<PAGE> 1
MACKENZIE SERIES TRUST
MACKENZIE FLORIDA LIMITED TERM
MUNICIPAL FUND
Supplement Dated January 1, 1996
to Prospectus Dated October 27, 1995
The tenth sentence of the paragraph under "Organization of the Fund" on page 6
is modified as follows:
Each class of shares has a different 12b-1 distribution policy and bears
different distribution fees.
The second sentence of the paragraph under "Transfer Agent" on page 6 is
replaced in its entirety as follows:
For transfer agency and shareholder services, the Fund pays MIISC a fee of
$20.75 per open account. The Fund also pays MIISC a fee of $4.36 for each
account that is closed and reimburses MIISC monthly for out-of-pocket expenses.
Certain Broker/Dealers that maintain shareholder accounts with the Fund through
an omnibus account provide transfer agent and other shareholder-related
services that would otherwise be provided by MIISC if the individual accounts
that comprise the omnibus account were opened by their beneficial owners
directly. As compensation for these services, MIISC pays the Broker/Dealer a
similar open account fee for each account within the omnibus account, or a fixed
rate (eg., .10%) based on the average daily net asset value of the omnibus
account (or a combination thereof).
The second paragraph under "Dividends and Taxes" on page 7 is deleted in its
entirety.
The first sentence of the third paragraph under "Dividends and Taxes" on page 7
is modified as follows:
The Fund intends to declare and pay monthly any dividends from net investment
income (to the extent not previously distributed) on both classes of Fund
shares, based on their relative net asset values.
The second paragraph under "Purchase of Class A Shares at Net Asset Value" on
page 11 is modified as follows:
Officers and Trustees of the Trust (and their relatives), MIMI, Ivy Management,
Inc. (which is a wholly owned subsidiary of MIMI) and Mackenzie Financial
Corporation (of which MIMI is a subsidiary) and their officers, directors,
employees and retired employees (and their relatives), and legal counsel and
independent accountants (and their relatives) may buy Class A shares of the Fund
without an initial sales charge or contingent deferred sales charge.
[LOGO IVY FUNDS]
Via Mizner Financial Plaza
700 S. Federal Highway
Boca Raton, Florida 33432
1-800-456-5111
MFLTMF-16-196
<PAGE> 2
October 27, 1995 [LOGO MACKENZIE]
MACKENZIE
FLORIDA
LIMITED TERM
MUNICIPAL
FUND
- -----------
PROSPECTUS
- -----------
Mackenzie Investment
Management Inc.
Via Mizner Financial
Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
[PICTURE]
Mackenzie Series Trust (the "Trust") is a registered investment company
currently consisting of five separate investment portfolios. One portfolio of
the Trust, Mackenzie Florida Limited Term Municipal Fund (the "Fund"), is
described in this Prospectus.
This Prospectus sets forth concisely the information about the Fund that
a prospective investor should know before investing and should be read
carefully and retained for future reference. Additional information about the
Fund is contained in the Statement of Additional Information ("SAI") for the
Fund, which is incorporated by reference into this Prospectus. The SAI, dated
October 27, 1995, has been filed with the Securities and Exchange Commission
("SEC") and is available upon request and without charge from the Trust at the
Distributor's address and telephone number provided below.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Schedule of Fees.............................2
Expense Data Table...........................2
The Fund's Financial Highlights..............3
Investment Objective and Policies............4
Investment Techniques and Risk Factors.......4
Organization of the Fund.....................6
Investment Manager ..........................6
Administrator ...............................6
Fund Accounting..............................6
Transfer Agent ..............................6
Distributor .................................6
Dividends and Taxes..........................7
Performance Data ............................7
Alternative Purchase Arrangements............8
Factors to Consider in Choosing an
Alternative................................8
How to Buy Shares ...........................8
How Your Purchase Price is Determined........9
How the Fund Values its Shares...............9
Initial Sales Charge--Class A Shares........10
Contingent Deferred Sales Charge--Class
A Shares .................................10
Waiver of Contingent Deferred Sales Charge..10
Qualifying for a Reduced Sales Charge.......10
Rights of Accumulation .....................10
Letter of Intent............................10
Purchases of Class A Shares At Net
Asset Value ..............................11
Contingent Deferred Sales Charge
Alternative--Class B Shares...............11
Conversion of Class B Shares.............12
Waiver of Contingent Deferred Sales
Charge.................................12
Arrangements with Broker/Dealers
and Others.................................12
How to Redeem Shares........................12
Minimum Account Balance Requirements .......13
Signature Guarantees .......................13
Choosing a Distribution Option..............13
Tax Identification Number...................14
Certificates ...............................14
Exchange Privilege .........................14
Reinvestment Privilege......................15
Systematic Withdrawal Plan .................15
Automatic Investment Method.................15
Consolidated Account Statements.............15
Shareholder Inquiries.......................15
</TABLE>
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT INVESTMENT
John S. Anderegg, Jr. Michael G. Landry, President Mackenzie Ivy Investor MANAGER
Paul H. Broyhill Keith J. Carlson, Vice President Services Corp. Mackenzie Investment
Stanley Channick C. William Ferris P.O. Box 3022 Management Inc.
Frank W. DeFriece, Jr. Secretary/Treasurer Boca Raton, FL 33431-0922 Boca Raton, FL
Roy J. Glauber 1-800-777-6472
Michael G. Landry DISTRIBUTOR
Joseph G. Rosenthal CUSTODIAN AUDITORS Mackenzie Ivy Funds
J. Brendan Swan Brown Brothers Harriman & Co. Coopers & Lybrand L.L.P. Distribution, Inc.
Boston, MA Ft. Lauderdale, FL Via Mizner Financial Plaza
LEGAL COUNSEL 700 South Federal Highway
Dechert Price & Rhoads Boca Raton, FL 33432
Boston, MA 1-800-456-5111
</TABLE>
<PAGE> 3
SCHEDULE OF FEES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Maximum sales load imposed on purchases
(as a percentage of offering
price at time of purchase).................... 3.00%* None
Maximum contingent deferred sales charge (as
a percentage of original purchase price)...... None** 3.00%***
The Fund has no sales load on reinvested
dividends, no redemption fees and no exchange
fees
</TABLE>
* Class A shares of the Fund may be purchased under a variety of plans that
provide for the reduction or elimination of the sales charge. See
"Alternative Purchase Arrangements" for more information.
** A contingent deferred sales charge may apply to the redemption of Class A
shares that are purchased without an initial sales charge. See "Purchases
of Class A Shares at Net Asset Value" and "Contingent Deferred Sales
Charge--Class A Shares."
*** The maximum contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge declines to 2
1/2% during the second year; 2% during the third year; 1 1/2% during the
fourth year; 1% during the fifth year; and 0% in the sixth year and
thereafter.
EXPENSE DATA TABLE
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Annual Fund Operating Expenses (as a percentage
of average daily net assets):
Management Fees After Expense Reimbursements (1)........ 0.00% 0.00%
12b-1 Service/Distribution Fees......................... 0.25% 0.75% (2)
Other Expenses.......................................... 0.64% 0.64%
---- ----
Total Fund Operating Expenses (3)....................... 0.89% 1.39%
==== ====
</TABLE>
(1) Management Fees for both Class A and Class B shares of the Fund reflect
expense reimbursements (see note (3) below). Without the expense
reimbursement, Management Fees would have been 0.55% of aveage daily net
assets.
(2) Long-term investors may, as a result of the Fund's 12b-1 fees, pay more
than the economic equivalent of the maximum front-end sales charge
permitted by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc.
(3) Mackenzie Investment Management Inc. ("MIMI") voluntarily limits the
Fund's Total Fund Operating Expenses (excluding taxes, 12b-1 fees,
brokerage commissions, interest, litigation and indemnification expenses
and other extraordinary expenses) to an annual rate of 0.64% of the Fund's
average daily net assets. Without expense reimbursements, Total Fund
Operating Expenses for Class A and B shares would have been 2.09% and
2.59%, respectively. MIMI, as investment adviser, has reserved the right
to terminate or revise this expense limitation at any time.
EXAMPLE
CLASS A SHARES
You would pay the following expenses on a $1,000 investment in the Fund,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$39(1) $58 $78 $136
</TABLE>
These figures assume that the current voluntary expense limitation is in
place for each of the time periods indicated. MIMI, as investment adviser, has
reserved the right to terminate or revise this expense limitation at any time,
which may affect the results in years one, three, five and ten in the preceding
Example. If the voluntary expense limitation is terminated, the Fund's Class A
expenses for the one-, three-, five- and ten-year periods are estimated to be
$51, $94, $139 and $265, respectively.
(1) Assumes deduction of the maximum 3.00% initial sales charge at the time of
purchase and no deduction of a contingent deferred sales charge at the time
of redemption.
EXAMPLE (1 OF 2)
CLASS B SHARES
You would pay the following expenses on a $1,000 investment in the Fund,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(4)
------ ------- ------- -----------
<S> <C> <C> <C>
$44(1) $64(2) $86(3) $153
</TABLE>
These figures assume that the current voluntary expense limitation is in
place for each of the time periods indicated. MIMI, as investment adviser, has
reserved the right to terminate or revise this expense limitation at any time,
which may affect the results in years one, three, five and ten in the preceding
Example. If the voluntary expense limitation is terminated, the Fund's Class B
expenses for the one, three, five and ten year periods are estimated to be $56,
$101, $148 and $280, respectively.
EXAMPLE (2 OF 2)
CLASS B SHARES
You would pay the following expenses on a $1,000 investment in the Fund,
assuming (1) 5% annual return and (2) no redemption:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(4)
------ ------- ------- -----------
<S> <C> <C> <C>
$14 $44 $76 $153
</TABLE>
These figures assume that the current voluntary expense limitation is in
place for each of the time periods indicated. MIMI, as investment adviser, has
reserved the right to terminate or revise this expense limitation at any time,
which may affect the results in years one, three, five and ten in the preceding
Example. If the voluntary expense limitation is terminated, the Fund's Class B
expenses for the one, three, five and ten year periods are estimated to be $26,
$81, $138 and $280, respectively.
(1) Assumes deduction of a 3% contingent deferred sales charge at the time of
redemption.
(2) Assumes deduction of a 2% contingent deferred sales charge at the time of
redemption.
(3) Assumes deduction of a 1% contingent deferred sales charge at the time of
redemption.
(4) Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the eighth year and, therefore, reflect Class A expenses for
years nine and ten.
The purpose of the foregoing tables is to provide an investor with an
understanding of the expenses that an investor in the Fund will bear, directly
or indirectly. The Examples assume reinvestment of all distributions and that
the percentage amounts under "Total Fund Operating Expenses" remain the same
each year. The assumed annual return of 5% is required by applicable law to be
applied by all investment companies and is used for illustrative purposes only.
THIS ASSUMPTION IS NOT A PROJECTION OF FUTURE PERFORMANCE. THE ACTUAL EXPENSES
FOR THE FUND MAY BE HIGHER OR LOWER THAN THE ESTIMATES GIVEN.
Except as set forth in the Fund's Financial Highlight Table below, the
percentages expressing annual fund operating expenses are based on amounts
incurred during the fiscal year ended June 30, 1995. The information in the
tables does not reflect the charge of $10.00 per transaction that would apply
if a shareholder makes a request to have redemption proceeds wired to his or
her bank account. For a more detailed discussion of the Fund's fees and
expenses, see the following sections of the Prospectus: "Organization of the
Fund," "Initial Sales Charge Alternative - Class A Shares," "Contingent
Deferred Sales Charge Alternative - Class B Shares," and "How to Buy Shares,"
and the following section of the SAI: "Investment Advisory and Other Services."
