United States |
Securities and Exchange Commission |
Washington, D.C. 20549 |
SCHEDULE 14A |
Proxy Statement Pursuant to Section 14(a) of the Securities |
Exchange Act of 1934 (Amendment No. ) |
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Filed by a Party other than the Registrant [ ] |
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[X] Preliminary Proxy Statement |
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
[ ] Definitive Proxy Statement |
[ ] Definitive Additional Materials |
[ ] Soliciting Material Pursuant to Section 240.14a-12 |
IVY FUNDS |
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DRAFT
Ivy Small Cap Value Fund
________________, 2006
Dear Shareholder:
You are cordially invited to attend a Special Meeting of shareholders of Ivy Small Cap Value Fund (the "Fund"), a series of the Ivy Funds (the "Trust"), which will be held on November 9, 2006 at 3:00 p.m., Central time, 6300 Lamar Avenue, Overland Park, Kansas.
The primary purpose of the Special Meeting is to ask you to vote on a proposed new investment sub-advisory agreement between Ivy Investment Management Company ("IICO"), the Fund's investment adviser, and BlackRock Capital Management, Inc. ("BCM"), an indirect subsidiary of BlackRock, Inc. ("BlackRock").
BlackRock and Merrill Lynch & Co., Inc. ("Merrill Lynch") announced on February 15, 2006 that they had reached an agreement pursuant to which Merrill Lynch will contribute its investment management business, Merrill Lynch Investment Managers, to BlackRock to form a new asset management company (the "Transaction"). Based in New York, BlackRock currently manages assets for institutional and individual investors worldwide through a variety of equity, fixed income, cash management and alternative investment products. The new company will operate under the BlackRock name and be governed by a board of directors with a majority of independent members. The Transaction has been approved by the boards of directors of Merrill Lynch, BlackRock and The PNC Financial Services Group, Inc., BlackRock's current majority shareholder, and is expected to close at the end of the third quarter of 2006.
Although BlackRock has informed the Board of Trustees of the Trust that it does not believe the Transaction will be an assignment of the current investment sub-advisory of the Fund under the Investment Company Act of 1940, as amended, it is possible that the Transaction could be determined to be such an assignment, which would result in the automatic termination of the current agreement. Due to this uncertainty, IICO has proposed, and the Board of Trustees has approved, a new sub-advisory agreement with BCM on the same terms as the current sub-advisory agreement with BlackRock Financial Management, Inc. ("BFM") (BCM is an affiliate of BFM and BCM will be the new contracting entity after the Transaction on all U.S. equity portfolios managed out of BlackRock's Boston office) to prevent any potential disruption in services after the Transaction is completed. After the Transaction, BCM will provide equity portfolio management services to BFM's current clients, including the Fund. Approval of the proposed new sub-advisory agreement will not affect the Fund's investment goal and strategies currently in place. The sub-advisory fee rate payable to BCM will remain the same under the new investment sub-advisory agreement. In addition,the overall fees the Fund currently pays for management and investment advisory services will stay the same.
Please review the enclosed material carefully for more information about the proposal.
Your vote is important. The Board of Trustees has approved the proposed new investment sub-advisory agreement and recommends that you approve it. Please complete, sign and date the enclosed proxy card and return it in the enclosed postage-paid return envelope. This will ensure that your vote is counted, even if you cannot attend the Special Meeting in person.
If you prefer, you may vote by telephone with a toll-free call to the telephone number, _____________, and following the recorded instructions. You may also vote via the Internet by logging on to ______________ and following the instructions that will appear. It is important that your vote promptly.
Sincerely, | |
Henry J. Herrmann | |
President |
Ivy Small Cap Value Fund Shareholders
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND AND VOTE ON THE PROPOSAL
While we encourage you to read the full text of the enclosed Proxy Statement, we are also providing you with a brief overview of the subject of the shareholder vote. Your vote is important.
Q & A
Q: What am I being asked to vote "For" on this proxy?
A: You are being asked to vote for a proposal to approve a new investment sub-advisory agreement for your Fund, between Ivy Investment Management Company ("IICO"), the Fund's investment adviser, and BlackRock Capital Management, Inc. ("BCM"), an affiliate of the Fund's current sub-adviser, on substantially identical terms as the current sub-advisory agreement. No change in advisory fee rates or scope of services is being proposed.
The Board of Trustees recommends that you vote "FOR" this proposal.
Q: Why did you send me this booklet?
A: You are receiving these proxy materials – a booklet that includes the Proxy Statement and the accompanying proxy card – because you have the right to vote on important proposals concerning your investment in the Fund.
Q: Why are we being asked to vote on a new sub-advisory agreement?
A: BlackRock, Inc. ("BlackRock") is the parent company of the Fund's current sub-adviser, BlackRock Financial Management, Inc. ("BFM"). BlackRock and Merrill Lynch Co., Inc. ("Merrill Lynch") announced on February 15, 2006 that they had reached an agreement pursuant to which Merrill Lynch will contribute its investment management business, Merrill Lynch Investment Managers ("MLIM"), to BlackRock, to form a new asset management company that will have approximately $1 trillion in assets under management (the "Transaction"). The new company will operate under the BlackRock name and be governed by a board of directors with a majority of independent members. Although BlackRock has informed the Board of Trustees of the Fund that it does not believe the Transaction will be an assignment of the current sub-advisory agreement of the Fund under the Investment Company Act of 1940, as amended, it is possible that the Transaction could be determined to be such an assignment, which would result in the automatic termination of the current investment sub-advisory agreement. Due to this uncertainty, IICO has proposed, and the Board of Trustees has approved, a new investment sub-advisory agreement with BCM on the same terms as the current sub-advisory agreement with BFM (BCM is an affiliate of BFM and will be the new contracting entity after the Transaction on all U.S. equity portfolios managed out of BlackRock's Boston office) to prevent any potential disruption in services after the Transaction is completed. The sub-advisory fee rate payable to BCM will remain the same under the new investment sub-advisory agreement.
Q: What is the rationale for the Transaction?
A: The contribution of MLIM to BlackRock will form one of the world's preeminent, diversified global money management organizations with approximately $1 trillion in assets under management. The new company will offer a full range of equity, fixed income, cash management and alternative investment products with strong representation in both retail and institutional channels, in the United States and in non-U.S. markets. It will have over 4,500 employees in 18 countries and a major presence in most key markets, including the United States, the United Kingdom, Asia, Australia, the Middle East and Europe. The contribution also will create operating efficiencies and the new company will offer its clients enhanced portfolio management capabilities.
Q: How is the proposed sub-advisory agreement different from the existing sub-advisory agreement?
A: The terms of the proposed agreement are substantially identical to the current agreement. It differs only in its beginning date and the investment sub-adviser (although the Fund will be managed by the same team currently responsible for the day-to-day management of the Fund). See the Proxy Statement for more information about the current and proposed investment sub-advisory agreements.
Q: Will there be a change in the management and advisory fees paid by my fund?
A: No. The advisory and sub-advisory fees will stay the same.
Q: Will the Fund's current portfolio manager continue to manage the Fund following the transaction?
A: The current portfolio manager will continue to manage the Fund following the Transaction, using the same investment objective and strategies.
Q: How does the Board of Trustees recommend that I vote on this proposal?
A: The Board of Trustees believes that the proposal is in the best interests of the Fund and its shareholders. After careful consideration, the Board of Trustees recommends that you vote "FOR" the Proposal.
Q: How can I vote my proxy?
A: Please complete the enclosed proxy card and return the card in the enclosed self-addressed, postage-paid envelope, or take advantage of the telephonic or electronic voting procedures described on the proxy card.
Q: Will the Fund pay for this proxy solicitation?
A: No. BlackRock and Merrill Lynch have agreed to pay the costs of this proxy solicitation.
It is important that you vote your proxy promptly. Please help keep the costs of this proxy solicitation reasonable by voting today.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF IVY FUNDS
To be held on November 9, 2006
Ivy Small Cap Value Fund
A Special Meeting of shareholders of Ivy Small Cap Value Fund (the "Fund"), a series of the Ivy Funds (the "Trust"), will be held at 6300 Lamar Avenue, Overland Park, Kansas, at 3:00 p.m., Central time, on November 9, 2006. At the Special Meeting, shareholders will be asked to vote on the following proposal:
1. | To approve a new investment sub-advisory agreement between Ivy Investment Management Company and BlackRock Capital Management, Inc.; and | |
2. | To transact any other business that properly comes before the Special Meeting. |
Please read the enclosed Proxy Statement carefully for information concerning the proposal to be placed before the Special Meeting or any adjournments or postponements thereof.
The Board of Trustees recommends that shareholders vote "FOR" the proposal.
The persons named as proxies will vote in their discretion on any other business that may properly come before the Special Meeting or any adjournments or postponements thereof.
