<PAGE> 1
Ivy Funds Logo
This is your prospectus from
IVY MACKENZIE
DISTRIBUTORS, INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
800.456.5111
May 3, 1999 EMERGING MARKET FUNDS
IVY ASIA PACIFIC FUND
IVY CHINA REGION FUND
IVY DEVELOPING NATIONS FUND
IVY SOUTH AMERICA FUND
Ivy Fund is a registered open-end investment company consisting of
nineteen separate portfolios. This Prospectus relates to the Class A,
Class B and Class C shares of the four funds listed above (the "Funds").
The Funds also offer Advisor Class shares, which are described in a
separate prospectus.
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy or accuracy of this
Prospectus. Any representation to the contrary is a criminal offense.
Investments in the Funds are not deposits of any bank and are not
federally insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
-- CONTENTS
2 Ivy Asia Pacific Fund
4 Ivy China Region Fund
6 Ivy Developing Nations Fund
8 Ivy South America Fund
11 Additional information
about investment strategies
and risks
15 Management
16 Shareholder information
22 Financial highlights
29 Account application
<TABLE>
<S> <C>
OFFICERS
Michael G. Landry, Chairman
Keith J. Carlson, President
James W. Broadfoot, Vice President
C. William Ferris,
Secretary/Treasurer
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, Massachusetts
CUSTODIAN AUDITORS
Brown Brothers Harriman & Co. PricewaterhouseCoopers LLP
Boston, Massachusetts Fort Lauderdale, Florida
TRANSFER AGENT INVESTMENT MANAGER
Ivy Mackenzie Services Corp. Ivy Management, Inc.
PO Box 3022 700 South Federal Highway
Boca Raton, Florida 33431-0922 Boca Raton, Florida 33432
800.777.6472 800.456.5111
</TABLE>
Mackenzie Logo
<PAGE> 2
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY ASIA PACIFIC FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
ASIA PACIFIC
FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term growth. Consideration of
current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in equity securities issued in Asia
Pacific countries, which include China, Hong Kong, India, Indonesia, Malaysia,
Pakistan, the Philippines, Singapore, Sri Lanka, South Korea, Taiwan, Thailand
and Vietnam.
The Fund's management team uses a value strategy to identify companies and
markets that have solid long-term growth prospects and appear to be undervalued.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the securities markets of many Asia-Pacific
countries fall into this category, the Fund is exposed to the following
additional risks:
- - securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange-rate regime or monetary policy;
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
REGIONAL RISK: Investing in the Asia-Pacific region involves special risks
beyond those described above. For example, certain Asia-Pacific countries may be
vulnerable to trade barriers and other protectionist measures that could have an
adverse effect on the value of the Fund's portfolio. The limited size of the
markets for some Asia-Pacific securities can also make them more susceptible to
investor perceptions which can impact their value and liquidity.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors who are seeking long term growth
potential in this sector of the world, but who can accept potentially dramatic
fluctuations in capital value in the short-term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
2
<PAGE> 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on January 1, 1997 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES* December 31
-------------------------------------------------------------
<S> <C>
(CHART)
'97' -39.58
- ---- ------
'98' -6.86
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q4 '98: 43.90%
Worst quarter Q2 '98: (34.21%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
--------------------------------------------------------------------------
LIPPER
MSCI FAR ASIA
EAST FREE PACIFIC
(EX-JAPAN) (EX-JAPAN)
CLASS A CLASS B CLASS C INDEX CATEGORY
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Past year............ (12.21%) (12.10%) (8.29%) (7.39%) (9.05%)
Since Inception*..... (27.29%) (27.09%) (28.60%) (28.94%) (23.78%)
</TABLE>
#Performance figures reflect any applicable sales charges.
*The inception date for all Classes was January 1, 1997.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- ---------------------------------------------------------
CLASS A CLASS B CLASS C
- ---------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases (as a
percentage of offering
price)...................... 5.75% none none
Maximum deferred sales
charge (load)(as a
percentage of purchase
price)...................... none 5.00% 1.00%
Maximum sales charge (load)
imposed on reinvested
dividends................... none none none
Redemption fee*............. 2.00%** none none
Exchange fee................ none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
**Deducted from net proceeds on shares redeemed (or exchanged)
within one month after purchase. This fee is retained by the Fund.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------------
CLASS A CLASS B CLASS C
- ---------------------------------------------------------
<S> <C> <C> <C>
Management fees............. 1.00% 1.00% 1.00%
Distribution and/or service
(12b-1) fees................ 0.25% 1.00% 1.00%
Other expenses.............. 4.28% 4.41% 4.30%
Total annual Fund
operating expenses.......... 5.53% 6.41% 6.30%
Expenses reimbursed*........ 3.38% 3.38% 3.38%
Net Fund
operating expenses*......... 2.15% 3.03% 2.92%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
-----------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1st $ 780 $ 806 $ 306 $ 395 $ 295
3rd 1,315 1,346 1,046 1,013 1,013
5th 1,875 2,087 1,807 1,754 1,754
10th 3,392 3,611 3,611 3,708 3,708
</TABLE>
3
<PAGE> 4
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY CHINA REGION FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
CHINA REGION
FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the equity securities of
companies that are located or have a substantial business presence in the China
Region, which includes China, Hong Kong, Taiwan, South Korea, Singapore,
Malaysia, Thailand, Indonesia and the Philippines.
The Fund may also invest in equity securities of companies whose current or
expected performance is considered to be strongly associated with the China
Region. A large portion of the Fund is likely to be invested in equity
securities of companies that trade in Hong Kong.
The Fund's management team uses a value approach to find stocks it believes are
undervalued relative to their long-term growth prospects.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the securities markets of many China Region
countries may be considered "developing", the Fund may be exposed to one or more
of the following additional risks:
- - securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange-rate regime or monetary policy;
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
REGIONAL RISK: Mainland China may be subject to a much higher degree of
economic, political and social instability than more developed countries, which
could at any time result in the disruption of its principal financial markets
(and to a lesser extent, those of other China Region countries). A number of
China Region countries also depend heavily on international trade, which makes
their securities markets particularly sensitive to the trade policies and
economic conditions of their principal trading partners.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors who are seeking long-term growth
potential in this sector of the world, but who can accept potentially dramatic
fluctuations in capital value in the short-term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
4
<PAGE> 5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on October 22, 1993 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES* December 31
- -------------------------------------------------------------------
<S> <C>
(CHART)
'94' -24.88
- ---- ------
'95' 1.59
'96' 20.50
'97' -21.94
'98' -20.56
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q4 '98: 25.48%
Worst quarter Q4 '97: (30.21%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
-----------------------------------------------------------------------------------------
LIPPER
CLASS CHINA HANG MSCI IFC
---------------------------- REGION SENG TAIWAN CHINA
A B C CATEGORY INDEX INDEX INDEX
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Past year............ (25.13%) (24.99%) (21.81%) (17.51%) (6.29%) (22.35%) (22.59%)
Past 5 years......... (11.68%) (11.63%) n/a (11.54%) (3.31%) 0.57% 2.95%
Since inception:
Class A & B*......... (8.76%) (8.55%) n/a (8.05%)** 2.77% 9.93% 2.72%
Class C***........... n/a n/a (13.93%) (12.22%) (3.21%) (1.19%) 18.37%
</TABLE>
#Performance figures reflect any applicable sales charges.
*The inception date for the Fund's Class A and Class B shares was October
22, 1993.
**Since October 28, 1993
***The inception date for the Fund's Class C shares was April 30, 1996.
-- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)................. 5.75% none none
Maximum deferred sales
charge (load)(as a
percentage of purchase
price)................. none 5.00% 1.00%
Maximum sales charge
(load) imposed on
reinvested dividends... none none none
Redemption fee*........ 2.00%** none none
Exchange fee........... none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
**Deducted from net proceeds on shares redeemed (or exchanged)
within one month after purchase. This fee is retained by the Fund.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Management fees........ 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1) fees... 0.25% 1.00% 1.00%
Other expenses......... 1.51% 1.54% 1.44%
Total annual Fund
operating expenses..... 2.76% 3.54% 3.44%
Expenses reimbursed*... 0.56% 0.56% 0.56%
Net Fund
operating expenses*.... 2.20% 2.98% 2.88%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1st $ 785 $ 801 $ 301 $ 391 $ 291
3rd 1,329 1,331 1,031 1,001 1,001
5th 1,898 1,982 1,782 1,735 1,735
10th 3,436 3,587 3,587 3,671 3,671
</TABLE>
5
<PAGE> 6
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY DEVELOPING NATIONS FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
DEVELOPING
NATIONS FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term growth. Consideration of
current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in equity securities of companies
that are located in, or are expected to profit from, countries whose markets
are generally considered to be "developing" or "emerging".
The Fund may invest more than 25% of its assets in a single country, but usually
will hold securities from at least three emerging market countries in its
portfolio.
The Fund's management team uses a value approach to find stocks it believes are
undervalued relative to their long-term growth prospects.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the Fund normally invests a substantial portion of
its assets in these countries, it is exposed to the following additional risks:
- - securities that are even less liquid and more volatile than those in more
developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange-rate regime or monetary policy;
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors who are seeking long-term growth
potential in the developing nations sector, but who can accept potentially
dramatic fluctuations in capital value in the short-term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
6
<PAGE> 7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on November 1, 1994 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES* December 31
- -------------------------------------------------------------------
(Chart)
<S> <C>
'95' 6.40%
'96' 11.83
'97' -27.42
'98' -11.67
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q4 '98: 29.00%
Worst quarter Q4 '97: (27.28%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
---------------------------------------------------------------------------------
MSCI IFC MORNINGSTAR
CLASS EMERGING EMERGING EMERGING
------------------------- MARKETS MARKETS MARKETS
A B C FREE INDEX INDEX UNIVERSE
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Past year............ (16.75%) (16.73%) (13.16%) (26.34%) (21.09%) (26.82%)
Since inception:
Class A & B*......... (10.76%) (10.60%) n/a (12.30%) (12.35%) (9.09%)
Class C**............ n/a n/a (15.22%) (15.50%) (15.71%) (12.23%)
</TABLE>
#Performance figures reflect any applicable sales charges.
*The inception date for the Fund's Class A and Class B shares was November
1, 1994.
**The inception date for the Fund's Class C shares was April 30, 1996.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases (as a
percentage of offering
price)..................... 5.75% none none
Maximum deferred sales
charge (load)(as a
percentage of purchase
price)..................... none 5.00% 1.00%
Maximum sales charge (load)
imposed on reinvested
dividends.................. none none none
Redemption fee*............ 2.00%** none none
Exchange fee............... none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
**Deducted from net proceeds on shares redeemed (or exchanged)
within one month after purchase. This fee is retained by the Fund.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
CLASS A CLASS B CLASS C
- --------------------------------------------------
<S> <C> <C> <C>
Management fees........ 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1) fees... 0.25% 1.00% 1.00%
Other expenses......... 2.22% 2.25% 2.25%
Total annual Fund
operating expenses..... 3.47% 4.25% 4.25%
Expenses reimbursed*... 1.29% 1.29% 1.29%
Net Fund
operating expenses*.... 2.18% 2.96% 2.96%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be as
follows:
EXAMPLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1st $ 783 $ 799 $ 299 $ 399 $ 299
3rd 1,325 1,326 1,026 1,026 1,026
5th 1,891 1,975 1,775 1,775 1,775
10th 3,422 3,573 3,573 3,747 3,747
</TABLE>
7
<PAGE> 8
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY SOUTH AMERICA FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
SOUTH AMERICA
FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal objective is long-term growth. Consideration of current
income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in equity securities and government
and corporate debt securities issued throughout South America, Central America
and the Spanish-speaking islands of the Caribbean.
The Fund is likely to have significant investments in Argentina, Brazil, Chile,
Colombia, Peru and Venezuela.
The Fund may invest in low rated debt securities to increase its potential
yield.
The Fund's management team uses a value approach to find stocks it believes are
undervalued relative to their long-term growth prospects or underlying asset
values.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
INTEREST RATE RISK: The Fund's debt security investments are susceptible to
decline in a rising interest rate environment.
CREDIT RISK: The market value of debt securities also tends to vary according to
the relative financial condition of the issuer. Many of the Fund's debt security
holdings may be considered below investment grade (commonly referred to as "high
yield" or "junk" bonds). Low-rated debt securities are considered speculative
and could significantly weaken the Fund's returns if the issuer defaults on its
payment obligations.
NON-DIVERSIFICATION RISK: The Fund is classified as "non-diversified" under the
Investment Company Act of 1940, and may therefore invest a greater percentage of
its assets in a particular issuer than a "diversified" fund. As a result, the
Fund may also be more susceptible than a diversified fund to the price movements
of certain securities it holds in its portfolio.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
8
<PAGE> 9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The risks of investing in foreign securities are more acute in countries with
developing economies, which characterizes many of the countries in which the
Fund may invest. As a result, the Fund is exposed to the following additional
risks:
- - securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange-rate regime or monetary policy;
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
REGIONAL RISK: The securities markets of certain Latin American countries are
substantially smaller, less developed, less liquid and more volatile than major
securities markets elsewhere in the world. For example, the limited market size
for a number of the Fund's portfolio holdings makes their prices vulnerable to
investor perceptions and traders who control large positions. Some Latin
American countries have also experienced unusually high inflation rates.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential in
this sector of the world, but who can accept potentially dramatic fluctuations
in capital value in the short-term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
- -- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some
indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and how the Fund's
average annual returns since its inception on November 1, 1994
compare with those of a broad measure of market performance. The
Fund's past performance is not an indication of how the Fund will
perform in the future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES* December 31
- -------------------------------------------------------
(CHART)
<S> <C>
'95' -17.28
'96' 24.22
'97' 7.03
'98' -36.07
</TABLE>
*Any applicable sales charges and account fees are not reflected,
and if they were the returns shown above would be lower. The
returns for the Fund's other classes of shares during these
periods were different from those of Class A because of variations
in their respective expense structures.
Best quarter Q2 '96: 14.34%
Worst quarter Q3 '98: (30.26%)
9
<PAGE> 10
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY SOUTH AMERICA FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
-----------------------------------------------------------
SINCE INCEPTION
PAST ------------------------
YEAR CLASS A & B* CLASS C**
-----------------------------------------------------------
<S> <C> <C> <C>
Class A................ (39.74%) (13.13%) n/a
Class B................ (39.76%) (13.00%) n/a
Class C................ (37.69%) n/a (11.75%)
MSCI EMF Latin America
Index.................. (35.11%) (6.61%) (2.28%)
MSCI Brazil Index...... (44.07%) (8.88%) (5.58%)
MSCI Argentina Index... (27.30%) (2.00%) (2.03%)
</TABLE>
#Performance figures reflect any applicable sales charges.
*The inception date for the Fund's Class A and Class B shares was November
1, 1994.
**The inception date for the Fund's Class C shares was April 30, 1996.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- --------------------------------------------------------------
CLASS A CLASS B CLASS C
- --------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases (as a
percentage of offering price).... 5.75% none none
Maximum deferred sales charge
(load)(as a percentage of
purchase price).................. none 5.00% 1.00%
Maximum sales charge (load)
imposed on reinvested
dividends........................ none none none
Redemption fee*.................. 2.00%** none none
Exchange fee..................... none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
**Deducted from net proceeds on shares redeemed (or exchanged)
within one month after purchase. This fee is retained by the Fund.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ------------------------------------------------------------------
CLASS A CLASS B CLASS C
- --------------------------------------------------------------
<S> <C> <C> <C>
Management fees.................. 1.00% 1.00% 1.00%
Distribution and/or service
(12b-1) fees..................... 0.25% 1.00% 1.00%
Other expenses................... 3.64% 3.69% 3.72%
Total annual Fund
operating expenses............... 4.89% 5.69% 5.72%
Expenses reimbursed*............. 2.71% 2.71% 2.71%
Net Fund
operating expenses*.............. 2.18% 2.98% 3.01%
</TABLE>
*The Fund's Manager has agreed to reimburse the Fund's expenses for
the current fiscal year to the extent necessary to ensure that the
Fund's Annual Fund Operating Expenses, when calculated at the Fund
level, do not exceed 1.95% of the Fund's average net assets
(excluding 12b-1 fees and taxes). For each of the following nine
years, the Investment Manager will ensure that these expenses do
not exceed 2.50% of the Fund's average net assets.
------------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1st $ 783 $ 801 $ 301 $ 404 $ 304
3rd 1,325 1,332 1,032 1,041 1,041
5th 1,891 1,985 1,785 1,799 1,799
10th 3,423 3,587 3,587 3,792 3,792
</TABLE>
10
<PAGE> 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
ABOUT INVESTMENT
STRATEGIES AND RISKS
- -- PRINCIPAL STRATEGIES
IVY ASIA PACIFIC FUND: The Fund seeks to achieve its investment objective of
long-term growth by investing primarily in securities issued in countries
throughout the Asia Pacific region, which includes China, Hong Kong, India,
Indonesia, Malaysia, Pakistan, the Philippines, Singapore, Sri Lanka, South
Korea, Taiwan, Thailand and Vietnam. The Fund usually invests in at least three
different countries, and does not intend to concentrate its investments in any
particular industry.
IVY CHINA REGION FUND: The Fund seeks to achieve its investment objective of
long-term capital growth primarily by investing in the equity securities of
companies that are expected to profit from the economic development and growth
of the China Region through a direct business connection (such as an exchange
listing or significant profit base) in one or more China Region countries. The
Fund may invest more than 25% of its assets in the securities of issuers in a
single China Region country, and could have significantly more than 50% of its
assets invested in Hong Kong. The Fund expects to invest the balance of its
assets in the equity securities of companies whose current or expected
performance is considered to be strongly associated with the China Region. The
Fund's management team seeks to reduce risk by focusing on companies with strong
foreign joint venture partners, well-positioned consumer franchises or
monopolies, or that operate in strategic or protected industries.
IVY DEVELOPING NATIONS FUND: The Fund seeks to achieve its principal objective
of long-term capital growth by investing primarily in the equity securities of
companies that the Fund's manager believes will benefit from the economic
development and growth of emerging markets. The Fund considers an emerging
market country to be one that is generally viewed as "developing" or "emerging"
by the World Bank, the International Finance Corporation or the United Nations.
The Fund usually invests its assets in at least three different emerging market
countries, and may invest at least 25% of its assets in the securities of
issuers located in a single country.
IVY SOUTH AMERICA FUND: The Fund seeks to achieve its principal objective of
long-term capital growth by investing primarily in the securities markets of
South America, Mexico and Central America. The Fund normally invests its assets
in at least three different countries, and expects to focus its investments in
Argentina, Brazil, Chile, Colombia, Peru and Venezuela. The Fund's holdings are
concentrated in high-quality companies, selected for both their defensive
strengths and long-term prospects.
The Fund does not expect to concentrate its investments in any particular
industry. The Fund may, however, invest more than 5% of a portion of its assets
in a single issuer (see "Non-diversification risk" on page 8).
ALL FUNDS: The countries in which each Fund invests are selected on the basis of
a mix of factors that include long-term economic growth prospects, anticipated
inflation levels, and the effect of applicable government policies on local
business conditions. The Funds are managed using a value approach which focuses
on financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Typically the securities purchased
are attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
11
<PAGE> 12
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
- -- PRINCIPAL RISKS
GENERAL MARKET RISK:
As with any mutual fund, the value of a Fund's investments and the income they
generate will vary daily and generally reflect market conditions, interest
rates and other issuer-specific, political or economic developments.
Each Fund's share value will decrease at any time during which its security
holdings or other investment techniques are not performing as well as
anticipated, and you could therefore lose money by investing in a Fund depending
upon the timing of your initial purchase and any subsequent redemption.
OTHER RISKS: Since the Funds are likely to invest heavily in countries with
economies or securities markets that are relatively undeveloped, each Fund is
more susceptible to the risks associated with these types of securities than
funds that invest primarily in more established markets. Following is a
description of these risks, along with the risks commonly associated with the
other securities and investment techniques that each Fund's manager considers
important in achieving the Fund's investment objective or in managing its
exposure to risk (and that could therefore have a significant effect on the
Fund's returns). Other investment methods that the Funds may use (such as
derivative investments), but that do not play a key role in their overall
investment strategies, are described in the Funds' Statement of Additional
Information (see back cover page for information on how you can receive a free
copy).
- - COMMON STOCKS: Common stock represents a proportionate ownership interest in a
company. As a result, the value of common stock rises and falls with a
company's success or failure. The market value of common stock can fluctuate
significantly, with smaller companies being particularly susceptible to price
swings. Transaction costs in smaller-company stocks may also be higher than
those of larger companies.
- - DEBT SECURITIES: The Funds may invest in debt securities, and Ivy South
America Fund may at any given time have a significant portion of its assets
invested in such instruments. The value of debt securities generally increases
as interest rates decline. Conversely, rising interest rates tend to cause the
value of debt securities to decrease. A Fund's portfolio is therefore
susceptible to losses in a rising interest rate environment. The market value
of debt securities also tends to vary according to the relative financial
condition of the issuer. Bonds with longer maturities also tend to be more
volatile than bonds with shorter maturities.
A Fund may invest a portion of its assets in low-rated debt securities
(sometimes referred to as "high yield" or "junk" bonds). In general, low-
rated debt securities offer higher yields due to the increased risk that the
issuer will be unable to meet its obligations on interest or principal
payments at the time called for by the debt instrument. For this reason, these
bonds are considered speculative and could significantly weaken a Fund's
returns.
Ivy South America Fund may have significant holdings in sovereign debt. For a
variety of reasons (such as cash flow problems, limited foreign reserves, and
political constraints), the governmental entity that controls the repayment of
sovereign debt may not be able or willing to repay the principal or interest
when due. A governmental entity's ability to honor its debt obligations to the
Fund may also be contingent on its receipt from others (such as the
International Monetary Fund and more solvent foreign governments) of specific
disbursements, which may in turn be conditioned on the perceived health of the
governmental entity's economy and/or its implementation of economic reforms.
If any of these conditions fail, the Fund could lose the entire value of its
investment for an indefinite period of time.
- - FOREIGN SECURITIES: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect each Fund's performance favorably or
unfavorably, depending upon prevailing conditions at any given
12
<PAGE> 13
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
time. For example, the securities markets of many foreign countries may be
smaller, less liquid and subject to greater price volatility than those in the
U.S. Foreign investing may also involve brokerage costs and tax considerations
that are not usually present in the U.S. markets. Many of the Funds'
securities also are denominated in foreign currencies and the value of each
Fund's investments, as measured in U.S. dollars, may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations. Currency conversions can also be costly.
Other factors that can affect the value of a Fund's foreign investments include
the comparatively weak supervision and regulation by some foreign governments of
securities exchanges, brokers and issuers, and the fact that many foreign
companies may not be subject to uniform accounting, auditing and financial
reporting standards. It may also be difficult to obtain reliable information
about the securities and business operations of certain foreign issuers.
Settlement of portfolio transactions may also be delayed due to local
restrictions or communication problems, which can cause a Fund to miss
attractive investment opportunities or impair its ability to dispose of
securities in a timely fashion (resulting in a loss if the value of the
securities subsequently declines).
- - SPECIAL EMERGING-MARKET CONCERNS: The risks of investing in foreign securities
are heightened in countries with new or developing economies. Among these
additional risks are the following:
- - securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - increased settlement delays;
- - unusually high inflation rates (which in extreme cases can cause the value of
a country's assets to erode sharply);
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- - DEPOSITORY RECEIPTS: Each Fund may acquire interests in foreign issuers in the
form of sponsored or unsponsored American Depository Receipts ("ADRs"), Global
Depository Receipts ("GDRs") and similar types of depository receipts. ADRs
typically are issued by a U.S. bank or trust company and represent ownership
of the underlying securities issued by a foreign corporation. GDRs and other
types of depository receipts are usually issued by foreign banks or trust
companies. Each Fund's investments in ADRs, GDRs and other depository receipts
are viewed as investments in the underlying securities.
Depository receipts can be difficult to price and are not always
exchange-listed. Unsponsored depository programs also are organized
independently without the cooperation of the issuer of the underlying
securities. As a result, information concerning the issuer may not be as
current or as readily available as in the case of sponsored depository
instruments, and their prices may be more volatile than if they were sponsored
by the issuers of the underlying securities.
- - FOREIGN CURRENCY EXCHANGE TRANSACTIONS AND FORWARD FOREIGN CURRENCY CONTRACTS:
A Fund may, but is not required to, use foreign currency exchange transactions
and forward foreign currency contracts to hedge certain market risks (such as
interest rates, currency exchange rates and broad or specific market
movement). These investment techniques involve a number of risks, including
the possibility of default by the counterparty to the transaction and, to the
extent the adviser's judgment as to certain market movements is incorrect, the
risk of losses that are greater than if the investment technique had not been
used. For example, there may be an imperfect correlation between a Fund's
portfolio holdings of securities denominated in a particular currency and the
forward contracts entered into by the Fund. An imperfect correlation of this
type may prevent a Fund from achieving the intended hedge or expose the Fund
13
<PAGE> 14
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
to the risk of currency exchange loss. In addition, although the use of these
investment techniques for hedging purposes should tend to minimize the risk of
loss due to a decline in the value of the hedged position, they also tend to
limit any potential gain that might result from an increase in the position's
value.
- - ILLIQUID SECURITIES: Each Fund may invest up to 15% of its net assets in
"illiquid securities," which are assets that may not be disposed of in the
ordinary course of business within seven days at roughly the value at which
the Fund has valued the assets. Some of these may by "restricted securities,"
which cannot be sold to the public without registration under the Securities
Act of 1933 (in the absence of an exemption) or because of other legal or
contractual restrictions on resale. Thus, while illiquid securities may offer
the potential for higher returns than more readily marketable securities,
there is a risk that a Fund will not be able to dispose of them promptly at an
acceptable price.
- - TEMPORARY DEFENSIVE POSITIONS: Each Fund may occasionally take a temporary
defensive position and invest without limit in U.S. Government securities,
investment-grade debt securities, and cash and cash equivalents such as
commercial paper, short-term notes and other money market securities. When a
Fund assumes such a defensive position it may not achieve its investment
objective.
- - BORROWING: For temporary or emergency purposes, Ivy China Region Fund may
borrow up to 10% of the value of its total assets from qualified banks. Ivy
Asia Pacific Fund, Ivy Developing Nations Fund and Ivy South America Fund may
borrow up to one-third of the value of its total assets from qualified banks,
but will not buy securities whenever its outstanding borrowings exceed 10% of
the value of its total assets. Borrowing may exaggerate the effect on a Fund's
share value of any increase or decrease in the value of the securities it
holds. Money borrowed will also be subject to interest costs.
- -- OTHER IMPORTANT INFORMATION
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem").The inability of computer-
based systems to make this distinction could have a seriously adverse effect on
the handling of securities trades, pricing and account services worldwide. The
Funds' service providers are taking steps that each believes are reasonably
designed to address the Year 2000 Problem with respect to the computer systems
that they use. Information about the year 2000 readiness of the issuers of the
securities that the Funds may purchase is also taken into consideration during
the investment decision-making process (though such information may not be
readily available, particularly in non-U.S. countries, and may be limited to
public filings or statements from company representatives that are not
independently verifiable).
The Funds' managers believe these steps will be sufficient to avoid any material
adverse impact on the Funds. At this time, however, there can be no assurance
that significant problems will not occur (which either directly or indirectly
may cause a Fund to lose money).
14
<PAGE> 15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MANAGEMENT
- -- INVESTMENT ADVISOR
Ivy Management, Inc.("IMI")
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
IMI provides investment advisory and business management services to the Funds.
IMI is an SEC-registered investment advisor with over $5 billion in assets under
management, and provides similar services to the other fifteen series of Ivy
Fund. For the Funds' fiscal year ending December 31, 1998, the Funds paid IMI a
fee that was equal to 1.00% of each Funds' respective average net assets.
- -- PORTFOLIO MANAGEMENT
Each Fund is managed by a team of investment professionals that is supported by
research analysts who acquire information on regional and country-specific
economic and political developments and monitor individual companies. These
analysts use a variety of research sources that include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
- - information from third-party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
15
<PAGE> 16
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
SHAREHOLDER
INFORMATION
- -- PRICING OF FUND SHARES
Each Fund calculates its share price by dividing the value of the Fund's net
assets by the total number of its shares outstanding as of the close of regular
trading (usually 4:00 p.m. Eastern time) on the New York Stock Exchange on each
day the Exchange is open for trading (normally any weekday that is not a
national holiday).
Each portfolio security that is listed or traded on a recognized stock exchange
is valued at the security's last sale price on the exchange on which it was
purchased.
If no sale is reported at that time, the average between the last bid and asked
prices is used. Securities and other Fund assets for which market prices are not
readily available are priced at their "fair value" as determined by IMI in
accordance with procedures approved by the Funds' Board of Trustees. IMI may
also price a foreign security at its fair value if events materially affecting
the estimated value of the security occur between the close of the foreign
exchange on which the security is principally traded and the time as of which a
Fund prices its shares. Fair-value pricing under these circumstances is designed
to protect existing shareholders from the actions of short-term investors
trading into and out of a Fund in an attempt to profit from short-term market
movements. When such fair-value pricing occurs, however, there may be some
period of time during which a Fund's share price and/or performance information
is not available.
The number of shares you receive when you place a purchase or exchange order,
and the payment you receive after submitting a redemption request, is based on a
Fund's net asset value ("NAV") next determined after your instructions are
received in proper form by Ivy Mackenzie Services Corp. ("IMSC") (the Fund's
transfer agent) or by your registered securities dealer. Each purchase and
redemption order is subject to any applicable sales charge (see "Choosing the
appropriate class of shares"). Since the Funds normally invest in securities
that are listed on foreign exchanges that may trade on weekends or other days
when the Funds do not price their shares, each Fund's share value may change on
days when shareholders will not be able to purchase or redeem the Fund's shares.
- -- HOW TO BUY SHARES
Purchasing Fund shares involves "Choosing the Appropriate Class of Shares" and
"Submitting Your Purchase Order". Please read these sections carefully before
investing.
CHOOSING THE APPROPRIATE CLASS OF SHARES:
The essential features of the Funds' different classes of shares are described
below. If you do not specify on your Account Application which class of shares
you are purchasing, it will be assumed that you are purchasing Class A shares.
Each Fund has adopted separate distribution plans pursuant to Rule 12b-1 under
the 1940 Act for its Class A, B and C shares that allow the Fund to pay
distribution and other fees for the sale and distribution of its shares and for
services provided to shareholders. Because these fees are paid out of the Fund's
assets on an ongoing basis, over time they will increase the cost of your
investment and may cost you more than paying other types of sales charges.
- - CLASS A SHARES: Class A shares are sold at net asset value plus a maximum
sales charge of 5.75% (the "offering price").The sales charge may be reduced
or eliminated if certain conditions are met (see "Additional Purchase
Information"). Class A shares are subject to a 0.25% Rule 12b-1 service fee.
16
<PAGE> 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- - CLASS B SHARES: Class B shares are offered at net asset value, without an
initial sales charge, but subject to a contingent deferred sales charge
("CDSC") that declines from 5% to zero on certain redemptions within six years
of purchase. Class B shares are subject to a 0.75% Rule 12b-1 distribution fee
and a 0.25% Rule 12b-1 service fee, and convert automatically into Class A
shares eight years after purchase.
- - CLASS C SHARES: Class C shares are offered at net asset value, without an
initial sales charge, but subject to a CDSC of 1% for redemptions within the
first year of purchase. Class C shares are subject to a 0.75% Rule 12b-1
distribution fee and a 0.25% Rule 12b-1 service fee.
The following table displays the various investment minimums, sales charges and
expenses that apply to each class.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum initial
investment*.......... $1,000 $1,000 $1,000
Minimum subsequent
investment*.......... $100 $100 $100
Initial sales
charge............... Maximum 5.75%, None None
with options
for a reduction
or waiver
CDSC................. None, except on Maximum 5.00%, 1.00% for the
certain NAV declines over first year
purchases six years
Service and
distribution fees.... 0.25% service 0.75% 0.75%
fee distribution distribution
fee and 0.25% fee and 0.25%
service fee service fee
</TABLE>
*Minimum initial and subsequent investments for retirement plans are $25.
- -- ADDITIONAL PURCHASE INFORMATION
CLASS A SHARES: Class A shares are sold at a public offering price equal to
their net asset value per share plus an initial sales charge, as set forth in
the following table (which is reduced as the amount invested increases):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
SALES SALES PORTION OF
CHARGE AS A CHARGE AS A PUBLIC
PERCENTAGE PERCENTAGE OFFERING
OF PUBLIC OF NET PRICE
OFFERING AMOUNT RETAINED BY
AMOUNT INVESTED PRICE INVESTED DEALER
- --------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000.... 5.75% 6.10% 5.00%
$50,000 but less than
$100,000............. 5.25% 5.54% 4.50%
$100,000 but less
than $250,000........ 4.50% 4.71% 3.75%
$250,000 but less
than $500,000........ 4.00% 3.09% 2.50%
$500,000 or over*.... 0.00% 0.00% 0.00%
</TABLE>
*A CDSC of 1.00% may apply to Class A shares that are redeemed within two years
of the end of the month in which they were purchased.
- - HOW TO REDUCE YOUR INITIAL SALES CHARGE:
- "Rights of Accumulation" permits you to pay the sales charge that applies to
the cost or value (whichever is higher)of all Ivy Fund Class A shares you
own.
- A "Letter of Intent" permits you to pay the sales charge that would apply to
your cumulative purchase of Fund shares over a 13-month period (certain
restrictions apply).
- - HOW TO ELIMINATE YOUR INITIAL SALES CHARGE: You may purchase Class A shares at
NAV (without an initial sales charge or a CDSC) through any one of the
following methods:
- - through certain investment advisors and financial planners who charge a
management, consulting or other fee for their services;
- - under certain qualified retirement plans;
- - as an employee or director of Mackenzie Investment Management Inc. or its
affiliates;
- - as an employee of a selected dealer; or
- - through the Merrill Lynch Daily K Plan (the "Plan"), provided the Plan has at
least $3 million in assets or over 500 or more eligible employees. Class B
shares of the Funds are made available to Plan participants at NAV without a
CDSC if the Plan has less than $3 million in assets or fewer than 500 eligible
employees. For further information see "Group Systematic Investment Program"
in the SAI.
Certain trust companies, bank trust departments, credit unions, savings and
loans and other similar organizations may also be exempt from the initial sales
charge on Class A shares.
You may also purchase Class A shares at NAV if you are investing at least
$500,000 through a dealer or agent. Ivy Mackenzie Distributors, Inc.("IMDI"),
the Fund's distributor, may pay the dealer or agent (out of IMDI's own
resources) for its distribution assistance according to the following schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------
PURCHASE AMOUNT COMMISSION
- --------------------------------------------------
<S> <C>
First $3,000,000...................... 1.00%
Next $2,000,000....................... 0.50%
Over $5,000,000....................... 0.25%
</TABLE>
IMDI may from time to time pay a bonus or other cash incentive to dealers (other
than IMDI) including, for example, those which employ a registered
representative who sells a minimum dollar amount of the shares of a Fund and/or
other funds distributed by IMDI during a specified time period.
17
<PAGE> 18
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
Each Fund may, from time to time, waive the initial sales charge on its Class A
shares sold to clients of certain dealers meeting criteria established by the
Distributor. This privilege will apply only to Class A shares of a Fund that are
purchased using proceeds obtained by such clients through redemption of another
mutual fund's shares on which a sales charge was paid. Purchases must be made
within 60 days of redemption from the other fund, and the Class A shares
purchased are subject to a 1.00% CDSC on shares redeemed within the first year
after purchase.
CLASS B AND CLASS C SHARES: Class B and Class C shares are not subject to an
initial sales charge but are subject to a CDSC. If you redeem your Class C
shares within one year of purchase they will be subject to a CDSC of 1%, and
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the following rates:
<TABLE>
<CAPTION>
- ----------------------------------------------------
CDSC AS A PERCENTAGE OF
YEAR SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- ----------------------------------------------------
<S> <C>
First...................... 5.00%
Second..................... 4.00%
Third...................... 3.00%
Fourth..................... 3.00%
Fifth...................... 2.00%
Sixth...................... 1.00%
Seventh and thereafter..... 0.00%
</TABLE>
The CDSC for both Class B and Class C shares will be assessed on an amount equal
to the lesser of the current market value or the original purchase cost of the
shares being redeemed. No charge will be assessed on increases in account value
above the original purchase price or on reinvested dividends and distributions.
Shares will be redeemed on a lot-by-lot basis in the following order:
- - Shares held more than six years;
- - Shares acquired through reinvestment of dividends and distributions;
- - Shares subject to the lowest CDSC percentage, on a first-in, first-out basis
(1) with the portion of the lot attributable to capital appreciation, which is
not subject to a CDSC, redeemed first; then
(2) the portion of the lot attributable to your original basis, which is
subject to a CDSC.
The CDSC for Class B shares is waived for:
- - Certain post-retirement withdrawals from an IRA or other retirement plan if
you are over 59 1/2 years old.
- - Redemptions by certain eligible 401(a) and 401(k) plans and certain retirement
plan rollovers.
- - Redemption resulting from a tax-free return of excess contribution to an IRA.
- - Withdrawals resulting from shareholder death or disability provided that the
redemption is requested within one year of death or disability.
- - Withdrawals through the Systematic Withdrawal Plan of up to 12% per year of
your account value at the time the plan is established.
Both Class B shares and Class C shares are subject to an ongoing service and
distribution fee at a combined annual rate of up to 1.00% of the portfolio's
average net assets attributable to its Class B or Class C shares. The ongoing
distribution fees will cause these shares to have a higher expense ratio than
that of Class A and Class I shares. IMDI uses the money that it receives from
the deferred sales charge and the distribution fees to cover various promotional
and sales related expenses, as well as expenses related to providing
distributions services, such as compensating selected dealers and agents for
selling these shares.
Approximately eight years after the original date of purchase, your Class B
shares will be converted automatically to Class A shares. Class A shares are
subject to lower annual expenses than Class B shares. The conversion from Class
B shares to Class A shares is not considered a taxable event for federal income
tax purposes. Class C shares do not have a similar conversion privilege.
- -- SUBMITTING YOUR PURCHASE ORDER
INITIAL INVESTMENTS: Complete and sign the Account Application appearing at the
end of this Prospectus. Enclose a check payable to the Fund in which you wish to
invest. You should note on the check the class of shares you wish to
purchase.(see page 17 for minimum initial investments.) Deliver your application
materials to your registered repre-
18
<PAGE> 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
sentative or selling broker, or send them to one of the following addresses:
- - BY REGULAR MAIL:
Ivy Mackenzie Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
- - BY COURIER:
Ivy Mackenzie Services Corp.
700 South Federal Highway
Boca Raton, FL 33432-6114
- -- BUYING ADDITIONAL SHARES
There are several ways to increase your investment in a Fund:
- - BY MAIL: Send your check with a completed investment slip (attached to your
account statement) or written instructions indicating the account
registration, Fund number or name, and account number. Mail to one of the
addresses above.
- - THROUGH YOUR BROKER: Deliver to your registered representative or selling
broker the investment slip attached to your statement, or written
instructions, along with your payment.
- - BY WIRE: Purchases may also be made by wiring money from your bank account to
your Ivy account. Your bank may charge a fee for wiring funds. Before wiring
any funds, please call IMSC at 800.777.6472. Wiring instructions are as
follows:
First Union National Bank of Florida
Jacksonville, FL
ABA #063000021
Account #2090002063833
For further credit to:
Your Account Registration
Your Fund Number and Account Number
- - BY AUTOMATIC INVESTMENT METHOD: You can authorize to have funds electronically
drawn each month from your bank account and invested as a purchase of shares
into your Ivy Fund account. Complete sections 6A and 7B of the Account
Application.
- -- HOW TO REDEEM SHARES
SUBMITTING YOUR REDEMPTION ORDER: You may redeem your Fund shares through your
registered securities dealer or directly through IMSC. If you choose to redeem
through your registered securities dealer, the dealer is responsible for
properly transmitting redemption orders in a timely manner. If you choose to
redeem directly through IMSC, you have several ways to submit your request:
- - BY MAIL: Send your written redemption request to IMSC at one of the addresses
on this page. Be sure that all registered owners listed on the account sign
the request. Medallion signature guarantees and supporting legal documentation
may be required. When you redeem, IMSC will normally send redemption proceeds
to you on the next business day, but may take up to seven days (or longer in
the case of shares recently purchased by check).
- - BY TELEPHONE: Call IMSC at 800.777.6472 to redeem from your individual, joint
or custodial account. To process your redemption order by telephone, you must
have telephone redemption privileges on your account. IMSC employs reasonable
procedures that require personal identification prior to acting on redemption
instructions communicated by telephone to confirm that such instructions are
genuine. In the absence of such procedures, the Fund or IMSC may be liable for
any losses due to unauthorized or fraudulent telephone instructions. Requests
by telephone can only be accepted for amounts up to $50,000.
- - BY SYSTEMATIC WITHDRAWAL PLAN ("SWP"): You can authorize to have funds
electronically drawn each month from your Ivy Fund account and deposited
directly into your bank account. Certain minimum balances and minimum
distributions apply. Complete section 6B of the Account Application to add
this feature to your account.
RECEIVING YOUR REDEMPTION PROCEEDS: You can receive redemption proceeds through
a variety of payment methods:
- - BY CHECK: Unless otherwise instructed in writing, checks will be made payable
to the current account registration and sent to the address of record.
- - BY FEDERAL FUNDS WIRE: Proceeds will be wired on the next business day to a
pre-designated bank account. Your account will be charged $10 each time
redemption proceeds are wired to your bank, and your bank may also charge you
a fee for receiving a Federal Funds wire.
19
<PAGE> 20
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
- - BY ELECTRONIC FUNDS TRANSFER ("EFT"): For SWP redemptions only.
REDEMPTION FEE: The Funds can experience substantial price fluctuations and are
intended for long-term investors. Redemption fees for the Funds are intended to
encourage long-term investment, to avoid transaction and other expenses caused
by early redemptions, and to facilitate portfolio management. This fee may be
waived at the discretion of IMSC. Effective June 1, 1999, the Funds may charge a
2.00% fee for redemptions or exchanges within one month of the date of purchase.
This fee is not a CDSC, is not a commission, and does not benefit IMI or IMSC in
any way. The redemption fee will be assessed on the net asset value of the
shares redeemed or exchanged and will be deducted from the redemption proceeds
otherwise payable to the shareholder. Each Fund will retain any fee charged.
OTHER IMPORTANT REDEMPTION INFORMATION:
- - A CDSC may apply to certain Class A share redemptions, to Class B shares
redeemed within six years of purchase, and to Class C shares that are redeemed
within one year of purchase.
- - If you own shares of more than one class of the Fund, the Fund will redeem
first the shares having the highest 12b-1 fees, unless you instruct otherwise.
- - Any shares subject to a CDSC will be redeemed last unless you specifically
elect otherwise.
- - Shares will be redeemed in the order described under "Additional Purchase
Information--Class B and Class C Shares".
- - A Fund may (on 60 days' notice) redeem the accounts of shareholders whose
investment, including sales charges paid, has been less than $1,000 for more
than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares recently
purchased by check) to send redemption proceeds.
- -- HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Ivy fund, subject to
certain restrictions (see "Important Exchange Information").
SUBMITTING YOUR EXCHANGE ORDER: You may submit an exchange request to IMSC as
follows:
- - BY MAIL: Send your written exchange request to IMSC at one of the addresses on
page 19 of this Prospectus. Be sure that all registered owners listed on the
account sign the request.
- - BY TELEPHONE: Call IMSC at 800.777.6472 to authorize an exchange transaction.
To process your exchange order by telephone, you must have telephone exchange
privileges on your account. IMSC employs reasonable procedures that require
personal identification prior to acting on exchange instructions communicated
by telephone to confirm that such instructions are genuine. In the absence of
such procedures, the Fund or IMSC may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
IMPORTANT EXCHANGE INFORMATION:
- - You must exchange into the same share class you currently own.
- -- Exchanges are considered taxable events and may result in a capital gain or
a capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange privilege
for the purpose of timing short-term market fluctuations. The Funds may
therefore limit the frequency of exchanges by a shareholder, charge a
redemption fee or cancel a shareholder's exchange privilege if at any time it
appears that such market-timing strategies are being used. For example,
shareholders exchanging more than five times in a 12-month period may be
considered to be using market-timing strategies. A redemption fee will be
charged on the asset value of shares exchanged within one month of purchase.
- -- DIVIDENDS, DISTRIBUTIONS AND TAXES
- - The Funds generally declare and pay dividends and capital gain distributions
(if any) at least once a year.
- - Dividends and distributions are "reinvested" in additional Fund shares unless
you request to receive them in cash.
- - Reinvested dividends and distributions are added to your account at NAV and
are not subject to a sales charge regardless of which share class you own.
20
<PAGE> 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- - Cash dividends and distributions can be sent to you:
- - BY MAIL: a check will be mailed to the address of record unless otherwise
instructed in writing.
- - BY ELECTRONIC FUNDS TRANSFER: your proceeds will be directly deposited into
your bank account.
To change your dividend and/or distribution options, call IMSC at 800.777.6472.
Dividends ordinarily will vary from one class to another. The Funds intend to
declare and pay dividends annually. The Funds will distribute net investment
income and net realized capital gains, if any, at least once a year. The Funds
may make an additional distribution of net investment income and net realized
capital gains to comply with the calendar year distribution requirement under
the excise tax provisions of Section 4982 of the Internal Revenue Code of 1986,
as amended (the "Code").
Dividends paid out of a Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to you as
ordinary income. If a portion of a Fund's income consists of dividends paid by
U.S. corporations, a portion of the dividends paid by the Fund may be eligible
for the corporate dividends-received deduction. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, are taxable to you as long-term capital gains, regardless of
how long you have held your shares. Dividends are taxable to you in the same
manner whether received in cash or reinvested in additional Fund shares.
If shares of a Fund are held in a tax-deferred account, such as a retirement
plan, income and gain will not be taxable each year. Instead, the taxable
portion of amounts held in a tax-deferred account generally will be subject to
tax as ordinary income only when distributed from that account.
A distribution will be treated as paid to you 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 a Fund during January of the
following calendar year. In certain years, you may be able to claim a credit or
deduction on your income tax return for your share of foreign taxes paid by your
Fund.
Upon the sale or exchange of your Fund shares, you may realize a capital gain or
loss which will be long term or short term, generally depending upon how long
you held your shares.
A Fund may be required to withhold U.S. Federal income tax at the rate of 31% of
all distributions payable to you if you fail to provide the Fund with your
correct taxpayer identification number or to make required certifications, or if
you have been notified by the Internal Revenue Service that you are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against your U.S. Federal income tax liability.
Fund distributions may be subject to state, local and foreign taxes.
You should consult with your tax adviser as to the tax consequences of an
investment in the Funds, including the status of distributions from the Fund
under applicable state or local law.
21
<PAGE> 22
[IVY LEAF LOGO]
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each
Funds' financial performance for the past five years (or less if a Fund has
a shorter operating history), and reflects results for a single Fund share.
