SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934 (Amendment No.__ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[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 Rule 14a-11(c) or Rule 14a-12
IVY FUND
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identity the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
Preliminary Copy
[IVY FUNDS LOGO]
IMPORTANT NEWS FOR SHAREHOLDERS
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.
QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Ivy Management, Inc. ("IMI"), your Fund's investment adviser and/or
manager, is a subsidiary of Mackenzie Investment Management Inc.
("MIMI"). MIMI has entered into a definitive agreement with Waddell &
Reed Financial, Inc. ("W&R"), whereby W&R will acquire MIMI's entire
operation, including IMI and Ivy Mackenzie Distributors, Inc. ("IMDI"),
your Fund's distributor (the "Transaction"). Following the closing of
the Transaction, IMI and IMDI will become part of W&R. The Transaction
is expected to close on December [ __ ], 2002.
Based in Overland Park, Kansas, W&R is a leading financial services
organization with a network of more than 3,100 financial advisers
throughout the United States. W&R's subsidiary, Waddell & Reed
Investment Management Company, manages more than $29 billion, including
approximately $24 billion in 47 mutual fund portfolios.
As a result of the sale of MIMI's operations to W&R, your Fund's master
business management and/or investment advisory agreement with IMI will
terminate. Accordingly, we are asking shareholders of the Funds to
approve new agreements. We are also asking shareholders to elect eight
nominees to the Ivy Fund Board of Trustees. The Proxy Statement
provides additional information about W&R, the new agreements and these
other matters. If the proposals are approved by shareholders, the
effectiveness of each is contingent upon the closing of the
Transaction, and each proposal will not become effective until the
closing of the Transaction. If the Transaction is not consummated, none
of the proposals will become effective.
The Board members of your Fund unanimously recommend that you vote FOR
these proposals.
Q. WHY DID YOU SEND ME THIS BOOKLET?
A. You are receiving these proxy materials - a booklet that includes the
Proxy Statement and one or more proxy cards - because you have the
right to vote on important proposals concerning your investment in a
Fund.
Q. WHY ARE MULTIPLE CARDS ENCLOSED?
A. If you own shares of more than one Fund, you will receive a proxy card
for each Fund that you own.
Q. WHY AM I BEING ASKED TO VOTE ON THE NEW AGREEMENTS?
A. The Transaction would result in a change in ownership of MIMI, which
would cause a "change in control" of IMI under U.S. federal securities
laws. Following the Transaction, it is expected that IMI and its
affiliates will provide the Funds with services at least equal in scope
and quality to those currently being provided to the Funds by IMI and
its affiliates. However, the "change in control" would automatically
end each Fund's master business management, investment advisory and
subadvisory agreements, as applicable. The new agreements on which your
approval is sought ("New Agreements") would replace the current
agreements.
The New Agreements are the same in all material respects as the current
agreements, with the exception of the New Agreements between IMI,
Henderson Global Investors (North America) Inc. ("HGINA") and Henderson
Investment Management Ltd. ("Henderson"), with respect to Ivy European
Opportunities Fund and Ivy International Small Companies Fund (the "New
Henderson Agreements"). Under the New Henderson Agreements, HGINA would
act as subadviser to IMI for these two Funds. Henderson, the two Funds'
current subadviser, would remain as a subadviser, but pursuant to a
subadvisory agreement with HGINA instead of with IMI. The New Henderson
agreements would also increase the subadvisory fee rates that IMI would
pay to HGINA for the subadvisory services. However, the overall
advisory fee rates the Funds pay for advisory services will not change.
Henderson's existing portfolio management team would continue to manage
these Funds.
For the Transaction to close, certain conditions must be satisfied,
including the approval of the New Agreements by shareholders of Funds.
If the Transaction closes and shareholders of a particular Fund have
not approved a New Agreement for that Fund, the Board of Trustees will
take such action as it deems to be in the best interests of that Fund
and its shareholders.
Q. HOW WILL THE TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A. Your Fund and its investment objectives would not change as a result of
the Transaction, and you would still own the same shares in the same
Fund.
Q. WILL THE FEES PAYABLE UNDER THE NEW AGREEMENTS INCREASE AS A RESULT OF
THE TRANSACTION?
A. No. The proposals to approve the New Agreements seek no increase in fee
rates.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund unanimously
recommend that you vote FOR the Proposals.
