fund. The Fund
reserves the right to change, modify or terminate the
check
writing service at
any time upon notification mailed to the address of
record of the
shareholder(s).
MINIMUM ACCOUNT BALANCE REQUIREMENTS
Due to the high cost of maintaining small accounts
and
subject to state law
requirements, the Fund may redeem the accounts of
shareholders
who have
maintained an investment, including sales charges paid,
of less
than $1,000 for
more than 12 months. No redemption will be made unless
the
shareholder has been
given at least 60 day's notice of the Fund's intention
to redeem
the shares. No
redemption will be made if a shareholder's account
falls below
the minimum due
to a reduction in the value of the Fund's portfolio
securities.
This provision
does not apply to IRAs, other retirement accounts and
UGMA/UTMA
accounts.
SIGNATURE GUARANTEES
For your protection, and to prevent fraudulent
redemptions,
we require a
signature guarantee in order to accommodate the
following
requests:
- Redemption requests over $50,000.
- Requests for redemption proceeds to be sent to
someone
other than the
registered shareholder.
- Requests for redemption proceeds to be sent to an
address
other than the
address of record.
- Registration transfer requests.
- Requests for redemption proceeds to be wired to
your bank
account (if this
option was not selected on your original
application, or if
you are
changing the bank wire information).
A signature guarantee may be obtained only from an
eligible
guarantor
institution as defined in Rule 17Ad-15 of the
Securities Exchange
Act of 1934,
as amended. An eligible guarantor institution includes
banks,
brokers, dealers,
municipal securities dealers, government securities
dealers,
government
securities brokers, credit unions, national securities
exchanges,
registered
securities associations, clearing agencies and savings
associations. The
signature guarantee must not be qualified in any way.
Notarizations from notary
publics are not the same as signature guarantees, and
are not
accepted.
Circumstances other than those described above may
require a
signature
guarantee. Please contact 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 net asset value in
additional shares
of the same
class of the Fund unless you specify one of the other
options.
15
<PAGE>
INVESTMENT IN ANOTHER IVY OR MACKENZIE FUND -- Both
dividends
and capital
gains are automatically invested at net asset value 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 net asset
value 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, 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, a signature guarantee is required.
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, you must
provide a
letter of
instruction signed by all registered owners with
signatures
guaranteed.
EXCHANGE PRIVILEGE
Shareholders of the Fund have an exchange privilege
with
other Ivy and
Mackenzie funds. Class A shareholders may exchange
their
outstanding Class A
shares for Class A shares of another Ivy or Mackenzie
fund on the
basis of the
net asset value per Class A share, plus an amount equal
to the
difference
between the sales charge previously paid on the
outstanding Class
A shares and
the sales charge payable at the time of the exchange on
the new
Class A shares.
Incremental sales charges are waived for outstanding
Class A
shares that have
been invested for 12 months or longer.
Class B shareholders may exchange their outstanding
Class B
shares for Class
B shares of another Ivy or Mackenzie Fund on the basis
of the net
asset value
per Class B share, without the payment of any
contingent deferred
sales charge
that would otherwise be due upon the redemption of
Class B
shares. Class B
shareholders who exercise the exchange privilege would
continue
to be subject to
the Fund's contingent deferred sales charge schedule
(or period)
following an
exchange if such schedule is higher (or longer) than
the
contingent deferred
sales charge 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 net
asset value
per Class I share.
Shares resulting from the reinvestment of dividends
and other
distributions
will not be charged an initial sales charge or a
contingent
deferred sales
charge 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. Prior to
executing an
exchange, you
should obtain and read the prospectus and consider the
investment
objective of
the fund to be purchased. Shares must be unissued in
order to
execute an
exchange. Exchanges are available only in states where
they can
be legally made.
This privilege is not intended to provide shareholders
a means by
which to
speculate on short-term movements in the market 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 contingent
deferred sales
charge, 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
contingent
deferred sales charge
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 Fund prior to December 31, 1991, who became
a
shareholder of the Fund
as a result of a reorganization or merger between the
Funds may
exchange between
funds without paying a sales charge. An investor who
was a
shareholder of
American Investors Income Fund, Inc. or American
Investors Growth
Fund, Inc. on
or after October 31, 1988, who became a shareholder of
the Fund
as a result of
the reorganization between the Funds will receive
credit toward
any applicable
sales charge imposed by any Ivy or Mackenzie fund into
which an
exchange is
made.
In calculating the sales charge assessed on an
exchange,
shareholders will
be allowed to use the Rights of Accumulation privilege.
EXCHANGES BY TELEPHONE: When you fill out the
application
for your purchase
of Fund shares, if Section 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
16
<PAGE>
wish to make telephone exchanges or let your registered
representative or
his/her assistant 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, all 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
the privilege of
reinvesting all or a part of the proceeds of the
redemption back
into Class A
shares of the Fund at net asset value (without a sales
charge)
within 24 months
after the date of redemption (with no limit on the
number of
times this
privilege may be used). 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, semi-annually, annually or on a
selected
monthly basis, to
yourself or any other designated payee. You may elect
to have
your systematic
withdrawal paid directly to your bank account via
electronic
funds transfer
("EFT"). Share certificates must be unissued (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 or
Class B 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
contingent deferred sales charge imposed on your
redemptions of
Class B 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
contingent deferred
sales charge will be assessed upon the redemptions. A
contingent
deferred sales
charge 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 under the
"Automatic
Investment Method"
and "Fed Wire/EFT" sections of the Account Application.
There is
no charge to
you for this program.
You may terminate or suspend your Automatic
Investment Method
by telephone
at any time by contacting 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
will receive a
single quarterly account statement, unless otherwise
specified.
This feature
consolidates the activity for each account onto one
statement.
Requests for
quarterly consolidated statements for all other
accounts must be
submitted in
writing and must be signed by all registered owners.
RETIREMENT PLANS
The Ivy Mackenzie Funds offer several tax sheltered
retirement plans that
may fit your needs:
- IRA (Individual Retirement Account)
- 401(k) Plan
Money Purchase Pension Plan
Profit Sharing Plan
- SEP-IRA (Simplified Employee Pension Plan)
- 403(b)(7) Plan
Minimum initial and subsequent investments for
retirement
plans are $25.00.
17
<PAGE>
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
MIMI, 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, including withholding requirements, and
various
documents
(available from IMSC), including IRS Form W-4P, and
information
must be provided
before the distribution may be made. The Ivy Mackenzie
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, tax
adviser
or IMSC.
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.
18
<PAGE>
IVY SHORT-TERM BOND FUND
________________________
ACCOUNT APPLICATION
ACCOUNT NUMBER
USE THIS APPLICATION FOR
CLASS A, CLASS B AND CLASS I
Please mail applications and checks to: Mackenzie Ivy
Investor
Services Corp.,
P.O. Box 3022, Boca Raton, FL
33431-0922.
(This application should not be used for retirement
accounts for
which Ivy is
custodian.)
<TABLE>
<S> <C> <C>
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--
IVY
SHORT-TERM BOND
FUND ACCOUNT APPLICATION
-----------------------------------------------------------------
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--
FUND
USE
101/
1 / 2 1 / 2 0 / 1 0
/ X
ONLY ----------------------- --------- ---------
------------ -------- ---------- ---------
---------
------------
Dealer # Branch # Rep #
Acct
Type Soc Cd Div Cd CG Cd Exc Cd
Red Cd
-----------------------------------------------------------------
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--
REGISTRATION
1 [ ] Individual
_________________________________________________________________
_______________________
[ ] Joint Tenant Owner,
Custodian or
Trustee
[ ] Estate
_________________________________________________________________
_______________________
[ ] UGMA/UTMA Co-owner or
Minor
[ ] Corporation
_________________________________________________________________
_______________________
[ ] Partnership
Minor's State of
Residence
[ ] Sole Proprietor
_________________________________________________________________
_______________________
[ ] Trust Street
__________________
_________________________________________________________________
_______________________
Date of Trust
[ ] Other ____________
_________________________________________________________________
_______/__/__/__/__/__/
__________________ City
State Zip
Code
/__/__/__/-/__/__/__/-/__/__/__/__/
/__/__/__/-/__/__/__/-/__/__/__/__/
Phone Number
-- Day
Phone Number -- Evening
-----------------------------------------------------------------
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--
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--
TAX ID #
2 /__/__/__/-/__/__/-/__/__/__/__/ of
/__/__/-/__/__/__/__/__/__/__/ Citizenship [ ] U.S. [
] Other
_______________
Social Security Number Tax
Identification Number
Under penalties of perjury, I certify by
signing in
Section 9 below that: (1) the number shown in this
section is my
correct taxpayer identification number (TIN),
and (2) I
am not subject to backup withholding because: (a) I
have not
been notified by the Internal Revenue Service
(IRS)
that I am subject to backup withholding as a result of
a failure
to report all interest or dividends, or (b)
the IRS has
notified me that I am no longer subject to backup
withholding. (Cross out item (2) if you have
been
notified by the IRS that you are currently subject to
backup
withholding because of underreporting
interest or
dividends on your tax return.) Please see the "Tax
Identification
Number" section of the Prospectus for
additional
information on completing this section.
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--
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--
DEALER INFORMATION
3 The undersigned ("Dealer") agrees to all
applicable
provisions in this Application, guarantees the
signature and
legal
capacity of the Shareholder, and agrees to
notify the
Manager of any purchases made under a Letter of Intent
or Rights
of Accumulation.
__________________________________________________________
__________________________________________________________
Dealer Name
Representative's Name and Number
__________________________________________________________
__________________________________________________________
Branch Office Address
Representative's Phone Number
__________________________________________________________
__________________________________________________________
City State Zip
Code
Authorized Signature of Dealer
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--
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-----------------------------------------------------------------
--
INVESTMENTS
4 A. Enclosed is my check for
$__________________
($1,000 minimum, except $5,000,000 for Class I) made
payable to
Ivy
Short-Term Bond Fund. Please invest it
in Class A
[ ] Class B [ ] or Class I [ ] shares.
B. I qualify for an elimination of the sales
charge
due to the following privilege (applies only to Class A
shares):
[ ] New Letter of Intent (if ROA or
90-day backdate
privilege is applicable, provide account(s) information
below).
[ ] ROA with the account(s) listed below.
[ ] Existing Letter of Intent with
account(s)
listed below.
____________________________________
/__/__/__/__/__/__/__/__/__/__/ [ ] or New
Fund Name
Account Number
____________________________________
/__/__/__/__/__/__/__/__/__/__/ [ ] or New
Fund Name
Account Number
If establishing a Letter of Intent, you
will need
to purchase Class A shares over a thirteen-month period
in
accordance with the provisions in the
Prospectus.
The aggregate amount of these purchases will be at
least equal to
$500,000.
C. FOR DEALER USE ONLY
Confirmed trade orders:
/__/__/__/__/__/__/ /__/__/__/__/__/__/ - /__/__/__/
/__/__/__/__/__/__/
Confirm
Number Number of Shares Trade
Date
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--
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-----------------------------------------------------------------
--
DISTRIBUTION OPTIONS
5 I would like to reinvest dividends and
capital gains
into additional shares of the same class in this
account at net
asset
value unless a different option is checked
below.
A. [ ] Reinvest all dividends and capital
gains into
additional shares in this Fund or a different Ivy or
Mackenzie
fund.
_____________________________________
/__/__/__/__/__/__/__/ [ ] New Account
Fund Name
Account
Number
B. [ ] Pay all dividends in cash and
reinvest capital
gains into additional shares of the same class in this
account or
an account in a different Mackenzie
or Ivy
fund.
_____________________________________
/__/__/__/__/__/__/__/ [ ] New Account
Fund Name
Account
Number
C. [ ] Pay all dividends and capital gains
in cash.
I REQUEST THE ABOVE CASH
DISTRIBUTION, SELECTED IN B OR C ABOVE, BE:
[ ] Sent to the address listed in the
registration.
[ ] Sent to the special payee listed in Section 7A [ ]
(By Mail)
7B [ ]
(By E.F.T.)
-----------------------------------------------------------------
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--
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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--
OPTIONAL SPECIAL FEATURES
6 A. [ ] AUTOMATIC INVESTMENT METHOD (AIM)
I wish to invest [ ] once per month.
My bank account will be debited on or about the
[ ] twice
______________ day of the month
[ ] 3 times
______________ day of the month
[ ] 4 times
______________ day of the month
______________ day of the month(*)
Please invest $_____________ each period
starting in
the month of _______ in Class A [ ] or Class B [ ] of
Ivy
Short-Term
Dollar Amount
Month
Bond Fund.
[ ] I have attached a voided check to ensure
my
correct bank account will be debited.
(*) There must be a period of at least seven
calendar
days between each investment period.
B. [ ] SYSTEMATIC WITHDRAWAL PLANS*
I wish to automatically withdraw funds
from my
[ ] Monthly [ ] Quarterly [ ] Semiannually [
]Annually
account in Class A [ ] or Class B [ ] of
Ivy
Short-Term
Bond Fund.
I request the distribution be:
[ ] Sent to the address listed in the
registration.
[ ] Once [ ] Twice [ ] 3 times [ ] 4
times per
month [ ] Sent to the special payee listed in
Section
7.
[ ] Invested into additional shares of the
same
class of a different Ivy or Mackenzie
fund.
------
------------------------------------------------------
Fund Name
/_/_/_/_/_/_/_/_/_/_/
Account Number
Amount $ _______________, starting on or
about
the_______________day of the________________________
Minimum $50
month
_______________day of the________________________
month
_______________day of the________________________
month(**)
(choose one)
NOTE: Account minimum: $5,000 in shares at
current
offering price)
(**) There must be a period of at least seven
calendar
days between each withdrawal period.
C. [ ] FEDERAL FUNDS WIRE FOR REDEMPTION
PROCEEDS(*)
I authorize the Agent to honor telephone
instructions for the redemption of Fund shares up to
$50,000.
Proceeds may
be wire transferred to the bank account
designated
($1,000 minimum, except $10,000 minimum for Class I).
Shares
issued in certificate form may not be
redeemed
under this privilege. (COMPLETE SECTION 7B)
D. [ ] TELEPHONE EXCHANGES(*) [ ] Yes [ ] No
I authorize exchanges by telephone among
The Ivy
and Mackenzie family of funds upon instructions from
any person
as
more fully described in the Prospectus.
To change
this option once established, written instruction must
be
received
from the shareholder of record or the
current
registered representative.
If neither box is checked, the telephone
exchange
privilege will be provided automatically.