In the event that the necessary quorum to transact business or the vote required to approve any proposal is not obtained at the Special Meeting, the persons named as proxies may propose one or more adjournments of the Special Meeting in accordance with applicable law to permit further solicitation of proxies. Any such adjournment as to a matter will require the affirmative vote of the holders of a majority of the Fund's shares present in person or by proxy at the Special Meeting. The persons named as proxies will vote "FOR" any such adjournment those proxies which they are entitled to vote in favor of that proposal and will vote "AGAINST" any such adjournment those proxies to be voted against that proposal.
Shareholders of record at the close of business on September 8, 2006 are entitled to notice of and to vote at the Special Meeting. You are invited to attend the Special Meeting. If you cannot do so, however, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD, AND RETURN IT IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE, OR TAKE ADVANTAGE OF THE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. Any shareholder attending the Special Meeting may vote in person even though a proxy already may have been returned.
By Order of the Board of Trustees, | |
Kristen A. Richards | |
Assistant Secretary |
__________, 2006
Overland Park, Kansas
Ivy Funds
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
Proxy Statement
______________ __, 2006
Special Meeting of Shareholders
To be held on November 9, 2006
This Proxy Statement provides you with information you should review before voting on the matter listed in the Notice of Special Meeting (the "Proposal") for Ivy Small Cap Value Fund (the "Fund"), a series of Ivy Funds (the "Trust"). The Trust's Board of Trustees (the "Board," the members of which are referred to herein as the "Trustees") is soliciting your vote for a Special Meeting of shareholders of the Fund (the "Special Meeting") to be held at 6300 Lamar Avenue, Overland Park, Kansas on November 9, 2006 at 3:00 p.m., Central time, and, if the Special Meeting is adjourned or postponed, at any adjournments or postponements of that meeting.
Solicitation of Proxies
The Board is soliciting votes from shareholders of the Fund by the mailing of this Proxy Statement and the accompanying proxy card to shareholders on or about ___________, 2006. Shareholders of record at the close of business on September 8, 2006 (the "record date") are entitled to vote at the Special Meeting.
The appointed proxies will vote in their discretion on any other business that may properly come before the Special Meeting or any adjournments or postponements thereof. Additional matters would only include matters that were not anticipated as of the date of this Proxy Statement.
Shareholder Reports
Copies of the Fund's Annual Report for the fiscal year ended March 31, 2006 have previously been mailed to shareholders.This Proxy Statement should be read in conjunction with the Annual Report. You can obtain copies of that report, without charge, by writing to Ivy Funds Distributor, Inc., 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217, or by calling 800-777-6472.
OVERVIEW
You are being asked to vote on one Proposal – a new investment sub-advisory agreement between Ivy Investment Management Company ("IICO") and BlackRock Capital Management, Inc. ("BCM") (the "Proposed Agreement"), with respect to the Fund.
As explained below, the Proposed Agreement for the Fund is substantially identical to the sub-advisory agreement currently in effect for the Fund between IICO and BCM's affiliate, BlackRock Financial Management, Inc. ("BFM") (the "Current Agreement").
BlackRock, Inc. ("BlackRock") is the parent company of BCM. BlackRock and Merrill Lynch & Co., Inc. ("Merrill Lynch") announced on February 15, 2006 that they had reached an agreement pursuant to which Merrill Lynch will contribute its investment management business, Merrill Lynch Investment Managers ("MLIM"), to BlackRock to form a new asset management company (the "Transaction").
Based in New York, BlackRock currently manages assets for institutional and individual investors worldwide through a variety of equity, fixed income, cash management and alternative investment products. The new company will operate under the BlackRock name and be governed by a board of directors with a majority of independent members. The new company will offer a full range of equity, fixed income, cash management and alternative investment products with strong representation in both retail and institutional channels, in the United States and in non-U.S. markets. It will have over 4,500 employees in 18 countries and a major presence in most key markets, including the United States, the United Kingdom, Asia, Australia, the Middle East and Europe. Merrill Lynch will have a 49.8% economic interest and a 45% voting interest in the combined company and The PNC Financial Services Group, Inc. ("PNC"), which currently holds a majority interest in BlackRock, will retain approximately 34% of the combined company's voting stock. Each of Merrill Lynch and PNC has agreed that it will vote all of its shares on all matters in accordance with the recommendation of BlackRock's board in order to assure the board's independence. Completion of the Transaction is subject to various regulatory approvals, client consents, approval by BlackRock shareholders and customary conditions. The Transaction has been approved by the boards of directors of Merrill Lynch, BlackRock and PNC and is expected to close at the end of the third quarter of 2006.
Although BlackRock has informed the Board that it does not believe the Transaction will be an assignment of the Current Agreement under the Investment Company Act of 1940, as amended, ("1940 Act"), it is possible that the Transaction could be determined to be such an assignment, which would result in the automatic termination of the Current Agreement. Due to this uncertainty, IICO has proposed, and the Board has unanimously approved (with one trustee abstaining) a new investment sub-advisory agreement with BCM on the same terms as the current sub-advisory agreement with BFM (BCM is an affiliate of BFM and will be the new contracting entity after the Transaction on all U.S. equity portfolios managed out of BlackRock's Boston office) to prevent any potential disruption in sub-advisory services after the Transaction is completed. After the Transaction, BCM will provide equity portfolio management services to BFM's current clients, including th e Fund. The sub-advisory fee rate payable to BCM will remain the same under the Proposed Agreement.
The Trustees have carefully considered the matter and have concluded that it is appropriate and in the best interest of the Fund's shareholders for IICO to enter into the Proposed Agreement for the Fund. Under the 1940 Act, IICO cannot enter into the Proposed Agreement unless the Fund's shareholders vote to approve the Proposed Agreement. The Meeting is being held to seek shareholder approval of the Proposed Agreement for the Fund. No change in advisory fee rate or scope of services from those under the Current Agreement is being proposed.
Each share is entitled to cast one vote, and fractional shares are entitled to a proportionate fractional vote.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE PROPOSED AGREEMENT FOR THE FUND.
PROPOSAL 1
PROPOSED AGREEMENT
Introduction
Shareholders are being asked to approve the Proposed Agreement between IICO and BCM with respect to the Fund. On August 15 and 16, 2006, with one member abstaining, the Board, including all of the Trustees who are not "interested persons" of the Trust, IICO, BCM or Merrill Lynch (the "Independent Trustees"), unanimously voted to approve the Proposed Agreement and to recommend the Proposed Agreement to Fund shareholders for approval. If approved by the shareholders, the Proposed Agreement will take effect on the later of such approval or the closing of the Transaction, which is anticipated to occur at the end of the third quarter of 2006. The Proposed Agreement will remain in effect through September 30, 2007 and will continue in effect thereafter only if its continuance is specifically approved at least annually (i) by the vote of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act) or by a ma jority of the Trustees and (ii) by the vote, cast in person at a meeting called for that purpose, of a majority of the Independent Trustees.
The Board has considered that the Transaction might be completed before the date of the Special Meeting and receipt of shareholder approval of the Proposed Agreement. Accordingly, with one member abstaining, the Board, including all of the Independent Trustees, unanimously approved an interim sub-advisory agreement ("Interim Agreement") between IICO and BCM with respect to the Fund pursuant to Rule 15a-4 under the 1940 Act.
This Rule, under certain circumstances, allows an interim advisory agreement to take effect, and to remain in effect for up to 150 days, without receiving prior shareholder approval, as long as the fees payable under the interim advisory agreement do not exceed the fees payable under the predecessor agreement that had been approved by shareholders and certain other contractual provisions are included in the interim agreement. The Interim Agreement requires all advisory fees earned by BCM to be escrowed pending approval by Fund shareholders of the Proposed Agreement. If the Proposed Agreement is not approved, BCM will be entitled to receive from escrow the lesser of (i) any costs incurred in performing the Interim Agreement (plus interest earned on the amount while in escrow) or (ii) the total amount in the escrow account (plus interest earned). The Interim Agreement will take effect upon the completion of the Transaction only if approval by Fund shareh olders has not then been obtained and will continue in effect for a period of up to 150 days.
A form of the Proposed Agreement is attached as Exhibit A. The description of the agreement's terms in this section is qualified in its entirety by reference to Exhibit A.
Board Recommendation
The Board of Trustees, including the Independent Trustees, recommends that shareholders of the Fund vote "FOR" approval of the Proposed Agreement.
For more information about the Trustees' deliberations and the reasons for their recommendation, please see the discussion under the heading "Evaluation by the Board."
Comparison of Current and Proposed Agreements
The Proposed Agreement for the Fund is substantially identical (but for a few non-material changes) to the Current Agreement for the Fund. The date of the Proposed Agreement for the Fund will be the later of the date on which shareholders of the Fund approve the Proposed Agreement or the date of the completion of the Transaction, and the initial term of the Proposed Agreement expires on September 30, 2007. The next several paragraphs briefly summarize some important provisions of both the Proposed Agreement and the Current Agreement, but for a complete understanding of the Proposed Agreement, you should read Exhibit A. For purposes of the discussion below, the Proposed Agreement and Current Agreement each will be referred to as the "Agreement," and BCM and BFM each will be referred to as the "Sub-adviser."