The total returns in the table represent the rate an investor would have
earned (or lost) each year on an investment in a Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with each Fund's
financial statements, is included in its Annual Report to shareholders
(which is available upon request).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------------------------------------------------
IVY ASIA PACIFIC FUND for the year ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
SELECTED PER SHARE DATA --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 6.01 $ 10.00 $ 5.99 $ 10.00 $ 5.99 $ 10.00
--------------------------------------------------------------
Loss from investment operations
Net investment loss (a)................................... .03 .02 (.01) -- (.01) --
Net gains or losses on securities (both realized and
unrealized)............................................. (.44) (3.98) (.44) (4.00) (.43) (3.99)
--------------------------------------------------------------
Total from investment operations.......................... (.41) (3.96) (.45) (4.00) (.44) (3.99)
--------------------------------------------------------------
Less distributions
Dividends
From net investment income.............................. -- .01 -- -- -- --
In excess of net investment income...................... .03 .02 .01 .01 .01 .02
Distributions from capital gains.......................... .01 -- -- -- -- --
--------------------------------------------------------------
Total distributions..................................... .04 .03 .01 .01 .01 .02
--------------------------------------------------------------
Net asset value, end of period.............................. $ 5.56 $ 6.01 $ 5.53 $ 5.99 $ 5.54 $ 5.99
--------------------------------------------------------------
--------------------------------------------------------------
Total return (%)(c)......................................... (6.86) (39.58) (7.48) (39.96) (7.37) (39.94)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $ 1,393 $ 692 $ 2,197 $ 929 $ 1,855 $ 764
Ratio of expenses to average net assets (d)
With expense reimbursement (%)............................ 2.77 2.11 3.65 2.86 3.54 2.74
Without expense reimbursement (%)......................... 6.15 10.17 7.03 10.92 6.92 10.80
Ratio of net investment income to average net assets
(%)(a).................................................... .53 .63 (.35) (.12) (.24) --
Portfolio turnover rate (%)................................. 86 1 86 1 86 1
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
IVY CHINA REGION FUND ------------------------------------------------------------------------
for the year ended
December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
SELECTED PER SHARE DATA ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 8.04 $ 10.30 $ 8.58 $ 8.61 $ 11.55
------------------------------------------------------------------------
Income (loss) from investment operations
Net investment loss (a).............................. .13 .02(b) .03 .14 .05
Net gains or losses on securities (both realized and
unrealized)........................................ (1.78) (2.28)(b) 1.74 (.01) (2.91)
------------------------------------------------------------------------
Total from investment operations..................... (1.65) (2.26) 1.77 .13 (2.86)
------------------------------------------------------------------------
Less distributions
Dividends
From net investment income......................... .09 -- .03 .14 .05
In excess of net investment income................. -- -- .02 -- .03
Distributions in excess of capital gains............. -- -- -- .02 --
--------------------------------------------------------------------
Total distributions................................ .09 -- .05 .16 .08
------------------------------------------------------------------------
Net asset value, end of period......................... $ 6.30 $ 8.04 $ 10.30 $ 8.58 $ 8.61
------------------------------------------------------------------------
------------------------------------------------------------------------
Total return (%)....................................... (20.56)(c) (21.94)(c) 20.50(c) 1.59(c) (24.88)(c)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)............... $ 9,061 $ 12,020 $ 15,290 $ 12,855 $ 13,180
Ratio of expenses to average net assets (d)
With expense reimbursement (%)....................... 2.30 2.44 2.20 2.20 2.20
Without expense reimbursement (%).................... 2.86 2.51 2.48 2.73 2.76
Ratio of net investment income to average net assets
(%)(a)............................................... 1.60 .28 .32 1.61 .55
Portfolio turnover rate (%)............................ 56 20 22 25 4
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
CLASS B CLASS C
- -------------------------------------------------------------------------------------------------------------
for the period
April 30, 1996
for the year for the year ended (Commencement)
ended December 31, December 31, to December 31,
- -------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 7.96 $ 10.28 $ 8.58 $ 8.61 $ 11.55 $ 7.94 $ 10.24 $ 9.44
- -------------------------------------------------------------------------------------------------------------
.05 (.04)(b) (.04) .08 (.02) .08 (.03)(b) --
(1.73) (2.28)(b) 1.74 (.02) (2.92) (1.75) (2.27)(b) .89
- -------------------------------------------------------------------------------------------------------------
(1.68) (2.32) 1.70 .06 (2.94) (1.67) (2.30) .89
- -------------------------------------------------------------------------------------------------------------
.04 -- -- .08 -- .02 -- --
-- -- -- -- -- -- -- .09
-- -- -- .01 -- -- -- --
- -------------------------------------------------------------------------------------------------------------
.04 -- -- .09 -- .02 -- .09
- -------------------------------------------------------------------------------------------------------------
$ 6.24 $ 7.96 $ 10.28 $ 8.58 $ 8.61 $ 6.25 $ 7.94 $ 10.24
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
(21.04)(c) (22.57)(c) 19.67(c) .83(c) (25.45)(c) (21.02)(c) (22.46)(c) 9.39 (f)
$ 6,080 $ 7,893 $ 8,995 $ 6,905 $ 7,336 $ 704 $ 1,129 $ 449
3.08 3.17 2.95 2.95 2.95 2.98 3.05 2.71 (e)
3.64 3.24 3.23 3.48 3.51 3.54 3.12 2.99 (e)
.82 (.45) (.43) .86 (.20) .92 (.33) (.19)(e)
56 20 22 25 4 56 20 22
</TABLE>
- --------------------------------------------------------------------------------
(a) Net investment income (loss) is net of expenses reimbursed by manager.
(b) Based on average shares outstanding.
(c) Total return does not reflect a sales charge.
(d) Beginning in 1995, total expenses include fees paid indirectly, if any,
through an expense offset arrangement.
(e) Annualized
(f) Total return repre- sents aggregate total return and does not reflect a
sales charge.
23
<PAGE> 24
[IVY LEAF LOGO]
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
IVY DEVELOPING NATIONS FUND ---------------------------------------------------------------------
for the period
November 1, 1994
for the year ended (Commencement)
December 31, to December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
SELECTED PER SHARE DATA ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 6.82 $ 10.12 $ 9.05 $ 8.64 $ 10.00
--------------------------------------------------------------------
Income (loss) from investment operations
Net investment income (loss) (a)....................... .06 .01 (.02) .01 --
Net gains or losses on securities (both realized
and unrealized)...................................... (.86) (2.80) 1.09 .54 (1.36)
--------------------------------------------------------------------
Total from investment operations....................... (.80) (2.79) 1.07 .55 (1.36)
--------------------------------------------------------------------
Less distributions
Dividends
From net investment income......................... -- -- -- .01 --
In excess of net investment income................. -- .01 -- -- --
Distributions
From capital gains................................. -- .30 -- .10 --
In excess of capital gains......................... -- .20 -- .03 --
--------------------------------------------------------------------
Total distributions.................................. -- .51 -- .14 --
--------------------------------------------------------------------
Net asset value, end of period........................... $ 6.02 $ 6.82 $ 10.12 $ 9.05 $ 8.64
====================================================================
Total return (%)......................................... (11.67)(c) (27.42)(c) 11.83(c) 6.40(c) (13.50)(f)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................. $ 5,487 $ 8,584 $ 9,925 $ 3,435 $ 611
Ratio of expenses to average net assets (d)
With expense reimbursement (%)......................... 2.18 2.31 2.45 2.55 2.20 (e)
Without expense reimbursement (%)...................... 3.47 2.39 2.82 7.18 20.74 (e)
Ratio of net investment income (loss) to average net
assets (%)(a).......................................... .88 .09 (.23) .24 .52 (e)
Portfolio turnover rate (%).............................. 47 42 27 14 --
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
IVY SOUTH AMERICA FUND ---------------------------------------------------------------------
for the period
November 1, 1994
for the year ended (Commencement)
December 31, to December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA 1998 1997 1996 1995 1994
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 8.96 $ 8.51 $ 6.88 $ 8.37 $ 10.00
---------------------------------------------------------------------
Income (loss) from investment operations
Net investment (loss) (a).............................. .21 .06 .01 .01 --
Net gains or losses on securities (both realized
and unrealized)...................................... (3.44) .53 1.66 (1.45) (1.63)
--------------------------------------------------------------------
Total from investment operations....................... (3.23) .59 1.67 (1.44) (1.63)
--------------------------------------------------------------------
Less distributions
Dividends from net investment income................... -- .04 -- -- --
Distributions from capital gains....................... .15 .10 .04 -- --
Returns of capital..................................... -- -- -- .05 --
--------------------------------------------------------------------
Total distributions.................................. .15 .14 .04 .05 --
--------------------------------------------------------------------
Net asset value, end of period........................... $ 5.58 $ 8.96 $ 8.51 $ 6.88 $ 8.37
====================================================================
Total return (%)......................................... (36.07)(c) 7.03(c) 24.22(c) (17.28)(c) (16.10)(f)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................. $ 1,638 $ 5,671 $ 4,016 $ 2,015 $ 571
Ratio of expenses to average net assets (d)
With expense reimbursement (%)......................... 2.38 2.45 2.55 2.61 2.20 (e)
Without expense reimbursement (%)...................... 5.09 3.18 4.89 9.26 16.22 (e)
Ratio of net investment income (loss) to average net
assets (%)(a).......................................... 1.96 .65 .24 .22 .21 (e)
Portfolio turnover rate (%).............................. 26 10 20 45 82
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------------------------------------------------------------------------------------
for the period for the period
November 1, 1994 April 30, 1996
for the year ended (Commencement) for the year ended (Commencement) to
December 31, to December 31, December 31, December 31,
---------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1998 1997 1996
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 6.77 $ 10.04 $ 9.05 $ 8.64 $ 10.00 $ 6.79 $ 10.06 $ 9.89
---------------------------------------------------------------------------------------------------------------------
.01 (.06) (.06) (.02) -- .01 (.07) (.02)
(.85) (2.76) 1.05 .51 (1.36) (.84) (2.76) .19
---------------------------------------------------------------------------------------------------------------------
(.84) (2.82) .99 .49 (1.36) (.83) (2.83) .17
---------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
-- .01 -- -- -- -- .01 --
-- .28 -- .08 -- -- .27 --
-- .16 -- -- -- -- .16 --
---------------------------------------------------------------------------------------------------------------------
-- .45 -- .08 -- -- .44 --
---------------------------------------------------------------------------------------------------------------------
$ 5.93 $ 6.77 $ 10.04 $ 9.05 $ 8.64 $ 5.96 $ 6.79 $ 10.06
=====================================================================================================================
(12.35)(c) (27.93)(c) 10.95(c) 5.62(c) (13.60)(f) (12.16)(c) (28.01)(c) 1.73(f)
$ 6,145 $ 8,488 $ 6,269 $ 945 $ 121 $ 2,641 $ 2,420 $ 1,854
2.96 3.09 3.20 3.30 2.95(e) 2.96 3.12 3.16(e)
4.25 3.17 3.57 7.93 21.49(e) 4.25 3.20 3.53(e)
.10 (.69) (.98) (.51) (.23)(e) .10 (.72) (.94)(e)
47 42 27 14 -- 47 42 27
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
CLASS B CLASS C
---------------------------------------------------------------------------------------------------------------------
for the period for the period
November 1, 1994 April 30, 1996
for the year ended (Commencement) for the year ended (Commencement) to
December 31, to December 31, December 31, December 31,
---------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1998 1997 1996
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 8.94 $ 8.48 $ 6.88 $ 8.37 $ 10.00 $ 8.89 $ 8.46 $ 7.96
---------------------------------------------------------------------------------------------------------------------
.12 (.01) (.03) (.02) (.01) .12 (.02) (.02)
(3.39) .53 1.63 (1.47) (1.62) (3.38) .53 .55
---------------------------------------------------------------------------------------------------------------------
(3.27) .52 1.60 (1.49) (1.63) (3.26) .51 .53
---------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
.15 .06 -- -- -- .15 .08 .03
-- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------
.15 .06 -- -- -- .15 .08 .03
---------------------------------------------------------------------------------------------------------------------
$ 5.52 $ 8.94 $ 8.48 $ 6.88 $ 8.37 $ 5.48 $ 8.89 $ 8.46
=====================================================================================================================
(36.59)(c) 6.18(c) 23.26(c) (17.90)(c) (16.20)(f) (36.69)(c) 6.06(c) 6.66 (f)
$ 972 $ 3,028 $ 2,025 $ 684 $ 122 $ 148 $ 453 $ 111
3.18 3.23 3.33 3.36 2.95(e) 3.21 3.30 3.46 (e)
5.89 3.96 5.67 10.01 16.97(e) 5.92 4.03 5.80 (e)
1.16 (.13) (.54) (.53) (.54)(e) 1.13 (.20) (.68)(e)
26 10 20 45 82 26 10 20
</TABLE>
(a) Net investment income (loss) is net of expenses reimbursed by manager.
(b) Based on average shares outstanding.
(c) Total return does not reflect a sales charge.
(d) Beginning in 1995, total expenses include fees paid indirectly, if any,
through an expense offset arrangement.
(e) Annualized
(f) Total return represents aggregate total return and does not reflect a
sales charge.
25
<PAGE> 26
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
26
<PAGE> 27
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
27
<PAGE> 28
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
28
<PAGE> 29
Account
Application
FUND USE ONLY
___________________
Account Number
___________________
Dealer/Branch/Rep
___________________
Account Type/Soc Cd
[IVY FUNDS LOGO]
Please mail applications and checks to:
Ivy Mackenzie Services Corp.,
P.O. Box 3022, Boca Raton, Florida 33431-0922
_________________________________________________________________________
This application should not be used for retirement accounts for which Ivy
Fund (IBT) is custodian.
_________________________________________________________________________
1 REGISTRATION
Name ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Address__________________________________________________________________
City _________________________________________ State _______ Zip ________
Phone # (day) (___)_________________ Phone # (evening) (__)_____________
__ Individual __ UGMA/UTMA __ Sole proprietor
__ Joint tenant __ Corporation __ Trust
__ Estate __ Partnership __ Other
Date of trust ________________ Minor's state of residence ______________
2 TAX I.D.
Citizenship: __ U.S. __ Other (please specify): __________________
Social security # _____-____-_______ or Tax identification _____________
Under penalties of perjury, I certify by signing in Section 8 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 "Dividends, distributions and taxes" 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 IMSC of any purchases made under a
Letter of Intent or Rights of Accumulation.
Dealer name _____________________________________________________________
Branch office address ___________________________________________________
City ______________________________ State _______________ Zip _________
Representative's name ___________________________________________________
Representative's # _________________ Representative's phone _____________
Authorized signature of dealer __________________________________________
4 INVESTMENTS
A. Enclosed is my check ($1,000 minimum) for $__________ made payable to
the appropriate fund. Please invest it in: _____ Class A ____ Class B
____ Class C _____ Class I shares ("--" Funds only) of the following
funds(s):
<TABLE>
<S> <C>
$ _____________ Ivy Asia Pacific Fund $ _____________ Ivy Developing Nations Fund
$ _____________ Ivy China Region Fund $ _____________ Ivy South America Fund
</TABLE>
B. I qualify for a reduction or elimination of the sales charge due to
the following privilege (applies only to Class A shares):
__ New Letter of Intent (if ROA or 90-day backdate privilege is
applicable, provide account(s) information below.)
__ ROA with the account(s) listed below.
__ Existing Letter of Intent with the account(s) listed below.
Fund name: __________________ Fund name: ___________________
Account #:___________________ Account #:____________________
If establishing a Letter of Intent, you will need to purchase Class A
shares over a 13-month period in accordance with the provisions in the
Prospectus. The aggregate amount of these purchases will be at least
equal to the amount indicated below (see Prospectus for minimum amount
required for reduced sales charges).
___ $50,000 ___ $100,000 ___$250,000 ___ $500,000
C. FOR DEALER USE ONLY
Confirmed trade orders: _______________ ________________ __________
Confirm Number Number of Shares Trade Date
<PAGE> 30
5 DISTRIBUTION OPTIONS
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.
A. ___ Reinvest all dividends and capital gains into additional shares
of the same class of a different Ivy fund account.
Fund name: ____________________________________________________
Account #: ____________________________________________________
B. ___ Pay all dividends in cash and reinvest capital gains into
additional shares of the same class in this account or a
different Ivy fund account.
Fund name: ____________________________________________________
Account #: ____________________________________________________
C. ___ Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN B OR C ABOVE, BE SENT
TO: _____ the address listed in the registration
_____ the special payee listed in Section 7A (by mail)
_____ the special payee listed in Section 7B (by EFT)
6 OPTIONAL SPECIAL FEATURES
A. AUTOMATIC INVESTMENT METHOD (AIM)
___ I wish to have my bank account listed in section 7B automatically
debited via EFT on a predetermined frequency and invested into my
Ivy Fund account listed below.
1. Withdraw $_____ for each time period indicated below and invest my
bank proceeds into the following Ivy fund:
Fund name:____________________________________ ____________________
Share class: __ Class A __ Class B __ Class C
Account #: ________________________________________________________
2. Debit my bank account:
___ Annually (on the ___ day of the month of
___________________).
___ Semiannually (on the ___ day of the months of
____________ and _____________).
___ Quarterly (on the ___ day of the first/second/third
month of each calendar quarter). (CIRCLE ONE)
___ Monthly*___ once per month on the ___ day
___ twice per month on the _____ days
___ 3 times per month on the _____ days
___ 4 times per month on the _____ days
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)**
___ I wish to have my Ivy Fund account automatically debited on a
predetermined frequency and the proceeds sent to me per my
instructions below.
1. Withdraw ($50 minimum) $_____ for each time period indicated
below from the following Ivy Fund account:
Fund name: ______________________________________________________
Share class: __ Class A __ Class B __ Class C
Account #: ______________________________________________________
2. Withdraw from my Ivy Fund account:
___ Annually (on the _____ day of the month of
__________).
___ Semiannually (on the _____ day of the months of
____________ and _____________).
___ Quarterly (on the _____ day of the first/second/third
month of each calendar quarter. (CIRCLE ONE)
___ Monthly*___ once per month on the ___ day
___ twice per month on the _____ days
___ 3 times per month on the _____ days
___ 4 times per month on the _____ days
3. I request the withdrawal proceeds be:
___ sent to the address listed in the registration
___ sent to the special payee listed in section 7A or 7B.
___ invested into additional shares of the same class of a
different Ivy fund:
Fund name: ____________________________________________________
Account #: ____________________________________________________
Note: A minimum balance of $5,000 is required to establish a SWP.
C. FEDERAL FUNDS WIRE
FOR REDEMPTION PROCEEDS** ___ yes ___ no
By checking "yes" immediately above, I authorize IMSC 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).
(COMPLETE SECTION 7B).
D. TELEPHONE EXCHANGES** ___ yes ___ no
By checking "yes" immediately above, I authorize exchanges by telephone
among the Ivy 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. TELEPHONIC REDEMPTIONS** ___ yes ___ no
By checking "yes" immediately above, the Fund or its agents are authorized
to honor telephone instructions from any person as more fully described in
the Prospectus for the redemption of Fund shares. The amount of the
redemption shall not exceed $50,000 and the proceeds are to be payable to
the shareholder of record and mailed to the address of record. To change
this option once established, written instructions must be received from
the shareholder of record or the current registered representative.
If neither box is checked, the telephone redemption privilege will be
provided automatically.
* There must be a period of at least seven calendar days between each
investment (AIM)/withdrawal (SWP) period.
** This option may not be used if shares are issued in certificate form.
7 SPECIAL PAYEE
A. MAILING ADDRESS: Please send all disbursements to this payee:
Name of bank or individual _______________________________________________
Account # (if applicable) ________________________________________________
Street ___________________________________________________________________
City _____________________________ State ______________ Zip ______________
B. FED WIRE/EFT INFORMATION
Financial institution ____________________________________________________
ABA # ____________________________________________________________________
Account # ________________________________________________________________
Street ___________________________________________________________________
City _____________________________ State ______________ Zip _____________
(PLEASE ATTACH A VOIDED CHECK.)
8 SIGNATURES
Investors should be aware that the failure to check the "No" under
Section 6D or 6E above means that the Telephone Exchange/ Redemption
Privileges will be provided. The Fund employs reasonable procedures that
require personal identification prior to acting on exchange/redemption
instructions communicated by telephone to confirm that such instructions
are genuine. In the absence of such procedures, the Fund may be liable for
any losses due to unauthorized or fraudulent telephone instructions.
Please see "How to exchange shares" and "How to redeem shares" in the
Prospectus for more information on these privileges.
I certify to my legal capacity to purchase or redeem shares of the
Fund for my own account or for the account of the organization named in
Section 1. I have received a current Prospectus and understand its terms
are incorporated in this application by reference. I am certifying my
taxpayer information as stated in Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID
BACKUP WITHHOLDING.
________________________________________ ______________________________
Signature of Owner, Custodian, Trustee or Date
Corporate Officer
________________________________________ ______________________________
Signature of Joint Owner, Co-Trustee or Date
Corporate Officer
DETACH ON PERFORATION TO MAIL
(Remember to sign Section 8)
<PAGE> 31
* Symbol not assigned as of this printing
- --------------------------------------------------------------------------------
-- QUOTRON SYMBOLS AND CUSIP NUMBERS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
FUND SYMBOL CUSIP
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Ivy Asia Pacific Fund - Class A IAPAX 465897494
Ivy Asia Pacific Fund - Class B IAPBX 465897486
Ivy Asia Pacific Fund - Class C IAPCX 465897478
Ivy China Region Fund - Class A IVCRX 465897866
Ivy China Region Fund - Class B ICRBX 465897858
Ivy China Region Fund - Class C ICRCX 465897643
Ivy Developing Nations Fund - Class A IVCAX 465897841
Ivy Developing Nations Fund - Class B IVCBX 465897833
Ivy Developing Nations Fund - Class C IVCCX 465897569
Ivy South America Fund - Class A IVLAX 465897825
Ivy South America Fund - Class B IVSBX 465897817
Ivy South America Fund - Class C IVSCX 465897577
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 32
[IVY LEAF LOGO]
-- HOW TO RECEIVE MORE
INFORMATION ABOUT THE FUNDS
Additional information about the Funds and their investments is
contained in the Funds' Statement of Additional Information dated May
3, 1999 (the "SAI"), which is incorporated by reference into this
Prospectus, and each Fund's annual and semiannual reports to
shareholders. Each Fund's annual report includes a discussion of the
market conditions and investment strategies that significantly affected
the Fund's performance during its most recent fiscal year. The SAI and
annual and semi annual reports are available upon request and without
charge from the Distributor at the following address and phone number.
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza
700 South Federal Highway,
Boca Raton, FL 33432
800.456.5111
Information about the Funds (including the SAI and annual and semi
annual reports) may also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. (please call 1-800-SEC-0330 for
further details). Information about the Funds is also available on the
SEC's Internet Website (www.sec.gov), and copies of this information
may be obtained, upon payment of a copying fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-6009.
Investment Company Act File No. 811-1028
-- SHAREHOLDER
INQUIRIES
Please call
Ivy Mackenzie
Services Corp.,
the Funds' transfer agent,
regarding any other
inquiries about the Funds
at 800.777.6472.
www.ivymackenzie.com
E-mail:
[email protected]
<PAGE> 33
Ivy Funds Logo
This is your prospectus from
IVY MACKENZIE
DISTRIBUTORS, INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
800.456.5111
May 3, 1999 EMERGING MARKET FUNDS ADVISOR CLASS SHARES
IVY ASIA PACIFIC FUND
IVY CHINA REGION FUND
IVY DEVELOPING NATIONS FUND
IVY SOUTH AMERICA FUND
Ivy Fund is a registered open-end investment company
consisting of nineteen separate portfolios. This Prospectus
relates to the Advisor Class shares of the four funds listed
above (the "Funds"). The Funds also offer Class A, Class B and
Class C shares, which are described in a separate prospectus.
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy or
accuracy of this Prospectus. Any representation to the
contrary is a criminal offense.
Investments in the Funds are not deposits of any bank and are
not federally insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
-- CONTENTS
2 Ivy Asia Pacific Fund
4 Ivy China Region Fund
6 Ivy Developing Nations Fund
8 Ivy South America Fund
11 Additional information
about investment strategies
and risks
15 Management
16 Shareholder information
20 Financial Highlights
21 Account application
<TABLE>
<S> <C> <C>
OFFICERS
Michael G. Landry, Chairman
Keith J. Carlson, President
James W. Broadfoot, Vice President
C. William Ferris, Secretary/Treasurer
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, Massachusetts
CUSTODIAN AUDITORS
Brown Brothers Harriman & Co. PricewaterhouseCoopers LLP
Boston, Massachusetts Fort Lauderdale, Florida
TRANSFER AGENT INVESTMENT MANAGER
Ivy Mackenzie Services Corp. Ivy Management, Inc.
PO Box 3022 700 South Federal Highway
Boca Raton, Florida 33431-0922 Boca Raton, Florida 33432
800.777.6472 800.456.5111
</TABLE>
Mackenzie Logo
<PAGE> 34
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY ASIA PACIFIC FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
ASIA PACIFIC
FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term growth. Consideration of
current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in equity securities issued in Asia
Pacific countries, which include China, Hong Kong, India, Indonesia, Malaysia,
Pakistan, the Philippines, Singapore, Sri Lanka, South Korea, Taiwan, Thailand
and Vietnam.
The Fund's management team uses a value strategy to identify companies and
markets that have solid long-term growth prospects and appear to be undervalued.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the securities markets of many Asia-Pacific
countries fall into this category, the Fund is exposed to the following
additional risks:
- - securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange-rate regime or monetary policy;
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
REGIONAL RISK: Investing in the Asia-Pacific region involves special risks
beyond those described above. For example, certain Asia-Pacific countries may be
vulnerable to trade barriers and other protectionist measures that could have an
adverse effect on the value of the Fund's portfolio. The limited size of the
markets for some Asia-Pacific securities can also make them more susceptible to
investor perceptions which can impact their value and liquidity.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long term growth potential in
this sector of the world, but who can accept potentially dramatic fluctuations
in capital value in the short-term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
2
<PAGE> 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on January 1, 1997 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
(CHART)
IVY ASIA PACIFIC FUND
---------------------
<S> <C>
'97 -39.585%
'98 -6.865%
</TABLE>
Best quarter Q4 '98: 43.90%
Worst quarter Q2 '98: (34.21%)
<TABLE>
<CAPTION>
<S> <C>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
-------------------------------------------------------------------------------------------------
MSCI FAR LIPPER
EAST FREE ASIA PACIFIC
(EX-JAPAN) (EX-JAPAN)
CLASS A INDEX CATEGORY
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Past year................................................... (6.86%) (7.39%) (9.05%)
Since inception............................................. (25.04%) (28.94%) (23.78%)
</TABLE>
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if
you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -------------------------------------------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price)............................... none
Maximum deferred sales charge (load) (as a percentage of
purchase price)............................................. none
Maximum sales charge (load) imposed on reinvested
dividends................................................... none
Redemption fee*............................................... 2.00%**
Exchange fee.................................................. none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
**Deducted from net proceeds on shares redeemed (or exchanged)
within one month after purchase. This fee is retained by the Fund.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Management fees............................. 1.00%
Distribution and/or service (12b-1)
fees...................................... none
Other expenses.............................. 4.28%
Total annual Fund operating expenses........ 5.28%
Expenses reimbursed*........................ 3.38%
Net Fund operating expenses*................ 1.90%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 193
3rd 710
5th 1,255
10th 2,742
</TABLE>
3
<PAGE> 36
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY CHINA REGION FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
CHINA REGION
FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the equity securities of
companies that are located or have a substantial business presence in the China
Region, which includes China, Hong Kong, Taiwan, South Korea, Singapore,
Malaysia, Thailand, Indonesia and the Philippines.
The Fund may also invest in equity securities of companies whose current or
expected performance is considered to be strongly associated with the China
Region. A large portion of the Fund is likely to be invested in equity
securities of companies that trade in Hong Kong.
The Fund's management team uses a value approach to find stocks it believes are
undervalued relative to their long-term growth prospects.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the securities markets of many China Region
countries fall into this category, the Fund may be exposed to one or more of the
following additional risks:
- - securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange-rate regime or monetary policy;
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
REGIONAL RISK: Mainland China may be subject to a much higher degree of
economic, political and social instability than more developed countries, which
could at any time result in the disruption of its principal financial markets
(and to a lesser extent, those of other China Region countries). A number of
China Region countries also depend heavily on international trade, which makes
their securities markets particularly sensitive to the trade policies and
economic conditions of their principal trading partners.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential in
this sector of the world, but who can accept potentially dramatic fluctuations
in capital value in the short-term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
4
<PAGE> 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on October 22, 1993 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
(CHINA REGION FUND BAR GRAPH)
<TABLE>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
CHINA REGION FUND
-----------------
<S> <C> <C>
'94 -24.88%
'95 1.59%
'96 20.5%
'97 -21.94%
'98 -20.56%
</TABLE>
Best quarter Q4 '98: 25.48%
Worst quarter Q4 '97: (30.21%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
------------------------------------------------------------------------------------------------------------
LIPPER
CHINA HANG MSCI IFC
REGION SENG TAIWAN CHINA
CLASS A CATEGORY INDEX INDEX INDEX
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Past year................................................... (20.56%) (17.51%) (6.29%) (22.35%) (22.59%)
Past 5 years................................................ (10.63%) (11.54%) (3.31%) 0.57% 2.95%
Since inception............................................. (7.71%) (8.05%) 2.77% 9.93% 2.72%
*Lipper performance is calculated from October 28, 1993.
</TABLE>
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -------------------------------------------------------
<S> <C> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price).................................... none
Maximum deferred sales charge (load) (as a
percentage of purchase price)............. none
Maximum sales charge (load) imposed on
reinvested dividends...................... none
Redemption fee*............................. 2.00%**
Exchange fee................................ none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
**Deducted from net proceeds on shares redeemed (or exchanged)
within one month after purchase. This fee is retained by the Fund.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Management fees........................... 1.00%
Distribution and/or service (12b-1)
fees...................................... none
Other expenses............................ 2.38%
Total annual Fund operating expenses...... 3.38%
Expenses reimbursed*...................... 0.56%
Net Fund operating expenses*.............. 2.82%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- --------------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 285
3rd 984
5th 1,706
10th 3,617
</TABLE>
5
<PAGE> 38
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY DEVELOPING NATIONS FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
DEVELOPING
NATIONS FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term growth. Consideration of
current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the equity securities of
companies that are located in, or are expected to profit from, countries whose
markets are generally considered to be "developing" or "emerging".
The Fund may invest more than 25% of its assets in a single country, but usually
will hold securities from at least three emerging market countries in its
portfolio.
The Fund's management team uses a value approach to find stocks it believes are
undervalued relative to their long-term growth prospects.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the Fund normally invests a substantial portion of
its assets in these countries, it is exposed to the following additional risks:
- - securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange-rate regime or monetary policy;
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential in
the developing nations sector, but who can accept potentially dramatic
fluctuations in capital value in the short-term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
6
<PAGE> 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on November 1, 1994 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
(DEVELOPING NATIONS FUND BAR GRAPH)
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
IVY EMERGING MARKETS - CLASS A
SHARES
------------------------------
<S> <C> <C>
'95 6.4%
'96 11.83%
'97 -27.42%
'98 -11.67%
</TABLE>
Best quarter: Q4 '98: 29.00%
Worst quarter: Q4 '97: (27.28%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
-----------------------------------------------------------------------------------------------------------
MSCI IFC MORNINGSTAR
EMERGING EMERGING EMERGING
MARKETS MARKETS MARKETS
CLASS A FREE INDEX INDEX UNIVERSE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Past year................................................... (11.67%) (25.34%) (21.09%) (26.82%)
Since inception............................................. (9.49%) (12.30%) (12.35%) (9.09%)
</TABLE>
- -- FEES AND EXPENSES:
The following tables describe the fees and expenses that you may pay if
you buy and hold shares of the Fund:
<TABLE>
fees paid directly from
SHAREHOLDER FEES your investment
- -------------------------------------------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price)............................... none
Maximum deferred sales charge (load) (as a percentage of
purchase price)............................................. none
Maximum sales charge (load) imposed on reinvested
dividends................................................... none
Redemption fee*............................................... 2.00%**
Exchange fee.................................................. none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
**Deducted from net proceeds on shares redeemed (or exchanged)
within one month after purchase. This fee is retained by the Fund.
<TABLE>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
<S> <C>
Management fees.......................... 1.00%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 1.97%
Total annual Fund operating expenses..... 2.97%
Expenses reimbursed*..................... 1.29%
Net Fund operating expenses*............. 1.68%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- --------------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 171
3rd 644
5th 1,145
10th 2,522
</TABLE>
7
<PAGE> 40
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY SOUTH AMERICA FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
SOUTH AMERICA
FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal objective is long-term growth. Consideration of current
income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in equity securities and government
and corporate debt securities issued throughout South America, Central America
and the Spanish-speaking islands of the Caribbean.
The Fund is likely to have significant investments in Argentina, Brazil, Chile,
Colombia, Peru and Venezuela.
The Fund may invest in low rated debt securities to increase its potential
yield.
The Fund's management team uses a value approach to find stocks it believes are
undervalued relative to their long-term growth prospects or underlying asset
values.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
INTEREST RATE RISK: The Fund's debt security investments are susceptible to
decline in a rising interest rate environment.
CREDIT RISK: The market value of debt securities also tends to vary according to
the relative financial condition of the issuer. Many of the Fund's debt security
holdings may be considered below investment grade (commonly referred to as "high
yield" or "junk" bonds). Low-rated debt securities are considered speculative
and could significantly weaken the Fund's returns if the issuer defaults on its
payment obligations.
NON-DIVERSIFICATION RISK: The Fund is classified as "non-diversified" under the
Investment Company Act of 1940, and may therefore invest a greater percentage of
its assets in a particular issuer than a "diversified" fund. As a result, the
Fund may also be more susceptible than a diversified fund to the price movements
of certain securities it holds in its portfolio.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies, which characterizes many of the countries in which the
Fund may invest. As a result, the Fund is exposed to the following additional
risks:
- - securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of
8
<PAGE> 41
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
businesses, restrictions on foreign ownership or prohibitions against
repatriation of assets);
- - abrupt changes in exchange-rate regime or monetary policy;
- - unusually large currency fluctuations and currency-conversion costs; and
- - high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
REGIONAL RISK: The securities markets of certain Latin American countries are
substantially smaller, less developed, less liquid and more volatile than major
securities markets elsewhere in the world. For example, the limited market size
for a number of the Fund's portfolio holdings makes their prices vulnerable to
investor perceptions and traders who control large positions. Some Latin
American countries have also experienced unusually high inflation rates.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long term growth potential in
this sector of the world, but who can accept potentially dramatic fluctuations
in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
9
<PAGE> 42
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY SOUTH AMERICA FUND
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on November 1, 1994 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
(SOUTH AMERICA FUND BAR GRAPH)
<TABLE>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
SOUTH AMERICA FUND
------------------
<S> <C> <C>
'95 -17.28%
'96 24.22%
'97 7.03%
'98 -36.07%
</TABLE>
Best quarter Q2 '96: 14.34%
Worst quarter Q3 '98: (30.26%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
-------------------------------------------------------------------------------------------------------
MSCI EMF
LATIN MSCI MSCI
AMERICA BRAZIL ARGENTINA
CLASS A INDEX INDEX INDEX
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Past year................................................... (36.07%) (35.11%) (44.07%) (27.30%)
Since inception............................................. (11.90%) (6.61%) (8.88%) (2.00%)
</TABLE>
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
<S> <C> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price).................................... none
Maximum deferred sales charge (load) (as a
percentage of purchase price)............. none
Maximum sales charge (load) imposed on
reinvested dividends...................... none
Redemption fee*............................. 2.00%**
Exchange fee................................ none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
**Deducted from net proceeds on shares redeemed (or exchanged)
within one month after purchase. This fee is retained by the Fund.
<TABLE>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
<S> <C> <C>
Management fees............................ 1.00%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses............................. 3.64%
Total annual Fund operating expenses....... 4.64%
Expenses reimbursed*....................... 2.71%
Net Fund operating expenses*............... 1.93%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 196
3rd 720
5th 1,271
10th 2,775
</TABLE>
10
<PAGE> 43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
ABOUT INVESTMENT
STRATEGIES AND RISKS
- -- PRINCIPAL STRATEGIES
IVY ASIA PACIFIC FUND: The Fund seeks to achieve its investment objective of
long-term growth by investing primarily in securities issued in countries
throughout the Asia-Pacific region, which includes China, Hong Kong, India,
Indonesia, Malaysia, Pakistan, the Philippines, Singapore, Sri Lanka, South
Korea, Taiwan, Thailand and Vietnam. The Fund usually invests in at least three
different countries, and does not intend to concentrate its investments in any
particular industry.
IVY CHINA REGION FUND: The Fund seeks to achieve its investment objective of
long-term capital growth primarily by investing in the equity securities of
companies that are expected to profit from the economic development and growth
of the China Region through a direct business connection (such as an exchange
listing or significant profit base) in one or more China Region countries. The
Fund may invest more than 25% of its assets in the securities of issuers in a
single China Region country, and could have significantly more than 50% of its
assets invested in Hong Kong. The Fund expects to invest the balance of its
assets in the equity securities of companies whose current or expected
performance is considered to be strongly associated with the China Region. The
Fund's management team seeks to reduce risk by focusing on companies with strong
foreign joint venture partners, well-positioned consumer franchises or
monopolies, or that operate in strategic or protected industries.
IVY DEVELOPING NATIONS FUND: The Fund seeks to achieve its principal objective
of long-term capital growth by investing primarily in the equity securities of
companies that the Fund's manager believes will benefit from the economic
development and growth of emerging markets. The Fund considers an emerging
market country to be one that is generally viewed as "developing" or "emerging"
by the World Bank, the International Finance Corporation or the United Nations.
The Fund usually invests its assets in at least three different emerging market
countries, and may invest at least 25% of its assets in the securities of
issuers located in a single country.
IVY SOUTH AMERICA FUND: The Fund seeks to achieve its principal objective of
long-term capital growth by investing primarily in the securities markets of
South America, Mexico and Central America. The Fund normally invests its assets
in at least three different countries, and expects to focus its investments in
Argentina, Brazil, Chile, Colombia, Peru and Venezuela. The Fund's holdings are
concentrated in high-quality companies, selected for both their defensive
strengths and long-term prospects.
The Fund does not expect to concentrate its investments in any particular
industry. The Fund may, however, invest more than 5% of a portion of its assets
in a single issuer (see "Non-diversification risk", on page 8).
ALL FUNDS: The countries in which each Fund invests are selected on the basis of
a mix of factors that include long-term economic growth prospects, anticipated
inflation levels, and the effect of applicable government policies on local
business conditions. The Funds are managed using a value approach, which focuses
on financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Typically the securities purchased
are attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
- -- PRINCIPAL RISKS
GENERAL MARKET RISK:
As with any mutual fund, the value of a Fund's investments and the income they
generate will vary daily and generally reflect market conditions, interest
rates and other issuer-specific, political or economic developments.
Each Fund's share value will decrease at any time during which its security
holdings or other investment techniques are not performing as well
11
<PAGE> 44
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
as anticipated, and you could therefore lose money by investing in a Fund
depending upon the timing of your initial purchase and any subsequent
redemption.
OTHER RISKS: Since the Funds are likely to invest heavily in countries with
economies or securities markets that are relatively undeveloped, each Fund is
more susceptible to the risks associated with these types of securities than
funds that invest primarily in more established markets. Following is a
description of these risks, along with the risks commonly associated with the
other securities and investment techniques that the Funds' adviser considers
important in achieving each Fund's investment objective or in managing its
exposure to risk (and that could therefore have a significant effect on a Fund's
returns). Other investment methods that the Funds may use (such as derivative
investments), but that do not play a key role in their overall investment
strategies, are described in the Funds' Statement of Additional Information (see
back cover page for information on how you can receive a free copy).
- - COMMON STOCKS: Common stock represents a proportionate ownership interest in a
company. As a result, the value of common stock rises and falls with a
company's success or failure. The market value of common stock can fluctuate
significantly, with smaller companies being particularly susceptible to price
swings. Transaction costs in smaller-company stocks may also be higher than
those of larger companies.
- - DEBT SECURITIES: The Funds may invest in debt securities, and Ivy South
America Fund may at any given time have a significant portion of its assets
invested in such instruments. The value of debt securities rises and falls
inversely with fluctuations in interest rates. For example, as interest rates
decline the value of debt securities generally increases. Conversely, rising
interest rates tend to cause the value of debt securities to decrease. A
Fund's portfolio is therefore susceptible to losses in a rising interest rate
environment. The market value of debt securities also tends to vary according
to the relative financial condition of the issuer. Bonds with longer
maturities tend to be more volatile than bonds with shorter maturities.
A Fund may invest a portion of its assets in low-rated debt securities
(sometimes referred to as "high yield" or "junk" bonds). In general, low-
rated debt securities offer higher yields due to the increased risk that the
issuer will be unable to meet its obligations on interest or principal
payments at the time called for by the debt instrument. For this reason, these
bonds are considered speculative and could significantly weaken the Fund's
returns.
Ivy South America Fund may have significant holdings in sovereign debt. For a
variety of reasons (such as cash flow problems, limited foreign reserves, and
political constraints), the governmental entity that controls the repayment of
sovereign debt may not be able or willing to repay the principal or interest
when due. A governmental entity's ability to honor its debt obligations to the
Fund may also be contingent on its receipt from others (such as the
International Monetary Fund and more solvent foreign governments) of specific
disbursements, which may in turn be conditioned on the perceived health of the
governmental entity's economy and/or its implementation of economic reforms.
If any of these conditions fail, the Fund could lose the entire value of its
investment for an indefinite period of time.
- - FOREIGN SECURITIES: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect each Fund's performance favorably or
unfavorably, depending upon prevailing conditions at any given time. For
example, the securities markets of many foreign countries may be smaller, less
liquid and subject to greater price volatility than those in the U.S. Foreign
investing may also involve brokerage costs and tax considerations that are not
usually present in the U.S. markets. Many of the Funds' securities also are
denominated in foreign currencies and the value of each Fund's investments, as
measured in U.S. dollars, may be affected favorably or unfavorably by changes
in foreign currency exchange rates and exchange control regulations. Currency
conversions can also be costly.
12
<PAGE> 45
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Other factors that can affect the value of a Fund's foreign investments
include the comparatively weak supervision and regulation by some foreign
governments of securities exchanges, brokers and issuers, and the fact that
many foreign companies may not be subject to uniform accounting, auditing and
financial reporting standards. It may also be difficult to obtain reliable
information about the securities and business operations of certain foreign
issuers. Settlement of portfolio transactions may also be delayed due to local
restrictions or communication problems, which can cause a Fund to miss
attractive investment opportunities or impair its ability to dispose of
securities in a timely fashion (resulting in a loss if the value of the
securities subsequently declines).
- - SPECIAL EMERGING-MARKET CONCERNS: The risks of investing in foreign securities
are heightened in countries with new or developing economies. Among these
additional risks are the following:
- securities that are even less liquid and more volatile than those in
more-developed foreign countries;
- less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- increased settlement delays;
- unusually high inflation rates (which in extreme cases can cause the value
of a country's assets to erode sharply);
- unusually large currency fluctuations and currency-conversion costs; and
- high national-debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- - DEPOSITORY RECEIPTS: Each Fund may acquire interests in foreign issuers in the
form of sponsored or unsponsored American Depository Receipts ("ADRs"), Global
Depository Receipts ("GDRs") and similar types of depository receipts. ADRs
typically are issued by a U.S. bank or trust company and represent ownership
of the underlying securities issued by a foreign corporation. GDRs and other
types of depository receipts are usually issued by foreign banks or trust
companies. Each Fund's investments in ADRs, GDRs and other depository receipts
are viewed as investments in the underlying securities.
Depository receipts can be difficult to price and are not always
exchange-listed. Unsponsored depository programs also are organized
independently without the cooperation of the issuer of the underlying
securities. As a result, information concerning the issuer may not be as
current or as readily available as in the case of sponsored depository
instruments, and their prices may be more volatile than if they were sponsored
by the issuers of the underlying securities.
- - FOREIGN CURRENCY EXCHANGE TRANSACTIONS AND FORWARD FOREIGN CURRENCY CONTRACTS:
A Fund may, but is not required to, use foreign currency exchange transactions
and forward foreign currency contracts to hedge certain market risks (such as
interest rates, currency exchange rates and broad or specific market
movement). These investment techniques involve a number of risks, including
the possibility of default by the counterparty to the transaction and, to the
extent the adviser's judgment as to certain market movements is incorrect, the
risk of losses that are greater than if the investment technique had not been
used. For example, there may be an imperfect correlation between a Fund's
portfolio holdings of securities denominated in a particular currency and the
forward contracts entered into by the Fund. An imperfect correlation of this
type may prevent a Fund from achieving the intended hedge or expose the Fund
to the risk of currency exchange loss. In addition, although the use of these
investment techniques for hedging purposes should tend to minimize the risk of
loss due to a decline in the value of the hedged position, they also tend to
limit any potential gain that might result from an increase in the position's
value.
- - ILLIQUID SECURITIES: Each Fund may invest up to 15% of its net assets in
"illiquid securities," which are assets that may not be disposed of in the
ordinary course of business within seven days at roughly the value at which
the Fund has valued the assets. Some of these may be "restricted securities,"
which cannot be sold to the public without registration under the Securities
Act of 1933 (in the absence of an exemption) or
13
<PAGE> 46
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
because of other legal or contractual restrictions on resale. Thus, while
illiquid securities may offer the potential for higher returns than more
readily marketable securities, there is a risk that a Fund will not be able to
dispose of them promptly at an acceptable price.
- - OTHER INVESTMENT COMPANIES: Each Fund may invest up to 10% of its total assets
in the shares of other investment companies. As a shareholder of an investment
company, a Fund would bear its ratable share of the fund's expenses (which
often include an asset-based management fee). A Fund could also lose money by
investing in other investment companies, since the value of their respective
investments and the income they generate will vary daily based on prevailing
market conditions.
- - TEMPORARY DEFENSIVE POSITIONS: Each Fund may occasionally take a temporary
defensive position and invest without limit in U.S. Government securities,
investment-grade debt securities, and cash and cash equivalents such as
commercial paper, short-term notes and other money market securities. When a
Fund assumes such a defensive position it may not achieve its investment
objective.
- - BORROWING: For temporary or emergency purposes, Ivy China Region Fund may
borrow up to 10% of the value of its total assets from qualified banks. Ivy
Asia Pacific Fund, Ivy Developing Nations Fund and Ivy South America Fund may
borrow up to one-third of the value of its total assets from qualified banks,
but will not buy securities whenever its outstanding borrowings exceed 10% of
the value of its total assets. Borrowing may exaggerate the effect on a Fund's
share value of any increase or decrease in the value of the securities it
holds. Money borrowed will also be subject to interest costs.
- -- OTHER IMPORTANT INFORMATION
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem"). The inability of computer-
based systems to make this distinction could have a seriously adverse effect on
the handling of securities trades, pricing and account services worldwide. The
Funds' service providers are taking steps that each believes are reasonably
designed to address the Year 2000 Problem with respect to the computer systems
that they use. Information about the year 2000 readiness of the issuers of the
securities that the Funds may purchase is also taken into consideration during
the investment decision-making process (though such information may not be
readily available, particularly in non-U.S. countries, and may be limited to
public filings or statements from company representatives that are not
independently verifiable).
The Funds' managers believe these steps will be sufficient to avoid any material
adverse impact on the Funds. At this time, however, there can be no assurance
that significant problems will not occur (which either directly or indirectly
may cause a Fund to lose money).
14
<PAGE> 47
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MANAGEMENT
- -- INVESTMENT ADVISOR
Ivy Management, Inc. ("IMI")
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
IMI provides investment advisory and business management services to the Funds.