E. [ ] TELEPHONE REDEMPTIONS(*) [ ] Yes [ ] No
The Fund or its agents are authorized to
honor
telephone instructions from any person as more fully
described in
the
Prospectus for the redemption of Fund
shares. The
amount of the redemption shall not exceed $50,000 and
the
proceeds
are to be payable to the shareholder of
record and
mailed to the address of record. To change this option
once
established, written instruction must be
received
from the shareholder of record or the current
registered
representative.
If neither box is checked, the telephone
exchange
privilege will be provided automatically.
*MAY NOT BE USED IF
SHARES
ARE ISSUED IN CERTIFICATE FORM.
-----------------------------------------------------------------
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--
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--
SPECIAL PAYEE
7 A. MAILING ADDRESS
B. FED WIRE / E.F.T. INFORMATION
-------------------------------------------------------
----------------------------------------------------
Please send all disbursements to this
special payee
-------------------------------------------------------
----------------------------------------------------
Name of Bank or Individual
Financial Institution
-------------------------------------------------------
---------------------------- ---------------------
Account Number (if applicable)
ABA # Account #
-------------------------------------------------------
----------------------------------------------------
Street
Street
-------------------------------------------------------
----------------------------------------------------
City/State/Zip
City/State/Zip
(Please attach a voided
check)
-----------------------------------------------------------------
-----------------------------------------------------------------
--
(Remember to
Sign Section 9)
-----------------------------------------------------------------
-----------------------------------------------------------------
--
CHECK WRITING
IVY SHORT
TERM BOND FUND
ENROLLMENT FORM (checks must
be written
for a minimum of $500)
8 Check writing privileges are available to Class
A
shareholders only. Shares purchased in the Fund may be
subject
to a
holding period of up to 15 calendar days before
being
redeemed by check. Please see the Prospectus for
details.
HOW TO ENROLL
1. ALL REGISTERED OWNERS MUST SIGN THIS FORM
IN THE
SPACE PROVIDED BELOW.
2. Check the appropriate Number of Signatures
Required
box to indicate the number of signatures required when
writing
checks.
NUMBER OF SIGNATURES REQUIRED
[ ] All signatures are required
[ ] One signature is required
[ ] More than one signature is required
--------------------------------------
number
of
signatures required
IF NONE OF THE ABOVE IS CHECKED THAN ALL
SIGNATURES WILL
BE REQUIRED
-----------------------------------------------
--------------------
Authorized Signature
Date
-----------------------------------------------
--------------------
Authorized Signature
Date
-----------------------------------------------------------------
-----------------------------------------------------------------
--
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-----------------------------------------------------------------
--
SIGNATURES
9 Investors should be aware that failure to check
"No" under
Section 6D or 6E above means that the Telephone
Exchange/Redemptions Privileges will be
provided. The Fund
employs reasonable procedures that require personal
identification prior to acting on
exchange/redemption
instructions communicated by telephone to confirm that
such
instructions are genuine. In the absence of such
procedures, the Fund may be liable for any losses due
to
unauthorized or
fraudulent telephone instructions. Please see
"Exchange
Privilege" and "How to Redeem Shares" in the Prospectus
for more
information on these privileges.
I certify to my legal capacity to purchase or
redeem
shares of the Fund for my own account or for the
account of the
organization named in Section 1. I have received
a current
Prospectus and understand its terms are incorporated in
this
application by reference. I am certifying my
taxpayer
information as stated in Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE
YOUR CONSENT
TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATE
REQUIRED TO AVOID BACKUP WITHHOLDING.
-----------------------------------------------------------------
---------- ------------------
Signature of Owner, Custodian, Trustee or
Corporate
Officer Date
-----------------------------------------------------------------
---------- ------------------
Signature of Joint Owner, Co-Trustee or
Corporate Officer
Date
-----------------------------------------------------------------
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--
</TABLE>
ISTBF-1-496
IVY MONEY MARKET FUND
a series of
IVY FUND
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1996
_________________________________________________________________
Ivy Fund (the "Trust") is a diversified, open-end
management
investment company that consists of thirteen fully
managed
portfolios. This Statement of Additional Information
describes
one of these portfolios: Ivy Money Market Fund (the
"Fund").
The other twelve portfolios of the Trust are described
in
separate Statements of Additional Information.
This Statement of Additional Information ("SAI")
is not a
prospectus, and should be read in conjunction with the
prospectus
for the Fund dated April 30, 1996 (the "Prospectus"),
which may
be obtained upon request and without charge from the
Trust at the
Distributor's address and telephone number listed
below.
INVESTMENT MANAGER
Ivy Management, Inc. ("IMI")
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 777-6472
DISTRIBUTOR
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
PAGE
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . .
. . . 4
U.S. GOVERNMENT SECURITIES . . . . . . . . . . . .
. . . 4
COMMERCIAL PAPER . . . . . . . . . . . . . . . . .
. . . 5
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
. . . 5
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 6
ADDITIONAL RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 7
ADDITIONAL RIGHTS AND PRIVILEGES . . . . . . . . . . .
. . . 8
AUTOMATIC INVESTMENT METHOD . . . . . . . . . . .
. . . 9
EXCHANGE OF SHARES . . . . . . . . . . . . . . . .
. . . 9
RETIREMENT PLANS . . . . . . . . . . . . . . . . .
. . . 10
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) . . . .
. . . 11
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS AND
CHARITABLE ORGANIZATIONS ("403(B)(7)
ACCOUNT") . . . . . . . . . . . . . . .
. . . 13
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAS . .
. . . 13
SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . .
. . . 13
GROUP SYSTEMATIC INVESTMENT PROGRAM . . . . . . .
. . . 14
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . .
. . . 15
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . .
. . . 17
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI . . . . .
. . . 21
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . .
. . . 23
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY
SERVICES . . 23
DISTRIBUTION SERVICES . . . . . . . . . . . . . .
. . . 25
CUSTODIAN . . . . . . . . . . . . . . . . . . . .
. . . 28
FUND ACCOUNTING SERVICES . . . . . . . . . . . . .
. . . 28
TRANSFER AND DIVIDEND PAYING AGENT . . . . . . . .
. . . 28
ADMINISTRATOR . . . . . . . . . . . . . . . . . .
. . . 28
AUDITORS . . . . . . . . . . . . . . . . . . . . .
. . . 29
CAPITALIZATION AND VOTING RIGHTS . . . . . . . . . . .
. . . 29
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .
. . . 31
REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . .
. . . 32
TAXATION . . . . . . . . . . . . . . . . . . . . . . .
. . . 33
GENERAL . . . . . . . . . . . . . . . . . . . . .
. . . 34
DEBT SECURITIES ACQUIRED AT A DISCOUNT . . . . . .
. . . 35
DISTRIBUTIONS . . . . . . . . . . . . . . . . . .
. . . 35
DISPOSITION OF SHARES . . . . . . . . . . . . . .
. . . 36
BACKUP WITHHOLDING . . . . . . . . . . . . . . . .
. . . 37
OTHER INFORMATION . . . . . . . . . . . . . . . .
. . . 37
CALCULATION OF YIELD . . . . . . . . . . . . . . . . .
. . . 37
STANDARDIZED YIELD QUOTATIONS . . . . . . . . . .
. . . 37
OTHER QUOTATIONS, COMPARISONS AND GENERAL
INFORMATION . 38
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . .
. . . 39
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
CORPORATE
BOND AND COMMERCIAL PAPER RATINGS . . . . . .
. 40
INVESTMENT OBJECTIVE AND POLICIES
The Trust is a diversified open-end management
investment
company organized as a Massachusetts business trust on
December
21, 1983. The Fund's investment objective and general
investment
policies are described in the Prospectus. Additional
information
concerning the Fund's investments is set forth below.
U.S. GOVERNMENT SECURITIES
The Fund may invest in U.S. Government securities.
U.S.
Government securities are obligations of, or guaranteed
by, the
U.S. Government, its agencies or instrumentalities.
Securities
guaranteed by the U.S. Government include: (1) direct
obligations
of the U.S. Treasury (such as Treasury bills, notes,
and bonds),
and (2) Federal agency obligations guaranteed as to
principal and
interest by the U.S. Treasury (such as GNMA
certificates, which
are mortgage-backed securities). The payment of
principal and
interest on these securities 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 on 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 prepayments 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; and 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.
COMMERCIAL PAPER
The Fund may invest in high-quality 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,
on the date of investment, is rated at least A-2 by
Standard &
Poor's Corporation ("S&P") or P-2 by Moody's Investors
Service,
Inc. ("Moody's") or, if not rated by S&P or Moody's,
issued by
companies having an outstanding debt issue rated AAA or
AA by S&P
or Aaa or Aa by Moody's, or judged by IMI to be of at
least
equivalent quality.
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
The Fund may invest in bank obligations, which may
include
certificates of deposit, bankers' acceptances and other
short-
term debt 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, that are "accepted" by a bank, meaning, in
effect,
that the bank unconditionally agrees to pay the face
value of the
instrument on maturity.
The Fund may invest in certificates of deposit of
large
domestic banks (i.e., banks that at the time of their
most recent
annual financial statements show total assets in excess
of $1
billion), including foreign branches of such domestic
banks, and
of smaller banks as described below. The Fund will not
invest in
certificates of deposit of foreign banks. Investment
in
certificates of deposit issued by foreign branches of
domestic
banks involves investment risks that are different in
some
respects from those associated with investment in
certificates of
deposit issued by domestic banks, including the
possible
imposition of withholding taxes on interest income, the
possible
adoption of foreign governmental restrictions which
might
adversely affect the payment of principal and interest
on such
certificates of deposit, or other adverse political or
economic
developments. In addition, it might be more difficult
to obtain
and enforce a judgment against a foreign branch of a
domestic
bank. Although the Trust recognizes that the size of a
bank is
important, this fact alone is not necessarily
indicative of its
creditworthiness. The Fund may invest in certificates
of deposit
issued by banks and savings and loan institutions that
at the
time of their most recent annual financial statements
had total
assets of less than $1 billion, provided that (i) the
principal
amounts of such certificates of deposit are insured by
an agency
of the U.S. Government, (ii) at no time will the Fund
hold more
than $100,000 principal amount of certificates of
deposit of any
one such bank, and (iii) at the time of acquisition, no
more than
10% of the Fund's assets (taken at current value) are
invested in
certificates of deposit of such banks having total
assets not in
excess of $1 billion.
INVESTMENT RESTRICTIONS
The Fund's investment objectives as set forth in
the
Prospectus under "Investment Objective and Policies,"
together
with 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 Investment Company Act
of 1940,
as amended (the "1940 Act")) of the Fund's outstanding
voting
shares. Under these restrictions, the Fund may not:
(i) borrow money, except for temporary
purposes where
investment transactions might
advantageously
require it. Any such loan may not be
for a period
in excess of 60 days, and the aggregate
amount of
all outstanding loans may not at any
time exceed
10% of the value of the total assets of
the Fund
at the time any such loan is made;
(ii) purchase securities on margin;
(iii) sell securities short;
(iv) lend any funds or other assets, except
that this
restriction shall not prohibit (a) the
entry into
repurchase agreements or (b) the
purchase of
publicly distributed bonds, debentures
and other
securities of a similar type, or
privately placed
municipal or corporate bonds, debentures
and other
securities of a type customarily
purchased by
institutional investors or publicly
traded in the
securities markets;
(v) participate in an underwriting or
selling group in
connection with the public distribution
of
securities except for its own capital
stock;
(vi) invest more than 5% of the value of its
total
assets in the securities of any one
issuer (except
obligations of domestic banks or the
U.S.
Government, its agencies, authorities
and
instrumentalities);
(vii) hold more than 10% of the voting
securities of
any one issuer (except obligations of
domestic
banks or the U.S. Government, its
agencies,
authorities and instrumentalities);
(viii) 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;
(ix) purchase or sell real estate or
commodities and
commodity contracts;
(x) purchase the securities of any other
open-end
investment company, except as part of a
plan of
merger or consolidation;
(xi) make an investment in securities of
companies in
any one industry (except obligations of
domestic
banks or the U.S. Government, its
agencies,
authorities, or instrumentalities) if
such
investment would cause investments in
such
industry to exceed 25% of the market
value of the
Fund's total assets at the time of such
investment; or
(xii) 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.
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 (ix) as prohibiting
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
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) 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;
(iii) invest more than 5% of the value of its
total
assets in the securities of issuers
which are not
readily marketable;
(iv) engage in the purchase and sale of puts,
calls,
straddles or spreads (except to the
extent
described in the Prospectus and in this
SAI);
(v) invest in companies for the purpose of
exercising
control of management;
(vi) purchase any security which it is
restricted from
selling to the public without
registration under
the Securities Act of 1933; or
(vii) 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.
Whenever an investment objective, policy or
restriction set
forth in the Prospectus or this SAI states a maximum
percentage
of assets that may be invested in any security or other
asset or
describes a policy regarding quality standards, such
percentage
limitation or standard shall, unless otherwise
indicated, apply
to the Fund only at the time a transaction is entered
into.
Accordingly, if a percentage limitation is adhered to
at the time
of investment, a later increase or decrease in the
percentage
which results from circumstances not involving any
affirmative
action by the Fund (such as a change in market
conditions or a
change in the Fund's asset level or other circumstances
beyond
the Fund's control) will not be considered a violation.
ADDITIONAL RIGHTS AND PRIVILEGES
The Trust offers to investors (and except as noted
below,
bears the cost of providing) the following rights and
privileges.
The Trust reserves the right to amend or terminate any
one or
more of such rights and privileges. Notice of
amendments to or
terminations of rights and privileges will be provided
to
shareholders in accordance with applicable law.
Certain of the rights and privileges described
below apply
to other funds distributed by Ivy Mackenzie
Distributors, Inc.
("IMDI")(formerly known as Mackenzie Ivy Funds
Distribution,
Inc.), which funds are not described in this SAI.
These funds
are: 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 New
Century Fund and Ivy Short-Term Bond Fund the other
twelve series
of the Trust; and Mackenzie California Municipal Fund,
Mackenzie
Limited Term Municipal Fund, Mackenzie Florida 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").
Before exercising any right or privilege that may
relate to any
of these funds, investors should obtain the fund's
current
prospectus.
AUTOMATIC INVESTMENT METHOD
The Automatic Investment Method is available for
all Trust
shareholders. The minimum initial and subsequent
investment
pursuant to this plan is $50 per month, except in the
case of a
tax-qualified retirement plan for which the minimum
initial and
subsequent investment is $25 per month. The Automatic
Investment
Method may be discontinued at any time upon receipt of
telephone
instructions by Ivy Mackenzie Services Corp. (formerly
known as
Mackenzie Ivy Investor Services Corp.) or written
notice to IMSC
from the investor. See "Automatic Investment Method"
in the New
Account Application.