The fees payable to BCM under the Proposed Agreement are paid by IICO and the fee rate will be no greater than the fee rate currently payable to BFM by IICO for sub-advisory services. In addition, BCM has assured the Board that it will continue to provide the same level of sub-advisory services to the Fund under the Proposed Agreement as BFM provides under the Current Agreement.
Services and Obligations
Under the Current Agreement, IICO appointed BFM, and under the Proposed Agreement, proposes to appoint BCM (an affiliate of BFM), to perform the portfolio selection services described below for the investment and reinvestment of the Fund's portfolio, subject to the supervision of IICO and subject also to the control and direction of the Board. The Sub-adviser is deemed to be an independent contractor and, except as expressly provided or authorized in the Agreement, the Sub-adviser has no authority, to act for or represent the Trust or IICO in any way or be deemed an agent of the Trust or IICO. Under the Agreement, the Sub-adviser provides the below-listed services and assumes the following obligations with respect to the Fund.
(1) Within the framework of the investment objectives, policies and restrictions of the Fund, and subject to the supervision of IICO, the Sub-adviser has the sole and exclusive responsibility for the making and execution of all investment decisions for the Fund. The investment of the assets of the Fund are at all times subject to the applicable provisions of the Trust's Declaration of Trust and bylaws, as well as the registration statement, current prospectus and statement of additional information applicable to the Fund, and must conform to the investment objectives, policies and restrictions of the Fund as set forth in such documents and as interpreted from time to time by the Board and by IICO.
(2) In carrying out its obligations to manage the investment and reinvestment of the assets of the Fund, the Sub-adviser is required to (i) obtain and evaluate pertinent economic, statistical, financial and other information affecting the economy generally and individual companies or industries, the securities of which are included in the Fund or are under consideration for inclusion therein; (ii) formulate and implement a continuous investment program for the Fund consistent with the investment objective and related investment policies of the Fund as described above; and (iii) take such steps as are necessary to implement the aforementioned investment program by placing orders for such purchases and sales of securities with broker-dealers, including the placing, or directing the placement through an affiliate (if any) of the Sub-adviser, of orders for such purchases and sales.
(3) In connection with the purchase and sale of securities of the Fund, the Sub-adviser arranges for the transmission to IICO (or its designee) and the custodian of the Fund on a daily basis such confirmations, trade tickets and other documents as may be necessary to enable them to perform their administrative responsibilities with respect to the Fund. The Sub-adviser is required to render such reports to IICO and/or the Board concerning the investment activity and portfolio composition of the Fund in such form and at such intervals as IICO or the Board may from time to time require.
(4) The Sub-adviser, in the name of the Trust, places or directs the placement of orders for the execution of portfolio transactions in accordance with the policies with respect thereto, as set forth in the Fund's registration statement. In connection with the placement of orders for the execution of the Fund's portfolio transactions, the Sub-adviser is required to create and maintain all necessary brokerage records of the Trust in accordance with all applicable law, rules and regulations, including but not limited to, records required by Section 31(a) of the 1940 Act. The Agreement provides that all records will be the property of the Trust and the Sub-adviser shall make such records available for inspection and use by the Securities and Exchange Commission ("SEC"), the Trust or any person retained by the Trust.
(5) In placing orders or directing the placement of orders for the execution of portfolio transactions, the Sub-adviser selects brokers and dealers for the execution of the Fund's transactions. In selecting brokers or dealers to execute such orders, the Sub-adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services that enhance investment research and portfolio management capability generally. Also, in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, the Sub-adviser may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Sub-adviser determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and/or research services (services that provide lawful and appropriate assistance to the Sub-adviser in the performance of investment decision-making responsibilities) (as defined in Section 28(e)) provided by such broker. Under the Agreement, the Sub-adviser is required to render such reports, at such intervals and in such form as may be mutually agreed to IICO and/or to the Board regarding the total amount and usage of all commissions generated as a result of trades executed for the Fund's portfolio, as well as information regarding third-party services, if any, received.
On occasions when the Sub-adviser deems the purchase or sale of a security to be in the best interest of the Fund as well as other customers, the Agreement permits the Sub-adviser, to the extent permitted by applicable law, to aggregate the securities to be sold or purchased in order to obtain the best execution or lower brokerage commissions, if any. The Sub-adviser also may purchase or sell a particular security for one or more clients in different amounts. To the extent permitted by applicable law and regulations, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, are to be made in the manner the Sub-adviser considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients.
(6) The Sub-adviser is required to review all proxy solicitation materials and is responsible for voting and handling all proxies in relation to the securities held in the Fund.
Standard of Care
Under the Agreement, the Sub-adviser is entitled to rely on information that it reasonably believes to be accurate and reliable. Except as may otherwise be provided by the 1940 Act, neither the Sub-adviser nor its officers, directors, employees or agents shall be subject to any liability for any error of judgment or mistake of law or for any loss arising out of any investment or other act or omission in the performance of its duties under the Agreement or for any loss or damage resulting from the imposition by any government or exchange control restrictions which might affect the liquidity of the Fund's assets, or from acts or omissions of IICO or custodians or other agents at the Trust or the Fund or securities depositories, or from war or political act of any foreign government to which such assets might be exposed, provided that nothing in the Agreement will be deemed to protect, or purport to protect, the Sub-adviser against any liability to the T rust to which it would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties under the Agreement, or by reason of reckless disregard of obligations and duties under the Agreement.
Compensation
The Fund pays IICO a fee accruing daily at an annual rate of 0.85% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion of the Fund's average daily net assets. IICO pays BFM, and under the Proposed Agreement would pay BCM, a sub-advisory fee at the annual rate of 0.50% of the Fund's average daily net assets managed by the Sub-adviser.
Renewal and Termination
Each of the Current Agreement and the Proposed Agreement provides that it continues in effect from year to year, provided its continuance is specifically approved at least annually (i) by the vote of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act) or by the entire Board and (ii) by the vote, cast in person at a meeting called for that purpose, of a majority of the Independent Trustees. At a meeting held on August 15 and 16, 2006, the Board, with Independent Trustees voting separately, unanimously approved the continuation of the Current Agreement until September 30, 2007. The initial term of the Proposed Agreement, if approved by the Fund's shareholders, will continue until September 30. 2007.
The Current Agreement and the Proposed Agreement each state that it can be terminated with respect to the Fund at any time, without the payment of any penalty, by a vote of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act) or by a vote of majority of the entire Board on 60 days' written notice to the sub-adviser, or by either party to the Agreement upon 60 days' written notice to the other. Each Agreement states that it will terminate automatically in the event of its assignment (as defined in the 1940 Act) or upon termination of IICO's advisory agreement with the Fund.
Other Provisions
The Agreement provides that the Sub-adviser irrevocably submits to the jurisdiction of any state or U.S. federal court sitting in the State of Kansas and that the Agreement shall be construed and enforced in accordance with the laws of Massachusetts, the 1940 Act and the applicable rules and guidance issued by the SEC and its staff thereunder.
Evaluation by the Board
At a meeting held on August 15 and 16, 2006, the Trustees, including all the Independent Trustees (except for one Independent Trustee who abstained), voted to approve the Proposed Agreement and to recommend that shareholders of the Fund vote to approve the Proposed Agreement. At that Board meeting, the Board also approved the Interim Agreement.
During the meeting, the Board met with a representative of BlackRock, who explained the Transaction, BCM's general plans and intentions regarding the Fund and BlackRock's planned combination of its business with that of MLIM. The Board was advised by the BlackRock representative that the current team responsible for the day-to-day management of the Fund would not change. The BlackRock representative further advised the Board that the portfolio management team would also have access to greater resources of the combined entity as a result of the Transaction, including additional research on small capitalization issuers from MLIM's existing small capitalization equity team.
Independent legal counsel provided the Board members with a memorandum that discussed the various factors that the Board should consider as part of its review of the Proposed Agreement. The Board considered the written responses and supplementary materials produced by BFM for the Board meeting and in response to a 15(c) due diligence request list submitted by the Independent Trustees' counsel prior to the meeting, including BlackRock's overall financial condition and asset management capabilities and organization, as well as materials and information about the Transaction. The Board also received extensive materials on performance, expenses and comparable fund information from Lipper, Inc., an independent mutual fund rating service, relating to BFM's current management of the Fund.
