PROSPECTUS
January 1, 1996
Ivy Money Market Fund
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 and
should be read carefully and retained for future
reference.
Additional information about the Fund is contained in
the
Statement of Additional Information ("SAI") for the
Fund, which
is incorporated by reference into this Prospectus. The
SAI,
dated January 1, 1996, has been filed with the
Securities and
Exchange Commission ("SEC") and is available upon
request and
without charge from the Trust at the Distributor s
address and
telephone number provided below.
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.
BOARD OF TRUSTEES: John S. Anderegg, Jr.; Paul H.
Broyhill; Frank
W. DeFriece, Jr.; Michael G. Landry; Michael R. Peers;
Joseph G.
Rosenthal; Richard N. Silverman; J. Brendan Swan
LEGAL COUNSEL: Dechert Price & Rhoads, Boston, MA
OFFICERS: Michael G. Landry, President; Keith J.
Carlson, Vice
President; C. William Ferris, Secretary/Treasurer;
Michael R.
Peers, Chairman
CUSTODIAN: Brown Brothers Harriman & Co., Boston, MA
TRANSFER AGENT: Mackenzie Ivy Investor Services Corp.,
P.O. Box
3022, Boca Raton, FL 33431-0922 (800) 777-6472
AUDITORS: Coopers & Lybrand L.L.P., Ft. Lauderdale, FL
INVESTMENT MANAGER: Ivy Management, Inc., Boca Raton,
FL
DISTRIBUTOR: Mackenzie Ivy Funds Distribution, Inc.,
Via Mizner
Financial Plaza; 700 South Federal Highway; Boca Raton,
FL 33432
(800) 456-5111
Table of Contents
Schedule of Fees
Expense Data Table
The Fund s Financial Highlights
Investment Objectives and Policies
Investment Techniques and Risk Factors
Organization of the Fund
Investment Manager
Administrator
Fund Accounting
Custodian
Transfer Agent
Dividends and Taxes
Performance Data
How to Buy Shares
How Your Purchase Price is Determined
How the Fund Values its Shares
How to Redeem Shares
Minimum Account Balance Requirements
Signature Guarantees
Choosing a Distribution Option
Tax Identification Number
Certificates
Exchange Privilege
Systematic Withdrawal Plan
Automatic Investment Method
Consolidated Account Statements
Retirement Plans
Schedule of Fees
SHAREHOLDER TRANSACTION EXPENSES
Class A
and Class
B Shares
Maximum sales load imposed on purchases (as a
percentage
of offering price at time of purchase)* . . . . . . . .
. . 0.00%
The Fund has no sales load on reinvested dividends, no
deferred sales load, no redemption fees and no exchange
fees.**
* 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.
However, if the 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 may carry over to the investment in
the Fund
and may be assessed upon redemption (see "How to
Redeem
Shares" and "Exchange Privilege").
EXPENSE DATA TABLE
Class A
and Class
B Shares
Annual Fund Operating Expenses (as a percentage of
average daily net assets):
Management Fees After Expense Reimbursements . . . . .
. . 0.01%
12b-1 Service/Distribution Fees . . . . . . . . . . . .
. . . N/A
Other Expenses . . . . . . . . . . . . . . . . . . . .
. . 0.84%
Total Fund Operating Expenses After Expense
Reimbursements* . . . . . . . . . . . . . . . . . . . .
. . 0.85%
* Ivy Management, Inc. ("IMI") 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 daily net assets. Without
the
expense reimbursements, Total Fund Operating
Expenses would
have been 1.24%.
Example
(Class A and Class B Shares)
You would pay the following expenses on a $1,000
investment in
the Fund, assuming (1) 5% annual return and (2)
redemption at the
end of each time period:
1 YEAR(1) 3 YEARS 5 YEARS 10 YEARS
$9 $27 $47 $105
These figures assume that the current voluntary expense
limitation is in place for each of the time periods
indicated.
IMI, as investment adviser, has reserved the right to
terminate
or revise this expense limitation at any time, which
may affect
the results in years one, three, five and ten in the
preceding
Example. If the voluntary expense limitation is
terminated, the
Class A and Class B expenses for the one, three, five
and ten
year periods are estimated to be $13, $39, $68 and
$150,
respectively.
The purpose of the foregoing Example is to show the
various costs
and expenses that an investor in the Fund will bear,
directly or
indirectly. The Example assumes reinvestment of all
dividends
and distributions and that the percentage amounts under
"Total
Fund Operating Expenses After Expense Reimbursements"
remain the
same each year. The assumed annual return of 5.00% 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 fiscal year ended December 31, 1994. The
information
in the table does not reflect the charge of $10.00 per
transaction that would apply if a shareholder has
redemption
proceeds wired to his/her bank account.
THE FUND'S FINANCIAL HIGHLIGHTS
The following information for the six months ended June
30, 1995
is unaudited. The information for the years ended
December 31,
1992, 1993 and 1994 has been audited by Coopers &
Lybrand L.L.P.,
independent accountants. The information for the year
ended
December 31, 1991 and prior periods was audited by
other
independent accountants. The report of Coopers &
Lybrand L.L.P.
on the Fund's financial statements appears in the
Fund's 1994
Annual Report, 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.
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
ENDED
JUNE 30, DECEMBER 31:
SELECTED PER SHARE DATA 1995* 1994 1993
1992.
Net asset value,
beginning of period . . . $1.00 $1.00 $1.00
$1.00
Income from investment
operations:
Net investment
income(a) . . . . . . .02 .04 .02
.03
Less distributions:
Dividends from net
investment income: . . (.02) (.04) (.02)
(.03)
Net asset value, end of
period . . . . . . . . $1.00 $1.00 $1.00
$1.00
Total return(%)(c) . . . 4.99(d) 4.21 2.42
2.81
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $27,226 $26,827
$25,782 $18,839
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . .85(d) .85 .85
.85
Without expense
reimbursement(%) . . . 1.40(d) 1.24 1.56
1.45
Ratio of net investment
income to average daily
net assets(%) . . . . . . 4.99(d) 3.29 2.22
2.75
____________
* Unaudited
(a) Net investment income is net of expense
reimbursements from
IMI.
(c) Total return does not reflect a sales charge.
(d) Annualized.
FOR THE YEAR ENDED
DECEMBER 31:
SELECTED PER SHARE DATA 1991 1990 1989
1988
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:
Dividends from net
investment income: . . . (.05) (.07) (.09)
(.07)
Net asset value, end of
period . . . . . . . . . . $1.00 $1.00 $1.00
$1.00
Total return(%)(c) . . . . 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
daily 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 daily
net assets(%) . . . . . . . 5.06 7.43 8.42
6.86
____________
(a) Net investment income is net of expense
reimbursements from
IMI.
(c) Total return does not reflect a sales charge.
FOR THE PERIOD ENDED
DECEMBER 31,
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:
Dividends from net
investment income: . . . (.01)
Net asset value, end of
period . . . . . . . . . . $1.00
Total return(%)(c) . . . . 1.86
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . . $6,784
Ratio of expenses to average
daily net assets:
With expense
reimbursement(%) . . . . .85(d)
Without expense
reimbursement(%) . . . . 1.94(d)
Ratio of net investment
income to average daily
net assets(%) . . . . . . . 6.77(d)
____________
(a) Net investment income is net of expense
reimbursements from
IMI.
(b) For the period from 10/15/87 through 12/31/87.
(c) Total return does not reflect a sales charge.
(d) Annualized.
INVESTMENT OBJECTIVES 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 will
limit its investments to securities with remaining
maturities of
thirteen months or less.
The Fund invests at least 80% of its assets (calculated
at market
value at the time of each investment) in money market
instruments
maturing within one year 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 attempt 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 not
rated, 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
(calculated at market value at the time of each
investment) 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 (measured at the time of investment) in
the
securities of a single issuer which were Second Tier
Securities
when acquired by the Fund. In addition, the Fund may
not invest
more than 5% of its total assets (calculated at market
value at
the time of each investment) in securities that are
Second Tier
Securities when acquired by the Fund.