EXCHANGE OF SHARES
As described in the Fund's Prospectus,
shareholders of the
Fund have an exchange privilege with certain other Ivy
and
Mackenzie Funds. Before effecting an exchange,
shareholders of
the Fund should obtain and read the currently effective
prospectus for the Ivy or Mackenzie Fund into which the
exchange
is to be made.
The minimum amount which may be exchanged into an
Ivy or
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 shares of the Fund) may be made if it would reduce
the
shareholder's interest in the Fund to less than $1,000.
Each exchange of Fund shares will be made on the
basis of
the relative net asset value per share of each Ivy or
Mackenzie
Fund (into which the exchange is being made) next
computed
following receipt of telephone instructions by IMSC or
a properly
executed request by IMSC. An exchange from the Fund
into any
other funds into which exchanges are permitted may be
subject to
a sales charge, unless such sales charge has already
been paid.
Exchanges, whether written or telephonic, must be
received by
IMSC by the close of regular trading on the New York
Stock
Exchange (the "Exchange") (normally 4:00 p.m., Eastern
time) to
receive the price computed on the day of receipt;
exchange
requests received after that time will receive the
price next
determined following receipt of the request. This
exchange
privilege may be modified or terminated at any time,
upon at
least 60 days' notice when such notice is required by
rules
adopted by the Securities and Exchange Commission
("SEC"). See
"Redemptions."
An exchange of shares in any fund of the Ivy
Mackenzie Funds
for shares in another fund generally will result in a
taxable
gain or loss. Generally, any such taxable gain or loss
will be a
capital gain or loss (long-term or short-term,
depending on the
holding period of the shares) in the amount of the
difference
between the net asset value of the shares surrendered
and the
shareholder's tax basis for those shares. However, in
certain
circumstances, shareholders will be ineligible to take
sales
charges into account in computing taxable gain or loss
on an
exchange. See "Taxation."
With limited exceptions, gain realized by a
tax-deferred
retirement plan will not be taxable to the plan and
will not be
taxed to the participant until distribution. Each
investor
should consult his or her tax adviser regarding the tax
consequences of an exchange transaction.
RETIREMENT PLANS
Shares of the Fund 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
more than two funds in the Ivy Mackenzie Funds, the
annual
maintenance fee will be limited to not more than $20.
The following discussion describes in general
terms the tax
treatment of certain tax-deferred retirement plans
under current
Federal income tax law. State income tax consequences
may vary.
An individual considering the establishment of a
retirement plan
should consult with an attorney and/or an accountant
with respect
to the terms and tax aspects of the plan.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS). Shares of
the Trust
may be used as a funding medium for an Individual
Retirement
Account ("IRA"). Eligible individuals may establish an
IRA by
adopting a model custodial account available from IMI,
which may
impose a charge for establishing the account.
Individuals may
wish to consult their tax advisers before investing IRA
assets in
a fund which primarily distributes exempt-interest
dividends.
An individual who has not reached age 70-1/2 and
who
receives compensation or earned income is eligible to
contribute
to an IRA, whether or not he or she is an active
participant in a
retirement plan. An individual who receives a
distribution from
another IRA, a qualified retirement plan, a qualified
annuity
plan or a tax-sheltered annuity or custodial account
("403(b)
plan") that qualifies for "rollover" treatment is also
eligible
to establish an IRA by rolling over the distribution
either
directly or within 60 days after its receipt. Tax
advice should
be obtained in connection with planning a rollover
contribution
to an IRA.
In general, an eligible individual may contribute
up to the
lesser of $2,000 or 100% of his or her compensation or
earned
income to an IRA each year. If a husband and wife are
both
employed, and both are under age 70-1/2, each may set
up his or
her own IRA within these limits. If both earn at least
$2,000
per year, the maximum potential contribution is $4,000
per year
for both. However, if one spouse has (or elects to be
treated as
having) no earned income for IRA purposes for a year,
the other
spouse may contribute to an IRA on his or her behalf.
In such a
case, the working spouse may contribute up to the
lesser of
$2,250 or 100% or his or her compensation or earned
income for
the year to IRAs for both spouses, provided that no
more than
$2,000 is contributed to the IRA of either 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 (and his or
her
spouse, if they file a joint Federal income tax return)
is not an
active participant in a qualified retirement plan (such
as a
qualified corporate, sole proprietorship, or
partnership pension,
profit sharing, 401(k) or stock bonus plan), qualified
annuity
plan, 403(b) plan, simplified employee pension, or
government
plan. If he or she (or his or her spouse) is an active
participant, a full deduction is only available if he
or she has
adjusted gross income that is no greater than a
specified level
($40,000 for married couples filing a joint return,
$25,000 for
single individuals, and $0 for a married individual
filing a
separate return). The deduction is phased out ratably
for active
participants with adjusted gross income between certain
levels
($40,000 and $50,000 for married individuals filing a
joint
return, $25,000 and $35,000 for single individuals, and
$0 and
$10,000 for married individuals filing separate
returns).
Individuals with income above the specified phase-out
level may
not deduct their IRA contributions. Rollover
contributions are
not includible in income for Federal income tax
purposes and,
therefore, are not deductible from it.
Generally, earnings on an IRA are not subject to
current
Federal income tax until distributed. Distributions
attributable
to tax-deductible contributions and to IRA earnings are
taxed as
ordinary income. Distributions of non-deductible
contributions
are not subject to Federal income tax. In general,
distributions
from an IRA to an individual before he or she reaches
age 59-1/2
are subject to a nondeductible penalty tax equal to 10%
of the
taxable amount of the distribution. The 10% penalty
tax does not
apply to amounts withdrawn from an IRA after the
individual
reaches age 59-1/2, becomes disabled or dies, if
withdrawn in the
form of substantially equal payments over the life or
life
expectancy of the individual and his or her designated
beneficiary, if any, or rolled over into another IRA.
Distributions must begin to be withdrawn not later than
April 1
of the calendar year following the calendar year in
which the
individual reaches age 70-1/2. Failure to take certain
minimum
required distributions will result in the imposition of
a 50%
non-deductible penalty tax. Extremely large
distributions in any
one year from an IRA (or from an IRA and other
retirement plans)
may also result in a penalty tax.
QUALIFIED PLANS. For those self-employed
individuals who
wish to purchase shares of one or more of the funds in
the Ivy
Mackenzie Funds through a qualified retirement plan, a
Retirement
Plan is available from IMI. 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 Retirement Plan. 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 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.
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 Fund in
conjunction with
such an arrangement. The special application for a
403(b)(7)
Account is available from IMI.
Distributions from the 403(b)(7) Account may be
made only
following death, disability, separation from service,
attainment
of age 59-1/2, or incurring a financial hardship. A
10% penalty
tax generally applies to distributions to an individual
before he
or she reaches age 59-1/2, unless the individual has
(1) reached
age 55 and separated from service; (2) died or become
disabled;
(3) used the withdrawal to pay tax-deductible medical
expenses;
(4) taken the withdrawal as part of a series of
substantially
equal payments over his or her life expectancy or the
joint life
expectancy of himself or herself and a designated
beneficiary; or
(5) rolled over the distribution. There is no set-up
fee for
403(b)(7) Accounts and the annual maintenance fee is
$20.00 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.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder may establish a Systematic
Withdrawal Plan
(the "Withdrawal Plan") by telephone instructions to
IMSC or by
delivery to IMSC of a written election to so redeem,
accompanied
by a surrender to IMSC of all share certificates then
outstanding
in the name of such shareholder, properly endorsed by
him. A
Withdrawal Plan may not be established if the investor
is
currently participating in the Automatic Investment
Method. The
Withdrawal Plan may involve the use of principal and,
to the
extent that it does, depending on the amount withdrawn,
the
investor's principal may be depleted.
A redemption under the Withdrawal Plan is a
taxable event.
Investors contemplating participation in the Withdrawal
Plan
should consult their tax advisers.
Additional investments in the Fund made by
investors
participating in the Withdrawal Plan must equal at
least $1,000
each while the Withdrawal Plan is in effect.
An investor may terminate his 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,
the Withdrawal Plan will terminate automatically. The
Trust or
MIMI may terminate the Withdrawal Plan at any time
after
reasonable notice to shareholders.
GROUP SYSTEMATIC INVESTMENT PROGRAM
Shares of 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
any purchase or suspend the offering of shares in
connection with
group systematic investment programs at any time and to
restrict
the offering of shareholder privileges, such as Check
Writing and
other optional privileges, as described in the
Prospectus, to
shareholders using group systematic investment
programs.
With respect to each shareholder account
established on or
after September 15, 1972 under a group systematic
investment
program, The Trust and IMI each currently charge a
maintenance
fee of $3.00 (or portion thereof) for each twelve-month
period
(or portion thereof) the account is maintained. The
Trust may
collect such fee (and any fees due to IMI) through a
deduction
from distributions to the shareholders involved or by
causing on
the date the fee is assessed a redemption in each such
shareholder account sufficient to pay such fee. The
Trust
reserves the right to change these fees from time to
time without
advance notice.
BROKERAGE ALLOCATION
Subject to the overall supervision of the
President and the
Board of Trustees of the Trust, IMI places orders for
the
purchase and sale of the Fund's portfolio securities.
All
portfolio transactions are effected at the best price
and
execution obtainable. Purchases and sales of debt
securities are
usually principal transactions and therefore, brokerage
commissions are usually not required to be paid by the
Fund for
such purchases and sales, although the price paid
generally
includes undisclosed compensation to the dealer. The
prices paid
to underwriters of newly-issued securities usually
include a
concession paid by the issuer to the underwriter, and
purchases
of after-market securities from dealers normally
reflect the
spread between the bid and asked prices. In connection
with
over-the-counter ("OTC") transactions, IMI attempts to
deal
directly with the principal market makers, except in
those
circumstances where IMI believes that better prices and
execution
are available elsewhere.
IMI selects broker-dealers to execute transactions
and
evaluates the reasonableness of commissions on the
basis of
quality, quantity, and the nature of the firms'
professional
services. Commissions to be charged and the rendering
of
investment services, including statistical, research,
and
counseling services by brokerage firms, are factors to
be
considered in placing of brokerage business. The types
of
research services provided by brokers may include
general
economic and industry data, and information on
securities of
specific companies. Research services provided by
brokers
through whom the Trust effects securities transactions
may be
used by IMI in servicing all of its accounts. In
addition, not
all of these services may be used by IMI in connection
with the
services it provides to the Fund or the Trust. IMI may
consider
sales of Fund shares as a factor in the selection of
broker-
dealers and may select broker-dealers that 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
consider
accepting securities only to increase its holdings in a
portfolio
security or to take a new portfolio position in a
security that
IMI deems to be a desirable investment for the Fund.
While no
minimum has been established, it is expected that the
Fund will
not accept securities having an aggregate value of less
than $1
million. The Trust may reject in whole or in part any
or all
offers to pay for Fund shares with securities and may
discontinue
accepting securities as payment for Fund shares at any
time
without notice. The Trust will value accepted
securities in the
manner and at the same time provided for valuing
portfolio
securities of the Fund, and Fund shares will be sold
for net
asset value determined at the same time the accepted
securities
are valued. The Trust will accept only securities
which are
delivered in proper form and will not accept securities
subject
to legal restrictions on transfer. The acceptance of
securities
by the Trust must comply with applicable laws of
certain states.
During the fiscal years ended December 31, 1993,
1994 and
1995, the Fund paid no brokerage commissions.
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
Age: 70 Physics, Harvard
University (since
1974);
Trustee of Ivy
Fund (1961-
1991); Trustee of
Mackenzie
Series Trust
(1994-
present).
Michael G. Landry Trustee President,
Chairman and
700 South Federal Hwy. and Director of
Mackenzie
Suite 300 President
Investment
Boca Raton, FL 33432 Management Inc.
Age: 49 (1987-present);
President
[*Deemed to be an and Director of
"interested person" Ivy Management,
Inc. (1992-
of the Trust, as present);
Chairman and
defined under the Director of
Mackenzie Ivy
1940 Act.] Investor Services
Corp.
(1993-present);
Director
and President of
Mackenzie
Ivy Funds
Distribution,
Inc. (1993-1994);
Chairman
and Director of
Mackenzie
Ivy Funds
Distribution,
Inc.
(1994-present);
Director and
President of
The Mackenzie
Funds Inc.
(1987-1995);
Trustee and
President of
Mackenzie
Series Trust
(1987-
present).
Michael R. Peers Trustee Chairman of the
Board,
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-
2/14/96); 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.
(1993-2/14/96);
President
and Director of
Mackenzie
Ivy Investor
Services Corp.
(2/14/96-present);
Secretary/
Treasurer of The
Mackenzie Funds
Inc. (1993-
1995);
Secretary/Treasurer
of Mackenzie
Series Trust
(1994-present).
As of March 23, 1996,the Officers and Trustees of
the Trust
as a group owned beneficially or of record 3.2% of the
outstanding Class A and Class B shares of the Fund.
There were
no Class C shares of the Fund outstanding as of such
date.
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI
Employees of IMI are permitted to make personal
securities
transactions, subject to requirements and restrictions
set forth
in IMI's Code of Ethics. The Code of Ethics contains
provisions
and requirements designed to identify and address
certain
conflicts of interest between personal investment
activities and
the interests of investment advisory clients such as
the Fund.
Among other things, the Code of Ethics, which generally
complies
with standards recommended by the Investment Company
Institute's
Advisory Group on Personal Investing, prohibits certain
types of
transactions absent prior approval, imposes time
periods during
which personal transactions may not be made in certain
securities, and requires the submission of duplicate
broker
confirmations and monthly reporting of securities
transactions.
Additional restrictions apply to portfolio managers,
traders,
research analysts and others involved in the investment
advisory
process. Exceptions to these and other provisions of
the Code of
Ethics may be granted in particular circumstances after
review by
appropriate personnel.
COMPENSATION TABLE
IVY FUND
(FISCAL YEAR ENDED DECEMBER 31, 1995)
TOTAL
PENSION OR
COMPENSA-
RETIREMENT
TION FROM
BENEFITS ESTIMATED
TRUST AND
AGGREGATE ACCRUED AS ANNUAL
FUND COM-
COMPENSA- PART OF BENEFITS
PLEX PAID
NAME, TION FUND UPON
TO
POSITION FROM TRUST EXPENSES RETIREMENT
TRUSTEES
John S. 7,112 N/A N/A
8,000
Anderegg, Jr.