Q. WILL MY FUND PAY FOR THIS PROXY SOLICITATION?
A. No. The Funds will not bear these costs.
Q. WHOM SHOULD I CALL FOR ADDITIONAL INFORMATION ABOUT THIS PROXY
STATEMENT?
A. Please call Georgeson Shareholder Communications Inc., your Fund's
information agent, at [toll-free number].
Preliminary Copy
[IVY FUNDS LOGO and ADDRESS]
October [21], 2002
Dear Shareholder:
On August 29, 2002, Mackenzie Investment Management Inc. ("MIMI"), the
parent company of Ivy Management, Inc. ("IMI"), your Fund's investment adviser
and/or manager, entered into a definitive agreement with Waddell & Reed
Financial, Inc. ("W&R"), whereby W&R will acquire MIMI's entire operation,
including IMI and Ivy Mackenzie Distributors, Inc. ("IMDI"), your Fund's
distributor (the "Transaction"). Following the closing of the Transaction, IMI
and IMDI will become part of W&R. The Transaction is expected to close on or
about December [ __ ], 2002.
Based in Overland Park, Kansas, W&R is a leading financial services
organization with a network of more than 3,100 financial advisers throughout the
United States. W&R's subsidiary, Waddell & Reed Investment Management Company,
manages more than $29 billion, including approximately $24 billion in 47 mutual
fund portfolios. The enclosed proxy statement contains a more thorough
description of W&R's businesses and operations.
Because of the Transaction, it is necessary for the shareholders of
each of the Funds to approve a new master business management agreement and, for
all Funds other than Ivy Global Natural Resources Fund, a new investment
advisory agreement. In addition, it is necessary for the shareholders of Ivy
European Opportunities Fund, Ivy International Small Companies Fund and Ivy
Cundill Global Value Fund to approve new subadvisory agreements.
At a shareholder meeting on December 10, 2002, you will be asked to
approve one or more of the following proposals, depending upon the Fund(s) in
which you are invested:
. A new master business management and investment advisory agreement
with IMI for all Funds other than Ivy Global Natural Resources
Fund;
. A new master business management agreement with IMI for Ivy Global
Natural Resources Fund;
. New subadvisory agreements with Henderson Global Investors (North
America) Inc. and Henderson Investment Management Limited for Ivy
European Opportunities Fund and Ivy International Small Companies
Fund;
. A new subadvisory agreement with Peter Cundill & Associates, Inc.
for Ivy Cundill Global Value Fund; and
. The election of eight nominees to serve as Trustees on the Board
of Trustees.
The new agreements are the same in all material respects as those
currently in effect, with the exception of the new agreements between IMI,
Henderson Global Investors (North America) Inc. ("HGINA"), and Henderson
Investment Management Ltd. ("Henderson") with respect to Ivy European
Opportunities Fund and Ivy International Small Companies Fund (the "New
Henderson Agreements"). Under the New Henderson Agreements, HGINA would act as
subadviser to IMI for these two Funds. Henderson, the two Funds' current
subadviser, would remain as a subadviser, but pursuant to a subadvisory
agreement with HGINA instead of with IMI. The New Henderson Agreements would
also increase the subadvisory fee rates that IMI would pay to HGINA for the
subadvisory services. However, the overall advisory fee rates the Funds pay for
advisory services will not change. Henderson's existing portfolio management
team would continue to manage these Funds.
If approved by shareholders at the shareholder meeting, each new
agreement would take effect upon the closing of the Transaction. However, the
effectiveness of each proposal is contingent upon the closing of the
Transaction, and each proposal will not become effective until the closing of
the Transaction. If the Transaction is not consummated, none of the proposals
will become effective.
Please remember that your Fund and its investment objectives will not
change as a result of this proxy solicitation or the Transaction. You will still
own the same shares in the same Fund.
After careful consideration, Ivy Fund's Board of Trustees unanimously
approved each of the proposals and recommends that shareholders vote "FOR" each
proposal.
Your vote is important. Please take a moment after reviewing the
enclosed materials to sign and return your proxy card in the enclosed postage
paid return envelope. It is important that we receive your vote no later than
the time of the shareholder meeting on December 10, 2002. If you are a
shareholder of more than one Fund, or have more than one account registered in
your name, you will receive a separate proxy card for each account. Please vote
and return each proxy card that you receive, or take advantage of the telephonic
or electronic voting procedures described in the proxy card(s). If we do not
hear from you after a reasonable amount of time, you may receive a telephone
call from our proxy solicitor, Georgeson Shareholder Communications, Inc.,
reminding you to vote your shares.