2
<PAGE> 4
THE FUND'S FINANCIAL HIGHLIGHTS
The following information through the year ended June 30, 1995 has been
audited by Coopers & Lybrand L.L.P., independent accountants. The report of
Coopers & Lybrand L.L.P. on the Fund's financial statements appears in the
Fund's Annual Report to shareholders. The Fund's Annual Report, which is
incorporated by reference into the SAI, contains further information about, and
management's discussion of, the Fund's performance, and is available to
shareholders upon request and without charge. The information presented below
should be read in conjunction with the financial statements and notes thereto.
<TABLE>
<CAPTION>
CLASS A
---------------------------
FOR THE FOR THE PERIOD
YEAR APRIL 1, 1994
ENDED (COMMENCEMENT)
JUNE 30, TO JUNE 30,
-------- -----------
1995 1994
---- ----
<S> <C> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period $10.10 $10.00*
------ ------
Income from investment operations
Net investment income (a) .......................... 47 .11
Net gain on investments (both realized and
unrealized) .13 .10
------ ------
Total from investment operations .60 .21
------ ------
Less distributions from:
Net investment income............................... .47 .11
Net capital gain.................................... .07 --
------ ------
Total distributions.......................... .54 .11
------ ------
Net asset value, end of period......................... $10.16 $10.10
====== ======
Total return (%)....................................... 6.14(b) 2.12(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)............... $4,166 $2,331
Ratio of expenses to average daily net assets:
With expense reimbursement(%)....................... .89 .89(d)
Without expense reimbursement(%).................... 2.09 2.87(d)
Ratio of net investment income to average daily net
assets (%)(a)........................................ 4.56 4.40(d)
Portfolio turnover rate(%)............................. 164 0
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------
FOR THE FOR THE PERIOD
YEAR APRIL 1, 1994
ENDED (COMMENCEMENT)
JUNE 30, TO JUNE 30,
-------- -----------
1995 1994
---- ----
<S> <C> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period................... $10.10 $10.00
------ ------
Income from investment operations
Net investment income(a)............................ .42 .10
Net gain on investments (both realized and
unrealized)....................................... .13 .10
------ ------
Total from investment operations.............. .55 .20
------ ------
Less distributions from:
Net investment income............................... .42 .10
Net capital gain.................................... .07 --
------ ------
Total distributions........................... .49 .10
------ ------
Net asset value, end of period......................... $10.16 $10.10
====== ======
Total return (%)....................................... 5.61(b) 2.01(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)............... $2,305 $1,553
Ratio of expenses to average daily net assets:
With expense reimbursement(%)....................... 1.39 1.39(d)
Without expense reimbursement(%).................... 2.59 3.37(d)
Ratio of net investment income to average daily net
assets(%)(a)........................................ 4.06 3.90(d)
Portfolio turnover rate(%)............................. 164 0
</TABLE>
(a) Net investment income is net of expenses reimbursed by MIMI.
(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.
* Price at inception excludes sales charge.
3
<PAGE> 5
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is fundamental and may not be changed
without the approval of a majority of the outstanding voting shares of the
Fund. Except for the Fund's investment objective and those investment
restrictions specifically identified as fundamental, all investment policies
and practices described in this Prospectus and in the SAI are non-fundamental,
and may be changed by the Trustees without shareholder approval. There can be
no assurance that the Fund's objective will be met. The different types of
securities and investment techniques used by the Fund involve varying degrees
of risk. For more information about the particular risks associated with each
type of investment, see "Investment Techniques and Risk Factors," below, and
the SAI.
The Fund seeks a high a level of interest income exempt from Federal
income taxes as is consistent with the preservation of shareholders' capital.
The Fund attempts to achieve this objective by investing primarily in
tax-exempt limited term municipal securities exempt from both regular Federal
income taxes, in the opinion of bond counsel, to the issuer, and Florida
intangible personal property taxes. As a fundamental policy, at least 80% of
the Fund's net assets will be invested, during normal market conditions, in
debt obligations issued by or on behalf of the State of Florida and its
political subdivisions (agencies, authorities and instrumentalities), and the
governments of Puerto Rico, the U.S. Virgin Islands and Guam, the interest on
which is exempt from regular Federal income tax and is not a tax preference
item under the Federal alternative minimum tax, and the value of which is
exempt from Florida intangible personal property taxes ("Florida municipal
securities"). The Fund will not invest more than 5% of its net assets in
obligations of each of the U.S. Virgin Islands and Guam, but may invest without
limit in obligations of Puerto Rico. The Fund ordinarily does not intend to
realize investment income from securities other than Florida municipal
securities. However, to the extent that Florida municipal securities are not
readily available for investment by the Fund, the Fund may invest more that 20%
of its net assets in securities other than Florida municipal securities, the
interest on which is, in the opinion of bond counsel to the issuer, exempt from
Federal income tax ("non-Florida municipal securities"). The Fund will attempt
to manage its investments in non-Florida municipal securities to minimize, to
the extent possible, the likelihood that such investments may result in shares
of the Fund being subject to the Florida intangible personal property tax. The
Fund expects to maintain a dollar-weighted average portfolio maturity of three
to six years and will only purchase instruments with remaining maturities of
ten years or less. If the Fund invests solely in assets that are exempt from
the Florida intangible personal property tax, including Florida municipal
securities and U.S. Government obligations, the value of its shares will also
be exempt from this tax.
The Fund is classified as "non-diversified" within the meaning of the
Investment Company Act of 1940, as amended (the "Act"), which means that the
Fund is not limited by the Act in the proportion of its assets that it may
invest in the obligations of a single issuer. However, the Fund's investments
will be limited so as to qualify it as a "regulated investment company" for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"). Toward
this end, the Trust will limit the Fund's investments so that at the close of
each quarter of the taxable year (i) not more than 25% of the market value of
the Fund's total assets will be invested in the securities of a single issuer,
and (ii) with respect to 50% of the market value of its total assets, not more
than 5% of the market value of its total assets will be invested in the
securities of a single issuer and the Fund will not own more than 10% of the
outstanding voting securities of a single issuer. A fund that elects to be
classified as "diversified" under the Act must satisfy the foregoing 5% and 10%
requirements with respect to 75% of its total assets.
The Fund's portfolio will be actively managed in the pursuit of its
objective, and therefore may have higher portfolio turnover than that of other
funds with similar objectives. Portfolio turnover may result in the realization
of taxable capital gains, which are not tax-exempt when distributed to
shareholders. See "Portfolio Turnover" in the SAI for further information about
portfolio turnover and portfolio transactions.
INVESTMENT TECHNIQUES AND RISK FACTORS
DEBT SECURITIES IN GENERAL: Investment in debt securities, including
municipal securities, involves both interest rate and credit risk. Generally,
the value of debt instruments rises and falls inversely with interest rates. As
interest rates decline, the value of debt securities generally increases.
Conversely, rising interest rates tend to cause the value of debt securities to
decrease. Bonds with longer maturities generally are more volatile than bonds
with shorter maturities. The market value of debt securities also varies
according to the relative financial condition of the issuer. In general,
lower-quality bonds offer higher yields due to the increased risk that the
issuer will be unable to meet its obligations on interest or principal payments
at the time called for by the debt instrument.
MUNICIPAL SECURITIES: Municipal securities are debt obligations that
generally have a maturity at the time of issue that exceeds one year and are
issued to obtain funds for various public purposes. The two principal
classifications of municipal bonds are "general obligation" and "revenue"
bonds, including industrial development bonds or private activity bonds.
General obligation bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. Revenue
bonds are payable only from the revenues derived from a particular facility or
class of facilities, or, in some cases, from the proceeds of a special excise
or specific revenue source. Industrial development bonds or private activity
bonds are issued by or on behalf of public authorities to obtain funds for
privately-operated facilities and are in most cases revenue bonds that do not
carry the pledge of the full faith and credit of the issuer of such bonds, but
depend for payment on the ability of the industrial user to meet its
obligations (or on any property pledged as security).
The interest on municipal securities is wholly exempt from Federal income
tax, in the opinion of bond counsel, to the issuers at the time of issuance.
Interest on certain municipal securities (including certain industrial
development bonds which are specified private activity bonds, as defined in the
Code, issued after August 7, 1986), while exempt from regular Federal income
tax, is a preference item for the purpose of the Federal alternative minimum
tax. Where a regulated investment company receives such interest, a
proportionate share of any exempt-interest dividend paid by the investment
company will be treated as such a preference item to shareholders. Interest on
Florida municipal securities is exempt from regular Federal income tax and is
not a preference item under the Federal alternative minimum tax. Under normal
conditions, the Fund will invest no more than 20% of its net assets (calculated
at market value at the time of each investment) in obligations the interest
from which gives rise to a preference item for the purpose of the alternative
minimum tax.
Certain municipal securities that the Fund may purchase bear interest at
rates that are not fixed, but that vary with changes in specified market rates
or indices (such as a Federal Reserve composite index). Such securities may
also carry a demand feature that would permit the holder to tender them back to
the issuer at par value prior to maturity, and may include participation
interests in variable rate tax-exempt municipal securities (expected to be
primarily in industrial development bonds) owned by banks. A participation
interest gives the Fund an undivided interest in the municipal securities in
the proportion that the Fund's participation interest bears to the total
principal amount of the municipal security and provides the demand purchase
feature described above. Each participation is backed by an irrevocable letter
of credit or guarantee of a bank that MIMI has determined meets the prescribed
investment quality standards for the Fund. The Fund has the right to sell the
instrument back to the bank and draw on the letter of credit on demand, on
seven days notice, for all or any part of the full principal amount of the
Fund's participation interest in the industrial development bond, plus accrued
interest. To the extent these securities are illiquid, the Fund will limit
4
<PAGE> 6
its investments in these and all other illiquid securities to not more
than 10% of its net assets (calculated at market value at the time of each
investment).
The Fund may purchase (i) municipal securities that are backed by the full
faith and credit of the United States Government; (ii) notes rated MIG-1 or
MIG-2 by Moody's Investor Services, Inc. ("Moody's") or AAA, AA, A, SP-1 or
SP-2 by Standard & Poor's Corporation ("S&P"); (iii) municipal bonds rated Aaa,
Aa or A by Moody's or AAA, AA, or A by S&P; (iv) other types of municipal
securities, provided that such obligations are rated A-1 or A-2 by S&P or
Prime-1 or Prime-2 by Moody's; and (v) municipal securities that are themselves
unrated, but either are issued by an entity that has other municipal securities
outstanding that meet one of the minimum rating requirements listed above, or
are of equivalent investment quality as determined by MIMI pursuant to
guidelines established and maintained in good faith by the Board of Trustees. A
description of the ratings of Moody's and S&P is contained in the SAI.
The Fund may invest without limit in municipal securities with similar
risk characteristics, such as municipal securities issued by issuers located in
the same geographic region, and municipal securities (other than those issued
by non-governmental issuers) that derive interest payments from revenues of
similar projects (for example, electric utility systems, hospitals and other
health care facilities, airport revenue obligations, or housing finance
agencies). As a result, the Fund's portfolio of investments may be more
susceptible to adverse political, economic or regulatory developments than a
portfolio of securities that is more diversified.