(Trustee)
Paul H. 7,112 N/A N/A
8,000
Broyhill
(Trustee)
Stanley -0- N/A N/A
8,000
Channick[*]
(Trustee)
Frank W. 7,112 N/A N/A
8,000
DeFriece, Jr.
(Trustee)
Roy J. -0- N/A N/A
8,000
Glauber[*]
(Trustee)
Michael G. -0- N/A N/A
-0-
Landry
(Trustee and
President)
Michael R. -0- N/A N/A
-0-
Peers
(Trustee and
Chairman of
the Board)
Joseph G. 7,112 N/A N/A
8,000
Rosenthal
(Trustee)
Richard N. 8,000 N/A N/A
8,000
Silverman
(Trustee)
J. Brendan 7,112 N/A N/A
8,000
Swan
(Trustee)
Keith J. -0- N/A N/A
-0-
Carlson
(Vice President)
C. William -0- N/A N/A
-0-
Ferris
(Secretary/Treasurer)
[*] Appointed as a Trustee of the Trust at a meeting
of the
Board of Trustees held on February 6, 1996.
INVESTMENT ADVISORY AND OTHER SERVICES
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY SERVICES
Ivy Management, Inc. provides business management
and
investment advisory services to the Fund pursuant to a
Business
Management and Investment Advisory Agreement with the
Trust (the
"Agreement"), which was approved by the shareholders of
the Fund
on December 30, 1991. Prior to approval by
shareholders, the
Agreement was approved on October 28, 1991 by the Board
of
Trustees, including a majority of the Trustees who are
neither
"interested persons" (as defined in the 1940 Act) of
the Trust
nor have any direct or indirect financial interest in
the
operation of the distribution plan (see "Distribution
Services")
or in any related agreement (the "Independent
Trustees"). IMI
also acts as manager and investment adviser to the
following
investment companies registered under the 1940 Act:
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 New Century Fund and
Ivy Short-
Term Bond Fund. IMI is a wholly owned subsidiary of
MIMI. MIMI
currently acts as manager of and investment adviser to
the
following investment companies registered under the
1940 Act:
Mackenzie National Municipal Fund, Mackenzie California
Municipal
Fund, Mackenzie New York 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
account of the Fund in accordance with its best
judgment and
within the investment objectives and restrictions set
forth in
the Fund's current Prospectus, the 1940 Act and the
provisions of
the Code relating to regulated investment companies,
subject to
policy decisions adopted by the Trust's Board of
Trustees. IMI
also determines the securities to be purchased or sold
by the
Fund and places orders with brokers or dealers who deal
in such
securities.
Under the Agreement, IMI also provides certain
business
management services. IMI is obligated to (1)
coordinate with the
Fund's Custodian and monitor the services it provides
to the
Fund; (2) coordinate with and monitor any other third
parties
furnishing services to the Fund; (3) provide the Fund
with the
necessary office space, telephones and other
communications
facilities as are adequate for the Fund's needs; (4)
provide the
services of individuals competent to perform
administrative and
clerical functions which are not performed by employees
or other
agents engaged by the Fund or by IMI acting in some
other
capacity pursuant to a separate agreement or
arrangement with the
Fund; (5) maintain or supervise the maintenance by
third parties
of such books and records of the Trust as may be
required by
applicable Federal or state law; (6) authorize and
permit IMI's
directors, officers and employees who may be elected or
appointed
as trustees or officers of the Trust to serve in such
capacities;
and (7) take such other action with respect to the
Trust, after
approval by the Trust, as may be required by applicable
law,
including without limitation the rules and regulations
of the SEC
and of state securities commissions and other
regulatory
agencies.
For business management and investment advisory
services,
the Fund pays IMI a monthly fee based on the Fund's
average daily
net assets during the preceding month at an annual rate
of 0.40%.
For the fiscal years ended December 31, 1995, 1994 and
1993, the
Fund paid IMI $110,748, $107,960 and $91,931,
respectively (of
which IMI reimbursed $148,768, $105,984 and $164,323,
respectively, pursuant to the voluntary expense
limitation
described below).
The Trust pays the following expenses under the
Agreement:
(1) the fees and expenses of the Trust's Independent
Trustees;
(2) the salaries and expenses of any of the Trust's
officers or
employees who are not affiliated with IMI; (3) interest
expenses;
(4) taxes and governmental fees, including any original
issue
taxes or transfer taxes applicable to the sale or
delivery of
shares or certificates therefor; (5) brokerage
commissions and
other expenses incurred in acquiring or disposing of
portfolio
securities; (6) the expenses of registering and
qualifying shares
for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8)
insurance
premiums; (9) fees and expenses of the Trust's
custodian and
transfer agent and any related services; (10) expenses
of
obtaining quotations of portfolio securities and of
pricing
shares; (11) expenses of maintaining the Trust's legal
existence
and of shareholders' meetings; (12) expenses of
preparation and
distribution to existing shareholders of periodic
reports, proxy
materials and prospectuses; and (13) fees and expenses
of
membership in industry organizations.
The Agreement provides that if the Fund's total
expenses in
any fiscal year exceed the permissible limit applicable
to the
Fund in any state in which its shares are then
qualified for
sale, IMI will bear the excess expenses. At the
present time,
the most restrictive state expense limitation provision
limits
the Fund's annual expenses (excluding interest, taxes,
distribution expenses, brokerage commissions and
extraordinary
expenses, and other expenses subject to approval by
state
securities administrators) to 2.5% of the first $30
million of
its average daily net assets, 2.0% of the next $70
million and
1.5% of its average daily net assets over $100 million.
IMI has agreed to limit the Fund's total operating
expenses
(excluding interest, taxes, brokerage commissions,
litigation and
indemnification expenses, and other extraordinary
expenses) to an
annual rate of 0.85% of the Fund's average daily net
assets.
This voluntary expense limitation may be terminated or
revised at
any time, at which time the Fund's expense may increase
and its
yield may be reduced, depending on the total assets of
the Fund.
On August 25, 1995, the Board of Trustees,
including a
majority of the Independent Trustees, last approved the
continuance of the Agreement. The Agreement will
continue in
effect with respect to the Fund for more than the
initial two-
year period only so long as the continuance is
specifically
approved at least annually (i) by the vote of a
majority of the
Independent Trustees and (ii) either (a) by the vote of
a
majority of the outstanding voting securities (as
defined in the
1940 Act) of the Fund or (b) by the vote of a majority
of the
entire Board of Trustees. If the question of
continuance of the
Agreement (or adoption of any new agreement) is
presented to
shareholders, continuance (or adoption) shall be
effected only if
approved by the affirmative vote of a majority of the
outstanding
voting securities of the Fund. See "Capitalization and
Voting
Rights."
The Agreement may be terminated with respect to
the Fund at
any time, without payment of any penalty, by a vote of
a majority
of the Board of Trustees, or by a vote of a majority of
the
outstanding voting securities of the Fund on 60 days'
written
notice to IMI, or by IMI on 60 days' written notice to
the Trust.
The Agreement shall terminate automatically in the
event of its
assignment.
DISTRIBUTION SERVICES
IMDI serves as the exclusive distributor of the
Fund shares
under an Amended and Restated Distribution Agreement
with the
Trust dated October 23, 1993 (the "Distribution
Agreement").
[FN][Effective October 1, 1993, IMDI, a wholly-owned
subsidiary
of MIMI, succeeded to and is continuing MIMI's
broker-dealer
activities. The provisions of the Trust's previous
Distribution
Agreement with MIMI remain unchanged by the
succession.] The
Distribution Agreement was last approved by the Board
of Trustees
on August 25, 1996. IMDI distributes Fund shares
through broker-
dealers who are members of the National Association of
Securities
Dealers, Inc. and who have executed dealer agreements
with IMDI.
IMDI distributes Fund shares on a continuous basis, but
reserves
the right to suspend or discontinue distribution on
such basis.
IMDI is not obligated to sell any specific amount of
Fund shares.
Pursuant to the Distribution Agreement, the Fund bears,
among
other expenses, the expenses of registering and
qualifying its
shares for sale under federal and state securities laws
and
preparing and distributing to existing shareholders
periodic
reports, proxy materials and Prospectuses. Shares of
the Fund
are sold at the Fund's net asset value per share
without a sales
load.
The Distribution Agreement will continue in effect
for
successive one-year periods, provided that such
continuance is
specifically approved at least annually by the vote of
a majority
of the Independent Trustees, cast in person at a
meeting called
for that purpose and by the vote of either a majority
of the
entire Board of Trustees or a majority of the
outstanding voting
securities of the Fund. The Distribution Agreement may
be
terminated with respect to the Fund at any time,
without payment
of any penalty, by IMDI on 60 days' written notice to
the Trust
or by the Fund by vote of either a majority of the
outstanding
voting securities of the Fund or a majority of the
Independent
Trustees on 60 days' written notice to IMDI. The
Distribution
Agreement shall terminate automatically in the event of
its
assignment.
If the Distribution Agreement is terminated (or
not renewed)
with respect to one or more funds of the Trust, it may
continue
in effect with respect to any fund as to which it has
not been
terminated (or has been renewed).
RULE 18F-3 PLAN. On February 23, 1995, the SEC
adopted Rule
18f-3 under the 1940 Act, which permits a registered
open-end
investment company whose shares are registered on Form
N-1A to
issue multiple classes of shares in accordance with a
written
plan approved by the investment company's board of
directors/trustees and filed with the SEC. At a
meeting held on
December 1-2, 1995, the Board of Trustees of the Trust
adopted a
multi-class plan on behalf of the Fund and authorized
the
redesignation of the Fund's shares into Class A and
Class B,
respectively. On February 29, 1996, the Trustees
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). The purpose of the Class B redesignation
(and the
Class C designation) of shares for the Fund is
primarily to
enable the transfer agent for the Ivy and Mackenzie
funds to
track the contingent deferred sales charge period that
applies to
Class B and Class C shares of Ivy and Mackenzie funds
(other than
the Fund) that are being exchanged for shares of the
Fund. In
all other relevant respects, the Fund's Class A, Class
B and
Class C shares are identical (i.e., having the same
arrangement
for shareholder services and the distribution of
securities).
CUSTODIAN
Brown Brothers Harriman & Co. ("Brown Brothers"),
a private
bank and member of the principal securities exchanges,
located at
40 Water Street, Boston, Massachusetts 02109, acts as
custodian
for the Trust's securities and cash pursuant to a
Custodian
Agreement with the Trust. Its primary responsibility
is to
maintain custody of the cash and securities in the
Fund's
portfolio. Rules adopted under the 1940 Act permit the
Trust to
maintain its foreign securities and cash in the custody
of
certain eligible foreign banks and securities
depositories.
Pursuant to those rules, Brown Brothers Harriman & Co.
has
entered into subcustodial agreements for the holding of
the
Fund's foreign securities. Brown Brothers may receive,
as
partial payment for its services, a portion of the
Trust's
brokerage business, subject to its ability to provide
best price
and execution.
FUND ACCOUNTING SERVICES
Pursuant to a Fund Accounting Services Agreement
that became
effective March 1, 1992, MIMI provides certain
accounting and
pricing services for the Fund, including bookkeeping
and
computation of daily net asset value. As compensation
for those
services, the Fund pays MIMI a monthly fee of 0.10% of
the Fund's
average daily net assets, plus out-of-pocket expenses
as
incurred. For the fiscal years ended December 31,
1993, 1994 and
1995, the Fund paid MIMI $27,783, $30,023 and $30,957,
respectively, for such services.
TRANSFER AND DIVIDEND PAYING AGENT
IMSC, a wholly owned subsidiary of MIMI, acts as
the Fund's
transfer agent pursuant to a Transfer Agency and
Shareholder
Services Agreement. For transfer agency and
shareholder
services, the Fund pays IMSC an annual fee of $22.00
per open
account and $4.36 for each account that is closed. The
Fund also
reimburses IMSC monthly for out-of-pocket expenses.
For the
fiscal year ended December 31, 1995, such fees and
expenses for
the Fund totalled $124,309. Certain broker-dealers
that maintain
shareholder accounts with the Fund through an omnibus
account
provide transfer agent and other shareholder-related
serrvices
that would otherwise be provided by IMSC if the
indivudual
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 (eg. 10%) fee, based on the average daily
net asset
value of the omnibus account (or a combination
thereof).
ADMINISTRATOR
MIMI provides certain administrative services to
the Fund
pursuant to an Administrative Services Agreement, in
exchange for
a monthly fee at the annual rate of .10% of the Fund's
average
daily net assets. For the fiscal years ended December
31, 1995,
1994 and 1993, the Fund paid MIMI $27,687, $26,990 and
$22,981,
respectively, for such services.
AUDITORS
Coopers & Lybrand L.L.P., independent certified
public
accountants, 200 East Las Olas Boulevard, Suite 1700,
Ft.
Lauderdale, Florida 33301, has been selected as
auditors for the
Trust. The audit services performed by Coopers &
Lybrand L.L.P.
include audits of the annual financial statements of
each of the
funds of the Trust. Other services provided primarily
relate to
filings with the SEC and the preparation of the Trust's
tax
returns.
CAPITALIZATION AND VOTING RIGHTS
The capitalization of the Trust consists of an
unlimited
number of shares of beneficial interest (no par value
per share).
When issued, shares of the Fund are fully paid,
non-assessable,
redeemable and fully transferable. Shares do not have
preemptive
rights or subscription rights.
The Amended and Restated Declaration of Trust
permits the
Trustees to create separate series or portfolios and to
divide
any series or portfolio into one or more classes. The
Trustees
have authorized thirteen series, each of which
represents a
separate investment portfolio. The Trustees have
further
authorized the issuance of Classes A, B and C shares
for the
Fund, Ivy Bond Fund, Ivy Canada Fund, Ivy China Region
Fund, Ivy
Emerging Growth Fund, Ivy Global Fund, Ivy Growth Fund,
Ivy
Growth with Income Fund, Ivy International Fund, Ivy
International Bond Fund and Ivy Latin America Strategy
Fund and
Ivy New Century Fund, as well as Classes A, B and I for
Ivy
Short-Term Bond Fund, Class I for Ivy International
Fund and Ivy
Bond Fund, and Class D shares for Ivy Growth with
Income Fund
[FN][The Class D shares of Ivy Growth with Income Fund
were
initially issued as "Ivy Growth with Income Fund --
Class C" to
shareholders of Mackenzie Growth & Income Fund, a
former series
of the Company, in connection with the reorganization
between
that fund and Ivy Growth with Income Fund, and are not
offered
for sale to the public. On February 29, 1996, the
Trustees of
the Trust resolved by written consent to establish a
new class of
shares designated as "Class C" for all Ivy Fund
portfolios (other
than Ivy Short-Term Bond Fund), and to redesignate the
shares of
beneficial interest of "Ivy Growth with Income
Fund--Class C" as
shares of beneficial interest of "Ivy Growth with
Income Fund--
Class D," which establishment and redesignation,
respectively,
are to become effective on April 30, 1996. The voting,
dividend,
liquidation and other rights, preferences, powers,
restrictions,
limitations, qualifications, terms and conditions of
the Class D
shares of Ivy Growth with Income Fund, as set forth in
Ivy Fund's
Declaration of Trust, as amended from time to time,
will not be
changed by this redesignation.].