We understand that the Transaction may cause you some concern. Once
again, neither this proxy solicitation nor the Transaction will change your Fund
or its investment objectives. If the Transaction goes forward, as expected, you
will still own the same shares in the same Fund. If you have any questions,
please review the attached "Questions and Answers" or call [toll-free number].
We'll help you get the answers you need promptly. We appreciate your
participation and prompt response in this matter and thank you for your
continued support of Ivy Funds.
Sincerely,
[signature]
Keith J. Carlson
Chairman of the Board
Preliminary Copy
NOTICE OF SPECIAL MEETING
OF THE SHAREHOLDERS OF
IVY FUND
Notice is hereby given that a Special Meeting of the Shareholders (the
"Special Meeting") of each fund listed on Appendix 1 to the attached Proxy
Statement (the "Funds," each a "Fund"), all of the series of Ivy Fund (the
"Trust"), will be held on December 10, 2002 at 10:00 a.m., Eastern time, at 925
South Federal Highway, Suite 600, Boca Raton, Florida 33432 for the following
purposes:
1. For shareholders of all of the Funds, except for Ivy Global Natural
Resources Fund, to approve or disapprove a new master business management
and investment advisory agreement between the Trust, on behalf of each of
those Funds, and Ivy Management, Inc. ("IMI");
2. For shareholders of Ivy Global Natural Resources Fund, to approve or
disapprove a new master business management agreement between the Trust, on
behalf of that Fund, and IMI;
3. For shareholders of Ivy European Opportunities Fund and Ivy International
Small Companies Fund, to approve or disapprove a new Subadvisory Agreement
between IMI and Henderson Global Investors (North America) Inc., and a new
Subadvisory Agreement between Henderson Global Investors (North America)
Inc. and Henderson Investment Management Limited;
4. For shareholders of Ivy Cundill Global Value Fund, to approve or disapprove
a new Subadvisory Agreement between IMI and Peter Cundill & Associates,
Inc.; and
5. For shareholders of all of the Funds, to approve or disapprove the election
of eight nominees to serve as Trustees on the Board of Trustees of the
Trust.
Please read the enclosed Proxy Statement carefully for information concerning
the proposals to be placed before the Special Meeting or any adjournments or
postponements thereof.
The Board of Trustees unanimously recommends that shareholders vote "FOR" all
applicable proposals.
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 applicable 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 October 14, 2002 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(S), 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(S). 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,
[signature]
Paula Wolfe
Secretary
October [21], 2002
Preliminary Copy
IVY FUND
925 South Federal Highway, Suite 600
Boca Raton, Florida 33432
PROXY STATEMENT
October [21], 2002
This Proxy Statement provides you with information you should review
before voting on the matters listed in the Notice of Special Meeting (each a
"Proposal") for each series listed on Appendix 1 to this Proxy Statement (the
"Funds," each a "Fund"), which are all of the series of Ivy Fund (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 each Fund (the "Special Meeting") to be held at 925 South
Federal Highway, Suite 600, Boca Raton, Florida 33432, on December 10, 2002 at
10:00 a.m., Eastern 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 a Fund only with
respect to the particular Proposals that affect that Fund. The solicitation of
votes is made by the mailing of this Proxy Statement and the accompanying proxy
card to shareholders on or about October [21], 2002. The following table
identifies which Funds are entitled to vote on each Proposal.