IMI is an SEC-registered investment advisor with over $5 billion in assets under
management, and provides similar services to the other fifteen series of Ivy
Fund. For the Funds' fiscal year ending December 31, 1998, the Funds each paid
IMI a fee that was equal to 1.00% of the Funds' respective average net assets.
- -- PORTFOLIO MANAGEMENT
Each Fund is managed by a team of investment professionals that is supported by
research analysts who acquire information on regional and country-specific
economic and political developments and monitor individual companies. These
analysts use a variety of research sources that include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
- - information from third-party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
15
<PAGE> 48
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
SHAREHOLDER
INFORMATION
- -- PRICING OF FUND SHARES
Each Fund calculates its share price by dividing the value of the Fund's net
assets by the total number of its shares outstanding as of the close of regular
trading (usually 4:00 p.m. Eastern time) on the New York Stock Exchange on each
day the Exchange is open for trading (normally any weekday that is not a
national holiday).
Each portfolio security that is listed or traded on a recognized stock exchange
is valued at the security's last sale price on the exchange on which it was
purchased.
If no sale is reported at that time, the average between the last bid and asked
prices is used. Securities and other Fund assets for which market prices are not
readily available are priced at their "fair value" as determined by IMI in
accordance with procedures approved by the Funds' Board of Trustees. IMI may
also price a foreign security at its fair value if events materially affecting
the estimated value of the security occur between the close of the foreign
exchange on which the security is principally traded and the time as of which a
Fund prices its shares. Fair-value pricing under these circumstances is designed
to protect existing shareholders from the actions of short-term investors
trading into and out of a Fund in an attempt to profit from short-term market
movements. When such fair-value pricing occurs, however, there may be some
period of time during which a Fund's share price and/or performance information
is not available.
The number of shares you receive when you place a purchase or exchange order,
and the payment you receive after submitting a redemption request, is based on a
Fund's net asset value next determined after your instructions are received in
proper form by Ivy Mackenzie Services Corp. ("IMSC") (the Fund's transfer agent)
or by your registered securities dealer. Since the Funds normally invest in
securities that are listed on foreign exchanges that may trade on weekends or
other days when the Funds do not price their shares, each Fund's share value may
change on days when shareholders will not be able to purchase or redeem the
Fund's shares.
- -- HOW TO BUY SHARES
Please read these sections below carefully before investing.
Advisor Class shares are offered through this Prospectus only to the following
investors:
- - trustees or other fiduciaries purchasing shares for employee benefit plans
that are sponsored by organizations that have at least 1,000 employees;
- - any account with assets of at least $10,000 if (a) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion, and where the investor pays such person as compensation for his
advice and other services an annual fee of at least .50% on the assets in the
account, or (b) such account is established under a "wrap fee" program and the
account holder pays the sponsor of the program an annual fee of at least .50%
on the assets in the account;
- - officers and Trustees of the Ivy Fund (and their relatives);
- - directors or employees of Mackenzie Investment Management Inc. or its
affiliates;
- - directors, officers, partners, registered representatives, employees and
retired employees (and their relatives) of dealers having a sales agreement
with IMDI (or trustees or custodians of any qualified retirement plan or IRA
established for the benefit of any such person.)
The following investment minimums, sales charges and expenses apply.
<TABLE>
<S> <C>
- ---------------------------------------------------
Minimum initial investment*............... $10,000
Minimum subsequent investment*............ $250
Initial sales charge...................... None
CDSC...................................... None
Service and distribution fees............. None
</TABLE>
*Minimum initial and subsequent investments for retirement plans are $25.
- -- SUBMITTING YOUR PURCHASE ORDER
INITIAL INVESTMENTS: Complete and sign the Account Application appearing at the
end of this
16
<PAGE> 49
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prospectus. Enclose a check payable to the Fund in which you wish to invest. You
should note on the check that you wish to purchase Advisor Class shares (see
page 16 for minimum initial investments.) Deliver your application materials to
your registered representative or selling broker, or send them to one of the
addresses below:
- - BY REGULAR MAIL:
Ivy Mackenzie Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
- - BY COURIER:
Ivy Mackenzie Services Corp.
700 South Federal Hwy.
Boca Raton, FL 33432-6114
- -- BUYING ADDITIONAL SHARES
There are several ways to increase your investment in a Fund:
- - BY MAIL: Send your check with a completed investment slip (attached to your
account statement) or written instructions indicating the account
registration, Fund number or name, and account number. Mail to one of the
addresses above.
- - THROUGH YOUR BROKER: Deliver to your registered representative or selling
broker the investment slip attached to your statement, or written
instructions, along with your payment.
- - BY WIRE: Purchases may also be made by wiring money from your bank account to
your Ivy account. Your bank may charge a fee for wiring funds. Before wiring
any funds, please call IMSC at 800.777.6472. Wiring instructions are as
follows:
First Union National Bank of Florida
Jacksonville, FL
ABA #063000021
Account #2090002063833
For further credit to:
Your Account Registration
Your Fund Number and Account Number
- - BY AUTOMATIC INVESTMENT METHOD: You can authorize to have funds electronically
drawn each month from your bank account and invested as a purchase of shares
into your Ivy Fund account. Complete sections 6A and 7B of the Account
Application.
- -- HOW TO REDEEM SHARES
SUBMITTING YOUR REDEMPTION ORDER: You may redeem your Fund shares through your
registered securities dealer or directly through IMSC. If you choose to redeem
through your registered securities dealer, the dealer is responsible for
properly transmitting redemption orders in a timely manner. If you choose to
redeem directly through IMSC, you have several ways to submit your request:
- - BY MAIL: Send your written redemption request to IMSC at one of the addresses
on this page. Be sure that all registered owners listed on the account sign
the request. Medallion signature guarantees and supporting legal documentation
may be required. When you redeem, IMSC will normally send redemption proceeds
to you on the next business day, but may take up to seven days (or longer in
the case of shares recently purchased by check).
- - BY TELEPHONE: Call IMSC at 800.777.6472 to redeem from your individual, joint
or custodial account. To process your redemption order by telephone, you must
have telephone redemption privileges on your account. IMSC employs reasonable
procedures that require personal identification prior to acting on redemption
instructions communicated by telephone to confirm that such instructions are
genuine. In the absence of such procedures, the Fund or IMSC may be liable for
any losses due to unauthorized or fraudulent telephone instructions. Requests
by telephone can only be accepted for amounts up to $50,000.
- - BY SYSTEMATIC WITHDRAWAL PLAN ("SWP"): You can authorize to have funds
electronically drawn each month from your Ivy Fund account and deposited
directly into your bank account. Certain minimum balances and minimum
distributions apply. Complete section 6B of the Account Application to add
this feature to your account.
RECEIVING YOUR REDEMPTION PROCEEDS: You can receive redemption proceeds through
a variety of payment methods:
- - BY CHECK: Unless otherwise instructed in writing, checks will be made payable
to the
17
<PAGE> 50
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
EMERGING MARKET FUNDS
- --------------------------------------------------------------------------------
current account registration and sent to the address of record.
- - BY FEDERAL FUNDS WIRE: Proceeds will be wired on the next business day to a
pre-designated bank account. Your account will be charged $10 each time
redemption proceeds are wired to your bank, and your bank may also charge you
a fee for receiving a Federal Funds wire.
- - BY ELECTRONIC FUNDS TRANSFER ("EFT"): For SWP redemptions only.
REDEMPTION FEE: The Funds can experience substantial price fluctuations and are
intended for long-term investors. Redemption fees for the Funds are intended to
encourage long-term investment, to avoid transaction and other expenses caused
by early redemptions, and to facilitate portfolio management. This fee may be
waived at the discretion of IMSC. Effective June 1, 1999, the Funds may charge a
2.00% fee for redemptions or exchanges within one month of the date of purchase.
This fee is not a CDSC, is not a commission, and does not benefit IMI or IMSC in
any way. The redemption fee will be assessed on the net asset value of the
shares redeemed or exchanged and will be deducted from the redemption proceeds
otherwise payable to the shareholder. Each Fund will retain the fee charged.
IMPORTANT REDEMPTION INFORMATION:
- - A redemption fee will be charged on the asset value of shares redeemed within
one month of purchase.
- - If you own shares of more than one class of a Fund, the Fund will redeem first
the shares having the highest 12b-1 fees, unless you instruct otherwise.
- - A Fund may (on 60 days' notice) redeem the accounts of shareholders whose
investment, including sales charges paid, has been less than $1,000 for more
than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares recently
purchased by check) to send redemption proceeds.
- -- HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Ivy fund, subject to
certain restrictions (see "Important exchange information").
SUBMITTING YOUR EXCHANGE ORDER: You may submit an exchange request to IMSC as
follows:
- - BY MAIL: Send your written exchange request to IMSC at one of the addresses on
page 17 of this Prospectus. Be sure that all registered owners listed on the
account sign the request.
- - BY TELEPHONE: Call IMSC at 800.777.6472 to authorize an exchange transaction.
To process your exchange order by telephone, you must have telephone exchange
privileges on your account. IMSC employs reasonable procedures that require
personal identification prior to acting on exchange instructions communicated
by telephone to confirm that such instructions are genuine. In the absence of
such procedures, the Fund or IMSC may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
IMPORTANT EXCHANGE INFORMATION:
- - You must exchange into the same share class you currently own.
- -- Exchanges are considered taxable events and may result in a capital gain or
a capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange privilege
for the purpose of timing short-term market fluctuations. The Fund may
therefore limit the frequency of exchanges by a shareholder, charge a
redemption fee or cancel a shareholder's exchange privilege if at any time it
appears that such market-timing strategies are being used. For example,
shareholders exchanging more than five times in a 12-month period may be
considered to be using market-timing strategies. An exchange fee will be
charged on the asset value of shares exchanged within one month of purchase.
- -- DIVIDENDS, DISTRIBUTIONS AND TAXES
- - The Funds generally declare and pay dividends and capital gain distributions
(if any) at least once a year.
- - Dividends and distributions are "reinvested" in additional Fund shares unless
you request to receive them in cash.
- - Reinvested dividends and distributions are added to your account at NAV and
are not subject to a
18
<PAGE> 51
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
sales charge regardless of which share class you own.
- - Cash dividends and distributions can be sent to you:
- - BY MAIL: a check will be mailed to the address of record unless otherwise
instructed.
- - BY ELECTRONIC FUNDS TRANSFER: your proceeds will be directly deposited into
your bank account.
To change your dividend and/or distribution options, call IMSC at 800.777.6472.
Dividends ordinarily will vary from one class to another. The Funds intend to
declare and pay dividends annually. The Funds will distribute net investment
income and net realized capital gains, if any, at least once a year. The Funds
may make an additional distribution of net investment income and net realized
capital gains to comply with the calendar year distribution requirement under
the excise tax provisions of Section 4982 of the Internal Revenue Code of 1986,
as amended (the "Code").
Dividends paid out of a Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to you as
ordinary income. If a portion of a Fund's income consists of dividends paid by
U.S. corporations, a portion of the dividends paid by the Fund may be eligible
for the corporate dividends-received deduction. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, are taxable to you as long-term capital gains, regardless of
how long you have held your shares. Dividends are taxable to you in the same
manner whether received in cash or reinvested in additional Fund shares.
If shares of a Fund are held in a tax-deferred account, such as a retirement
plan, income and gain will not be taxable each year. Instead, the taxable
portion of amounts held in a tax-deferred account generally will be subject to
tax as ordinary income only when distributed from that account.
A distribution will be treated as paid to you 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 a Fund during January of the
following calendar year. In certain years, you may be able to claim a credit or
deduction on your income tax return for your share of foreign taxes paid by your
Fund.
Upon the sale or exchange of your Fund shares, you may realize a capital gain or
loss which will be long term or short term, generally depending upon how long
you held your shares.
A Fund may be required to withhold U.S. Federal income tax at the rate of 31% of
all distributions payable to you if you fail to provide the Fund with your
correct taxpayer identification number or to make required certifications, or if
you have been notified by the Internal Revenue Service that you are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against your U.S. Federal income tax liability.
Fund distributions may be subject to state, local and foreign taxes.
You should consult with your tax adviser as to the tax consequences of an
investment in the Funds, including the status of distributions from the Fund
under applicable state or local law.
19
<PAGE> 52
[IVY LEAF LOGO]
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each
Fund's financial performance and reflects results for a single Fund share.
Ivy Asia Pacific Fund and Ivy South America Fund had no Advisor Class
shares outstanding at December 31, 1998, and accordingly, no financial
information is presented. The total returns in the table represent the rate
an investor would have earned (or lost) on an investment in a Fund
(assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report,
along with each Fund's financial statements, is included in its Annual
Report to shareholders (which is available upon request).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
February 10, 1998
(Commencement)
to December 31,
IVY CHINA REGION FUND 1998
- -----------------------------------------------------------------------
<S> <C>
ADVISOR CLASS
SELECTED PER SHARE DATA -----------------
Net asset value, beginning of period............ $ 7.89
-----------------
Loss from investment operations
Net investment income(a)...................... .08
Net gains or losses on securities (both
realized and unrealized).................... (1.62)
-----------------
Total from investment operations.............. (1.54)
-----------------
Less distributions
Dividends (from net investment income)........ .08
-----------------
Total distributions......................... .08
-----------------
Net asset value, end of period.................. $ 6.27
=================
Total return (%)(b)............................. (19.56)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)........ $ 10
Ratio of expenses to average net assets(c)
With expense reimbursement (%)(d)............. 2.92
Without expense reimbursement (%)(d).......... 3.48
Ratio of net investment income to average net
assets (%)(a)(d).............................. .98
Portfolio turnover rate (%)..................... 56
</TABLE>
(a) Net investment income (loss) is net of expenses reimbursed by manager.
(b) Total return represents aggregate total return and does not reflect a sales
charge.
(c) Total expenses include fees paid indirectly, if any, through an expense
offset arrangement.
(d) Annualized
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
April 30, 1998
(COMMENCEMENT)
IVY DEVELOPING TO DECEMBER 31,
NATIONS FUND 1998
- ---------------------------------------------------------------------
ADVISOR CLASS
SELECTED PER SHARE DATA ---------------
<S> <C>
Net asset value, beginning of period............ $ 7.48
---------------
Loss from investment operations
Net investment income(a)...................... .04
Net gains or losses on securities (both
realized and unrealized).................... (1.47)
---------------
Total from investment operations.............. (1.43)
---------------
Net asset value, end of period.................. $ 6.05
===============
Total return (%)(b)............................. (19.06)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)........ $ 82
Ratio of expenses to average net assets(c)
With expense reimbursement (%)(d)............. 1.68
Without expense reimbursement (%)(d).......... 2.97
Ratio of net investment income to average net
assets (%)(a)(d).............................. 1.38
Portfolio turnover rate (%)..................... 47
</TABLE>
(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return represents aggregate total return and does not reflect a sales
charge.
(c) Total expenses include fees paid indirectly, if any, through an expense
offset arrangement.
(d) Annualized
20
<PAGE> 53
Account
Application
FUND USE ONLY
___________________
Account Number
___________________
Dealer/Branch/Rep
___________________
Account Type/Soc Cd
[IVY FUNDS LOGO]
Please mail applications and checks to: USE FOR ADVISOR
Ivy Mackenzie Services Corp., CLASS ONLY
P.O. Box 3022, Boca Raton, Florida 33431-0922
This application should not be used for retirement accounts for which Ivy
Fund (IBT) is custodian.
1 REGISTRATION
Name ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Address _________________________________________________________________
City _______________________________________ State ________ Zip _________
Phone # (day) (____)___________________ Phone # (evening) (____)_________
__ Individual __ UGMA/UTMA __ Sole proprietor
__ Joint tenant __ Corporation __ Trust
__ Estate __ Partnership __ Other
Date of trust _________________________ Minor's state of residence ____
2 TAX I.D.
Citizenship: __ U.S. __ Other (please specify): ________________
Social security # ____- __- ____ or Tax identification # ___________
Under penalties of perjury, I certify by signing in Section 8 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 "Dividends, distributions and taxes" 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 IMSC of any purchases made under a
Letter of Intent or Rights of Accumulation.
Dealer name ____________________________________________________________
Branch office address __________________________________________________
City ___________________________________________ State ____ Zip ________
Representative's name __________________________________________________
Representative's # ____________ Representative's phone # ______________
Authorized signature of dealer ________________________________________
4 INVESTMENTS
A. Enclosed is my check ($10,000 minimum) for $ __________ made payable
to the appropriate fund. Please invest it in Advisor Class shares of
the following fund(s):
<TABLE>
<S> <C>
$ _____________ Ivy Asia Pacific Fund $ ______________ Ivy Developing Nations Fund
$ _____________ Ivy China Region Fund $ ______________ Ivy South America Fund
</TABLE>
B. FOR DEALER USE ONLY
<TABLE>
<S> <C> <C> <C>
Confirmed trade orders: _______________ __________________ __________________
Confirm Number Number of Shares Trade Date
</TABLE>
<PAGE> 54
5 DISTRIBUTION OPTIONS
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.
A. ___ Reinvest all dividends and capital gains into additional shares
of a different Ivy fund account.
Fund name: _______________________________________________________
Account #: _______________________________________________________
B. ___ Pay all dividends in cash and reinvest capital gains into
additional shares in this account or a different Ivy fund
account.
Fund name: _______________________________________________________
Account #: _______________________________________________________
C. ___ Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN B OR C ABOVE, BE SENT
TO: _____ the address listed in the registration
_____ the special payee listed in Section 7A (by mail)
_____ the special payee listed in Section 7B (by EFT)
6 OPTIONAL SPECIAL FEATURES
A. AUTOMATIC INVESTMENT METHOD (AIM)
___ I wish to have my bank account listed in section 7B automatically
debited via EFT on a predetermined frequency and invested into my
Ivy Fund account listed below.
1. Withdraw $________ for each time period indicated below and invest my
bank proceeds in Advisor Class shares of the following Ivy fund:
Fund name: _______________________________________________________
Account #: _______________________________________________________
2. Debit my bank account:
_____ Annually (on the _____ day of the month of
___________________________________).
_____ Semiannually (on the _____ day of the months of
________ and __________).
_____ Quarterly (on the _____ day of the first/second/third
month of each calendar quarter). (CIRCLE ONE)
_____ Monthly*_____ once per month on the _____ day
_____ twice per month on the _____ days
_____ 3 times per month on the _____ days
_____ 4 times per month on the _____ days
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)**
_____ I wish to have my Ivy Fund account automatically debited on a
predetermined frequency and the proceeds sent to me per my
instructions below.
1. Withdraw ($250 minimum) $_____ for each time period indicated
below from the following Ivy Fund account:
Fund name: ______________________________________________________
Account #: ______________________________________________________
2. Withdraw from my Ivy Fund account:
_____ Annually (on the _____ day of the month of
_______________).
_____ Semiannually (on the _____ day of the months of
_______________ and _______________).
_____ Quarterly (on the _____ day of the first/second/third
month of each calendar quarter. (CIRCLE ONE)
_____ Monthly*_____ once per month on the _____ day
_____ twice per month on the _____ days
_____ 3 times per month on the _____ days
_____ 4 times per month on the _____ days
3. I request the withdrawal proceeds be:
_____ sent to the address listed in the registration
_____ sent to the special payee listed in section 7A or 7B.
_____ invested into additional Advisor Class shares of a
different Ivy Fund:
Fund name: ______________________________________________________
Account #: ______________________________________________________
Note: A minimum balance of $10,000 is required to establish a SWP.
6. OPTIONAL SPECIAL FEATURES (CONT.)
C. FEDERAL FUNDS WIRE
FOR REDEMPTION PROCEEDS** _____ yes _____ no
By checking "yes" immediately above, I authorize IMSC 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).
(COMPLETE SECTION 7B).
D. TELEPHONE EXCHANGES** _____ yes _____ no
By checking "yes" immediately above, I authorize exchanges by telephone
among the Ivy 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. TELEPHONIC REDEMPTIONS** _____ yes _____ no
By checking "yes" immediately above, the Fund or its agents are authorized
to honor telephone instructions from any person as more fully described in
the Prospectus for the redemption of Fund shares. The amount of the
redemption shall not exceed $50,000 and the proceeds are to be payable to
the shareholder of record and mailed to the address of record. To change
this option once established, written instructions must be received from
the shareholder of record or the current registered representative.
If neither box is checked, the telephone redemption privilege will be
provided automatically.
* There must be a period of at least seven calendar days between each
investment (AIM)/withdrawal (SWP) period.
** This option may not be used if shares are issued in certificate form.
7 SPECIAL PAYEE
A. MAILING ADDRESS: Please send all disbursements to this payee:
Name of bank or individual _______________________________________________
Account # (if applicable) ________________________________________________
Street ___________________________________________________________________
City _________________________________________ State _____ Zip ___________
B. FED WIRE/EFT INFORMATION
Financial institution ____________________________________________________
ABA # ____________________________________________________________________
Account # ________________________________________________________________
Street ___________________________________________________________________
City _________________________________________ State _____ Zip ___________
(PLEASE ATTACH A VOIDED CHECK.)
8 SIGNATURES
Investors should be aware that the failure to check the "No" under
Section 6D or 6E above means that the Telephone Exchange/ Redemption
Privileges will be provided. The Fund employs reasonable procedures that
require personal identification prior to acting on exchange/redemption
instructions communicated by telephone to confirm that such instructions
are genuine. In the absence of such procedures, the Fund may be liable for
any losses due to unauthorized or fraudulent telephone instructions.
Please see "How to exchange shares" and "How to redeem shares" in the
Prospectus for more information on these privileges.
I certify to my legal capacity to purchase or redeem shares of the
Fund for my own account or for the account of the organization named in
Section 1. I have received a current Prospectus and understand its terms
are incorporated in this application by reference. I am certifying my
taxpayer information as stated in Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID
BACKUP WITHHOLDING.
_________________________________________ ____________________
Signature of Owner, Custodian, Trustee or Date
Corporate Officer
_________________________________________ ____________________
Signature of Owner, Custodian, Trustee or Date
Corporate Officer
(Remember to sign Section 8)
<PAGE> 55
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- QUOTRON SYMBOLS AND CUSIP NUMBERS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
FUND SYMBOL CUSIP
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Ivy Asia Pacific Fund Advisor Class * 465897312
Ivy China Region Fund Advisor Class * 465897270
Ivy Developing Nations Fund Advisor Class * 465897163
Ivy South America Fund Advisor Class * 465897171
- ----------------------------------------------------------------------------------------
</TABLE>
* Symbol not assigned as of this printing
<PAGE> 56
(Ivy Funds Logo)
-- HOW TO RECEIVE MORE
INFORMATION ABOUT THE FUNDS
Additional information about the Funds and their investments is
contained in the Funds' Statement of Additional Information dated May
3, 1999 (the "SAI"), which is incorporated by reference into this
Prospectus, and each Fund's annual and semiannual reports to
shareholders. Each Fund's annual report includes a discussion of the
market conditions and investment strategies that significantly affected
the Fund's performance during its most recent fiscal year. The SAI and
annual and semiannual reports are available upon request and without
charge from the Distributor at the following address and phone number.
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432
800.456.5111
Information about the Funds (including the SAI and annual and
semiannual reports) may also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. (please call 1-800-SEC-0330 for
further details). Information about the Funds is also available on the
SEC's Internet Website (www.sec.gov), and copies of this information
may be obtained, upon payment of a copying fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-6009.
Investment Company Act File No. 811-1028
-- SHAREHOLDER
INQUIRIES
Please call
Ivy Mackenzie
Services Corp.,
the Funds' transfer agent,
regarding any other
inquiries about the Funds
at 1.800.777.6472.
www.ivymackenzie.com
E-mail:
[email protected]
<PAGE> 57
Ivy Funds Logo
This is your prospectus from
IVY MACKENZIE
DISTRIBUTORS, INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
800.456.5111
May 3, 1999 IVY INTERNATIONAL EQUITY FUNDS
IVY EUROPEAN OPPORTUNITIES FUND
IVY GLOBAL FUND
IVY GLOBAL NATURAL RESOURCES FUND
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
IVY INTERNATIONAL FUND II
IVY INTERNATIONAL SMALL COMPANIES FUND
IVY PAN-EUROPE FUND
Ivy Fund is a registered open-end investment company consisting of
nineteen separate portfolios. This Prospectus relates to the Class A,
Class B and Class C shares of the seven funds listed above (the "Funds"),
and the Class I shares of Ivy European Opportunities Fund, Ivy Global
Science & Technology Fund, Ivy International Fund II and Ivy
International Small Companies Fund. The Funds also offer Advisor Class
shares, which are described in a separate prospectus.
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy or accuracy of this
Prospectus. Any representation to the contrary is a criminal offense.
Investments in the Funds are not deposits of any bank and are not
federally insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
- -- CONTENTS
2 Ivy European Opportunities Fund
4 Ivy Global Fund
6 Ivy Global Natural Resources Fund
8 Ivy Global Science &
Technology Fund
10 Ivy International Fund II
12 Ivy International Small
Companies Fund
14 Ivy Pan-Europe Fund
16 Additional Information
about investment strategies
and risks
20 Management
22 Shareholder information
30 Financial highlights
37 Account application
<TABLE>
<S> <C>
OFFICERS
Michael G. Landry, Chairman
Keith J. Carlson, President
James W. Broadfoot, Vice President
C. William Ferris, Secretary/Treasurer
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, Massachusetts
CUSTODIAN AUDITORS
Brown Brothers Harriman & Co. PricewaterhouseCoopers LLP
Boston, Massachusetts Fort Lauderdale, Florida
TRANSFER AGENT INVESTMENT MANAGER
Ivy Mackenzie Services Corp. Ivy Management, Inc.
PO Box 3022 700 South Federal Highway
Boca Raton, Florida 33431-0922 Boca Raton, Florida 33432
800.777.6472 800.456.5111
</TABLE>
[Mackenzie Logo]
<PAGE> 58
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY EUROPEAN OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
- -------------------------------
IVY EUROPEAN
OPPORTUNITIES FUND
- -- INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital growth by investing in the
securities markets of Europe.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in the equity
securities of European companies, which may include:
- - companies operating in Europe's emerging markets;
- - small-capitalization companies in the more developed markets of Europe; and
- - large European companies, or European companies of any size that provide
special investment opportunities (such as privatized companies or those
providing exceptional value).
The fund may also invest in European debt securities, up to 20% of which may be
low-rated (commonly referred to as "high yield" or "junk" bonds).
The Fund's manager uses a "bottom-up" investment approach, focusing on prospects
for long term earnings growth.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
SMALL AND MEDIUM-SIZED COMPANY RISK: Securities of smaller companies may be
subject to more abrupt or erratic market movements than the securities of
larger, more established companies, since smaller companies tend to be thinly
traded and because they are subject to greater business risk. Transaction costs
in smaller-company stocks may also be higher than those of larger companies.
INTEREST RATE RISK: The Fund's debt security investments are susceptible to
decline in a rising interest rate environment, even where "management risk" is
not a factor.
CREDIT RISK: The market value of debt securities also tends to vary according to
the relative financial condition of the issuer. Certain of the Fund's debt
security holdings may be considered below investment grade (commonly referred to
as "high yield" or "junk" bonds). Low-rated debt securities are considered
speculative and could weaken the Fund's returns if the issuer defaults on its
payment obligations.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
EURO CONVERSION RISK: On January 1, 1999, a new European currency called the
"euro" was introduced and adopted for use by eleven European countries. The
transition to daily usage of the euro will occur during the period from January
1, 1999 through December 31, 2001, at which time euro
(GLOBE ARTWORK)
2
(GLOBE ARTWORK)
<PAGE> 59
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
bills and coins will be put into circulation. Certain European Union members,
including the United Kingdom, did not officially implement the euro on January
1, 1999 and may cause market disruptions when and if they decide to do so.
Should this occur, the Fund could experience investment losses.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
- -- PERFORMANCE INFORMATION
The Fund commenced operations on April 30, 1999, therefore no information is
available.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- ------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a percentage
of offering price)........ 5.75% none none none
Maximum deferred sales
charge (load)(as a
percentage of purchase
price).................... none 5.00% 1.00% none
Maximum sales charge
(load) imposed on
reinvested dividends...... none none none none
Redemption fee*........... none none none none
Exchange fee.............. none none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- -----------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees........... 1.00% 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1) fees...... 0.25% 1.00% 1.00% none
Other expenses............ 0.95% 0.95% 0.95% 0.86%
Total annual Fund
operating expenses*....... 2.20% 2.95% 2.95% 1.86%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
- -- EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st $ 785 $ 798 $ 298 $ 398 $ 298 $189
3rd 1,330 1,323 1,023 1,023 1,023 699
</TABLE>
3
<PAGE> 60
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY GLOBAL FUND
- --------------------------------------------------------------------------------
- -------------------------------
IVY
GLOBAL
FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth. Any income realized will be incidental.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the equity securities of
companies in at least three different countries, including the United States.
The Fund might engage in foreign currency exchange transactions and forward
foreign currency contracts to control its exposure to certain risks.
The Fund's management team uses a disciplined value approach while looking for
investment opportunities around the world. The Fund is expected to have some
emerging markets exposure in an attempt to achieve higher returns over the long
term.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
Since the Fund may invest a substantial portion of its assets in these
countries, it is exposed to the following additional risks:
- - securities that are even less liquid and more volatile than those in more
developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange rate regime or monetary policy;
- - unusually large currency fluctuations and currency conversion costs; and
- - high national debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
4
(GLOBE ARTWORK)
<PAGE> 61
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns since its inception on
April 18, 1991 compare with those of a broad measure of market performance. The
Fund's past performance is not an indication of how the Fund will perform in the
future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES* December 31
- -------------------------------------------------------------------
[CHART]
CLASS A SHARES
--------------
<S> <C>
'92' 2.74
'93' 29.63
'94' -4.6
'95' 12.08
'96' 16.21
'97' -8.72
'98' 8.59
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q4 '98: 24.15%
Worst quarter Q3 '98: (20.47%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
------------------------------------------------------------------------------
MSCI
-------------------------
WORLD EAFE EMF
CLASS A CLASS B CLASS C INDEX INDEX INDEX
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Past year............ 2.35% 2.69% 6.30% 24.34% 20.00% (25.34%)
Past 5 years......... 3.03% n/a n/a 15.68% 9.19% (9.27%)
Since inception:
Class A*............. 6.78% n/a n/a 13.03% 8.44% 5.10%
Class B**............ n/a 4.11% n/a 16.43% 8.91% (7.91%)
Class C***........... n/a n/a (0.06%) 17.37% 7.84% (15.71%)
</TABLE>
# Performance figures reflect any applicable sales charges.
* The inception date for the Fund's Class A shares was April 18, 1991.
Index performance is calculated from April 30, 1991.
** The inception date for the Fund's Class B shares was April 1, 1994.
*** The inception date for the Fund's Class C shares was April 30, 1996.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)................... 5.75% none none
Maximum deferred sales
charge (load)(as a
percentage of purchase
price)................... none 5.00% 1.00%
Maximum sales charge
(load) imposed on
reinvested dividends..... none none none
Redemption fee*.......... none none none
Exchange fee............. none none none
* If you choose to receive your redemption proceeds
via Federal Funds wire, a $10 wire fee will be
charged to your account.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Management fees*....... 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1) fees... 0.25% 1.00% 1.00%
Other expenses......... 1.29% 1.33% 1.66%
Total annual Fund
operating expenses..... 2.54% 3.33% 3.66%
Expenses
reimbursed**........... 0.36% 0.36% 0.36%
Net Fund operating
expenses**............. 2.18% 2.97% 3.30%
</TABLE>
*Management fees are reduced to 0.75% for net assets over $500
million.
**The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1st $ 783 $ 800 $ 300 $ 433 $ 333
3rd 1,325 1,329 1,029 1,125 1,125
5th 1,891 1,980 1,780 1,935 1,935
10th 3,422 3,579 3,579 4,044 4,044
</TABLE>
5
<PAGE> 62
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY GLOBAL NATURAL RESOURCES FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY GLOBAL
NATURAL RESOURCES FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks long-term growth. Any income realized will be incidental.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in equity securities.
The Fund's manager seeks to maximize the Fund's returns by seeking out natural
resources companies of any size with strong management and financial positions,
adding balance with established low cost, low debt producers and positions that
are based on anticipated commodity price trends. For these purposes, "natural
resources" generally include:
- - precious metals (such as gold, silver and platinum);
- - ferrous and nonferrous metals (such as iron, aluminum, copper and steel);
- - strategic metals (such as uranium and titanium);
- - fossil fuels and chemicals;
- - forest products and agricultural commodities; and
- - undeveloped real property.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
SMALL AND MEDIUM-SIZED COMPANY RISK: Securities of smaller companies may be
subject to more abrupt or erratic market movements than the securities of
larger, more established companies, since smaller companies tend to be thinly
traded and because they are subject to greater business risk. Transaction costs
in smaller company stocks may also be higher than those of larger companies.
NATURAL RESOURCES AND PHYSICAL COMMODITIES RISK: Investing in natural resources
can be riskier than other types of investment activities because of a range of
factors, including:
- - price fluctuations caused by real and perceived inflationary trends and
political developments; and
- - the costs assumed by natural resource companies in complying with
environmental and safety regulations.
Investing in physical commodities, such as gold, exposes the Fund to other risk
considerations, such as:
- - potentially severe price fluctuations over short periods of time;
- - storage costs that can exceed the custodial and/or brokerage costs associated
with the Fund's other portfolio holdings.
INDUSTRY-CONCENTRATION RISK: Since the Fund can invest a significant portion of
its assets in securities of companies engaged in natural resources activities,
the Fund could experience wider fluctuations in value than funds with more
diversified portfolios.
FOREIGN SECURITY RISK: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect the Fund's performance unfavorably,
depending upon prevailing conditions at any given time. Among these potential
risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept potentially dramatic fluctuations in capital value in the
short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
6
<PAGE> 63
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns since its inception on
January 1, 1997 compare with those of a broad measure of market performance. The
Fund's past performance is not an indication of how the Fund will perform in the
future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES* December 31
-------------------------------------------------------------
CLASS A SHARES
--------------
<S> <C>
'97' 6.95
'98' -29.35
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q3 '97: 19.66%
Worst quarter Q4 '97: (23.28%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
-----------------------------------------------------------
MSCI
COMMODITY-
RELATED
CLASS A CLASS B CLASS C INDEX
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Past year............ (33.41%) (33.33%) (31.19%) (14.61%)
Since inception*..... (15.68%) (15.45%) (14.17%) (9.65%)
</TABLE>
#Performance figures reflect any applicable sales charges.
*The inception date for all Classes was January 1, 1997.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)................... 5.75% none none
Maximum deferred sales
charge (load) (as a
percentage of purchase
price)................... none 5.00% 1.00%
Maximum sales charge
(load) imposed on
reinvested dividends..... none none none
Redemption fee*.......... none none none
Exchange fee............. none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Management fees........ 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1) fees... 0.25% 1.00% 1.00%
Other expenses......... 4.50% 4.43% 5.10%
Total annual Fund
operating expenses..... 5.75% 6.43% 7.10%
Expenses reimbursed*... 3.53% 3.53% 3.53%
Net Fund
operating expenses*.... 2.22% 2.90% 3.57%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1st $ 787 $ 793 $ 293 $ 460 $ 360
3rd 1,336 1,308 1,008 1,203 1,203
5th 1,909 1,946 1,746 2,061 2,061
10th 3,459 3,541 3,541 4,273 4,273
</TABLE>
7
<PAGE> 64
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY GLOBAL SCIENCE &
TECHNOLOGY FUND
- -- INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital growth. Any income realized
will be incidental.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in equity securities
of companies throughout the world that are expected to profit from the
development, advancement and use of science and technology.
Industries that are likely to be represented in the Fund's portfolio holdings
include:
- - internet;
- - computers and peripheral products;
- - software;
- - electronic components and systems; and
- - telecommunications, media and information services.
The Fund's management team believes that technology is a fertile growth area,
and actively seeks to position the Fund to benefit from this growth by investing
in companies of any size that may deliver rapid earnings growth and potentially
high investment returns.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
SMALL AND MEDIUM-SIZED COMPANY RISK: Many of the companies in which the Fund may
invest have relatively small market capitalizations. Securities of smaller
companies may be subject to more abrupt or erratic market movements than the
securities of larger, more established companies, since smaller companies tend
to be thinly traded and because they are subject to greater business risk.
Transaction costs in smaller-company stocks may also be higher than those of
larger companies.
INDUSTRY-CONCENTRATION RISK: Since the Fund focuses its investments in
securities of companies engaged in the science and technology industries, the
Fund could experience wider fluctuations in value than funds with more
diversified portfolios. For example, rapid advances in these industries tend to
cause existing products to become obsolete, and the Fund's returns could suffer
to the extent it holds an affected company's shares. Companies in a number of
science and technology industries are also subject to government regulations and
approval processes that may affect their overall profitability and cause their
stock prices to be more volatile.
FOREIGN SECURITY RISK: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect the Fund's performance unfavorably,
depending upon prevailing conditions at any given time. Among these potential
risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
new or developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
8
<PAGE> 65
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on July 22, 1996 compare with those of a broad measure
of market performance. The Fund's past performance is not an indication of
how the Fund will perform in the future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES* December 31
-------------------------------------------------------------
CLASS A SHARES
--------------
<S> <C>
'97 9.00
'98 35.26
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q4 '98: 39.16%
Worst quarter Q1 '97: (19.15%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
--------------------------------------------------------------------------
RUSSELL 2000
TECHNOLOGY
CLASS A CLASS B CLASS C CLASS I** INDEX
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Past year............ 27.48% 29.20% 33.37% n/a 20.57%
Since inception*..... 38.96% 40.78% 41.64% n/a 15.12%
</TABLE>
#Performance figures reflect any applicable sales charges.
*The inception date for all Classes was July 22, 1996. Index performance
is calculated from July 30, 1996.
**The Fund has had no outstanding Class I shares.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- ------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of
offering price)...... 5.75% none none none
Maximum deferred
sales charge (load)
(as a percentage of
purchase price)...... none 5.00% 1.00% none
Maximum sales charge
(load) imposed on
reinvested
dividends............ none none none none
Redemption
fee*................. none none none none
Exchange fee......... none none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees...... 1.00% 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1)
fees................. 0.25% 1.00% 1.00% none
Other expenses....... 0.91% 0.95% 0.84% 0.82%
Total annual Fund
operating expenses... 2.16% 2.95% 2.84% 1.82%
</TABLE>
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st $ 781 $ 798 $ 298 $ 387 $ 287 $ 185
3rd 1,212 1,213 913 880 880 573
5th 1,668 1,752 1,552 1,499 1,499 985
10th 2,925 3,085 3,085 3,166 3,166 2,137
</TABLE>
9
<PAGE> 66
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY INTERNATIONAL FUND II
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
INTERNATIONAL
FUND II
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in equity securities principally
traded in European, Pacific Basin and Latin American markets.
To control its exposure to certain risks, the Fund might engage in foreign
currency exchange transactions and forward foreign currency contracts.
The Fund's manager uses a disciplined value approach while looking for
investment opportunities around the world.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
10
<PAGE> 67
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on May 13, 1997 compare with those of a broad measure
of market performance. The Fund's past performance is not an indication of
how the Fund will perform in the future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the year ending
FOR CLASS A SHARES* December 31
-------------------------------------------------------------
(CHART)
CLASS A SHARES
--------------
<S> <C>
'98 6.63
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q4 '98: 16.49%
Worst quarter Q3 '98: (18.29%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
-------------------------------------------------------------------------------------------------
MORNINGSTAR LIPPER
MSCI CATEGORY CATEGORY
EAFE FOR INTL FOR INTL
CLASS A CLASS B CLASS C CLASS I** INDEX STOCK FUNDS STOCK FUNDS
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Past year............ 0.50% 0.84% 4.79% n/a 20.00% 12.26% 13.02%
Since Inception*..... (6.12%) (5.81%) (3.48%) n/a 9.40% 5.88% 6.43%
</TABLE>
#Performance figures reflect any applicable sales charges.
*The inception date for all Classes was May 13, 1997. MSCI EAFE Index
performance is calculated from May 30, 1997. Morningstar performance
calculated from June 1, 1997. Lipper performance calculated from May 15,
1997.
**The Fund has had no outstanding Class I shares.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)................. 5.75% none none none
Maximum deferred sales
charge (load)(as a
percentage of purchase
price)................. none 5.00% 1.00% none
Maximum sales charge
(load) imposed on
reinvested dividends... none none none none
Redemption fee*........ none none none none
Exchange fee........... none none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees......... 1.00% 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1) fees.... 0.25% 1.00% 1.00% none
Other expenses.......... 0.63% 0.63% 0.66% 0.54%
Total annual Fund
operating expenses...... 1.88% 2.63% 2.66% 1.54%
Expenses reimbursed*.... 0.14% 0.14% 0.14% 0.14%
Net Fund operating
expenses*............... 1.74% 2.49% 2.52% 1.40%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.50% of the Fund's
average net assets (excluding 12b-1 fees, and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
- -- EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st $ 742 $ 752 $ 252 $ 355 $ 255 $ 143
3rd 1,287 1,278 978 987 987 653
5th 1,857 1,927 1,727 1,741 1,741 1,190
10th 3,400 3,531 3,531 3,726 3,726 2,660
</TABLE>
11
<PAGE> 68
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY INTERNATIONAL SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
INTERNATIONAL SMALL
COMPANIES FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks long-term growth. Consideration of current income is secondary to
this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the common stock of foreign
issuers having total market capitalization of less than $1 billion.
The Fund might engage in foreign currency exchange transactions and forward
foreign currency contracts to control its exposure to certain risks.
The Fund is managed by a team that focuses on both value and growth factors.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
SMALL COMPANY RISK: Securities of smaller companies may be subject to more
abrupt or erratic market movements than the securities of larger, more
established companies, since they tend to be thinly traded and because the
companies are subject to greater business risk. Transaction costs in smaller
company stocks may also be higher than those of larger companies.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
12
<PAGE> 69
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on January 1, 1997 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
<TABLE>
[CHART]
ANNUAL TOTAL RETURN for years ending
FOR CLASS A SHARES* December 31
-------------------------------------------------------------
(CHART)
CLASS A SHARES
--------------
<S> <C>
'97 -12.52
'98 5.24
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q1 '98: 17.44%
Worst quarter Q3 '98: (14.96%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
---------------------------------------------------------------------------
HSBC JAMES
CAPEL WORLD
(EX-US) SMALL
COMPANY
CLASS A CLASS B CLASS C CLASS I** INDEX
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Past year............ (0.81%) (0.54%) 3.55% n/a 3.31%
Since inception*..... (6.88%) (6.73%) (4.72%) n/a (5.13%)
</TABLE>
#Performance figures reflect any applicable sales charges.
*The inception date for all Classes was January 1, 1997. Index performance
is calculated from the same date.
**The Fund has had no outstanding Class I shares.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
SHAREHOLDER fees paid directly from
FEES your investment
- -------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)................ 5.75% none none none
Maximum deferred sales
charge (load)(as a
percentage of purchase
price)................ none 5.00% 1.00% none
Maximum sales charge
(load) imposed on
reinvested
dividends............. none none none none
Redemption fee*....... none none none none
Exchange fee.......... none none none none
*If you choose to receive your redemption proceeds via
Federal Funds wire, a $10 wire fee will be charged to your
account.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees...... 1.00% 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1)
fees................. 0.25% 1.00% 1.00% none
Other expenses....... 4.88% 4.90% 4.82% 4.79%
Total annual Fund
operating expenses... 6.13% 6.90% 6.82% 5.79%
Expenses
reimbursed*.......... 3.91% 3.91% 3.91% 3.91%
Net Fund
operating
expenses*............ 2.22% 2.99% 2.91% 1.88%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st $ 787 $ 802 $ 302 $ 394 $ 294 $ 191
3rd 1,335 1,334 1,034 1,010 1,010 704
5th 1,907 1,987 1,787 1,749 1,749 1,244
10th 3,455 3,598 3,598 3,698 3,698 2,720
</TABLE>
13
<PAGE> 70
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY PAN-EUROPE FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
PAN-EUROPE
FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the equity securities of large
and medium-sized European companies.
The Fund's management team uses a disciplined value approach while looking for
investment opportunities around the world.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities may be selected for the Fund that may not perform as
well as the securities held by other mutual funds with investment objectives
that are similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY RISK: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect the Fund's performance unfavorably,
depending upon prevailing conditions at any given time. Among these potential
risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
EURO CONVERSION RISKS: On January 1, 1999, a new European currency called the
"euro" was introduced and adopted for use by eleven European countries. The
transition to daily usage of the euro will occur during the period from January
1, 1999 through December 31, 2001, at which time euro bills and coins will be
put into circulation. Certain European Union members, including the United
Kingdom, did not officially implement the euro on January 1, 1999 and may cause
market disruptions when and if they decide to do so. Should this occur, the Fund
could experience investment losses.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
14
<PAGE> 71
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on May 13, 1997 compare with those of a broad measure
of market performance. The Fund's past performance is not an indication of
how the Fund will perform in the future.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS for the year ending
FOR CLASS A SHARES* December 31
-------------------------------------------------------------
(CHART)
<S> <C>
'98 6.72
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q1 '98: 17.61%
Worst quarter Q3 '98: (21.25%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
----------------------------------------------------------------------
MORNINGSTAR
MSCI EUROPE
EUROPE STOCK
CLASS A CLASS B CLASS C INDEX UNIVERSE
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Past year............ 0.59% 0.98% 1.38% 24.50% 18.97%
Since inception*..... 3.71% 4.54% 2.38% 23.66% 17.10%
</TABLE>
# Performance figures reflect any applicable sales charges.
* The inception date for all Classes was May 13, 1997. MSCI performance is
calculated from May 30, 1997. Morningstar performance is calculated from
June 1, 1997.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)................. 5.75% none none
Maximum deferred sales
charge (load) (as a
percentage of purchase
price)................. none 5.00% 1.00%
Maximum sales charge
(load) imposed on
reinvested dividends... none none none
Redemption fee*........ none none none
Exchange fee........... none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Management fees........ 1.00% 1.00% 1.00%
Distribution and/or
service (12b-1) fees... 0.25% 1.00% 1.00%
Other expenses......... 4.31% 4.34% 4.33%
Total annual Fund
operating expenses..... 5.56% 6.34% 6.33%
Expenses reimbursed*... 3.37% 3.37% 3.37%
Net Fund operating
expenses*.............. 2.19% 2.97% 2.96%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1st $ 784 $ 800 $ 300 $ 399 $ 299
3rd 1,327 1,328 1,028 1,025 1,025
5th 1,894 1,979 1,779 1,774 1,774
10th 3,429 3,580 3,580 3,745 3,745
</TABLE>
15
<PAGE> 72
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
ABOUT INVESTMENT
STRATEGIES AND RISKS
- -- PRINCIPAL STRATEGIES
IVY EUROPEAN OPPORTUNITIES FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing primarily in the equity
securities of companies located or otherwise doing business in European
countries and covering a broad range of economic and industry sectors. The Fund
may also invest a significant portion of its assets in debt securities, up to
20% of which is considered below investment grade (commonly referred to as "high
yield" or "junk" bonds). The Fund's manager follows a "bottom-up" approach to
investing, which focuses on prospects for long term earnings growth. Company
selection is generally based on an analysis of a wide range of indicators (such
as growth, earnings, cash, book and enterprise value), as well as factors such
as market position, competitive advantage and management strength. Country and
sector allocation decisions are driven by the company-selection process.