Shareholders have the right to vote for the
election of
Trustees of the Trust and on any and all matters on
which they
may be entitled to vote by law or by the provisions of
the
Amended and Restated Declaration of Trust. Shares of
the Fund
entitle their holders to one vote per share (with
proportionate
voting for fractional shares). Shareholders of the
Trust vote
separately by Fund on any matter submitted to
shareholders,
except when otherwise required by the 1940 Act, in
which case the
shareholders of all funds of the Trust affected by the
matter in
question will vote together. Approval of an investment
advisory
agreement and a change in fundamental policies would be
regarded
as matters requiring separate voting by the
shareholders of each
fund of the Trust. If the Trustees determine that a
matter does
not affect the interests of the Fund, then the
shareholders of
the Fund will not be entitled to vote on that matter.
Matters
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 of the funds
that
comprise the Trust.
As used in this SAI and the Fund's Prospectus, the
phrase
"majority vote of the outstanding shares" of the Fund
means the
vote of the lesser of: (1) 67% of the shares of the
Fund (or of
the Trust) present at a meeting if the holders of more
than 50%
of the outstanding shares are present in person or by
proxy; or
(2) more than 50% of the outstanding shares of the Fund
(or of
the Trust). With respect to the submission to
shareholder vote
of a matter requiring separate voting by the Fund, the
matter
shall have been effectively acted upon with respect to
the Fund
if a majority of the outstanding voting securities of
the Fund
votes for the approval of the matter, notwithstanding
that:
(1) the matter has not been approved by a majority of
the
outstanding voting securities of any other fund of the
Trust; or
(2) the matter has not been approved by a majority of
the
outstanding voting securities of the Trust.
Under Massachusetts law, the Trust's shareholders
could,
under certain circumstances, be held personally liable
for the
obligations of the Trust. However, the Amended and
Restated
Declaration of Trust disclaims liability of the
shareholders,
Trustees or officers of the Trust for acts or
obligations of the
Trust, which are binding only on the assets and
property of the
Trust, and requires that notice of the disclaimer be
given in
each contract or obligation entered into or executed by
the Trust
or its Trustees. The Amended and Restated Declaration
of Trust
provides for indemnification out of fund property for
all loss
and expense of any shareholder of a Fund held
personally liable
for the obligations of that Fund. The risk of a
shareholder of
the Trust incurring financial loss on account of
shareholder
liability is limited to circumstances in which the
Trust itself
would be unable to meet its obligations and, thus,
should be
considered remote. No series of the Trust is liable
for the
obligations of any other series of the Trust.
The Trust's shares do not have cumulative voting
rights and
accordingly the holders of more than 50% of the
outstanding
shares could elect the entire Board of Trustees, in
which case
the holders of the remaining shares would not be able
to elect
any Trustees.
To the knowledge of the Trust, as of March 29,
1996, no
shareholder owned beneficially or of record 5% or more
of the
Fund's outstanding shares, except that of the
outstanding Class B
shares of the Fund, Janney Montgomery Scott (custodian)
FBO Elisa
Pierce Lynch c/o Clark Capital Management, 1735 Market
Street,
Philadelphia, PA 19103, owned of record 108,518.910
shares
(7.12%), A G Edwards & Sons (custodian) FBO Helen
Strauss, 402
West Borough Lane, Safety Harbor, FL 34695, owned of
record
100,731.360 shares (6.61%), Smith Barney Inc., 388
Greenwich
Street, New York, NY 10013, owned of record 87,616.640
shares
(5.75%), and Albert Chang, 311 2nd Street, Suite 103,
Kirkland,
WA 98033, owned of record 87,323.840 shares
(5.73%).
NET ASSET VALUE
The market price at any given time for each Fund
share is
its net asset value. The net asset value per share for
the Fund
is computed by dividing the value of the total assets
of the
Fund, less all of its liabilities, by the total number
of shares
of the Fund outstanding. For the purposes of
determining the
aggregate net assets of the Fund, cash and receivables
will be
valued at their realizable amounts. Pursuant to a rule
of the
SEC, the Fund's portfolio securities are valued using
the
amortized cost method of valuation in a neffort to
maintain a
constant net asset value of $1.00 per share, which the
Board of
Trustees has determined to be in the best interest of
the Fund
and its shareholders. The amortized cost method
involves valuing
a security at cost on the date of acquisition and
thereafter
assuming a constant rate of accretion of discount or
amortization
of premium. While this method provides certainty in
valuation,
it may result in periods during which value, as
determined by
amortized cost, is higher or lower than the price the
Fund would
receive if it sold the instrument. During such
periods, the
yield to an investor in the Fund may differ somewhat
from that
obtained in a similar investment company which uses
available
market quotations to value all of its portfolio
securities.
Portfolio securities are valued and net asset
value per
share of the Fund 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 those days when either or both of the Fund's
Custodian or the
New York Stock Exchange close early as a result of such
day being
a partial holiday or otherwise, the right is reserved
to advance
the time on that day by which purchase and redemption
requests
must be received.
Fund shares will not be sold during any period
when the
determination of the Fund's net asset value is
suspended pursuant
to rules or orders of the SEC or by the Board of
Trustees
whenever in its judgment it is in the best interest of
the Fund
to do so.
REDEMPTIONS
Shares of the Fund are redeemed at their net asset
value
next determined after a redemption request in proper
form has
been received by IMSC. The Fund does not assess a
contingent
deferred sales charge. However, if shares of another
Ivy or
Mackenzie Fund that are subject to a contingent
deferred sales
charge are exchanged for shares of the Fund, the
contingent
deferred sales charge will carry over to the investment
in the
Fund and may be assessed upon redemption.
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, to the extent permitted by
Federal
securities laws, (i) for any period during which the
Exchange is
closed (other than customary weekend and holiday
closing) or
during which trading on the Exchange is restricted,
(ii) for any
period during which an emergency exists as determined
by the SEC
as a result of which disposal of securities owned by
the Fund is
not reasonably practicable or it is not reasonably
practicable
for the Fund fairly to determine the value of its net
assets, or
(iii) for such other periods as the SEC may by order
permit for
the protection of the Fund's shareholders.
Under unusual circumstances, when the Board of
Trustees
deems it in the best interest of the Fund's
shareholders, the
Fund may pay for shares repurchased or redeemed, in
whole or in
part, in securities of the Fund taken at current value.
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). If payment is made in
the form of
Fund 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
of less than $1,000 ($250 for retirement plans) in the
Fund for a
period of more than 12 months. All accounts below that
minimum
will be redeemed simultaneously when MIMI deems it
advisable.
The $1,000 balance will be determined by actual dollar
amounts
invested by the shareholder, unaffected by market
fluctuations.
The Trust will notify any such shareholder by certified
mail of
its intention to redeem such account, and the
shareholder shall
have 60 days from the date of such letter to invest
such
additional sum as shall raise the value of such account
above
that minimum. Should the shareholder fail to forward
such sum
within 60 days of the date of the Trust's letter of
notification,
the Trust will redeem the shares held in such account
and
transmit the proceeds thereof to the shareholder.
However, those
shareholders who are investing pursuant to the
Automatic
Investment Method or Group Systematic Investment
Program 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 would have to "rollover" any sum so
redeemed into
another qualified plan within 60 days. The Trustees of
the Trust
may change the minimum account size.
If a shareholder has given authorization for
telephonic
redemption privilege, shares can be redeemed and
proceeds sent by
Federal wire to a single previously designated bank
account.
Delivery of the proceeds of a wire redemption request
of $250,000
or more may be delayed by the Fund for up to seven days
if deemed
appropriate under then-current market conditions. The
Trust
reserves the right to change this minimum or to
terminate the
telephonic redemption privilege without prior notice.
The Trust
cannot be responsible for the efficiency of the Federal
wire
system of the shareholder's dealer of record or bank.
The
shareholder is responsible for any charges by the
shareholder's
bank.
The Fund employs reasonable procedures that
require personal
identification prior to acting on redemption or
exchange
instructions communicated by telephone to confirm that
such
instructions are genuine. In the absence of such
procedures, the
Fund may be liable for any losses due to unauthorized
or
fraudulent telephone instructions.
TAXATION
The following is a general discussion of certain
tax rules
thought to be applicable with respect to the Fund. It
is merely
a summary and is not an exhaustive discussion of all
possible
situations or of all potentially applicable taxes.
Accordingly,
shareholders and prospective shareholders should
consult a
competent tax advisor about the tax consequences to
them of
investing in the Fund.
GENERAL. The Fund intends to 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 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.
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.
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
reinvestment date.
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. Investors
should be
careful to consider the tax implications of buying
shares just
prior to a distribution. The price of shares purchased
at this
time may reflect the amount of the forthcoming
distribution.
Those purchasing just prior to a distribution will
receive a
distribution which generally will be taxable to them.
DISPOSITION OF SHARES. Upon a redemption, sale or
exchange
of his or her shares, a shareholder generally 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 a portion of their sales loads into account for
purposes
of determining the amount of gain or loss realized on
the
disposition of their shares. This prohibition
generally applies
where (1) the shareholder incurs a sales load in
acquiring the
shares of a Fund, (2) the shares are disposed of before
the 91st
day after the date on which they were acquired, and (3)
the
shareholder subsequently acquires shares in the same
Fund or
another regulated investment company and the otherwise
applicable
sales charge is reduced under a "reinvestment right"
received
upon the initial purchase of Fund shares. The term
"reinvestment
right" means any right to acquire shares of one or more
regulated
investment companies without the payment of a sales
load or with
the payment of a reduced sales charge. Sales charges
affected by
this rule are treated as if they were incurred with
respect to
the shares acquired under the reinvestment right. This
provision
may be applied to successive acquisitions of fund
shares.
BACKUP WITHHOLDING. The Fund will be required to
report to
the Internal Revenue Service (the "IRS") all
distributions and,
in certain circumstances, gross proceeds from the
redemption of
the Fund's shares, except in the case of certain exempt
shareholders. All such distributions and proceeds will
be
subject to withholding of Federal income tax at a rate
of 31%
("backup withholding") in the case of non-exempt
shareholders if
(1) the shareholder fails to furnish the Fund with and
to certify
the shareholder's correct taxpayer identification
number or
social security number, (2) the IRS notifies the
shareholder or
the Fund that the shareholder has failed to report
properly
certain interest and dividend income to the IRS and to
respond to
notices to that effect, or (3) when required to do so,
the
shareholder fails to certify that he or she is not
subject to
backup withholding. If the withholding provisions are
applicable, any such distributions or proceeds, whether
reinvested in additional shares or taken in cash, will
be reduced
by the amounts required to be withheld.
OTHER INFORMATION. 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
its
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.
CALCULATION OF YIELD
The Fund's yield quotations as they may appear in
the
Prospectus, this SAI, advertising or sales literature
are
calculated by standard methods prescribed by the SEC.
STANDARDIZED YIELD QUOTATIONS. The Fund's current
yield
quotation is computed by determining the net change,
exclusive of
capital changes (i.e., realized gains and losses from
the sale of
securities and unrealized appreciation and
depreciation), in the
value of a hypothetical pre-existing account having a
balance of
one share at the beginning of the base period,
subtracting a
hypothetical charge reflecting expense deductions from
the
hypothetical account, and dividing the difference by
the value of
the account at the beginning of the base period to
obtain the
base period return. This base period return is then
multiplied
by 365/7 with the resulting yield figure carried to the
nearest
100th of 1%. The determination of net change in
account value
reflects the value of additional shares purchased with
dividends
from the original share, dividends declared on both the
original
share and any such additional shares, and all fees,
other than
non-recurring account or sales charges, that are
charged to all
shareholder accounts in the Fund in proportion to the
length of
the base period. For any account fees that vary with
the size of
the account in the Fund, the account fee used for
purposes of the
yield computation is assumed to be the fee that would
be charged
to the mean account size of the Fund. The distribution
rate will
differ from the current yield computation because it
may include
distributions to shareholders from sources other than
dividends
and interest, short-term capital gains and net
equalization
credits.
The Fund's current yield for the seven-day period
ended
December 31, 1995 was 4.74%. IMI currently reimburses
the Fund
to limit ordinary operating expenses to 0.85% of
average net
assets. Without reimbursement, the Fund's current
yield for this
period would have been 3.65%.
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.
The
voluntary expense reimbursement by IMI with respect to
the Fund
has the effect of increasing yields of the Fund. These
factors
and possible differences in the methods used in
calculating
yields should be considered when comparing performance
information regarding the Fund to information published
for other
investment companies and other investment vehicles.
Yields
should also be considered relative to changes in the
value of the
Fund's shares and the risk associated with the Fund's
investment
objective and policies. At any time in the future,
yields may be
higher or lower than past yields and there can be no
assurance
that any historical yield quotation will continue in
the future.
The Fund may also cite endorsements or use for
comparison
its performance rankings and listings reported in such
newspapers
or business or consumer publications as, among others:
AAII
Journal, Barron's, Boston Business Journal, Boston
Globe, Boston
Herald, Business Week, Consumer's Digest, Consumer
Guide
Publications, Changing Times, Financial Planning,
Financial
World, Forbes, Fortune, Growth Fund Guide, Houston
Post,
Institutional Investor, International Fund Monitor,
Investor's
Daily, Los Angeles Times, Medical Economics, Miami
Herald, Money
Mutual Fund Forecaster, Mutual Fund Letter, Mutual Fund
Source
Book, Mutual Fund Values, National Underwriter Nelson's
Director
of Investment Managers, New York Times, Newsweek, No
Load Fund
Investor, No Load Fund* X, Oakland Tribune, Pension
World,
Pensions and Investment Age, Personal Investor, Rugg
and Steele,
Time, U.S. News and World Report, USA Today, The Wall
Street
Journal, and Washington Post.