- -------------------------------------------------------------------------------------------------------------------------------
Fund Proposal Description of Proposal
---- Number -----------------------
------
- -------------------------------------------------------------------------------------------------------------------------------
All Funds, except Ivy Global 1 to approve or disapprove a new Master Business Management and Investment
Natural Resources Fund Advisory Agreement between the Trust, on behalf of the applicable Funds, and
Ivy Management, Inc. ("IMI")
- -------------------------------------------------------------------------------------------------------------------------------
Ivy Global Natural 2 to approve or disapprove a new Master Business Management Agreement between
Resources Fund the Trust, on behalf of the Fund, and IMI
- -------------------------------------------------------------------------------------------------------------------------------
Ivy European Opportunities 3A to approve or disapprove a new Subadvisory Agreement between IMI and
Fund and Ivy International Henderson Global Investors (North America) Inc. ("HGINA")
Small Companies Fund
- -------------------------------------------------------------------------------------------------------------------------------
Ivy European Opportunities 3B to approve or disapprove a new Subadvisory Agreement between HGINA and
Fund and Ivy International Henderson Investment Management Limited ("Henderson")
Small Companies Fund
- -------------------------------------------------------------------------------------------------------------------------------
Ivy Cundill Global Value 4 to approve or disapprove a new Subadvisory Agreement between IMI and Peter
Fund Cundill & Associates, Inc. ("Cundill")
- -------------------------------------------------------------------------------------------------------------------------------
All Funds 5 to approve or disapprove the election of eight nominees to serve as Trustees
on the Board of Trustees
- -------------------------------------------------------------------------------------------------------------------------------
The appointed proxies will vote in their discretion on any other
business as 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 Trust's Annual Report for the fiscal year ended December
31, 2001, and the Trust's Semi-Annual Report for the period ended June 30, 2002,
have previously been mailed to shareholders. This Proxy Statement should be read
in conjunction with the Annual and Semi-Annual Reports. You can obtain copies of
the Annual and Semi-Annual Reports, without charge, by writing to Ivy Mackenzie
Distributors, Inc. ("IMDI"), 925 South Federal Highway, Suite 600, Boca Raton,
Florida 33432, or by calling 800-456-5111.
GENERAL OVERVIEW
On August 29, 2002, Mackenzie Investment Management Inc. ("MIMI"), the
parent company of IMI, Mackenzie Financial Corporation ("MFC"), the indirect
parent of MIMI, and Ivy Acquisition Corporation ("IAC"), a wholly-owned
subsidiary of MFC and majority shareholder of MIMI, entered into an agreement
with Waddell & Reed Financial, Inc. ("W&R"), pursuant to which MIMI is being
indirectly sold to W&R (the "Transaction"). The Transaction is structured as a
dissolution followed by a stock purchase. Following the expected approval by
MIMI shareholders of a plan of complete liquidation and dissolution of MIMI,
MIMI will, upon dissolution, make a cash payment to shareholders of MIMI other
than IAC and distribute all of its remaining assets and liabilities, including
MIMI's ownership interest in IMI, to IAC. MFC will then sell, and W&R has agreed
to purchase, all of the outstanding shares of IAC. Upon the closing of the
Transaction, it is anticipated that IMI will become a wholly-owned subsidiary of
IAC and an indirect wholly-owned subsidiary of W&R.
W&R is a leading financial services organization with a network of more
than 3,100 financial advisers serving clients throughout the United States. W&R
conducts business through its subsidiaries. The following is a general summary
of W&R's principal business operations.
.. Investment Management. Waddell & Reed Investment Management Company
("WRIMCO"), a subsidiary of W&R, is a registered investment adviser
that provides investment management and advisory services to four
families of mutual funds: the Waddell & Reed Advisors Group of Mutual
Funds; W&R Funds, Inc.; W&R Target Funds, Inc.; and Waddell & Reed
InvestEd Portfolios, Inc. (collectively, the "W&R Mutual Funds").
WRIMCO also provides investment management and advisory services to
institutions and other private clients. As of June 30, 2002, WRIMCO had
nearly $29.1 billion in assets under management, of which approximately
$24.2 billion were mutual fund assets and approximately $3.2 billion
were institutional and separately managed accounts. W&R has
approximately 660,700 mutual fund customers and approximately 118
separate account customers. Austin, Calvert & Flavin, Inc., a
wholly-owned subsidiary of W&R based in San Antonio, Texas, is a
registered investment adviser that manages investments for trusts, high
net worth families and individuals, and pension plans, with
approximately $1.7 billion under management.
.. Mutual Fund and Insurance Product Distribution. Waddell & Reed, Inc.
("WRI"), a subsidiary of W&R, is a registered broker-dealer and
registered investment adviser that acts primarily as the national
distributor and underwriter for shares of the W&R Mutual Funds and the
distributor of variable and other insurance products issued by
Nationwide Life Insurance Company and other insurance companies. WRI is
the exclusive distributor of 31 W&R Mutual Fund portfolios. The other
16 W&R Mutual Fund portfolios are distributed by WRI and other select
third party distributors.
.. Financial Planning. W&R has a proprietary network of over 3,100
financial advisers working from 219 offices across the United States.