IVY GLOBAL FUND: The Fund seeks to achieve its principal objective of long-term
capital growth by investing primarily in the equity securities of companies
throughout the world. The Fund invests in a variety of economic sectors,
industry segments and individual securities to reduce the effects of price
volatility in any one area, and normally invests its assets in at least three
different countries (including the United States). Countries are selected on the
basis of a mix of factors that include long-term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using a value approach, which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Typically the securities
purchased are attractively valued on one or more of these measures relative to a
broad universe of comparable securities.
IVY GLOBAL NATURAL RESOURCES FUND: The Fund seeks to achieve its principal
objective of long-term growth by investing primarily in the equity securities of
companies throughout the world that own, explore or develop natural resources
and other basic commodities (or that supply goods and services to such
companies). The Fund's manager targets for investment well managed companies
that are expected to increase shareholder value through successful exploration
and development of natural resources, balancing the Fund's portfolio with low
cost, low debt producers that have outstanding asset bases, and positions that
are based on anticipated commodity price trends. Additional emphasis is placed
on sectors that are out of favor but appear to offer the most significant
recovery potential over a one to three year period. All investment decisions are
reviewed systematically and cash reserves may be allowed to build up when
valuations seem unattractive. The manager attempts to minimize risk through
diversifying the Fund's portfolio by commodity, country, issuer and asset class.
Typically the Fund's top 50 investments comprise more than 80% of the Fund's
assets.
IVY GLOBAL SCIENCE & TECHNOLOGY FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing in the common stock of
companies that are expected to profit from the development, advancement and use
of science and technology. The Fund may also invest in companies that are
expected to benefit indirectly from the commercialization of technological and
scientific advances. Industries likely to be represented in the Fund's overall
portfolio holdings include internet, computers and peripheral products,
software, electronic components and systems, telecommunications, and media and
information services. Rapid advances in these industries in recent years have
stimulated unprecedented growth. While this is no guarantee of future
performance, the Fund's management team believes that these industries offer
substantial opportunities for long-term capital appreciation. The Fund intends
to invest its assets in at least three different countries, but may at any given
time have a substantial portion of its assets invested in the United States.
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IVY INTERNATIONAL FUND II: The Fund seeks to achieve its principal objective of
long-term capital growth by investing in equity securities principally traded in
European, Pacific Basin and Latin American markets. The Fund invests in a
variety of economic sectors and industry segments to reduce the effects of price
volatility in any one area. The Fund's manager seeks out rapidly expanding
foreign economies and companies that generally have at least $1 billion in
capitalization at the time of investment and a solid history of operations.
Other factors that the Fund's manager considers in selecting particular
countries include long term economic growth prospects, anticipated inflation
levels, and the effect of applicable government policies on local business
conditions. The Fund is managed using a value approach, which focuses on
financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Typically the securities purchased
are attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
IVY INTERNATIONAL SMALL COMPANIES FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing in the foreign stock markets,
focusing on issuers that are valued at less than $1 billion across a wide range
of geographic, economic and industry sectors. Countries are selected on the
basis of a mix of factors that include long-term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using a value approach, which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Typically the securities
purchased are attractively valued on one or more of these measures relative to a
broad universe of comparable securities.
IVY PAN-EUROPE FUND: The Fund seeks to achieve its principal objective of
long-term capital growth by investing primarily in the equity securities of
companies located or otherwise doing business in European countries and that
cover a broad range of economic and industry sectors. The Fund may also invest a
significant portion of its assets outside of Europe. Countries are selected on
the basis of a mix of factors that include long-term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using a value approach, which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Typically the securities
purchased are attractively valued on one or more of these measures relative to a
broad universe of comparable securities.
- -- PRINCIPAL RISKS
GENERAL MARKET RISK:
As with any mutual fund, the value of a Fund's investments and the income they
generate will vary daily and generally reflect market conditions, interest
rates and other issuer-specific, political or economic developments.
Each Fund's share value will decrease at any time during which its security
holdings or other investment techniques are not performing as well as
anticipated, and you could therefore lose money by investing in a Fund depending
upon the timing of your initial purchase and any subsequent redemption.
OTHER RISKS: The table on the following page identifies the investment
techniques that each Fund's advisor considers important in achieving the Fund's
investment objective or in managing its exposure to risk (and that could
therefore have a significant effect on a Fund's returns). Following the table is
a description of the general risk characteristics of these investment
techniques. Other investment methods that the Funds may use (such as derivative
investments), but that are not likely to play a key role in their overall
investment strategies, are described in the Funds' Statement of
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INTERNATIONAL EQUITY FUNDS
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Additional Information (see back cover page for information on how you can
receive a free copy).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
INVESTMENT
TECHNIQUE: IEOF IGF IGNRF IGSTF IIF2 IISCF IPEF
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stocks........ X X X X X X X
Debt securities...... X
Low-rated debt
securities........... X
Foreign securities... X X X X X X X
Emerging markets..... X X X X X X X
Foreign currencies... X X X X X X X
Depository
receipts............ X X X X X X X
Derivatives.......... X X
Illiquid
securities.......... X X X X X X X
Precious metals...... X
Borrowing............ X X X X X X X
Temporary defensive
positions............ X X X X X X X
</TABLE>
RISK CHARACTERISTICS
- - COMMON STOCKS: Common stocks represent a proportionate ownership interest in a
company. As a result, the value of common stock rises and falls with a
company's success or failure. The market value of common stock can fluctuate
significantly, with smaller companies being particularly susceptible to price
swings. Transaction costs in smaller-company stocks may also be higher than
those of larger companies.
- - DEBT SECURITIES, IN GENERAL: Investing in debt securities involves both
interest rate and credit risk. Generally, the value of debt instruments rises
and falls inversely with fluctuations in interest rates. For example, as
interest rates decline, the value of debt securities generally increases.
Conversely, rising interest rates tend to cause the value of debt securities
to decrease. A Fund's portfolio is therefore susceptible to the decline in
value of the debt instruments it holds in a rising interest rate environment.
The market value of debt securities also tends to vary according to the
relative financial condition of the issuer. Bonds with longer maturities tend
to be more volatile than bonds with shorter maturities.
- - LOW-RATED DEBT SECURITIES: In general, low-rated debt securities (commonly
referred to as "high yield" or "junk" 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.
For this reason, these bonds are considered speculative and could
significantly weaken a Fund's returns.
- - FOREIGN SECURITIES: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect a Fund's performance favorably or
unfavorably, depending upon prevailing conditions at any given time. For
example, the securities markets of many foreign countries may be smaller, less
liquid and subject to greater price volatility than those in the U.S. Foreign
investing may also involve brokerage costs and tax considerations that are not
usually present in the U.S. markets. Many of the Funds' securities also are
denominated in foreign currencies and the value of each Fund's investments, as
measured in U.S. dollars, may be affected favorably or unfavorably by changes
in foreign currency exchange rates and exchange control regulations. Currency
conversions can also be costly.
Other factors that can affect the value of a Fund's foreign investments
include the comparatively weak supervision and regulation by some foreign
governments of securities exchanges, brokers and issuers, and the fact that
many foreign companies may not be subject to uniform accounting, auditing and
financial reporting standards. It may also be difficult to obtain reliable
information about the securities and business operations of certain foreign
issuers. Settlement of portfolio transactions may also be delayed due to local
restrictions or communication problems, which can cause a Fund to miss
attractive investment opportunities or impair its ability to dispose of
securities in a timely fashion (resulting in a loss if the value of the
securities subsequently declines).
- - SPECIAL EMERGING-MARKET CONCERNS: The risks of investing in foreign securities
are heightened in countries with new or developing economies. Among these
additional risks are the following:
- securities that are even less liquid and more volatile than those in more
developed foreign countries;
- less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- increased settlement delays;
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- unusually high inflation rates (which in extreme cases can cause the value
of a country's assets to erode sharply);
- unusually large currency fluctuations and currency conversion costs; and
- high national debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- - DEPOSITORY RECEIPTS: Interests in foreign issuers may be acquired in the form
of sponsored or unsponsored American Depository Receipts ("ADRs"), Global
Depository Receipts ("GDRs") and similar types of depository receipts. ADRs
typically are issued by a U.S. bank or trust company and represent ownership
of the underlying securities issued by a foreign corporation. GDRs and other
types of depository receipts are usually issued by foreign banks or trust
companies. The investing Fund's investments in ADRs, GDRs and other depository
receipts are viewed as investments in the underlying securities.
Depository receipts can be difficult to price and are not always
exchange-listed. Unsponsored depository programs also are organized
independently without the cooperation of the issuer of the underlying
securities. As a result, information concerning the issuer may not be as
current or as readily available as in the case of sponsored depository
instruments, and their prices may be more volatile than if they were sponsored
by the issuers of the underlying securities.
- - DERIVATIVE INVESTMENT TECHNIQUES: A Fund may, but is not required to, use
certain derivative investment techniques to hedge various market risks (such
as interest rates, currency exchange rates and broad or specific market
movements) or to enhance potential gain. Among the derivative techniques a
Fund might use are options, futures, forward foreign currency contracts and
foreign currency exchange transactions.
Using put and call options could cause a Fund to lose money by forcing the
sale or purchase of portfolio securities at inopportune times or for prices
higher (in the case of put options) or lower (in the case of call options)
than current market values, by limiting the amount of appreciation the Fund
can realize on its investments, or by causing the Fund to hold a security it
might otherwise sell.
Futures transactions (and related options) involve other types of risks. For
example, the variable degree of correlation between price movements of futures
contracts and price movements in the related portfolio position of a Fund
could cause losses on the hedging instrument that are greater than gains in
the value of the Fund's position. In addition, futures and options markets may
not be liquid in all circumstances and certain over-the-counter options may
have no markets. As a result, a Fund might not be able to close out a
transaction before expiration without incurring substantial losses (and it is
possible that the transaction cannot even be closed). In addition, the daily
variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would purchases of options, where the
exposure is limited to the cost of the initial premium.
Foreign currency transactions (such as forward foreign currency contracts) can
cause investment losses in a variety of ways. For example, changes in currency
exchange rates may result in poorer overall performance for a Fund than if it
had not engaged in such transactions. There may also be an imperfect
correlation between a Fund's portfolio holdings of securities denominated in a
particular currency and the forward contracts entered into by the Fund. An
imperfect correlation of this type may prevent a Fund from achieving the
intended hedge or expose the Fund to the risk of currency exchange loss.
- - ILLIQUID SECURITIES: "Illiquid securities" are assets that may not be disposed
of in the ordinary course of business within seven days at roughly the value
at which the investing fund has valued the assets. These may be "restricted
securities," which cannot be sold to the public without registration under the
Securities Act of 1933 (in the absence of an exemption) or because of other
legal or contractual restrictions on resale. Thus, while illiquid securities
may offer the potential for higher returns than more readily marketable
securities, there is a risk that the investing fund will not be able to
dispose of them promptly at an acceptable price.
- - PRECIOUS METALS AND OTHER PHYSICAL COMMODITIES: Ivy Global Natural Resources
Fund can invest in precious metals and other physical commodities. Commodities
trading is
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generally considered speculative because of the significant potential for
investment loss. Among the factors that could affect the value of the Fund's
investments in commodities are cyclical economic conditions, sudden political
events and adverse international monetary policies. Markets for precious
metals and other commodities are likely to be volatile and there may be sharp
price fluctuations even during periods when prices overall are rising. The
Fund may also pay more to store and accurately value its commodity holdings
than it does with its other portfolio investments.
- - BORROWING: For temporary or emergency purposes, Ivy Global Fund, Ivy Global
Science & Technology Fund and Ivy International Fund II may borrow up to 10%
of the value of its total assets from qualified banks. Ivy European
Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Small
Companies Fund and Ivy Pan-Europe Fund may borrow up to one-third of the value
of its total assets from qualified banks, but (with the exception of Ivy
European Opportunities Fund) will not buy securities whenever its outstanding
borrowings exceed 10% of the value of its total assets. Borrowing may
exaggerate the effect on a Fund's share value of any increase or decrease in
the value of the securities it holds. Money borrowed will also be subject to
interest costs.
- - TEMPORARY DEFENSIVE POSITIONS: A Fund may occasionally take a temporary
defensive position and invest without limit in U.S. Government securities,
investment-grade debt securities, and cash and cash equivalents such as
commercial paper, short-term notes and other money market securities. When a
Fund assumes such a defensive position it may not achieve its investment
objective. Its exposure to the risks associated with debt securities would
also be heightened (see "Debt Securities" above).
- -- OTHER IMPORTANT INFORMATION
EUROPEAN MONETARY UNION: The Funds may have investments in Europe. On January 1,
1999, a new European currency called the "euro" was introduced and adopted for
use by eleven European countries. The transition to daily usage of the euro will
occur during the period from January 1, 1999 through December 31, 2001, at which
time euro bills and coins will be put into circulation. Certain European Union
members, including the United Kingdom, did not officially implement the euro on
January 1, 1999 and may cause market disruptions when and if they decide to do
so. Should this occur, a Fund could experience investment losses.
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem"). The inability of computer-
based systems to make this distinction could have a seriously adverse effect on
the handling of securities trades, pricing and account services worldwide. The
Funds' service providers are taking steps that each believes are reasonably
designed to address the Year 2000 Problem with respect to the computer systems
that they use. Information about the Year 2000 readiness of the issuers of the
securities that the Funds may purchase is also taken into consideration during
the investment decision-making process (though such information may not be
readily available, particularly in non-U.S. countries, and may be limited to
public filings or statements from company representatives that are not
independently verifiable).
The Funds' managers believe these steps will be sufficient to avoid any material
adverse impact on the Funds. At this time, however, there can be no assurance
that significant problems will not occur (which either directly or indirectly
may cause a Fund to lose money).
MANAGEMENT
- -- INVESTMENT ADVISORS
Ivy Management, Inc. ("IMI")
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
IMI provides business management services to the Funds and investment advisory
services to all Funds other than Ivy European Opportunities Fund and Ivy Global
Natural Resources Fund. IMI is an SEC-registered investment advisor with over $5
billion in assets under management, and provides similar services to the other
twelve series of Ivy Fund. For the Funds' fiscal year ending December 31, 1998,
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the Funds (other than Ivy European Opportunities Fund) each paid IMI a fee that
was equal to 1.00% of the Funds' respective average net assets. Ivy European
Opportunities Fund will pay IMI a fee equal to 1.00% of the Fund's average net
assets.
Henderson Investment Management Limited ("Henderson"), 3 Finsbury Avenue,
London, England EC2M 2PA, serves as subadviser to Ivy European Opportunities
Fund under an Agreement with IMI. For its services, Henderson receives a fee
from IMI that is equal, on an annual basis, to 0.50% of the Fund's average net
assets. As of February 1, 1999, Henderson also serves as subadviser with respect
to 50% of the net assets of Ivy International Small Companies Fund, for which
Henderson receives a fee from IMI that is equal, on an annual basis, to 0.50% of
that portion of the Fund's assets that Henderson manages. Henderson is an
indirect, wholly owned subsidiary of AMP Limited, an Australian life insurance
and financial services company located in New South Wales, Australia.
Mackenzie Financial Corporation ("MFC"), 150 Bloor Street West, Suite 400,
Toronto, Ontario, Canada M5S 3B5, serves as the investment adviser to Ivy Global
Natural Resources Fund and is responsible for selecting the Fund's portfolio
investments. MFC has been an investment counsel and mutual fund manager in
Toronto for more than 30 years, and has over $17.8 billion in assets under
management. For the Fund's fiscal year ending December 31, 1998, the Fund paid
to MFC an aggregate fee equal to 0.50% of the Fund's average net assets.
- -- PORTFOLIO MANAGEMENT
IVY EUROPEAN OPPORTUNITIES FUND: Stephen Peak, Executive Director of Henderson
and head of Henderson's European equities team, is primarily responsible for
selecting the Fund's portfolio of investments. Formerly a director and portfolio
manager with Touche Remnant & Co., Mr. Peak has 24 years of investment
experience.
IVY GLOBAL FUND: Barbara Trebbi, a Senior Vice President of IMI, manages the
foreign portion of the Fund's portfolio. She is also Managing Director of
International Equities and a member of the Ivy international portfolio
management team. Ms. Trebbi joined IMI in 1988 and has 11 years of professional
investment experience. She is a Chartered Financial Analyst and holds a graduate
diploma from the London School of Economics. Paul P. Baran, a Senior Vice
President of IMI, manages the domestic portion of the Fund's portfolio. Before
joining IMI, Mr. Baran was Senior Vice President/Chief Investment Officer of
Central Fidelity National Bank. He has 24 years of professional investment
experience and is a Chartered Financial Analyst. He has an MBA from Wayne State
University.
IVY GLOBAL NATURAL RESOURCES FUND: Frederick Sturm, a Senior Vice President of
MFC, has managed the Fund since its inception. Mr. Sturm joined MFC in 1983 and
has 14 years of professional investment experience. He is a Chartered Financial
Analyst and holds a graduate degree in commerce and finance from the University
of Toronto.
IVY GLOBAL SCIENCE & TECHNOLOGY FUND: The Fund is managed by IMI's Global
Technology Team. James W. Broadfoot, President of IMI and a Vice President of
Ivy Fund, is the Team's lead manager. Before joining IMI in 1990, Mr. Broadfoot
was the principal in an investment counsel firm specializing in emerging growth
companies. He has over 25 years of professional investment experience, holds an
MBA from the Wharton School of Business and is a Chartered Financial Analyst.
IVY INTERNATIONAL FUND II: Barbara Trebbi, a Senior Vice President of IMI, has
managed the Fund since its inception. She is also Managing Director of
International Equities and a member of the Ivy international portfolio
management team. Ms. Trebbi joined IMI in 1988 and has 11 years of professional
investment experience. She is a Chartered Financial Analyst and holds a graduate
diploma from the London School of Economics.
Ms. Trebbi is supported by a team of research analysts who are responsible for
providing information on regional and country-specific economic and political
developments and monitoring individual companies. These analysts use a variety
of research sources that include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
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- - information from third party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
IVY INTERNATIONAL SMALL COMPANIES FUND: The Fund is managed using a team
approach. IMI's international equity team is comprised of investment
professionals and is supported by research analysts who acquire information on
regional and country-specific economic and political developments and monitor
individual companies. These analysts use a variety of research sources that
include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
- - information from third party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
The Henderson team's investment process combines top down regional allocation
with a bottom up stock selection approach. Regional allocations are based on
factors such as interest rates and current economic cycles, which are used to
identify economies with relatively strong prospects for real economic growth.
Individual stock selections are based largely on prospects for earnings growth.
IVY PAN-EUROPE FUND: The Fund is managed by a team of investment professionals
that is supported by research analysts who acquire information on regional and
country-specific economic and political developments and monitor individual
companies. These analysts use a variety of research sources that include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
- - information from third party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
SHAREHOLDER INFORMATION
- -- PRICING OF FUND SHARES
Each Fund calculates its share price by dividing the value of the Fund's net
assets by the total number of its shares outstanding as of the close of regular
trading (usually 4:00 p.m. Eastern time) on the New York Stock Exchange on each
day the Exchange is open for trading (normally any weekday that is not a
national holiday).
Each portfolio security that is listed or traded on a recognized stock exchange
is valued at the security's last sale price on the exchange on which it was
purchased.
If no sale is reported at that time, the average between the last bid and asked
prices is used. Securities and other Fund assets for which market prices are not
readily available are priced at their "fair value" as determined by IMI in
accordance with procedures approved by the Funds' Board of Trustees. IMI may
also price a foreign security at its fair value if events materially affecting
the estimated value of the security occur between the close of the foreign
exchange on which the security is principally traded and the time as of which a
Fund prices its shares. Fair-value pricing under these circumstances is designed
to protect existing shareholders from the actions of short-term investors
trading into and out of a Fund in an attempt to profit from short-term market
movements. When such fair-value pricing occurs, however, there may be some
period of time during which a Fund's
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share price and/or performance information is not available.
The number of shares you receive when you place a purchase or exchange order,
and the payment you receive after submitting a redemption request, is based on a
Fund's net asset value next determined after your instructions are received in
proper form by Ivy Mackenzie Services Corp. ("IMSC") (the Fund's transfer agent)
or by your registered securities dealer. Each purchase and redemption order is
subject to any applicable sales charge (see "Choosing the appropriate class of
shares"). Since the Funds normally invest in securities that are listed on
foreign exchanges that may trade on weekends or other days when the Funds do not
price their shares, each Fund's share value may change on days when shareholders
will not be able to purchase or redeem the Fund's shares.
- -- HOW TO BUY SHARES
Please read these sections below carefully before investing.
CHOOSING THE APPROPRIATE CLASS OF SHARES:
The essential features of the Funds' different classes of shares are described
below. If you do not specify on your Account Application which class of shares
you are purchasing, it will be assumed that you are purchasing Class A shares.
Each Fund has adopted separate distribution plans pursuant to Rule 12b-1 under
the 1940 Act for its Class A, B and C shares that allow the Fund to pay
distribution and other fees for the sale and distribution of its shares and for
services provided to shareholders. Because fees are paid out of the Fund's
assets on an ongoing basis, over time they will increase the cost of your
investment and may cost you more than paying other types of sales charges.
- - CLASS A SHARES: Class A shares are sold at net asset value plus a maximum
sales charge of 5.75% (the "offering price"). The sales charge may be reduced
or eliminated if certain conditions are met (see "Additional purchase
information"). Class A shares are subject to a 0.25% Rule 12b-1 service fee.
- - CLASS B SHARES: Class B shares are offered at net asset value, without an
initial sales charge, but subject to a contingent deferred sales charge
("CDSC") that declines from 5% to zero on certain redemptions within six years
of purchase. Class B shares are subject to a 0.75% Rule 12b-1 distribution fee
and a 0.25% Rule 12b-1 service fee, and convert automatically into Class A
shares eight years after purchase.
- - CLASS C SHARES: Class C shares are offered at net asset value, without an
initial sales charge, but subject to a CDSC of 1% for redemptions within the
first year of purchase. Class C shares are subject to a 0.75% Rule 12b-1
distribution fee and a 0.25% Rule 12b-1 service fee.
- - CLASS I SHARES: Class I shares are offered to certain classes of investors of
Ivy European Opportunities Fund, Ivy Global Science & Technology Fund, Ivy
International Fund II and Ivy International Small Companies Fund without any
sales load or Rule 12b-1 fees.
The following table displays the various investment minimums, sales charges and
expenses that apply to each class.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Minimum initial
investment*.......... $1,000 $1,000 $1,000 $5,000,000
Minimum subsequent
investment*.......... $100 $100 $100 $10,000
Initial sales
charge............... Maximum none none none
5.75%, with
options for a
reduction or
waiver
CDSC.................. None, except Maximum 1.00% for the none
on certain 5.00%, first year
NAV purchases declines over
six years
Service and
distribution fees.... 0.25% Service 0.75% 0.75% none
fee Distribution distribution
fee and 0.25% fee and 0.25%
service fee service fee
</TABLE>
*Minimum initial and subsequent investments for retirement plans are $25.
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- -- ADDITIONAL PURCHASE INFORMATION
CLASS A SHARES: Class A shares are sold at a public offering price equal to
their net asset value per share plus an initial sales charge, as set forth below
(which is reduced as the amount invested increases):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SALES SALES PORTION OF
CHARGE AS A CHARGE AS A PUBLIC
PERCENTAGE PERCENTAGE OFFERING
OF PUBLIC OF NET PRICE
OFFERING AMOUNT RETAINED BY
AMOUNT INVESTED PRICE INVESTED DEALER
- ---------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000..... 5.75% 6.10% 5.00%
$50,000 but less than
$100,000.............. 5.25% 5.54% 4.50%
$100,000 but less than
$250,000.............. 4.50% 4.71% 3.75%
$250, 000 but less
than $500,000......... 3.00% 3.09% 2.50%
$500,000 or over*..... 0.00% 0.00% 0.00%
</TABLE>
*A CDSC of 1.00% may apply to Class A shares that are redeemed within two years
of the end of the month in which they were purchased.
Class A shares that are acquired through reinvestment of dividends or
distributions are not subject to any sales charges.
HOW TO REDUCE YOUR INITIAL SALES CHARGE:
- "Rights of Accumulation" permits you to pay the sales charge that applies to
the cost or value (whichever is higher) of all Ivy Fund Class A shares you
own.
- A "Letter of Intent" permits you to pay the sales charge that would apply to
your cumulative purchase of Fund shares over a 13-month period (certain
restrictions apply).
HOW TO ELIMINATE YOUR INITIAL SALES CHARGE: You may purchase Class A shares at
NAV (without an initial sales charge or a CDSC) through any one of the following
methods:
- - through certain investment advisors and financial planners who charge a
management, consulting or other fee for their services;
- - under certain qualified retirement plans;
- - as an employee or director of Mackenzie Investment Management Inc. or its
affiliates;
- - as an employee of a selected dealer; or
- - through the Merrill Lynch Daily K Plan (the "Plan"), provided the Plan has at
least $3 million in assets or over 500 or more eligible employees. Class B
shares of the Funds are made available to Plan participants at NAV without a
CDSC if the Plan has less than $3 million in assets or fewer than 500 eligible
employees. For further information see "Group Systematic Investment Program"
in the SAI.
Certain trust companies, bank trust departments, credit unions, savings and
loans and other similar organizations may also be exempt from the initial sales
charge on Class A shares.
You may also purchase Class A shares at NAV if you are investing at least
$500,000 through a dealer or agent. Ivy Mackenzie Distributors, Inc. ("IMDI"),
the Fund's distributor, may pay the dealer or agent (out of IMDI's own
resources) for its distribution assistance according to the following schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------
PURCHASE AMOUNT COMMISSION
- --------------------------------------------------
<S> <C>
First $3,000,000...................... 1.00%
Next $2,000,000....................... 0.50%
Over $5,000,000....................... 0.25%
</TABLE>
IMDI may from time to time pay a bonus or other cash incentive to dealers (other
than IMDI) including, for example, those which employ a registered
representative who sells a minimum dollar amount of the shares of a Fund and/or
other funds distributed by IMDI during a specified time period.
Each Fund may, from time to time, waive the initial sales charge on its Class A
shares sold to clients of certain dealers meeting criteria established by the
Distributor. This privilege will apply only to Class A shares of a Fund that are
purchased using proceeds obtained by such clients through redemption of another
mutual fund's shares on which a sales charge was paid. Purchases must be made
within 60 days of redemption from the other fund, and the Class A shares
purchased are subject to a 1.00% CDSC on shares redeemed within the first year
after purchase.
CLASS B AND CLASS C SHARES: Class B and Class C shares are not subject to an
initial sales charge but are subject to a CDSC. If you redeem your Class C
shares within one year of purchase they will be subject to a CDSC of 1%, and
Class B shares
24
<PAGE> 81
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
redeemed within six years of purchase will be subject to a CDSC at the following
rates:
<TABLE>
<CAPTION>
- ----------------------------------------------------
CDSC AS A PERCENTAGE
YEAR SINCE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- ----------------------------------------------------
<S> <C>
First...................... 5.00%
Second..................... 4.00%
Third...................... 3.00%
Fourth..................... 3.00%
Fifth...................... 2.00%
Sixth...................... 1.00%
Seventh and thereafter..... 0.00%
</TABLE>
The CDSC for both Class B and Class C shares will be assessed on an amount equal
to the lesser of the current market value or the original purchase cost of the
shares being redeemed. No charge will be assessed on increases in account value
above the original purchase price or on reinvested dividends and distributions.
Shares will be redeemed on a lot-by-lot basis in the following order:
- - Shares held more than six years
- - Shares acquired through reinvestment of dividends and distributions
- - Shares subject to the lowest CDSC percentage; on a first-in, first-out basis
(1) with the portion of the lot attributable to capital appreciation redeemed
first, which is not subject to a CDSC; then
(2) the portion of the lot attributable to your original basis, which is
subject to a CDSC.
The CDSC for Class B shares is waived for:
- - Certain post-retirement withdrawals from an IRA or other retirement plan if
you are over 59 1/2 years old.
- - Redemptions by certain eligible 401(a) and 401(k) plans and certain retirement
plan rollovers.
- - Redemptions resulting from a tax-free return of excess contribution to an IRA.
- - Withdrawals resulting from shareholder death or disability provided that the
redemption is requested within one year of death or disability.
- - Withdrawals through the Systematic Withdrawal Plan of up to 12% per year of
your account value at the time the plan is established.
Both Class B shares and Class C shares are subject to an ongoing service and
distribution fee at a combined annual rate of up to 1.00% of the portfolio's
average net assets attributable to its Class B or Class C shares. The ongoing
distribution fees will cause these shares to have a higher expense ratio than
that of Class A and Class I shares. IMDI uses the money that it receives from
the deferred sales charge and the distribution fees to cover various promotional
and sales-related expenses, as well as expenses related to providing
distributions services, such as compensating selected dealers and agents for
selling these shares.
Approximately eight years after the original date of purchase, your Class B
shares will be converted automatically to Class A shares. Class A shares are
subject to lower annual expenses than Class B shares. The conversion from Class
B shares to Class A shares is not considered a taxable event for federal income
tax purposes. Class C shares do not have a similar conversion privilege.
CLASS I SHARES: Class I shares are offered only to institutions and certain
individuals, and are not subject to an initial sales charge or a CDSC, nor to
ongoing service or distribution fees. Class I shares also bear lower fees than
Class A, Class B and Class C shares.
- -- SUBMITTING YOUR PURCHASE ORDER
INITIAL INVESTMENTS: Complete and sign the Account Application appearing at the
end of this Prospectus. Enclose a check payable to the Fund in which you wish to
invest. You should note on the check the class of shares you wish to invest in
(see page 23 for minimum initial investments.) Deliver your application
materials to your registered representative or selling broker, or send them to
one of the addresses below:
- - BY REGULAR MAIL:
Ivy Mackenzie Services Corp.
PO Box 3022
Boca Raton, FL 33431-0922
- - BY COURIER:
Ivy Mackenzie Services Corp.
700 South Federal Hwy.
Boca Raton, FL 33432-6114
25
<PAGE> 82
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
- -- BUYING ADDITIONAL SHARES
There are several ways to increase your investment in the Fund:
- - BY MAIL: Send your check with a completed investment slip (attached to your
account statement) or written instructions indicating the account
registration, Fund number or name, and account number. Mail to one of the
addresses above.
- - THROUGH YOUR BROKER: Deliver to your registered representative or selling
broker the investment slip attached to your statement, or written
instructions, along with your payment.
- - BY WIRE: Purchases may also be made by wiring money from your bank account to
your Ivy account. Your bank may charge a fee for wiring funds. Before wiring
any funds, please call IMSC at 800.777.6472. Wiring instructions are as
follows:
First Union National Bank of Florida
Jacksonville, FL
ABA #063000021
Account #2090002063833
For further credit to:
Your Account Registration
Your Fund Number and Account Number
- - BY AUTOMATIC INVESTMENT METHOD: You can authorize to have funds electronically
drawn each month from your bank account and invested as a purchase of shares
into your Ivy Fund account. Complete sections 6A and 7B of the Account
Application.
- -- HOW TO REDEEM SHARES
SUBMITTING YOUR REDEMPTION ORDER: You may redeem your Fund shares through your
registered securities dealer or directly through IMSC. If you choose to redeem
through your registered securities dealer, the dealer is responsible for
properly transmitting redemption orders in a timely manner. If you choose to
redeem directly through IMSC, you have several ways to submit your request:
- - BY MAIL: Send your written redemption request to IMSC at one of the addresses
at left. Be sure that all registered owners listed on the account sign the
request. Medallion signature guarantees and supporting legal documentation may
be required. When you redeem, IMSC will normally send redemption proceeds to
you on the next business day, but may take up to seven days (or longer in the
case of shares recently purchased by check).
- - BY TELEPHONE: Call IMSC at 800.777.6472 to redeem from your individual, joint
or custodial account. To process your redemption order by telephone, you must
have telephone redemption privileges on your account. IMSC employs reasonable
procedures that require personal identification prior to acting on redemption
instructions communicated by telephone to confirm that such instructions are
genuine. In the absence of such procedures, the Fund or IMSC may be liable for
any losses due to unauthorized or fraudulent telephone instructions. Requests
by telephone can only be accepted for amounts up to $50,000.
- - BY SYSTEMATIC WITHDRAWAL PLAN ("SWP"): You can authorize to have funds
electronically drawn each month from your Ivy Fund account and deposited
directly into your bank account. Certain minimum balances and minimum
distributions apply. Complete section 6B of the Account Application to add
this feature to your account.
RECEIVING YOUR REDEMPTION PROCEEDS: You can receive redemption proceeds through
a variety of payment methods:
- - BY CHECK: Unless otherwise instructed in writing, checks will be made payable
to the current account registration and sent to the address of record.
- - BY FEDERAL FUNDS WIRE: Proceeds will be wired on the next business day to a
pre-designated bank account. Your account will be charged $10 each time
redemption proceeds are wired to your bank, and your bank may also charge you
a fee for receiving a Federal Funds wire.
- - BY ELECTRONIC FUNDS TRANSFER ("EFT"): For SWP redemptions only.
IMPORTANT REDEMPTION INFORMATION:
- - A CDSC may apply to certain Class A share redemptions, to Class B shares
redeemed within
26
<PAGE> 83
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
six years of purchase, and to Class C shares that are redeemed within one year
of purchase.
- - If you own shares of more than one class of a Fund, the Fund will redeem first
the shares having the highest 12b-1 fees, unless you instruct otherwise.
- - Any shares subject to a CDSC will be redeemed last unless you specifically
elect otherwise.
- - Shares will be redeemed in the order described under "Additional purchase
information -- Class B and Class C shares".
- - A Fund may (on 60 days' notice) redeem the accounts of shareholders whose
investment, including sales charges paid, has been less than $1,000 for more
than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares recently
purchased by check) to send redemption proceeds.
- -- HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Ivy fund, subject to
certain restrictions (see "Important exchange information").
SUBMITTING YOUR EXCHANGE ORDER: You may submit an exchange request to IMSC as
follows:
- - BY MAIL: Send your written exchange request to IMSC at one of the addresses on
page 25 of this Prospectus. Be sure that all registered owners listed on the
account sign the request.
- - BY TELEPHONE: Call IMSC at 800.777.6472 to authorize an exchange transaction.
To process your exchange order by telephone, you must have telephone exchange
privileges on your account. IMSC employs reasonable procedures that require
personal identification prior to acting on exchange instructions communicated
by telephone to confirm that such instructions are genuine. In the absence of
such procedures, the Fund or IMSC may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
IMPORTANT EXCHANGE INFORMATION:
- - You must exchange into the same share class you currently own.
- -- Exchanges are considered taxable events and may result in a capital gain or a
capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange privilege
for the purpose of timing short-term market fluctuations. The Funds may
therefore limit the frequency of exchanges by a shareholder, charge a
redemption fee (in the case of certain Funds) or cancel a shareholder's
exchange privilege if at any time it appears that such market-timing
strategies are being used. For example, shareholders exchanging more than five
times in a 12-month period may be considered to be using market-timing
strategies.
- -- DIVIDENDS, DISTRIBUTIONS AND TAXES
- - The Funds generally declare and pay dividends and capital gain distributions
(if any) at least once a year.
- - Dividends and distributions are "reinvested" in additional Fund shares unless
you request to receive them in cash.
- - Reinvested dividends and distributions are added to your account at NAV and
are not subject to a CDSC regardless of which share class you own.
- - Cash dividends and distributions can be sent to you:
- - BY MAIL: a check will be mailed to the address of record unless otherwise
instructed.
- - BY ELECTRONIC FUNDS TRANSFER: your proceeds will be directly deposited into
your bank account.
To change your dividend and/or distribution options, call IMSC at 800.777.6472.
Dividends ordinarily will vary from one class to another. The Funds intend to
declare and pay dividends annually. The Funds will distribute net investment
income and net realized capital gains, if any, at least once a year. The Funds
may make an additional distribution of net investment income and net realized
capital gains to comply with the calendar year distribution requirement under
the
27
<PAGE> 84
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
excise tax provisions of Section 4982 of the Internal Revenue Code of 1986, as
amended (the "Code").
Dividends paid out of a Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to you as
ordinary income. If a portion of a Fund's income consists of dividends paid by
U.S. corporations, a portion of the dividends paid by the Fund may be eligible
for the corporate dividends-received deduction. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, are taxable to you as long-term capital gains, regardless of
how long you have held your shares. Dividends are taxable to you in the same
manner whether received in cash or reinvested in additional Fund shares.
If shares of a Fund are held in a tax-deferred account, such as a retirement
plan, income and gain will not be taxable each year. Instead, the taxable
portion of amounts held in a tax-deferred account generally will be subject to
tax as ordinary income only when distributed from that account.
A distribution will be treated as paid to you on December 31 of the current
calendar year if it is declared by a Fund in October, November or December with
a record date in such a month and paid by the Fund during January of the
following calendar year. In certain years, you may be able to claim a credit or
deduction on your income tax return for your share of foreign taxes paid by your
Fund.
Upon the sale or exchange of your Fund shares, you may realize a capital gain or
loss which will be long term or short term, generally depending upon how long
you held your shares.
A Fund may be required to withhold U.S. Federal income tax at the rate of 31% of
all distributions payable to you if you fail to provide the Fund with your
correct taxpayer identification number or to make required certifications, or if
you have been notified by the Internal Revenue Service that you are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against your U.S. Federal income tax liability.
Fund distributions may be subject to state, local and foreign taxes.
You should consult with your tax adviser as to the tax consequences of an
investment in the Funds, including the status of distributions from the Funds
under applicable state or local law.
28
<PAGE> 85
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
29
<PAGE> 86
[IVY LEAF LOGO]
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each
Fund's financial performance for the past five years (or less if a Fund has
a shorter operating history), and reflects results for a single Fund share.
Ivy European Opportunities Fund commenced operations on April 30, 1999, and
accordingly, no financial information is presented for that Fund. The total
returns in the table represent the rate an investor would have earned (or
lost) each year on an investment in each Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Funds' financial
statements, is included in its Annual Report to shareholders (which is
available upon request).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
IVY GLOBAL FUND --------------------------------------------------------------------------
for the six for the
for the year ended months ended year ended
December 31, December 31, June 30,
- ---------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1994
SELECTED PER SHARE DATA --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 10.93 $ 13.17 $ 11.97 $ 11.23 $ 11.52 $ 10.62
--------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income (loss)....................... .02(a) .08 .08 .09(a) --(a) --(a)
Net gains or losses on securities (both realized
and unrealized).................................. .91 (1.23) 1.86 1.25 (.10) 1.79
--------------------------------------------------------------------------
Total from investment operations................... .93 (1.15) 1.94 1.34 (.10) 1.79
--------------------------------------------------------------------------
Less distributions
Dividends
From net investment income....................... -- .05 .08 .04 -- .01
In excess of net investment income............... -- .05 .18 -- -- --
Distributions
From net realized gain........................... .54 .99 .48 .49 .09 .88
In excess of net realized gain................... -- -- -- .07 -- --
Returns of capital............................... -- -- -- -- .10 --
--------------------------------------------------------------------------
Total distributions................................ .54 1.09 .74 .60 .19 .89
--------------------------------------------------------------------------
Net asset value, end of period...................... $ 11.32 $ 10.93 $ 13.17 $ 11.97 $ 11.23 $ 11.52
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Total return (%).................................... 8.59(b) (8.72)(b) 16.21(b) 12.08(b) (1.00)(c) 16.71(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)............ $ 14,660 $19,692 $24,152 $21,264 $ 19,327 $17,393
Ratio of expenses to average net assets
With expense reimbursement (%)..................... 2.18 -- -- 2.20 2.20(d) 2.20
Without expense reimbursement (%).................. 2.54 2.07 2.18 2.46 2.34(d) 2.42
Ratio of net investment income (loss) to average net
assets (%)......................................... .16(a) .58 .58 .71(a) (.06)(a)(d) .01(a)
Portfolio turnover rate (%)......................... 17 45 43 53 23 85
</TABLE>
30
<PAGE> 87
<TABLE>
<CAPTION>
CLASS B CLASS C
-----------------------------------------------------------------------------------------------------------------------
for the period for the period
for the six April 1, 1994 for the April 30, 1996
for the year ended months ended (Commencement) year ended (Commencement)
December 31, December 31, to June 30, December 31, to December 31,
-----------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1994 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.90 $ 13.12 $11.97 $11.23 $11.52 $12.12 $10.67 $12.94 $13.31
-----------------------------------------------------------------------------------------------------------------------
(.09)(a) (.02) (.02) --(a) (.03)(a) (.01)(a) (.16)(a) (.02) (.01)
.92 (1.20) 1.85 1.25 (.12) (.04) .93 (1.24) .42
-----------------------------------------------------------------------------------------------------------------------
.83 (1.22) 1.83 1.25 (.15) (.05) .77 (1.26) .41
-----------------------------------------------------------------------------------------------------------------------
-- .05 -- -- -- -- -- .05 --
-- .05 .20 -- -- -- -- .05 .30
.54 .90 .48 .45 .08 .55 .54 .91 .48
-- -- -- .06 -- -- -- -- --
-- -- -- -- .06 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------
.54 1.00 .68 .51 .14 .55 .54 1.01 .78
-----------------------------------------------------------------------------------------------------------------------
$11.19 $ 10.90 $13.12 $11.97 $11.23 $11.52 $10.90 $10.67 $12.94
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
7.69(b) (9.33)(b) 15.30(b) 11.25(b) (1.37)(c) .38(c) 7.30(b) (9.72)(b) 3.07(c)
$7,495 $10,056 $8,968 $4,811 $2,956 $ 376 $ 428 $ 727 $ 71
2.97 -- -- 2.95 2.95(d) 2.95(d) 3.30 -- --
3.33 2.82 2.94 3.21 3.09(d) 3.17(d) 3.66 2.82 3.77(d)
(.63)(a) (.18) (.17) (.04)(a) (.81)(a)(d) (.74)(a)(d) (.96)(a) (.18) (1.01)(d)
17 45 43 53 23 85 17 45 43
</TABLE>
- -------------------------------------------------------------------------------
(a) Net investment
income (loss) is net of
expenses reimbursed
by manager.
(b) Total return does
not reflect a sales
charge.
(c) Total return repre-
sents aggregate total
return and does not
reflect a sales charge.
(d) Annualized
31
<PAGE> 88
[IVY LEAF LOGO]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
IVY GLOBAL NATURAL -----------------------------------------------------------
RESOURCES FUND for the year ended December 31,
- --------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
SELECTED PER SHARE DATA -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 9.01 $10.00 $ 9.00 $10.00 $ 9.00 $10.00
Income (loss) from investment operations
Net investment income (loss)(a)........................... .03 (.11) (.04) (.15) (.14) (.17)
Net gains or losses on securities (both realized and
unrealized)............................................. (2.68) .70 (2.65) .68 (2.61) .68
-----------------------------------------------------------
Total from investment operations.......................... (2.65) .59 (2.69) .53 (2.75) .51
-----------------------------------------------------------
Less distributions
Dividends in excess of net investment income.............. .04 .22 .04 .17 .04 .15
Distributions
From net realized gain.................................. -- 1.08 -- 1.08 -- 1.08
In excess of net realized gain.......................... -- .28 -- .28 -- .28
-----------------------------------------------------------
Total distributions..................................... .04 1.58 .04 1.53 .04 1.51
-----------------------------------------------------------
Net asset value, end of period.............................. $ 6.32 $ 9.01 $ 6.27 $ 9.00 $ 6.21 $ 9.00
-----------------------------------------------------------
-----------------------------------------------------------
Total return (%)(b)......................................... (29.35) 6.95 (29.82) 6.28 (30.49) 6.08
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $ 1,345 $3,907 $ 1,320 $2,706 $ 41 $ 124
Ratio of expenses to average net assets
With expense reimbursement (%)............................ 2.22 2.10 2.90 2.86 3.57 3.08
Without expense reimbursement (%)......................... 5.75 2.88 6.43 3.64 7.10 3.86
Ratio of net investment income (loss) to average net assets
(%)(a).................................................... .29 (1.10) (.39) (1.86) (1.06) (2.08)
Portfolio turnover rate (%)................................. 98 199 98 199 98 199
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
IVY GLOBAL SCIENCE & TECHNOLOGY FUND ------------------------------------------------
for the period
July 22, 1996
for the year ended (Commencement)
December 31, to December 31,
- -----------------------------------------------------------------------------------------------------------------
1998 1997 1996
SELECTED PER SHARE DATA ------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 17.47 $ 16.40 $10.00
Income from investment operations
Net investment loss........................................ (.36)(e) (.31)(e) (.06)(a)
Net gains or losses on securities (both realized and
unrealized).............................................. 6.52(e) 1.38(e) 6.49
--------------------------------------------
Total from investment operations........................... 6.16 1.07 6.43
--------------------------------------------
Less distributions
Distributions from net realized gain....................... -- -- .03
--------------------------------------------
Total distributions...................................... -- -- .03
--------------------------------------------
Net asset value, end of period.............................. $ 23.63 $ 17.47 $16.40
--------------------------------------------
--------------------------------------------
Total return (%)............................................ 35.26(b) 6.53(b) 64.34(c)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $17,888 $12,159 $8,324
Ratio of expenses to average net assets
With expense reimbursement (%)............................. -- -- 2.19(d)
Without expense reimbursement (%).......................... 2.16 2.11 2.90(d)
Ratio of net investment loss to average net assets (%)...... (1.88) (1.91) (2.18)(a)(d)
Portfolio turnover rate (%)................................. 73 54 23
</TABLE>
32
<PAGE> 89
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
- -----------------------------------------------------------------------------------------
for the period for the period
July 22, 1996 July 22, 1996
for the year ended (Commencement) for the year ended (Commencement)
December 31, to December 31, December 31, to December 31,
- ----------------------------------------------------------------------------------------
1998 1997 1996 1998 1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 17.37 $ 16.44 $ 10.00 $ 17.40 $ 16.46 $ 10.00
(.50)(e) (.32)(e) (.06)(a) (.48)(e) (.42)(e) (.05)(a)
6.44(e) 1.25(e) 6.52 6.46(e) 1.36(e) 6.53
- ----------------------------------------------------------------------------------------
5.94 .93 6.46 5.98 .94 6.48
- ----------------------------------------------------------------------------------------
-- -- .02 -- -- .02
- ----------------------------------------------------------------------------------------
-- -- .02 -- -- .02
- ----------------------------------------------------------------------------------------
$ 23.31 $ 17.73 $ 16.44 $ 23.38 $ 17.40 $ 16.46
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
$ 34.20(b) $ 5.66(b) $ 64.59(c) 34.37(b) 5.71(b) 64.84(c)
$10,197 $ 8,577 $ 3,425 $ 8,431 $ 6,348 $ 2,106
-- -- 2.99(d) -- -- 2.95(d)
2.95 2.92 3.70(d) 2.84 2.85 3.66(d)
(2.67) (2.72) (2.98)(a)(d) (2.56) (2.65) (2.94)(a)(d)
73 54 23 73 54 23
</TABLE>
(a) Net investment
loss is net of expenses
reimbursed by Manager.
(b) Total return
does not reflect
a sales charge.
(c) Total return
represents aggregate
total return and
does not reflect
a sales charge.
(d) Annualized
(e) Based on average
shares outstanding.