SPECIAL CONSIDERATIONS RELATING TO FLORIDA MUNICIPAL SECURITIES: Florida's
economy has typically performed better than the nation's, due in large part to
Florida's strong population growth. Since 1985, the job creation rate for
Florida has almost doubled the rate for the nation as a whole and, over the
years, Florida's personal income has been growing at a strong pace and has
generally outperformed that of other states. Under the Florida Constitution,
the state budget as a whole and each separate fund within the state budget is
required to be kept in balance from currently available revenues each fiscal
year. Florida is not authorized by law to issue obligations to fund
governmental operations. Because Florida lacks an income tax, it relies
principally on revenues generated by the state sales and use tax. The lack of
an income tax subjects state tax collections to greater volatility than would
otherwise be the case and, in the event of an economic downturn in its economy,
could affect Florida's ability to pay principal and interest in a timely
manner. In addition, investments in obligations of the government of Puerto
Rico require a careful assessment of certain risk factors, including its
reliance on substantial Federal assistance and favorable tax programs,
above-average levels of unemployment and low wealth levels, and susceptibility
to adverse shifts in energy prices as well as U.S. foreign trade/monetary
policies. Additional financial considerations relating to the risks associated
with investing in Florida and Puerto Rico debt securities are described in the
SAI.
U.S. GOVERNMENT SECURITIES: The Fund may invest in U.S. Government
securities. U.S. Government securities are obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities. Securities guaranteed
by the U.S. Government include: (1) direct obligations of the U.S. Treasury
(such as Treasury bills, notes, and bonds) and (2) Federal agency obligations
guaranteed as to principal and interest by the U.S. Treasury (such as GNMA
certificates, which are mortgage-backed securities). When such securities are
held to maturity, the payment of principal and interest is unconditionally
guaranteed by the U.S. Government, and thus they are of the highest possible
credit quality. U.S. Government securities that are not held to maturity are
subject to variations in market value caused by fluctuations in interest rates.
Mortgage-backed securities are securities representing part ownership of a
pool of mortgage loans. Although the mortgage loans in the pool will have
maturities of up to 30 years, the actual average life of the loans typically
will be substantially less because the mortgages will be subject to normal
principal amortization and may be prepaid prior to maturity. In periods of
falling interest rates, the rate of prepayment tends to increase, thereby
shortening the actual average life of the security. Conversely, rising interest
rates tend to decrease the rate of prepayment, thereby lengthening the
security's actual average life. Since it is not possible to predict accurately
the average life of a particular pool, and because prepayments are reinvested
at current rates, the market value of mortgage-backed securities may decline
during periods of declining interest rates.
CORPORATE DEBT SECURITIES: Bonds rated Aaa by Moody's and AAA by S&P are
of the highest quality, carrying the smallest degree of investment risk. Bonds
rated Aa by Moody's and AA by S&P are also considered very high quality, rating
lower than the best bonds because margins of protection may not be as large or
fluctuation of protective elements may be of greater amplitude.
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS: The Fund may invest in
bank obligations, which may include certificates of deposit, bankers'
acceptances, and other short-term debt obligations. Investments in certificates
of deposit and bankers' acceptances are limited to obligations of (i) banks
having total assets in excess of $1 billion, and (ii) other banks if the
principal amount of such obligation is fully insured by the Federal Deposit
Insurance Corporation ("FDIC") (currently up to $100,000). Investments in
certificates of deposit of savings associations are limited to obligations of
federally or state chartered institutions that have total assets in excess of
$1 billion and whose deposits are insured by the FDIC.
COMMERCIAL PAPER: Commercial paper represents short-term unsecured
promissory notes issued in bearer form by bank holding companies, corporations
and finance companies. Investments in commercial paper are limited to
obligations rated Prime-1 by Moody's or A-1 by S&P or, if not rated by Moody's
or S&P, issued by companies having an outstanding debt issue currently rated
Aaa or Aa by Moody's or AAA or AA by S&P.
REPURCHASE AGREEMENTS: Repurchase agreements are agreements under which
the Fund buys a money market instrument and obtains a simultaneous commitment
from the seller to repurchase the instrument at a specified time and at an
agreed upon yield. The Fund will not enter into a repurchase agreement with
more than seven days to maturity if, as a result, more than 10% of the Fund's
net assets (calculated at market value at the time of each investment) would be
invested in illiquid securities including such repurchase agreements. The Fund
may enter into repurchase agreements with banks or broker/dealers deemed to be
creditworthy by MIMI under guidelines approved by the Board of Trustees. In the
unlikely event of failure of the executing bank or broker/dealer, the Fund
could experience some delay in obtaining direct ownership of the underlying
collateral and might incur a loss if the value of the security should decline,
as well as costs in disposing of the security.
BORROWING: As a matter of fundamental policy, the Fund may borrow from a
bank up to a limit of 10% of its total assets (calculated at market value at
the time of the borrowing), but only for temporary or emergency purposes.
Borrowing may exaggerate the effect on the Fund's net asset value of any
increase or decrease in the value of the Fund's portfolio securities. Money
borrowed will be subject to interest costs (which may include commitment fees
and/or the cost of maintaining minimum average balances).
TAXABLE FIXED INCOME OBLIGATIONS: Under normal market conditions, the Fund
may invest up to 20% of its net assets in taxable fixed income obligations. For
temporary defensive purposes, the Fund may invest without limit in such
securities. Taxable investments of the Fund may consist of obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities,
com-
5
<PAGE> 7
mercial paper, corporate obligations rated Aaa or Aa by Moody's or AAA or AA
by S&P, certificates of deposit or bankers' acceptances or other short-term
obligations of domestic banks or thrifts, or repurchase agreements with banks
or broker/dealers.
OTHER INVESTMENT TECHNIQUES: The Fund may make commitments to purchase
municipal obligations on a "when-issued" or firm commitment basis. The Fund may
also acquire third party puts or stand by commitments to enable the Fund to
improve its portfolio liquidity by providing a ready market for certain
municipal securities at an acceptable price.
ORGANIZATION OF THE FUND
The Fund is organized as a separate portfolio of the Trust, an open-end
management investment company organized as a Massachusetts business trust on
April 22, 1985. The Fund is "non-diversified" as defined under the 1940 Act.
The business and affairs of the Fund are managed under the direction of the
Trustees. Information about the Trustees, as well as the Trust's executive
officers, may be found in the SAI. The Trust has an unlimited number of
authorized shares of beneficial interest. The Trustees have the authority,
without shareholder approval, to classify and reclassify shares of the Fund
into one or more classes. The Trustees have authorized the issuance of two
classes of shares of the Fund, designated as Class A and Class B. Shares of the
Fund entitle their holders to one vote per share (with proportionate voting for
fractional shares). The shares of each class of the Fund represent an interest
in the same portfolio of investments of the Fund. Each class of shares has a
different dividend and distribution policy and bears different Rule
12b-1 distribution fees. Shares of each class have equal rights as to voting,
redemption, dividends and liquidation, but have exclusive voting rights with
respect to their Rule 12b-1 distribution plans.
INVESTMENT MANAGER
The Trust employs MIMI to provide business management, investment
advisory, administrative and accounting services. As of October 10, 1995, MIMI
had approximately $217 million in assets under management. MIMI is a subsidiary
of Mackenzie Financial Corporation, which has been an investment counsel and
mutual fund manager in Toronto, Ontario, Canada for more than 25 years. MIMI's
subsidiary, Ivy Management, Inc., provides investment advice to 13 U.S.
investment portfolios, which as of October 10, 1995 had combined assets of
approximately $1.1 billion.
PORTFOLIO MANAGEMENT: The Fund is managed by a team, with each team
member having specific responsibilities. The following individuals have
responsibilities related to the management of the Fund. Daniel J. Johnedis,
Jr., portfolio manager for the Fund from 1993 to 1995, presently serves in an
advisory capacity to the Fund and as a consultant to MIMI. Mr. Johnedis has
eight years of professional investment experience and is a Chartered Financial
Analyst. Leslie A. Ferris, a Vice President of MIMI and Managing Director -
Fixed Income, has been a portfolio manager for the Fund since 1995. Ms. Ferris
joined MIMI in 1988 and has 13 years of professional investment experience. She
is a Chartered Financial Analyst and holds an MBA degree from the University of
Chicago. Prior to joining MIMI, Ms. Ferris was a portfolio manager at Kemper
Financial Services Inc. from 1982-1988. Michael Borowsky has served as a
portfolio assistant to the Fund since 1994. Michael G. Landry, the President
and a Director of MIMI and the President and a Trustee of the Trust, is the
investment strategist for the Fund. Mr. Landry joined MIMI in 1987 and has 23
years of professional investment experience.
INVESTMENT MANAGEMENT EXPENSES: For management of its investments and
business affairs, the Fund pays MIMI a monthly fee calculated on the basis of
the Fund's average daily net assets at an annual rate of 0.55%.
Under the Fund's management agreement, MIMI pays all expenses incurred by
it in rendering management services to the Fund. The Fund bears its own costs
of operations. See the SAI. If, however, the Fund's total expenses in any
fiscal year exceed the permissible limits that apply to the Fund in any state
in which its shares are then qualified for sale, MIMI will bear the excess
expenses. In addition, MIMI may voluntarily limit the Fund's total operating
expenses. Without voluntary expense reimbursements, the ratio of operating
expenses to average daily net assets for Class A and Class B shares of the Fund
for the fiscal year ended June 30, 1995 was 2.09% and 2.59%, respectively.
The assets received by each class of the Fund for the issue or sale of
its shares and all income, earnings, profits, losses and proceeds therefrom,
subject only to the rights of the creditors, are allocated to, and constitute
the underlying assets of, that class of the Fund. The underlying assets of each
class of the Fund are allocated and are charged with the expenses with respect
to that class of the Fund and with a share of the general expenses of the
Trust. General expenses of the Trust (such as costs of maintaining the Trust's
existence, legal fees, proxy and shareholders meeting costs, etc.) that are not
readily identifiable as belonging to a particular series of the Trust or to a
particular class of a series of the Trust will be allocated among and charged
to the assets of each series on a fair and equitable basis, which may be based
on the relative assets of each series or the nature of the services performed
and relative applicability to each series. Expenses that relate exclusively to
a particular series of the Trust, such as certain registration fees, brokerage
commissions and other portfolio expenses, will be borne directly by that
series.
ADMINISTRATOR
The Trust has entered into an Administrative Services Agreement with
MIMI, pursuant to which MIMI provides various administrative services for the
Fund, including maintenance of registration or qualification of the Fund's
shares under state "Blue Sky" laws, assisting in the preparation of Federal,
state and local income tax returns and preparing financial and other
information for prospectuses, statements of additional information, and
periodic reports to shareholders. In addition, MIMI will assist the Trust's
legal counsel with SEC registration statements, proxies and other required
filings. Under the agreement, the Fund's average daily net assets are subject
to a monthly fee at the annual rate of 0.10%.
FUND ACCOUNTING
The Trust has entered into a Fund Accounting Services Agreement with
MIMI, pursuant to which MIMI provides certain accounting and pricing services
for the Fund. For fund accounting services, the Fund pays MIMI out-of-pocket
expenses as incurred and a monthly fee based upon the Fund's net assets at the
end of the preceding month at the following rates: $1,000 when net assets are
$20 million and under; $1,500 when net assets are over $20 million to $75
million; $4,000 when net assets are over $75 million to $100 million; and
$6,000 when net assets are over $100 million.
TRANSFER AGENT
Mackenzie Ivy Investor Services Corp. ("MIISC"), a wholly owned
subsidiary of MIMI, is the transfer agent and dividend paying agent for the
Fund and provides certain shareholder and shareholder-related services as
required by the Fund. For transfer agency and shareholder services, the Fund
pays MIISC an annual fee of $20.75 per open account and $4.25 for each account
that is closed. In addition, the Fund reimburses MIISC monthly for
out-of-pocket expenses.
DISTRIBUTOR
Mackenzie Ivy Funds Distribution, Inc. ("MIFDI" or the "Distributor"),
a wholly owned subsidiary of MIMI, is the principal underwriter of the Fund's
shares.