As part of their review, the Board considered: (i) the strategic reasons for the Transaction, as presented by BlackRock to the Board; (ii) the reputation, financial strength and resources of BlackRock and the anticipated financial strength and resources of the new combined company; (iii) the fact that the current portfolio manager to the Fund (and his team) will remain in place; (iv) that BlackRock advised the Board that following the Transaction, there is not expected to be any diminution in the nature, quality and extent of services provided to the Fund and its shareholders by BCM, including compliance services; (v) the potential effects of regulatory restrictions on the Fund as a result of Merrill Lynch's ownership of BlackRock after the Transaction, including the possibility that BCM would execute trades through MLIM's affiliated broker/dealer; (vi) the fact that the Fund's total sub-advisory fees will not increase by virtue of the Proposed Agreem ent, but rather will remain the same, and the fact that IICO will continue to bear all of sub-advisory fees; and (vii) the terms and conditions of the Proposed Agreement and the Current Agreement are substantially the same.
After considering this information, the Board concluded that the investment performance of the Fund, including against its peers as contained in the Lipper materials, as well as against the Lipper Small Cap Value Index since BFM commenced day-to-day responsibility is acceptable. The Board further noted that the Fund's total sub-advisory fees would not increase as a result of the Transaction and concluded that BCM's proposed fees appear to be reasonable. The Board next considered the nature, extent and quality of services proposed to be provided to the Fund by BCM. In that regard, the Board reviewed the resources and key personnel of BCM, especially those who provide investment management services to the Fund, and took into account that there would not be any change in portfolio management personnel who currently provide services to the Fund after the close of the Transaction. The Board further considered the legal and compliance programs of BCM and the anticipated positive impact of the Transaction on BCM's general business reputation and overall financial resources and concluded that BCM would be able to meet any reasonably foreseeable obligation under the Proposed Agreement, and further concluded that, given the services currently provided by BFM, the nature and extent of the services proposed to be provided by BCM are acceptable. The Board next discussed whether BCM would derive any other direct or indirect benefits from serving the Fund and concluded that it did not appear that either BCM or any of its affiliates receive (or would receive) any additional direct benefits that would warrant reconsideration and/or preclude the Board from approving the Proposed Agreement with BCM. The Board finally considered the current and anticipated asset level of the Fund and the potential for growth in the Fund's assets, including the fact that BCM believes that it might be appropriate for the Fund to close to new investors once a certain level of assets was r eached. The Board concluded that the current asset size of the Fund did not warrant reevaluating BCM's (or IICO's) fee schedule for the Fund at the current time.
No single factor was considered in isolation or to be determinative in the Board's decision to approve the Proposed Agreement. Rather the Board, including all of the Independent Trustees (with one Independent Trustee abstaining), concluded that it was in the best interests of the Fund to approve the Proposed Agreement, to recommend the Proposed Agreement to shareholders and to approve the Interim Agreement.
In the event that the shareholders do not approve the Proposed Agreement, the Trustees of the Trust will consider what alternatives may then be available.
Vote Required
Approval of Proposal 1 requires an affirmative vote of the lesser of (i) 67% or more of the Fund's shares present at the Special Meeting if more than 50% of the outstanding shares of the Fund are present or represented by proxy or (ii) more than 50% of the outstanding shares of the Fund.
The Board unanimously recommends that shareholders of the Fund vote "FOR" Proposal 1.
ADDITIONAL INFORMATION
Additional Information about Ivy Investment Company ("IICO")
IICO, 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas, 66201-9217, is a subsidiary of Waddell & Reed Financial, Inc. ("Waddell & Reed"), 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas, 66201-9217, a publicly held company. IICO currently provides business management services to certain funds that are series of Ivy Funds, investment advisory services to the Fund and other funds that are series of Ivy Funds and Ivy Funds, Inc. and sub-advisory services to certain other funds. IICO is a SEC-registered investment adviser with approximately $11 billion in assets under management as of June 30, 2006.
During the fiscal year ended March 31, 2006, the Fund paid IICO fees of $976,785. During the fiscal year ended March 31, 2006 IICO paid subadvisory fees to BFM in the amount of $574,581. There were no other material payments by the Fund to BFM or any of its affiliates during that period.
Additional Information about BlackRock Capital Management, Inc. ("BCM")
BCM is an indirect, wholly-owned subsidiary of BlackRock, Inc. ("BlackRock"), which trades on the New York Stock Exchange under the symbol BLK. BlackRock is one of the largest publicly-traded investment management firms in the United States with $464 billion of assets under management as of June 30, 2006. Approximately 14% of BlackRock's stock is held by the public, while employees own 16% and a subsidiary of PNC holds 70%. PNC, headquartered in Pittsburgh, is one of the nation's largest diversified financial services organizations providing regional banking, corporate banking, real estate finance, asset-based lending, wealth management, asset management and global fund services. Together with its affiliates, BlackRock serves as investment adviser to fixed income, equity and liquidity investors in the United States and overseas through fund and institutional accounts with combined total assets at June 30, 2006, of approximately $464 billi on.
BlackRock currently manages three other funds with a small cap value strategy that have similar objectives to the Fund. BlackRock Advisors, Inc. ("BAI"), an indirect, wholly-owned subsidiary of BlackRock, is the investment adviser for the BlackRock Small Cap Value Equity Portfolio, which had approximately $102 million in assets as of June 30, 2006. For the management of the fund, BAI is paid at the rates of: 0.55% of net assets up to $1 billion; 0.50% of net assets over $1 billion and up to $2 billion; 0.475% of net assets over $2 billion and up to $3 billion; and 0.45% of net assets over $3 billion. In addition, BAI is the investment sub-adviser for two additional clients, the first with approximately $111 million in assets as of June 30, 2006, and the second with approximately $174 million in assets as of June 30, 2006. BAI is paid a sub-advisory fee of 0.50% of net assets for each of these two funds. In addition, BCM is the proposed sub- adviser for these funds, effective upon the close of the transaction.
The following table lists the names, addresses and principal occupations of the principal executive officer and each director of BCM:
Name and Address | Status or Title with BCM |
Lawrence D. Fink | Chairman and Chief Executive Officer |
Ralph L. Schlosstein | President and Director |
Robert S. Kapito | Vice Chairman and Director |
Robert P. Connolly | General Counsel, Secretary and Managing Director |
Susan L. Wagner | Vice Chairman and Chief Operating Officer |
Steven E. Buller | Chief Financial Officer and Managing Director |
Keith L. Anderson | Vice Chairman |
Charles S. Hallac | Vice Chairman |
Barbara G. Novick | Vice Chairman |
Paul L. Audet | Director |
Laurence J. Carolan | Director |
Kevin Klingert | Director |
John P. Moran | Director |
Mark Steinberg | Director |
The address of the principal executive officer and each of directors listed above is BlackRock Capital Management, Inc., 100 Bellevue Parkway, Wilmington, DE 19809.
Organization and Management of the Trust
The Trust is governed by the Board. A majority of the Board members are Independent Trustees. The Board elects the officers who are responsible for administering the Fund's day-to-day operations.
Each Trustee and officer serves an indefinite term, until he or she dies, resigns, is removed or becomes disqualified. The Independent Trustees and their principal occupations during the past five years are:
Name, Address and Age | Position(s) Held with the Trust | Principal Occupation(s) During Past 5 Years |
Jarold W. Boettcher (66) | Trustee | President of Boettcher Enterprises, Inc. (agriculture products and services) since 1979; President of Boettcher Supply, Inc. (electrical and plumbing supplies distributor) since 1979; President of Boettcher Aerial, Inc. (Aerial Ag Applicator) since 1983; Director of Guaranty State Bank and Trust; Director of Guaranty, Inc.; Trustee, Kansas Public Employees Retirement System. |
James D. Gressett (56) | Trustee | Secretary of Street Homes, LLP (homebuilding company) since 2001; Chief Executive Officer (CEO) of PacPizza, Inc. (Pizza Hut franchisee) from 2000 to 2004; President of Alien, Inc. (real estate developer) from 1997 to 2001; Director of Collins Financial Services. |
Joseph Harroz, Jr. (39) 6300 Lamar Avenue Overland Park, KS 66202 | Trustee and Chairman of the Board | Vice President and General Counsel of the Board of Regents, University of Oklahoma since 1996; Adjunct Professor, University of Oklahoma Law School since 1997; Managing Member, Harroz Investments, LLC (commercial enterprise) since 1998; Consultant, MTV Associates, 2004; Director of Valliance Bank NA; Director of Advisors Fund Complex. |
Glendon E. Johnson, Jr. (54) | Trustee | Of Counsel, Lee & Smith, PC (law firm) since 1996; Member/Manager, Castle Valley Ranches, LLC (ranching) since 1995. |
Eleanor B. Schwartz (69) | Trustee | Professor Emeritus, University of Missouri at Kansas City since 2003; Professor of Business Administration, University of Missouri at Kansas City from 1980 to 2003; Director of Advisors Fund Complex. |
Michael G. Smith (62)* | Trustee | Retired; Director of Executive Board, Cox Business School, Southern Methodist University; Director of Northwestern Mutual Life Series Funds & Mason Street Advisors Funds (18 portfolios overseen). |
Edward M. Tighe (63) 6300 Lamar Avenue Overland Park, KS 66202 | Trustee | Retired; CEO and Director of Asgard Holding, LLC (computer network and security services) from 2002 to 2004; CEO and Director of JBE Technology Group, Inc. (telecommunications and computer network consulting) from 2001 to 2003; Director of Hansberger Institutional Funds (5 portfolios overseen). |
*As of the close of the Transaction, Mr. Smith will be deemed an "interested person" (as defined in the 1940 Act).