The Fund's investment objectives are 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 objectives
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.
INVESTMENT TECHNIQUES AND RISK FACTORS
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: 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.
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). 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.
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. 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 (currently
$100,000) 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
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 (calculated at market value at the
time of each
investment) 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. 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: 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 at the
time of such borrowing. The Fund has no current
intention of
borrowing amounts that exceed, in the aggregate, 5% of
the Fund's
assets. 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).
ORGANIZATION 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 is comprised of
thirteen
series of shares. The Trustees of the Trust have the
authority,
without shareholder approval, to classify and
reclassify the
shares of the Fund into one or more classes. Pursuant
to this
authority, effective January 1, 1996, the Trustees have
redesignated the Fund's shares into two separate
classes,
identified as Class A and Class B, each of which
represents an
interest in the same portfolio of investments of the
Fund. The
purpose of this redesignation 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
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 and Class B shares are
identical
(i.e., having the same arrangement for shareholder
services and
the distribution of securities). Shareholders of Class
A and
Class B shares are each entitled to one vote per share
(with
proportionate voting for fractional shares), and have
equal
rights as to voting, redemption, dividends and
liquidation.
INVESTMENT MANAGER
The Trust employs IMI to provide business management
and
investment advisory services; Mackenzie Investment
Management
Inc.("MIMI") to provide administrative and accounting
services;
and Mackenzie Ivy Funds Distribution, Inc. ("MIFDI," or
the
"Distributor") to distribute the Fund's shares.
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, Vice President of MIMI and
Managing
Director -- Fixed Income, has been a portfolio manager
with Ivy
Management, Inc. since 1988, and for the Fund since
1995. Ms.
Ferris joined MIMI in 1988 and has 13 years of
professional
investment experience. She is a Chartered Financial
Analyst and
holds an MBA degree from the University of Chicago.
Prior to
joining MIMI, Ms. Ferris was a portfolio manger at
Kemper
Financial Services Inc. from 1982-1988. Michael
Borowsky has
served as a portfolio assistant to the Fund since 1994.
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 0.40%.
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 daily net assets of the Fund
for the
fiscal year ended December 31, 1994 was 0.85%. Without
expense
reimbursements, the ratio of operating expenses to
average
daily net assets of the Fund for the fiscal year ended
December
31, 1994 was 1.24%.
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 daily net assets. As long
as the
Fund's expense limitation continues, it may lower the
Fund's
expenses and increase its yield. The Fund's expense
limitation
may be terminated or revised at any time, at which time
the
Fund's expenses may increase and its yield may be
reduced,
depending on the total assets of the Fund. Thereafter,
IMI will
comply with any applicable state regulations that may
require IMI
to make reimbursements to the Fund in the event that
the Fund's
aggregate operating expenses, including advisory fees,
administrative services fees and transfer agency and
shareholder
services fees, but generally excluding interest, taxes,
brokerage
commissions and extraordinary expenses, exceed specific
applicable limitations. The strictest state-imposed
expense
limitation that currently applies to the Fund is 2.5%
of the
first $30 million of its average daily net assets, 2.0%
of the
next $70 million of its average daily net assets and
1.50% of its
average daily net assets over $100 million.
ADMINISTRATOR
The Trust has entered into an Administrative Services
Agreement
with MIMI, pursuant to which MIMI provides various
administrative
services for the Fund, including maintenance of
registration or
qualification of Fund shares under state "Blue Sky"
laws,
assisting in the preparation of Federal, state and
local income
tax returns and preparing financial and other
information for
prospectuses, statements of additional information, and
periodic
reports to shareholders. 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 monthly fee at the annual rate of 0.10%.
FUND ACCOUNTING
The Trust has entered into a Fund Accounting Services
Agreement
with MIMI, pursuant to which MIMI provides certain
accounting and
pricing services for the Fund. For fund accounting
services, the
Fund pays MIMI out-of-pocket expenses as incurred and a
monthly
fee of 0.10% of the Fund's average daily net assets.
CUSTODIAN
Brown Brothers Harriman & Co. (the "Custodian"), a
private bank
and a member of the principal securities exchanges,
located at 40
Water Street, Boston, Massachusetts 02109, serves as
custodian
for the Fund.
TRANSFER AGENT
Mackenzie Ivy Investor Services Corp. ("MIISC"), a
wholly owned
subsidiary of MIMI, is the transfer agent for the Fund
and
provides certain shareholder and shareholder-related
services.
For transfer agency and shareholder services, the Fund
pays MIISC
an annual fee of $22.00 per open account. In addition,
the Fund
pays MIISC a fee of $4.36 for each account that is
closed and
reimburses MIISC monthly for out-of-pocket expenses.
DIVIDENDS AND TAXES
Dividends that you receive from the Fund are reinvested
in
additional Fund shares 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. An investor should consult with
his/her own
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 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 gain (the excess of net
long-term
capital gain over net short-term capital loss), if any,
designated as capital gain dividends are taxable as
long-term
capital gains, regardless of how long the shareholder
has held
the Fund's shares. Dividends are taxable to
shareholders in the
same manner whether received in cash or reinvested in
additional
Fund shares.
A distribution will be treated as paid on December 31
of the
current calendar year if it is declared by the Fund in
October,
November or December with a record date in such a month
and paid
by the Fund during January of the following calendar
year. Such
distributions will be taxable to shareholders in the
calendar
year in which the distributions are declared, rather
than the
calendar year in which the distributions are received.
Each year the Fund will notify shareholders of the tax
status of
dividends and distributions.
Investments in securities that are issued at a discount
will
result in income to the Fund each year equal to a
portion of the
excess of the face value of the securities over their
issue
price, even though the Fund receives no cash interest
payments
from the securities.
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.
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 advisors regarding the particular tax
consequences of an
investment in the Fund.
PERFORMANCE DATA
Performance information for the Fund may be compared,
in reports
and promotional literature, to: (i) Donoghue's Money
Fund Index,
The Bank Rate Monitor's Index of Money Market Account
Interest
Rates, U.S. Treasury Bill rates or other comparable
indices or
investment vehicles; (ii) other groups of mutual funds
tracked by
Lipper Analytical Services, a widely used independent
research
firm that ranks mutual funds by overall performance,
investment
objectives and assets, or tracked by other services,
companies,
publications or persons who rank mutual funds on
overall
performance or other criteria; (iii) the Consumer
Price Index
(measure for inflation) to assess the real rate of
return from an
investment in the Fund; and (iv) unmanaged indices so
that
investors may compare the Fund's results with those of
a group of
securities widely regarded by investors as
representative of the
securities markets in general. Unmanaged indices may
assume the
reinvestment of dividends, but generally do not reflect
deductions for administrative and management costs and
expenses.
Performance rankings are based on historical
information and are
not intended to indicate future performance.
In addition, advertisements, sales literature and
communications
to shareholders may contain various measures of the
Fund's
performance, including various expressions of total
return. Such
materials may occasionally cite statistics to reflect
the Fund's
volatility or risk. Performance information is
computed
separately in accordance with the formula described
below.
As prescribed by the SEC, average annual total return
figures
represent the average annual percentage change in value
of $1,000
invested at the net asset value for one-, five- and
ten-year
periods, or any portion thereof (to the extent
applicable)
through the end of the most recent calendar quarter,
assuming
reinvestment of all distributions.
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 net asset value on the last day of that period and
then
annualizing the result.