W&R's financial advisers provide their clients with personalized
investment advice and guidance regarding mutual funds, retirement
plans, educational savings plans, and a broad array of insurance
products, including life insurance and annuities. The Legend Group, a
wholly-owned subsidiary of W&R based in Palm Beach Gardens, Florida,
primarily serves employees of school districts and other not-for-profit
organizations through its network of 316 financial advisers.
2
It is W&R's intention to maintain and expand the Ivy Funds brand. Following
W&R's acquisition of IAC, W&R may align the investment management, sales and
distribution functions of IMI and IAC with its own. As a part of this process,
W&R may merge IMI into IAC. W&R will also examine opportunities to achieve
synergies and cost reductions in areas of administration and services, for the
benefit of Fund shareholders. IMI, MIMI, IAC and W&R have advised the
Independent Trustees (as defined below) of Ivy Fund that they believe that the
combined organization will continue to provide services that will be at least
equal in scope and quality to those currently being provided to the Funds by IMI
and its affiliates.
PROPOSAL 1
APPROVAL OF MASTER BUSINESS MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
WITH IMI
(For Shareholders of All Funds Except Ivy Global Natural Resources Fund)
Introduction
Shareholders of each Fund are being asked to approve a new master
business management and investment advisory agreement between the Trust, on
behalf of each Fund, and IMI, and a supplement to the agreement that relates to
the Funds (the new master business management and investment advisory agreement
and the supplement to the agreement are together referred to herein as the "New
Agreement"). Approval of the New Agreement is sought so that the management of
each Fund can continue uninterrupted because the present master business
management and investment advisory agreement, as supplemented from time to time
(the "Former Agreement"), would terminate automatically as a result of the
Transaction. For purposes of this Proposal 1, references to the "Funds" or to a
"Fund" do not include Ivy Global Natural Resources Fund.
As stated above, the Transaction is expected to be consummated on or
about December [ __ ], 2002. At that time, IMI is expected to become a
wholly-owned subsidiary of IAC and an indirect wholly-owned subsidiary of W&R.
The change in ownership of IMI resulting from the Transaction would be deemed
under the Investment Company Act of 1940, as amended (the "1940 Act"), to be an
assignment of the Former Agreement. The Former Agreement provides for its
automatic termination upon an assignment. Accordingly, the New Agreement between
IMI and the Trust, on behalf of each Fund, is proposed for approval by
shareholders of each Fund. If the Transaction closes and shareholders of a
particular Fund have not approved the New Agreement for that Fund, the Former
Agreement will terminate and the Board of Trustees will take such action as it
deems to be in the best interests of that Fund and its shareholders. If the
Transaction does not close, the Former Agreement will continue in effect.
The form of the New Agreement is attached as Exhibit A to this Proxy
Statement and the description of its terms in this section is qualified in its
entirety by reference to Exhibit A.
Appendix 2 shows the date when each Fund commenced operations, the date
the Former Agreement became effective with respect to each Fund, the date when
the Former Agreement was last approved by the Board with respect to each Fund,
the date to which the Former Agreement was last continued with respect to each
Fund, and the date when the Former Agreement was last approved by the
shareholders of each Fund./1/ The Former Agreement will terminate upon the
consummation of the Transaction.
IMI does not anticipate that the Transaction will cause any reduction
in the quality of services now provided to the Funds or have any adverse effect
on the ability of IMI to fulfill its obligations to the Funds.
- --------------------
/1/ On April 20, 2001, Investors Group, Inc. ("IGI"), a leading Canadian
financial services organization, acquired control of MFC. That change
in control constituted an assignment of the Funds' then-current
business management and investment advisory agreements, resulting in a
termination of those agreements. On May 29, 2001, shareholders approved
the Former Agreement.
3
The New Agreement must be voted upon separately by the shareholders of
each Fund. If the New Agreement is approved by shareholders, it will take effect
upon the consummation of the Transaction. The New Agreement will remain in
effect for one year following the consummation of the Transaction, and, unless
earlier terminated, will continue from year to year thereafter, provided that
each such continuance is approved annually with respect to each Fund (i) by the
Board or by the vote of a majority of the outstanding voting securities of the
particular Fund, and, in either case, (ii) by a majority of the Trustees who are
not "interested persons" (as defined in the 1940 Act) of any party to the New
Agreement.