33
<PAGE> 90
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
IVY INTERNATIONAL FUND II ---------------------------------------
for the period
for the May 13, 1997
year ended (Commencement)
December 31, to December 31,
- ------------------------------------------------------------------------------------------------------
1998 1997
SELECTED PER SHARE DATA ---------------------------------------
<S> <C> <C>
Net asset value, beginning of period........................ $ 8.98 $ 10.01
---------------------------------------
Income (loss) from investment operations
Net investment income (a)................................. .08 --(f)
Net gains or losses on securities (both realized and
unrealized)............................................. .52 (1.03)(f)
---------------------------------------
Total from investment operations.......................... .60 (1.03)
---------------------------------------
Less distributions
Dividends from net investment income...................... .08 --
Distributions from net realized gain...................... .02 --
---------------------------------------
Total distributions..................................... .10 --
---------------------------------------
Net asset value, end of period.............................. $ 9.48 $ 8.98
---------------------------------------
---------------------------------------
Total return (%)............................................ 6.63(b) (10.29)(d)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $24,993 $16,202
Ratio of expenses to average net assets
With expense reimbursement (%)............................ 1.74 1.80(e)
Without expense reimbursement (%)......................... 1.88 2.11(e)
Ratio of net investment income to average net assets
(%)(a).................................................... .80 .12(e)
Portfolio turnover rate (%)................................. 16 10
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
IVY INTERNATIONAL SMALL ----------------------------------------------------------
COMPANIES FUND for the year ended December 31,
- ------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
SELECTED PER SHARE DATA ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $8.66 $ 10.00 $ 8.63 $ 10.00 $ 8.65 $ 10.00
----------------------------------------------------------
Income (loss) from investment operations
Net investment income (loss) (a).......................... .04 (.01) (.03) (.05) (.03) (.06)
Net gains or losses on securities (both realized and
unrealized)............................................. .41 (1.24) .41 (1.27) .42 (1.25)
----------------------------------------------------------
Total from investment operations.......................... .45 (1.25) .38 (1.32) .39 (1.31)
----------------------------------------------------------
Less distributions
Dividends in excess of net investment income.............. .15 -- .08 -- .06 --
Distributions from net realized gain...................... .01 .09 .01 .05 .01 .04
----------------------------------------------------------
Total distributions..................................... .16 .09 .09 .05 .07 .04
----------------------------------------------------------
Net asset value, end of period.............................. $8.95 $ 8.66 $ 8.92 $ 8.63 $ 8.97 $ 8.65
----------------------------------------------------------
----------------------------------------------------------
Total return (%)(b)......................................... 5.24 (12.52) 4.46 (13.19) 4.55 (13.14)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $ 980 $ 992 $1,027 $ 1,007 $1,125 $ 1,574
Ratio of expenses to average net assets (c)
With expense reimbursement (%)............................ 2.47 2.50 3.24 3.31 3.16 3.23
Without expense reimbursement (%)......................... 6.38 4.87 7.15 5.68 7.07 5.60
Ratio of net investment income (loss) to average net assets
(%)(a).................................................... .39 (.11) (.38) (.91) (.30) (.83)
Portfolio turnover rate (%)................................. 18 10 18 10 18 10
</TABLE>
34
<PAGE> 91
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
- -------------------------------------------------------------------
for the period for the period
for the May 13, 1997 for the May 13, 1997
year ended (Commencement) year ended (Commencement)
December 31, to December 31, December 31, to December 31,
- -------------------------------------------------------------------
1998 1997 1998 1997
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 8.93 $ 10.01 $ 8.93 $ 10.01
- -------------------------------------------------------------------
.01 (.02)(f) .01 (.02)(f)
.51 (1.06)(f) .51 (1.06)(f)
- -------------------------------------------------------------------
.52 (1.08) .52 (1.08)
- -------------------------------------------------------------------
.01 -- .01 --
.02 -- .02 --
- -------------------------------------------------------------------
.03 -- .03 --
- -------------------------------------------------------------------
$ 9.42 $ 8.93 $ 9.42 $ 8.93
- -------------------------------------------------------------------
- -------------------------------------------------------------------
5.84(b) (10.29)(d) 5.79(b) (10.79)(d)
$80,938 $53,652 $40,408 $27,074
2.49 2.63(e) 2.52 2.63(e)
2.63 2.94(e) 2.66 2.94(e)
.05 (.71)(e) .03 (.71)(e)
16 10 16 10
</TABLE>
(a) Net investment
income (loss) is net of
expenses reimbursed
by manager.
(b) Total return
does not reflect
a sales charge.
(c) Total expenses
include fees paid
indirectly, if any,
through an expense
offset arrangement.
(d) Total return
represents aggregate
total return
and does not
reflect a
sales charge.
(e) Annualized
(f) Based on average
shares outstanding.
35
<PAGE> 92
36
[IVY LEAF LOGO]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
IVY PAN-EUROPE FUND CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------
for the period for the period for the period
for the year May 13, 1997 for the year May 13, 1997 January 29, 1998
ended (Commencement) ended (Commencement) (Commencement)
December 31, to December 31, December 31, to December 31, to December 31,
- --------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998
SELECTED PER SHARE DATA ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $10.56 $10.02 $10.54 $10.02 $10.91
---------------------------------------------------------------------------------------
Income from investment operations
Net investment loss (a)............. (.01)(f) (.02) (.01)(f) (.03) (.02)(f)
Net gains or losses on securities
(both realized and unrealized).... .72(f) .58 .64(f) .56 .28(f)
---------------------------------------------------------------------------------------
Total from investment operations.... .71 .56 .63 .53 .26
---------------------------------------------------------------------------------------
Less distributions
Distributions from net realized
gain.............................. -- .02 -- .01 --
---------------------------------------------------------------------------------------
Total distributions............... -- .02 -- .01 --
---------------------------------------------------------------------------------------
Net asset value, end of period........ $11.27 $10.56 $11.17 $10.54 $11.17
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Total return (%)...................... 6.72(d) 5.54(b) 5.98(d) 5.26(b) 2.38(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).......................... $1,862 $ 575 $3,604 $ 70 $ 863
Ratio of expenses to average net
assets (e)
With expense reimbursement (%)...... 2.49 2.20(c) 3.27 3.29(c) 3.26(c)
Without expense reimbursement (%)... 5.86 28.41(c) 6.64 29.50(c) 6.63(c)
Ratio of net investment loss to
average net assets (%)(a)........... (.12) (.48)(c) (.90) (1.58)(c) (.89)(c)
Portfolio turnover rate (%)........... 25 5 25 5 25
</TABLE>
(a) Net investment
loss is net of
expenses reimbursed
by manager.
(b) Total return represents
aggregate total return
and does not reflect
a sales charge.
(c) Annualized
(d) Total return
does not reflect
a sales charge.
(e) Total expenses include
fees paid indirectly,
if any, through an
expense offset arrangement.
(f) Based on average
shares outstanding.
<PAGE> 93
Account
Application
FUND USE ONLY
__________________________
Account Number
__________________________
Dealer/Branch/Rep
__________________________
Account Type/Soc Cd
[IVY FUNDS LOGO]
Please mail applications and checks to:
Ivy Mackenzie Services Corp.,
P.O. Box 3022, Boca Raton, Florida 33431-0922
This application should not be used for retirement accounts for which
Ivy Fund (IBT) is custodian.
1 REGISTRATION
Name_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Address _________________________________________________________________
City_______________________________________State__________ Zip___________
Phone # (day) (____)_____________ Phone # (evening) (___)________________
__ Individual __ UGMA/UTMA __ Sole proprietor
__ Joint tenant __ Corporation __ Trust
__ Estate __ Partnership __ Other
Date of trust ________________ Minor's state of residence _______________
2 TAX I.D.
Citizenship: ___ U.S. ___ Other (please specify):___________________
Social security # ______-____-______ or Tax identification______________
Under penalties of perjury, I certify by signing in Section 8 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 "Dividends, distributions and taxes" 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 IMSC of any purchases made under a
Letter of Intent or Rights of Accumulation.
Dealer name______________________________________________________________
Branch office address____________________________________________________
City_______________________________________State__________ Zip___________
Representative's name ___________________________________________________
Representative's #___________________ Representative's phone_____________
Authorized signature of dealer __________________________________________
4 INVESTMENTS
A. Enclosed is my check ($1,000 minimum) for________ made payable to the
appropriate fund. Please invest it in:
________________ Class A
________________ Class B
________________ Class C
________________ Class I shares ("*" Funds only) of the following fund(s):
<TABLE>
<S> <C>
$ _____________ Ivy European Opportunities Fund* $ _____________ Ivy International Fund II*
$ _____________ Ivy Global Fund $ _____________ Ivy International Small Companies Fund*
$ _____________ Ivy Global Natural Resources Fund $ _____________ Ivy Pan-Europe Fund
$ _____________ Ivy Global Science & Technology Fund*
</TABLE>
B. I qualify for a reduction or elimination of the sales charge due to
the following privilege (applies only to Class A shares):
___ New Letter of Intent (if ROA or 90-day backdate privilege is
applicable, provide account(s) information below.)
___ ROA with the account(s) listed below.
___ Existing Letter of Intent with the account(s) listed below.
<TABLE>
<S> <C>
Fund name: Fund name:
____________________________________ _________________________________
Account #: Account #:
____________________________________ _________________________________
</TABLE>
If establishing a Letter of Intent, you will need to purchase Class A
shares over a 13-month period in accordance with the provisions in the
Prospectus. The aggregate amount of these purchases will be at least
equal to the amount indicated below (see Prospectus for minimum amount
required for reduced sales charges).
_______ $50,000 _______ $100,000 _______ $250,000 _______ $500,000
C. FOR DEALER USE ONLY
Confirmed trade orders: ______________ ________________ __________
Confirm Number Number of Shares Trade Date
<PAGE> 94
5 DISTRIBUTION OPTIONS
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.
A. ___ Reinvest all dividends and capital gains into additional shares
of the same class of a different Ivy fund account.
Fund name: _______________________________________________________
Account #: _______________________________________________________
B. ___ Pay all dividends in cash and reinvest capital gains into
additional shares of the same class in this account or a different
Ivy fund account.
Fund name: _______________________________________________________
Account #: _______________________________________________________
C. ___ Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN B OR C ABOVE, BE SENT
TO: _____ the address listed in the registration
_____ the special payee listed in Section 7A (by mail)
_____ the special payee listed in Section 7B (by EFT)
6 OPTIONAL SPECIAL FEATURES
A. AUTOMATIC INVESTMENT METHOD (AIM)
___ I wish to have my bank account listed in section 7B automatically
debited via EFT on a predetermined frequency and invested into my
Ivy Fund account listed below.
1. Withdraw $__________ for each time period indicated below and invest
my bank proceeds into the following Ivy fund:
Fund name:__________________________________________________________
Share class: __ Class A __ Class B __ Class C
Account #: _________________________________________________________
2. Debit my bank account:
___ Annually (on the ___ day of the month of___________________).
___ Semiannually (on the ___ day of the months of
_______________and______________).
___ Quarterly (on the ___ day of the first/second/third
month of each calendar quarter). (CIRCLE ONE)
___ Monthly*___ once per month on the ___ day
___ twice per month on the ___ days
___ 3 times per month on the ___ days
___ 4 times per month on the ___ days
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)**
___ I wish to have my Ivy Fund account automatically debited on a
predetermined frequency and the proceeds sent to me per my
instructions below.
1. Withdraw ($50 minimum) $----- for each time period indicated
below from the following Ivy Fund account:
Fund name: ________________________________________________________
Share class: __ Class A __ Class B __ Class C
Account #: ________________________________________________________
2. Withdraw from my Ivy Fund account:
___ Annually (on the _____ day of the month of
__________).
___ Semiannually (on the _____ day of the months of
______________ and ________________).
___ Quarterly (on the ____ day of the first/second/third
month of each calendar quarter. (CIRCLE ONE)
___ Monthly*___ once per month on the ____day
___ twice per month on the ____ days
___ 3 times per month on the ____ days
___ 4 times per month on the ____ days
3. I request the withdrawal proceeds be:
____ sent to the address listed in the registration
____ sent to the special payee listed in section 7A or 7B.
____ invested into additional shares of the same class of a
different Ivy fund:
Fund name:__________________________________________________________
Account #: _________________________________________________________
Note: A minimum balance of $5,000 is required to establish a SWP.
6. OPTIONAL SPECIAL FEATURES (CONT.)
C. FEDERAL FUNDS WIRE
FOR REDEMPTION PROCEEDS** ___ yes ___ no
By checking "yes" immediately above, I authorize IMSC 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).
(COMPLETE SECTION 7B).
D. TELEPHONE EXCHANGES** ___ yes ___ no
By checking "yes" immediately above, I authorize exchanges by telephone
among the Ivy 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. TELEPHONIC REDEMPTIONS** ___ yes ___ no
By checking "yes" immediately above, the Fund or its agents are authorized
to honor telephone instructions from any person as more fully described in
the Prospectus for the redemption of Fund shares. The amount of the
redemption shall not exceed $50,000 and the proceeds are to be payable to
the shareholder of record and mailed to the address of record. To change
this option once established, written instructions must be received from
the shareholder of record or the current registered representative.
If neither box is checked, the telephone redemption privilege will be
provided automatically.
* There must be a period of at least seven calendar days between each
investment (AIM)/withdrawal (SWP) period.
** This option may not be used if shares are issued in certificate form.
7 SPECIAL PAYEE
A. MAILING ADDRESS: Please send all disbursements to this payee:
Name of bank or individual ______________________________________________
Account # (if applicable) _______________________________________________
Street __________________________________________________________________
City __________________________________________ State ________ Zip ______
B. FED WIRE/EFT INFORMATION
Financial institution ___________________________________________________
ABA # ___________________________________________________________________
Account # _______________________________________________________________
Street __________________________________________________________________
City _________________________________________ State _________ Zip ______
(PLEASE ATTACH A VOIDED CHECK.)
8 SIGNATURES
Investors should be aware that the failure to check the "No" under
Section 6D or 6E above means that the Telephone Exchange/ Redemption
Privileges will be provided. The Fund employs reasonable procedures that
require personal identification prior to acting on exchange/redemption
instructions communicated by telephone to confirm that such instructions
are genuine. In the absence of such procedures, the Fund may be liable for
any losses due to unauthorized or fraudulent telephone instructions.
Please see "How to exchange shares" and "How to redeem shares" in the
Prospectus for more information on these privileges.
I certify to my legal capacity to purchase or redeem shares of the
Fund for my own account or for the account of the organization named in
Section 1. I have received a current Prospectus and understand its terms
are incorporated in this application by reference. I am certifying my
taxpayer information as stated in Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID
BACKUP WITHHOLDING.
__________________________________________ _____________________________
Signature of Owner, Custodian, Trustee or Date
Corporate Officer
__________________________________________ _____________________________
Signature of Joint Owner, Co-Trustee or Date
Corporate Officer
DETACH ON PERFORATION TO MAIL
(Remember to sign Section 8)
<PAGE> 95
* Symbol not assigned as of this printing.
- --------------------------------------------------------------------------------
-- QUOTRON SYMBOLS AND CUSIP NUMBERS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
FUND SYMBOL CUSIP
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Ivy European Opportunities Fund - Class A * 465898815
Ivy European Opportunities Fund - Class B * 465898823
Ivy European Opportunities Fund - Class C * 465898831
Ivy European Opportunities Fund - Class I * 465898849
Ivy Global Fund - Class A MCGLX 465897742
Ivy Global Fund - Class B IVGBX 465897734
Ivy Global Fund - Class C IVGCX 465897593
Ivy Global Natural Resources Fund - Class A IGNAX 465897429
Ivy Global Natural Resources Fund - Class B IGNBX 465897411
Ivy Global Natural Resources Fund - Class C IGNCX 465897395
Ivy Global Science & Technology Fund - Class A IVTAX 465897544
Ivy Global Science & Technology Fund - Class B IVTBX 465897536
Ivy Global Science & Technology Fund - Class C IVTCX 465897528
Ivy Global Science & Technology Fund - Class I IVSIX 465897510
Ivy International Fund II - Class A IVIAX 465897353
Ivy International Fund II - Class B IIFBX 465897346
Ivy International Fund II - Class C IVIFX 465897338
Ivy International Fund II - Class I * 465897320
Ivy International Small Companies Fund - Class A IYSAX 465897460
Ivy International Small Companies Fund - Class B IYSBX 465897452
Ivy International Small Companies Fund - Class C IYSCX 465897445
Ivy International Small Companies Fund - Class I IYSIX 465897437
Ivy Pan-Europe Fund - Class A * 465897387
Ivy Pan-Europe Fund - Class B * 465897379
Ivy Pan-Europe Fund - Class C * 465897361
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 96
(Ivy Funds Logo)
-- HOW TO RECEIVE MORE
INFORMATION ABOUT THE FUNDS
Additional information about the Funds and their investments is
contained in the Funds' Statement of Additional Information dated May
3, 1999 (the "SAI"), which is incorporated by reference into this
Prospectus, and the Funds' annual and semiannual reports to
shareholders. Each Fund's annual report includes a discussion of the
market conditions and investment strategies that significantly affected
the Funds' performance during its most recent fiscal year. The SAI and
the Funds' annual and semiannual reports are available upon request and
without charge from the Distributor at the following address and phone
number.
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432
800.456.5111
Information about the Funds (including the SAI and the annual and
semiannual reports) may also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. (please call 1-800-SEC-0330 for
further details). Information about the Funds is also available on the
SEC's Internet Website (www.sec.gov), and copies of this information
may be obtained, upon payment of a copying fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-6009.
Investment Company Act File No. 811-1028
-- SHAREHOLDER
INQUIRIES
Please call
Ivy Mackenzie
Services Corp.,
the Funds' transfer agent,
regarding any other
inquiries about the Funds
at 800.777.6472.
www.ivymackenzie.com
E-mail:
[email protected]
01INTLX0499
<PAGE> 97
[Ivy Funds Logo]
This is your prospectus from
IVY MACKENZIE
DISTRIBUTORS, INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
800.456.5111
May 3, 1999 INTERNATIONAL EQUITY FUNDS ADVISOR CLASS SHARES
IVY EUROPEAN OPPORTUNITIES FUND
IVY GLOBAL FUND
IVY GLOBAL NATURAL RESOURCES FUND
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
IVY INTERNATIONAL FUND II
IVY INTERNATIONAL SMALL COMPANIES FUND
IVY PAN-EUROPE FUND
Ivy Fund is a registered open-end investment company consisting
of nineteen separate portfolios. This Prospectus relates to the
Advisor Class shares of the seven funds listed above (the
"Funds"). The Funds also offer Class A, Class B and Class C
shares (and Class I shares in the case of Ivy European
Opportunities Fund, Ivy Global Science & Technology Fund, Ivy
International Fund II and Ivy International Small Companies
Fund), which are described in a separate prospectus.
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy or
accuracy of this Prospectus. Any representation to the contrary
is a criminal offense. Investments in the Funds are not deposits
of any bank and are not federally insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government
agency.
- -- CONTENTS
2 Ivy European Opportunities Fund
4 Ivy Global Fund
6 Ivy Global Natural Resources Fund
8 Ivy Global Science & Technology
Fund
10 Ivy International Fund II
12 Ivy International Small Companies
Fund
14 Ivy Pan-Europe Fund
16 Additional information
about investment strategies
and risks
20 Management
23 Shareholder information
27 Financial highlights
29 Account application
<TABLE>
<S> <C>
OFFICERS
Michael G. Landry, Chairman
Keith J. Carlson, President
James W. Broadfoot, Vice President
C. William Ferris, Secretary/Treasurer
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, Massachusetts
CUSTODIAN AUDITORS
Brown Brothers Harriman & Co. PricewaterhouseCoopers LLP
Boston, Massachusetts Fort Lauderdale, Florida
TRANSFER AGENT INVESTMENT MANAGER
Ivy Mackenzie Services Corp. Ivy Management, Inc.
PO Box 3022 700 South Federal Highway
Boca Raton, Florida 33431-0922 Boca Raton, Florida 33432
800.777.6472 800.456.5111
</TABLE>
[Mackenzie Logo]
<PAGE> 98
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY EUROPEAN OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY EUROPEAN
OPPORTUNITIES FUND
- -- INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital growth by investing in the
securities markets of Europe.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in the equity
securities of European companies, which may include:
- - companies operating in Europe's emerging markets;
- - small-capitalization companies in the more developed markets of Europe; and
- - large European companies, or European companies of any size that provide
special investment opportunities (such as privatized companies or those
providing exceptional value).
The Fund may also invest in European debt securities, up to 20% of which may be
low-rated (commonly referred to as "high yield" or "junk" bonds).
The Fund's manager uses a "bottom-up" investment approach, focusing on prospects
for long term earnings growth.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
SMALL AND MEDIUM-SIZED COMPANY RISK: Securities of smaller companies may be
subject to more abrupt or erratic market movements than the securities of
larger, more established companies, since smaller companies tend to be thinly
traded and because they are subject to greater business risk. Transaction costs
in smaller company stocks may also be higher than those of larger companies.
INTEREST RATE RISK: The Fund's debt security investments are susceptible to
decline in a rising interest rate environment, even where "management risk" is
not a factor.
CREDIT RISK: The market value of debt securities also tends to vary according to
the relative financial condition of the issuer. Certain of the Fund's debt
security holdings may be considered below investment grade (commonly referred to
as "high yield" or "junk" bonds). Low-rated debt securities are considered
speculative and could weaken the Fund's returns if the issuer defaults on its
payment obligations.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
2
<PAGE> 99
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EURO CONVERSION RISK: On January 1, 1999, a new European currency called
the "euro" was introduced and adopted for use by eleven European countries.
The transition to daily usage of the euro will occur during the period from
January 1, 1999 through December 31, 2001, at which time euro bills and
coins will be put into circulation. Certain European Union members,
including the United Kingdom, did not officially implement the euro on
January 1, 1999 and may cause market disruptions when and if they decide to
do so. Should this occur, the Fund could experience investment losses.
-- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth
potential, but who can accept moderate fluctuations in capital value in the
short term.
*You should consult with your financial advisor before deciding whether the
Fund is an appropriate investment choice in light of your particular
financial needs and risk tolerance.
-- PERFORMANCE INFORMATION
The Fund commenced operations on April 30, 1999, therefore no information
is available.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<S> <C>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price)................................... none
Maximum deferred sales charge (load) (as
a percentage of purchase price).......... none
Maximum sales charge (load) imposed on
reinvested dividends..................... none
Redemption fee*.......................... none
Exchange fee............................. none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Management fees.......................... 1.00%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 0.95%
Total annual Fund operating expenses*.... 1.95%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -------------
YEAR
- -------------
<S> <C>
1st $198
3rd 726
</TABLE>
3
<PAGE> 100
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY GLOBAL FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
GLOBAL
FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth. Any income realized will be incidental.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the equity securities of
companies in at least three different countries, including the United States.
The Fund might engage in foreign currency exchange transactions and forward
foreign currency contracts to control its exposure to certain risks.
The Fund's management team uses a disciplined value approach while looking for
investment opportunities around the world. The Fund is expected to have some
emerging markets exposure in an attempt to achieve higher returns over the long
term.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
Since the Fund may invest a substantial portion of its assets in these
countries, it is exposed to the following additional risks:
- - securities that are even less liquid and more volatile than those in more
developed foreign countries;
- - unusually long settlement delays;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - abrupt changes in exchange rate regime or monetary policy;
- - unusually large currency fluctuations and currency conversion costs; and
- - high national debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
4
<PAGE> 101
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on April 18, 1991 compare with those of a broad measure
of market performance. The Fund's past performance is not an indication of
how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
<TABLE>
<S> <C>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES
--------------
<S> <C>
'92 2.74%
'93 29.63%
'94 -4.6%
'95 12.08%
'96 16.21%
'97 -8.72%
'98 8.59%
</TABLE>
Best quarter Q4 '98: 24.15%
Worst quarter Q3 '98: (20.47%)
<TABLE>
<S> <C>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MSCI
--------------------------
WORLD EAFE EMF
CLASS A INDEX INDEX INDEX
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Past year................................................... 8.59% 24.34% 20.00% (25.34%)
Past 5 years................................................ 4.26% 15.68% 9.19% (9.27%)
Since inception*............................................ 7.61% 13.03% 8.44% 5.10%
</TABLE>
*Index performance is calculated from April 30, 1991.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<S> <C>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price).................................... none
Maximum deferred sales charge (load) (as a
percentage of purchase price)............. none
Maximum sales charge (load) imposed on
reinvested dividends...................... none
Redemption fee*........................... none
Exchange fee.............................. none
</TABLE>
*If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Management fees*......................... 1.00%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 1.11%
Total annual Fund operating expenses..... 2.11%
Expenses reimbursed**.................... 0.36%
Net Fund operating expenses**............ 1.75%
</TABLE>
*Management fees are reduced to 0.75% for net assets over $500
million.
**The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 178
3rd 666
5th 1,180
10th 2,593
</TABLE>
5
<PAGE> 102
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY GLOBAL NATURAL RESOURCES FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY GLOBAL
NATURAL
RESOURCES FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks long-term growth. Any income realized will be incidental.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in equity securities.
The Fund's manager seeks to maximize the Fund's returns by seeking out natural
resources companies of any size with strong management and financial positions,
adding balance with established low cost, low debt producers and positions that
are based on anticipated commodity price trends. For these purposes, "natural
resources" generally include:
- - precious metals (such as gold, silver and platinum);
- - ferrous and nonferrous metals (such as iron, aluminum, copper and steel);
- - strategic metals (such as uranium and titanium);
- - fossil fuels and chemicals;
- - forest products and agricultural commodities; and
- - undeveloped real property.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
SMALL AND MEDIUM-SIZED COMPANY RISK: Securities of smaller companies may be
subject to more abrupt or erratic market movements than the securities of
larger, more established companies, since smaller companies tend to be thinly
traded and because they are subject to greater business risk. Transaction costs
in smaller company stocks may also be higher than those of larger companies.
NATURAL RESOURCES AND PHYSICAL COMMODITIES RISK: Investing in natural resources
can be riskier than other types of investment activities because of a range of
factors, including:
- - price fluctuations caused by real and perceived inflationary trends and
political developments; and
- - the costs assumed by natural resource companies in complying with
environmental and safety regulations.
Investing in physical commodities, such as gold, exposes the Fund to other risk
considerations, such as:
- - potentially severe price fluctuations over short periods of time;
- - storage costs that can exceed the custodial and/or brokerage costs associated
with the Fund's other portfolio holdings.
INDUSTRY-CONCENTRATION RISK: Since the Fund can invest a significant portion of
its assets in securities of companies engaged in natural resources activities,
the Fund could experience wider fluctuations in value than funds with more
diversified portfolios.
FOREIGN SECURITY RISK: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect the Fund's performance unfavorably,
depending upon prevailing conditions at any given time. Among these potential
risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept potentially dramatic fluctuations in capital value in the
short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
6
<PAGE> 103
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on January 1, 1997 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
<TABLE>
<S> <C>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
</TABLE>
[CHART]
<TABLE>
<CAPTION>
CLASS A SHARES
--------------
<S> <C>
'97 6.95%
'98 -29.35%
</TABLE>
Best quarter Q3 '97: 19.66%
Worst quarter Q4 '97: (23.28%)
<TABLE>
<S> <C>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MSCI
COMMODITY-
RELATED
CLASS A INDEX
----------------------------------------------------------------------------------
<S> <C> <C>
Past year................................................... (29.35%) (14.61%)
Since inception............................................. (13.11%) (9.65%)
</TABLE>
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if
you buy and hold shares of the Fund:
<TABLE>
<S> <C>
fees paid directly from
SHAREHOLDER FEES your investment
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge (load) imposed on purchases (as a
percentage of offering
price)...................................................... none
Maximum deferred sales charge (load) (as a percentage of
purchase price)............................................. none
Maximum sales charge (load) imposed on reinvested
dividends................................................... none
Redemption fee*............................................. none
Exchange fee................................................ none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Management fees.......................... 1.00%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 4.50%
Total annual Fund operating expenses..... 5.50%
Expenses reimbursed*..................... 3.53%
Net Fund operating expenses*............. 1.97%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 200
3rd 732
5th 1,291
10th 2,814
</TABLE>
7
<PAGE> 104
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY GLOBAL
SCIENCE & TECHNOLOGY
FUND
- -- INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital growth. Any income realized
will be incidental.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in equity securities
of companies throughout the world that are expected to profit from the
development, advancement and use of science and technology.
Industries that are likely to be represented in the Fund's portfolio holdings
include:
- - internet;
- - computers and peripheral products;
- - software;
- - electronic components and systems; and
- - telecommunications, media and information services.
The Fund's management team believes that technology is a fertile growth area,
and actively seeks to position the Fund to benefit from this growth by investing
in companies of any size that may deliver rapid earnings growth and potentially
high returns.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
SMALL AND MEDIUM-SIZED COMPANY RISK: Many of the companies in which the Fund may
invest have relatively small market capitalizations. Securities of
smaller-companies may be subject to more abrupt or erratic market movements than
the securities of larger, more established companies, since smaller companies
tend to be thinly traded because they are subject to greater business risk.
Transaction costs in smaller-company stocks may also be higher than those of
larger companies.
INDUSTRY-CONCENTRATION RISK: Since the Fund focuses its investments in
securities of companies engaged in the science and technology industries, the
Fund could experience wider fluctuations in value than funds with more
diversified portfolios. For example, rapid advances in these industries tend to
cause existing products to become obsolete, and the Fund's returns could suffer
to the extent it holds an affected company's shares. Companies in a number of
science and technology industries are also subject to government regulations and
approval processes that may affect their overall profitability and cause their
stock prices to be more volatile.
FOREIGN SECURITY RISK: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect the Fund's performance unfavorably,
depending upon prevailing conditions at any given time. Among these potential
risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
new or developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
8
<PAGE> 105
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on July 22, 1996 compare with those of a broad measure
of market performance. The Fund's past performance is not an indication of
how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
<TABLE>
<S> <C>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
</TABLE>
(CHART)
<TABLE>
<CAPTION>
CLASS A SHARES
--------------
<S> <C>
'97 6.53%
'98 35.26%
</TABLE>
Best quarter Q4 '98: 39.16%
Worst quarter Q1 '97: (19.15%)
<TABLE>
<S> <C>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RUSSELL 2000
TECHNOLOGY
CLASS A INDEX
- --------------------------------------------------------------------------------------
<S> <C> <C>
Past year................................................... 35.26% 20.57%
Since inception*............................................ 42.30% 15.12%
</TABLE>
*Index performance is calculated from July 30, 1996.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<S> <C>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price)................................... none
Maximum deferred sales charge (load) (as
a percentage of purchase price........... none
Maximum sales charge (load) imposed on
reinvested dividends..................... none
Redemption fee*.......................... none
Exchange fee............................. none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Management fees.......................... 1.00%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 1.18%
Total annual Fund operating expenses..... 2.18%
</TABLE>
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- ------------------
YEAR
- ------------------
<S> <C>
1st $ 221
3rd 682
5th 1,169
10th 2,513
</TABLE>
9
<PAGE> 106
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY INTERNATIONAL FUND II
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
INTERNATIONAL
FUND II
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES:
The Fund invests at least 65% of its assets in equity securities principally
traded in European, Pacific Basin and Latin American markets.
To control its exposure to certain risks, the Fund might engage in foreign
currency exchange transactions and forward foreign currency contracts.
The Fund's manager uses a disciplined value approach while looking for
investment opportunities around the world.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
10
<PAGE> 107
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on May 13, 1997 compare with those of a broad measure
of market performance. The Fund's past performance is not an indication of
how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
<TABLE>
<S> <C>
ANNUAL TOTAL RETURNS for the year ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
</TABLE>
[CHART]
<TABLE>
<CAPTION>
CLASS A SHARES
--------------
<S> <C>
'98 6.63%
</TABLE>
Best quarter Q4 '98: 16.49%
Worst quarter Q3 '98: (18.29%)
<TABLE>
<S> <C>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MORNINGSTAR LIPPER
CATEGORY FOR CATEGORY FOR
MSCI EAFE INTERNATIONAL INTERNATIONAL
CLASS A INDEX STOCK FUNDS STOCK FUNDS
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Past year................................................... 6.63% 20.00% 12.26% 13.02%
Since inception*............................................ (2.68%) 9.40% 5.88% 6.43%
</TABLE>
*MSCI EAFE Index performance is calculated from May 30, 1997. Morningstar
performance is calculated from June 1, 1997. Lipper performance is
calculated from May 15, 1997.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<S> <C>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price).................................... none
Maximum deferred sales charge (load) (as a
percentage of purchase price)............. none
Maximum sales charge (load) imposed on
reinvested dividends...................... none
Redemption fee*........................... none
Exchange fee.............................. none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Management fees.......................... 1.00%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 0.45%
Total annual Fund operating expenses..... 1.45%
Expenses reimbursed*..................... 0.13%
Net Fund operating expenses*............. 1.32%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.50% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 134
3rd 628
5th 1,149
10th 2,579
</TABLE>
11
<PAGE> 108
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY INTERNATIONAL SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
INTERNATIONAL
SMALL COMPANIES FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks long-term growth. Consideration of current income is secondary to
this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the common stock of foreign
issuers having total market capitalization of less than $1 billion.
The Fund might engage in foreign currency exchange transactions and forward
foreign currency contracts to control its exposure to certain risks.
The Fund is managed by a team that focuses on both value and growth factors.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
SMALL COMPANY RISK: Securities of smaller companies may be subject to more
abrupt or erratic market movements than the securities of larger, more
established companies, since they tend to be thinly traded and because the
companies are subject to greater business risk. Transaction costs in
smaller-company stocks may also be higher than those of larger companies.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
12
<PAGE> 109
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on January 1, 1997 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
<TABLE>
<S> <C>
ANNUAL TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
</TABLE>
[CHART]
<TABLE>
<CAPTION>
CLASS A SHARES
--------------
<S> <C>
'97 -12.52%
'98 5.24%
</TABLE>
Best quarter Q1 '98: 17.44%
Worst quarter Q3 '98: (14.96%)
<TABLE>
<S> <C>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
HSBC JAMES
CAPEL WORLD
(EX-US) SMALL
CLASS A COMPANY INDEX
--------------------------------------------------------------------------------------
<S> <C> <C>
Past year................................................... 5.24% 3.31%
Since inception............................................. (4.06%) (5.13%)
</TABLE>
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if
you buy and hold shares of the Fund:
<TABLE>
<S> <C>
fees paid directly from
SHAREHOLDER FEES your investment
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price)............................... none
Maximum deferred sales charge (load)(as a percentage of
purchase price)............................................. none
Maximum sales charge (load) imposed on reinvested
dividends................................................... none
Redemption fee*............................................. none
Exchange fee................................................ none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Management fees......................... 1.00%
Distribution and/or service (12b-1)
fees.................................... none
Other expenses.......................... 4.88%
Total annual Fund operating expenses.... 5.88%
Expenses reimbursed*.................... 3.91%
Net Fund operating expenses*............ 1.97%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE:
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 200
3rd 731
5th 1,289
10th 2,810
</TABLE>
13
<PAGE> 110
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY PAN-EUROPE FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
PAN-EUROPE
FUND
- -- INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the equity securities of large
and medium-sized European companies.
The Fund's management team uses a disciplined value approach while looking for
investment opportunities around the world.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK: Common stock represents a proportionate ownership interest in a
company. The market value of common stock can fluctuate significantly even where
"management risk" is not a factor, so you could lose money if you redeem your
Fund shares at a time when the Fund's stock portfolio is not performing as well
as expected.
FOREIGN SECURITY RISK: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect the Fund's performance unfavorably,
depending upon prevailing conditions at any given time. Among these potential
risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
EURO CONVERSION RISKS: On January 1, 1999, a new European currency called the
"euro" was introduced and adopted for use by eleven European countries. The
transition to daily usage of the euro will occur during the period from January
1, 1999 through December 31, 2001, at which time euro bills and coins will be
put in circulation. Certain European Union members, including the United
Kingdom, did not officially implement the euro on January 1, 1999 and may cause
market disruptions when and if they decide to do so. Should this occur, the Fund
could experience investment losses.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
14
<PAGE> 111
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides
some indication of the risks of investing in the Fund by showing changes in
the Fund's performance from year to year and how the Fund's average annual
returns since its inception on May 13, 1997 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
Since Advisor Class shares have been outstanding for less than one year,
the information presented below relates to the Fund's Class A shares
exclusive of any applicable sales charges. The performance for Advisor
Class shares would have been substantially similar to that of Class A
shares, because all Fund shares are invested in the same portfolio of
securities. Any differences in the returns for the Fund's Class A and
Advisor Class shares would result from variations in their respective
expense structures.
<TABLE>
<S> <C>
ANNUAL TOTAL RETURNS for the year ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
</TABLE>
(CHART)
<TABLE>
<CAPTION>
CLASS A SHARES
--------------
<S> <C>
'97 5.54%
'98 6.72%
</TABLE>
Best quarter Q1 '98: 17.61%
Worst quarter Q3 '98: (21.25%)
<TABLE>
<S> <C>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MORNINGSTAR
MSCI EUROPE EUROPE STOCK
CLASS A INDEX UNIVERSE
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Past year................................................... 6.72% 24.50% 18.97%
Since inception*............................................ 7.55% 23.66% 17.10%
</TABLE>
*MSCI Europe Index performance is calculated from May 30, 1997. Morningstar
performance is calculated from June 1, 1997.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<S> <C>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price)................................... none
Maximum deferred sales charge (load)(as a
percentage of purchase price)............ none
Maximum sales charge (load) imposed on
reinvested dividends..................... none
Redemption fee*.......................... none
Exchange fee............................. none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<S> <C>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Management fees.......................... 1.00%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 4.48%
Total annual Fund operating expenses..... 5.48%
Expenses reimbursed*..................... 3.37%
Net Fund operating expenses*............. 2.11%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.95% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 2.50% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $ 214
3rd 774
5th 1,360
10th 2,950
</TABLE>
15
<PAGE> 112
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
ABOUT INVESTMENT
STRATEGIES AND RISKS
- -- PRINCIPAL STRATEGIES
IVY EUROPEAN OPPORTUNITIES FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing primarily in the equity
securities of companies located or otherwise doing business in European
countries and covering a broad range of economic and industry sectors. The Fund
may also invest a significant portion of its assets in debt securities, up to
20% of which is considered below investment grade (commonly referred to as "high
yield" or "junk" bonds). The Fund's manager follows a "bottom-up" approach to
investing, which focuses on prospects for long-term earnings growth. Company
selection is generally based on an analysis of a wide range of indicators (such
as growth, earnings, cash, book and enterprise value), as well as factors such
as market position, competitive advantage and management strength. Country and
sector allocation decisions are driven by the company-selection process.
IVY GLOBAL FUND: The Fund seeks to achieve its principal objective of long-term
capital growth by investing primarily in the equity securities of companies
throughout the world. The Fund invests in a variety of economic sectors,
industry segments and individual securities to reduce the effects of price
volatility in any one area, and normally invests its assets in at least three
different countries (including the United States). Countries are selected on the
basis of a mix of factors that include long-term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using a value approach, which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Typically the securities
purchased are attractively valued on one or more of these measures relative to a
broad universe of comparable securities.
IVY GLOBAL NATURAL RESOURCES FUND: The Fund seeks to achieve its principal
objective of long-term growth by investing primarily in the equity securities of
companies throughout the world that own, explore or develop natural resources
and other basic commodities (or that supply goods and services to such
companies). The Fund's manager targets for investment well managed companies
that are expected to increase shareholder value through successful exploration
and development of natural resources, balancing the Fund's portfolio with low
cost, low debt producers that have outstanding asset bases, and positions that
are based on anticipated commodity price trends. Additional emphasis is placed
on sectors that are out of favor but appear to offer the most significant
recovery potential over a one to three year period. All investment decisions are
reviewed systematically and cash reserves may be allowed to build up when
valuations seem unattractive. The manager attempts to minimize risk through
diversifying the Fund's portfolio by commodity, country, issuer and asset class.
Typically the Fund's top 50 investments comprise more than 80% of the Fund's
assets.
IVY GLOBAL SCIENCE & TECHNOLOGY FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing in the common stock of
companies that are expected to benefit from the development, advancement and use
of science and technology. The Fund may also invest in companies that are
expected to benefit indirectly from the commercialization of technological and
scientific advances. Industries likely to be represented in the Fund's overall
portfolio holdings include internet, computers and peripheral products,
software, electronic components and systems, telecommunications, and media and
information services. Rapid advances in these industries in recent years have
stimulated unprecedented growth. While this is no guarantee of future
performance, the Fund's management team believes that these industries offer
substantial opportunities for long-term capital appreciation. The Fund intends
to invest its assets in at least three different countries, but may at any given
time have a substantial portion of its assets invested in the United States.
IVY INTERNATIONAL FUND II: The Fund seeks to achieve its principal objective of
long-term capital growth by investing in equity securities principally traded in
European, Pacific Basin and Latin American markets. The Fund invests in a
variety of
16
<PAGE> 113
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
economic sectors and industry segments to reduce the effects of price volatility
in any one area. The Fund's manager seeks out rapidly expanding foreign
economies and companies that generally have at least $1 billion in
capitalization at the time of investment and a solid history of operations.
Other factors that the Fund's manager considers in selecting particular
countries include long-term economic growth prospects, anticipated inflation
levels, and the effect of applicable government policies on local business
conditions. The Fund is managed using a value approach, which focuses on
financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Typically the securities purchased
are attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
IVY INTERNATIONAL SMALL COMPANIES FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing in the foreign stock markets,
focusing on issuers that are valued at less than $1 billion across a wide range
of geographic, economic and industry sectors. Countries are selected on the
basis of a mix of factors that include long-term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using a value approach, which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Typically the securities
purchased are attractively valued on one or more of these measures relative to a
broad universe of comparable securities.
IVY PAN-EUROPE FUND: The Fund seeks to achieve its principal objective of
long-term capital growth by investing primarily in the equity securities of
companies located or otherwise doing business in European countries and that
cover a broad range of economic and industry sectors. The Fund may also invest a
significant portion of its assets outside of Europe. Countries are selected on
the basis of a mix of factors that include long-term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using a value approach, which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Typically the securities
purchased are attractively valued on one or more of these measures relative to a
broad universe of comparable securities.
- -- PRINCIPAL RISKS
GENERAL MARKET RISK:
As with any mutual fund, the value of a Fund's investments and the income they
generate will vary daily and generally reflect market conditions, interest
rates and other issuer-specific, political or economic developments.
Each Fund's share value will decrease at any time during which its security
holdings or other investment techniques are not performing as well as
anticipated, and you could therefore lose money by investing in a Fund depending
upon the timing of your initial purchase and any subsequent redemption.
OTHER RISKS: The table on the following page identifies the investment
techniques that each Fund's advisor considers important in achieving the Fund's
investment objective or in managing its exposure to risk (and that could
therefore have a significant effect on a Fund's returns). Following the table is
a description of the general risk characteristics of these investment
techniques. Other investment methods that the Funds may use (such as derivative
investments), but that are not likely to play a key role in their overall
investment strategies, are described in the Funds' Statement of
17
<PAGE> 114
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
Additional Information (see back cover page for information on how you can
receive a free copy).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
INVESTMENT
TECHNIQUE: IEOF IGF IGNRF IGSTF IIF2 IISCF IPEF
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stocks........ X X X X X X X
Debt securities...... X
Low-rated debt
securities........... X
Foreign securities... X X X X X X X
Emerging markets..... X X X X X X X
Foreign currencies... X X X X X X X
Depository receipts.. X X X X X X X
Derivatives.......... X X
Illiquid
securities........... X X X X X X X
Precious metals...... X
Borrowing............ X X X X X X X
Temporary defensive
positions............ X X X X X X X
</TABLE>
RISK CHARACTERISTICS:
- - COMMON STOCKS: Common stocks represent a proportionate ownership interest in a
company. As a result, the value of common stock rises and falls with a
company's success or failure. The market value of common stock can fluctuate
significantly, with smaller companies being particularly susceptible to price
swings. Transaction costs in smaller-company stocks may also be higher than
those of larger companies.
- - DEBT SECURITIES, IN GENERAL: Investing in debt securities involves both
interest rate and credit risk. Generally, the value of debt instruments rises
and falls inversely with fluctuations in interest rates. For example, as
interest rates decline, the value of debt securities generally increases.
Conversely, rising interest rates tend to cause the value of debt securities
to decrease. A Fund's portfolio is therefore susceptible to the decline in
value of the debt instruments it holds in a rising interest rate environment.
The market value of debt securities also tends to vary according to the
relative financial condition of the issuer. Bonds with longer maturities tend
to be more volatile than bonds with shorter maturities.
- - LOW-RATED DEBT SECURITIES: In general, low-rated debt securities (commonly
referred to as "high yield" or "junk" 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.
For this reason, these bonds are considered speculative and could
significantly weaken a Fund's returns.
- - FOREIGN SECURITIES: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect a Fund's performance favorably or
unfavorably, depending upon prevailing conditions at any given time. For
example, the securities markets of many foreign countries may be smaller, less
liquid and subject to greater price volatility than those in the U.S. Foreign
investing may also involve brokerage costs and tax considerations that are not
usually present in the U.S. markets. Many of the Funds' securities also are
denominated in foreign currencies and the value of each Fund's investments, as
measured in U.S. dollars, may be affected favorably or unfavorably by changes
in foreign currency exchange rates and exchange control regulations. Currency
conversions can also be costly.
Other factors that can affect the value of a Fund's foreign investments
include the comparatively weak supervision and regulation by some foreign
governments of securities exchanges, brokers and issuers, and the fact that
many foreign companies may not be subject to uniform accounting, auditing and
financial reporting standards. It may also be difficult to obtain reliable
information about the securities and business operations of certain foreign
issuers. Settlement of portfolio transactions may also be delayed due to local
restrictions or communication problems, which can cause a Fund to miss
attractive investment opportunities or impair its ability to dispose of
securities in a timely fashion (resulting in a loss if the value of the
securities subsequently declines).
- - SPECIAL EMERGING-MARKET CONCERNS: The risks of investing in foreign securities
are heightened in countries with new or developing economies. Among these
additional risks are the following:
- securities that are even less liquid and more volatile than those in more
developed foreign countries;
18
<PAGE> 115
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- increased settlement delays;
- unusually high inflation rates (which in extreme cases can cause the value of
a country's assets to erode sharply);
- unusually large currency fluctuations and currency conversion costs; and
- high national debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- - DEPOSITORY RECEIPTS: Interests in foreign issuers may be acquired in the form
of sponsored or unsponsored American Depository Receipts ("ADRs"), Global
Depository Receipts ("GDRs") and similar types of depository receipts. ADRs
typically are issued by a U.S. bank or trust company and represent ownership
of the underlying securities issued by a foreign corporation. GDRs and other
types of depository receipts are usually issued by foreign banks or trust
companies. The investing Fund's investments in ADRs, GDRs and other depository
receipts are viewed as investments in the underlying securities.
Depository receipts can be difficult to price and are not always
exchange-listed. Unsponsored depository programs also are organized
independently without the cooperation of the issuer of the underlying
securities. As a result, information concerning the issuer may not be as
current or as readily available as in the case of sponsored depository
instruments, and their prices may be more volatile than if they were sponsored
by the issuers of the underlying securities.
- - DERIVATIVE INVESTMENT TECHNIQUES: A Fund may, but is not required to, use
certain derivative investment techniques to hedge various market risks (such
as interest rates, currency exchange rates and broad or specific market
movements) or to enhance potential gain. Among the derivative techniques a
Fund might use are options, futures, forward foreign currency contracts and
foreign currency exchange transactions.