FINANCIAL STATEMENTS
The Fund's Portfolio of Investments as of December
31, 1995,
the Statement of Assets and Liabilities as of December
31, 1995,
the Statement of Operations for the fiscal year ended
December
31, 1995, the Statement of Changes in Net Assets for
the fiscal
years ended December 31, 1994 and 1995,the Financial
Highlights,
Notes to Financial Statements, and Report of
Independent
Accountants are included in the Fund's December 31,
1995 Annual
Report to Shareholders, which is incorporated by
reference into
this SAI.
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE
BOND AND
COMMERCIAL PAPER RATINGS[FN][ From "Moody's Bond
Record,"
November 1994 Issue (Moody's Investor Service, New
York, 1994),
and "Standard & Poor's Municipal Ratings Handbook,"
October 1994
Issue (McGraw Hill, New York, 1994).]
Moody's:
(a) CORPORATE BONDS. Bonds rated Aaa by Moody's
are judged
by Moody's to be of the best quality, carrying the
smallest
degree of investment risk. Interest payments are
protected by a
large or exceptionally stable margin and principal is
secure.
Bonds rated Aa are judged by Moody's to be of high
quality by all
standards. Aa bonds are rated lower than Aaa bonds
because
margins of protection may not be as large as those of
Aaa bonds,
or fluctuations of protective elements may be of
greater
amplitude, or there may be other elements present which
make the
long-term risks appear somewhat larger than those
applicable to
Aaa securities. Bonds which are rated A by Moody's
possess many
favorable investment attributes and are considered as
upper
medium-grade obligations. Factors giving security to
principal
and interest are considered adequate, but elements may
be present
which suggest a susceptibility to impairment sometime
in the
future.
Bonds rated Baa by Moody's are considered
medium-grade
obligations, i.e., they are neither highly protected
nor poorly
secured. Interest payments and principal security
appear
adequate for the present, but certain protective
elements may be
lacking or may be characteristically unreliable over
any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as
well.
(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.
(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:
Contained in Part A: Financial Highlights
Incorporated by reference in Part B:
December 31, 1995 Annual Report to
Shareholders of
Ivy Short-Term Bond Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
for the six
months ended December 31, 1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy Money Market Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Years ended December 31, 1995 and
December
31, 1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
(b) Exhibits:
1. (a) Amended and Restated Declaration of
Trust
dated December 10, 1992 filed with
Post-
Effective Amendment No. 71 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(b) Amendment to Amended and Restated
Declaration
of Trust filed with Post-Effective
Amendment
No. 73 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(c) Amendment to Amended and Restated
Declaration
of Trust filed with Post-Effective
Amendment
No. 74 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(d) Establishment and Designation of
Additional
Series (Ivy Emerging Growth Fund)
filed with
Post-Effective Amendment No. 73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(e) Redesignation of Shares (Ivy Growth
with
Income Fund--Class A) and
Establishment and
Designation of Additional Class
(Ivy Growth
with Income Fund--Class C) filed
with Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(f) Redesignation of Shares (Ivy
Emerging Growth
Fund--Class A, Ivy Growth
Fund--Class A and
Ivy International Fund--Class A)
filed with
Post-Effective Amendment No. 74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(g) Establishment and Designation of
Additional
Series (Ivy China Region Fund)
filed with
Post-Effective Amendment No. 74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(h) Establishment and Designation of
Additional
Class (Ivy China Region Fund--Class
B, Ivy
Emerging Growth Fund--Class B, Ivy
Growth
Fund--Class B, Ivy Growth with
Income Fund--
Class B and Ivy International
Fund--Class B)
filed with Post-Effective Amendment
No. 74
for Registration Statement No.
2-17613 and
incorporated by reference herein.
(i) Establishment and Designation of
Additional
Class (Ivy International
Fund--Class I) filed
with Post-Effective Amendment No.
74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(j) Establishment and Designation of
Series and
Classes (Ivy Latin American
Strategy Fund--
Class A and Class B, Ivy New
Century Fund--
Class A and Class B) filed with
Post-
Effective Amendment No. 75 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(k) Establishment and Designation of
Series and
Classes (Ivy International Bond
Fund--Class A
and Class B) filed with
Post-Effective
Amendment No. 76 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(l) Establishment and Designation of
Series and
Classes (Ivy Bond Fund, Ivy Canada
Fund, Ivy
Global Fund, Ivy Short-Term U.S.
Government
Securities Fund (now known as Ivy
Short-Term
Bond Fund) -- Class A and Class B)
filed with
Post-Effective Amendment No. 77 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(m) Redesignation of Ivy Short-Term
U.S.
Government Securities Fund as Ivy
Short-Term
Bond Fund filed with Post-Effective
Amendment
No. 81 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(n) Redesignation of Shares (Ivy Money
Market
Fund--Class A and Ivy Money Market
Fund--
Class B) filed with 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.
2. By-Laws, as amended and filed with
Post-Effective
Amendment No. 48 to Registration
Statement No. 2-
17613 and incorporated by reference
herein.
3. Not Applicable
4. (a) Specimen Securities for Ivy Growth
Fund, Ivy
Growth with Income Fund, Ivy
International
Fund and Ivy Money Market Fund
filed with
Post-Effective Amendment No. 49 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(b) Specimen Security for Ivy Emerging
Growth
Fund filed with Post-Effective
Amendment No.
70 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(c) Specimen Security for Ivy China
Region Fund
filed with Post-Effective Amendment
No. 74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(d) Specimen Security for Ivy Latin
American
Strategy Fund filed with
Post-Effective
Amendment No. 75 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(e) Specimen Security for Ivy New
Century Fund
filed with Post-Effective Amendment
No. 75 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(f) Specimen Security for Ivy
International Bond
Fund filed with Post-Effective
Amendment No.
76 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(g) Specimen Securities for Ivy Bond
Fund, Ivy
Canada Fund, Ivy Global Fund, and
Ivy Short-
Term U.S. Government Securities
Fund filed
with Post-Effective Amendment No.
77 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
5. (a) Master Business Management and
Investment
Advisory Agreement between Ivy Fund
and Ivy
Management Inc. and Supplements for
Ivy
Growth Fund, Ivy Growth with Income
Fund, Ivy
International Fund and Ivy Money
Market Fund
filed with Post-Effective Amendment
No. 68 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(b) Subadvisory Contract by and among
Ivy Fund,
Ivy Management Inc. and Boston
Overseas
Investors, Inc. filed with
Post-Effective
Amendment No. 68 to Registration
Statement
No. 2-17613 and incorporated by the
reference
herein.
(c) Assignment Agreement relating to
Subadvisory
Contract filed with Post-Effective
Amendment
No. 74 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(d) Business Management and Investment
Advisory
Agreement Supplement for Ivy
Emerging Growth
Fund filed with Post-Effective
Amendment No.
74 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(e) Business Management and Investment
Advisory
Agreement Supplement for Ivy China
Region
Fund filed with Post-Effective
Amendment No.
71 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(f) Form of Business Management and
Investment
Advisory Supplement for Ivy Latin
America
Strategy Fund filed with
Post-Effective
Amendment No. 75 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(g) Form of Business Management and
Investment
Advisory Agreement Supplement for
Ivy New
Century Fund filed with
Post-Effective
Amendment No. 75 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(h) Form of Business Management and
Investment
Advisory Agreement Supplement for
Ivy
International Bond Fund filed with
Post-
Effective Amendment No. 76 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(i) Business Management and Investment
Advisory
Agreement Supplement for Ivy Bond
Fund, Ivy
Global Fund and Ivy Short-Term U.S.
Government Securities Fund filed
with Post-
Effective Amendment No. 81 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(j) Master Business Management
Agreement between
Ivy Fund and Ivy Management Inc.
filed with
Post-Effective Amendment No. 81 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(k) Form of Supplement to Master
Business
Agreement between Ivy Fund and Ivy
Management
Inc.--Ivy Canada Fund filed with
Post-
Effective Amendment No. 77 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(l) Form of Investment Advisory
Agreement between
Ivy Fund and Mackenzie Financial
Corporation
filed with Post-Effective Amendment
No. 77 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
6. (a) Dealer Agreement, as amended and
filed with
Post-Effective Amendment No. 70 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(b) Amended and Restated Distribution
Agreement
filed with Post-Effective Amendment
No. 73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(c) Amendment to Amended and Restated
Distribution Agreement filed with
Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(d) Addendum to Amended and Restated
Distribution
Agreement (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.
(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.
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.
10. Opinion and Consent of Dechert Price &
Rhoads,
filed herewith.
11. Consent of Coopers & Lybrand L.L.P.,
filed
herewith.
12. Reports of Coopers & Lybrand L.L.P.,
filed
herewith, and the following Financial
Statements
filed electronically on February 29,
1996 and
incorporated by reference herein:
(a) Annual Report to Shareholders of
Ivy Money
Market Fund for the year ended
December 31,
1995
(b) Annual Report to Shareholders of
Ivy Short-
Term Bond Fund for the year ended
December
31, 1995
13. Not applicable
14. Not applicable
15. (a) Amended and Restated Distribution
Plan for
Class A shares of Ivy China Region
Fund, Ivy
Growth Fund, Ivy Growth with Income
Fund, Ivy
International Fund and Ivy Emerging
Growth
Fund filed with Post-Effective
Amendment No.
73 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(b) Distribution Plan for Class B
shares of Ivy
China Region Fund, Ivy Growth Fund,
Ivy
Growth with Income Fund, Ivy
International
Fund and Ivy Emerging Growth Fund
filed with
Post-Effective Amendment No. 73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(c) Distribution Plan for Class C
shares of Ivy
Growth with Income Fund filed with
Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(d) Form of Rule 12b-1 Related
Agreement filed
with Post-Effective Amendment No.
73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(e) Supplement to Master Amended and
Restated
Distribution Plan for Ivy Fund
Class A Shares
filed with Post-Effective Amendment
No. 76 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(f) Supplement to Distribution Plan for
Ivy Fund
Class B Shares filed with
Post-Effective
Amendment No. 76 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(g) Supplement to Master Amended and
Restated
Distribution Plan for Ivy Fund
Class A Shares
filed with Post-Effective Amendment
No. 77 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(h) Supplement to Distribution Plan for
Ivy Fund
Class B Shares filed with
Post-Effective
Amendment No. 77 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(i) Form of Supplement to Distribution
Plan for
Ivy Growth with Income Fund Class C
Shares
(Redesignation as Class D Shares)
filed with
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 this Post-Effective Amendment
No. 85 to
Registration Statement No. 2-17613.
16. Schedule of Computation of Standardized
Performance Quotations filed with
Post-Effective
Amendment No. 71 to Registration
Statement No. 2-
17613 and incorporated by reference
herein.
17. Financial Data Schedules filed with this
Post-
Effective Amendment No. 85 to
Registration
Statement No. 2-17613.
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 this
Post-
Effective Amendment No. 85 to
Registration
Statement No. 2-17613.
25. Persons Controlled by or Under Common Control with
Registrant
- Not applicable
26. Number of Holders of Securities (the inception
date for
Class C shares is April 30, 1996, and therefore
there were
no Class C shareholders of any Fund as of the date
shown
below).
Fund: Date Class Record
Holders
Ivy Bond Fund 1/31/96 Class A 5,319
Class B 195
Class C -0-
Ivy Canada Fund 1/31/96 Class A 2,941
Class B 102
Ivy China Region 1/31/96 Class A 2,302
Class B 1,213
Ivy Emerging 1/31/96 Class A 3,800
Growth Fund Class B 1,718
Ivy Global Fund 1/31/96 Class A 1,518
Class B 378
Ivy Growth Fund 1/31/96 Class A 32,531
Class B 210
Ivy Growth with 1/31/96 Class A 5,156
Income Fund Class B 766
Class C* 90
Ivy International 1/31/96 Class A 16,002
Fund Class B 6,726
Class I 171
Ivy International 1/31/96 Class A -0-
Bond Fund Class B -0-
Ivy Latin America 1/31/96 Class A 262
Strategy Fund Class B 133
Ivy Money Market 1/31/96 Class A 2,578
Fund Class B 118
Ivy New Century 1/31/96 Class A 372
Fund Class B 133
Ivy Short-Term 1/31/96 Class A 280
Bond Fund Class B 6
Class I -0-
* Effective April 30, 1996, Class C shares of Ivy
Growth with
Income Fund will be redesignated as "Ivy Growth
with Income-
- Class D".
27. Indemnification
The information required by this item is
incorporated by
reference to Item 27 of Part C of Post-Effective
Amendment
No. 48 to Registrant's Registration Statement on
Form N-1A
under the Securities Act of 1933 (File No.
2-17613).
Mackenzie Investment Management Inc. ("Mackenzie")
has
agreed to indemnify certain disinterested Trustees
of the
Fund for legal fees and court costs, not exceeding
$250,000
in the aggregate, except to the extent that
indemnification
is otherwise provided by the Fund or such fees or
costs are
covered by insurance. Mackenzie is not obligated
to
indemnify any such Trustee if he is finally
adjudicated by
the SEC or any court to have acted in bad faith or
with
gross negligence or willful misconduct with
respect to any
Board action in connection with Mackenzie's
purchase of all
of the outstanding capital stock of Ivy
Management, Inc.
Mackenzie has also agreed to indemnify the selling
shareholders, consisting of William M. Watson and
a company
controlled by Michael R. Peers (Trustees and
Officers of Ivy
Fund), against a variety of matters with respect
to the sale
of such stock to Mackenzie.
28. Business and Other Connections of Investment
Adviser
Information Regarding Adviser and Subadviser Under
Advisory
Arrangements. Reference is made to the Form ADV
of each of
Ivy Management, Inc., the adviser to the Trust,
Mackenzie
Financial Corporation, the adviser to Ivy Canada
Fund, and
Northern Cross Investments Limited (the successor
to Boston
Overseas Investors, Inc.), the subadviser to Ivy
International Fund.
The list required by this Item 28 of officers and
directors
of Ivy Management, Inc. and Northern Cross
Investments
Limited, together with information as to any other
business
profession, vocation or employment of a
substantial nature
engaged in by such officers and directors during
the past
two years, is incorporated by reference to
Schedules A and D
of each firm's respective Form ADV.
29. Principal Underwriters
(a) Mackenzie Ivy Funds Distribution, Inc.
("MIFDI"), Via
Mizner Financial Plaza, 700 South Federal
Highway,
Suite 300, Boca Raton, Florida 33432,
Registrant's
distributor, is a subsidiary of Mackenzie
Investment
Management Inc. ("MIMI"), Via Mizner
Financial Plaza,
700 South Federal Highway, Suite 300, Boca
Raton,
Florida 33432. MIFDI also serves as the
distributor
for Mackenzie Series Trust. MIFDI is the
successor to
MIMI's distribution activities.