Yield, which is calculated according to a formula
prescribed by
the SEC (see the SAI), is not indicative of the
dividends or
distributions that were or will be paid to the Fund's
shareholders. Dividends or distributions paid to
shareholders
are reflected in the current distribution rate, which
may be
quoted to shareholders. The current distribution rate
is
computed by dividing the total amount of dividends per
share paid
by the Fund during the preceding 12 months by the
Fund's current
net asset value. Under certain circumstances, such as
when there
has been a change in the amount of dividend payout, or
a
fundamental change in investment policies, it might be
appropriate to annualize the dividends paid during the
period
when such policies would be in effect, rather than
using the
dividends during the past 12 months. The distribution
rate will
differ from the current yield computation because it
may include
distributions to shareholders from sources other than
dividends
and interest, short-term capital gains and net
equalization
credits and will be calculated over a different period
of time.
Performance figures are based upon past performance and
reflect
all recurring charges against Fund income. The
investment
results of the Fund, like all others, will fluctuate
over time;
thus, performance figures should not be considered to
represent
what an investment may earn or what the Fund's total
return may
be in the future.
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." All
purchases must be made in U.S. dollars; no third party
checks
will be accepted. Complete the Account Application
attached to
this Prospectus. Indicate whether you are purchasing
Class A or
Class B shares. If you do not specify which class of
shares you
are purchasing, MIISC will assume you are investing in
Class A
shares. The Fund reserves the right to reject for any
reason any
purchase order or exchange (see "Exchange Privilege"
below).
DIRECT PURCHASES OF CLASS B SHARES: Class B
shares may only
be purchased directly through the shareholder's
election of a
systematic withdrawal plan under which specified
withdrawal
amounts are used to purchase Class B 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.
OPENING AN ACCOUNT
By Check
1. Make your check payable to the fund in which
you are
investing.
2. Deliver the completed application and check
to your
registered representative or selling broker,
or mail it
directly to MIISC.
3. Our address is:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
4. Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
By Wire
1. Deliver a completed Account Application to
your
registered representative or selling broker,
or mail it
directly to MIISC. Before wiring any funds,
please
contact MIISC at 1-800-777-6472 to verify
your account
number.
2. Instruct your bank to wire funds to:
Barnett Bank of Palm Beach County
ABA #067008582
For deposit to the Ivy and Mackenzie funds
a/c #1455031505
Name of your account
Your Ivy or Mackenzie account number
The Ivy or Mackenzie fund you are buying
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place
an order to purchase shares through your Registered
Securities
Dealer.
Buying Additional Shares
By Check
1. Complete the investment stub attached to your
statement
or include a note with your investment
listing the name
of the Fund, your account number and the
name(s)in
which the account is registered.
2. Make your check payable to the fund in which
you are
investing.
3. Mail the account information and check to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
or deliver it to your registered representative or
selling
broker.
By Wire
Instruct your bank to wire funds to:
Barnett Bank of Palm Beach County
ABA #067008582
For deposit to
The Ivy and Mackenzie funds
a/c #1455031505
Name of your account
Your Ivy or Mackenzie account number
The Ivy or Mackenzie fund you are buying
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place
an order to purchase shares through your Registered
Securities
Dealer.
By Automatic Investment Method ("AIM")
1. Complete the "Automatic Investment Method"
and
"Wire/EFT Information" sections on the
Account
Application designating a bank account from
which funds
may be drawn. Please note that in order to
invest
using this method, your bank must be a member
of the
Automated Clearing House system (ACH). The
minimum
investment under this plan is $50 per month
($25 per
month for retirement plans). Please remember
to attach
a voided check to your Account Application.
2. At pre-specified intervals, your bank account
will be
debited and the proceeds will be credited to
your Ivy
or Mackenzie fund account.
HOW YOUR PURCHASE PRICE IS DETERMINED
Your purchase price is the net asset value per share
(see
"How the Fund Values its Shares"). 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 MIISC or
by your Registered Securities Dealer prior to the time
of the
determination of the net asset value. Any orders
received after
the time of the determination of the net asset value
will be
entered at the next calculated price.
Orders placed with a securities dealer before the net
asset value
is determined and that are transmitted through the
facilities of
the National Securities Clearing Corporation by 7:00
p.m., EST,
on the same day are confirmed at that day's price. Any
loss
resulting from the dealer's failure to submit an order
by the
deadline will be borne by that dealer.
You will receive an account statement 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 Fund offers two classes of shares in this
Prospectus, Class A
and Class B shares, neither of which are subject to an
initial
sales charge or a contingent deferred sales charge.
Thus, the
Net Asset Value ("NAV") per share is the value of one
Class A or
Class B share. The NAV is determined in the following
manner:
the total of all liabilities, including accrued
expenses and
taxes and any necessary reserves, is deducted from the
aggregate
value of all assets, and the difference is divided by
the number
of shares outstanding at the time, adjusted to the
nearest cent.
The NAV per share is determined once every business day
(as of
the close of regular trading on each day the New York
Stock
Exchange is open, normally 4:00 p.m. EST)(see the SAI
under "Net
Asset Value" for a detailed description of how the NAV
is
determined).
HOW TO REDEEM SHARES
You may redeem your Fund shares through your registered
securities representative, by mail, by telephone, by
Federal
Funds wire 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. EST to be processed at the NAV for that day. Any
redemption
request in good order that is received after 4:00
p.m. EST 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 contingent deferred sales
charge.
However, if the shares of another Ivy or Mackenzie fund
that are
subject to a contingent deferred sales charge are
exchanged for
Class B shares of the Fund, the contingent deferred
sales charge
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. 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 MIISC at 1-800-777-6472.
THROUGH YOUR REGISTERED SECURITIES DEALER: The
Dealer is
responsible for promptly transmitting redemption
orders.
Redemptions requested by dealers will be made at the
NAV (less
any applicable contingent deferred sales charge)
determined at
the close of regular trading (4:00 p.m. EST) on the day
that a
redemption request is received in good order by MIISC.
BY MAIL: Requests for redemption in writing are
considered
to be in "proper or good order" if they contain the
following:
- Any outstanding certificate(s) for shares
being
redeemed.
- A letter of instruction, including the fund
name, the
account number, the account name(s), the
address and
the dollar amount or number of shares to be
redeemed.
- Signatures of all registered owners whose
names appear
on the account.
- Any required signature guarantees.
- Other supporting legal documentation, if
required (in
the case of estates, trusts, guardianships,
corporations, retirement plans or other
representative
capacities).
The dollar amount or number of shares indicated
for
redemption must not exceed the available shares or NAV
of your
account at the next- determined prices. If your
request exceeds
these limits, then the trade will be rejected in its
entirety.
Mail your request to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
BY TELEPHONE: Individual and joint accounts may
redeem up
to $50,000 per day over the telephone by contacting
MIISC at 1-
800-777-6472. In times of unusual economic or market
changes,
the telephone redemption privilege may be difficult to
implement.
If you are unable to execute your transaction (for
example,
during such times), you may want to consider placing
the order in
writing and sending it by mail or overnight courier.
Checks will be made payable to the current account
registration
and sent to the address of record. If there has been a
change of
address in the last 30 days, please use the
instructions for
redemption requests by mail described above. A
signature
guarantee would be required.
Requests for telephone redemptions will be accepted
from the
registered owner of the account, the designated
registered
representative or his/her assistant.
Shares held in certificate form cannot be redeemed by
telephone.
If Section 6E of the 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 permit your registered
representative or
his/her assistant to do so on your behalf, you must
notify MIISC
in writing.
The Fund employs reasonable procedures that require
personal
identification prior to acting on redemption
instructions
communicated by telephone to confirm that such
instructions are
genuine. In the absence of such procedures, the Fund
may be
liable for any losses due to unauthorized or fraudulent
telephone
instructions.
BY FEDERAL FUNDS WIRE: For shareholders who
established
this feature at the time they opened their new 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
change
existing bank account information, please submit a
letter of
instructions including your bank information to MIISC
at the
address provided above. The letter must be signed by
all
registered owners, and their signatures must be
guaranteed.
Your account will be charged a $10.00 fee each time
redemption
proceeds are wired to your bank.
Neither MIISC nor the Fund can be responsible for the
efficiency
of the Federal Funds wire system or the shareholder's
bank.