The address for the Interested Trustee and each of the officers in the following tables is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217. The Trustee considered by the Trust and its counsel to be an "interested person" (as defined in the 1940 Act) of the Fund is:
Name and Age | Position(s) Held with the Trust | Principal Occupation(s) During Past 5 Years |
Henry J. Herrmann (63) | Trustee and President | CEO of Waddell & Reed Financial, Inc. (WDR) since 2005; President and CEO of IICO since 2002; President and CEO of Waddell & Reed Investment Management Company (WRIMCO), an affiliate of IICO, since 1993; President and Chief Investment Officer (CIO) of WDR from 1998 to 2005; CIO of IICO from 2003-2005; CIO of WRIMCO from 1991 to 2005; President and Director/Trustee of each of the funds in the Waddell & Reed Fund Complex since 2001; Director of WDR, IICO, Waddell & Reed Services Company (WRSCO), Waddell & Reed, Inc. (W&R), Austin, Calvert and Flavin, Inc., an affiliate of WRIMCO, and Ivy Services, Inc., an affiliate of IICO. |
The Board has appointed officers who are responsible for the day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. In addition to Mr. Herrmann, who is President of the Trust, the Trust's officers are:
Name and Age | Position(s) Held with the Trust | Principal Occupation(s) During Past 5 Years |
Joseph W. Kauten (37) | Treasurer and Principal Accounting Officer | Treasurer and Principal Accounting Officer of each of the funds in the Waddell & Reed Fund Complex since 2006; Assistant Treasurer of each of the funds in the Waddell & Reed Fund Complex from 2003 to 2006; Senior Manager, Deloitte & Touche LLP from 2001 to 2003. |
Mara Herrington (42) | Vice President and Secretary | Vice President and Secretary of each of the funds in the Waddell & Reed Fund Complex since 2006; formerly Vice President and Associate General Counsel, Deutsche Investment Management Americas, Inc. |
Kristen A. Richards (38) | Vice President, Assistant Secretary and Associate General Counsel | Vice President, Associate General Counsel and Chief Compliance Officer of WRIMCO since 2000; Vice President, Associate General Counsel and Chief Compliance Officer of IICO since 2002; Vice President, Associate General Counsel of each of the funds in the Waddell & Reed Fund Complex since 2002; Secretary of each of the funds in the Waddell & Reed Fund Complex from 2000 to 2006; Assistant Secretary of each of the funds in the Waddell & Reed Fund Complex since 2006. |
Daniel C. Schulte (40) | Vice President, General Counsel and Assistant Secretary | Senior Vice President and General Counsel of WDR since 2000; Senior Vice President, Secretary and General Counsel of W&R, WRIMCO and WRSCO since 2000; Senior Vice President, General Counsel and Assistant Secretary of Ivy Services, Inc. since 2002; Senior Vice President, General Counsel and Assistant Secretary of IICO since 2002; Vice President and Assistant Secretary of each of the funds in the Waddell & Reed Fund Complex since 2000. |
Scott Schneider (38) | Chief Compliance Officer | Chief Compliance Officer for each of the funds in the Waddell & Reed Fund Complex since 2004; Senior Attorney and Compliance Officer for each of the funds in the Waddell & Reed Fund Complex from 2000 to 2004. |
As of _____________ 2006, the Trust believes that its Trustees and officers, as a group, owned less than 1% of the outstanding shares of the Fund.
ADDITIONAL INFORMATION ABOUT THE MEETING
Voting Rights
Shareholders of record on September 8, 2006 (the "record date") are entitled to be present and to vote at the Special Meeting or any adjourned meeting. The number of shares that you may vote is the total of the number shown on the proxy card accompanying this Proxy Statement. Shareholders are entitled to one vote for each full share and a proportionate vote for each fractional share held.
As of the record date, the Fund offered multiple classes of shares to the public pursuant to a Rule 18f-3 Plan adopted by the Trustees on behalf of the Fund. The key features of the plan are as follows: (i) shares of each class of the Fund represent an equal pro rata interest in the Fund and generally have identical voting, dividend, liquidation, and other rights, preferences, powers, restrictions, limitations, qualifications, terms and conditions, except that each class bears certain class-specific expenses and has separate voting rights on certain matters that relate solely to that class or in which the interests of shareholders of one class differ from the interests of shareholders of another class; (ii) subject to certain limitations described in the most recent prospectus of the Fund, shares of a particular class of the Fund may be exchanged for shares of the same class of another Fund of the Trust or Ivy Funds, Inc.; and (iii) the Fund's Clas s B shares will convert automatically to Class A shares of the Fund after a period of eight years, based on the relative net asset value of such shares at the time of conversion. As of the record date, the Fund had ____________ outstanding Class A shares, ____________ outstanding Class B shares, ____________ outstanding Class C shares and ____________ outstanding Class Y shares.
Revocation of Proxies
Any shareholder giving a proxy has the power to revoke it by mail (addressed to the Secretary at the principal executive office of the Trust at the address shown at the beginning of this Proxy Statement) or in person at the Special Meeting, by executing a superseding proxy or by submitting a notice of revocation to the Trust. A superseding proxy may also be executed by voting via telephone or internet. The superseding proxy need not be voted using the same method (mail, telephone, internet) as the original proxy vote.
Quorum, Voting at the Meeting and Adjournment
The presence in person or by proxy of a majority of the Fund's shares of all classes entitled to vote is a quorum for the transaction of business. In the event that a quorum of shareholders is not represented at the Special Meeting, the Special Meeting may be adjourned by a majority of the Fund's shareholders present in person or by proxy until a quorum exists. If there are insufficient votes to approve the Proposal, the persons named as proxies may propose one or more adjournments of the Special Meeting to permit additional time for the solicitation of proxies, in accordance with applicable law. Adjourned meetings must be held within a reasonable time after the date originally set for the meeting (but not more than 90 days after the record date). Solicitation of votes may continue to be made without any obligation to provide any additional notice of the adjournment. The persons named as proxies will vote in favor of such adjournment those proxie s which they are entitled to vote in favor of the Proposal and will vote against any such adjournment those proxies to be voted against the Proposal.
For purposes of determining the presence of a quorum for transacting business at the Special Meeting, abstentions and broker "non-votes" (i.e., shares held by brokers or nominees, typically in "street name," as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter) will be treated as shares that are present for purposes of determining a quorum. For purposes of determining the approval of the proposals, abstentions and broker "non-votes" will be treated as shares voted "Against" the proposals. Accordingly, shareholders are urged to vote or forward their voting instructions promptly.
Broker-dealer firms holding shares in "street name" for the benefit of their customers and clients will request the instructions of such customers and clients on how to vote their shares on each proposal before the Special Meeting. The New York Stock Exchange (the "NYSE") may take the position that broker-dealers that are members of the NYSE and that have not received instructions from a customer may not vote such customer's shares on any of the proposals. A signed proxy card or other authorization by a beneficial owner of shares that does not specify how the beneficial owner's shares are to be voted on a proposal may be deemed to be an instruction to vote such shares in favor of the proposal.
If you hold shares of the Fund through a bank or other financial institution or intermediary (called a service organization) that has entered into a service contract with the Fund, or the Fund's distributor, the service organization may be the record holder of your shares. At the Special Meeting, a service organization will vote shares for which it receives instructions from its customers in accordance with those instructions. A signed proxy card or other authorization by a shareholder that does not specify how the shareholder's shares should be voted on a proposal may be deemed an instruction to vote such shares in favor of the applicable proposal. If a service organization is not a member of the NYSE, it may be permissible for the service organization to vote shares with respect to which it has not received specific voting instructions from its customers. Some service organizations are affiliates of BlackRock and Merrill Lynch and therefore have an i nterest in the outcome of the voting on the new investment sub-advisory agreement in Proposal 1 and stand to benefit if that proposal is approved. With respect to any shares for which a BlackRock -affiliated service organization that is not a member of the NYSE (including certain affiliates of PNC) is the holder of record and for which it does not receive voting instructions from its customers, such service organization may, subject to applicable law, vote those shares in the same proportion as the votes received from its customers for which instructions have been received to the extent it deems doing so to be in the best interests of the Fund and shareholders.