6
<PAGE> 8
DIVIDENDS AND TAXES
Dividends and capital gain distributions that you receive from the Fund
are reinvested in additional shares of your class unless you elect to receive
them in cash. If you elect the cash option and the U.S. Postal Service cannot
deliver your checks, your election will be converted to the reinvestment
option. Because of the higher expenses associated with Class B shares, any
dividend on these shares will be lower than on Class A shares.
In order to provide that the Class A and Class B shares of the Fund have
the same net asset value, the Board of Trustees intends normally to declare
daily a distribution to the Fund's Class A shareholders, based on the Fund's
adjusted net assets attributable to its Class A shares at the beginning of the
day, at an annual rate of 0.50%, plus any additional amount needed to equalize
the net asset values of the two classes. The accumulated daily declarations
will be paid monthly to Class A shareholders of the Fund. If a shareholder of
the Fund redeems all of his/her Fund shares at any time prior to payment of a
distribution, all declarations accrued to the date of redemption, including the
date of redemption, are paid in addition to the redemption proceeds.
In addition, the Fund intends to declare and pay monthly on an equal
basis any dividends from net investment income (to the extent not previously
distributed) on both classes of Fund shares. Net investment income generally is
the income from interest earned on the Fund's investments, less expenses
incurred in its operations. Thus, the amount of dividends paid per share may
vary from month to month. The Fund intends to make a final distribution for
each fiscal year of any remaining net investment income and net realized
short-term capital gain, as well as undistributed net long-term capital gain
realized during the year. An additional distribution may be made of net
investment income, net realized short-term capital gain and net realized
long-term capital gain to comply with the calendar year distribution
requirement under the excise tax provisions of Section 4982 the Code.
If, for any year, the total distributions from the Fund exceed earnings
and profits for the Fund, the excess, distributed from the assets of the Fund,
will generally be treated as return of capital. The amount treated as a return
of capital will reduce a shareholder's adjusted basis in his/her shares
(thereby increasing the potential gain or reducing the potential loss on the
sale of the shares) and, to the extent that the amount exceeds this basis, will
be treated as a taxable gain. However, if the Fund has current or accumulated
earnings and profits, so as to characterize all or a portion of such excess as
a dividend for Federal income tax purposes, the distributions, to that extent,
would normally be taxable as ordinary income (unless taxable as a capital gain
dividend or exempt-interest dividend, as described below).
TAXATION: The following discussion is intended for general information
only. An investor should consult with his/her own tax advisor as to the tax
consequences of an investment in the Fund, including the status of
distributions from the Fund under applicable state or local law.
The Fund intends to qualify annually and elect to be treated as a
regulated investment company under the Code. To qualify, the Fund must meet
certain income, distribution and diversification requirements. In any year in
which the Fund qualifies as a regulated investment company and timely
distributes all of its taxable income and substantially all of its net
tax-exempt interest income, the Fund generally will not pay any U.S. Federal
income or excise tax.
Dividends distributed by the Fund that are derived from interest income
exempt from Federal income tax and are designated by the Fund as "exempt
interest dividends" will be exempt from Federal income taxation.
Dividends paid out of the Fund's investment company taxable income
(including dividends, interest and net short-term capital gain) will be taxable
to a shareholder as ordinary income. Because no portion of the Fund's income is
expected to consist of dividends paid by U.S. corporations, no portion of the
dividends paid by the Fund is expected to be eligible for the corporate
dividends-received deduction. Distributions of net capital gain (the excess of
net long-term capital gain over net short-term capital loss), if any,
designated as capital gain dividends are taxable as long-term capital gains,
regardless of how long the shareholder has held the Fund's shares. Dividends
are taxable to shareholders in the same manner whether received in cash or
reinvested in additional Fund shares.
A distribution will be treated as paid on December 31 of the current
calendar year if it is declared by the Fund in October, November or December
with a record date in such a month and paid by the Fund during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year in which the distributions are declared, rather than the
calendar year in which the distributions are received.
Each year the Fund will notify shareholders of the tax status of
dividends and distributions.
Any gain or loss realized by a shareholder upon the sale or other
disposition of shares of the Fund, or upon receipt of a distribution in
complete liquidation of the Fund, generally will be a capital gain or loss
which will be long term or short term, generally depending upon the
shareholder's holding period for the shares.
The Fund may be required to withhold U.S. Federal income tax at the rate
of 31% of all taxable distributions payable to shareholders who fail to provide
their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service
("IRS") that they are subject to backup withholding. Backup withholding is not
an additional tax. Any amounts withheld may be credited against the
shareholder's U.S. Federal income tax liability.
Further information relating to tax consequences is contained in the SAI.
STATE AND LOCAL TAXES: Fund distributions may be subject to state and
local taxes. In certain states, Fund distributions which are derived from
interest on obligations of that state or its municipalities or any political
subdivisions thereof may be exempt from state and local taxes. Fund
distributions which are derived from interest on obligations of the U.S.
Government and certain of its agencies, authorities and instrumentalities also
may be exempt from state and local taxes in certain states. Under Florida law,
shares of the Fund will be exempt from the Florida intangible personal property
tax if, on an annual valuation date, the Fund's portfolio of assets consists
solely of assets, including Florida municipal securities and U.S. Government
obligations, that are exempt from the tax. Shareholders should consult their
own tax advisers regarding the particular tax consequences of an investment in
the Fund.
PERFORMANCE DATA
Performance information is computed separately for the Fund's Class A and
Class B shares in accordance with the formulas described below. Because Class B
shares bear the expense of distribution fees, it is expected that the level of
performance of the Fund's Class B shares will be lower than that of the Fund's
Class A shares.
Average annual total return figures as prescribed by the SEC represent
the average annual percentage change in value of $1,000 invested at the maximum
public offering price (offering price includes applicable sales charge) for
one-, five- and ten-year periods, or portion thereof, to the extent applicable,
through
7
<PAGE> 9
the end of the most recent calendar quarter, assuming reinvestment of
all distributions. The Fund may also furnish total return quotations for other
periods, or based on investments at various sales charge levels or at net asset
value. For such purposes total return equals the total of all income and
capital gains paid to shareholders, assuming reinvestment of all distributions,
plus (or minus) the change in the value of the original investment expressed as
a percentage of the purchase price.
Current yield reflects the income per share earned by the Fund's
portfolio investments, and is calculated by dividing the Fund's net investment
income per share during a recent 30-day period by the maximum public offering
price on the last day of that period and then annualizing the result.
Yield, which is calculated according to a formula prescribed by the
SEC (see the SAI), is not indicative of the dividends or distributions that
were or will be paid to the Fund's shareholders. Dividends or distributions
paid to shareholders are reflected in the current distribution rate, which may
be quoted to shareholders. The current distribution rate is computed by
dividing the total amount of dividends per share paid by the Fund during the 12
months by a current maximum offering price (offering price includes sales
charge). Under certain circumstances, such as when there has been a change in
the amount of dividend payout or a fundamental change in investment policies,
it might be appropriate to annualize the dividends paid during the period when
such policies would be in effect, rather than using the dividends during the
past 12 months. The distribution rate will differ from the current yield
computation because it may include distributions to shareholders from sources
other than dividends and interest, short-term capital gains and net
equalization credits and will be calculated over a different period of time.
Performance figures are based upon past performance and reflect all
recurring charges against Fund income. In the case of Class A shares,
performance figures may assume the payment of the maximum sales charge on the
purchase of shares, which charge would reduce a performance figure. In the case
of Class B shares, performance figures may assume the deduction of any
applicable contingent deferred sales charge imposed on a redemption of shares
held for the period. The investment results of the Fund, like all others, will
fluctuate over time; thus, performance figures should not be considered to
represent what an investment may earn in the future or what the Fund's total
return may be in any future period.
ALTERNATIVE PURCHASE ARRANGEMENTS
You can purchase shares of the Fund at a price equal to the net asset
value per share, plus a sales charge. At your election, this charge may be
imposed either at the time of purchase (see "Initial Sales Charge Alternative -
Class A Shares") or on a contingent deferred basis (see "Contingent Deferred
Sales Charge Alternative - Class B Shares"). If you do not specify on your
Account Application which class of shares you are purchasing, it will be
assumed that you are investing in Class A shares.
CLASS A SHARES: If you elect to purchase Class A shares, you will incur
an initial sales charge unless the amount you purchase is $500,000 or more. If
you purchase $500,000 or more of Class A shares, you will not be subject to an
initial sales charge, but you will incur a contingent deferred sales charge
("CDSC") if you redeem your shares within 24 months of purchase. See
"Contingent Deferred Sales Charge - Class A Shares." Class A shares of the Fund
are subject to ongoing service fees at an annual rate of up to 0.25% of the
Fund's average daily net assets attributable to Class A shares. Certain
purchases of Class A shares qualify for a reduced initial sales charge. See
"Qualifying for a Reduced Sales Charge."
CLASS B SHARES: You will not incur a sales charge when you purchase Class
B shares, but the shares are subject to a contingent deferred sales charge if
you redeem them within five years of purchase. Class B shares are subject to
ongoing service and distribution fees at a combined annual rate of up to 0.75%
of the Fund's average daily net assets attributable to Class B shares. The
ongoing distribution fee will cause these shares to have a higher expense ratio
than that of Class A shares. To the extent that any dividends are paid by the
Fund, these higher expenses will also result in lower dividends than those paid
on Class A shares.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE
The alternative purchase arrangement allows you to choose the most
beneficial way to buy shares given the amount of your purchase, the length of
time you expect to hold your shares and other circumstances. You should
consider whether, during the anticipated life of your investment in the Fund,
the accumulated fees on Class B shares would be less than the initial sales
charge and accumulated fees on Class A shares purchased at the same time, and
to what extent this differential would be offset by the Class A shares '
potentially higher yield. To help you make this determination, the table under
the caption "Expense Data Table" at the beginning of this Prospectus gives
examples of the charges that apply to each class of shares. Class A shares will
normally be more beneficial if you qualify for a reduced sales charge. See
"Qualifying for a Reduced Sales Charge".
Class A shares are not subject to distribution fees, and accordingly, pay
correspondingly higher dividends per share. However, because initial sales
charges are deducted at the time of purchase, you would not have all of your
funds invested initially and, therefore, would own fewer shares. If you do not
qualify for a reduced initial sales charge and expect to maintain your
investment for an extended period of time, you might consider purchasing Class
A shares because the accumulated service and distribution charges on Class B
shares may exceed the initial sales charge and accumulated service charges on
Class A shares during the life of your investment.
Alternatively, you might determine that it would be more advantageous to
purchase Class B shares in order to have all of your funds invested initially,
although remaining subject to a contingent deferred sales charge over a period
of five years, and a distribution fee over a period of eight years.
In the case of Class A shares, the distribution expenses that MIFDI
incurs in connection with the sale of the shares will be paid from the proceeds
of the initial sales charge and the ongoing service fees. In the case of Class
B shares, the expenses will be paid from the proceeds of ongoing service and
distribution fees, as well as the CDSC incurred upon redemption within five
years of purchase. The purpose and function of the Class B shares' CDSC and
ongoing service and distribution fees are the same as those of the Class A
shares' initial sales charge and ongoing service fees. Sales personnel
distributing each Fund's shares may receive different compensation for selling
each class of shares.
HOW TO BUY SHARES
The minimum initial investment for the Fund is $1,000; the minimum
additional investment is $100. All purchases must be made in U.S. dollars.
Complete the Account Application attached to this Prospectus. Indicate whether
you are purchasing Class A or Class B shares. If you do not specify which class
of shares you are purchasing, MIISC will assume you are investing in Class A
shares. The Fund reserves the right to reject for any reason any purchase order
or exchange (see "Exchange Privilege" below).