BY CHECK WRITING: 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 the Check Writing
Enrollment Form on the last page of the new 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, whichever
is less.
In order to qualify for the check writing privilege,
Fund
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 MIISC 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 is a
nominal charge for each supply of checks, copies of
canceled
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
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.
Check writing
is not available for retirement accounts. 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 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.
- Requests for redemption proceeds to be sent
to someone
other than the registered shareholder.
- Requests for redemption proceeds to be sent
to an
address other than the address of record.
- Registration transfer requests.
- Requests for redemption proceeds to be wired
to your
bank account (if this option was not selected
on your
original application, or if you are changing
the bank
wire information).
A signature guarantee may be obtained only from an
eligible
guarantor institution as defined in Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended. An
eligible
guarantor institution includes banks, brokers, dealers,
municipal
securities dealers, government securities dealers,
government
securities brokers, credit unions, national securities
exchanges,
registered securities associations, clearing agencies
and savings
associations. The signature guarantee must not be
qualified in
any way. Notarizations from notary publics are not the
same as
signature guarantees, and are not accepted.
Circumstances other than those described above may
require a
signature guarantee. Please contact MIISC at
1-800-777-6472 for
more information.
CHOOSING A DISTRIBUTION OPTION
You have the option of selecting the dividend and
capital gain
distribution option that best suits your needs:
(1) AUTOMATIC REINVESTMENT OPTION -- Both dividends
and capital
gains are automatically reinvested at NAV in
additional
shares of the same class of the Fund unless you
specify one
of the other options.
(2) INVESTMENT IN ANOTHER IVY OR MACKENZIE FUND --
Both
dividends and capital gains are automatically
invested at
NAV in another Ivy or Mackenzie fund of the same
class.
(3) DIVIDENDS IN CASH/CAPITAL GAINS REINVESTED --
Dividends will
be paid in cash. Capital gains will be reinvested
at NAV in
additional shares of the same class of the Fund or
another
Ivy or Mackenzie fund of the same class.
(4) DIVIDENDS AND CAPITAL GAINS IN CASH -- Both
dividends and
capital gains will be paid in cash.
If you wish to have your cash distributions
deposited
directly to your bank account via electronic funds
transfer, or
if you wish to change your distribution option, please
contact
MIISC at 1-800-777-6472.
If you wish to have your cash distributions go to an
address
other than the address of record, a signature guarantee
is
required.
TAX IDENTIFICATION NUMBER
In general, to avoid being subject to a 31% Federal
backup
withholding tax on dividends, capital 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 MIISC at
1-800-777-
6472 and request that one be sent to you. (Retirement
plan
accounts are not eligible for this service.) Please
note that if
you were to lose your certificate, you would incur an
expense to
replace it.
Certificates 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 signature guarantee. The letter
of
instruction would then be mailed to MACKENZIE IVY
INVESTOR
SERVICES CORP., P.O. BOX 3022, BOCA RATON, FL
33431-0922.
EXCHANGE PRIVILEGE
Shareholders of the Fund have an exchange privilege
with other
Ivy and Mackenzie funds. Class A shareholders of the
Fund may
exchange their outstanding Class A shares for 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 shares directly may exchange
their Class B
shares for Class B shares of another Ivy or Mackenzie
fund on the
basis of the relative NAV per Class B share (see
"Direct
Purchases of Class B Shares" under "How to Buy
Shares"), subject
to the contingent deferred sales charge schedule (or
period) of
the fund into which the exchange is being made
(beginning with
the date of the exchange).
Class B shareholders of another Ivy or Mackenzie fund
may
exchange their shares for Class B shares of the Fund.
Exchanges
from another Ivy or Mackenzie Fund will continue to be
subject to
the contingent deferred sales change schedule (or
period) of the
fund from which the exchange was made, but will reflect
the time
the shares are held in the Fund.
With respect to both Class A and Class B, 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
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.
Before
executing an exchange, you should obtain and read the
prospectus
and consider the investment objective of the fund to be
purchased. Shares must be uncertificated in order to
execute an
exchange. Exchanges are available only in states where
they can
be legally made. This privilege is not intended to
provide
shareholders a means by which to speculate on
short-term
movements in the market. Exchanges are accepted only
if the
registrations of the two accounts are identical.
Amounts to be
exchanged must meet minimum investment requirements for
the Ivy
or Mackenzie fund into which the exchange is made.
With respect to Fund shares subject to a contingent
deferred
sales charge (i.e., Class B 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
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 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: 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 wish to make telephone exchanges or
permit your
registered representative or his/ her assistant to do
so on your
behalf, you must notify MIISC in writing.
In order to execute an exchange, please contact MIISC
at 1-800-
777-6472. Have the account number of your current fund
and the
exact name in which it is registered available to give
to the
telephone representative.
The Fund employs reasonable procedures that require
personal
identification prior to acting on exchange instructions
communicated by telephone to confirm that such
instructions are
genuine. In the absence of such procedures, the Fund
may be
liable for any losses due to unauthorized or fraudulent
telephone
instructions.
EXCHANGES IN WRITING: In a letter, request an
exchange and
provide the following information:
- The name of the fund whose shares you
currently own.
- Your account number
- The name(s) in which the account is
registered.
- The name of the fund in which you wish your
exchange to
be invested.
- The number of shares, all shares or the
dollar amount
you wish to exchange.
The request must be signed by all registered
owners.
Mail the request and information to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
SYSTEMATIC WITHDRAWAL PLAN
You must elect the Systematic Withdrawal Plan at any
time by
completing the Account Application, which is attached
to this
Prospectus. You can also obtain this application by
contacting
your registered representative or MIISC at
1-800-777-6472. To be
eligible, you must have at least $5,000 in your
account.
Payments (minimum distribution amount -- $50) from your
account
can be made monthly, quarterly, semi-annually, annually
or on a
selected monthly basis, to yourself or any other
designated
payee. You may elect to have your systematic
withdrawal paid
directly to your bank account via electronic funds
transfer
("EFT"). Share certificates must be unissued (i.e.,
held by 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 MIISC at
1-800-777-6472.
If payments you receive through the Systematic
Withdrawal Plan
exceed the dividends and capital appreciation of your
account,
you will be reducing the value of your account.
Additional
investments made by shareholders participating in the
Systematic
Withdrawal Plan must equal at least $1,000 while the
plan is in
effect. 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
redemption. 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 MIISC at 1-800-777-6472 to obtain the
necessary
paperwork to establish a plan.
If the U.S. Postal Service cannot deliver your checks,
or if
deposits to a bank account are returned for any reason,
your
redemptions will be discontinued.
AUTOMATIC INVESTMENT METHOD
You may authorize an investment to be automatically
drawn each
month from your bank for investment in Fund shares
under the
"Automatic Investment Method" and "Fed Wire/EFT"
sections of the
Account Application. There is no charge to you for
this program.
You may terminate or suspend your Automatic Investment
Method by
telephone at any time by contacting MIISC at
1-800-777-6472.
If you have investments being withdrawn from a bank
account and
we are notified that the account has been closed, your
Automatic
Investment Method will be discontinued.
CONSOLIDATED ACCOUNT STATEMENTS
Shareholders with two or more Ivy or Mackenzie fund
accounts will
receive a single quarterly account statement, unless
otherwise
specified. This feature consolidates the activity for
each
account onto one statement. Requests for quarterly
consolidated
statements for all other accounts must be submitted in
writing
and must be signed by all registered owners.
RETIREMENT PLANS
The Ivy and Mackenzie funds offer several tax-sheltered
retirement plans that may fit your needs:
- IRA (Individual Retirement Account)
- 401(k) Plan
Money Purchase Pension Plan
Profit Sharing Plan
- SEP-IRA (Simplified Employee Pension Plan)
- 403(b)(7) Plan
Minimum initial and subsequent investments for
retirement
plans are $25.00.