If you own shares that are held of record by a service organization, and if you have not given or do not give voting instructions for your shares, they may not be voted at all or, as described above, may be voted in a manner that you may not intend. Therefore, you are strongly encouraged to be sure your broker-dealer or service organization has instructions as to how you want your shares to be voted.
Other Matters to Come Before the Meeting
Management of the Fund does not know of any matters to be presented at the Special Meeting other than those described in this Proxy Statement. If other business should properly come before the Special Meeting, the proxy holders will vote thereon in accordance with their best judgment.
Shareholder Proposals for Future Meetings
The Fund is not required to hold annual meetings of shareholders and currently does not intend to hold such meetings unless shareholder action is required in accordance with the 1940 Act. In order for a shareholder proposal to be considered for inclusion in the proxy statement at any subsequent meeting of shareholders, the proposal must be submitted a reasonable time before the proxy statement for that meeting is mailed. Whether a proposal is timely submitted in the proxy statement will be determined in accordance with applicable federal and state laws. The timely submission of a proposal does not guarantee its inclusion.
Principal Shareholders
The only persons known to own of record or beneficially 5% or more of the outstanding shares of the Fund as of the record date were:
[Insert Table]
Expenses and Additional Proxy Solicitation Information
BlackRock and Merrill Lynch have agreed to bear the total costs of the Special Meeting, which includes all the costs of preparing, printing and mailing the proxy materials for the Special Meeting of shareholders of the Trust and all costs of solicitation of proxies. The solicitation of proxies will be made primarily by mail, oral communication, telephone, or other permissible electronic means by representatives of the Trust, Trust affiliates, IICO, IICO affiliates and certain broker-dealers (who may be specifically compensated for such services).
By order of the Board of Trustees, | |
Kristen A. Richards | |
Assistant Secretary |
_________, 2006
Exhibit A
PROPOSED INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT, made as of the ____________, by and betweenIvy Investment Management Company, a Delaware corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Adviser") and BlackRock Capital Management, Inc., a Delaware corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Sub-Adviser").
WHEREAS, the Adviser is the investment manager to Ivy Funds (the "Trust"), an open-end diversified management investment company organized as a series fund, registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with portfolio selection and related research and statistical services in connection with the Adviser's investment advisory activities on behalf of the Trust's Small Cap Value Fund (hereinafter "Fund"), and the Sub-Adviser desires to furnish such services to the Adviser;
NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, it is agreed as follows:
1. Appointment of Sub-Adviser
In accordance with and subject to the Investment Management Agreement between the Trust and the Adviser dated July 23, 2003, the Adviser hereby appoints the Sub-Adviser to perform portfolio selection services described herein for investment and reinvestment of the Fund, subject to the control and direction of the Trust's Board of Trustees, for the period and on the terms hereinafter set forth. The Sub-Adviser accepts such appointment and agrees to furnish the services hereinafter set forth for the compensation herein provided. The Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized, have no authority to act for or represent the Trust or the Adviser in any way or otherwise be deemed an agent of the Trust or the Adviser.
2. Obligations of and Services to be Provided by the Sub-Adviser
(a) The Sub-Adviser shall provide the following services and assume the following obligations with respect to the Fund of the Trust:
(1) | The investment of the assets of the Fund shall at all times be subject to the applicable provisions of the Declaration of Trust, the Bylaws, the Registration Statement, the current Prospectus and the Statement of Additional Information of the Trust and shall conform to the investment objectives, policies and restrictions of the Fund as set forth in such documents and as interpreted from time to time by the Board of Trustees of the Trust and by the Adviser. Within the framework of the investment objectives, policies and restrictions of the Fund, and subject to the supervision of the Adviser, the Sub-Adviser shall have the sole and exclusive responsibility for the making and execution of all investment decisions for the Fund. The Adviser agrees to promptly inform the Sub-Adviser if such objective, policies or restrictions change and to deliver to the Sub-Adviser updated documents, if prepared. | ||
(2) | In carrying out its obligations to manage the investments and reinvestments of the assets of the Fund, the Sub-Adviser shall: (1) obtain and evaluate pertinent economic, statistical, financial and other information affecting the economy generally and individual companies or industries the securities of which are included in the Fund or are under consideration for inclusion therein; (2) formulate and implement a continuous investment program for the Fund consistent with the investment objective and related investment policies for the Fund as set forth in the Trust's Registration Statement, as amended; and (3) take such steps as are necessary to implement the aforementioned investment program by purchase and sale of securities including the placing, or directing the placement through an affiliate of the Sub-Adviser, of orders for such purchases and sales. | ||
(3) | In connection with the purchase and sale of securities of the Fund, the Sub-Adviser shall arrange for the transmission to the Adviser (or its designee) and the Custodian for the Trust on a daily basis such confirmation, trade tickets and other documents as may be necessary to enable them to perform their administrative responsibilities with respect to the Fund. With respect to portfolio securities to be purchased or sold through the Depository Trust Company, the Sub-Adviser shall arrange for the automatic transmission of the I.D. confirmation of the trade to the Custodian of the Fund. The Sub-Adviser shall render such reports to the Adviser and/or to the Trust's Board of Trustees concerning the investment activity and portfolio composition of the Fund in such form and at such intervals as the Adviser or the Board may from time to time require. | ||
(4) | The Sub-Adviser shall, in the name of the Trust, place or direct the placement of orders for the execution of portfolio transactions in accordance with the policies with respect thereto, as set forth in the Trust's Registration Statement, as amended from time to time, and under the Securities Act of 1933, as amended (the "1933 Act") and the 1940 Act. In connection with the placement of orders for the execution of the Fund's portfolio transactions, the Sub-Adviser shall create and maintain all necessary brokerage records of the Trust in accordance with all applicable law, rules and regulations, including but not limited to, records required by Section 31(a) of the 1940 Act. All records shall be the property of the Trust and shall be available for inspection and use by the Securities and Exchange Commission, the Trust or any person retained by the Trust. Where applicable, such records shall be maintained by the Sub-Adviser for the period and in the place required by Rule 31a-2 under the 1940 Act. | ||
(5) | In placing orders or directing the placement of orders for the execution of portfolio transactions, the Sub-Adviser shall select brokers and dealers for the execution of the Fund's transactions. In selecting brokers or dealers to execute such orders, the Sub-Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services which enhance the Sub-Adviser's investment research and portfolio management capability generally. It is further understood in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Sub-Adviser may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Sub-Adviser determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and/or research services (as defined in Section 28(e) provided by such broker, viewed in te rms either of the Fund's or the Sub-Adviser's overall responsibilities to the Sub-Adviser's discretionary accounts. | ||
The Sub-Adviser shall render such reports to the Adviser and/or to the Fund's Board of Trustees regarding the total amount and usage of all commissions generated as a result of trades executed for the Fund's holdings, as well as information regarding third-party services, if any, received by the Sub-Adviser as a result of trading activity with select brokers and dealers. |
(b) The Sub-Adviser shall use the same skill and care in providing services to the Trust as it uses in providing services to fiduciary accounts for which it has investment responsibility. The Sub-Adviser will comply with all applicable rules and regulations of the Securities and Exchange Commission.
(c) The Sub-Adviser shall (i) comply with all reasonable requests of the Trust (through the Adviser) for information, including information required in connection with the Trust's filings with the Securities and Exchange Commission (the "SEC") and state securities commissions, and (ii) provide such other services as the Sub-Adviser shall from time to time determine to be necessary or useful to the administration of the Trust.
(d) The Sub-Adviser shall furnish to the Adviser for distribution to the Trust's Board of Trustees periodic reports on the investment performance of the Fund and on the performance of its obligations under this Agreement and shall supply such additional reports and information as the Trust's officers or Board of Trustees shall reasonably request.
(e) On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other customers, the Sub-Adviser, to the extent permitted by applicable law, may aggregate the securities to be so sold or purchased in order to obtain the best execution or lower brokerage commissions, if any. The Sub-Adviser also may purchase or sell a particular security for one or more customers in different amounts. On either occasion, and to the extent permitted by applicable law and regulations, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other customers. In no instance, however, will the Fund's assets be purchased from or sold to the Adviser, the Sub-Adviser , the Trust's principal underwriter, or any affiliated person of either the Trust, the Adviser, the Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the SEC and the 1940 Act.
(f) Consistent with U.S. securities laws, the Sub-Adviser agrees to adopt written trade allocation procedures that are "fair and equitable" to its clients which are consistent with the investment policies set out in the prospectuses and statements of additional information (including amendments) of the Fund or as the Trust's Board of Trustees may direct from time to time. The Sub-Adviser also agrees to effect securities transactions in client accounts consistent with the allocation system described in such written procedures, to keep accurate records of such transactions and to fully disclose such trade allocation procedures and practices to clients.