OPENING AN ACCOUNT
BY CHECK
1. Make your check payable to the Fund. Third party checks will not be
accepted
2. Deliver the completed application and check to your registered
representative or selling broker, or mail it directly to MIISC.
8
<PAGE> 10
3. Our address is:
MACKENZIE IVY INVESTOR SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
4. Our courier address is:
MACKENZIE IVY INVESTOR SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
BY WIRE
1. Deliver the completed Account Application to your registered
representative or selling broker, or mail it directly to MIISC. Before
wiring any funds, please contact MIISC at 1-800-777-6472 to verify your
account number.
2. Instruct your bank to wire funds to:
BARNETT BANK OF PALM BEACH COUNTY
ABA #067008582
FOR DEPOSIT TO
THE IVY AND MACKENZIE FUNDS
A/C #1455031505
NAME OF YOUR ACCOUNT
YOUR IVY OR MACKENZIE ACCOUNT NUMBER
THE IVY OR MACKENZIE FUND YOU ARE BUYING
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may also place an order to
purchase shares through your Registered Securities Dealer.
BUYING ADDITIONAL CLASS A AND CLASS B SHARES
BY CHECK
1. Complete the investment stub attached to your statement or include a note
with your check listing the name of the fund in which you are investing,
the class of shares to purchase, your account number and the name(s) in
which the account is registered.
2. Make your check payable to the Fund.
3. Mail the account information and check to:
MACKENZIE IVY INVESTOR SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
Our courier address is:
MACKENZIE IVY INVESTOR SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
or deliver it to your registered representative or selling broker.
BY WIRE
Instruct your bank to wire funds to:
BARNETT BANK OF PALM BEACH COUNTY
ABA #067008582
FOR DEPOSIT TO
THE IVY AND MACKENZIE FUNDS
A/C #1455031505
NAME OF YOUR ACCOUNT
YOUR IVY OR MACKENZIE ACCOUNT NUMBER
THE IVY OR MACKENZIE FUND YOU ARE BUYING
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may also place an order to
purchase shares through your Registered Securities Dealer.
BY AUTOMATIC INVESTMENT METHOD ("AIM")
1. Complete the "Automatic Investment Method" and "Wire/EFT Information"
sections on the Account Application designating a bank account from which
funds may be drawn. Please note that in order to invest using this
method, your bank must be a member of the Automated Clearing House system
(ACH). The minimum investment under this plan is $50 per month ($25 per
month for retirement plans). Please remember to attach a voided check to
your Account Application.
2. At pre-specified intervals, your bank account will be debited and the
proceeds will be credited to your Ivy or Mackenzie fund account.
HOW YOUR PURCHASE PRICE IS DETERMINED
Your purchase price for Class A shares of the Fund is the net asset value
per share plus a sales charge, which may be reduced or eliminated in certain
circumstances. The purchase price for Class A shares is known as the public
offering price. Your purchase price for Class B shares of the Fund is the net
asset value per share.
Your purchase of shares will be made at the next determined price after
the purchase order is received. The price is effective for orders received by
MIISC or by your Registered Securities Dealer prior to the time of the
determination of the net asset value. Any orders received after the time of the
determination of the net asset value will be entered at the next calculated
price.
Orders placed with a securities dealer before the time of determination
of the net asset value and transmitted through the facilities of the National
Securities Clearing Corporation by 7:00 p.m., EST, on the same day are
confirmed at that day's price. Any loss resulting from the dealer's failure to
submit an order by the deadline will be borne by that dealer.
You will receive an account statement after any purchase, exchange or
full liquidation. Statements related to reinvestment of distributions,
automatic investment plans (see the SAI for further explanation) and/or
systematic withdrawal plans will be sent quarterly.
HOW THE FUND VALUES ITS SHARES
The Net Asset Value ("NAV") per share is the value of one Fund share. The
NAV is determined in the following manner: the total of all Fund liabilities,
including accrued expenses and taxes and any necessary reserves, is deducted
from the aggregate value of all Fund assets, and the difference is divided by
the number of shares outstanding at the time, adjusted to the nearest cent. The
NAV per share is determined once every business day (as of the close of regular
trading on each day the New York Stock Exchange is open, normally 4:00 p.m.
EST) (see the SAI under "Net Asset Value" for a detailed description of how the
NAV is determined).
The Fund offers two classes of shares in this Prospectus: Class A shares,
which are subject to an initial sales charge; and Class B shares, which are
subject to a contingent deferred sales charge. IF YOU DO NOT SPECIFY A
PARTICULAR CLASS OF
9
<PAGE> 11
SHARES, IT WILL BE ASSUMED THAT YOU ARE PURCHASING CLASS A SHARES AND AN
INITIAL SALES CHARGE WILL BE ASSESSED.
INITIAL SALES CHARGE ALTERNATIVE - CLASS A SHARES
Class A shares may be purchased at a public offering price equal to their
NAV per share plus a sales charge, as set forth below:
<TABLE>
<CAPTION>
SALES CHARGE
---------------------------------------------
AS A AS A PORTION OF
PERCENTAGE PERCENTAGE PUBLIC OFFERING
OF PUBLIC OF NET PRICE
OFFERING AMOUNT RETAINED
AMOUNT INVESTED PRICE INVESTED BY DEALER
- --------------- ------------ -------- ---------
<S> <C> <C> <C>
Less than $25,000................................... 3.00% 3.09% 2.50%
$25,000 but less than $250,000...................... 2.50% 2.56% 2.00%
$250,000 but less than $500,000..................... 2.00% 2.04% 1.65%
$500,000 and over*.................................. 0.00% 0.00% 0.00%
</TABLE>
* A contingent deferred sales charge may apply to the redemption of Class A
shares that were purchased on or after January 26, 1994 without an initial
sales charge. See "Contingent Deferred Sales Charge--Class A Shares."
Sales charges are not applied to any dividends which are reinvested in
additional shares of the Fund.
MIFDI may, at the time of any purchase of Class A shares, pay out of
MIFDI's own resources commissions to dealers that provided distribution
assistance in connection with the purchase. For purchases over $500,000, the
commission would be computed at 0.75% of the first $3,000,000 invested; 0.50%
of the next $2,000,000 invested; and 0.25% of the amount invested in excess of
$5,000,000. An investor may be charged a transaction fee for Class A shares
purchased or redeemed at net asset value through a broker or agent other than
MIFDI.
MIFDI compensates participating brokers who sell Class A shares through
the initial sales charge. MIFDI retains that portion of the initial sales
charge that is not reallowed to the dealers, which it may use to distribute the
Fund's Class A shares. MIFDI may, from time to time, reallow the entire sales
charge or a portion of the sales charge greater than that which will normally
be reallowed to selected dealers who sell or are expected to sell significant
amounts of shares of the Fund during specified time periods. During periods
when 90% or more of the sales commission is reallowed, such dealers may be
deemed to be underwriters, as that term is defined in the Securities Act of
1933. Pursuant to separate distribution plans for the Fund's Class A and Class
B shares, MIFDI bears various promotional and sales-related expenses, including
the cost of printing and mailing prospectuses to persons other than
shareholders. Pursuant to the Fund's distribution plans applicable to its Class
A and Class B shares, MIFDI currently pays a continuing service fee to
qualified dealers at an annual rate of 0.25% of qualified investments.
MIFDI may from time to time pay a bonus or other incentive to dealers
(other than MIFDI) that employ a registered representative who sells a minimum
dollar amount of the shares of the Fund and/or other funds distributed by MIFDI
during a specified period of time. This bonus or other incentive may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and members of their
families to places within or without the United States or other bonuses such as
gift certificates or the cash equivalent of such bonus or incentive.
CONTINGENT DEFERRED SALES CHARGE - CLASS A SHARES
Purchases of $500,000 or more of Class A shares will be made at net asset
value with no initial sales charge, but if the shares are redeemed within 24
months after the end of the calendar quarter in which the purchase was made
(the contingent deferred sales charge period), a contingent deferred sales
charge of 0.75% will be imposed.
In order to recover commissions paid to dealers on NAV Transfers (as
defined in "Purchase of Class A Shares at Net Asset Value"), Class A shares of
the Fund are subject to a contingent deferred sales charge of 0.75% for certain
redemptions within 24 months after the date of purchase.
The charge will be assessed on an amount equal to the lesser of the
current market value or the original purchase cost of the Class A shares
redeemed. Accordingly, no contingent deferred sales charge will be imposed on
increases in account value above the initial purchase price, including any
dividends which have been reinvested in additional Class A shares.
In determining whether a contingent deferred sales charge applies to a
redemption, the calculation will be determined in a manner that results in the
lowest possible rate being charged. Therefore, it will be assumed that the
redemption is first made from any shares in your account not subject to the
contingent deferred sales charge. The contingent deferred sales charge is
waived in certain circumstances. See the discussion below under the caption
"Waiver of Contingent Deferred Sales Charge."
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The contingent deferred sales
charge is waived for any partial or complete redemption following the death or
disability (as defined in Section 72(m)(7) of the Code) of a shareholder from
an account in which the deceased or disabled is named, provided that the
redemption is requested within one year of the death or disability. MIFDI may
require documentation prior to waiver of the contingent deferred sales charge.
Class A shareholders may exchange their Class A shares subject to a
contingent deferred sales charge ("outstanding Class A shares") for Class A
shares of another Ivy or Mackenzie fund ("new Class A shares") on the basis of
the relative net asset value per Class A share, without the payment of any
contingent deferred sales charge that otherwise would be due upon the
redemption of the outstanding Class A shares. The original contingent deferred
sales charge rate that would have been charged if the outstanding Class A
shares were redeemed will carry over to the Class A shares received in the
exchange, and will be charged accordingly at the time of redemption.
QUALIFYING FOR A REDUCED SALES CHARGE
RIGHTS OF ACCUMULATION: Rights of Accumulation ("ROA") is calculated by
determining the current market value of all Class A shares in all Ivy or
Mackenzie fund accounts (except Ivy Money Market Fund) owned by you, your
spouse and your children under 21 years of age. ROA is also applicable to
accounts under a trustee or other single fiduciary (including retirement
accounts qualified under Section 401 of the Code). The current market value of
each of your accounts as described above is added together and then added to
your current purchase amount. If the combined total is equal to or greater than
a breakpoint amount for the Fund, then you qualify for the reduced sales
charge. To reduce or eliminate the sales charge, you must complete Section 4B
of the Account Application. For additional information, shareholders should
call 1-800-777-6472.
LETTER OF INTENT: A Letter of Intent ("LOI") is a non-binding agreement
that states your intention to invest in additional Class A shares, within a
thirteen month period after the initial purchase, an amount equal to a
breakpoint amount for the Fund. The LOI may be backdated up to 90 days. To sign
an LOI, complete Section 4B of the Account Application.
Should the LOI not be fulfilled within the thirteen month period, your
account will be debited for the difference between the full sales charge that
applies
10
<PAGE> 12
and the reduced sales charge actually paid on purchases placed under the
terms of the LOI. For additional information, shareholders should call
1-800-777-6472.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE
An investor who was a shareholder of any Ivy Fund on December 31, 1991 or
a shareholder of American Investors Income Fund, Inc. or American Investors
Growth Fund, Inc. on October 31, 1988 and who became a shareholder of Ivy Bond
Fund (formerly Mackenzie Fixed Income Trust) or Ivy Growth Fund as a result of
the respective reorganizations of the funds will be exempt from sales charges,
including any contingent deferred sales charge, on purchases of Class A shares
of any Ivy or Mackenzie fund. This privilege is also available to immediate
family members of a shareholder (i.e., the shareholder's children, the
shareholder's spouse and the children of the shareholder's spouse). This
no-load privilege terminates for the investor if the investor redeems all
shares owned. Shareholders and their relatives as described above should call
1-800-235-3322 for further information on additional purchases or to inquire
about their account.