Investors Bank & Trust, which serves as custodian or
trustee
under the retirement plan prototypes available from 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, and various documents
(available
from MIISC), including IRS Form W-4P, and information
must be
provided before the distribution may be made. The Ivy
and
Mackenzie funds and MIISC assume no responsibility to
determine
whether a distribution satisfies the conditions of
applicable tax
laws, and will not be responsible for any penalties
assessed.
For additional information, please contact your broker,
tax
adviser or MIISC.
Please call MIISC at 1-800-777-6472 for complete
information kits
describing the plans and their benefits, restrictions,
provisions
and fees.
SHAREHOLDER INQUIRIES
Inquiries regarding the Fund should be directed to
MIISC at 1-
800-777-6472.
IVY MONEY MARKET FUND
ACCOUNT APPLICATION
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.)
(Fund Use Only)
Account Number:
Dealer #:
Branch #:
Rep. I.D. #:
1 REGISTRATION
/ / Individual
/ / Joint Tenant
/ / Estate
/ / UGMA/UTMA
/ / Corporation
/ / Partnership
/ / Sole Proprietor
/ / Trust
/ / Other
Date of Trust
Owner, Custodian or Trustee
Co-owner or Minor
Minor's State of Residence
Street
City
State
Zip Code
Phone Number -- Day
Phone Number -- Evening
2 TAX ID
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.
3 DEALER INFORMATION
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
Branch Office Address
City
State
Zip Code
Representative's Name and Number
Representative's Phone Number
Authorized Signature of Dealer
4 INVESTMENTS
A. Enclosed is my check ($1,000 minimum) made
payable to
Ivy Money Market Fund. Please invest it in
Class A or
Class B shares.*
$_______________________(Amount Enclosed)
* Direct purchases of Class B shares may only
be made in
conjunction with a systematic withdrawal plan
into the
same Class of a different Ivy or Mackenzie
fund. (See
"Direct Purchases of Class B Shares" under
"How to Buy
Shares.")
5 DISTRIBUTION OPTIONS
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.
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.
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.)
6 OPTIONAL SPECIAL FEATURES
A. / / Automatic Investment Method (AIM)
- I wish to invest _________________
/ / once per month
/ / twice
/ / 3 times
/ / 4 times*
- My bank account will be debited on the
_________ day of
the month
Please invest $___________________ each period
starting in
the month of __________________ in Ivy Money
Market 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
account in
Ivy Money Market Fund.
/ / Monthly / / Quarterly / /Semiannually / /
Annually
/ / Once / / Twice / / 3 times / / 4 times
per month
I request the distribution be:
/ / Sent to the address listed in the
registration.
/ / Sent to the special payee listed in Section
7.
/ / Invested into additional shares of the same
class of a
different Ivy Mackenzie fund.
Fund Name
Account Number
Amount $__________________(Minimum $50) starting
on or about
the
- _______ day of the month
- _______ day of the month
- _______ day of the month
- _______ day of the month**
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. Electronic Funds Transfer 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
redemption
privilege will be provided automatically.
*MAY NOT BE USED IF SHARES ARE ISSUED IN
CERTIFICATE FORM.
7 SPECIAL PAYEE
A. MAILING ADDRESS
Please send all disbursements to this special
payee:
Name of Bank or Individual
Account Number (If Applicable)
Street
City/State/Zip
B. FED WIRE / E.F.T. INFORMATION
Financial Institution
ABA #
Account #
Street
City/State/Zip
(Please attach a voided check)
8 CHECK WRITING ENROLLMENT FORM
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
9 SIGNATURES
Investors should be aware that the failure to
check the "No"
under Section 6, "Optional Special Features",
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.
______________________________
________________________
Signature of Owner, Custodian, Date
Trustee or Corporate Officer
______________________________
________________________
Signature of Joint Owner, Date
Co-Trustee or Corporate Officer
IMMF-1-96 (REMEMBER TO SIGN SECTION 9)
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
January 1, 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 January 1, 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
798 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 777-6472
DISTRIBUTOR
Mackenzie Ivy Funds Distribution, Inc.
("MIFDI")
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 456-5111
TABLE OF CONTENTS
PAGE
INVESTMENT OBJECTIVE AND POLICIES
U.S. GOVERNMENT SECURITIES
COMMERCIAL PAPER
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
WARRANTS
INVESTMENT RESTRICTIONS
ADDITIONAL RESTRICTIONS
ADDITIONAL RIGHTS AND PRIVILEGES
AUTOMATIC INVESTMENT METHOD
EXCHANGE OF SHARES
RETIREMENT PLANS
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
QUALIFIED PLANS
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS AND
CHARITABLE ORGANIZATIONS ("403(B)(7)
ACCOUNT")
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAS
SYSTEMATIC WITHDRAWAL PLAN
GROUP SYSTEMATIC INVESTMENT PROGRAM
PORTFOLIO TRANSACTIONS
TRUSTEES AND OFFICERS
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI
INVESTMENT ADVISORY AND OTHER SERVICES
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY
SERVICES
DISTRIBUTION SERVICES
CUSTODIAN
FUND ACCOUNTING SERVICES
TRANSFER AND DIVIDEND PAYING AGENT
ADMINISTRATOR
AUDITORS
CAPITALIZATION AND VOTING RIGHTS
NET ASSET VALUE
REDEMPTIONS
TAXATION
GENERAL
DEBT SECURITIES ACQUIRED AT A DISCOUNT
DISTRIBUTIONS
DISPOSITION OF SHARES
BACKUP WITHHOLDING
OTHER INFORMATION
CALCULATION OF YIELD
STANDARDIZED YIELD QUOTATIONS
OTHER QUOTATIONS, COMPARISONS AND GENERAL
INFORMATION
FINANCIAL STATEMENTS
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE
BOND AND
COMMERCIAL PAPER RATINGS
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.
WARRANTS
The Fund may invest in warrants. The Fund's
investments in
warrants, valued at the lower of cost or market, will
not exceed
5% of the value of its net assets. Included within
that amount,
but not to exceed 2% of the Fund's net assets, may be
warrants
that are not listed on either the New York or the
American Stock
Exchanges. Warrants acquired by the Fund in units or
attached to
securities will be deemed to be without value for
purposes of
this restriction.
The holder of a warrant has the right to purchase
a given
number of shares of a particular issuer at a specified
price
until expiration of the warrant. Such investments can
provide a
greater potential for profit or loss than an equivalent
investment in the underlying security. Prices of
warrants do not
necessarily move in tandem with the prices of the
underlying
securities, and are speculative investments. Warrants
pay no
dividends and confer no rights other than a purchase
option. If
a warrant is not exercised by the date of its
expiration, the
Fund will lose its entire investment in such warrant.
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 MIFDI, 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 Mackenzie Ivy Investor Services Corp.
("MIISC")
or written notice to MIISC 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 MIISC or
a
properly executed request by MIISC. 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 MIISC by the close of regular trading on
the New York
Stock Exchange (the "Exchange") (normally 4:00 p.m.,
Eastern
time) to receive the price computed on the day of
receipt;
exchange requests received after that time will receive
the price
next determined following receipt of the request. This
exchange
privilege may be modified or terminated at any time,
upon at
least 60 days' notice when such notice is required by
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 MIFDI may be purchased in
a single
application establishing a single plan account, and
shares held
in such an account may be exchanged among the funds in
the Ivy
Mackenzie Funds in accordance with the terms of the
applicable
plan and the exchange privilege available to all
shareholders.
Initial and subsequent purchase payments in connection
with tax-
deferred retirement plans must be at least $25 per
participant.
The following fees will be charged to individual
shareholder
accounts as described in the retirement prototype plan
document:
Retirement Plan New Account Fee No fee
Retirement Plan Annual Maintenance Fee $10.00 per
account
For shareholders whose retirement accounts are
diversified across
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
MIISC, which
may impose a charge for establishing the account.