(g) The Sub-Adviser shall review all proxy solicitation materials and be responsible for voting and handling all proxies in relation to the securities held in the Fund. The Adviser shall instruct the custodian and other appropriate parties providing services to the Fund to promptly forward misdirected proxies to the Sub-Adviser.
The Sub-Adviser shall provide to the Advisor a copy of Sub-Adviser's written proxy voting policies and procedures, as adopted, including policies on addressing potential conflicts of interest and a copy of any summary of the procedures, if applicable. Sub-Adviser shall also be responsible for maintaining records with respect to the proxy votes cast for the Fund. The records shall conform to the applicable SEC proxy regulations.
Records of all applicable proxy voting records will be provided to the Adviser within 3 business days of any request, written or oral (voting records should be available in hard and soft copy).
(h) The Sub-Adviser shall review all notices, including but not limited to corporate action notices, and provide and respond to all corresponding requests for information in relation to the securities held in the Fund. The Adviser shall instruct the custodian and other appropriate parties providing services to the Fund to promptly forward misdirected corporate action notices to the Sub-Adviser.
(i) The Sub-Adviser shall promptly notify the Adviser of any financial condition that is likely to impair the Sub-Adviser's ability to fulfill its commitment under this Agreement and/or any termination or resignation of senior (key) personnel.
3. Delivery of Documents to the Adviser. The Sub-Adviser has furnished the Adviser with copies of each of the following documents:
(a) The Sub-Adviser's current Form ADV and any amendments thereto, if applicable;
(b) The Sub-Adviser's most recent audited balance sheet;
(c) Separate lists of persons whom the Sub-Adviser wishes to have authorized to give written and/or oral instructions to the custodian and the fund accounting agent of Trust assets for the Fund; and
(d) The Code of Ethics of the Sub-Adviser as currently in effect.
(e) The Sub-Adviser's compliance policies and procedures adopted pursuant to Rule 206(4)-7 under the Investment Adviser Act of 1940 (the "Adviser Act").
The Sub-Adviser will furnish the Adviser from time to time with copies, properly certified or otherwise authenticated, of all material amendments of or supplements to the foregoing, if any. Additionally, the Sub-Adviser will provide to the Adviser such other documents relating to its services under this Agreement as the Adviser may reasonably request on a periodic basis. Such material amendments or supplements as to items (a) through (d) above will be provided within 30 days of the time such materials became available to the Sub-Adviser.
4. Expenses
During the terms of this Agreement, the Sub-Adviser will pay all expenses incurred by it in connection with its activities under this Agreement.
5. Compensation
In payment for the investment sub-advisory services to be rendered by the Sub-Adviser in respect of the Fund hereunder, the Adviser shall pay to the Sub-Adviser as full compensation for all services hereunder a fee computed at an annual rate which shall be a percentage of the average daily value of the net assets of the Fund. The fee shall be accrued daily and shall be based on the net asset values of all of the issued and outstanding shares of the Fund as determined as of the close of each business day pursuant to the Declaration of Trust, Bylaws and currently effective Prospectus and Statement of Additional Information of the Trust. The fee shall be payable in arrears on the last day of each calendar month.
The amount of such annual fee, as applied to the average daily value of the net assets of the Fund shall be as described in the schedule below:
Assets Fee
Net Portfolio Assets 0.50%
6. Renewal and Termination
This Agreement shall continue in effect until September 30, 2007, and from year to year thereafter provided such continuance is specifically approved at least annually by a vote of the holders of the majority of the outstanding voting securities of a Fund, or by a vote of the majority of the Trust's Board of Trustees. And further provided that such continuance is also approved annually by a vote of the majority of the Trust's Board of Trustees who are not parties to this Agreement or interested persons of parties hereto, cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated at any time without payment of penalty: (i) by the Trust's Board of Trustees or by a vote of a majority of the outstanding voting securities of the class of capital stock of the Fund on sixty days' prior written notice, or (ii) by either party hereto upon sixty days' prior written notice to the other. This Agreement will terminate automatically upon any termination of the Investment Management Agreement between the Trust and the Adviser or in the event of its assignment. The terms "interested person," "assignment" and "vote of a majority of the outstanding voting securities" shall have the meanings set forth in the 1940 Act.
7. General Provisions
(a) The Sub-Adviser may rely on information reasonably believed by it to be accurate and reliable. Except as may otherwise be provided by the 1940 Act, neither the Sub-Adviser nor its officers, directors, employees or agents shall be subject to any liability for any error of judgment or mistake of law or for any loss arising out of any investment or other act or omission in the performance by the Sub-Adviser of its duties under this Agreement or for any loss or damage resulting from the imposition by any government or exchange control restrictions which might affect the liquidity of the Fund's assets, or from acts or omissions of custodians or securities depositories, or from any war or political act of any foreign government to which such assets might be exposed, provided that nothing herein shall be deemed to protect, or purport to protect, the Sub-Adviser against any liability to the Trust or to its shareholders to which the Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its obligations and duties hereunder.
(b) The Adviser and the Trust's Board of Trustees understand that the value of investments made for the Account may go up as well as down, is not guaranteed and that investment decisions will not always be profitable. The Adviser has not made and is not making any guarantees, including any guarantee as to any specific level of performance of the Fund. The Adviser and the Trust's Board of Trustees acknowledge that each Fund is designed for the described investment objective and is not intended as a complete investment program. They also understand that investment decisions made on behalf of the Fund by Sub-Adviser are subject to various market and business risks.
(c) This Agreement shall not become effective unless and until it is approved by the Board of Trustees of the Trust, including a majority of the members who are not "interested persons" to parties to this Agreement, by a vote cast in person at a meeting called for the purpose of voting such approval, and by a majority of the outstanding voting securities of the class of capital stock of the Fund.
(d) The Adviser understands that the Sub-Adviser now acts, will continue to act, or may act in the future, as investment adviser to fiduciary and other managed accounts, including other investment companies, and the Adviser has no objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly performs all obligations under this Agreement. The Adviser also understands that the Sub-Adviser may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Sub-Adviser with respect to the Fund. Nothing in this Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Trust, any security which the Sub-Adviser or its shareholders, directors, officers, employees or affiliates may purchase or sell for its or their own accou nt(s) or for the account of any other client.
(e) Except to the extent necessary to perform its obligations hereunder, nothing herein shall be deemed to limit or restrict the right of the Sub-Adviser, or the right of any of its officers, directors or employees who may also be an officer, trustee or employee of the Trust, or persons otherwise affiliated with the Trust (within the meaning of the 1940 Act) to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other trust, corporation, firm, individual or association.
8. Confidential Treatment. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Fund or such persons as the Adviser may designate in connection with the Fund. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder, particularly, but not limited to, any list of securities which, on a temporary basis, may not be bought or sold for the Fund, is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Fund.
9. Representations and Warranties. The Sub-Adviser hereby represents and warrants as follows:
(a) The Sub-Adviser is registered with the SEC as an investment adviser under the Advisers Act, and such registration is current, complete and in full compliance with all material applicable provisions of the Advisers Act and the rules and regulations thereunder;
(b) The Sub-Adviser has all requisite authority to enter into, execute, deliver and perform the Sub-Adviser's obligations under this Agreement;
(c) The Sub-Adviser's performance of its obligations under this Agreement does not conflict with any law, regulation or order to which the Sub-Adviser is subject; and
(d) The Sub-Adviser has reviewed the portion of (i) the registration statement filed with the SEC, as amended from time to time, for the Fund ("Registration Statement"), and (ii) Fund's prospectuses and statements of additional information (including amendments) thereto, in each case in the form received from the Adviser with respect to the disclosure about the Sub-Adviser and the Fund of which the Sub-Adviser has knowledge and except as advised in writing to the Adviser such Registration Statement, prospectuses and statements of additional information (including amendments) contain, as of their respective dates, no untrue statement of any material fact of which the Sub-Adviser has knowledge and do not omit any statement of a material fact of which the Sub-Adviser has knowledge which was required to be stated therein or necessary to make the statements contained therein not misleading.
10. Use of Names.
(a) The Sub-Adviser acknowledges and agrees that the names Ivy Funds and Ivy Investment Management Company, and abbreviations or logos associated with those names, are the valuable property of the Adviser and its affiliates; that the Trust, the Adviser and their affiliates have the right to use such names, abbreviations and logos; and that the Sub-Adviser shall use the names Ivy Funds and Ivy Investment Management Company, and associated abbreviations and logos, only in connection with the Sub-Adviser's performance of its duties hereunder. Further, in any communication with the public and in any marketing communications of any sort, the Sub-Adviser agrees to obtain prior written approval from the Adviser before using or referring to Ivy Funds and Ivy Investment Management Company, or the Fund or any abbreviations or logos associated with those names; provided that nothing herein shall be deemed to pr ohibit the Sub-Adviser from referring to the performance of the Fund in the Sub-Adviser's marketing material as long as such marketing material does not constitute "sales literature" or "advertising" for the Fund, as those terms are used in the rules, regulations and guidelines of the SEC and the National Association of Securities Dealers, Inc.