Using put and call options could cause a Fund to lose money by forcing the
sale or purchase of portfolio securities at inopportune times or for prices
higher (in the case of put options) or lower (in the case of call options)
than current market values, by limiting the amount of appreciation the Fund
can realize on its investments, or by causing the Fund to hold a security it
might otherwise sell.
Futures transactions (and related options) involve other types of risks. For
example, the variable degree of correlation between price movements of futures
contracts and price movements in the related portfolio position of a Fund
could cause losses on the hedging instrument that are greater than gains in
the value of the Fund's position. In addition, futures and options markets may
not be liquid in all circumstances and certain over-the-counter options may
have no markets. As a result, a Fund might not be able to close out a
transaction before expiration without incurring substantial losses (and it is
possible that the transaction cannot even be closed). In addition, the daily
variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would purchases of options, where the
exposure is limited to the cost of the initial premium.
Foreign currency transactions (such as forward foreign currency contracts) can
cause investment losses in a variety of ways. For example, changes in currency
exchange rates may result in poorer overall performance for a Fund than if it
had not engaged in such transactions. There may also be an imperfect
correlation between a Fund's portfolio holdings of securities denominated in a
particular currency and the forward contracts entered into by the Fund. An
imperfect correlation of this type may prevent a Fund from achieving the
intended hedge or expose the Fund to the risk of currency exchange loss.
- - ILLIQUID SECURITIES: "Illiquid securities" are assets that may not be disposed
of in the ordinary course of business within seven days at roughly the value
at which the investing fund has valued the assets. These may be "restricted
securities," which cannot be sold to the public without registration under the
Securities Act of 1933 (in the absence of an exemption) or because of other
legal or contractual restrictions on resale. Thus, while illiquid securities
may
19
<PAGE> 116
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
offer the potential for higher returns than more readily marketable
securities, there is a risk that the investing fund will not be able to
dispose of them promptly at an acceptable price.
- - PRECIOUS METALS AND OTHER PHYSICAL COMMODITIES: Ivy Global Natural Resources
Fund can invest in precious metals and other physical commodities. Commodities
trading is generally considered speculative because of the significant
potential for investment loss. Among the factors that could affect the value
of the Fund's investments in commodities are cyclical economic conditions,
sudden political events and adverse international monetary policies. Markets
for precious metals and other commodities are likely to be volatile and there
may be sharp price fluctuations even during periods when prices overall are
rising. The Fund may also pay more to store and accurately value its commodity
holdings than it does with its other portfolio investments.
- - BORROWING: For temporary or emergency purposes, Ivy Global Fund, Ivy Global
Science & Technology Fund and Ivy International Fund II may borrow up to 10%
of the value of its total assets from qualified banks. Ivy European
Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Small
Companies Fund and Ivy Pan-Europe Fund may borrow up to one third of the value
of their total assets from qualified banks, but (with the exception of Ivy
European Opportunities Fund) will not buy securities whenever its outstanding
borrowings exceed 10% of the value of its total assets. Borrowing may
exaggerate the effect on a Fund's share value of any increase or decrease in
the value of the securities it holds. Money borrowed will also be subject to
interest costs.
- - TEMPORARY DEFENSIVE POSITIONS: A Fund may occasionally take a temporary
defensive position and invest without limit in U.S. Government securities,
investment-grade debt securities, and cash and cash equivalents such as
commercial paper, short-term notes and other money market securities. When a
Fund assumes such a defensive position it may not achieve its investment
objective. Its exposure to the risks associated with debt securities would
also be heightened (see "Debt Securities, in General" on page 18).
- -- OTHER IMPORTANT INFORMATION
EUROPEAN MONETARY UNION: The Funds may have investments in Europe. On January 1,
1999, a new European currency called the "euro" was introduced and adopted for
use by eleven European countries. The transition to daily usage of the euro will
occur during the period from January 1, 1999 through December 31, 2001, at which
time euro bills and coins will be put into circulation. Certain European Union
members, including the United Kingdom, did not officially implement the euro on
January 1, 1999 and may cause market disruptions when and if they decide to do
so. Should this occur, a Fund could experience investment losses.
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem"). The inability of computer-
based systems to make this distinction could have a seriously adverse effect on
the handling of securities trades, pricing and account services worldwide. The
Funds' service providers are taking steps that each believes are reasonably
designed to address the Year 2000 Problem with respect to the computer systems
that they use. Information about the year 2000 readiness of the issuers of the
securities that the Funds may purchase is also taken into consideration during
the investment decision-making process (though such information may not be
readily available, particularly in non-U.S. countries, and may be limited to
public filings or statements from company representatives that are not
independently verifiable).
The Funds' managers believe these steps will be sufficient to avoid any material
adverse impact on the Funds. At this time, however, there can be no assurance
that significant problems will not occur (which either directly or indirectly
may cause a Fund to lose money).
MANAGEMENT
- -- INVESTMENT ADVISOR
Ivy Management, Inc.("IMI")
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
IMI provides business management services to the Funds and investment advisory
to all Funds other than Ivy Global Natural Resources Fund. IMI is an
SEC-registered investment advisor with over $5 billion in assets under
management, and provides similar services to the other twelve series of Ivy
20
<PAGE> 117
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fund. For the Funds' fiscal year ending December 31, 1998, the Funds (other than
Ivy European Opportunities Fund) each paid IMI a fee that was equal to 1.00% of
the Funds' respective average net assets. Ivy European Opportunities Fund will
pay IMI a fee equal to 1.00% of the Fund's average net assets.
Henderson Investment Management Limited ("Henderson"), 3 Finsbury Avenue,
London, England EC2M 2PA, serves as subadviser to Ivy European Opportunities
Fund under an Agreement with IMI. For its services, Henderson receives a fee
from IMI that is equal, on an annual basis, to 0.50% of the Fund's average net
assets. As of February 1, 1999, Henderson also serves as subadviser with respect
to 50% of the net assets of Ivy International Small Companies Fund, for which
Henderson receives a fee from IMI that is equal, on an annual basis, to 0.50% of
that portion of the Fund's assets that Henderson manages. Henderson is an
indirect, wholly owned subsidiary of AMP Limited, an Australian life insurance
and financial services company located in New South Wales, Australia.
Mackenzie Financial Corporation ("MFC"), 150 Bloor Street West, Suite 400,
Toronto, Ontario, Canada M5S 3B5, serves as the investment adviser to Ivy Global
Natural Resources Fund and is responsible for selecting the Fund's portfolio
investments. MFC has been an investment counsel and mutual fund manager in
Toronto for more than 30 years, and has over $17.8 billion in assets under
management. For the Fund's fiscal year ending December 31, 1998, the Fund paid
to MFC an aggregate fee equal to 0.50% of the Fund's average net assets.
- -- PORTFOLIO MANAGEMENT
IVY EUROPEAN OPPORTUNITIES FUND: Stephen Peak, Executive Director of Henderson
and head of Henderson's European equities team, is primarily responsible for
selecting the Fund's portfolio of investments. Formerly a director and portfolio
manager with Touche Remnant & Co., Mr. Peak has 24 years of investment
experience.
IVY GLOBAL FUND: Barbara Trebbi, a Senior Vice President of IMI, manages the
foreign portion of the Fund's portfolio. She is also Managing Director of
International Equities and a member of the Ivy international portfolio
management team. Ms. Trebbi joined IMI in 1988 and has 11 years of professional
investment experience. She is a Chartered Financial Analyst and holds a graduate
diploma from the London School of Economics. Paul P. Baran, a Senior Vice
President of IMI, manages the domestic portion of the Fund's portfolio. Before
joining IMI, Mr. Baran was Senior Vice President/Chief Investment Officer of
Central Fidelity National Bank. He has 24 years of professional investment
experience and is a Chartered Financial Analyst. He has an MBA from Wayne State
University.
IVY GLOBAL NATURAL RESOURCES FUND: Frederick Sturm, a Senior Vice President of
MFC, has managed the Fund since its inception. Mr. Sturm joined MFC in 1983 and
has 14 years of professional investment experience. He is a Chartered Financial
Analyst and holds a graduate degree in commerce and finance from the University
of Toronto.
IVY GLOBAL SCIENCE & TECHNOLOGY FUND: The Fund is managed by IMI's Global
Technology Team. James W. Broadfoot, President of IMI and a Vice President of
Ivy Fund, is the Team's lead manager. Before joining IMI in 1990, Mr. Broadfoot
was the principal in an investment counsel firm specializing in emerging growth
companies. He has over 25 years of professional investment experience, holds an
MBA from the Wharton School of Business and is a Chartered Financial Analyst.
IVY INTERNATIONAL FUND II: Barbara Trebbi, a Senior Vice President of IMI, has
managed the Fund since its inception. She is also Managing Director of
International Equities and a member of the Ivy international portfolio
management team. Ms. Trebbi joined IMI in 1988 and has 11 years of professional
investment experience. She is a Chartered Financial Analyst and holds a graduate
diploma from the London School of Economics.
Ms. Trebbi is supported by a team of research analysts who are responsible for
providing information on regional and country-specific economic and political
developments and monitoring individual companies. These analysts use a variety
of research sources that include:
- - brokerage reports;
- - economic and financial news services;
21
<PAGE> 118
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
- - company reports; and
- - information from third party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
IVY INTERNATIONAL SMALL COMPANIES FUND: The Fund is managed using a team
approach. IMI's international equity team is comprised of investment
professionals and is supported by research analysts who acquire information on
regional and country-specific economic and political developments and monitor
individual companies. These analysts use a variety of research sources that
include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
- - information from third party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
The Henderson team's investment process combines top down regional allocation
with a bottom up stock selection approach. Regional allocations are based on
factors such as interest rates and current economic cycles, which are used to
identify economies with relatively strong prospects for real economic growth.
Individual stock selections are based largely on prospects for earnings growth.
IVY PAN-EUROPE FUND: The Fund is managed by a team of investment professionals
that is supported by research analysts who acquire information on regional and
country-specific economic and political developments and monitor individual
companies. These analysts use a variety of research sources that include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
- - information from third party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
22
<PAGE> 119
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER
INFORMATION
- -- PRICING OF FUND SHARES
Each Fund calculates its share price by dividing the value of the Fund's net
assets by the total number of its shares outstanding as of the close of regular
trading (usually 4:00 p.m. Eastern time) on the New York Stock Exchange on each
day the Exchange is open for trading (normally any weekday that is not a
national holiday).
Each portfolio security that
is listed or traded on a
recognized stock exchange is
valued at the security's last sale price on the exchange on which it was
purchased.
If no sale is reported at that time, the average between the last bid and asked
prices is used. Securities and other Fund assets for which market prices are not
readily available are priced at their "fair value" as determined by IMI in
accordance with procedures approved by the Funds' Board of Trustees. IMI may
also price a foreign security at its fair value if events materially affecting
the estimated value of the security occur between the close of the foreign
exchange on which the security is principally traded and the time as of which a
Fund prices its shares. Fair-value pricing under these circumstances is designed
to protect existing shareholders from the actions of short-term investors
trading into and out of a Fund in an attempt to profit from short-term market
movements. When such fair-value pricing occurs, however, there may be some
period of time during which a Fund's share price and/or performance information
is not available.
The number of shares you receive when you place a purchase or exchange order,
and the payment you receive after submitting a redemption request, is based on a
Fund's net asset value next determined after your instructions are received in
proper form by Ivy Mackenzie Services Corp. ("IMSC") (the Fund's transfer agent)
or by your registered securities dealer. Since the Funds normally invest in
securities that are listed on foreign exchanges that may trade on weekends or
other days when the Funds do not price their shares, each Fund's share value may
change on days when shareholders will not be able to purchase or redeem the
Fund's shares.
- -- HOW TO BUY SHARES
Please read these sections below carefully before investing.
Advisor Class shares are offered through this Prospectus only to the following
investors:
- - trustees or other fiduciaries purchasing shares for employee benefit plans
that are sponsored by organizations that have at least 1,000 employees;
- - any account with assets of at least $10,000 if (a) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion, and where the investor pays such person as compensation for his
advice and other services an annual fee of at least .50% on the assets in the
account, or (b) such account is established under a "wrap fee" program and the
account holder pays the sponsor of the program an annual fee of at least 0.50%
on the assets in the account;
- - officers and Trustees of the Ivy Fund (and their relatives);
- - directors or employees of Mackenzie Investment Management Inc. or its
affiliates;
- - directors, officers, partners, registered representatives, employees and
retired employees (and their relatives) of dealers having a sales agreement
with IMDI (or trustees or custodians of any qualified retirement plan or IRA
established for the benefit of any such person.)
The following investment minimums, sales charges and expenses apply.
<TABLE>
<S> <C>
- --------------------------------------------------
Minimum initial investment*.............. $10,000
Minimum subsequent investment*........... $250
Initial sales charge..................... none
CDSC..................................... none
Service and distribution fees............ none
</TABLE>
*Minimum initial and subsequent investments for retirement plans are $25.
- -- SUBMITTING YOUR PURCHASE ORDER
INITIAL INVESTMENTS: Complete and sign the Account Application appearing at the
end of this Prospectus. Enclose a check payable to the
23
<PAGE> 120
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
Fund in which you wish to invest. You should note on the check that you wish to
invest in Advisor Class shares (see page 23 for minimum initial investments.)
Deliver your application materials to your registered representative or selling
broker, or send them to one of the addresses below:
- - BY REGULAR MAIL:
Ivy Mackenzie Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
- -BY COURIER:
Ivy Mackenzie Services Corp.
700 South Federal Hwy.
Boca Raton, FL 33432-6114
- -- BUYING ADDITIONAL SHARES
There are several ways to increase your investment in a Fund:
- - BY MAIL: Send your check with a completed investment slip (attached to your
account statement) or written instructions indicating the account
registration, Fund number or name, and account number. Mail to one of the
addresses above.
- - THROUGH YOUR BROKER: Deliver to your registered representative or selling
broker the investment slip attached to your statement, or written
instructions, along with your payment.
- - BY WIRE: Purchases may also be made by wiring money from your bank account to
your Ivy account. Your bank may charge a fee for wiring funds. Before wiring
any funds, please call IMSC at 800.777.6472. Wiring instructions are as
follows:
First Union National Bank of Florida
Jacksonville, FL
ABA #063000021
Account #2090002063833
For further credit to:
Your Account Registration
Your Fund Number and Account Number
- - BY AUTOMATIC INVESTMENT METHOD: You can authorize to have funds electronically
drawn each month from your bank account and invested as a purchase of shares
into your Ivy Fund account. Complete sections 6A and 6B of the Account
Application.
- -- HOW TO REDEEM SHARES
SUBMITTING YOUR REDEMPTION ORDER: You may redeem your Fund shares through your
registered securities dealer or directly through IMSC. If you choose to redeem
through your registered securities dealer, the dealer is responsible for
properly transmitting redemption orders in a timely manner. If you choose to
redeem directly through IMSC, you have several ways to submit your request:
- - BY MAIL: Send your written redemption request to IMSC at one of the addresses
at left. Be sure that all registered owners listed on the account sign the
request. Medallion signature guarantees and supporting legal documentation may
be required. When you redeem, IMSC will normally send redemption proceeds to
you on the next business day, but may take up to seven days (or longer in the
case of shares recently purchased by check).
- - BY TELEPHONE: Call IMSC at 800.777.6472 to redeem from your individual, joint
or custodial account. To process your redemption order by telephone, you must
have telephone redemption privileges on your account. IMSC employs reasonable
procedures that require personal identification prior to acting on redemption
instructions communicated by telephone to confirm that such instructions are
genuine. In the absence of such procedures, the Fund or IMSC may be liable for
any losses due to unauthorized or fraudulent telephone instructions. Requests
by telephone can only be accepted for amounts up to $50,000.
- - BY SYSTEMATIC WITHDRAWAL PLAN ("SWP"): You can authorize to have funds
electronically drawn each month from your Ivy Fund account and deposited
directly into your bank account. Certain minimum balances and minimum
distributions apply. Complete section 6B of the Account Application to add
this feature to your account.
24
<PAGE> 121
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RECEIVING YOUR REDEMPTION PROCEEDS: You can receive redemption proceeds through
a variety of payment methods:
- - BY CHECK: Unless otherwise instructed in writing, checks will be made payable
to the current account registration and sent to the address of record.
- - BY FEDERAL FUNDS WIRE: Proceeds will be wired on the next business day to a
pre-designated bank account. Your account will be charged $10 each time
redemption proceeds are wired to your bank, and your bank may also charge you
a fee for receiving a Federal Funds wire.
- - BY ELECTRONIC FUNDS TRANSFER ("EFT"): For SWP redemptions only.
IMPORTANT REDEMPTION INFORMATION:
- - If you own shares of more than one class of a Fund, the Fund will redeem first
the shares having the highest 12b-1 fees, unless you instruct otherwise.
- - A Fund may (on 60 days' notice) redeem the accounts of shareholders whose
investment, including sales charges paid, has been less than $1,000 for more
than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares recently
purchased by check) to send redemption proceeds.
- -- HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Ivy fund, subject to
certain restrictions (see "Important exchange information").
SUBMITTING YOUR EXCHANGE ORDER: You may submit an exchange request to IMSC as
follows:
- - BY MAIL: Send your written exchange request to IMSC at one of the addresses on
page 24 of this Prospectus. Be sure that all registered owners listed on the
account sign the request.
- - BY TELEPHONE: Call IMSC at 800.777.6472 to authorize an exchange transaction.
To process your exchange order by telephone, you must have telephone exchange
privileges on your account. IMSC employs reasonable procedures that require
personal identification prior to acting on exchange instructions communicated
by telephone to confirm that such instructions are genuine. In the absence of
such procedures, the Fund or IMSC may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
IMPORTANT EXCHANGE INFORMATION:
- - You must exchange into the same share class you currently own.
- -- Exchanges are considered taxable events and may result in a capital gain or
a capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange privilege
for the purpose of timing short-term market fluctuations. The Funds may
therefore limit the frequency of exchanges by a shareholder, charge a
redemption fee (in the case of certain Funds) or cancel a shareholder's
exchange privilege if at any time it appears that such market-timing
strategies are being used. For example, shareholders exchanging more than five
times in a 12-month period may be considered to be using market-timing
strategies.
- -- DIVIDENDS, DISTRIBUTIONS AND TAXES
- - The Funds generally declare and pay dividends and capital gain distributions
(if any) at least once a year.
- - Dividends and distributions are "reinvested" in additional Fund shares unless
you request to receive them in cash.
- - Reinvested dividends and distributions are added to your account at NAV and
are not subject to a sales charge regardless of which share class you own.
- - Cash dividends and distributions can be sent to you:
- - BY MAIL: a check will be mailed to the address of record unless otherwise
instructed.
- - BY ELECTRONIC FUNDS TRANSFER: your proceeds will be directly deposited into
your bank account.
To change your dividend and/or distribution options, call IMSC at 800.777.6472.
Dividends ordinarily will vary from one class to another. The Funds intend to
declare and pay
25
<PAGE> 122
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUNDS
- --------------------------------------------------------------------------------
dividends annually. The Funds will distribute net investment income and net
realized capital gains, if any, at least once a year. The Funds may make an
additional distribution of net investment income and net realized capital gains
to comply with the calendar year distribution requirement under the excise tax
provisions of Section 4982 of the Internal Revenue Code of 1986, as amended (the
"Code").
Dividends paid out of a Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to you as
ordinary income. If a portion of a Fund's income consists of dividends paid by
U.S. corporations, a portion of the dividends paid by the Fund may be eligible
for the corporate dividends-received deduction. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, are taxable to you as long-term capital gains, regardless of
how long you have held your shares. Dividends are taxable to you in the same
manner whether received in cash or reinvested in additional Fund shares.
If shares of a Fund are held in a tax-deferred account, such as a retirement
plan, income and gain will not be taxable each year. Instead, the taxable
portion of amounts held in a tax-deferred account generally will be subject to
tax as ordinary income only when distributed from that account.
A distribution will be treated as paid to you 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 a Fund during January of the
following calendar year. In certain years, you may be able to claim a credit or
deduction on your income tax return for your share of foreign taxes paid by your
Fund.
Upon the sale or exchange of your Fund shares, you may realize a capital gain or
loss which will be long term or short term, generally depending upon how long
you held your shares.
A Fund may be required to withhold U.S. Federal income tax at the rate of 31% of
all distributions payable to you if you fail to provide the Fund with your
correct taxpayer identification number or to make required certifications, or if
you have been notified by the Internal Revenue Service that you are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against your U.S. Federal income tax liability.
Fund distributions may be subject to state, local and foreign taxes.
You should consult with your tax adviser as to the tax consequences of an
investment in the Fund, including the status of distributions from the Funds
under applicable state or local law.
26
<PAGE> 123
27
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each
Fund's financial performance and reflects results for a single Fund share.
Ivy European Opportunities Fund commenced operations on April 30, 1999, and as
of December 31, 1998 Ivy Global Natural Resources Fund and Ivy
International Small Companies Fund had not issued any Advisor Class shares.
Accordingly, no financial information is presented for these Funds. The
total returns in the table represent the rate an investor would have earned
(or lost) on an investment in a Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Funds' financial
statements, is included in its Annual Report to shareholders (which is
available upon request).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVY GLOBAL FUND ADVISOR CLASS
-------------------------
for the period
April 30, 1998
(Commencement)
to December 31,
- ------------------------------------------------------------------------------------------
1998
SELECTED PER SHARE DATA -------------------------
<S> <C> <C>
Net asset value, beginning of period....................... $ 13.26
-------------------------
Loss from investment operations
Net investment income (a)................................ .05
Net gains or losses on securities (both realized and
unrealized)............................................ (1.41)
-------------------------
Total from investment operations......................... (1.36)
-------------------------
Less distributions
Distributions from capital gains......................... .54
-------------------------
Total distributions.................................... .54
-------------------------
Net asset value, end of period............................. $ 11.36
=========================
Total return (%)(b)........................................ (10.19)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................... $ 321
Ratio of expenses to average net assets
With expense reimbursement (%)(c)........................ 1.75
Without expense reimbursement (%)(c)..................... 2.11
Ratio of net investment income to average net assets
(%)(a)(c)................................................ .59
Portfolio turnover rate (%)................................ 17
</TABLE>
(a) Net investment
income is net of
expenses reimbursed by
Manager.
(b) Total return repre-
sents aggregate total
return and does not
reflect a sales charge.
(c) Annualized
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADVISOR CLASS
IVY GLOBAL SCIENCE & -------------------------
TECHNOLOGY FUND FOR THE PERIOD
April 15, 1998
(Commencement)
to December 31,
- ------------------------------------------------------------------------------------------
1998
SELECTED PER SHARE DATA -------------------------
<S> <C> <C>
Net asset value, beginning of period....................... $20.19
-------------------------
Income from investment operations
Net investment loss (c).................................. (.20)
Net gains or losses on securities (both realized and
unrealized)(c)......................................... 3.63
-------------------------
Total from investment operations......................... 3.43
-------------------------
Net asset value, end of period............................. $23.62
=========================
Total return (%)(a)........................................ 16.99
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................... $ 15
Ratio of expenses to average net assets
Without expense reimbursement (%)(b)..................... 2.18
Ratio of net investment loss to average net assets
(%)(b)................................................... (1.91)
Portfolio turnover rate (%)................................ 73
</TABLE>
(a) Total return repre-
sents aggregate total
return and does not
reflect a sales charge.
(b) Annualized
(c) Based on average
shares outstanding.
<PAGE> 124
28
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVY INTERNATIONAL FUND II ADVISOR CLASS
-------------------------
for the period
February 23, 1998
(Commencement)
to December 31,
- ------------------------------------------------------------------------------------------
1998
SELECTED PER SHARE DATA -------------------------
<S> <C> <C>
Net asset value, beginning of period....................... $9.63
-------------------------
Loss from investment operations
Net investment income (a)................................ .11
Net gains or losses on securities (both realized and
unrealized)............................................ (.13)
-------------------------
Total from investment operations......................... (.02)
-------------------------
Less distributions
Dividends from net investment income..................... .11
Distributions from capital gains......................... .02
-------------------------
Total distributions.................................... .13
-------------------------
Net asset value, end of period............................. $9.48
=========================
Total return (%)(b)........................................ (.15)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................... $ 510
Ratio of expenses to average net assets
With expense reimbursement (%)(c)........................ 1.32
Without expense reimbursement (%)(c)..................... 1.45
Ratio of net investment income to average net assets
(%)(a)(c)................................................ 1.23
Portfolio turnover rate (%)................................ 16
</TABLE>
(a) Net investment
income is net of expenses
reimbursed by manager.
(b) Total return represents
aggregate total return and
does not reflect a sales
charge.
(c) Annualized
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVY PAN-EUROPE FUND ADVISOR CLASS
-------------------------
for the period
March 23, 1998
(Commencement)
to December 31,
- ------------------------------------------------------------------------------------------
1998
SELECTED PER SHARE DATA -------------------------
<S> <C> <C>
Net asset value, beginning of period....................... $12.31
-------------------------
Loss from investment operations
Net investment loss (a)(e)............................... (.01)
Net gains or losses on securities (both realized and
unrealized)(e)......................................... (1.02)
-------------------------
Total from investment operations......................... (1.03)
-------------------------
Net asset value, end of period............................. $11.28
=========================
Total return (%)(b)........................................ (8.37)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................... $ 65
Ratio of expenses to average net assets (d)
With expense reimbursement (%)(c)........................ 2.41
Without expense reimbursement (%)(c)..................... 5.78
Ratio of net investment loss to average net assets
(%)(a)(c)................................................ (.04)
Portfolio turnover rate (%)................................ 25
</TABLE>
(a) Net investment
loss is net of expenses
reimbursed by Manager.
(b) Total return represents
aggregate total return and
does not reflect a sales
charge.
(c) Annualized
(d) Total expenses include
fees paid indirectly, if any,
through an expense offset
arrangement.
(e) Based on average shares
outstanding.
<PAGE> 125
Account
Application
FUND USE ONLY
Account Number
Dealer/Branch/Rep
Account Type/Soc Cd
[IVY FUNDS LOGO]
Please mail applications and checks to: USE FOR
ADVISOR
Ivy Mackenzie Services Corp., CLASS ONLY
P.O. Box 3022, Boca Raton, Florida 33431-0922
This application should not be used for
retirement accounts for which Ivy Fund (IBT) is
custodian.
1 REGISTRATION
Name -------------------------
-------------------------
-------------------------
Address -------------------------
City ---------- State ---------- Zip -------
Phone # (day) ( )
--------------------------------------------
Phone # (evening) ( )
--------------------------------------------
<TABLE>
<S> <C> <C>
-- Individual -- UGMA/UTMA -- Sole proprietor
-- Joint tenant -- Corporation -- Trust
-- Estate -- Partnership -- Other
------------------------------------
Date of trust --------------------------------- Minor's state of residence ---------------
</TABLE>
2 TAX I.D.
<TABLE>
<S> <C> <C>
Citizenship: -- U.S. -- Other (please specify): ----------
</TABLE>
Social security # ---- or Tax identification # ----
Under penalties of perjury, I certify by signing
in Section 8 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
"Dividends, distributions and taxes" 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 IMSC of
any purchases made under a Letter of Intent or
Rights of Accumulation.
Dealer name -----------------------------------
Branch office address -------------------------
City ---------- State ---------- Zip -------
Representative's
name ------------------------------------------------------------------
Representative's # -----Representative's phone # -----
Authorized signature of
dealer -----------------------------------------------------------------
4 INVESTMENTS
A. Enclosed is my check ($10,000 minimum) for
$ ---------- made payable to the appropriate
fund.
Please invest it in Advisor Class shares of
the following fund(s):
<TABLE>
<S> <C>
$ --------------- Ivy European Opportunities Fund $ --------------- Ivy International Fund II
$ --------------- Ivy Global Fund $ --------------- Ivy International Small Companies
$ --------------- Ivy Global Natural Resources Fund Fund
$ --------------- Ivy Global Science & Technology $ --------------- Ivy Pan-Europe Fund
Fund
</TABLE>
B. FOR DEALER USE ONLY
<TABLE>
<S> <C> <C> <C>
Confirmed trade orders: ------------------ ------------------ ------------------
Confirm Number Number of Shares Trade Date
</TABLE>
<PAGE> 126
5 DISTRIBUTION OPTIONS
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.
A. --- Reinvest all dividends and capital gains into additional shares
of a different Ivy fund account.
Fund name: --------------------
Account #: --------------------
B. --- Pay all dividends in cash and reinvest capital gains into
additional shares in this account or a different Ivy fund
account.
Fund name: --------------------
Account #: --------------------
C. --- Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN B OR C ABOVE, BE SENT
TO: ----- the address listed in the registration
----- the special payee listed in Section 7A (by mail)
----- the special payee listed in Section 7B (by EFT)
6 OPTIONAL SPECIAL FEATURES
A. AUTOMATIC INVESTMENT METHOD (AIM)
--- I wish to have my bank account listed in section 7B automatically
debited via EFT on a predetermined frequency and invested into my
Ivy Fund account listed below.
1. Withdraw $ ---------------- for each time period indicated below and
invest my bank proceeds in Advisor Class shares of the following Ivy
fund:
Fund name: --------------------
Account #: --------------------
2. Debit my bank account:
--- Annually (on the --- day of the month of
-----------------------).
--- Semiannually (on the --- day of the months of
--- and ---).
--- Quarterly (on the --- day of the first/second/third
month of each calendar quarter). (CIRCLE ONE)
--- Monthly*--- once per month on the --- day
--- twice per month on the ----- days
--- 3 times per month on the ----- days
--- 4 times per month on the ----- days
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)**
--- I wish to have my Ivy Fund account automatically debited on a
predetermined frequency and the proceeds sent to me per my
instructions below.
1. Withdraw ($250 minimum) $----- for each time period indicated
below from the following Ivy Fund account:
Fund name: --------------------
Account #: --------------------
2. Withdraw from my Ivy Fund account:
--- Annually (on the ----- day of the month of
----------).
---Semiannually (on the ----- day of the months of
----- and -----).
--- Quarterly (on the ----- day of the first/second/third
month of each calendar quarter. (CIRCLE ONE)
--- Monthly*--- once per month on the --- day
--- twice per month on the ----- days
--- 3 times per month on the ----- days
--- 4 times per month on the ----- days
3. I request the withdrawal proceeds be:
--- sent to the address listed in the registration
--- sent to the special payee listed in section 7A or 7B.
--- invested into additional Advisor Class shares of a
different Ivy Fund:
Fund name: --------------------
Account #: --------------------
Note: A minimum balance of $10,000 is required to establish a SWP.
6. OPTIONAL SPECIAL FEATURES (CONT.)
C. FEDERAL FUNDS WIRE
FOR REDEMPTION PROCEEDS** --- yes --- no
By checking "yes" immediately above, I authorize IMSC 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).
(COMPLETE SECTION 7B).
D. TELEPHONE EXCHANGES** --- yes --- no
By checking "yes" immediately above, I authorize exchanges by telephone
among the Ivy 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. TELEPHONIC REDEMPTIONS** --- yes --- no
By checking "yes" immediately above, the Fund or its agents are authorized
to honor telephone instructions from any person as more fully described in
the Prospectus for the redemption of Fund shares. The amount of the
redemption shall not exceed $50,000 and the proceeds are to be payable to
the shareholder of record and mailed to the address of record. To change
this option once established, written instructions must be received from
the shareholder of record or the current registered representative.
If neither box is checked, the telephone redemption privilege will be
provided automatically.
* There must be a period of at least seven calendar days between each
investment (AIM)/withdrawal (SWP) period.
** This option may not be used if shares are issued in certificate form.
7 SPECIAL PAYEE
A. MAILING ADDRESS: Please send all disbursements to this payee:
Name of bank or individual ----------
Account # (if applicable) ----------
Street ----------
City ---------- State ----- Zip -----
B. FED WIRE/EFT INFORMATION
Financial institution ----------
ABA # ----------
Account # ----------
Street ----------
City ---------- State ----- Zip -----
(PLEASE ATTACH A VOIDED CHECK.)
8 SIGNATURES
Investors should be aware that the failure to check the "No" under
Section 6D or 6E above means that the Telephone Exchange/ Redemption
Privileges will be provided. The Fund employs reasonable procedures that
require personal identification prior to acting on exchange/redemption
instructions communicated by telephone to confirm that such instructions
are genuine. In the absence of such procedures, the Fund may be liable for
any losses due to unauthorized or fraudulent telephone instructions.
Please see "How to exchange shares" and "How to redeem shares" in the
Prospectus for more information on these privileges.
I certify to my legal capacity to purchase or redeem shares of the
Fund for my own account or for the account of the organization named in
Section 1. I have received a current Prospectus and understand its terms
are incorporated in this application by reference. I am certifying my
taxpayer information as stated in Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID
BACKUP WITHHOLDING.
---------------------------------------- --------------------
Signature of Owner, Custodian, Trustee or Date
Corporate Officer
---------------------------------------- --------------------
Signature of Joint Owner, Co-Trustee or Date
Corporate Officer
(Remember to sign Section 8)
DETACH ON PERFORATION TO MAIL
<PAGE> 127
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- QUOTRON SYMBOLS AND CUSIP NUMBERS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
FUND SYMBOL CUSIP
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ivy European Opportunities Fund - Advisor Class * 465898856
Ivy Global Fund - Advisor Class * 465897239
Ivy Global Natural Resources Fund - Advisor Class * 465897221
Ivy Global Science & Technology Fund - Advisor Class * 465897213
Ivy International Fund II - Advisor Class * 465897197
Ivy International Small Companies Fund - Advisor
Class * 465897189
Ivy Pan-Europe Fund - Advisor Class * 465897155
-------------------------------------------------------------------------------------------------------
* Symbol not assigned as of this printing
</TABLE>
<PAGE> 128
(Ivy Funds Logo)
-- HOW TO RECEIVE MORE
INFORMATION ABOUT THE FUNDS
Additional information about the Funds and their investments is
contained in the Funds' Statement of Additional Information dated May
3, 1999 (the "SAI"), which is incorporated by reference into this
Prospectus, and each Fund's annual and semiannual reports to
shareholders. Each Fund's annual report includes a discussion of the
market conditions and investment strategies that significantly affected
the Fund's performance during its most recent fiscal year. The SAI and
annual and semiannual reports are available upon request and without
charge from the Distributor at the following address and phone number.
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432
800.456.5111
Information about the Funds (including the SAI and annual and
semiannual reports) may also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. (please call 1-800-SEC-0330 for
further details). Information about the Funds is also available on the
SEC's Internet Website (www.sec.gov), and copies of this information
may be obtained, upon payment of a copying fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-6009.
Investment Company Act File No. 811-1028
01INTLADV0499
-- SHAREHOLDER
INQUIRIES
Please call
Ivy Mackenzie
Services Corp.,
the Funds' transfer agent,
regarding any other
inquiries about the Funds
at 800.777.6472.
www.ivymackenzie.com
E-mail:
[email protected]
<PAGE> 129
Ivy Funds Logo This is your prospectus from
IVY MACKENZIE
DISTRIBUTORS, INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
800.456.5111
May 3, 1999 FIXED INCOME FUNDS
IVY BOND FUND
IVY INTERNATIONAL STRATEGIC BOND FUND
IVY MONEY MARKET FUND
Ivy Fund is a registered open-end investment company consisting of nineteen
separate portfolios. This Prospectus relates to the Class A, Class B and Class C
shares of the three funds listed above (the "Funds"), and the Class I shares of
Ivy Bond Fund and Ivy International Strategic Bond Fund. These two Funds also
offer Advisor Class shares, which are described in a separate prospectus.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy or accuracy of this Prospectus. Any
representation to the contrary is a criminal offense.
Investments in the Funds are not deposits of any bank and are not federally
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
- -- CONTENTS
2 Ivy Bond Fund
4 Ivy International
Strategic Bond Fund
6 Ivy Money Market Fund
8 Additional information
about investment strategies
and risks
12 Management
13 Shareholder information
20 Financial highlights
25 Account application
<TABLE>
<S> <C> <C>
OFFICERS
Michael G. Landry, Chairman
Keith J. Carlson, President
James W. Broadfoot, Vice President
C. William Ferris, Secretary/Treasurer
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, Massachusetts
CUSTODIAN AUDITORS
Brown Brothers Harriman & Co. PricewaterhouseCoopers LLP
Boston, Massachusetts Fort Lauderdale, Florida
TRANSFER AGENT INVESTMENT MANAGER
Ivy Mackenzie Services Corp. Ivy Management, Inc.
PO Box 3022 700 South Federal Highway
Boca Raton, Florida 33431-0922 Boca Raton, Florida 33432
800.777.6472 800.456.5111
</TABLE>
Mackenzie Logo
<PAGE> 130
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY BOND FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
BOND
FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks a high level of current income.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in bonds rated in
the four highest rating categories used by Moody's and S&P and similar
investment grade fixed income securities.
To increase its potential yield, the Fund may invest up to 35% of its net assets
in low-rated debt securities (commonly referred to as "high yield" or "junk"
bonds). The Fund may also invest a portion of its assets in foreign debt
securities to diversify its holdings and to increase its potential return. Other
securities and investment techniques that the Fund's management team considers
important in achieving the Fund's investment objective (or in controlling the
Fund's exposure to risk) include zero coupon bonds.
The Fund's management team targets for investment companies whose
creditworthiness is believed to be stable or improving.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
INTEREST RATE RISK: The Fund's debt security investments are susceptible to
decline in a rising interest rate environment even where "management risk" is
not a factor, so you could lose money if you redeem your Fund shares at a time
when interest rates are rising.
CREDIT RISK: The market value of debt securities also tends to vary according to
the relative financial condition of the issuer. As much as 35% of the Fund's
debt security holdings may be considered below investment grade (commonly
referred to as "high yield" or "junk" bonds). Low-rated debt securities are
considered speculative and could significantly weaken the Fund's returns if the
issuer defaults on its payment obligations.
FOREIGN SECURITY AND EMERGING-MARKET RISK: The Fund may invest up to 20% of its
net assets in foreign issuers. Investing in foreign securities involves a number
of economic, financial and political considerations that are not associated with
the U.S. market and that could affect the Fund's performance unfavorably,
depending upon prevailing conditions at any given time. Among these potential
risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
new or developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking current income, but who can
accept moderate fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
2
<PAGE> 131
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on September 6, 1985 compare with those of a broad
measure of market performance. The Fund's past performance is not an
indication of how the Fund will perform in the future.
<TABLE>
<CAPTION>
TOTAL RETURNS for the years ending
FOR CLASS A SHARES* December 31
-------------------------------------------------------------
[CHART]
<S> <C>
'89' 15.11
'90' 4.26
'91' 14.45
'92' 8.16
'93' 15.45
'94' -4.1
'95' 17.41
'96' 8.06
'97' 11.87
'98' 0.00
</TABLE>
*Any applicable sales charges and account fees are not reflected, and if
they were the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
Best quarter Q2 '89: 9.58%
Worst quarter Q1 '90: (4.52%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS# December 31, 1998
----------------------------------------------------------------------------------------------
MORNINGSTAR
-------------------------------
CORPORATE MULTI- LONG-
BOND SECTOR TERM
GENERAL BOND BOND
CLASS A CLASS B CLASS C CLASS I*** UNIVERSE UNIVERSE UNIVERSE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Past year............ (4.75%) (5.77%) (1.81%) n/a 6.83% 1.20% 6.53%
Past 5 years......... 5.33% n/a n/a n/a 6.29% 5.81% 6.98%
Past 10 years........ 8.32% n/a n/a n/a 8.67% 8.45% 9.42%
Since inception:
Class B*............. n/a 6.15% n/a n/a 7.27% 7.21% 8.21%
Class C**............ n/a n/a 7.04% n/a 8.09% 7.07% 9.25%
</TABLE>
# Performance figures reflect any applicable sales charges.
* The inception date for the Fund's Class B shares was April
1, 1994.
** The inception date for the Fund's Class C shares is April
30, 1996. Index performance calculated from May 1, 1996.
*** The Fund has had no outstanding Class I shares.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- ---------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price).................. 4.75% none none none
Maximum deferred sales
charge (load) (as a
percentage of purchase
price).................. none 5.00% 1.00% none
Maximum sales charge
(load) imposed on
reinvested dividends.... none none none none
Redemption fee*......... none none none none
Exchange fee............ none none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I**
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees*....... 0.75% 0.75% 0.75% 0.75%
Distribution and/or
service (12b-1) fees... 0.25% 1.00% 1.00% none
Other expenses......... 0.39% 0.38% 0.37% 0.30%
Total annual Fund
operating expenses..... 1.39% 2.13% 2.12% 1.05%
</TABLE>
*Management Fees are reduced to 0.50% for net assets over $100
million.
**The Fund has had no outstanding Class I shares. Percentages shown
are estimates based on expenses for Class A shares.
- --------------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st $ 708 $ 716 $ 216 $ 315 $ 215 $ 107
3rd 990 967 667 664 664 334
5th 1,292 1,344 1,144 1,139 1,139 579
10th 2,148 2,274 2,274 2,452 2,452 1,283
</TABLE>
3
<PAGE> 132
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY INTERNATIONAL STRATEGIC BOND FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
INTERNATIONAL
STRATEGIC
BOND FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks total return and, consistent with that objective, to maximize
current income.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in a managed portfolio of foreign
bonds.
The Fund may also invest in U.S. bonds. The types of debt securities the Fund
may hold include corporate, government, and mortgage or asset backed securities.
At least 65% of the value of the Fund's portfolio is expected to be rated in the
four highest rating categories used by Moody's and S&P.
Among the other securities and investment techniques that the Fund's manager
considers important in achieving the Fund's investment objective (or in
controlling the Fund's exposure to risk) are:
- - low rated debt securities (commonly referred to as "high yield" or "junk"
bonds); and
- - derivative investment techniques (such as options, futures, interest rate and
credit swaps, and foreign currency exchange transactions).
The Fund's manager invests in bonds and bond markets that are believed to be
undervalued relative to other issuers or markets. In selecting bonds for the
Fund's portfolio, the manager will consider yields, credit quality and the
fundamental outlook for currency and interest rate trends in different parts of
the world, and may also take into account the ability to hedge currency and
local bond price risk.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
INTEREST RATE RISK: The Fund's debt security investments are susceptible to
decline in a rising interest rate environment even where "management risk" is
not a factor, so you could lose money if you redeem your Fund shares at a time
when interest rates are rising.
CREDIT RISK: The market value of debt securities also tends to vary according to
the relative financial condition of the issuer. Many of the Fund's debt security
holdings may be considered below investment grade (commonly referred to as "high
yield" or "junk" bonds). Low-rated debt securities are considered speculative
and could significantly weaken the Fund's returns if the issuer defaults on its
payment obligations.
NON-DIVERSIFICATION RISK: The Fund is classified as "non-diversified" under the
Investment Company Act of 1940, and may therefore invest a greater percentage of
its assets in a particular issuer than a "diversified" fund. As a result, the
Fund may also be more susceptible than a diversified fund to the price movements
of certain securities it holds in its portfolio.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
4
<PAGE> 133
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The risks of investing in foreign securities are more acute in countries
with new or developing economies.
DERIVATIVES RISK: The Fund may, but is not required to, use a range of
derivative investment techniques to hedge various market risks (such as
interest rates, currency exchange rates, and broad or specific equity or
fixed-income market movements) or to enhance potential gain. The use of
these derivative investment techniques involves a number of risks,
including the possibility of default by the counterparty to the transaction
and, to the extent the judgment of the Fund's manager as to certain market
movements is incorrect, the risk of losses that are greater than if the
derivative technique(s) had not been used.
-- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking a mix of total return and
current income, but who can accept potentially dramatic fluctuations in
capital value in the short term.
*You should consult with your financial advisor before deciding whether the
Fund is an appropriate investment choice in light of your particular
financial needs and risk tolerance.
-- PERFORMANCE INFORMATION
The Fund commenced operations on May 3, 1999, therefore, no performance
information is available.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
SHAREHOLDER fees paid directly from
FEES your investment
- ------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)................ 4.75% none none none
Maximum deferred sales
charge (load)(as a
percentage of purchase
price)................ none 5.00% 1.00% none
Maximum sales charge
(load) imposed on
reinvested
dividends............. none none none none
Redemption fee*....... none none none none
Exchange fee.......... none none none none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees...... 0.75% 0.75% 0.75% 0.75%
Distribution and/or
service (12b-1)
fees................. 0.25% 1.00% 1.00% none
Other expenses....... 0.50% 0.50% 0.50% 0.41%
Total annual Fund
operating
expenses*............ 1.50% 2.25% 2.25% 1.16%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.25% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 1.75% of the Fund's average net
assets.
- -------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods (with
additional information shown for Class B and Class C shares based on the
assumption that you do not redeem your shares at that time). The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st $ 719 $ 728 $ 228 $ 328 $ 228 $118
3rd 1,121 1,106 806 806 806 475
</TABLE>
5
<PAGE> 134
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY MONEY MARKET FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
MONEY
MARKET FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks to obtain as high a level of current income as is consistent with
the preservation of capital and liquidity.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in money market instruments maturing within thirteen months or
less and maintains a portfolio with a dollar-weighted average maturity of 90
days or less.
The Fund's emphasis on securities with relatively short-term maturities is
designed to enable the Fund to maintain a constant net asset value of $1.00 per
share.
Among the types of money market instruments that are likely to be included in
the Fund's portfolio are:
- - debt securities issued or guaranteed by the U.S. Government;
- - obligations of domestic banks and savings and loans associations (including
certificates of deposit and bankers' acceptances);
- - high-quality commercial paper;
- - high quality short-term corporate notes, bonds and debentures; and
- - short-term repurchase agreements involving U.S. Government securities.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other money market funds.
MARKET RISK: An investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Thus,
although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
INTEREST RATE RISK: Many of the Fund's portfolio holdings are susceptible to
decline in a rising interest rate environment.
CREDIT RISK: The issuers of the Fund's portfolio holdings could fail to meet
their obligations on interest payments and/or principal repayments, which could
cause the Fund to lose money.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking a combination of current
income and stability of capital.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
6
<PAGE> 135
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and how the Fund's average annual returns
since its inception on April 3, 1987 compare with those of a broad measure
of market performance. The Fund's past performance is not an indication of
how the Fund will perform in the future.
<TABLE>
<CAPTION>
TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
[CHART]
<S> <C>
'89' 8.87
'90' 7.69
'91' 5.16
'92' 2.81
'93' 2.42
'94' 4.21
'95' 4.80
'96' 4.47
'97' 4.60
'98' 4.51
</TABLE>
Best quarter Q3 '90: 1.94%
Worst quarter Q3 '98: 0.38%
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Past year................................................... 4.51% 4.59% 4.55%
Past 5 years................................................ 4.45% n/a n/a
Past 10 years............................................... 4.88% n/a n/a
Since inception*............................................ n/a 4.64% 5.30%
</TABLE>
*The inception dates for the Fund's three classes of shares were as
follows: Class A, April 3, 1987; Class B, January 1, 1996; and Class C,
April 30, 1996.
The Fund's 7-day yield as of December 31, 1998 was 4.11%.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
SHAREHOLDER fees paid directly from
FEES your investment
- -----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of offering
price)................... none none none
Maximum deferred sales
charge (load) (as a
percentage of purchase
price)*.................. none none none
Maximum sales charge
(load) imposed on
reinvested dividends..... none none none
Redemption fee**......... none none none
Exchange fee............. none none none
</TABLE>
*No contingent deferred sales charge ("CDSC") applies to your
purchase of Fund shares. If, however, you exchange shares of
another Ivy fund that are subject to a CDSC for shares of the
Fund, the CDSC may carry over to your investment in the Fund and
be assessed when you redeem your Fund shares (depending on how
much time has elapsed since your original purchase date).