Individuals
may wish to consult their tax advisers before investing
IRA
assets in a fund which primarily distributes
exempt-interest
dividends.
An individual who has not reached age 70-1/2 and
who
receives compensation or earned income is eligible to
contribute
to an IRA, whether or not he or she is an active
participant in a
retirement plan. An individual who receives a
distribution from
another IRA, a qualified retirement plan, a qualified
annuity
plan or a tax-sheltered annuity or custodial account
("403(b)
plan") that qualifies for "rollover" treatment is also
eligible
to establish an IRA by rolling over the distribution
either
directly or within 60 days after its receipt. Tax
advice should
be obtained in connection with planning a rollover
contribution
to an IRA.
In general, an eligible individual may contribute
up to the
lesser of $2,000 or 100% of his or her compensation or
earned
income to an IRA each year. If a husband and wife are
both
employed, and both are under age 70-1/2, each may set
up his or
her own IRA within these limits. If both earn at least
$2,000
per year, the maximum potential contribution is $4,000
per year
for both. However, if one spouse has (or elects to be
treated as
having) no earned income for IRA purposes for a year,
the other
spouse may contribute to an IRA on his or her behalf.
In such a
case, the working spouse may contribute up to the
lesser of
$2,250 or 100% or his or her compensation or earned
income for
the year to IRAs for both spouses, provided that no
more than
$2,000 is contributed to the IRA of 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, or if
withdrawn in
the form of substantially equal payments over the life
or life
expectancy of the individual and his or her designated
beneficiary, if any. Distributions must begin to be
withdrawn
not later than April 1 of the calendar year following
the
calendar year in which the individual reaches age
70-1/2.
Failure to take certain minimum required distributions
will
result in the imposition of a 50% non-deductible
penalty tax.
Extremely large distributions in any one year from an
IRA (or
from an IRA and other retirement plans) may also result
in a
penalty tax.
QUALIFIED PLANS. For those self-employed
individuals who
wish to purchase shares of one or more of the funds in
the Ivy
Mackenzie Funds through a qualified retirement plan, a
Retirement
Plan is available from MIISC. The Retirement Plan may
be adopted
as a profit sharing plan or a money purchase pension
plan. A
profit sharing plan permits an annual contribution to
be made in
an amount determined each year by the self-employed
individual
within certain limits prescribed by law. A money
purchase
pension plan requires annual contributions at the level
specified
in the 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 MIISC.
Distributions from the 403(b)(7) Account may be
made only
following death, disability, separation from service,
attainment
of age 59-1/2, or incurring a financial hardship. A
10% penalty
tax generally applies to distributions to an individual
before he
or she reaches age 59-1/2, unless the individual has
(1) reached
age 55 and separated from service; (2) died or become
disabled;
(3) used the withdrawal to pay tax-deductible medical
expenses;
(4) taken the withdrawal as part of a series of
substantially
equal payments over his or her life expectancy or the
joint life
expectancy of himself or herself and a designated
beneficiary; or
(5) rolled over the distribution. There is no set-up
fee for
403(b)(7) Accounts and the annual maintenance fee is
$20.00.
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAS. An
employer may
deduct contributions to a SEP up to the lesser of
$30,000 or 15%
of compensation. SEP accounts generally are subject to
all rules
applicable to IRA accounts, except the deduction
limits, and are
subject to certain employee participation requirements.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder may establish a Systematic
Withdrawal Plan
(the "Withdrawal Plan") by telephone instructions to
MIISC or by
delivery to MIISC of a written election to so redeem,
accompanied
by a surrender to MIISC of all share certificates then
outstanding in the name of such shareholder, properly
endorsed by
him. 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
MIISC. If all shares held by the investor are
liquidated at any
time, the Withdrawal Plan will terminate automatically.
The
Trust or MIMI may terminate the Withdrawal Plan at any
time after
reasonable notice to shareholders.
GROUP SYSTEMATIC INVESTMENT PROGRAM
Shares of 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.
PORTFOLIO TRANSACTIONS
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.
TRUSTEES AND OFFICERS
The Trustees and Executive Officers of the Trust,
their
business addresses and principal occupations during the
past five
years are:
Position
with the Business
Affiliations
Name, Address, Age Trust and Principal
Occupations
John S. Anderegg, Jr. Trustee Chairman,
Dynamics
60 Concord Street Research Corp.
instruments
Wilmington, MA 01887 and controls);
Director,
Age: 71 Burr-Brown Corp.
(operational
amplifiers);
Director,
Metritage
Incorporated
(level
measuring
instruments);
Trustee of
Mackenzie Series
Trust
(1992-present).
Paul H. Broyhill Trustee Chairman, BMC
Fund, Inc.
800 Hickory Blvd. (1983-present);
Chairman,
Golfview Park Broyhill Family
Foundation,
Lenoir, NC 28645 Inc. (1983-
Present);
Age: 71 Chairman and
President,
Broyhill
Investments, Inc.
(1983-present);
Chairman,
Broyhill Timber
Resources
(1983-present);
Management
of a personal
portfolio of
fixed-income and
equity
investments
(1983-present);
Trustee of
Mackenzie Series
Trust
(1988-present);
Director of The
Mackenzie
Funds Inc.
(1988-1995).
Frank W. DeFriece, Jr. Trustee Director, Manager
and Vice
322 Seventh Street President,
Massengill-
Bristol, TN 37620-2218 DeFriece
Foundation
Age:74 (charitable
organization)
(1950-present);
Trustee and
Second Vice
Chairman, East
Tennessee Public
Communications
Corp. (WSJK-
TV)
(1984-present); Trustee
of Mackenzie
Series Trust
(1985-present);
Director of
The Mackenzie
Funds Inc.
(1987-1995).
Michael G. Landry, Trustee President,
Chairman and
700 South Federal Hwy. and Director of
Mackenzie
Suite 300 President Investment
Management Inc.
Boca Raton, FL 33432 (1987-present);
Age: 49* President and
Director of
[Deemed to be an Ivy Management,
Inc. (1992-
"interested person" present);
Chairman and
of the Trust, as Director of
Mackenzie Ivy
defined under the Investor Services
Corp.
1940 Act.] (1993-present);
Director
and President of
Mackenzie
Ivy Funds
Distribution,
Inc. (1993-1994);
Chairman
and Director of
Mackenzie
Ivy Funds
Distribution,
Inc.
(1994-present);
Director and
President of
The Mackenzie
Funds Inc.
(1987-1995);
Trustee and
President of
Mackenzie
Series Trust
(1987-
present).
Michael R. Peers Trustee Chairman of the
Board,
c/o Brattle, Inc. and Ivy Management,
Inc.
176 Federal Street, Chairman (1984-1991);
Chairman
5th Floor of the of the Board, Ivy
Fund
Boston, MA 02110 Board (1974-present);
Private
Age: 66* Investor.
[Deemed to be an
"interested person"
of the Trust, as
defined under the
1940 Act.]
Joseph G. Rosenthal Trustee Chartered
Accountant
110 Jardin Drive (1958-present);
Trustee
Unit #12 of Mackenzie
Series
Concord, Ontario Canada Trust
(1985-present);
L4K 2T7 Director of The
Mackenzie
Age: 61 Funds Inc.
(1987-1995).
Richard N. Silverman Trustee Formerly
President,
18 Bonnybrook Road Hy-Sil
Manufacturing
Waban, MA 02168 Company, a
division of
Age: 71 Van Leer, U.S.A.,
Inc.
(gift packaging
materials
and metalized
film
products);
Formerly
Director, Waters
Manufacturing Co.
(manufacturer of
electronic
parts); Director,
Panorama
Television
Network.
J. Brendan Swan Trustee President,
Airspray
4701 North Federal Hwy. International,
Inc.;
Suite 465 Joint Managing
Director,
Pompano Beach, FL 33064 Airspray
International
Age: 65 B.V. (an
environmentally
sensitive
packaging
company);
Director, The
Mackenzie Funds
Inc. (1992-
1995); Trustee of
Mackenzie
Series Trust
(1992-
present).