Officers and Trustees of the Trust (and their relatives), MIMI, Ivy
Management, Inc. (which is a wholly owned subsidiary of MIMI) and Mackenzie
Financial Corporation (of which MIMI is a subsidiary) and their officers,
directors, employees and retired employees (and their relatives) may buy Class
A shares of the Fund without an initial sales charge or a contingent deferred
sales charge.
Directors, officers, partners, registered representatives, employees (and
their relatives) of dealers having a sales agreement with MIFDI may buy Class A
shares of the Fund without an initial sales charge or a contingent deferred
sales charge. In addition, certain investment advisers and financial planners
who charge a management, consulting or other fee for their services and who
place trades for their own accounts and the accounts of their clients may
purchase Class A shares of the Fund without an initial sales charge or a
contingent deferred sales charge, provided such purchases are placed through a
broker or agent who maintains an omnibus account with the Fund. Also, clients
of these advisers and planners may make purchases under the same conditions if
the purchases are through the master account of such adviser or planner on the
books of such broker or agent.
Class A shares of the Fund can also be purchased without an initial sales
charge, but subject to a contingent deferred sales charge of 0.75% during the
first 24 months by trust companies, bank trust departments, credit unions,
savings and loans, and other similar organizations in their fiduciary capacity
or for their own accounts, subject to any minimum requirements set by MIFDI.
Currently, these criteria require that the amount invested or to be invested
during the subsequent 13-month period totals at least $250,000. MIFDI may, at
the time of any such purchase, pay out of MIFDI's own resources commissions to
dealers which provided distribution assistance in connection with the purchase.
Commissions would be computed at 0.75% of the first $3,000,000 invested; 0.50%
of the next $2,000,000 invested; and 0.25% of the amount invested in excess of
$5,000,000.
Class A shares of the Fund can also be purchased without an initial sales
charge, but subject to a contingent deferred sales charge of 0.75% during the
first 24 months by any state, county, or city, or any instrumentality,
department, authority or agency of these entities, which is prohibited by
applicable investment laws from paying a sales charge or commission when
purchasing shares of any registered management investment company (an "eligible
governmental authority"). MIFDI may, at the time of such purchase, pay out of
MIFDI's own resources commissions to dealers which provided distribution
assistance in connection with the purchase. Commissions would be computed at
0.75% of the first $3,000,000 invested; 0.50% of the next $2,000,000 invested;
and 0.25% of the amount invested in excess of $5,000,000.
Class A shares of the Fund may also be purchased without a sales charge
in connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.
The Fund may, from time to time, waive the initial sales charge on its
Class A shares sold to clients of various broker/dealers with which MIFDI has a
selling relationship. This privilege will apply only to Class A shares of the
Fund that are purchased using all or a portion of the proceeds obtained by such
clients through redemptions of shares (on which a commission has been paid) of
an investment company (other than the Trust or Ivy Fund), unit investment trust
or limited partnership ("NAV Transfers"). Some dealers may elect not to
participate in this program. Those dealers that do elect to participate in the
program must complete certain forms required by MIFDI. The normal service fee,
as described in the "Initial Sales Charge Alternative - Class A Shares" and
"Contingent Deferred Sales Charge Alternative - Class B Shares" sections of
this Prospectus, will also be paid to dealers in connection with these
purchases. Additional information on reductions or waivers may be obtained from
MIFDI at the address listed on the cover of this Prospectus.
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE - CLASS B SHARES
Class B shares are offered at net asset value without a front-end sales
charge. However, Class B shares redeemed within five years of purchase will be
subject to a contingent deferred sales charge at the rates set forth below.
This charge will be assessed on an amount equal to the lesser of the current
market value or the original cost of the shares being redeemed. Accordingly,
you will not be assessed a contingent deferred sales charge on increases in
account value above the initial purchase price, including shares derived from
the reinvestment of distributions. In determining whether a contingent deferred
sales charge applies to a redemption, the calculation will be determined in a
manner that results in the lowest possible rate being charged. It will be
assumed that your redemption comes first from shares you have held beyond the
contingent deferred sales charge redemption period or those you acquire through
reinvestment of distributions, and next from the shares you have held the
longest.
Proceeds from the contingent deferred sales charge are paid to MIFDI.
MIFDI uses them, in whole or in part, to defray its expenses related to
providing the Fund with distribution services in connection with the sale of
Class B shares, such as compensating selected dealers and agents for selling
these shares. The combination of the contingent deferred sales charge and the
service and distribution fees makes it possible for the Fund to sell Class B
shares without deducting a sales charge at the time of purchase.
The amount of the contingent deferred sales charge, if any, will vary
depending upon the number of years from the time of your purchase of Class B
shares until the time you redeem them. Solely for purposes of determining this
holding period, all payments during the quarter will be aggregated and deemed
to have been made on the last day of the quarter.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
- ------------------- -----------------
<S> <C>
First.............................................................. 3%
Second............................................................. 2 1/2%
Third.............................................................. 2%
Fourth............................................................. 1 1/2%
Fifth.............................................................. 1%
Sixth and thereafter............................................... 0%
</TABLE>
MIMI, on behalf of MIFDI, currently intends to pay dealers a sales
commission of 2.50% of the sale price of Class B shares of the Fund sold by
such dealers, subject to future amendment or termination. MIFDI will retain
0.50%
11
<PAGE> 13
of the continuing 0.75% service/distribution fee for the Fund assessed to
Class B shareholders and will receive the entire amount of the contingent
deferred sales charge paid by shareholders on the redemption of Class B shares
to finance the sales commission plus related marketing expenses.
CONVERSION OF CLASS B SHARES: Your Class B shares and an appropriate
portion of both reinvested distributions on those shares will be converted into
Class A shares automatically no later than the month following eight years
after the shares were purchased, resulting in the discontinuance of annual
distribution fees. If you exchanged Class B shares from another Ivy or
Mackenzie fund into Class B shares of the Fund, the calculation will be based
on the time the shares in the original fund were purchased.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The contingent deferred sales
charge is waived for any partial or complete redemption following the death or
disability (as defined in Section 72(m)(7) of the Code) of a shareholder from
an account in which the deceased or disabled is named, provided that the
redemption is requested within one year of death or disability. MIFDI may
require documentation prior to waiver of the contingent deferred sales charge.
ARRANGEMENTS WITH BROKER/DEALERS AND OTHERS: MIFDI may, at its own
expense, pay concessions in addition to those described above to dealers which
satisfy certain criteria established from time to time by MIFDI. These
conditions relate to increasing sales of shares of the Fund over specified
periods and to certain other factors. These payments may, depending on the
dealer's satisfaction of the required conditions, be periodic and may be up to
(i) 0.25% of the value of Fund shares sold by such dealer during a particular
period, and (ii) 0.10% of the value of Fund shares held by the dealer's
customers for more than one year, calculated on an annual basis.
HOW TO REDEEM SHARES
You may redeem your Fund shares through your registered securities
representative, by mail, by telephone or by Federal Funds wire. A contingent
deferred sales charge may apply to certain Class A share redemptions, and to
Class B share redemptions prior to conversion. All redemptions are made at the
net asset value next determined after a redemption request has been received in
good order. Requests for redemptions must be received by 4:00 p.m. EST to be
processed at the net asset value for that day. Any redemption request in good
order that is received after 4:00 p.m. will be processed at the price
determined on the following business day. IF SHARES TO BE REDEEMED WERE
PURCHASED BY CHECK, PAYMENT OF THE REDEMPTION MAY BE DELAYED UNTIL THE CHECK
HAS CLEARED OR FOR UP TO 15 DAYS AFTER THE DATE OF PURCHASE, WHICHEVER IS LESS.
If you own shares of more than one class of the Fund, the Fund will redeem
Class A shares first; any shares subject to a contingent deferred sales charge
will be redeemed last unless you specifically elect otherwise.
When shares are redeemed, the Fund generally sends you payment on the
next business day. Under unusual circumstances, the Fund may suspend
redemptions or postpone payment to the extent permitted by Federal securities
laws. The proceeds of the redemption may be more or less than the purchase
price of your shares, depending upon, among other factors, the market value of
the Fund's securities at the time of the redemption. If the redemption is for
over $50,000, or the proceeds are to be sent to an address other than the
address of record, or an address change has occurred in the last 30 days, it
must be requested in writing with a signature guarantee. See "Signature
Guarantees" below.
If you are not certain of the requirements for a redemption, please
contact MIISC at 1-800-777-6472.
THROUGH YOUR REGISTERED SECURITIES DEALER: The Dealer is responsible for
promptly transmitting redemption orders. Redemptions requested by dealers will
be made at the net asset value (less any applicable contingent deferred sales
charge) determined at the close of regular trading (4:00 p.m. EST) on the day
that a redemption request is received in good order by MIISC.
BY MAIL: Requests for redemption in writing are considered to be in
"proper or good order" if they contain the following:
- Any outstanding certificate(s) for shares being redeemed.
- A letter of instruction, including the fund name, the account number,
the account name(s), the address and the dollar amount or number of
shares to be redeemed.
- Signatures of all registered owners whose names appear on the
account.
- Any required signature guarantees.
- Other supporting legal documentation, if required (in the case of
estates, trusts, guardianships, corporations or other representative
capacities).
The dollar amount or number of shares indicated for redemption must not
exceed the available shares or net asset value of your account at the next
determined prices. If your request exceeds these limits, then the trade will be
rejected in its entirety.
Mail your request to:
MACKENZIE IVY INVESTOR SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
Our courier address is:
MACKENZIE IVY INVESTOR SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
BY TELEPHONE: Individual and joint accounts may redeem up to $50,000 per
day over the telephone by contacting MIISC at 1-800-777-6472. In times of
unusual economic or market changes, the telephone redemption privilege may be
difficult to implement. If you are unable to execute your transaction (for
example, during such times), you may want to consider placing the order in
writing and sending it by mail or overnight courier.
Checks will be made payable to the current account registration and sent
to the address of record. If there has been a change of address in the last 30
days, please use the instructions for redemption requests by mail described
above. A signature guarantee would be required.
Requests for telephone redemptions will be accepted from the registered
owner of the account, the designated registered representative or his/her
assistant.
Shares held in certificate form cannot be redeemed by telephone.
If Section 6E of the Account Application is not completed, telephone
redemption privileges will be provided automatically. Although telephone
redemptions may be a convenient feature, you should realize that you may be
giving up a measure of security that you may otherwise have if you terminated
the privilege and redeemed your shares in writing. If you do not wish to make
telephone redemptions or permit your registered representative or his/her
assistant to do so on your behalf, you must notify MIISC in writing.
12
<PAGE> 14
The Fund employs reasonable procedures that require personal
identification prior to acting on redemption instructions communicated by
telephone to confirm that such instructions are genuine. In the absence of such
procedures, the Fund may be liable for any losses due to unauthorized or
fraudulent telephone instructions.
CHECK WRITING: Check writing is available on Class A shares of the Fund.
Checks must be written for a minimum of $500. You may sign up for this option
by completing Section 8--Check Writing Enrollment on the last page of the new
account application. If the Class A shares to be redeemed have been purchased
by check, availability of the shares for redemption by check may be delayed
until your check clears or for up to 15 calendar days after the date of
purchase, whichever is less.
In order to qualify for check writing, Fund shareholders must maintain a
minimum average balance of $1,000. Class A shares must be unissued (held at the
Fund) for any account requesting check writing privileges.