**If you choose to receive your redemption proceeds via Federal
Funds wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------
<S> <C> <C> <C>
Management fees...... 0.40% 0.40% 0.40%
Distribution and/or
service (12b-1)
fees................. none none none
Other expenses....... 1.02% 0.91% 0.96%
Total annual Fund
operating expenses... 1.42% 1.31% 1.36%
Expenses
reimbursed*.......... 0.55% 0.55% 0.55%
Net Fund operating
expenses*............ 0.87% 0.76% 0.81%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses do not exceed
0.85% of the Fund's average net assets, when calculated at the Fund
level,. For each of the following nine years, the Investment
Manager will ensure that these expenses do not exceed 1.25% of the
Fund's average net assets.
- --------------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- ----------------------------------
YEAR CLASS A CLASS B CLASS C
- ----------------------------------
<S> <C> <C> <C>
1st $ 659 $ 78 $ 83
3rd 917 329 344
5th 1,196 600 626
10th 1,988 1,404 1,431
</TABLE>
7
<PAGE> 136
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FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
ABOUT INVESTMENT
STRATEGIES AND RISKS
- -- PRINCIPAL STRATEGIES
IVY BOND FUND: The Fund seeks to achieve its investment objective of a high
level of current income by investing primarily in investment grade corporate
bonds (which are rated Baa or higher by Moody's or BBB or higher by S&P) and
U.S. Government securities that mature in more than 13 months. The Fund may
invest up to 35% of its net assets in low-rated debt securities (commonly
referred to as "high yield" or "junk" bonds). As much as 20% of the Fund's
portfolio may be invested in foreign securities.
The Fund's manager targets for investment issuers with stable or improving
credit profiles. Individual securities are selected on the basis of factors such
as comparative yields and credit quality, and where appropriate,
country-specific currency and interest rate trends.
IVY INTERNATIONAL STRATEGIC BOND FUND: The Fund seeks to achieve its primary
investment objective of total return, and secondarily current income, by
investing in the debt securities of issuers in any nation. The Fund's portfolio
is actively managed to limit its exposure to individual country, sector,
interest rate and currency risks. The Fund may, however, invest more than 5% of
a portion of its assets in a single issuer (see "Non-diversification risk" on
page 4). Individual securities are selected based on factors such as yields,
credit quality, and the fundamental outlook for country-specific currency and
interest rate trends.
IVY MONEY MARKET FUND: The Fund seeks to achieve its investment objective of as
high a level of current income as is consistent with the preservation of capital
and liquidity by investing in high-quality, short-term securities. The Fund's
debt investments are required to present minimal credit risk and be included in
one of the two highest short-term rating categories that apply to debt
securities. By purchasing these types of securities, the Fund will attempt to
maintain a constant net asset value of $1.00 per share (although there is no
guarantee that the Fund's efforts will be successful). The Fund's portfolio is
actively monitored on a daily basis to maintain competitive yields.
- -- PRINCIPAL RISKS
GENERAL MARKET RISK:
As with any mutual fund, the value of a Fund's investments and the income they
generate will vary daily and generally reflect market conditions, interest
rates and other issuer-specific, political or economic developments.
Each Fund's share value will decrease at any time during which its security
holdings or other investment techniques are not performing as well as
anticipated, and you could therefore lose money by investing in a Fund depending
upon the timing of your initial purchase and any subsequent redemption.
OTHER RISKS: The following table identifies the investment techniques that each
Fund's manager considers important in achieving the Fund's investment objective
or in managing its exposure to risk (and that could therefore have a significant
effect on a Fund's returns). Following the table is a description of the general
risk characteristics of these investment techniques. Other investment methods
that the Funds may use (such as derivative investments), but that are not likely
to play a key role in their overall investment strategies, are described in the
Funds' Statement of Additional Information (see back cover page for information
on how you can receive a free copy).
8
<PAGE> 137
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
IVY INTERNATIONAL IVY MONEY
INVESTMENT IVY BOND STRATEGIC MARKET
TECHNIQUE FUND BOND FUND FUND
- ---------------------------------------------------------------
<S> <C> <C> <C>
Debt securities...... X X X
Low-rated debt
securities........... X X
Sovereign debt....... X
Zero coupon bonds.... X
Foreign securities... X
Emerging markets..... X X
Foreign currencies... X
Derivatives.......... X
Illiquid
securities......... X X
Borrowing............ X X X
Temporary defensive
positions............ X X
</TABLE>
RISK CHARACTERISTICS:
- - DEBT SECURITIES, IN GENERAL: Investing in debt securities involves both
interest rate and credit risk. The value of debt instruments generally
increase as interest rates decline. Conversely, rising interest rates tend to
cause the value of debt securities to decrease. The Fund's portfolio is
therefore susceptible to losses in a rising interest rate environment. The
market value of debt securities also tends to vary according to the relative
financial condition of the issuer. Bonds with longer maturities also tend to
be more volatile than bonds with shorter maturities.
- - LOW-RATED DEBT SECURITIES: In general, low-rated debt securities (commonly
referred to as "high yield" or "junk" 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.
For this reason, these bonds are considered speculative and could
significantly weaken the Funds' returns.
- - SOVEREIGN DEBT SECURITIES: Sovereign debt is issued by foreign governments.
For a variety of reasons (such as cash flow problems, limited foreign
reserves, and political constraints), the governmental entity that controls
the repayment of sovereign debt may not be able or willing to repay the
principal or interest when due. A governmental entity's ability to honor its
debt obligations to the investing Fund may also be contingent on its receipt
from others (such as the International Monetary Fund and more solvent foreign
governments) of specific disbursements, which may in turn be conditioned on
the perceived health of the governmental entity's economy and/or its
implementation of economic reforms. If any of these conditions fail, the Fund
could lose the entire value of its investment for an indefinite period of
time.
- - ZERO COUPON BONDS: Zero coupon bonds are debt obligations issued without any
requirement for the periodic payment of interest (and are issued at a
significant discount from face value). Because the income from zero coupon
bonds is recognized currently for Federal income tax purposes, the amount of
the unpaid, accrued interest a fund generally would be required to distribute
as dividends includes that income (even though the fund has not actually
received any income proceeds). The fund could be forced to sell other
portfolio securities at a disadvantageous time and/or price in order to meet
its distribution obligations.
- - FOREIGN SECURITIES: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect a Fund's performance favorably or
unfavorably, depending upon prevailing conditions at any given time. For
example, the securities markets of many foreign countries may be smaller, less
liquid and subject to greater price volatility than those in the U.S. Foreign
investing may also involve brokerage costs and tax considerations that are not
usually present in the U.S. markets.
Other factors that can affect the value of a Fund's foreign investments include
the comparatively weak supervision and regulation by some foreign governments of
securities exchanges, brokers and issuers, and the fact that many foreign
companies may not be subject to uniform accounting, auditing and financial
reporting standards. It may also be difficult to obtain reliable information
about the securities and business operations of certain foreign issuers.
Settlement of portfolio transactions may also be delayed due to local
restrictions or communication problems, which can cause a Fund to miss
attractive investment opportunities or impair its ability to dispose of
securities in a timely fashion (resulting
9
<PAGE> 138
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
in a loss if the value of the securities subsequently declines).
- - FOREIGN CURRENCIES: Many of the securities that Ivy International Strategic
Bond Fund buys are denominated in foreign currencies and the value of the
Fund's investments, as measured in U.S. dollars, may be affected unfavorably
by changes in foreign currency exchange rates and exchange control
regulations. Currency conversions can also be costly.
- - SPECIAL EMERGING-MARKET CONCERNS: The risks of investing in foreign securities
are heightened in countries with new or developing economies. Among these
additional risks are the following:
- securities that are even less liquid and more volatile than those in more
developed foreign countries;
- less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- increased settlement delays;
- unusually high inflation rates (which in extreme cases can cause the value
of a country's assets to erode sharply);
- unusually large currency fluctuations and currency conversion costs; and
- high national debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- - DERIVATIVE INVESTMENT TECHNIQUES: Ivy International Strategic Bond Fund may,
but is not required to, use certain derivative investment techniques to hedge
various market risks (such as interest rates, currency exchange rates and
broad or specific market movements) or to enhance potential gain. Among the
derivative techniques the Fund might use are options, futures, forward foreign
currency contracts and foreign currency exchange transactions.
Using put and call options could cause the Fund to lose money by forcing the
sale or purchase of portfolio securities at inopportune times or for prices
higher (in the case of put options) or lower (in the case of call options) than
current market values, by limiting the amount of appreciation the Fund can
realize on its investments, or by causing the Fund to hold a security it might
otherwise sell.
Futures transactions (and related options) involve other types of risks. For
example, the variable degree of correlation between price movements of futures
contracts and price movements in the related portfolio position of the Fund
could cause losses on the hedging instrument that are greater than gains in the
value of the Fund's position. In addition, futures and options markets may not
be liquid in all circumstances and certain over-the-counter options may have no
markets. As a result, the Fund might not be able to close out a transaction
before expiration without incurring substantial losses (and it is possible that
the transaction cannot even be closed). In addition, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium.
Foreign currency transactions (such as forward foreign currency contracts) can
cause investment losses in a variety of ways. For example, changes in currency
exchange rates may result in poorer overall performance for the Fund than if it
had not engaged in such transactions. There may also be an imperfect correlation
between the Fund's portfolio holdings of securities denominated in a particular
currency and the forward contracts entered into by the Fund. An imperfect
correlation of this type may prevent the Fund from achieving the intended hedge
or expose the Fund to the risk of currency exchange loss.
- - ILLIQUID SECURITIES: "Illiquid securities" are assets that may not be disposed
of in the ordinary course of business within seven days at roughly the value
at which the investing fund has valued the assets. These may be "restricted
securities," which cannot be sold to the public without registration under the
Securities Act of 1933 (in the absence of an exemption) or because of other
legal or contractual restrictions on resale. Thus, while illiquid securities
may offer the potential for higher returns than more readily marketable
securities, there is a risk that the investing fund will not be able to
dispose of them promptly at an acceptable price.
10
<PAGE> 139
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- - BORROWING: For temporary or emergency purposes, each Fund may borrow up to a
specific percentage of its total assets from qualified banks (10% in the case
of Ivy Bond Fund and Ivy Money Market Fund, and 20% in the case of Ivy
International Strategic Bond Fund). Borrowing may exaggerate the effect on a
Fund's share value or any increase or decrease in the value of the securities
it holds. Money borrowed will also be subject to interest costs.
- - TEMPORARY DEFENSIVE POSITIONS: Each Fund may occasionally take a temporary
defensive position and invest without limit in U.S. Government securities,
investment-grade debt securities, and cash and cash equivalents such as
commercial paper, short-term notes and other money market securities. When a
Fund assumes such a defensive position it may not achieve its investment
objective.
- -- OTHER IMPORTANT INFORMATION
EUROPEAN MONETARY UNION: The Funds may have investments in Europe. On January 1,
1999, a new European currency called the "euro" was introduced and adopted for
use by eleven European countries. The transition to daily usage of the euro will
occur during the period from January 1, 1999 through December 31, 2001, at which
time euro bills and coins will be put into circulation. Certain European Union
members, including the United Kingdom, did not officially implement the euro on
January 1, 1999 and may cause market disruptions when and if they decide to do
so. Should this occur, the Funds could experience investment losses.
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem"). The inability of computer-
based systems to make this distinction could have a seriously adverse effect on
the handling of securities trades, pricing and account services worldwide. The
Funds' service providers are taking steps that each believes are reasonably
designed to address the Year 2000 Problem with respect to the computer systems
that they use. Information about the year 2000 readiness of the issuers of the
securities that the Funds may purchase is also taken into consideration during
the investment decision-making process (though such information may not be
readily available, particularly in non-U.S. countries, and may be limited to
public filings or statements from company representatives that are not
independently verifiable).
The Funds' managers believe these steps will be sufficient to avoid any material
adverse impact on the Funds. At this time, however, there can be no assurance
that significant problems will not occur (which either directly or indirectly
may cause a Fund to lose money).
11
<PAGE> 140
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
MANAGEMENT
- -- INVESTMENT ADVISOR
Ivy Management, Inc. ("IMI")
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
IMI provides investment advisory and business management services to the Funds.
IMI is an SEC-registered investment advisor with over $5 billion in assets under
management, and provides similar services to the other sixteen series of Ivy
Fund. For the Funds' fiscal year ending December 31, 1998, the Funds paid IMI a
fee that was equal to the following percentages of the Funds' respective average
net assets:
- - Ivy Bond Fund, 0.66%;
- - Ivy Money Market Fund, 0.40%.
Ivy International Strategic Bond Fund will pay IMI a fee equal to 0.75% of the
Fund's average net assets.
- -- PORTFOLIO MANAGEMENT
IVY BOND FUND AND IVY MONEY MARKET FUND: The Funds are managed by IMI's Fixed
Income Team. Among the research sources and techniques that team members use
during the investment decision-making process are:
- - issuer financial statements;
- - discussions with company managers and Wall Street analysts;
- - credit rating agency opinions; and
- - various financial publications.
IVY INTERNATIONAL STRATEGIC BOND FUND: Richard A. Gluck, Vice President of IMI,
is the Fund's portfolio manager. Before joining IMI, Mr. Gluck was a Vice
President and portfolio manager at Oppenheimer Capital. He has been managing
global fixed income funds since 1989. Mr. Gluck holds a Masters Degree in
management with a concentration in finance from the M.I.T. Sloan School of
Management.
Mr. Gluck is supported by the members of IMI's Fixed Income Team, which is
responsible for providing information on regional and country-specific economic
and political developments and monitoring individual companies. Team members use
a variety of research sources that include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
- - information from third party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
12
<PAGE> 141
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER
INFORMATION
- -- PRICING OF FUND SHARES
Each Fund calculates its share price by dividing the value of the Fund's net
assets by the total number of its shares outstanding as of the close of regular
trading (usually 4:00 p.m. Eastern time) on the New York Stock Exchange on each
day the Exchange is open for trading (normally any weekday that is not a
national holiday).
Each portfolio security that is listed or traded on a recognized stock exchange
is valued at the security's last sale price on the exchange on which it was
purchased.
If no sale is reported at that time, the average between the last bid and asked
prices is used. Securities and other Fund assets for which market prices are not
readily available are priced at their "fair value" as determined by IMI in
accordance with procedures approved by the Funds' Board of Trustees. IMI may
also price a foreign security at its fair value if events materially affecting
the estimated value of the security occur between the close of the foreign
exchange on which the security is principally traded and the time as of which a
Fund prices its shares. Fair-value pricing under these circumstances is designed
to protect existing shareholders from the actions of short-term investors
trading into and out of a Fund in an attempt to profit from short-term market
movements. When such fair-value pricing occurs, however, there may be some
period of time during which a Fund's share price and/or performance information
is not available.
Each purchase and redemption order is subject to any applicable sales charge
(see "Choosing the appropriate class of shares" at right).
Ivy International Strategic Bond Fund normally invests in securities that are
listed on foreign exchanges that may trade on weekends or other days when the
Fund does not price its shares. Therefore, the Funds' share value may change on
days when shareholders will not be able to purchase or redeem shares.
IVY MONEY MARKET FUND: The Fund values all of its portfolio securities using the
"amortized cost method," which involves valuing each security at its initial
cost to the Fund and then assuming a constant rate of accretion of discount or
amortization of premium. Cash and receivables are valued at their realizable
amounts.
ALL FUNDS: The number of shares you receive when you place a purchase or
exchange order, and the payment you receive after submitting a redemption
request, is based on a Fund's net asset value ("NAV") next determined after your
instructions are received in proper form by Ivy Mackenzie Services Corp.
("IMSC") (the Fund's transfer agent) or by your registered securities dealer.
Each purchase and redemption order is subject to any applicable sales charge
(see "Choosing the appropriate class of shares" below).
- -- HOW TO BUY SHARES
Please read these sections carefully before investing.
CHOOSING THE APPROPRIATE CLASS OF SHARES: The essential features of the Funds'
different classes of shares are described below. If you do not specify on your
Account Application which class of shares you are purchasing, it will be assumed
that you are purchasing Class A shares.
IVY BOND FUND AND IVY INTERNATIONAL STRATEGIC BOND FUND: The Fund's have each
adopted separate distribution plans pursuant to Rule 12b-1 under the 1940 Act
for their Class A, B and C shares that allow the Funds to pay distribution and
other fees for the sale and distribution of its shares and for services provided
to shareholders. Because these fees are paid out of the Funds' assets on an
ongoing basis, over time they will increase the cost of your investment and may
cost you more than paying other types of sales charges.
- - CLASS A SHARES: Class A shares of Ivy Bond Fund and Ivy International
Strategic Bond Fund are sold at net asset value plus a maximum sales charge of
4.75% (the "offering price"). The sales charge may be reduced or eliminated if
certain conditions are met (see "Additional
13
<PAGE> 142
(IVY LEAF)
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
purchase information"). Class A shares are subject to a 0.25% Rule 12b-1
service fee.
- - CLASS B SHARES: Class B shares of Ivy Bond Fund and Ivy International
Strategic Bond Fund are offered at net asset value, without an initial sales
charge, but subject to a contingent deferred sales charge ("CDSC") that
declines from 5.00% to zero on certain redemptions within six years of
purchase. Class B shares are subject to a 0.75% Rule 12b-1 distribution fee
and a 0.25% Rule 12b-1 service fee, and convert automatically into Class A
shares eight years after purchase.
- - CLASS C SHARES: Class C shares are offered at net asset value, without an
initial sales charge, but subject to a CDSC of 1.00% for redemptions within
the first year of purchase. Class C shares are subject to a 0.75% Rule 12b-1
distribution fee and a 0.25% Rule 12b-1 service fee.
- - CLASS I SHARES: Class I shares are offered to certain classes of investors at
net asset value, without any sales load or Rule 12b-1 fees.
The following table displays the various investment minimums, sales charges and
expenses that apply to each class of Ivy Bond Fund and Ivy International
Strategic Bond Fund:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Minimum initial
investment*.......... $1,000 $1,000 $1,000 $5,000,000
Minimum subsequent
investment*.......... $100 $100 $100 $10,000
Initial sales
charge............... Maximum 4.75%, None None None
with options
for a reduction
or waiver
CDSC................. None, except on Maximum 5.00%, 1.00% for the None
certain NAV declines over first year
purchases six years
Service and
distribution fees.... 0.25% service 0.75% 0.75% None
fee distribution distribution
fee and 0.25% fee and 0.25%
service fee service fee
</TABLE>
*Minimum initial and subsequent investments for retirement plans are $25.
IVY MONEY MARKET FUND: The following table displays the various investment
minimums, sales charges and expenses that apply to each class of Ivy Money
Market Fund:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum initial
investment*................ $1,000 $1,000 $1,000
Minimum subsequent
investment*................ $100 $100 $100
Initial sales charge....... None None None
CDSC....................... None None, except on None, except on
shares purchased shares purchased
with proceeds from with proceeds from
the exchange of the exchange of
other Ivy Fund other Ivy fund
shares that would shares that would
otherwise have been otherwise have been
subject to a CDSC subject to a CDSC
(maximum 5.00%, (maximum 1.00% for
declines over six the first year)
years)
Service and distribution
fees....................... None None None
</TABLE>
*Minimum initial and subsequent investments for retirement plans are $25.
- -- ADDITIONAL PURCHASE INFORMATION FOR IVY BOND FUND AND IVY INTERNATIONAL
STRATEGIC BOND FUND
CLASS A SHARES: Class A shares are sold at a public offering price equal to
their net asset value per share plus an initial sales charge, as set forth below
(which is reduced as the amount invested increases):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SALES SALES PORTION OF
CHARGE AS A CHARGE AS A PUBLIC
PERCENTAGE PERCENTAGE OFFERING
OF PUBLIC OF NET PRICE
OFFERING AMOUNT RETAINED BY
AMOUNT INVESTED PRICE INVESTED DEALER
- ---------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000.... 4.75% 4.99% 4.00%
$100,000 but less than
$250,000.............. 3.75% 3.90% 3.00%
$250,000 but less than
$500,000.............. 2.50% 2.56% 2.00%
$500,000 or over*..... 0.00% 0.00% 0.00%
</TABLE>
*A CDSC of 1.00% may apply to Class A shares that are redeemed within two years
of the end of the month in which they were purchased.
Class A shares that are acquired through reinvestment of dividends or
distributions are not subject to any sales charges.
HOW TO REDUCE YOUR INITIAL SALES CHARGE:
- - "Rights of Accumulation" permits you to pay the sales charge that applies to
the cost or value (whichever is higher) of all Ivy Fund Class A shares you
own.
14
<PAGE> 143
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- - A "Letter of Intent" permits you to pay the sales charge that would apply to
your cumulative purchase of Fund shares over a 13-month period (certain
restrictions apply).
HOW TO ELIMINATE YOUR INITIAL SALES CHARGE: You may purchase Class A shares at
NAV (without an initial sales charge or a CDSC) through any one of the following
methods:
- - through certain investment advisors and financial planners who charge a
management, consulting or other fee for their services;
- - under certain qualified retirement plans;
- - as an employee or director of Mackenzie Investment Management Inc. or its
affiliates;
- - as an employee of a selected dealer; or
- - through the Merrill Lynch Daily K Plan (the "Plan"), provided the Plan has at
least $3 million in assets or over 500 or more eligible employees. Class B
shares of the Funds are made available to Plan participants at NAV without a
CDSC if the Plan has less than $3 million in assets or fewer than 500 eligible
employees. For further information see "Group Systematic Investment Program"
in the SAI.
Certain trust companies, bank trust departments, credit unions, savings and
loans and other similar organizations may also be exempt from the initial sales
charge on Class A shares.
You may also purchase Class A shares at NAV if you are investing at least
$500,000 through a dealer or agent. Ivy Mackenzie Distributors, Inc. ("IMDI"),
the Fund's distributor, may pay the dealer or agent (out of IMDI's own
resources) for its distribution assistance according to the following schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------
PURCHASE AMOUNT COMMISSION
- --------------------------------------------------
<S> <C>
First $3,000,000...................... 1.00%
Next $2,000,000....................... 0.50%
Over $5,000,000....................... 0.25%
</TABLE>
IMDI may from time to time pay a bonus or other cash incentive to dealers (other
than IMDI) including, for example, those which employ a registered
representative who sells a minimum dollar amount of the shares of a Fund and/or
other funds distributed by IMDI during a specified time period.
Each Fund may, from time to time, waive the initial sales charge on its Class A
shares sold to clients of certain dealers meeting criteria established by the
Distributor. This privilege will apply only to Class A shares of a Fund that are
purchased using proceeds obtained by such clients through redemption of another
mutual fund's shares on which a sales charge was paid. Purchases must be made
within 60 days of redemption from the other fund, and the Class A shares
purchased are subject to a 1.00% CDSC on shares redeemed within the first year
of purchase.
CLASS B AND CLASS C SHARES: Class B and Class C shares are not subject to an
initial sales charge but are subject to a CDSC. If you redeem your Class C
shares within one year of purchase they will be subject to a CDSC of 1.00%, and
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the following rates:
<TABLE>
<CAPTION>
- ----------------------------------------------------
CDSC AS A PERCENTAGE OF
YEAR SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- ----------------------------------------------------
<S> <C>
First...................... 5.00%
Second..................... 4.00%
Third...................... 3.00%
Fourth..................... 3.00%
Fifth...................... 2.00%
Sixth...................... 1.00%
Seventh and thereafter..... 0.00%
</TABLE>
The CDSC for both Class B and Class C shares will be assessed on an amount equal
to the lesser of the current market value or the original purchase cost of the
shares being redeemed. No charge will be assessed on increases in account value
above the original purchase price or on reinvested dividends and distributions.
Shares will be redeemed on a lot-by-lot basis in the following order:
- - Shares held more than six years;
- - Shares acquired through reinvestment of dividends and distributions;
- - Shares subject to the lowest CDSC percentage, on a first-in, first-out basis
(1) with the portion of the lot attributable to capital appreciation which is
not subject to a CDSC; redeemed first, then
(2) the portion of the lot attributable to your original basis, which is
subject to a CDSC.
15
<PAGE> 144
(IVY LEAF)
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
The CDSC for Class B shares is waived for:
- - Certain post-retirement withdrawals from an IRA or other retirement plan if
you are over 59 1/2 years old.
- - Redemptions by certain eligible 401(a) and 401(k) plans and certain retirement
plan rollovers.
- - Redemptions resulting from a tax-free return of excess contribution to an IRA.
- - Withdrawals resulting from shareholder death or disability provided that the
redemption is requested within one year of death or disability.
- - Withdrawals through the Systematic Withdrawal Plan of up to 12% per year of
your account value at the time the plan is established.
Both Class B shares and Class C shares are subject to an ongoing service and
distribution fee at a combined annual rate of up to 1.00% of the portfolio's
average net assets attributable to its Class B or Class C shares. The ongoing
distribution fees will cause these shares to have a higher expense ratio than
that of Class A and Class I shares. IMDI uses the money that it receives from
the deferred sales charge and the distribution fees to cover various promotional
and sales related expenses, as well as expenses related to providing
distributions services, such as compensating selected dealers and agents for
selling these shares.
Approximately eight years after the original date of purchase, your Class B
shares will be converted automatically to Class A shares. Class A shares are
subject to lower annual expenses than Class B shares. The conversion from Class
B shares to Class A shares is not considered a taxable event for Federal income
tax purposes. Class C shares do not have a similar conversion privilege.
CLASS I SHARES: Class I shares are offered only to institutions and certain
individuals, and are not subject to an initial sales charge or a CDSC, nor to
ongoing service or distribution fees. Class I shares also bear lower fees than
Class A, Class B and Class C shares.
- -- SUBMITTING YOUR PURCHASE ORDER
INITIAL INVESTMENTS: Complete and sign the Account Application appearing at the
end of this Prospectus. Enclose a check payable to the Fund in which you wish to
invest. You should note on the check the class of shares you wish to purchase
(see page 14 for minimum initial investments.) Deliver your application
materials to your registered representative or selling broker, or send them to
one of the addresses below:
- - BY REGULAR MAIL:
Ivy Mackenzie Services Corp.
PO Box 3022
Boca Raton, FL 33431-0922
- - BY COURIER:
Ivy Mackenzie Services Corp.
700 South Federal Hwy.
Boca Raton, FL 33432-6114
- -- BUYING ADDITIONAL SHARES
There are several ways to increase your investment in a Fund:
- - BY MAIL: Send your check with a completed investment slip (attached to your
account statement) or written instructions indicating the account
registration, Fund number or name, and account number. Mail to one of the
addresses above.
- - THROUGH YOUR BROKER: Deliver to your registered representative or selling
broker the investment slip attached to your statement, or written
instructions, along with your payment.
- - BY WIRE: Purchases may also be made by wiring money from your bank account to
your Ivy account. Your bank may charge a fee for wiring funds. Before wiring
any funds, please call IMSC at 800.777.6472. Wiring instructions are as
follows:
First Union National Bank of Florida
Jacksonville, FL
ABA #063000021
Account #2090002063833
For further credit to:
Your Account Registration
Your Fund Number and Account Number
- - BY AUTOMATIC INVESTMENT METHOD: You can authorize to have funds electronically
drawn each month from your bank account and invested as a purchase of shares
into your Ivy Fund account. Complete sections 6A and 7B of the Account
Application.
16
<PAGE> 145
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- HOW TO REDEEM SHARES
SUBMITTING YOUR REDEMPTION ORDER: You may redeem your Fund shares through your
registered securities dealer or directly through IMSC. If you choose to redeem
through your registered securities dealer, the dealer is responsible for
properly transmitting redemption orders in a timely manner. If you choose to
redeem directly through IMSC, you have several ways to submit your request:
- - BY MAIL: Send your written redemption request to IMSC at one of the addresses
on page 16 of this Prospectus. Be sure that all registered owners listed on
the account sign the request. Medallion signature guarantees and supporting
legal documentation may be required. When you redeem, IMSC will normally send
redemption proceeds to you on the next business day, but may take up to seven
days (or longer in the case of shares recently purchased by check).
- - BY TELEPHONE: Call IMSC at 800.777.6472 to redeem from your individual, joint
or custodial account. To process your redemption order by telephone, you must
have telephone redemption privileges on your account. IMSC employs reasonable
procedures that require personal identification prior to acting on redemption
instructions communicated by telephone to confirm that such instructions are
genuine. In the absence of such procedures, the Fund or IMSC may be liable for
any losses due to unauthorized or fraudulent telephone instructions. Requests
by telephone can only be accepted for amounts up to $50,000.
- - BY SYSTEMATIC WITHDRAWAL PLAN ("SWP"): You can authorize to have funds
electronically drawn each month from your Ivy Fund account and deposited
directly into your bank account. Certain minimum balances and minimum
distributions apply. Complete section 6B of the Account Application to add
this feature to your account.
RECEIVING YOUR REDEMPTION PROCEEDS: You can receive redemption proceeds through
a variety of payment methods:
- - BY CHECK: Unless otherwise instructed in writing, checks will be made payable
to the current account registration and sent to the address of record.
- - BY FEDERAL FUNDS WIRE: Proceeds will be wired on the next business day to a
pre-designated bank account Your account will be charged $10 each time
redemption proceeds are wired to your bank, and your bank may also charge you
a fee for receiving a Federal Funds wire.
- - BY ELECTRONIC FUNDS TRANSFER ("EFT"): For SWP redemptions only.
IMPORTANT REDEMPTION INFORMATION:
- - A CDSC may apply to certain Class A share redemptions, to Class B shares
redeemed within six years of purchase, and to Class C shares that are redeemed
within one year of purchase.
- - If you own shares of more than one class of the Fund, the Fund will redeem
first the shares having the highest 12b-1 fees, unless you instruct otherwise.
- - Any shares subject to a CDSC will be redeemed last unless you specifically
elect otherwise.
- - Shares will be redeemed in the order described under "Additional Purchase
Information--Class B and Class C Shares", above.
- - A Fund may (on 60 days' notice) redeem the accounts of shareholders whose
investment, including sales charges paid, has been less than $1,000 for more
than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares recently
purchased by check) to send redemption proceeds.
17
<PAGE> 146
(IVY LEAF)
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
- -- HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Ivy fund, subject to
certain restrictions (see "Important exchange information" at right).
IVY MONEY MARKET FUND: Class A shareholders of Ivy Money Market Fund may
exchange their outstanding shares for Class A shares of another Ivy 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. Class B (or Class C) shareholders of Ivy Money
Market Fund may exchange their Class B (or Class C) shares for Class B (or Class
C) shares of another Ivy fund on the basis of the relative NAV per Class B (or
Class C) share, subject to the CDSC schedule of the fund into which the exchange
is being made (beginning with the date of the exchange).
Class B and Class C shareholders of another Ivy fund may exchange their shares
for Class B and Class C shares of the Fund. Exchanges from another Ivy Fund will
continue to be subject to the CDSC schedule of the fund from which the exchange
was made, but will reflect the time the shares are held in the Ivy Money Market
Fund.
ALL FUNDS:
SUBMITTING YOUR EXCHANGE ORDER: You may submit an exchange request to IMSC as
follows:
- - BY MAIL: Send your written exchange request to IMSC at one of the addresses on
page 16 of this Prospectus. Be sure that all registered owners listed on the
account sign the request.
- - BY TELEPHONE: Call IMSC at 800.777.6472 to authorize an exchange transaction.
To process your exchange order by telephone, you must have telephone exchange
privileges on your account. IMSC employs reasonable procedures that require
personal identification prior to acting on exchange instructions communicated
by telephone to confirm that such instructions are genuine. In the absence of
such procedures, the Fund or IMSC may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
IMPORTANT EXCHANGE INFORMATION:
- - You must exchange into the same share class you currently own.
- -- Exchanges are considered taxable events and may result in a capital gain or a
capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange privilege
for the purpose of timing short-term market fluctuations. The Funds may
therefore limit the frequency of exchanges by a shareholder, charge a
redemption fee (in the case of certain funds), or cancel a shareholder's
exchange privilege if at any time it appears that such market-timing
strategies are being used. For example, shareholders exchanging more than five
times in a 12-month period may be considered to be using market-timing
strategies.
- -- DIVIDENDS, DISTRIBUTIONS AND TAXES
- - The Funds generally declare and pay dividends and capital gain distributions
(if any) at least once a year.
- - Dividends and distributions are "reinvested" in additional Fund shares unless
you request to receive them in cash.
- - Reinvested dividends and distributions are added to your account at NAV and
are not subject to a sales charge regardless of which share class you own.
- - Cash dividends and distributions can be sent to you:
- - BY MAIL: a check will mailed to the address of record unless otherwise
instructed.
- - BY ELECTRONIC FUNDS TRANSFER: your proceeds will be directly deposited into
your bank account.
To change your dividend and/or distribution options, call IMSC at 800.777.6472.
18
<PAGE> 147
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dividends ordinarily will vary from one class to another. Ivy Bond Fund and Ivy
International Strategic Bond Fund intend to declare and pay dividends monthly.
Ivy Money Market Fund intends to declare dividends daily and pay accrued amounts
monthly. The Funds will distribute net realized capital gains, if any, at least
once a year. The Funds may make an additional distribution of net investment
income and net realized capital gains to comply with the calendar year
distribution requirement under the excise tax provisions of Section 4982 of the
Internal Revenue Code of 1986, as amended (the "Code").
Dividends paid out of a Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to you as
ordinary income. If a portion of a Fund's income consists of dividends paid by
U.S. corporations, a portion of the dividends paid by the Fund may be eligible
for the corporate dividends-received deduction. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, are taxable to you as long-term capital gains, regardless of
how long you have held your shares. Dividends are taxable to you in the same
manner whether received in cash or reinvested in additional Fund shares.
If shares of a Fund are held in a tax-deferred account, such as a retirement
plan, income and gain will not be taxable each year. Instead, the taxable
portion of amounts held in a tax-deferred account generally will be subject to
tax as ordinary income only when distributed from that account.
A distribution will be treated as paid to you on December 31 of the current
calendar year if it is declared by a Fund in October, November or December with
a record date in such a month and paid by a Fund during January of the following
calendar year. In certain years, you may be able to claim a credit or deduction
on your income tax return for your share of foreign taxes paid by your Fund.
Upon the sale or exchange of your Fund shares, you may realize a capital gain or
loss which will be long term or short term, generally depending upon how long
you held your shares.
A Fund may be required to withhold U.S. Federal income tax at the rate of 31% of
all distributions payable to you if you fail to provide the Fund with your
correct taxpayer identification number or to make required certifications, or if
you have been notified by the Internal Revenue Service that you are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against your U.S. Federal income tax liability.
Fund distributions may be subject to state, local and foreign taxes.
You should consult with your tax adviser as to the tax consequences of an
investment in the Funds, including the status of distributions from a Fund under
applicable state or local law.
19
<PAGE> 148
[IVY LEAF LOGO]
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
Funds' financial performance for the past five years (or less if a Fund has
a shorter operating history) and reflects results for a single Fund share.
Ivy International Strategic Bond Fund commenced operations on May 3, 1999,
and accordingly, no financial information is presented for that Fund. The
total returns in the table represent the rate an investor would have earned
(or lost) each year on an investment in a Fund (assuming reinvestment of
all dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Funds' financial
statements, is included in its Annual Report to shareholders (which is
available upon request).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
CLASS A
IVY BOND FUND ----------------------------------------------------------------------------
for the
six months for the
for the year ended year ended
ended December 31, December 31, June 30,
- --------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1994
SELECTED PER SHARE DATA ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $ 10.22 $ 9.80 $ 9.78 $ 9.01 $ 9.38 $ 10.34
----------------------------------------------------------------------------
Income from investment operations
Net investment income.................... .69 .80 .72 .67(a) .33(a) .63
Net gains or losses on securities (both
realized and unrealized)............... (.69) .42 .03 .84 (.29) (.60)
----------------------------------------------------------------------------
Total from investment operations......... -- 1.22 .75 1.51 .04 .03
----------------------------------------------------------------------------
Less distributions
Dividends
From net investment income............. .68 .80 .72 .63 .32 .61
In excess of net investment income..... -- -- .01 -- -- --
Distributions
From capital gains..................... -- -- -- -- -- .38
In excess of capital gains............. -- -- -- -- .09 --
Returns of capital....................... -- -- -- .11 -- --
----------------------------------------------------------------------------
Total distributions.................... .68 .80 .73 .74 .41 .99
----------------------------------------------------------------------------
Net asset value, end of period............. $ 9.54 $ 10.22 $ 9.80 $ 9.78 $ 9.01 $ 9.38
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total return (%)........................... .00(b) 11.87(b) 8.06(b) 17.41(b) .43(c) .00(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)... $ 109,445 $106,497 $97,881 $108,840 $110,232 $120,073
Ratio of expenses to average net assets
With expense reimbursement (%)........... -- -- -- 1.54 1.50(d) --
Without expense reimbursement (%)........ 1.39 1.47 1.56 1.54 1.52(d) 1.45
Ratio of net investment income to average
net assets (%)........................... 6.88 7.08 7.36 7.09(a) 6.92(a)(d) 6.19
Portfolio turnover rate (%)................ 43 71 90 93 44 78
</TABLE>
20
<PAGE> 149
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B CLASS C
- ----------------------------------------------------------------------------------------------------------------------------
for the period for the period
for the six April 1, 1994 April 30, 1996
for the year ended months ended (Commencement) for the year ended (Commencement)
December 31, December 31, to June 30, December 31, to December 31,
- ----------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1994 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 10.22 $ 9.80 $ 9.78 $ 9.01 $ 9.38 $ 9.82 $ 10.24 $ 9.82 $9.44
- ----------------------------------------------------------------------------------------------------------------------------
.59 .68 .64 .60(a) .30(a) .10 .60 .64 .39
(.67) .46 .04 .84 (.29) (.32) (.68) .48 .43
- ----------------------------------------------------------------------------------------------------------------------------
(.08) 1.14 .68 1.44 .01 (.22) (.08) 1.12 .82
- ----------------------------------------------------------------------------------------------------------------------------
.59 .72 .64 .56 .29 .14 .60 .70 .39
.02 -- .02 -- -- -- .01 -- .05
-- -- -- -- -- .08 -- -- --
-- -- -- -- .09 -- -- -- --
-- -- -- .11 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
.61 .72 .66 .67 .38 .22 .61 .70 .44
- ----------------------------------------------------------------------------------------------------------------------------
$ 9.53 $ 10.22 $ 9.80 $ 9.78 $ 9.01 $ 9.38 $ 9.55 $10.24 $9.82
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
(.81)(b) 11.12(b) 7.25(b) 16.54(b) .06(c) (2.24)(c) (.81)(b) 11.11(b) 8.81(c)
$42,166 $18,499 $5,300 $5,184 $2,420 $ 761 $11,266 $6,580 $ 618
-- -- -- 2.29 2.25(d) -- -- -- --
2.13 2.21 2.29 2.29 2.27(d) 2.20(d) 2.12 2.20 2.35(d)
6.14 6.35 6.62 6.34(a) 6.17(a)(d) 5.44(d) 6.15 6.35 6.56(d)
43 71 90 93 44 78 43 71 90
(a) Net investment
income is net of
expenses reimbursed
by manager.
(b) Total return does
not reflect a sales
charge.
(c) Total return
represents aggregate
total return and does not
reflect a sales charge.
(d) Annualized
</TABLE>
21
<PAGE> 150
[IVY LEAF LOGO]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A
IVY MONEY MARKET FUND --------------------------------------------------------------
for the year ended
December 31,
- ---------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
SELECTED PER SHARE DATA --------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------
Income from investment operations
Net investment income (a)............................... .05 .05 .04 .05 .04
Less distributions
Dividends (from net investment income).................. (.05) (.05) (.04) (.05) (.04)
--------------------------------------------------------------
Net asset value, end of period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------
--------------------------------------------------------------
Total return (%).......................................... 4.51 4.60 4.47 4.80 4.21
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................. $19,103 $15,385 $21,359 $24,609 $26,827
Ratio of expenses to average net assets
With expense reimbursement (%).......................... .87 .88 .86 .85 .85
Without expense reimbursement (%)....................... 1.42 1.57 1.86 1.39 1.24
Ratio of net investment income to average net assets
(%)(a).................................................. 4.50 4.60 4.47 4.91 3.29
</TABLE>
22
<PAGE> 151
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(a) Net investment
income is net of
expenses reimbursed
by manager.
(b) Total return repre-
sents aggregate total
return.
(c) Annualized
CLASS B CLASS C
-----------------------------------------------------------------------------------
from April 30, 1996
for the year ended for the year ended (Commencement)
December 31, December 31, to December 31,
-----------------------------------------------------------------------------------
1998 1997 1996 1998 1997 1996
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------------------
.05 .05 .05 .05 .05 .03
(.05) (.05) (.05) (.05) (.05) (.03)
-----------------------------------------------------------------------------------
$ 1.00 $ 1.00 $ 1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
4.59 4.77 4.57 4.55 4.78 4.78(b)
$6,636 $3,812 $3,474 $ 423 $ 405 $ 74
.76 .70 .77 .81 .70 .56(c)
1.31 1.39 1.77 1.36 1.39 1.56(c)
4.61 4.77 4.57 4.56 4.78 4.78(c)
</TABLE>
23
<PAGE> 152
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
24
<PAGE> 153
Account
Application
FUND USE ONLY
__________________________
Account Number
__________________________
Dealer/Branch/Rep
__________________________
Account Type/Soc Cd
[IVY FUNDS LOGO]
Please mail applications and checks to:
Ivy Mackenzie Services Corp.,
P.O. Box 3022, Boca Raton, Florida 33431-0922
This application should not be used for
retirement accounts for which Ivy Fund (IBT) is
custodian.
1 REGISTRATION
Name ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
Address ________________________________________________________________
City ___________________________________ State _____________ Zip _______
Phone # (day) (____)_____________ Phone # (evening) (___)_______________
___ Individual ___ UGMA/UTMA ___ Sole proprietor
___ Joint tenant ___ Corporation ___ Trust
___ Estate ___ Partnership ___ Other
Date of trust _____________________ Minor's state of residence _________
2 TAX I.D.
Citizenship: ___ U.S. ___ Other (please specify):___________________
Social security # _______-____-_______ or Tax identification #________
Under penalties of perjury, I certify by signing in Section 8 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 "Dividends, distributions and taxes" 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 IMSC of any purchases made under a
Letter of Intent or Rights of Accumulation.
Dealer name_____________________________________________________________
Branch office address __________________________________________________
City _____________________________________ State _______ Zip __________
Representative's name __________________________________________________
Representative's # _________________ Representative's phone # __________
Authorized signature of dealer _________________________________________
4 INVESTMENTS
A. Enclosed is my check ($1,000 minimum) for $_____________ made payable
to the appropriate fund. Please invest it in:
__________________________________ Class A
__________________________________ Class B
__________________________________ Class C
__________________________________ Class I shares
("*" Funds only)
of the following fund(s):
<TABLE>
<S> <C>
$ _____________ Ivy Bond Fund* $ ------------- Ivy Money Market Fund
$ _____________ Ivy International Strategic Bond Fund*
</TABLE>
B. I qualify for a reduction or elimination of the sales charge due to
the following privilege (applies only to Class A shares):
___ New Letter of Intent (if ROA or 90-day backdate privilege is
applicable, provide account(s) information below.)
___ ROA with the account(s) listed below.
___ Existing Letter of Intent with the account(s) listed below.
<TABLE>
<S> <C>
Fund name: ___________________________________ Fund name: _________________________________
Account #: ___________________________________ Account #: _________________________________
</TABLE>
If establishing a Letter of Intent, you will need to purchase Class A
shares over a 13-month period in accordance with the provisions in the
Prospectus. The aggregate amount of these purchases will be at least
equal to the amount indicated below (see Prospectus for minimum amount
required for reduced sales charges).
____ $100,000 ____ $250,000 ____ $500,000
C. FOR DEALER USE ONLY
<TABLE>
<S> <C> <C> <C>
Confirmed trade orders: __________________ ___________________ _____________________
Confirm Number Number of Shares Trade Date
</TABLE>
<PAGE> 154
5 DISTRIBUTION OPTIONS
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.
A. ___ Reinvest all dividends and capital gains into additional shares
of the same class of a different Ivy fund account.
Fund name: ________________________________________________________
Account #: ________________________________________________________
B. ___ Pay all dividends in cash and reinvest capital gains into
additional shares of the same class in this account or a
different Ivy fund account.
Fund name: ________________________________________________________
Account #: ________________________________________________________
C. ___ Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN B OR C ABOVE, BE SENT
TO: ___ the address listed in the registration
___ the special payee listed in Section 7A (by mail)
___ the special payee listed in Section 7B (by EFT)
6 OPTIONAL SPECIAL FEATURES
A. AUTOMATIC INVESTMENT METHOD (AIM)
___ I wish to have my bank account listed in section 7B automatically
debited via EFT on a predetermined frequency and invested into my
Ivy Fund account listed below.
1. Withdraw $ _______ for each time period indicated below and invest my
bank proceeds into the following Ivy fund:
Fund name: ________________________________________________________
Share class: __ Class A __ Class B __ Class C
Account #: ________________________________________________________
2. Debit my bank account:
___ Annually (on the ___ day of the month of
_____________________).
___ Semiannually (on the ___ day of the months of
_____ and _____).
___ Quarterly (on the ___ day of the first/second/third
month of each calendar quarter). (CIRCLE ONE)
___ Monthly*___ once per month on the ___ day
___ twice per month on the ___ days
___ 3 times per month on the ___ days
___ 4 times per month on the ___ days
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)**
___ I wish to have my Ivy Fund account automatically debited on a
predetermined frequency and the proceeds sent to me per my
instructions below.
1. Withdraw ($50 minimum) $___ for each time period indicated
below from the following Ivy Fund account:
Fund name: ________________________________________________________
Share class: __ Class A __ Class B __ Class C
Account #: ________________________________________________________
2. Withdraw from my Ivy Fund account:
___ Annually (on the ___ day of the month of
_________-).
___ Semiannually (on the ___ day of the months of
___ and ___).
___ Quarterly (on the ___ day of the first/second/third
month of each calendar quarter. (CIRCLE ONE)
___ Monthly*___ once per month on the ___ day
___ twice per month on the ___ days
___ 3 times per month on the ___ days
___ 4 times per month on the ___ days
3. I request the withdrawal proceeds be:
___ sent to the address listed in the registration
___ sent to the special payee listed in section 7A or 7B.
___ invested into additional shares of the same class of a
different Ivy fund:
Fund name: ________________________________________________________
Account #: ________________________________________________________
Note: A minimum balance of $5,000 is required to establish a SWP.
6. OPTIONAL SPECIAL FEATURES (CONT.)
C. FEDERAL FUNDS WIRE
FOR REDEMPTION PROCEEDS** ___ yes ___ no
By checking "yes" immediately above, I authorize IMSC 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).
(COMPLETE SECTION 7B).
D. TELEPHONE EXCHANGES** ___ yes ___ no
By checking "yes" immediately above, I authorize exchanges by telephone
among the Ivy 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. TELEPHONIC REDEMPTIONS** ___ yes ___ no
By checking "yes" immediately above, the Fund or its agents are authorized
to honor telephone instructions from any person as more fully described in
the Prospectus for the redemption of Fund shares. The amount of the
redemption shall not exceed $50,000 and the proceeds are to be payable to
the shareholder of record and mailed to the address of record. To change
this option once established, written instructions must be received from
the shareholder of record or the current registered representative.