Keith J. Carlson Vice Senior Vice
President
700 South Federal Hwy. President and Director of
Mackenzie
Suite 300 Investment
Management,
Boca Raton, FL 33432 Inc.
(1994-present);
Age: 39 Senior Vice
President,
Secretary and
Treasurer of
Mackenzie
Investment
Management Inc.
(1985-
1994); Senior
Vice
President and
Director of
Ivy Management,
Inc. (1994-
present); Senior
Vice
President,
Treasurer and
Director of Ivy
Management,
Inc. (1992-1994);
Vice
President of The
Mackenzie
Funds Inc.
(1987-1995);
President and
Director of
Mackenzie Ivy
Investor
Services Corp.
(1993-
present); Vice
President of
Mackenzie Series
Trust
(1994-present);
Treasurer
of Mackenzie
Series Trust
(1985-1994);
President and
Director of
Mackenzie Ivy
Funds
Distribution, Inc.
(1994-present);
Executive
Vice President
and Director
of Mackenzie Ivy
Funds
Distribution,
Inc. (1993-
1994).
C. William Ferris Secretary/ Senior Vice
President,
700 South Federal Hwy. Treasurer
Secretary/Treasurer
Suite 300 and Director of
Boca Raton, FL 33432 Mackenzie
Investment
Age: 51 Management Inc.
(1994-
present); Senior
Vice
President,
Finance and
Administration/Compliance
Officer of
Mackenzie
Investment
Management Inc.
(1989-1994);
Senior Vice
President,
Secretary/Treasurer and
Clerk of Ivy
Management,
Inc.
(1994-present); Senior
Vice President,
Finance and
Administration/Compliance
Officer of Ivy
Management,
Inc. (1992-1994);
Senior
Vice President,
Secretary/Treasurer and
Clerk of Ivy
Management,
Inc. (1989-1994);
Senior
Vice President,
Secretary/Treasurer of
Mackenzie Ivy
Funds
Distribution,
Inc. (1994-
present);
Secretary/Treasurer and
Director of
Mackenzie Ivy
Funds
Distribution, Inc.
(1993-1994);
Secretary/Treasurer and
Director of
Mackenzie Ivy
Investor Services
Corp.
(1993-present);
Secretary/Treasurer of The
Mackenzie Funds
Inc. (1993-
1995);
Secretary/Treasurer
of Mackenzie
Series Trust
(1994-present).
As of December 8, 1995, the officers and Trustees
of the
Trust as a group owned 2.44% of the outstanding shares
of the
Fund.
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)
Pension or
Retirement
Total
Benefits Estimated
Compensat
Aggregate Accrued as Annual
ion from
Compen- Part of Benefits
Trust
Name, sation Fund Upon
Paid to
Position From Trust Expenses Retirement
Trustees
John S. 7,112 N/A N/A
7,112
Anderegg, Jr.
(Trustee)
Paul H. 7,112 N/A N/A
7,112
Broyhill
(Trustee)
Frank W. 7,112 N/A N/A
7,112
DeFriece, Jr.
(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
7,112
Rosenthal
(Trustee)
Richard N. 8,000 N/A N/A
8,000
Silverman
(Trustee)
J. Brendan 7,112 N/A N/A
7,112
Swan
(Trustee)
Keith J. - 0 - N/A N/A
- 0 -
Carlson
(Vice President)
C. William - 0 - N/A N/A
- 0 -
Ferris
(Secretary/Treasurer)
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, 1994, 1993 and
1992, the
Fund paid IMI $107,960, $91,931 and $73,205,
respectively (of
which IMI reimbursed $105,984, $164,323 and $137,936,
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 26, 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
MIFDI 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").1
[Effective October 1, 1993, MIFDI, 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.] MIFDI
distributes Fund shares through broker-dealers who are
members of
the National Association of Securities Dealers, Inc.
and who have
executed dealer agreements with MIFDI. MIFDI
distributes Fund
shares on a continuous basis, but reserves the right to
suspend
or discontinue distribution on such basis. MIFDI is
not
obligated to sell any specific amount of Fund shares.
Pursuant
to the Distribution Agreement, the Fund bears, among
other
expenses, the expenses of registering and qualifying
its shares
for sale under federal and state securities laws and
preparing
and distributing to existing shareholders periodic
reports, proxy
materials and Prospectuses. 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 MIFDI on 60 days' written notice to
the Trust
or by the Fund by vote of either a majority of the
outstanding
voting securities of the Fund or a majority of the
Independent
Trustees on 60 days' written notice to MIFDI. The
Distribution
Agreement shall terminate automatically in the event of
its
assignment.
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. The purpose of this redesignation 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 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 and Class B
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 period from March 1, 1992 through
December 31,
1992, the fiscal years ended December 31, 1993 and
1994, and the
six months ended June 30, 1995, the Fund paid MIMI
$16,100,
$27,783, $30,023 and $14,980, respectively, for such
services.
TRANSFER AND DIVIDEND PAYING AGENT
MIISC, 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 MIISC an annual fee of $22.00
per open
account and $4.36 for each account that is closed. The
Fund also
reimburses MIISC monthly for out-of-pocket expenses.
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 six months ended June 30,
1995 and the
fiscal years ended December 31, 1994, 1993 and 1992,
the Fund
paid MIMI $13,012, $26,990, $22,981 and $18,300,
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 Class A and B 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, Ivy New Century
Fund and Ivy
Short-Term Bond Fund. The Trustees have also
authorized Class I
shares for Ivy Short-Term Bond Fund, Ivy Bond Fund and
Ivy
International Fund, as well as Class C shares for Ivy
Growth with
Income Fund (issued only to shareholders of Mackenzie
Growth &
Income Fund, a former series of The Mackenzie Funds
Inc., in
connection with the reorganization between that fund
and Ivy
Growth with Income Fund and not offered for sale to the
public).
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.
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 November 30,
1995, no
shareholder owned of record or beneficially 5% or more
of the
Fund's outstanding shares, except that Bank of New York
(custodian) FBO Equity League Pension Fund, 52 William
Street,
5th Floor, New York, New York 10286, owned of record
1,501,672.060 shares (5.85%); and Amalgamated Bank of
New York
(custodian) FBO New York Hotel Trades & Hotel
Associates of New
York City, Inc. Pension Fund, owned of record
1,283,047.750
shares (5.00%).
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. 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.
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, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Veterans Day, Thanksgiving
Day and
Christmas Day. On those days when either or both of
the Fund's
Custodian or the New York Stock Exchange close early as
a result
of such day being a partial holiday or otherwise, the
right is
reserved to advance the time on that day by which
purchase and
redemption requests must be received.
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 MIISC. 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 issued after July 18,
1984 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 current and effective 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 Fund also may advertise a quotation of
effective yield
together with its current yield. Effective yield is
computed by
compounding the unannualized base period return (as
determined in
the preceding paragraph) by adding 1 to the base period
return,
raising the sum to a power equal to 365 divided by 7,
and
subtracting 1 from the result, according to the
following
formula:
Effective Yield = (base period return + 1)365/7 -
1
The Fund's current yield and effective yield for
the seven-
day period ended June 30, 1995 were 4.99% and 5.11%,
respectively. IMI currently reimburses the Fund to
limit
ordinary operating expenses to 0.85% of average net
assets.
Without reimbursement, the Fund's current yield and
effective
yield for this period would have been 3.55% and 3.61%,
respectively.