Board Approval and Recommendation
At the September 30, 2002 meeting of the Board, the New Agreement was
approved unanimously by the Board, including the Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to the New
Agreement. The New Agreement, as approved by the Board, is submitted for
approval by the shareholders of each Fund. The Board unanimously recommends that
shareholders approve the New Agreement.
Description of the New Agreement
General. Under the New Agreement, IMI provides continuing business
management and investment advisory services with respect to each Fund. The New
Agreement provides that IMI will make investments for the account of each Fund
in accordance with IMI's best judgment and within the investment objectives and
restrictions set forth in the prospectuses applicable to the Funds, the 1940 Act
and the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), relating to regulated investment companies, subject to policy decisions
adopted by the Board. IMI will determine the securities to be purchased or sold
by each Fund and will place orders pursuant to its determinations with any
broker or dealer who deals in such securities. IMI will also (i) comply with all
reasonable requests of the Trust for information, and (ii) provide such other
services as IMI will from time to time determine to be necessary or useful to
the administration of the Funds.
Differences between the New Agreement and Former Agreement. The terms
of the New Agreement are the same in all material respects as those of the
Former Agreement, except for the dates of execution and termination.
Portfolio Transactions. On occasions when IMI deems the purchase or
sale of a security to be in the best interest of a Fund as well as other
customers, the New Agreement permits IMI, to the extent permitted by applicable
law, to aggregate the securities to be so sold or purchased in order to obtain
the best execution or lower brokerage commissions, if any. IMI 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 IMI in the manner it considers to
be the most equitable and consistent with its fiduciary obligations to the Fund
involved and to such other customers.
IMI's Responsibilities. The New Agreement also provides that IMI will
supervise the Funds' business and affairs and will provide such services
reasonably necessary for the operation of the Funds as are not provided by
employees or other agents engaged by the Funds; provided, that IMI will not have
any obligation to provide under the New Agreement any direct or indirect
services to the Funds' shareholders, any services related to the distribution of
the Funds' shares, or any other services which are the subject of a separate
agreement or arrangement between the Funds and IMI. Subject to the foregoing, in
providing business management services under the New Agreement, IMI will, at its
expense: (1) coordinate with the Funds' custodian and monitor the services it
provides to the Funds; (2) coordinate with and monitor any other third parties
furnishing services to the Funds; (3) provide the Funds with the necessary
office space, telephones and other communications facilities as are adequate for
the Funds' needs; (4) provide the services of individuals competent to perform
administrative and clerical functions that are not performed by employees or
other agents engaged by the Funds or by IMI acting in some other capacity
pursuant to a separate agreement or arrangement with the Funds; (5) maintain or
supervise the maintenance by third parties of such books and records of the
Trust as may be required by applicable federal or state law; (6) authorize and
permit IMI's directors, officers and employees who may be elected or appointed
as trustees or officers of the Trust to serve in such capacities; and (7) take
such other action with respect to the Trust, after approval by the Trust, as may
be required by applicable law. The New Agreement also permits IMI to retain
third parties to provide the foregoing services to the Trust, at IMI's own cost
and expense.
4
Fund Expenses. The New Agreement provides that, except as provided in
the sections of the New Agreement related to the provision of business
management services, or as provided in any separate agreement between the Funds
and IMI, the Trust will be responsible for all of its expenses and liabilities,
including: (1) the fees and expenses of the Trustees who are not parties to the
New Agreement or "interested persons" (as defined in the 1940 Act) of any such
party; (2) the salaries and expenses of any of the Trust's officers or employees
who are not affiliated with IMI; (3) interest expenses; (4) taxes and
governmental fees, including any original issue taxes or transfer taxes
applicable to the sale or delivery of shares or certificates therefor; (5)
brokerage commissions and other expenses incurred in acquiring or disposing of
portfolio securities; (6) the expenses of registering and qualifying shares for
sale with the Securities and Exchange Commission (the "SEC") and with various
state securities commissions; (7) accounting and legal costs; (8) insurance
premiums; (9) fees and expenses of the Trust's custodian and transfer agent and
any related services; (10) expenses of obtaining quotations of portfolio
securities and of pricing shares; (11) expenses of maintaining the Trust's legal
existence and of shareholders' meetings; (12) expenses of preparation and
distribution to existing shareholders of periodic reports, proxy materials and
prospectuses; (13) fees and expenses of membership in industry organizations;
and (14) such nonrecurring or extraordinary expenses as may arise, including
litigation affecting a Fund, and any indemnification by a Fund of its officers,
directors, employees and agents with respect thereto. Subsection (14) above is
not included in the Former Agreement, and has been added to the New Agreement to
make explicit what had previously been implicit in the Former Agreement.