(b) The information required by this Item 29
regarding each
director, officer or partner of MIFDI is
incorporated
by reference to Schedule A of Form BD filed
by MIFDI
pursuant to the Securities Exchange Act of
1934.
(c) Not applicable
30. Location of Accounts and Records
The information required by this item is
incorporated by
reference to Item 7 of Part II of Post-Effective
Amendment
No. 46 to Registration Statement No. 2-17613.
31. Not applicable
32. Undertakings
(a) Not applicable
(b) Not applicable
(c) Registrant undertakes to furnish each person
to whom a
prospectus is delivered with a copy of
Registrant's
latest annual report to shareholders, upon
request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933
and the Investment Company Act of 1940, the Registrant
certifies
that it meets all of the requirements for effectiveness
of this
Post-Effective Amendment No. 85 to its Registration
Statement
pursuant to Rule 485(b) under the Securities Act of
1933 and has
duly caused this Post-Effective Amendment No. 85 to its
Registration Statement to be signed on its behalf by
the
undersigned, thereunto duly authorized, in the City of
Boston, in
the Commonwealth of Massachusetts, on the 25th day of
April,
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. 85 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
4/25/96
President (Chief
Executive Officer)
JOHN S. ANDEREGG, JR.* Trustee
4/25/96
PAUL H. BROYHILL* Trustee
4/25/96
STANLEY CHANNICK* Trustee
4/25/96
FRANK W. DEFRIECE, JR.* Trustee
4/25/96
ROY J. GLAUBER* Trustee
4/25/96
MICHAEL R. PEERS* Trustee and
4/25/96
Chairman of
the Board
JOSEPH G. ROSENTHAL* Trustee
4/25/96
RICHARD N. SILVERMAN* Trustee
4/25/96
J. BRENDAN SWAN* Trustee
4/25/96
C. WILLIAM FERRIS* Treasurer (Chief
4/25/96
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
10 Opinion and Consent of Dechert Price & Rhoads
11 Consent of Coopers & Lybrand L.L.P.
12 Reports of Coopers & Lybrand L.L.P. relating
to the
Financial Statements and Financial Highlights
included
in the December 31, 1995 Annual Reports to
Shareholders
of Ivy Money Market Fund and Ivy Short-Term
Bond Fund
15(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
17 Financial Data Schedules
18(b) Form of Amended and Restated Plan adopted
pursuant to
Rule 18f-3 under the Investment Company Act
of 1940
EXHIBIT 10
April 25, 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 the
registration statement relating to its shares of beneficial
interest (the "Shares") filed under the Securities Act of 1933,
as amended (File No. 2-17613)(the "Registration Statement"). We
have also examined such other records of the Trust, agreements,
documents and instruments as we deemed appropriate.
Based upon the foregoing, it is our opinion that the Shares
have been duly authorized and, when issued and sold at the public
offering price contemplated by the Registration Statement and
delivered by the Trust against receipt of the net asset value of
the Shares, will be issued as fully paid and nonassessable Shares
of the Trust.
We consent to the filing of this opinion on behalf of the
Trust with the Securities and Exchange Commission in connection
with the filing of Post-Effective Amendment No. 85 to the
Registration Statement.
Very truly yours,
DECHERT PRICE & RHOADS
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Ivy Fund
We hereby consent to the incorporation by reference and inclusion
in Post-Effective Amendment No. 85 to the Registration Statement
on Form N-1A (File No. 2-17613, hereafter the "Registration
Statement") of Ivy Fund of our reports dated February 16, 1996,
on our audits of the financial statements and financial
highlights of Ivy Money Market Fund and Ivy Short-Term Bond Fund
appearing in the December 31, 1995 Annual Reports to Shareholders
of the Funds, which annual reports are incorporated by reference
in Post-Effective Amendment No. 85 to the Registration Statement.
We also consent to the reference to our Firm under the caption
"Financial Highlights" in each Fund's Prospectus and "Auditors"
in each Fund's Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
April 25, 1996
EXHIBIT 12
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Money Market Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits. The financial highlights for the
year ended December 31, 1991, were audited by other auditors,
whose report, dated January 31, 1992, expressed an unqualified
opinion on the selected per share data and ratios.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of other
auditors, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Short-Term Bond Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for the six month period ended December 31, 1994
and for the year ended December 31, 1995, and the financial
highlights for each of the periods indicated. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for the six month period ended December 31, 1994
and for the year ended December 31, 1995, and the financial
highlights for each of the periods indicated, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
EXHIBIT 15(J)
DISTRIBUTION PLAN
FOR IVY FUND CLASS C SHARES
WHEREAS, Ivy Fund (the "Trust") is registered as an open-end
investment company under the Investment Company Act of 1940, as
amended (the "Act"), and consists of one or more separate
investment portfolios (the "Portfolios") as may be established
and designated from time to time;
WHEREAS, the Trust and Mackenzie Ivy Funds Distribution,
Inc. (the "Distributor"), a broker-dealer registered under the
Securities Exchange Act of 1934, have entered into a Distribution
Agreement pursuant to which the Distributor acts as a distributor
of shares of the Trust for sale to the public; and
WHEREAS, the Board of Trustees of the Trust has determined
to adopt a Plan (the "Plan"), in accordance with the requirements
of the Act, and determined that there is a reasonable likelihood
that the Plan will benefit the Trust and its shareholders.
NOW THEREFORE, the Trust hereby adopts the Plan to apply
only to its Class C shares on the following terms and conditions:
1. The Plan will pertain to the Class C shares of Ivy Bond
Fund, Ivy Canada Fund, Ivy China Region Fund, Ivy Emerging Growth
Fund, Ivy Global Fund, Ivy Growth Fund, Ivy Growth with Income
Fund, Ivy International Fund, Ivy International Bond Fund, Ivy
Latin America Strategy Fund and Ivy New Century Fund, and to the
Class C shares of those Portfolios as shall be designated from
time to time by the Board of Trustees in any supplement to the
Plan ("Supplement").
2. The Trust shall pay the Distributor a fee for
distribution of the Class C shares of each Portfolio at the
annual rate of 0.75% of that Portfolio's average daily net assets
attributable to that Portfolio's Class C shares. Such fee shall
be calculated and accrued daily and paid monthly or at such other
intervals as the Trustees shall determine, subject to any
applicable restriction imposed by rules of the National
Association of Securities Dealers, Inc. If this Plan is
terminated, the Trust will owe no payments to the Distributor
other than any portion of the distribution fee accrued through
the effective date of termination but unpaid as of such date.
3. The amount set forth in paragraph 2 of this Plan shall
be paid for the Distributor's services as distributor of the
Class C shares of a Portfolio in connection with any activities
or expenses primarily intended to result in the sale of the Class
C shares of a Portfolio, including but not limited to,
compensation to broker-dealers that have entered into a Dealer
Agreement with the Distributor, bonuses and other incentives paid
to broker-dealers, compensation to and expenses of employees of
the Distributor who engage in or support distribution of a
Portfolio's Class C shares; telephone expenses; interest
expense[FN][Only to the extent not prohibited by a regulation or
order of the Securities and Exchange Commission]; printing of
prospectuses and reports for other than existing shareholders;
preparation, printing and distribution of sales literature and
advertising materials; and profit on the foregoing.
4. The Trust will reimburse the Distributor for payments
made to brokers, which are unaffiliated with the Distributor, in
connection with account maintenance and personal services to
shareholders (the "Service Fee"). The services for which the
Service Fee may be made include, among others, advising clients
or customers regarding the purchase, sale or retention of Class C
shares of a Portfolio, answering routine inquiries concerning a
Portfolio, assisting shareholders in changing options or
enrolling in specific plans and providing shareholders with
information regarding the Portfolio and related developments.
The Distributor will be reimbursed for such payments, subject to
any applicable restriction imposed by the Rules of the National
Association of Securities Dealers, Inc., up to an amount equal on
an annual basis to 0.25% of the average daily net asset value of
outstanding Class C shares of a Portfolio which are registered in
the name of a broker as nominee or held in a shareholder account
that designates a broker as broker of record. Service Fees for
which the Distributor will be reimbursed may also be used to
compensate certain entities in addition to brokers, such as banks
and investment advisers, for rendering certain shareholder
liaison services similar to those services rendered for Service
Fees, pursuant to a related agreement between the Distributor and
such entity.
5. The Plan shall not take effect with respect to Class C
of a Portfolio until it has been approved by a vote of at least a
majority (as defined in the Act) of the outstanding voting
securities of Class C of that Portfolio. With respect to the
submission of the Plan for such a vote, it shall have been
effectively approved with respect to Class C of a Portfolio if a
majority of the outstanding voting securities of Class C of the
Portfolio votes for approval of the Plan, notwithstanding that
the matter has not been approved by a majority of the outstanding
voting securities of the Trust or of any other Portfolio or
class.
6. The Plan shall not take effect until it has been
approved, together with any related agreements and supplements,
by votes of a majority of both (a) the Board of Trustees of the
Trust, and (b) those Trustees of the Trust who are not
"interested persons" (as defined in the Act) and who have no
direct or indirect financial interest in the operation of the
Plan or any agreements related to it (the "Plan Trustees") cast
in person at a meeting (or meetings) called for the purpose of
voting on the Plan and such related agreements.
7. The Plan shall continue in effect so long as such
continuance is specifically approved at least annually in the
manner provided for approval of the Plan in paragraph 6.
8. Any person authorized to direct the disposition of
monies paid or payable by the Trust pursuant to the Plan or any
related agreement shall provide to the Trust's Board of Trustees,
and the Board shall review, at least quarterly, a written report
of the amounts so expended and the purposes for which such
expenditures were made.
9. Any agreement related to the Plan shall be in writing
and shall provide: (a) that such agreement may be terminated at
any time as to a Portfolio, without payment of any penalty, by
vote of a majority of the Plan Trustees or by vote of a majority
of the outstanding voting securities of Class C of the Portfolio,
on not more than sixty (60) days' written notice to any other
party to the agreement; and (b) that such agreement shall
terminate automatically in the event of its assignment.
10. The Plan may be terminated at any time with respect to
Class C of a Portfolio, without payment of any penalty, by vote
of a majority of the Plan Trustees, or by vote of a majority of
the outstanding voting securities of Class C of the Portfolio.
11. The Plan may be amended at any time with respect to
Class C of a Portfolio by the Board of Trustees, provided that
(a) any amendment to increase materially the costs which the
Portfolio may bear for distribution (including the Service Fee)
pursuant to the Plan shall be effective only upon approval by a
vote of a majority of the outstanding voting securities of Class
C of the Portfolio, and (b) any material amendments of the terms
of the Plan shall become effective only upon approval as provided
in paragraph 6 hereof.
12. While the Plan is in effect, the selection and
nomination of Trustees who are not interested persons (as defined
in the Act) of the Trust shall be committed to the discretion of
the Trustees who are not interested persons.
13. The Trust shall preserve copies of the Plan, any
related agreement and any report made pursuant to paragraph 8
hereof, for a period of not less than six (6) years from the date
of the Plan, such agreement or report, as the case may be, the
first two (2) years of which shall be in an easily accessible
place.
14. It is understood and expressly stipulated that neither
the holders of shares of the Trust nor any Trustee, officer,
agent or employees of the Trust shall be personally liable
hereunder, nor shall any resort be had to other private property
for the satisfaction of any claim or obligation hereunder, but
the Trust only shall be liable.
15. This Distribution Plan shall become effective as of the
date on which the Registration Statement pertaining to the Class
C shares of the Funds, filed with the Securities and Exchange
Commission on or about February 29, 1996 pursuant to Rule 485(a)
under the Securities Act of 1933, first becomes effective.
IN WITNESS WHEREOF, the Trust has adopted this Distribution
Plan as of the 10th day of February, 1996.
IVY FUND
By: ______________________________
Michael G. Landry, President
EXHIBIT 18(B)
IVY FUND
PLAN PURSUANT TO RULE 18F-3
UNDER THE
INVESTMENT COMPANY ACT OF 1940
(As Amended and Restated on April 30, 1996)
I. INTRODUCTION
In accordance with Rule 18f-3 under the Investment Company
Act of 1940, as amended (the "1940 Act"), this Plan describes the
multi-class structure that will apply to certain series of Ivy
Fund (each, a "Fund" and collectively, the "Funds"), including
the separate class arrangements for the service and distribution
of shares, the method for allocating the expenses and income of
each Fund among its classes, and any related exchange privileges
and conversion features that apply to the different classes.
II. THE MULTI-CLASS STRUCTURE
Each of the following Funds is authorized to issue three
classes of shares, identified as Class A, Class B and Class C,
respectively: 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 Latin America Strategy Fund, Ivy
Money Market Fund [[FN1: The separation of Ivy Money Market Fund
shares into three separate classes has been authorized as a means
of enabling the Funds' transfer agent to track the contingent
deferred sales charge period that applies to Class B and Class C
shares of other Ivy or Mackenzie Funds that are being exchanged
for shares of Ivy Money Market Fund. In all other relevant
respects, the three classes of Ivy Money Market Fund shares are
identical (i.e., having the same arrangement for shareholder
services and the distribution of securities), and are not subject
to any sales load other than in connection with the redemption of
Class B or Class C shares of that have been acquired pursuant to
an exchange from another Ivy or Mackenzie Fund. (See Section
III.D.)]], Ivy International Fund, Ivy International Bond Fund
and Ivy New Century Fund. Ivy Bond Fund and Ivy International
Fund are also authorized to issue a fourth class of shares,
identified as Class I. Ivy Short-Term Bond Fund is authorized to
issue Class A, Class B and Class I shares.
Shares of each class of a Fund represent an equal pro rata
interest in the underlying assets of that Fund, and generally
have identical voting, dividend, liquidation, and other rights,
preferences, powers, restrictions, limitations, qualifications
and terms and conditions, except that: (a) each class shall have
a different designation; (b) each class shall bear certain class-
specific expenses, as described more fully in Section III.C.2.,
below; (c) each class shall have exclusive voting rights on any
matter submitted to shareholders that relates solely to its
arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of
one class differ from the interests of any other class. Each
class of shares shall also have the distinct features described
in Section III, below.
III. CLASS ARRANGEMENTS
A. FRONT-END SALES CHARGES AND CONTINGENT DEFERRED SALES
CHARGES
Class A shares shall be offered at net asset value plus a
front-end sales charge. The front-end sales charge shall be in
such amount as is disclosed in each Fund's current prospectus and
shall be subject to reductions for larger purchases and such
waivers or reductions as are determined or approved by the Board
of Trustees. Class A shares generally will not be subject to a
CDSC, although a CDSC may be imposed in certain limited cases as
disclosed in each Fund's current prospectus or prospectus
supplement.