Checks can be reordered by calling MIISC at 1-800-777-6472. Checking
activity is reported on your statement, and cancelled checks are returned to
you each month. There is no limitation on the number of checks a shareholder
may write.
Checks written on the Fund are redemptions of shares and considered
taxable events by the IRS. As such, any capital gain realized must be reported
on your income tax return.
When a check is presented for payment, the Fund redeems a sufficient
number of Class A shares to cover the amount of the check. Checks written on
accounts with insufficient shares will be returned to the payee marked
"non-sufficient funds." There is a nominal charge for each supply of checks,
copies of cancelled checks, stop payment orders, checks drawn for amounts less
than the Fund minimum (see above) and checks returned for "non-sufficient
funds." To pay for these charges, the Fund automatically redeems an appropriate
number of the shareholder's Class A shares after the charges are incurred.
You may not close your Fund account by writing a check because any earned
dividends will remain in your account. Check writing is not available for
accounts in Class B of the Fund. The Fund reserves the right to change, modify
or terminate the check writing service at any time upon notification mailed to
the address of record of the shareholder(s).
BY FEDERAL FUNDS WIRE: For shareholders who established this feature at
the time they opened their new account, telephone instructions will be accepted
for redemption amounts up to $50,000 ($1,000 minimum) and proceeds will be
wired on the next business day to a pre-designated bank account.
In order to add this feature to an existing account or change existing
bank account information, please submit a letter of instructions including your
bank information to MIISC at the address provided above. The letter must be
signed by all registered owners, and their signatures must be guaranteed.
Your account will be charged a $10 fee each time redemption proceeds are
wired to your bank.
Neither MIISC nor the Fund can be responsible for the efficiency of the
Federal Funds wire system or the shareholder's bank.
MINIMUM ACCOUNT BALANCE REQUIREMENTS
Due to the high cost of maintaining small accounts and subject to state
law requirements, the Fund may redeem the accounts of shareholders who have
maintained an investment, including sales charges paid, of less than $1,000 for
more than 12 months. No redemption will be made unless the shareholder has been
given at least 60 days notice of the Fund's intention to redeem the shares. No
redemption will be made if a shareholder's account falls below the minimum due
to a reduction in the value of the Fund's portfolio securities. SIGNATURE
GUARANTEES
For your protection, and to prevent fraudulent redemptions, we require a
signature guarantee in order to accommodate the following requests:
- Redemption requests over $50,000.
- Requests for redemption proceeds to be sent to someone other than
the registered shareholder.
- Requests for redemption proceeds to be sent to an address other than
the address of record.
- Registration transfer requests.
- Requests for redemption proceeds to be wired to your bank account
(if this option was not selected on your original application, or
if you are changing the bank wire information).
A signature guarantee may be obtained only from an eligible guarantor
institution. An eligible guarantor institution includes banks, brokers,
dealers, municipal securities dealers, government securities dealers,
government securities brokers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
The signature guarantee must not be qualified in any way. Notarizations from
notary publics are not the same as signature guarantees, and are not accepted.
Circumstances other than those described above may require a signature
guarantee. Please contact MIISC at 1-800-777-6472 for more information.
CHOOSING A DISTRIBUTION OPTION
You have the option of selecting the dividend and capital gain
distribution option that best suits your needs:
1. AUTOMATIC REINVESTMENT OPTION - Both dividends and capital gains are
automatically reinvested at net asset value in additional shares of the same
class of the Fund unless you specify one of the other options.
2. INVESTMENT IN ANOTHER IVY OR MACKENZIE FUND - Both divi- dends and capital
gains are automatically invested at net asset value in an- other Ivy or
Mackenzie fund of the same class.
3. DIVIDENDS IN CASH/CAPITAL GAINS REINVESTED - Dividends will be paid in cash.
Capital gains will be reinvested at net asset value in additional shares of
the same class of the Fund or another Ivy or Mackenzie fund of the same
class.
4. DIVIDENDS AND CAPITAL GAINS IN CASH - Both dividends and capital gains will
be paid in cash.
If you wish to have your cash distributions deposited directly to your
bank account via electronic funds transfer, or if you wish to change your
distribution option, please contact MIISC at 1-800-777-6472.
If you wish to have your cash distributions go to an address other than
the address of record, a signature guarantee is required.
13
<PAGE> 15
TAX IDENTIFICATION NUMBER
In general, to avoid being subject to a 31% Federal backup withholding
tax on dividends, capital gain distributions and redemption proceeds, you must
furnish the Fund with your certified tax identification number ("TIN") and
certify that you are not subject to backup withholding due to prior
under-reporting of interest and dividends to the IRS. If you fail to provide a
certified TIN, or such other tax-related certifications as the Fund may
require, within 30 days of opening your new account, the Fund reserves the
right to involuntarily redeem your account and send the proceeds to the address
of record.
You can avoid the above withholding and/or redemption by correctly
furnishing your TIN and making certain certifications in Section 2 of the
Account Application at the time you open your new account, unless the IRS
requires that backup withholding be applied to your account.
Certain payees, such as corporations, generally are exempt from backup
withholding. Please complete IRS Form W-9 with the Account Application to claim
the exemption. If the registration is for a UGMA/UTMA account, please provide
the social security number of the minor. Non-U.S. investors who do not have a
TIN must provide, with the new Account Application, a completed IRS Form W-8.
CERTIFICATES
In order to facilitate transfers, exchanges and redemptions, most
shareholders elect not to receive certificates. Should you wish to have a
certificate issued, please contact MIISC at 1-800-777-6472 and request that one
be sent to you. Please note that if you were to lose your certificate, you
would incur an expense to replace it.
Certificates for shares valued up to $50,000 will be issued to the
current registration and mailed to the address of record. Should you wish to
have your certificates mailed to a different address, or registered differently
from the current registration, you must provide a letter of instruction, signed
by all registered owners with signature guarantee. The letter of instruction
would then be mailed to MACKENZIE IVY INVESTOR SERVICES CORP., P.O. BOX 3022,
BOCA RATON, FL 33431-0922.
EXCHANGE PRIVILEGE
Shareholders of the Fund have an exchange privilege with other Ivy and
Mackenzie funds. Class A shareholders may exchange their outstanding Class A
shares for Class A shares of another Ivy or Mackenzie fund on the basis of the
net asset value per Class A share, plus an amount equal to the difference
between the sales charge previously paid on the outstanding Class A shares and
the sales charge payable at the time of the exchange on the new Class A shares.
Incremental sales charges are waived for outstanding Class A shares that have
been invested for 12 months or longer.
Class B shareholders may exchange their Class B shares for Class B shares
of another Ivy or Mackenzie fund on the basis of the net asset value per Class
B share, without the payment of any contingent deferred sales charge that would
otherwise be due upon the redemption of Class B shares. Class B shareholders
who exercise the exchange privilege would continue to be subject to the Fund's
contingent deferred sales charge schedule (or period) following an exchange if
such schedule is higher (or longer) than the contingent deferred sales charge
for the new Class B shares.
Shares resulting from the reinvestment of distributions will not be
charged an initial sales charge or a contingent deferred sales charge when
exchanged into another Ivy or Mackenzie fund.
Exchanges are considered to be taxable events, and may result in a
capital gain or a capital loss for tax purposes. Prior to executing an
exchange, you should obtain and read the prospectus and consider the investment
objective of the fund to be purchased. Shares must be unissued in order to
execute an exchange. Exchanges are available only in states where they can be
legally made. This privilege is not intended to provide shareholders a means by
which to speculate on short-term movements in the market. Exchanges are
accepted only if the registrations of the two accounts are identical. Amounts
to be exchanged must meet minimum investment requirements for the Ivy or
Mackenzie fund into which the exchange is made.
With respect to Fund shares subject to a contingent deferred sales
charge, if less than all of an investment is exchanged out of the Fund, the
shares exchanged will reflect, pro rata, the cost, capital appreciation and/or
reinvestment of distributions of the original investment as well as the
original purchase date, for purposes of calculating any contingent deferred
sales charge for future redemptions of the exchanged shares.
An investor who was a shareholder of American Investors Income Fund, Inc.
or American Investors Growth Fund, Inc. prior to October 31, 1988, or a
shareholder of any Ivy Fund prior to December 31, 1991, who became a
shareholder of the Fund as a result of a reorganization or merger between the
Funds may exchange between funds without paying a sales charge. An investor who
was a shareholder of American Investors Income Fund, Inc. or American Investors
Growth Fund, Inc. on or after October 31, 1988 who became a shareholder of the
Fund as a result of the reorganization between the Funds will receive credit
toward any applicable sales charge imposed by any Ivy or Mackenzie fund into
which an exchange is made.
In calculating the sales charge assessed on an exchange, shareholders
will be allowed to use the Rights of Accumulation privilege.
EXCHANGES BY TELEPHONE: When you fill out the application for your
purchase of Fund shares, if Section 6E of the new Account Application is not
completed, telephone exchange privileges will be provided automatically.
Although telephone exchanges may be a convenient feature, you should realize
that you may be giving up a measure of security that you may otherwise have if
you terminated the privilege and exchanged your shares in writing. If you do
not wish to make telephone exchanges or permit your registered representative
or his/ her assistant to do so on your behalf, you must notify MIISC in
writing.
In order to execute an exchange, please contact MIISC at 1-800-777-6472.
Have the account number of your current fund and the exact name in which it is
registered available to give to the telephone representative.
The Fund employs reasonable procedures that require personal
identification prior to acting on exchange instructions communicated by
telephone to confirm that such instructions are genuine. In the absence of such
procedures, the Fund may be liable for any losses due to unauthorized or
fraudulent telephone instructions.
EXCHANGES IN WRITING: In a letter, request an exchange and provide the
following information:
- The name and class of the fund whose shares you currently own.
- Your account number
- The name(s) in which the account is registered.
- The name of the fund in which you wish your exchange to be invested.
14
<PAGE> 16
- The number of shares, all shares or the dollar amount you wish to
exchange.
The request must be signed by all registered owners.
Mail the request and information to:
MACKENZIE IVY INVESTOR SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
REINVESTMENT PRIVILEGE
Investors who have redeemed Class A shares of the Fund have an unlimited
privilege of reinvesting all or a part of the proceeds of the redemption back
into Class A shares of the Fund at net asset value (without a sales charge)
within 24 months after the date of redemption. IN ORDER TO REINVEST WITHOUT A
SALES CHARGE, SHAREHOLDERS OR THEIR BROKERS MUST INFORM MIISC THAT THEY ARE
EXERCISING THE REINVESTMENT PRIVILEGE AT THE TIME OF REINVESTMENT. The tax
status of a gain realized on a redemption generally will not be affected by the
exercise of the reinvestment privilege, but a loss realized on a redemption
generally may be disallowed by the IRS if the reinvestment privilege is
exercised within 30 days after the redemption. In addition, upon a
reinvestment, the shareholder may not be permitted to take into account sales
charges incurred on the original purchase of shares in computing their taxable
gain or loss.
SYSTEMATIC WITHDRAWAL PLAN
You may elect the Systematic Withdrawal Plan at any time by completing
the Account Application, which is attached to this Prospectus. You can also
obtain this application by contacting your registered representative or MIISC
at 1-800-777-6472. To be eligible, you must have at least $5,000 in your
account. Payments (minimum distribution amount--$50) from your account can be
made monthly, quarterly, semi-annually, annually or on a selected monthly
basis, to yourself or any other designated payee. You may elect to have your
systematic withdrawal paid directly to your bank account via electronic funds
transfer ("EFT"). Share certificates must be unissued (held by the Fund) while
the Systematic Withdrawal Plan is in effect. A Systematic Withdrawal Plan may
not be established if you are currently participating in the Automatic
Investment Method. For more information, please contact MIISC at
1-800-777-6472.