Liability of IMI. Pursuant to the New Agreement, IMI will give the
Trust the benefit of IMI's best judgment and efforts in rendering business
management and investment advisory services. The New Agreement states that IMI
will not be liable under the New Agreement for any mistake in judgment or in any
other event whatsoever except for lack of good faith. The New Agreement also
states, however, that nothing in the New Agreement will be deemed to protect or
purport to protect IMI against any liability to the Trust or its shareholders to
which IMI would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of IMI's duties under the New Agreement,
or by reason of IMI's reckless disregard of its obligations and duties under the
New Agreement.
Compensation Paid to IMI. The New Agreement provides that for IMI's
provision of business and management services, each Fund pays IMI a monthly fee
on the first business day of each month based on the average daily value of the
net assets of the Fund during the preceding month at the annual rates set forth
in Appendix 3 to this Proxy Statement. The fee rate payable by each Fund
pursuant to the New Agreement is the same as that Fund's rate payable under the
Former Agreement.
Termination of the Agreement. The New Agreement also provides that it
will continue in effect only if its continuance is specifically approved at
least annually (i) by the vote of a majority of the outstanding voting
securities of that 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 (as defined under "Evaluation by the Board:
The New Agreement" below). The New Agreement also provides that it may be
terminated with respect to a Fund at any time, without the payment of any
penalty, by a vote of a majority of the outstanding voting securities of that
Fund (as defined in the 1940 Act) or by a vote of a majority of the entire Board
on sixty (60) days' written notice to IMI, or by IMI on sixty (60) days' written
notice to the Trust. The New Agreement provides that it will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
Additional Information About the New Agreement
Under the New Agreement, subject to a Fund's obtaining any initial and
periodic approvals that are required under Section 15 of the 1940 Act, IMI may
retain a sub-adviser with respect to that Fund, at IMI's own cost and expense.
The New Agreement further provides that nothing contained in the New
Agreement will limit the freedom of IMI or any affiliated person of IMI to
render investment supervisory and administrative services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
5
Finally, the New Agreement provides that it will be construed in
accordance with the laws of the State of Florida, provided that nothing in the
New Agreement will be construed in a manner inconsistent with the 1940 Act, and
that the obligations of the Trust are not personally binding upon, nor will
resort be had to the private property of, any of the Trustees, shareholders,
officers, employees or agents of the Trust, but only the Trust's property will
be bound.
Information About IMI
IMI, 925 South Federal Highway, Suite 600, Boca Raton, Florida 33432,
is a Massachusetts corporation and a wholly-owned subsidiary of MIMI. As of the
closing date of the Transaction, it is anticipated that IMI will become a
wholly-owned subsidiary of IAC. IMI is an SEC-registered investment adviser that
provides investment advisory services to the Trust and provides sub-advisory
services to fifteen mutual funds sold only in Canada and managed by MFC.
MIMI, 925 South Federal Highway, Suite 600, Boca Raton, Florida 33432,
is a Delaware corporation. MIMI is currently a majority-owned subsidiary of IAC
and an indirect subsidiary of MFC. MIMI's outstanding common stock is listed and
posted for trading on the Toronto Stock Exchange. As described above, it is
anticipated that MIMI shareholders will approve a plan of complete liquidation
and dissolution at a special meeting of shareholders to be held on December
[____], 2002, and, as a result, MIMI will make a cash payment to shareholders of
MIMI other than IAC and distribute all of its remaining assets and liabilities,
including its entire ownership interest in IMI, to IAC. Following the
distributions, MIMI will be dissolved in accordance with the laws of the State
of Delaware.
Formed in August, 2002, IAC, 925 South Federal Highway, Suite 600, Boca
Raton, Florida 33432, is a wholly-owned subsidiary of MFC. IAC owns
approximately 85% of MIMI's outstanding common stock. MFC is a Toronto-based
investment counsel and mutual fund management company that was founded in 1967.
MFC is a wholly-owned subsidiary of IGI, One Canada Centre, 447 Portage Avenue,
Winnipeg, Manitoba, Canada R3C 3B6, a financial services company that was
incorporated in 1978. Power Financial Corporation, a Montreal-based holding
company and a subsidiary of Power Corporation of Canada, owns a majority of the
shares of IGI.