Class B and Class C shares shall be offered at net asset
value without the imposition of a front-end sales charge. A CDSC
in such amount as is described in each Fund's current prospectus
or prospectus supplement shall be imposed on Class B and Class C
shares, subject to such waivers or reductions as are determined
or approved by the Board of Trustees.
Class I shares are not subject to a front-end sales charge
or a CDSC.
B. RULE 12B-1 PLANS
Each Fund (other than Ivy Money Market Fund) has adopted a
service and distribution plan pursuant to Rule 12b-1 under the
1940 Act (a "12b-1 plan") under which it pays to Ivy Mackenzie
Distributors, Inc. (the "Distributor") an annual fee based on the
average daily net assets value of the Fund's outstanding Class A,
Class B and Class C shares, respectively.[[FN2: Class I shares
are not subject to Rule 12b-1 service or distribution fees.]]
The maximum fees currently charged to each Fund under its 12b-1
plan are set forth in the table below, and are expressed as a
percentage of the Fund's average daily net assets.[[FN3: Fees for
services in connection with the Rule 12b-1 plans will be
consistent with any applicable restriction imposed by the
National Association of Securities Dealers, Inc.]]
The services that the Distributor provides in connection
with each Rule 12b-1 plan for which service fees[[FN4: Each Fund
pays the Distributor at the annual rate of up to 0.25% of the
average daily net asset value attributable to its Class A, Class
B and Class C shares, respectively. Ivy Canada Fund pays an
additional service-related fee of 0.15% of the average daily net
asset value attributable to its Class A shares. In addition,
each Fund (other than Ivy Canada Fund and Ivy Short-Term Bond
Fund) pays the Distributor a fee for other distribution services
at the annual rate of 0.75% of the Fund's average daily net
assets attributable to its Class B and Class C shares. Ivy
Canada Fund and Ivy Short-Term Bond Fund pay the Distributor an
additional amount for other distribution services at the annual
rate of 0.60% and 0.50%, respectively, of average daily net
assets attributable to their respective Class B and Class C
shares.]] are paid include, among other things, advising clients
or customers regarding the purchase, sale or retention of a
Fund's Class A, Class B or Class C shares, answering routine
inquiries concerning the Fund, assisting shareholders in changing
options or enrolling in specific plans and providing shareholders
with information regarding the Fund and related developments.
The other distribution services provided by the Distributor
in connection with each Fund's Rule 12b-1 plan include any
activities primarily intended to result in the sale of the Fund's
Class B and Class C shares. For such distribution services, the
Distributor is paid for, among other things, compensation to
broker-dealers and other entities that have entered into
agreements with the Distributor; bonuses and other incentives
paid to broker-dealers or such other entities; compensation to
and expenses of employees of the Distributor who engage in or
support distribution of a Fund's Class B or Class C shares;
telephone expenses; interest expense (only to the extent not
prohibited by a regulation or order of the SEC); printing of
prospectuses and reports for other than existing shareholders;
and preparation, printing and distribution of sales literature
and advertising materials.
RULE 12b-1 FEES
CLASS B AND
CLASS A CLASS A CLASS C SHARES
SHARES SHARES (SERVICE AND
(SERVICE (DISTRIBUTION DISTRIBUTION
FUND NAME FEE) FEES) FEES)
Ivy Bond Fund 0.25% 0.00% 1.00%
Ivy Canada Fund 0.25% 0.15% 1.00%
Ivy China Region 0.25% 0.00% 1.00%
Fund
Ivy Emerging 0.25% 0.00% 1.00%
Growth Fund
Ivy Global Fund 0.25% 0.00% 1.00%
Ivy Growth Fund 0.25% 0.00% 1.00%
Ivy Growth with 0.25% 0.00% 1.00%
Income Fund
Ivy International 0.25% 0.00% 1.00%
Bond Fund
Ivy International 0.25% 0.00% 1.00%
Fund
Ivy Latin America 0.25% 0.00% 1.00%
Strategy Fund
Ivy Money Market 0.00% 0.00% 0.00%
Fund[FN5]
Ivy New Century 0.25% 0.00% 1.00%
Fund
Ivy Short-Term 0.25% 0.00% 0.75%[FN6]
Bond Fund
[FN5] See footnote 1.
[FN6] Ivy Short-Term Bond Fund has no Class C shares.
C. ALLOCATION OF EXPENSES AND INCOME
1. "TRUST" AND "FUND" EXPENSES
The gross income, realized and unrealized capital gains and
losses and expenses (other than "Class Expenses," as defined
below) of each Fund shall be allocated to each class on the basis
of its net asset value relative to the net asset value of the
Fund. Expenses so allocated include expenses of Ivy Fund that
are not attributable to a particular Fund or class of a Fund
("Trust Expenses") and expenses of a Fund not attributable to a
particular class of the Fund ("Fund Expenses"). Trust Expenses
include, but are not limited to, Trustees' fees and expenses;
insurance costs; certain legal fees; expenses related to
shareholder reports; and printing expenses. Fund Expenses
include, but are not limited to, certain registration fees (i.e.,
state registration fees imposed on a Fund-wide basis and SEC
registration Fees ); custodial fees; transfer agent fees;
advisory fees; fees related to the preparation of separate
documents of a particular Fund, such as a separate prospectus;
and other expenses relating to the management of the Fund's
assets.
2. "CLASS" EXPENSES
The types of expenses attributable to a particular class
("Class Expenses") include: (a) payments pursuant to the Rule
12b-1 plan for that class; (b) transfer agent fees attributable
to a specific class[[FN7: Class I shares of Ivy Bond Fund, Ivy
Short-Term Bond Fund and Ivy International Fund are lower than
the corresponding expenses for such Funds' other classes of
shares, because Class I shares bear lower transfer agency fees
and bear no distribution or service fees. For example, while
Class A, Class B and Class C shares bear an annual transfer
agency fee of $20.75 per open account, Class I shares bear an
annual transfer agency fee of only $10.25 per open account. In
addition, Class I shares of Ivy Bond Fund and Ivy International
Fund bear lower administrative services fees relative to these
Funds' other classes of shares (i.e., Class I shares of the Funds
pay a monthly administrative services fee based upon each Fund's
average daily net assets at the annual rate of only 0.01%, while
Class A, Class B and Class C shares of these two Funds pay such a
fee at the annual rate of 0.10%).]]; (c) printing and postage
expenses related to preparing and distributing shareholder
reports, prospectuses and proxy materials; (d) registration fees
(other than those set forth in Section C.1. above); (e) the
expense of administrative personnel and services as required to
support the shareholders of a specific class; (f) litigation or
other legal expenses relating solely to a specific class of
shares; (g) Trustees' fees incurred as a result of issues
relating to a specific class of shares; and (h) the expense of
holding meetings solely for shareholders of a specific class.
Expenses described in subpart (a) of this paragraph must be
allocated to the class for which they are incurred. All other
expenses described in this paragraph may (but need not) be
allocated as Class Expenses, but only if Ivy Fund's Board of
Trustees' determines, or Ivy Fund's President and
Secretary/Treasurer have determined, subject to ratification by
the Board of Trustees, that the allocation of such expenses by
class is consistent with applicable legal principles under the
1940 Act and the Internal Revenue Code of 1986, as amended.
In the event that a particular expense is no longer
reasonably allocable by class or to a particular class, it shall
be treated as a Trust Expense or Fund Expense, and in the event a
Trust Expense or Fund Expense becomes reasonably allocable as a
Class Expense, it shall be so allocated, subject to compliance
with Rule 18f-3 and to approval or ratification by the Board of
Trustees.
3. WAIVERS OR REIMBURSEMENTS OF EXPENSES
Expenses may be waived or reimbursed by any adviser to Ivy
Fund, by Ivy Fund's underwriter or any other provider of services
to Ivy Fund without the prior approval of Ivy Fund's Board of
Trustees.
D. EXCHANGE PRIVILEGES
Shareholders of each Fund have exchange privileges with the
other Funds and with the five funds that comprise Mackenzie
Series Trust (together, with the Funds, the "Ivy and Mackenzie
Funds").[[FN8: Other exchange privileges, not described herein,
exist under certain other circumstances, as described in each
Fund's current prospectus or prospectus supplement.]]
1. CLASS A:
INITIAL SALES CHARGE SHARES. Class A shareholders may
exchange their Class A shares ("outstanding Class A shares") for
Class A shares of another Ivy or Mackenzie Fund (or for shares of
another Ivy or Mackenzie Fund that currently offers only a single
class of shares) ("new Class A Shares") on the basis of the
relative net asset value per Class A share, plus an amount equal
to the difference, if any, between the sales charge previously
paid on the outstanding Class A shares and the sales charge
payable at the time of the exchange on the new Class A shares.
Incremental sales charges are waived for outstanding Class A
shares that have been invested for 12 months or longer.
CONTINGENT DEFERRED SALES CHARGE SHARES. Class A
shareholders may exchange their Class A shares subject to a
contingent deferred sales charge ("CDSC"), as described in the
Prospectus ("outstanding Class A shares"), for Class A shares of
another Ivy or Mackenzie Fund (or for shares of another Ivy or
Mackenzie Fund that currently offers only a single class of
shares) ("new Class A shares") on the basis of the relative net
asset value per Class A share, without the payment of a CDSC that
would otherwise be due upon the redemption of the outstanding
Class A shares. Class A shareholders of a Fund exercising the
exchange privilege will continue to be subject to the Fund's CDSC
schedule (or period) following an exchange, unless the CDSC
schedule that applies to the new Class A shares is higher (or
such period is longer) than the CDSC schedule (or period), if
any, applicable to the outstanding Class A shares, in which case
the schedule (or period) of the Fund into which the exchange is
made shall apply.
2. CLASS B AND CLASS C:
Shareholders may exchange their Class B or Class C shares
("outstanding Class B shares" or "outstanding Class C shares,"
respectively) for Class B (or Class C) shares of another Ivy or
Mackenzie Fund ("new Class B shares" or "new Class C shares,"
respectively) on the basis of the net asset value per Class B (or
Class C) share, without the payment of any CDSC that would
otherwise be due upon the redemption of the outstanding Class B
(or Class C) shares. Class B and Class C shareholders of a Fund
exercising the exchange privilege will continue to be subject to
the Fund's CDSC schedule (or period) following an exchange,
unless, in the case of Class B shareholders, the CDSC schedule
that applies to the new Class B shares is higher (or such period
is longer) than the CDSC schedule (or period) applicable to the
outstanding Class B shares, in which case the schedule (or
period) of the Fund into which the exchange is made shall apply.
3. CLASS I:
Class I shareholders may exchange their outstanding Class I
shares for Class I shares of another Fund or Mackenzie Fund on
the basis of the net asset value per Class I share.
4. GENERAL:
Shares resulting from the reinvestment of dividends and
other distributions will not be charged an initial sales charge
or CDSC when exchanged into another Ivy or Mackenzie Fund.
With respect to Fund shares subject to a CDSC, if less than
all of an investment is exchanged out of the Fund, the shares
exchanged will reflect, pro rata, the cost, capital appreciation
and/or reinvestment of distributions of the original investment
as well as the original purchase date, for purposes of
calculating any CDSC for future redemptions of the exchanged
shares.
E. CONVERSION FEATURE
Class B shares of a Fund convert automatically to Class A
shares of the Fund as of the close of business on the first
business day after the last day of the calendar quarter in which
the eighth anniversary of the purchase date of the Class B shares
occurs. The conversion will be based on the relative net asset
values per share of the two classes, without the imposition of
any sales load, fee or other charge. For purposes of calculating
the eight year holding period, the "purchase date" shall mean the
date on which the Class B shares were initially purchased,
regardless of whether the Class B shares that are subject to the
conversion were obtained through an exchange (or series of
exchanges) from a different Ivy or Mackenzie Fund. For purposes
of conversion of Class B shares, Class B shares acquired through
the reinvestment of dividends and capital gain distributions paid
in respect of Class B shares will be held in a separate sub-
account. Each time any Class B shares in the shareholder's
regular account (other than those shares in the sub-account)
convert to Class A shares, a pro rata portion of the Class B
shares in the sub-account will also convert to Class A shares.
The portion will be determined by the ratio that the
shareholder's Class B shares converting to Class A shares bears
to the shareholder's total Class B shares not acquired through
the reinvestment of dividends and capital gain distributions.
IV. BOARD REVIEW
A. INITIAL APPROVAL
The Board of Trustees of Ivy Fund, including a majority of
the Trustees who are not interested persons of Ivy Fund, as
defined under the 1940 Act (the "Independent Trustees"), at a
meeting held on December 1-2, 1995, initially approved this Plan
based on a determination that the Plan, including the expense
allocation, is in the best interests of each class of shares of
each Fund individually and Ivy Fund as a whole.[[FN9: The Plan,
as initially approved, pertained only to the Class A and Class B
shares of the Funds, and the Class I shares of Ivy Bond Fund, Ivy
Short-Term Bond Fund and Ivy International Fund. By written
consent dated as of February 29, 1996, the Trustees of Ivy Fund
approved the establishment and designation of Class C shares of
the Funds (other than Ivy Short-Term Bond Fund), the effective
date of which will coincide with the date that the Registration
Statement for Class C shares filed with the SEC on or about
February 29, 1996 pursuant to Rule 485(a) under the Securities
Act of 1933 first becomes effective (i.e., 60 days after
filing).]]
B. APPROVAL OF AMENDMENTS
Before any material amendments to this Plan, Ivy Fund's
Board of Trustees, including a majority of the Independent
Trustees, must find that the Plan, as proposed to be amended
(including any proposed amendments to the method of allocating
class and/or fund expenses), is in the best interests of each
class of shares of each Fund individually and Ivy Fund as a
whole. In considering whether to approve any proposed
amendment(s) to the Plan, the Trustees of Ivy Fund shall request
and evaluate such information as they consider reasonably
necessary to evaluate the proposed amendment(s) to the Plan.
Such information shall address the issue of whether any waivers
or reimbursements of advisory or administrative fees could be
considered a cross-subsidization of one class by another, and
other potential conflicts of interest between classes.
C. PERIODIC REVIEW
The Board of Trustees of Ivy Fund shall review the Plan as
frequently as it deems necessary, consistent with applicable
legal requirements.
V. EFFECTIVE DATE
The Plan first became effective as of January 1, 1996.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> IVY SHORT-TERM BOND FUND - CLASS A
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<NAME> IVY SHORT-TERM BOND FUND - CLASS B
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