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 Portfolio of Investments as of June 30, 1995,
the
Statement of Assets and Liabilities as of June 30,
1995, the
Statement of Operations for the six months ended June
30, 1995,
the Statement of Changes in Net Assets for the six
months ended
June 30, 1995 and the fiscal year ended December 31,
1994,
Financial Highlights, and the Notes to Financial
Statements are
included in the Fund's June 30, 1995 Semi-Annual Report
to
Shareholders (unaudited) (the "Semi-Annual Report"),
which is
incorporated by reference into this SAI. The Portfolio
of
Investments as of December 31, 1994, the Statement of
Assets and
Liabilities as of December 31, 1994, the Statement of
Operations
for the fiscal year ended December 31, 1994, the
Statement of
Changes in Net Assets for the fiscal years ended
December 31,
1994 and December 31, 1993, Financial Highlights, the
Notes to
Financial Statements, and Report of Independent
Accountants are
included in the Fund's December 31, 1994 Annual Report
to
Shareholders (the "Annual Report"), which is also
incorporated by
reference into this SAI. Copies of the Semi-Annual
Report and
the Annual Report may be obtained upon request and
without charge
from the Trust at the Distributor's address and
telephone number
provided on the cover page of this SAI.
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE
BOND AND
COMMERCIAL PAPER RATINGS
[From "Moody's Bond Record," November 1994 Issue
(Moody's
Investor Service, New York, 1994), and "Standard &
Poor's
Municipal Ratings Handbook," October 1994 Issue (McGraw
Hill, New
York, 1994).]
MOODY'S:
(a) CORPORATE BONDS. Bonds rated Aaa by Moody's
are judged
by Moody's to be of the best quality, carrying the
smallest
degree of investment risk. Interest payments are
protected by a
large or exceptionally stable margin and principal is
secure.
Bonds rated Aa are judged by Moody's to be of high
quality by all
standards. Aa bonds are rated lower than Aaa bonds
because
margins of protection may not be as large as those of
Aaa bonds,
or fluctuations of protective elements may be of
greater
amplitude, or there may be other elements present which
make the
long-term risks appear somewhat larger than those
applicable to
Aaa securities. Bonds which are rated A by Moody's
possess many
favorable investment attributes and are considered as
upper
medium-grade obligations. Factors giving security to
principal
and interest are considered adequate, but elements may
be present
which suggest a susceptibility to impairment sometime
in the
future.
Bonds rated Baa by Moody's are considered
medium-grade
obligations, i.e., they are neither highly protected
nor poorly
secured. Interest payments and principal security
appear
adequate for the present, but certain protective
elements may be
lacking or may be characteristically unreliable over
any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as
well. Bonds which are rated Ba are judged to have
speculative
elements; their future cannot be considered
well-assured. Often
the protection of interest and principal payments may
be very
moderate and thereby not well safeguarded during both
good and
bad times over the future. Uncertainty of position
characterizes
bonds in this class. Bonds which are rated B generally
lack
characteristics of the desirable investment. Assurance
of
interest and principal payments of or maintenance of
other terms
of the contract over any long period of time may be
small.
Bonds which are rated Caa are of poor standing.
Such
issues may be in default or there may be present
elements of
danger with respect to principal or interest. Bonds
which are
rated Ca represent obligations which are speculative in
a high
degree. Such issues are often in default or have other
marked
shortcomings. Bonds which are rated C are the lowest
rated class
of bonds and issues so rated can be regarded as having
extremely
poor prospects of ever attaining any real investment
standing.
(b) COMMERCIAL PAPER. The Prime rating is the
highest
commercial paper rating assigned by Moody's. Among the
factors
considered by Moody's in assigning ratings are the
following:
(1) evaluation of the management of the issuer; (2)
economic
evaluation of the issuer's industry or industries and
an
appraisal of speculative-type risks which may be
inherent in
certain areas; (3) evaluation of the issuer's products
in
relation to competition and customer acceptance; (4)
liquidity;
(5) amount and quality of long-term debt; (6) trend of
earnings
over a period of ten years; (7) financial strength of a
parent
company and the relationships which exist with the
issuer; and
(8) recognition by management of obligations which may
be present
or may arise as a result of public interest questions
and
preparations to meet such obligations. Issuers within
this Prime
category may be given ratings 1, 2 or 3, depending on
the
relative strengths of these factors. The designation
of Prime-1
indicates the highest quality repayment capacity of the
rated
issue.
S&P:
(a) CORPORATE BONDS. An S&P corporate debt
rating is a
current assessment of the creditworthiness of an
obligor with
respect to a specific obligation. The ratings are
based on
current information furnished by the issuer or obtained
by S&P
from other sources it considers reliable. The ratings
described
below may be modified by the addition of a plus or
minus sign to
show relative standing within the major rating
categories.
Debt rated AAA by S&P is considered by S&P to be
the highest
grade obligation. Capacity to pay interest and repay
principal
is extremely strong. Debt rated AA is judged by S&P to
have a
very strong capacity to pay interest and repay
principal and
differs from the highest rated issues only in small
degree. Debt
rated A by S&P has a strong capacity to pay interest
and repay
principal, although it is somewhat more susceptible to
the
adverse effects of changes in circumstances and
economic
conditions than debt in higher rated categories.
Debt rated BBB by S&P is regarded by S&P as having
an
adequate capacity to pay interest and repay principal.
Although
such bonds normally exhibit adequate protection
parameters,
adverse economic conditions or changing circumstances
are more
likely to lead to a weakened capacity to pay interest
and repay
principal than debt in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as
having
predominately speculative characteristics with respect
to
capacity to pay interest and repay principal. BB
indicates the
least degree of speculation and C the highest. While
such debt
will likely have some quality and protective
characteristics,
these are outweighed by large uncertainties or
exposures to
adverse conditions. Debt rated BB has less near-term
vulnerability to default than other speculative issues.
However,
it faces major ongoing uncertainties or exposure to
adverse
business, financial or economic conditions which could
lead to
inadequate capacity to meet timely interest and
principal
payments. The BB rating category is also used for debt
subordinated to senior debt that is assigned an actual
or implied
BBB- rating. Debt rated B has a greater vulnerability
to default
but currently has the capacity to meet interest
payments and
principal repayments. Adverse business, financial, or
economic
conditions will likely impair capacity or willingness
to pay
interest and repay principal. The B rating category is
also used
for debt subordinated to senior debt that is assigned
an actual
or implied BB or BB- rating. Debt rated CCC has a
currently
identifiable vulnerability to default, and is dependent
upon
favorable business, financial, and economic conditions
to meet
timely payment of interest and repayment of principal.
In the
event of adverse business, financial or economic
conditions, it
is not likely to have the capacity to pay interest and
repay
principal. The CCC rating category is also used for
debt
subordinated to senior debt that is assigned an actual
or implied
B or B- rating. The rating CC typically is applied to
debt
subordinated to senior debt which is assigned an actual
or
implied CCC debt rating. The rating C typically is
applied to
debt subordinated to senior debt which is assigned an
actual or
implied CCC- debt rating. The C rating may be used to
cover a
situation where a bankruptcy petition has been filed,
but debt
service payments are continued.
(b) COMMERCIAL PAPER. An S&P commercial paper
rating is a
current assessment of the likelihood of timely payment
of debt
having an original maturity of no more than 365 days.
Commercial paper rated A by S&P has the following
characteristics: (i) liquidity ratios are adequate to
meet cash
requirements; (ii) long-term senior debt rating should
be A or
better, although in some cases BBB credits may be
allowed if
other factors outweigh the BBB; (iii) the issuer should
have
access to at least one additional channel of borrowing;
(iv)
basic earnings and cash flow should have an upward
trend with
allowances made for unusual circumstances; and (v)
typically the
issuer's industry should be well established and the
issuer
should have a strong position within its industry and
the
reliability and quality of management should be
unquestioned.
Issues rated A are further referred to by use of
numbers 1, 2 and
3 to denote relative strength within this highest
classification.
For example, the A-1 designation indicates that the
degree of
safety regarding timely payment of debt is strong.
Issues rated B are regarded as having only
speculative
capacity for timely payment. The C rating is assigned
to short-
term debt obligations with a doubtful capacity for
payment.