(b) The Sub-Adviser acknowledges that the Fund and its agents may use the "BlackRock" and "BlackRock Capital Management, Inc." names and the name of the responsible portfolio manager(s) in connection with accurately describing the activities of the Fund, including use with marketing and other promotional and informational material relating to the Fund. The Sub-Adviser hereby agrees and consents to the use of the Sub-Adviser's name upon the foregoing terms and conditions.
11. Reports by the Sub-Adviser and Records of the Fund. The Sub-Adviser shall furnish the Adviser monthly, quarterly and annual reports concerning transactions and performance of the Fund, including information required to be disclosed in the Trust's Registration Statement, in such form as may be mutually agreed. The Sub-Adviser shall permit the financial statements, books and records with respect to the Fund to be inspected and audited by the Trust, the Adviser or their agents at all reasonable times during normal business hours. The Sub-Adviser shall immediately notify and forward to both the Adviser and legal counsel for the Trust any legal process served upon it on behalf of the Adviser or the Trust. The Sub-Adviser shall promptly notify the Adviser of any changes in any information concerning the Sub-Adviser of which the Sub-Adviser becomes aware that would be required to be disclosed in the Trust's Registration Statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser agrees that all records it maintains for the Fund are the property of the Fund and the Trust and further agrees to surrender promptly to the Trust or the Adviser any such records upon the Trust's or the Adviser's request. The Sub-Adviser further agrees to maintain for the Trust the records the Trust is required to maintain under Rule 31a-1(b) insofar as such records relate to the investment affairs of the Fund. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains for the Trust.
12. Indemnification. The Sub-Adviser agrees to indemnify and hold harmless the Fund, each independent trustee of the Fund, the Adviser, any affiliated person within the meaning of Section 2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if any, who, within the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act"), controls ("controlling person") the Adviser, against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Adviser, the Fund, the Trust or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Sub-Adviser's responsibilities as sub-adviser of the Fund (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Sub-Adviser, any of the Sub-Adviser's employees or representatives or any affiliate of or any person acting on behalf of the Sub-Adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Fund or the Trust or any amendment thereof or any supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made in reliance upon written information furnished by the Sub-Adviser to the Adviser, the Trust or any affiliated person of the Adviser or the Trust expressly for use in the Trust's Registration Statement, or upon verbal information confirmed by the Sub-Adviser in writing expressly for use in the Trust's Registration Statement or (3) to the extent of, and as a result of, the failure of the Sub-Ad viser to execute, or cause to be executed, portfolio transactions according to the standards and requirements of the 1940 Act; provided, however, that in no case is the Sub-Adviser's indemnity in favor of the Adviser or any affiliated person or controlling person of the Adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.
The Adviser agrees to indemnify and hold harmless the Sub-Adviser against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Sub-Adviser or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Adviser's responsibilities as investment manager of the Fund (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Adviser, any of the Adviser's employees or representatives or any affiliate of or any person acting on behalf of the Adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Fund or the Trust or any amendment thereof or any supplement thereto or the om ission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made by the Trust other than in reliance upon written information furnished by the Sub-Adviser, or any affiliated person of the Sub-Adviser, expressly for use in the Trust's Registration Statement or other than upon verbal information confirmed by the Sub-Adviser in writing expressly for use in the Trust's Registration Statement; provided, however, that in no case is the Adviser's indemnity in favor of the Sub-Adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.
13. Assignment by the Sub-adviser. This Agreement shall not be assigned by the Sub-adviser to any other person or company without the Adviser's prior written consent.
14. Jurisdiction and Applicable Law. The Sub-adviser irrevocably submits to the jurisdiction of any state or U.S. federal court sitting in the State of Kansas over any suit, action or proceeding arising out of or relating to this proposal and the agreement contemplated herein. This Agreement shall be construed and enforced in accordance with the laws of Massachusetts, the 1940 Act and the applicable rules and guidance issued by the Securities and Exchange Commission and its staff thereunder. The Sub-adviser irrevocably waives, to the fullest extent permitted by law, any objection which it may have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. The Sub-adviser agrees that final judgment in any such suit, action or proceeding brou ght in such a court shall be conclusive and binding upon the Sub-adviser, and may be enforced to the extent permitted by applicable law in any court of the jurisdiction of which the Sub-adviser is subject by a suit upon such judgment.
Nothing in this Section 14 shall affect the right of the Adviser to serve process in any manner permitted by law or limit the right of the Adviser to bring proceedings against the Sub-adviser in the courts of any jurisdiction or jurisdictions.
15. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered or sent by pre-paid first class letter post to the following addresses or to such other address as the relevant addressee shall hereafter notify for such purpose to the others by notice in writing and shall be deemed to have been given at the time of delivery.
If to the Adviser: | IVY INVESTMENT MANAGEMENT COMPANY | |
6300 Lamar Avenue | ||
Overland Park, KS 66202, U.S.A. | ||
Attention: Henry J. Herrmann, President | ||
If to the Trust or Fund: | IVY FUNDS | |
6300 Lamar Avenue | ||
Overland Park, KS 66202, U.S.A. | ||
Attention: Kristen A. Richards, Vice President and | ||
If to the Sub-Adviser: | BLACKROCK CAPITAL MANAGEMENT, INC. |
19. Severability. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors.
20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all such counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement.
IVY INVESTMENT MANAGEMENT COMPANY
By:___________________________
Henry J. Herrmann
Its: President
Date:
BLACKROCK CAPITAL MANAGEMENT, INC.
By:___________________________
Its:___________________________
Date:_________________________
Form of Proxy Card
IVY FUNDS | IMPORTANT: ELECTRONIC VOTING OPTIONS AVAILABLE Fast, convenient, easy and available 24 hours a day! Vote by Phone: Call toll-free 1-___-___-____. Follow the recorded instructions. Vote on the Internet: Log on to www.proxyweb.com. Follow the on-screen instructions. Vote by Mail: Check the appropriate boxes on the reverse side of this card, sign and date this card and return in the envelope provided. |
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR CARD. |
*** CONTROL NUMBER: 999 999 999 999 99 ***
IVY SMALL CAP VALUE FUND A Series of IVY FUNDS | SPECIAL MEETING OF THE SHAREHOLDERS November 9, 2006 |
The undersigned, having received Notice of the November 9, 2006 Special Meeting of Shareholders of the above referenced fund (the "Fund"), a series of Ivy Funds (the "Trust"), and the related Proxy Statement, hereby appoints Kristen A. Richards and Daniel C. Schulte as proxies, each with full power of substitution and revocation, to represent the undersigned and to vote all shares of the Fund that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at 6300 Lamar Avenue, Overland Park, Kansas on November 9, 2006 at 3:00 p.m. Central Time, and any adjournments or postponements thereof. The undersigned hereby revokes any and all proxies with respect to such shares previously given by me. This instruction may be revoked at any time prior to its exercise at the Special Meeting by execution of a subsequent proxy card, by written notice to the Secretary of the Trust, or by voting in person at the Special Meeting.
Dated: ____________________, 2006 | |||
[ | ] | ||
Signature(s) of Shareholder(s) (Please sign in Box) |
Please sign name or names as appearing on proxy and return promptly in the enclosed postage-paid envelope. If signing as a representative, please include capacity.
PLEASE INDICATE VOTES ON OPPOSITE SIDE OF CARD.
Please fill in boxes as shown using black or blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSALS.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFICATIONS. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF EACH PROPOSAL.
1. To approve a sub-advisory agreement between Ivy Investment Management Company and BlackRock Capital Management, Inc. with respect to the Fund.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business that may properly come before the
meeting or any adjournments or postponements thereof.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. IF YOU ARE NOT VOTING BY PHONE OR INTERNET, PLEASE SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Form of Buckslip
IVY FUNDS
THREE EASY WAYS TO VOTE
YOUR PROXY
The accompanying proxy statement discusses important matters affecting Ivy Small Cap Value Fund, a series of Ivy Funds. Please take time to read the proxy statement, then cast your vote. There are three easy ways to vote -- choose the method that's most convenient for you. Please vote all proxy cards received.
1. | Vote by telephone. Just call our dedicated proxy voting number --1-__________. This is a toll-free number. It's available 24 hours a day, seven days a week. For each proxy, enter the 14-digit number printed on the upper portion of the card and follow the voice promptings to record your vote. |
2. | Vote by Internet. Visit the web site --www.proxyweb.com and enter the 14-digit number. Then follow the voting instructions that will appear. Vote each card received separately. |
3. | Vote by mail. Simply fill out the proxy card(s) and return them to us in the enclosed postage paid envelope.Please do not return your cards if you vote by phone or Internet. |
Remember -- your vote matters.
Please vote today!