If payments you receive through the Systematic Withdrawal Plan exceed the
dividends and capital appreciation of your account, you will be reducing the
value of your account. Additional investments made by shareholders
participating in the Systematic Withdrawal Plan must equal at least $1,000
while the plan is in effect. However, it may not be advantageous to purchase
additional Class A or Class B shares when you have a Systematic Withdrawal
Plan, because you may be subject to an initial sales charge on your purchase of
Class A shares or to a contingent deferred sales charge imposed on your
redemptions of Class B shares. In addition, redemptions are taxable events.
Amounts paid to you through the Systematic Withdrawal Plan are derived
from the redemption of shares in your account. Any applicable contingent
deferred sales charge will be assessed upon redemption. A contingent deferred
sales charge will not be assessed on withdrawals not exceeding 12% annually of
the initial account balance when the Systematic Withdrawal Plan was started.
Should you wish at any time to add a Systematic Withdrawal Plan to an
existing account or change payee instructions, you will need to submit a
written request, signed by all registered owners, with signatures guaranteed.
If the U.S. Postal Service cannot deliver your checks, or if deposits to a
bank account are returned for any reason, your redemptions will be
discontinued.
AUTOMATIC INVESTMENT METHOD
You may authorize an investment to be automatically drawn each month from
your bank for investment in Fund shares under the "Automatic Investment Method"
and "Fed Wire/EFT" sections of the Account Application. There is no charge to
you for this program.
You may terminate or suspend your Automatic Investment Method by
telephone at any time by contacting MIISC at 1-800-777-6472.
If you have investments being withdrawn from a bank account and we are
notified that the account has been closed, your Automatic Investment Method
will be discontinued.
CONSOLIDATED ACCOUNT STATEMENTS
Shareholders with two or more Ivy or Mackenzie fund accounts will receive
a single quarterly account statement, unless otherwise specified. This feature
consolidates the activity for each account onto one statement. Requests for
quarterly consolidated statements for all other accounts must be submitted in
writing and must be signed by all registered owners.
SHAREHOLDER INQUIRIES
Inquiries regarding the Fund should be directed to MIISC at
1-800-777-6472.
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ACCOUNT APPLICATION
MACKENZIE FLORIDA LIMITED TERM MUNICIPAL FUND
CLASS A AND CLASS B SHARES
Please mail applications and checks to: Mackenzie Ivy Investor Services Corp.,
P.O. Box 3022, Boca Raton, FL 33431-0922.
(This application should not be used for retirement accounts for
which Ivy is custodian.)
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FUND
USE
ONLY ______________________________________________ _________________ _______________ ________________
Account Number Dealer # Branch # Rep. I.D #
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REGISTRATION--1
[ ] Individual ______________________________________________________________________________________
[ ] Joint Tenant Owner, Custodian or Trustee
[ ] Estate ______________________________________________________________________________________
[ ] UGMA/UTMA Co-owner or Minor
[ ] Corporation ______________________________________________________________________________________
[ ] Partnership Minor's State of Residence
[ ] Sole Proprietor ______________________________________________________________________________________
[ ] Trust Street
________________
Date of Trust ______________________________________________________________________________________
[ ] Other __________ City State Zip
___________________
_________________________________________ ____________________________________
Phone Number -- Day Phone Number -- Evening
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TAX ID#--2 ________________________________ or ______________________________________ Citizenship [ ] U.S. [ ] Other _____________
Social Security Number Tax Identification Number
Under penalties of perjury, I certify by signing in Section 9 below that: (1) the number shown in this section is my
correct taxpayer identification number (TIN), and (2) I am not subject to backup withholding because: (a) I have not
been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (b) the IRS has notified me that I am no longer subject to backup
withholding. (Cross out item (2) if you have been notified by the IRS that you are currently subject to backup
withholding because of under reporting interest or dividends on your tax return.) Please see the "Tax Identification
Number" section of the Prospectus for additional information on completing this section.
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DEALER
INFORMATION--3
The undersigned ("Dealer") agrees to all applicable provisions in this Application, guarantees the signature and
legal capacity of the Shareholder, and agrees to notify the Manager of any purchases made under a Letter of Intent or
Rights of Accumulation.
__________________________________________________________ __________________________________________________________
Dealer Name Representative's Name and Number
__________________________________________________________ __________________________________________________________
Branch Office Address Representative's Phone Number
__________________________________________________________ __________________________________________________________
City State Zip Code Authorized Signature of Dealer
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INVESTMENTS--4
A. Enclosed is my check for $ ______________ ($1,000 minimum) made payable to Mackenzie Florida Limited Term Municipal
Fund.
Please invest it in: [ ] Class A or [ ] Class B shares.
B. I qualify for an elimination of the sales charge due to the following privilege (applies only to Class A shares):
[ ] New Letter of Intent (if ROA or 90-day backdate privilege is applicable, provide account(s) information below.)
[ ] ROA with the account(s) listed below.
[ ] Existing Letter of Intent with account(s) listed below.
_____________________________________ ________________________________ [ ] or New
Fund Name Account Number
_____________________________________ ________________________________ [ ] or new
Fund Name Account Number
If establishing a Letter of Intent, you will need to purchase Class A shares over a thirteen-month period in
accordance with the provisions in the Prospectus. The aggregate amount of these purchases will be at least equal to
the amount indicated below (see Prospectus for minimum amount required for reduced sales charges).
[ ] $25,000 [ ] $250,000 [ ] $500,000
C. FOR DEALER USE ONLY _________________________ ________________________________ _________________________
Confirmed trade orders: Confirm Number Number of Shares Trade Date
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DISTRIBUTION
OPTIONS--5
A. I would like to reinvest dividends and capital gains into additional shares of the same class in this account at
net asset value unless a different option is checked below.
B. [ ] Reinvest all dividends and capital gains into additional shares of the same class in an account in a
different Mackenzie or Ivy fund.
___________________________________ __________________________ [ ] New Account
Fund Name Account Number
C. [ ] Pay all dividends in cash and reinvest capital gains into additional shares of the same class in this account
or an account in a different Mackenzie or Ivy fund.
___________________________________ __________________________ [ ] New Account
Fund Name Account Number
D. [ ] Pay all dividends and capital gains in cash. I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN C
OR D BE:
[ ] Sent to the address listed in the registration.
[ ] Sent to the special payee listed in Section
7A [ ] (By-Mail)
7B [ ] (By-E.F.T.)
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OPTIONAL SPECIAL FEATURES--6
A. [ ] AUTOMATIC INVESTMENT METHOD (AIM)*
I wish to invest [ ] once per month. My bank account will be debited on or about the ______________ day of the month
[ ] twice ______________ day of the month
[ ] 3 times ______________ day of the month
[ ] 4 times ______________ day of the month *
Please invest $_____________ each period starting in the month of _______ in Class A [ ] or Class B [ ] shares of Mackenzie
(Dollar Amount) (Month) Florida Limited Term Municipal Fund
[ ] I have attached a voided check to ensure my correct bank account will be debited.
* There must be a period of at least seven calendar days between each investment period.
B. [ ] SYSTEMATIC WITHDRAWAL PLANS** I request the distribution be:
I wish to automatically withdraw funds from my Mackenzie [ ] Monthly [ ] Quarterly [ ] Semiannually [ ]Annually
Florida Limited Term Municipal Fund. [ ] Sent to the address listed in the registration.
In Class A [ ] or Class B [ ] shares--[ ] Once [ ] Sent to the special payee listed in Section 7.
[ ] Twice [ ] 3 times [ ] 4 times per month [ ] Invested into additional shares of the same
class of a different Ivy or Mackenzie fund.
Amount (Minimum $50) $ ____________: starting on or _________________________________________________
about the__________day of the month (Fund Name)
__________day of the month _________________________________________________
__________day of the month (Account Number)
__________day of the month
NOTE: (Account minimum: $5,000 in shares at current offering price)
** There must be a period of at least seven calendar days between each withdrawal period
C. [ ] ELECTRONIC FUNDS TRANSFER FOR REDEMPTION PROCEEDS*
I authorize the Agent to honor telephone instructions for the redemption of Fund shares up to $50,000. Proceeds may
be wire transferred to the bank account designated ($1,000 minimum). Shares issued in certificate form may not be
redeemed under this privilege. (COMPLETE SECTION 7B)
D. [ ] TELEPHONE EXCHANGES* [ ] Yes [ ] No (IF NEITHER BOX IS CHECKED, THE TELEPHONE EXCHANGE PRIVILEGE WILL BE PROVIDED
AUTOMATICALLY.)
I authorize exchanges by telephone among the Ivy and Mackenzie family of funds upon instructions from any person as
more fully described in the Prospectus. To change this option once established, written instruction must be received
from the shareholder of record or the current registered representative.
E. [ ] TELEPHONE REDEMPTIONS* [ ] Yes [ ] No (IF NEITHER BOX IS CHECKED, THE TELEPHONE EXCHANGE PRIVILEGE WILL BE PROVIDED
AUTOMATICALLY.)
The Fund or its agents are authorized to honor telephone instructions from any person as more fully described in the
Prospectus for the redemption of Fund shares. The amount of the redemption shall not exceed $50,000 and the proceeds
are to be payable to the shareholder of record and mailed to the address of record. To change this option once
established, written instruction must be received from the shareholder of record or the current registered
representative.
*MAY NOT BE USED IF SHARES ARE ISSUED IN CERTIFICATE FORM.
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SPECIAL PAYEE--7
(A.) MAILING ADDRESS B. FED WIRE / E.F.T. INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
Please send all disbursements to this special payee
_______________________________________________________ ____________________________________________________
Name of Bank or Individual Financial Institution
_______________________________________________________ ____________________________ _____________________
Account Number (if applicable) ABA # Account #
_______________________________________________________ ____________________________________________________
Street Street
_______________________________________________________ ____________________________________________________
City/State/Zip City/State/Zip
(Please attach a voided check)
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(Remember to sign Section 9)
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CHECK WRITING ENROLLMENT FORM--8
CHECK WRITING PRIVILEGES are available to Class A shareholders of Mackenzie Florida Limited Term Municipal Fund (checks must
be written for a minimum of $500). Class A shares purchased in the Fund may be subject to a holding period of up to 15
calendar days before being redeemed by check. Please see the Prospectus for details.
HOW TO ENROLL
1. ALL REGISTERED OWNERS MUST SIGN THIS FORM IN THE SPACE PROVIDED BELOW.
2. Check the appropriate Number of Signatures Required box to indicate the number of signatures required
when writing checks.
NUMBER OF SIGNATURES REQUIRED
[ ] All signatures are required [ ] One signature is required [ ] More than one signature is required ____________________
number of signatures
required
IF NONE OF THE ABOVE IS CHECKED THEN ALL SIGNATURES WILL BE REQUIRED
______________________________________________________ ___________________
Authorized Signature Date
______________________________________________________ ___________________
Authorized Signature Date
______________________________________________________ ___________________
Authorized Signature Date
______________________________________________________ ___________________
Authorized Signature Date
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SIGNATURE--9
Investors should be aware that failure to check "No" under Section 6, "Optional Special Features", 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 "Exchanging by Telephone" and "How to Redeem Your Mackenzie Fund
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 informations as stated in Section 2.
--------------------------------------------------------------------------- ------------------
SIGNATURE OF OWNER, CUSTODIAN, TRUSTEE OR CORPORATE OFFICER DATE
--------------------------------------------------------------------------- ------------------
SIGNATURE OF JOINT OWNER, CO-TRUSTEE OR CORPORATE OFFICER DATE
- ------------------------------------------------------------------------------------------------------------------------------------
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