If neither box is checked, the telephone redemption privilege will be
provided automatically.
* There must be a period of at least seven calendar days between each
investment (AIM)/withdrawal (SWP) period.
** This option may not be used if shares are issued in certificate form.
7 SPECIAL PAYEE
A. MAILING ADDRESS: Please send all disbursements to this payee:
Name of bank or individual _______________________________________________
Account # (if applicable) ________________________________________________
Street ___________________________________________________________________
City __________________________________________ State ______ Zip _________
B. FED WIRE/EFT INFORMATION
Financial institution ____________________________________________________
ABA # ____________________________________________________________________
Account # (if applicable) ________________________________________________
Street ___________________________________________________________________
City __________________________________________ State ______ Zip _________
(PLEASE ATTACH A VOIDED CHECK.)
8 SIGNATURES
Investors should be aware that the failure to check the "No" under
Section 6D or 6E above means that the Telephone Exchange/ Redemption
Privileges will be provided. The Fund employs reasonable procedures that
require personal identification prior to acting on exchange/redemption
instructions communicated by telephone to confirm that such instructions
are genuine. In the absence of such procedures, the Fund may be liable for
any losses due to unauthorized or fraudulent telephone instructions.
Please see "How to exchange shares" and "How to redeem shares" in the
Prospectus for more information on these privileges.
I certify to my legal capacity to purchase or redeem shares of the
Fund for my own account or for the account of the organization named in
Section 1. I have received a current Prospectus and understand its terms
are incorporated in this application by reference. I am certifying my
taxpayer information as stated in Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID
BACKUP WITHHOLDING.
_______________________________________ ___________________________
Signature of Owner, Custodian, Trustee or Date
Corporate Officer
_______________________________________ ___________________________
Signature of Owner, Custodian, Trustee or Date
Corporate Officer
DETACH ON PERFORATION TO MAIL
(Remember to sign Section 8)
<PAGE> 155
* Symbol not assigned as of this printing
- --------------------------------------------------------------------------------
-- QUOTRON SYMBOLS AND CUSIP NUMBERS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
FUND SYMBOL CUSIP
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Ivy Bond Fund Class A MCFIX 465897791
Ivy Bond Fund Class B IVBBX 465897783
Ivy Bond Fund Class C IVBCX 465897668
Ivy Bond Fund Class I * 465897775
Ivy International Strategic Bond Fund Class
A * 465898104
Ivy International Strategic Bond Fund Class
B * 465898203
Ivy International Strategic Bond Fund Class
C * 465898302
Ivy International Strategic Bond Fund Class
I * 465898401
Ivy Money Market Fund Class A IVMXX 465897684
Ivy Money Market Fund Class B IVBXX 465897676
Ivy Money Market Fund Class C IVCXX 465897551
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 156
(Ivy Funds Logo)
-- HOW TO RECEIVE MORE
INFORMATION ABOUT THE FUNDS
Additional information about the Funds and their investments is
contained in the Funds' Statement of Additional Information dated May
3, 1999 (the "SAI"), which is incorporated by reference into this
Prospectus, and the Funds' annual and semiannual reports to
shareholders. Each Fund's annual report includes a discussion of the
market conditions and investment strategies that significantly affected
the Fund's performance during its most recent fiscal year. The SAI and
annual and semiannual reports are available upon request and without
charge from the Distributor at the following address and phone number.
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432
800.456.5111
Information about the Funds (including the SAI and annual and
semiannual reports) may also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. (please call 1-800-SEC-0330 for
further details). Information about the Funds is also available on the
SEC's Internet Website (www.sec.gov), and copies of this information
may be obtained, upon payment of a copying fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-6009.
Investment Company Act File No. 811-1028
-- SHAREHOLDER
INQUIRIES
Please call
Ivy Mackenzie
Services Corp.,
the Funds' transfer agent,
regarding any other
inquiries about the Funds
at 800.777.6472.
www.ivymackenzie.com
E-mail:
[email protected]
<PAGE> 157
Ivy Funds Logo
This is your prospectus from
IVY MACKENZIE
DISTRIBUTORS, INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
800.456.5111
May 3, 1999 FIXED INCOME FUNDS ADVISOR CLASS SHARES
IVY BOND FUND
IVY INTERNATIONAL STRATEGIC BOND FUND
Ivy Fund is a registered open-end investment company consisting
of nineteen separate portfolios. This Prospectus relates to the
Advisor Class shares of the two funds listed above (the "Funds").
The Funds also offer Class A, Class B, Class C and Class I
shares, which are described in a separate prospectus.
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy or
accuracy of this Prospectus. Any representation to the contrary
is a criminal offense.
Investments in the Funds are not deposits of any bank and are not
federally insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
-- CONTENTS
2 Ivy Bond Fund
4 Ivy International
Strategic Bond Fund
6 Additional information
about investment strategies
and risks
10 Management
11 Shareholder information
14 Financial highlights
17 Account application
<TABLE>
<S> <C>
OFFICERS
Michael G. Landry, Chairman
Keith J. Carlson, President
James W. Broadfoot, Vice President
C. William Ferris, Secretary/Treasurer
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, Massachusetts
CUSTODIAN AUDITORS
Brown Brothers Harriman & Co. PricewaterhouseCoopers LLP
Boston, Massachusetts Fort Lauderdale, Florida
TRANSFER AGENT INVESTMENT MANAGER
Ivy Mackenzie Services Corp. Ivy Management, Inc.
PO Box 3022 700 South Federal Highway
Boca Raton, Florida 33431-0922 Boca Raton, Florida 33432
800.777.6472 800.456.5111
</TABLE>
Mackenzie Logo
<PAGE> 158
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY BOND FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
BOND
FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks a high level of current income.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in bonds rated in
the four highest rating categories used by Moody's and S&P and similar
investment-grade fixed income securities.
To increase its potential yield, the Fund may invest up to 35% of its net assets
in low-rated debt securities (commonly referred to as "high yield" or "junk"
bonds). The Fund may also invest a portion of its assets in foreign debt
securities to diversify its holdings and to increase its potential return. Other
securities and investment techniques that the Fund's management team considers
important in achieving the Fund's investment objective (or in controlling the
Fund's exposure to risk) include zero coupon bonds.
The Fund's management team targets for investment companies whose
creditworthiness is believed to be stable or improving.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund may not perform as well as the
securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
INTEREST RATE RISK: The Fund's debt security investments are susceptible to
decline in a rising interest rate environment even where "management risk" is
not a factor, so you could lose money if you redeem your Fund shares at a time
when interest rates are rising.
CREDIT RISK: The market value of debt securities also tends to vary according to
the relative financial condition of the issuer. As much as 35% of the Fund's
debt security holdings may be considered below investment grade (commonly
referred to as "high yield" or "junk" bonds). Low-rated debt securities are
considered speculative and could significantly weaken the Fund's returns if the
issuer defaults on its payment obligations.
FOREIGN SECURITY AND EMERGING-MARKET RISK: The Fund may invest up to 20% of its
net assets in foreign issuers. Investing in foreign securities involves a number
of economic, financial and political considerations that are not associated with
the U.S. market and that could affect the Fund's performance unfavorably,
depending upon prevailing conditions at any given time. Among these potential
risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
new or developing economies.
- -- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking current income, but who can
accept moderate fluctuations in capital value in the short term.
*You should consult with your financial advisor before deciding whether the Fund
is an appropriate investment choice in light of your particular financial needs
and risk tolerance.
2
<PAGE> 159
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns since its inception on
September 6, 1985 compare with those of a broad measure of market performance.
The Fund's past performance is not an indication of how the Fund will perform in
the future.
Since Advisor Class shares have been outstanding for less than one year, the
information presented below relates to the Fund's Class A shares, exclusive of
any applicable sales charges. The performance for Advisor Class shares would
have been substantially similar to that of Class A shares, because all Fund
shares are invested in the same portfolio of securities. Any differences in the
returns for the Fund's Class A and Advisor Class shares would result from
variations in their respective expense structures.
<TABLE>
<CAPTION>
TOTAL RETURNS for the years ending
FOR CLASS A SHARES December 31
-------------------------------------------------------------
<S> <C>
'89' 15.11
'90' 4.26
'91' 14.45
'92' 8.16
'93' 15.45
'94' -4.1
'95' 17.41
'96' 8.06
'97' 11.87
'98' 0.00
</TABLE>
Best quarter Q2 '89: 9.58%
Worst quarter Q1 '90: (4.52%)
<TABLE>
<CAPTION>
AVERAGE ANNUAL for the periods ending
TOTAL RETURNS December 31, 1998
---------------------------------------------------------------------------------------------------------------
MORNINGSTAR
---------------------------------------
CORPORATE MULTI-
BOND SECTOR LONG-TERM
GENERAL BOND BOND
CLASS A UNIVERSE UNIVERSE UNIVERSE
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Past year................................................... 0.00% 6.83% 1.20% 6.53%
Past 5 years................................................ 6.36% 6.29% 5.81% 6.98%
Past 10 years............................................... 8.85% 8.67% 8.45% 9.42%
</TABLE>
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
fees paid directly from
SHAREHOLDER FEES your investment
- -----------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price)..................................... none
Maximum deferred sales charge (load) (as a
percentage of purchase price).............. none
Maximum sales charge (load) imposed on
reinvested dividends....................... none
Redemption fee*............................ none
Exchange fee............................... none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ----------------------------------------------------
<S> <C>
Management fees*......................... 0.75%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 0.36%
Total annual Fund operating expenses..... 1.11%
</TABLE>
*Management Fees are reduced to 0.50% for net assets over $100
million.
- -------------------------------------------------------------------------
- -- EXAMPLE
The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be as follows:
<TABLE>
<CAPTION>
- ----------------
YEAR
- ----------------
<S> <C>
1st $ 113
3rd 353
5th 612
10th 1,352
</TABLE>
3
<PAGE> 160
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
IVY INTERNATIONAL STRATEGIC BOND FUND
- --------------------------------------------------------------------------------
(GLOBE ARTWORK)
IVY
INTERNATIONAL
STRATEGIC
BOND FUND
- -- INVESTMENT OBJECTIVE
The Fund seeks total return and, consistent with that objective, to maximize
current income.
- -- PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in a managed portfolio of foreign
bonds.
The Fund may also invest in U.S. bonds. The types of debt securities the Fund
may hold include corporate, government, and mortgage or asset backed securities.
At least 65% of the value of the Fund's portfolio is expected to be rated in the
four highest rating categories used by Moody's and S&P.
Among the other securities and investment techniques that the Fund's manager
considers important in achieving the Fund's investment objective (or in
controlling the Fund's exposure to risk) are:
- - low rated debt securities (commonly referred to as "high yield" or "junk"
bonds); and
- - derivative investment techniques (such as options, futures, interest rate and
credit swaps, and foreign currency exchange transactions).
The Fund's manager invests in bonds and bond markets that are believed to be
undervalued relative to other issuers or markets. In selecting bonds for the
Fund's portfolio, the manager will consider yields, credit quality and the
fundamental outlook for currency and interest rate trends in different parts of
the world, and may also take into account the ability to hedge currency and
local bond price risk.
- -- PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK: Securities selected for the Fund might not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
INTEREST RATE RISK: The Fund's debt security investments are susceptible to
decline in a rising interest rate environment even where "management risk" is
not a factor, so you could lose money if you redeem your Fund shares at a time
when interest rates are rising.
CREDIT RISK: The market value of debt securities also tends to vary according to
the relative financial condition of the issuer. Many of the Fund's debt security
holdings may be considered below investment grade (commonly referred to as "high
yield" or "junk" bonds). Low-rated debt securities are considered speculative
and could significantly weaken the Fund's returns if the issuer defaults on its
payment obligations.
NON-DIVERSIFICATION RISK: The Fund is classified as "non-diversified" under the
Investment Company Act of 1940, and may therefore invest a greater percentage of
its assets in a particular issuer than a "diversified" fund. As a result, the
Fund may also be more susceptible than a diversified fund to the price movements
of certain securities it holds in its portfolio.
FOREIGN SECURITY AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial and political considerations that are
not associated with the U.S. markets and that could affect the Fund's
performance unfavorably, depending upon prevailing conditions at any given time.
Among these potential risks are:
- - greater price volatility;
- - comparatively weak supervision and regulation of securities exchanges, brokers
and issuers;
- - higher brokerage costs;
- - fluctuations in foreign currency exchange rates and related conversion costs;
- - adverse tax consequences; and
- - settlement delays.
The risks of investing in foreign securities are more acute in countries with
new or developing economies.
4
<PAGE> 161
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DERIVATIVES RISK: The Fund may, but is not required to, use a range of
derivative investment techniques to hedge various market risks (such as
interest rates, currency exchange rates, and broad or specific equity or
fixed-income market movements) or to enhance potential gain. The use of
these derivative investment techniques involves a number of risks,
including the possibility of default by the counterparty to the transaction
and, to the extent the judgment of the Fund's manager as to certain market
movements is incorrect, the risk of losses that are greater than if the
derivative technique(s) had not been used.
-- WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking a mix of total return and
current income, but who can accept potentially dramatic fluctuations in
capital value in the short term.
*You should consult with your financial advisor before deciding whether the
Fund is an appropriate investment choice in light of your particular
financial needs and risk tolerance.
-- PERFORMANCE INFORMATION
The Fund commenced operations on April 30, 1999, therefore, no performance
information is available.
- -- FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund:
<TABLE>
<CAPTION>
SHAREHOLDER fees paid directly from
FEES your investment
- ------------------------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price).................................. none
Maximum deferred sales charge (load) (as
a percentage of purchase price)......... none
Maximum sales charge (load) imposed on
reinvested dividends.................... none
Redemption fee*......................... none
Exchange fee............................ none
</TABLE>
*If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account.
<TABLE>
<CAPTION>
ANNUAL FUND expenses that are
OPERATING EXPENSES deducted from Fund assets
- ---------------------------------------------------------------------
<S> <C>
Management fees.......................... 0.75%
Distribution and/or service (12b-1)
fees..................................... none
Other expenses........................... 0.50%
Total annual Fund operating expenses*.... 1.25%
</TABLE>
*The Fund's Investment Manager has agreed to reimburse the Fund's
expenses for the current fiscal year to the extent necessary to
ensure that the Fund's Annual Fund Operating Expenses, when
calculated at the Fund level, do not exceed 1.25% of the Fund's
average net assets (excluding 12b-1 fees and taxes). For each of
the following nine years, the Investment Manager will ensure that
these expenses do not exceed 1.75% of the Fund's average net
assets.
------------------------------------------------------------------------------
-- EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be as
follows:
<TABLE>
<CAPTION>
- -----------------
YEAR
- -----------------
<S> <C>
1st $127
3rd 502
</TABLE>
5
<PAGE> 162
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
ABOUT INVESTMENT
STRATEGIES AND RISKS
- -- PRINCIPAL STRATEGIES
IVY BOND FUND: The Fund seeks to achieve its investment objective of a high
level of current income by investing primarily in investment grade corporate
bonds (which are rated Baa or higher by Moody's or BBB or higher by S&P) and
U.S. Government securities that mature in more than 13 months. The Fund may
invest up to 35% of its net assets in low-rated debt securities (commonly
referred to as "high yield" or "junk" bonds). As much as 20% of the Fund's
portfolio may be invested in foreign securities.
The Fund's manager targets for investment issuers with stable or improving
credit profiles. Individual securities are selected on the basis of factors such
as comparative yields and credit quality, and where appropriate,
country-specific currency and interest rate trends.
IVY INTERNATIONAL STRATEGIC BOND FUND: The Fund seeks to achieve its primary
investment objective of total return, and secondarily current income, by
investing in the debt securities of issuers in any nation. The Fund's portfolio
is actively managed to limit its exposure to individual country, sector,
interest rate and currency risks. The Fund may, however, invest more than 5% of
a portion of its assets in a single issuer (see "Non-diversification risk" on
page 4). Individual securities are selected based on factors such as yields,
credit quality, and the fundamental outlook for country-specific currency and
interest rate trends.
- -- PRINCIPAL RISKS
GENERAL MARKET RISK:
As with any mutual fund, the value of a Fund's investments and the income they
generate will vary daily and generally reflect market conditions, interest
rates and other issuer-specific, political or economic developments.
Each Fund's share value will decrease at any time during which its security
holdings or other investment techniques are not performing as well as
anticipated, and you could therefore lose money by investing in a Fund depending
upon the timing of your initial purchase and any subsequent redemption.
OTHER RISKS: The following table identifies the investment techniques that each
Fund's manager considers important in achieving the Fund's investment objective
or in managing its exposure to risk (and that could therefore have a significant
effect on a Fund's returns). Following the table is a description of the general
risk characteristics of these investment techniques. Other investment methods
that the Funds may use (such as derivative investments), but that are not likely
to play a key role in their overall investment strategies, are described in the
Funds' Statement of Additional Information (see back cover page for information
on how you can receive a free copy).
<TABLE>
<CAPTION>
- -------------------------------------------------------------
IVY INTERNATIONAL
IVY BOND STRATEGIC
INVESTMENT TECHNIQUE FUND BOND FUND
- -------------------------------------------------------------
<S> <C> <C>
Debt securities............... X X
Low-rated debt securities..... X X
Sovereign debt................ X
Zero coupon bonds............. X
Foreign securities............ X
Emerging markets.............. X X
Foreign currencies............ X
Derivatives................... X
Illiquid securities........... X X
Borrowing..................... X X
Temporary defensive
positions..................... X X
</TABLE>
6
<PAGE> 163
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RISK CHARACTERISTICS:
- - DEBT SECURITIES, IN GENERAL: Investing in debt securities involves both
interest rate and credit risk. The value of debt instruments generally
increase as interest rates decline. Conversely, rising interest rates tend to
cause the value of debt securities to decrease. The Fund's portfolio is
therefore susceptible to losses in a rising interest rate environment. The
market value of debt securities also tends to vary according to the relative
financial condition of the issuer. Bonds with longer maturities also tend to
be more volatile than bonds with shorter maturities.
- - LOW-RATED DEBT SECURITIES: In general, low-rated debt securities (commonly
referred to as "high yield" or "junk" 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.
For this reason, these bonds are considered speculative and could
significantly weaken the Funds' returns.
- - SOVEREIGN DEBT SECURITIES: Sovereign debt is issued by foreign governments.
For a variety of reasons (such as cash flow problems, limited foreign
reserves, and political constraints), the governmental entity that controls
the repayment of sovereign debt may not be able or willing to repay the
principal or interest when due. A governmental entity's ability to honor its
debt obligations to the investing Fund may also be contingent on its receipt
from others (such as the International Monetary Fund and more solvent foreign
governments) of specific disbursements, which may in turn be conditioned on
the perceived health of the governmental entity's economy and/or its
implementation of economic reforms. If any of these conditions fail, the Fund
could lose the entire value of its investment for an indefinite period of
time.
- - ZERO COUPON BONDS: Zero coupon bonds are debt obligations issued without any
requirement for the periodic payment of interest (and are issued at a
significant discount from face value). Because the income from zero coupon
bonds is recognized currently for Federal income tax purposes, the amount of
the unpaid, accrued interest a fund generally would be required to distribute
as dividends includes that income (even though the fund has not actually
received any income proceeds). The fund could be forced to sell other
portfolio securities at a disadvantageous time and/or price in order to meet
its distribution obligations.
- - FOREIGN SECURITIES: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect a Fund's performance favorably or
unfavorably, depending upon prevailing conditions at any given time. For
example, the securities markets of many foreign countries may be smaller, less
liquid and subject to greater price volatility than those in the U.S. Foreign
investing may also involve brokerage costs and tax considerations that are not
usually present in the U.S. markets.
Other factors that can affect the value of a Fund's foreign investments include
the comparatively weak supervision and regulation by some foreign governments of
securities exchanges, brokers and issuers, and the fact that many foreign
companies may not be subject to uniform accounting, auditing and financial
reporting standards. It may also be difficult to obtain reliable information
about the securities and business operations of certain foreign issuers.
Settlement of portfolio transactions may also be delayed due to local
restrictions or communication problems, which can cause a Fund to miss
attractive investment opportunities or impair its ability to dispose of
securities in a timely fashion (resulting in a loss if the value of the
securities subsequently declines).
- - FOREIGN CURRENCIES: Many of the securities that Ivy International Strategic
Bond Fund buys are denominated in foreign currencies and the value of the
Fund's investments, as measured in U.S. dollars, may be affected unfavorably
by changes in foreign currency exchange rates and exchange control
regulations. Currency conversions can also be costly.
- - SPECIAL EMERGING-MARKET CONCERNS: The risks of investing in foreign securities
are heightened in countries with new or developing econo-
7
<PAGE> 164
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
mies. Among these additional risks are the following:
- - securities that are even less liquid and more volatile than those in more
developed foreign countries;
- - less stable governments that are susceptible to sudden adverse actions (such
as nationalization of businesses, restrictions on foreign ownership or
prohibitions against repatriation of assets);
- - increased settlement delays;
- - unusually high inflation rates (which in extreme cases can cause the value of
a country's assets to erode sharply);
- - unusually large currency fluctuations and currency conversion costs; and
- - high national debt levels (which may impede an issuer's payment of principal
and/or interest on external debt).
- - DERIVATIVE INVESTMENT TECHNIQUES: Ivy International Strategic Bond Fund may,
but is not required to, use certain derivative investment techniques to hedge
various market risks (such as interest rates, currency exchange rates and
broad or specific market movements) or to enhance potential gain. Among the
derivative techniques the Fund might use are options, futures, forward foreign
currency contracts and foreign currency exchange transactions.
Using put and call options could cause the Fund to lose money by forcing the
sale or purchase of portfolio securities at inopportune times or for prices
higher (in the case of put options) or lower (in the case of call options) than
current market values, by limiting the amount of appreciation the Fund can
realize on its investments, or by causing the Fund to hold a security it might
otherwise sell.
Futures transactions (and related options) involve other types of risks. For
example, the variable degree of correlation between price movements of futures
contracts and price movements in the related portfolio position of the Fund
could cause losses on the hedging instrument that are greater than gains in the
value of the Fund's position. In addition, futures and options markets may not
be liquid in all circumstances and certain over-the-counter options may have no
markets. As a result, the Fund might not be able to close out a transaction
before expiration without incurring substantial losses (and it is possible that
the transaction cannot even be closed). In addition, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium.
Foreign currency transactions (such as forward foreign currency contracts) can
cause investment losses in a variety of ways. For example, changes in currency
exchange rates may result in poorer overall performance for the Fund than if it
had not engaged in such transactions. There may also be an imperfect correlation
between the Fund's portfolio holdings of securities denominated in a particular
currency and the forward contracts entered into by the Fund. An imperfect
correlation of this type may prevent the Fund from achieving the intended hedge
or expose the Fund to the risk of currency exchange loss.
- - ILLIQUID SECURITIES: "Illiquid securities" are assets that may not be disposed
of in the ordinary course of business within seven days at roughly the value
at which the investing fund has valued the assets. These may be "restricted
securities," which cannot be sold to the public without registration under the
Securities Act of 1933 (in the absence of an exemption) or because of other
legal or contractual restrictions on resale. Thus, while illiquid securities
may offer the potential for higher returns than more readily marketable
securities, there is a risk that the investing fund will not be able to
dispose of them promptly at an acceptable price.
- - BORROWING: For temporary or emergency purposes, each Fund may borrow up to a
specific percentage of its total assets from qualified banks (10% in the case
of Ivy Bond Fund and 20% in the case of Ivy International Strategic Bond
Fund). Borrowing may exaggerate the effect on a Fund's share value or any
increase or decrease in the value of the securities it holds. Money borrowed
will also be subject to interest costs.
- - TEMPORARY DEFENSIVE POSITIONS: Each Fund may occasionally take a temporary
defensive position and invest without limit in U.S. Government securities,
investment-grade debt securities, and cash and cash equivalents such as
commercial
8
<PAGE> 165
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
paper, short-term notes and other money market securities. When a Fund assumes
such a defensive position it may not achieve its investment objective.
- -- OTHER IMPORTANT INFORMATION
EUROPEAN MONETARY UNION: The Funds may have investments in Europe. On January 1,
1999, a new European currency called the "euro" was introduced and adopted for
use by eleven European countries. The transition to daily usage of the euro will
occur during the period from January 1, 1999 through December 31, 2001, at which
time euro bills and coins will be put into circulation. Certain European Union
members, including the United Kingdom, did not officially implement the euro on
January 1, 1999 and may cause market disruptions when and if they decide to do
so. Should this occur, the Funds could experience investment losses.
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem"). The inability of computer-
based systems to make this distinction could have a seriously adverse effect on
the handling of securities trades, pricing and account services worldwide. The
Funds' service providers are taking steps that each believes are reasonably
designed to address the Year 2000 Problem with respect to the computer systems
that they use. Information about the year 2000 readiness of the issuers of the
securities that the Funds may purchase is also taken into consideration during
the investment decision-making process (though such information may not be
readily available, particularly in non-U.S. countries, and may be limited to
public filings or statements from company representatives that are not
independently verifiable).
The Funds' managers believe these steps will be sufficient to avoid any material
adverse impact on the Funds. At this time, however, there can be no assurance
that significant problems will not occur (which either directly or indirectly
may cause a Fund to lose money).
MANAGEMENT
- -- INVESTMENT ADVISOR
Ivy Management, Inc. ("IMI")
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
IMI provides investment advisory and business management services to the Funds.
IMI is an SEC-registered investment advisor with over $5 billion in assets under
management, and provides similar services to the other seventeen series of Ivy
Fund. For Ivy Bond Fund's fiscal year ending December 31, 1998, the Fund paid
IMI a fee that was equal to 0.66% of the Fund's average net assets. Ivy
International Strategic Bond Fund will pay IMI a fee equal to 0.75% of the
Fund's average net assets.
- -- PORTFOLIO MANAGEMENT
IVY BOND FUND: The Fund is managed by IMI's Fixed Income Team. Among the
research sources and techniques that team members use during the investment
decision-making process are:
- - issuer financial statements;
- - discussions with company managers and Wall Street analysts;
- - credit rating agency opinions; and
- - various financial publications.
IVY INTERNATIONAL STRATEGIC BOND FUND: Richard A. Gluck, Vice President of IMI,
is the Fund's portfolio manager. Before joining IMI, Mr. Gluck was a Vice
President and portfolio manager at Oppenheimer Capital. He has been managing
global fixed income funds since 1989. Mr. Gluck holds a Masters Degree in
management with a concentration in finance from the M.I.T. Sloan School of
Management.
Mr. Gluck is supported by the members of IMI's Fixed Income Team, which is
responsible for providing information on regional and country-specific economic
and political developments and monitoring individual companies. Team members use
a variety of research sources that include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
9
<PAGE> 166
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
- - information from third party research firms (ranging from large investment
banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
SHAREHOLDER
INFORMATION
- -- PRICING OF FUND SHARES
Each Fund calculates its share price by dividing the value of the Fund's net
assets by the total number of its shares outstanding as of the close of regular
trading (usually 4:00 p.m. Eastern time) on the New York Stock Exchange on each
day the Exchange is open for trading (normally any weekday that is not a
national holiday).
Each portfolio security that is listed or traded on a recognized stock exchange
is valued at the security's last sale price on the exchange on which it was
purchased.
If no sale is reported at that time, the average between the last bid and asked
prices is used. Securities and other Fund assets for which market prices are not
readily available are priced at their "fair value" as determined by IMI in
accordance with procedures approved by the Funds' Board of Trustees. IMI may
also price a foreign security at its fair value if events materially affecting
the estimated value of the security occur between the close of the foreign
exchange on which the security is principally traded and the time as of which a
Fund prices its shares. Fair-value pricing under these circumstances is designed
to protect existing shareholders from the actions of short-term investors
trading into and out of a Fund in an attempt to profit from short-term market
movements. When such fair-value pricing occurs, however, there may be some
period of time during which a Fund's share price and/or performance information
is not available.
Ivy International Strategic Bond Fund normally invests in securities that are
listed on foreign exchanges that may trade on weekends or other days when the
Fund does not price its shares. Therefore, the Fund's share value may change on
days when shareholders will not be able to purchase or redeem shares.
The number of shares you receive when you place a purchase or exchange order,
and the payment you receive after submitting a redemption request, is based on
the Fund's net asset value ("NAV") next determined after your instructions are
received in proper form by Ivy Mackenzie Services Corp. ("IMSC") (the Fund's
transfer agent) or by your registered securities dealer.
- -- HOW TO BUY SHARES
Please read these sections carefully before investing.
Advisor Class shares are offered through this Prospectus only to the following
investors:
- - trustees or other fiduciaries purchasing shares for employee benefit plans
that are sponsored by organizations that have at least 1,000 employees;
- - any account with assets of at least $10,000 if (a) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion, and where the investor pays such person as compensation for his
advice and other services an annual fee of at least 0.50% on the assets in the
account, or (b) such account is established under a "wrap fee" program and the
account holder pays the sponsor of the program an annual fee of at least 0.50%
on the assets in the account;
- - officers and Trustees of Ivy Fund (and their relatives);
- - directors and employees of Mackenzie Investment Management Inc. or its
affiliates;
- - Directors, officers, partners, registered representatives, employees and
retired employees (and their relatives) of dealers having a sales agreement
with IMDI (or trustees or custodians of any qualified retirement plan or IRA
established for the benefit of any such person.)
The following investment minimums, sales charges and expenses apply.
10
<PAGE> 167
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- -------------------------------------------------
Minimum initial investment*............. $10,000
Minimum subsequent investment*.......... $250
Initial sales charge.................... None
CDSC.................................... None
Service and distribution fees........... None
</TABLE>
*Minimum initial and subsequent investments for retirement plans are $25.
- -- SUBMITTING YOUR PURCHASE ORDER
INITIAL INVESTMENTS: Complete and sign the Account Application appearing at the
end of this Prospectus. Enclose a check payable to the Fund in which you wish to
invest. You should note on the check that you wish to purchase Advisor Class
shares (see minimum initial investments above.) Deliver your application
materials to your registered representative or selling broker, or send them to
one of the addresses below:
- - BY REGULAR MAIL:
Ivy Mackenzie Services Corp.
PO Box 3022
Boca Raton, FL 33431-0922
- - BY COURIER:
Ivy Mackenzie Services Corp.
700 South Federal Hwy.
Boca Raton, FL 33432-6114
- -- BUYING ADDITIONAL SHARES
There are several ways to increase your investment in a Fund:
- - BY MAIL: Send your check with a completed investment slip (attached to your
account statement) or written instructions indicating the account
registration, Fund number or name, and account number. Mail to one of the
addresses above.
- - THROUGH YOUR BROKER: Deliver to your registered representative or selling
broker the investment slip attached to your statement, or written
instructions, along with your payment.
- - BY WIRE: Purchases may also be made by wiring money from your bank account to
your Ivy account. Your bank may charge a fee for wiring funds. Before wiring
any funds, please call IMSC at 800.777.6472. Wiring instructions are as
follows:
First Union National Bank of Florida
Jacksonville, FL
ABA #063000021
Account #2090002063833
For further credit to:
Your Account Registration
Your Fund Number and Account Number
- - BY AUTOMATIC INVESTMENT METHOD: You can authorize to have funds electronically
drawn each month from your bank account and invested as a purchase of shares
into your Ivy Fund account. Complete sections 6A and 7B of the Account
Application.
- -- HOW TO REDEEM SHARES
SUBMITTING YOUR REDEMPTION ORDER: You may redeem your Fund shares through your
registered securities dealer or directly through IMSC. If you choose to redeem
through your registered securities dealer, the dealer is responsible for
properly transmitting redemption orders in a timely manner. If you choose to
redeem directly through IMSC, you have several ways to submit your request:
- - BY MAIL: Send your written redemption request to IMSC at one of the addresses
at left. Be sure that all registered owners listed on the account sign the
request. Medallion signature guarantees and supporting legal documentation may
be required. When you redeem, IMSC will normally send redemption proceeds to
you on the next business day, but may take up to seven days (or longer in the
case of shares recently purchased by check).
- - BY TELEPHONE: Call IMSC at 800.777.6472 to redeem from your individual, joint
or custodial account. To process your redemption order by telephone, you must
have telephone redemption privileges on your account. IMSC employs reasonable
procedures that require personal identification prior to acting on redemption
instructions communicated by telephone to confirm that such instructions are
genuine. In the absence of such procedures, the Fund or IMSC may be liable for
any losses due to unauthorized or fraudulent telephone instructions. Requests
by telephone can only be accepted for amounts up to $50,000.
11
<PAGE> 168
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
- - BY SYSTEMATIC WITHDRAWAL PLAN ("SWP"): You can authorize to have funds
electronically drawn each month from your Ivy Fund account and deposited
directly into your bank account. Certain minimum balances and minimum
distributions apply. Complete section 6B of the Account Application to add
this feature to your account.
RECEIVING YOUR REDEMPTION PROCEEDS: You can receive redemption proceeds through
a variety of payment methods:
- - BY CHECK: Unless otherwise instructed in writing, checks will be made payable
to the current account registration and sent to the address of record.
- - BY FEDERAL FUNDS WIRE: Proceeds will be wired on the next business day to a
pre-designated bank account. Your account will be charged $10 each time
redemption proceeds are wired to your bank, and your bank may also charge you
a fee for receiving a Federal Funds wire.
- - BY ELECTRONIC FUNDS TRANSFER ("EFT"): For SWP redemptions only.
IMPORTANT REDEMPTION INFORMATION:
- - If you own shares of more than one class of a Fund, the Fund will redeem first
the shares having the highest 12b-1 fees, unless you instruct otherwise.
- - A Fund may (on 60 days' notice) redeem the accounts of shareholders whose
investment, including sales charges paid, has been less than $1,000 for more
than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares recently
purchased by check) to send redemption proceeds.
- -- HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Ivy fund, subject to
certain restrictions (see "Important Exchange Information" below).
SUBMITTING YOUR EXCHANGE ORDER: You may submit an exchange request to IMSC as
follows:
- - BY MAIL: Send your written exchange request to IMSC at one of the addresses on
page 12 of this Prospectus. Be sure that all registered owners listed on the
account sign the request.
- - BY TELEPHONE: Call IMSC at 800.777.6472 to authorize an exchange transaction.
To process your exchange order by telephone, you must have telephone exchange
privileges on your account. IMSC employs reasonable procedures that require
personal identification prior to acting on exchange instructions communicated
by telephone to confirm that such instructions are genuine. In the absence of
such procedures, the Fund or IMSC may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
IMPORTANT EXCHANGE INFORMATION:
- - You must exchange into the same share class you currently own.
- -- Exchanges are considered taxable events and may result in a capital gain or
a capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange privilege
for the purpose of timing short-term market fluctuations. The Funds may
therefore limit the frequency of exchanges by a shareholder, charge a
redemption fee (in the case of certain Funds), or cancel a shareholder's
exchange privilege if at any time it appears that such market-timing
strategies are being used. For example, shareholders exchanging more than five
times in a 12-month period may be considered to be using market-timing
strategies.
- -- DIVIDENDS, DISTRIBUTIONS AND TAXES
- - The Funds generally declare and pay dividends and capital gain distributions
(if any) at least once a year.
- - Dividends and distributions are "reinvested" in additional Fund shares unless
you request to receive them in cash.
- - Reinvested dividends and distributions are added to your account at NAV and
are not subject to a sales charge regardless of which share class you own.
- - Cash dividends and distributions can be sent to you:
- - BY MAIL: a check will mailed to the address of record unless otherwise
instructed.
12
<PAGE> 169
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- - BY ELECTRONIC FUNDS TRANSFER: your proceeds will be directly deposited into
your bank account.
To change your dividend and/or distribution options, call IMSC at 800.777.6472.
Dividends ordinarily will vary from one class to another. The Funds intend to
declare and pay dividends monthly. The Funds will distribute net realized
capital gains, if any, at least once a year. The Funds may make an additional
distribution of net investment income and net realized capital gains to comply
with the calendar year distribution requirement under the excise tax provisions
of Section 4982 of the Internal Revenue Code of 1986, as amended (the "Code").
Dividends paid out of a Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to you as
ordinary income. If a portion of a Fund's income consists of dividends paid by
U.S. corporations, a portion of the dividends paid by a Fund may be eligible for
the corporate dividends-received deduction. Distributions of net capital gains
(the excess of net long-term capital gains over net short-term capital losses),
if any, are taxable to you as long-term capital gains, regardless of how long
you have held your shares. Dividends are taxable to you in the same manner
whether received in cash or reinvested in additional Fund shares.
If shares of a Fund are held in a tax-deferred account, such as a retirement
plan, income and gain will not be taxable each year. Instead, the taxable
portion of amounts held in a tax-deferred account generally will be subject to
tax as ordinary income only when distributed from that account.
A distribution will be treated as paid to you 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 a Fund during January of the
following calendar year. In certain years, you may be able to claim a credit or
deduction on your income tax return for your share of foreign taxes paid by your
Fund.
Upon the sale or exchange of your Fund shares, you may realize a capital gain or
loss which will be long term or short term, generally depending upon how long
you held your shares.
A Fund may be required to withhold U.S. Federal income tax at the rate of 31% of
all distributions payable to you if you fail to provide the Fund with your
correct taxpayer identification number or to make required certifications, or if
you have been notified by the Internal Revenue Service that you are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against your U.S. Federal income tax liability.
Fund distributions may be subject to state, local and foreign taxes.
You should consult with your tax adviser as to the tax consequences of an
investment in the Fund, including the status of distributions from the Funds
under applicable state or local law.
13
<PAGE> 170
[IVY LEAF LOGO]
FINANCIAL HIGHLIGHTS
The "Financial highlights" table is intended to help you understand the Ivy
Bond Fund's financial performance and reflects results for a single Fund
share. Ivy International Strategic Bond Fund commenced operations on April 30,
1999, and accordingly, no financial information is presented for that Fund.
The total returns in the table represent the rate an investor would have
earned (or lost) each year on an investment in Ivy Bond Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, is included in its Annual Report to shareholders
(which is available upon request).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVY BOND FUND ADVISOR CLASS
-------------------------
For the period
January 20, 1998
(Commencement)
to December 31,
- ------------------------------------------------------------------------------------------
1998
SELECTED PER SHARE DATA -------------------------
<S> <C>
Net asset value, beginning of period....................... $10.28
-------------------------
Loss from investment operations
Net investment income.................................... .69
Net gains or losses on securities (both realized
and unrealized)........................................ (.72)
-------------------------
Total from investment operations......................... (.03)
-------------------------
Less distributions
Dividends
From net investment income............................. .69
In excess of net investment income..................... .02
-------------------------
Total distributions.................................... .71
-------------------------
Net asset value, end of period............................. $ 9.54
=========================
Total return (%)(a)........................................ (.30)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................... $ 347
Ratio of expenses to average net assets (%)(b)............. 1.11
Ratio of net investment income to average net assets
(%)(b)................................................... 7.16
Portfolio turnover rate (%)................................ 43
(a) Total return repre-
sents aggregate total
return and does not
reflect a sales charge.
(b) Annualized
</TABLE>
14
<PAGE> 171
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
15
<PAGE> 172
[IVY LEAF LOGO]
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
16
<PAGE> 173
Account
Application
FUND USE ONLY
___________________
Account Number
___________________
Dealer/Branch/Rep
___________________
Account Type/Soc Cd
[IVY FUNDS LOGO]
Please mail applications and checks to:
USE FOR ADVISOR
CLASS ONLY
Ivy Mackenzie Services Corp.,
P.O. Box 3022, Boca Raton, Florida 33431-0922
This application should not be used for retirement accounts for which Ivy
Fund (IBT) is custodian.
1 REGISTRATION
Name ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Address__________________________________________________________________
City _________________________________________ State _______ Zip ________
Phone # (day) (___)_________________ Phone # (evening) (__)_____________
__ Individual __ UGMA/UTMA __ Sole proprietor
__ Joint tenant __ Corporation __ Trust
__ Estate __ Partnership __ Other
Date of trust ________________ Minor's state of residence ______________
2 TAX I.D.
Citizenship: __ U.S. __ Other (please specify): __________________
Social security # _____-____-_______ or Tax identification _____________
Under penalties of perjury, I certify by signing in Section 8 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 "Dividends, distributions and taxes" 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 IMSC of any purchases made under a
Letter of Intent or Rights of Accumulation.
Dealer name _____________________________________________________________
Branch office address ___________________________________________________
City ______________________________ State _______________ Zip _________
Representative's name ___________________________________________________
Representative's # _________________ Representative's phone _____________
Authorized signature of dealer __________________________________________
4 INVESTMENTS
A. Enclosed is my check ($10,000 minimum) for $__________ made payable to
the appropriate fund. Please invest it in Advisor Class Shares of the
following fund(s):
$ ______________ Ivy Bond Fund $ _______________ Ivy International
Strategic Bond Fund
B. FOR DEALER USE ONLY
Confirmed trade orders: ______________ ________________ ___________
Confirm Number Number of Shares Trade Date
<PAGE> 174
5 DISTRIBUTION OPTIONS
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.
A. ___ Reinvest all dividends and capital gains into additional shares
of a different Ivy fund account.
Fund name: ________________________________________________________
Account #: ________________________________________________________
B. ___ Pay all dividends in cash and reinvest capital gains into
additional shares in this account or a different Ivy fund
account.
Fund name: ________________________________________________________
Account #: ________________________________________________________
C. ___ Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN B OR C ABOVE, BE SENT
TO: _____ the address listed in the registration
_____ the special payee listed in Section 7A (by mail)
_____ the special payee listed in Section 7B (by EFT)
6 OPTIONAL SPECIAL FEATURES
A. AUTOMATIC INVESTMENT METHOD (AIM)
___ I wish to have my bank account listed in section 7B automatically
debited via EFT on a predetermined frequency and invested into my
Ivy Fund account listed below.
1. Withdraw $____ for each time period indicated below and invest my
bank proceeds in Advisor Class shares of the following Ivy fund:
Fund name: __________________________________________________________
Account #: __________________________________________________________
2. Debit my bank account:
___ Annually (on the ___ day of the month of
___________________).
___ Semiannually (on the ___ day of the months of
_______ and _______).
___ Quarterly (on the ___ day of the first/second/third
month of each calendar quarter). (CIRCLE ONE)
___ Monthly*___ once per month on the ___ day
___ twice per month on the _____ days
___ 3 times per month on the _____ days
___ 4 times per month on the _____ days
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)**
___ I wish to have my Ivy Fund account automatically debited on a
predetermined frequency and the proceeds sent to me per my
instructions below.
1. Withdraw ($250 minimum) $_____ for each time period indicated
below from the following Ivy Fund account:
Fund name: ________________________________________________________
Account #: ________________________________________________________
2. Withdraw from my Ivy Fund account:
___ Annually (on the _____ day of the month of
__________).
___ Semiannually (on the _____ day of the months of
___________ and __________).
___ Quarterly (on the _____ day of the first/second/third
month of each calendar quarter. (CIRCLE ONE)
___ Monthly*___ once per month on the ___ day
___ twice per month on the _____ days
___ 3 times per month on the _____ days
___ 4 times per month on the _____ days
3. I request the withdrawal proceeds be:
___ sent to the address listed in the registration
___ sent to the special payee listed in section 7A or 7B.
___ invested into additional Advisor Class shares of a
different Ivy Fund:
Fund name: ________________________________________________________
Account #: ________________________________________________________
Note: A minimum balance of $10,000 is required to establish a SWP.
6 OPTIONAL SPECIAL FEATURES (CONT.)
C. FEDERAL FUNDS WIRE
FOR REDEMPTION PROCEEDS** ___ yes ___ no
By checking "yes" immediately above, I authorize IMSC 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).
(COMPLETE SECTION 7B).
D. TELEPHONE EXCHANGES** ___ yes ___ no
By checking "yes" immediately above, I authorize exchanges by telephone
among the Ivy 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. TELEPHONIC REDEMPTIONS** ___ yes ___ no
By checking "yes" immediately above, the Fund or its agents are authorized
to honor telephone instructions from any person as more fully described in
the Prospectus for the redemption of Fund shares. The amount of the
redemption shall not exceed $50,000 and the proceeds are to be payable to
the shareholder of record and mailed to the address of record. To change
this option once established, written instructions must be received from
the shareholder of record or the current registered representative.
If neither box is checked, the telephone redemption privilege will be
provided automatically.
* There must be a period of at least seven calendar days between each
investment (AIM)/withdrawal (SWP) period.
** This option may not be used if shares are issued in certificate form.
7 SPECIAL PAYEE
A. MAILING ADDRESS: Please send all disbursements to this payee:
Name of bank or individual _______________________________________________
Account # (if applicable) ________________________________________________
Street ___________________________________________________________________
City _____________________________ State _________________ Zip ___________
B. FED WIRE/EFT INFORMATION
Financial institution ____________________________________________________
ABA # ____________________________________________________________________
Account # ________________________________________________________________
Street ___________________________________________________________________
City _____________________________ State _________________ Zip ___________
(PLEASE ATTACH A VOIDED CHECK.)
8 SIGNATURES
Investors should be aware that the failure to check the "No" under
Section 6D or 6E above means that the Telephone Exchange/ Redemption
Privileges will be provided. The Fund employs reasonable procedures that
require personal identification prior to acting on exchange/redemption
instructions communicated by telephone to confirm that such instructions
are genuine. In the absence of such procedures, the Fund may be liable for
any losses due to unauthorized or fraudulent telephone instructions.
Please see "How to exchange shares" and "How to redeem shares" in the
Prospectus for more information on these privileges.
I certify to my legal capacity to purchase or redeem shares of the
Fund for my own account or for the account of the organization named in
Section 1. I have received a current Prospectus and understand its terms
are incorporated in this application by reference. I am certifying my
taxpayer information as stated in Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID
BACKUP WITHHOLDING.
________________________________________ _______________________________
Signature of Owner, Custodian, Trustee or Date
Corporate Officer
________________________________________ _______________________________
Signature of Joint Owner, Co-Trustee or Date
Corporate Officer
(Remember to sign Section 8)
DETACH ON PERFORATION TO MAIL
<PAGE> 175
* Symbol not assigned as of this printing
- --------------------------------------------------------------------------------
-- QUOTRON SYMBOLS AND CUSIP NUMBERS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
FUND SYMBOL CUSIP
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Ivy Bond Fund Advisor Class * 465897296
Ivy International Strategic Bond Fund
Advisor Class * 465898500
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 176
(Ivy Funds Logo)
-- HOW TO RECEIVE MORE
INFORMATION ABOUT THE FUNDS
Additional information about the Funds and their investments is
contained in the Funds' Statement of Additional Information dated May
3, 1999, which is incorporated by reference into this Prospectus, and
each Fund's annual and semiannual reports to shareholders. Each Fund's
annual report includes a discussion of the market conditions and
investment strategies that significantly affected the Fund's
performance during its most recent fiscal year. The SAI and annual and
semiannual reports are available upon request and without charge from
the Distributor at the following address and phone number.
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432
800.456.5111
Information about the Funds (including the SAI and annual and
semiannual reports) may also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. (please call 1-800-SEC-0330 for
further details). Information about the Funds is also available on the
SEC's Internet Website (www.sec.gov), and copies of this information
may be obtained, upon payment of a copying fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-6009.
Investment Company Act File No. 811-1028
-- SHAREHOLDER
INQUIRIES
Please call
Ivy Mackenzie
Services Corp.,
the Funds' transfer agent,
regarding any other
inquiries about the Funds
at 800.777.6472.
www.ivymackenzie.com
E-mail:
[email protected]
01FXINADV0499