Please refer to Appendix 4 to this Proxy Statement for information
regarding the principal executive officers and directors of IMI and those
individuals serving as officers of the Trust and/or Trustees that are also
officers, directors or employees of IMI.
Appendix 5 sets forth the amount of fees that have been paid by each
Fund to IMI under the Former Agreement during the fiscal year ended December 31,
2001. IMI does not provide business management and investment advisory services
to any other investment companies with investment objectives similar to those of
the Funds.
Evaluation by the Board
In determining whether to approve the New Agreement, the Board,
including the Trustees who are not interested persons of the Trust, as defined
under Section 2(a)(19) of the 1940 Act (the "Independent Trustees"), considered
various materials and representations provided by IMI, MIMI and W&R and met with
senior representatives of IMI, MIMI and W&R. The Independent Trustees were
advised by independent legal counsel throughout this process. The Board met on
September 5 and September 30, 2002 to review and consider, among other things,
information relating to the Transaction and the New Agreement.
In preparing for the meetings, the Board was provided with a variety of
information about W&R, the Transaction, IMI, MIMI and IAC. The Board received a
summary of the agreement governing the Transaction, copies of W&R's most recent
financial statements, the Former Agreement and the New Agreement. The Board also
reviewed information concerning (1) W&R's organizational structure and senior
personnel; (2) W&R's operations and, in particular, its mutual fund advisory
and distribution activities; and (3) the personnel, operations and financial
condition, and investment management capabilities, methodologies, and
performance of IMI as investment adviser and manager to the Funds. At the
meetings, the Board was informed that (1) IMI, MIMI, IAC and W&R
6
believe that the combined organization will continue to provide services that
will be at least equal in scope and quality to those currently being provided to
the Funds by IMI and its affiliates; (2) W&R intends to use its extensive
resources in portfolio management and research to provide additional support and
assistance to IMI in managing the Funds; (3) the rates of compensation to be
received by IMI under the New Agreement are the same as the rates of
compensation paid under the Former Agreement; (4) IMI, IAC and W&R will each
comply with Section 15(f) of the 1940 Act until the third anniversary of the
closing of the Transaction (see "Section 15(f) of the 1940 Act" in the "General
Information" section below); (5) IMI presently intends to maintain any expense
limitations currently in effect for the period contemplated by the applicable
provision; and (6) after the Transaction, it is expected that IMI and W&R will
examine opportunities and consider any steps they might take to achieve
operating efficiencies in areas of administration and other Fund services for
the benefit of Fund shareholders. These might include recommendations to
shareholders that they consider combining one or more of the Funds within the
Ivy Fund family as well as inter-fund combinations with other funds managed by
W&R. Neither IMI nor W&R has any present intention to propose or effect any such
transaction.
In the course of their deliberations, the Trustees considered, in
addition to the above information and representations, (1) the commonality of
the terms and provisions of the New Agreement and the Former Agreement; (2)
W&R's general reputation and its commitment to the advisory business; (3) the
potential for economies of scale to be achieved in light of existing W&R
businesses; (4) the nature and quality of the services rendered by IMI under the
Former Agreement and the potential for enhanced services offered by W&R under
the New Agreement; (5) the advantages to the Funds of IMI's becoming part of a
much larger U.S. mutual fund organization with significant depth in portfolio
management talent, distribution capabilities and product diversification; and
(6) the favorable performance history of many of the W&R Mutual Funds, including
certain W&R Mutual Funds with investment objectives and policies similar to
certain Funds. In addition, the Board reviewed the rates of compensation payable
to IMI under the New Agreement.
Based upon the foregoing information and considerations, the Trustees,
including the Independent Trustees, unanimously voted to approve the New
Agreement for each Fund and to submit the New Agreement to shareholders for
approval.
If the shareholders of a Fund should fail to approve the New Agreement,
the Board will meet to consider appropriate action for that Fund. Such action
may include negotiating a new master business management and investment advisory
agreement with an advisory organization selected by the Board or making other
appropriate arrangements. If the Transaction does not close, the Former
Agreement will remain in effect.
Vote Required
Shareholders of each Fund must separately approve the New Agreement.
Approval of this Proposal 1 by a Fund 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. If
shareholders of a Fund approve the New Agreement, its effectiveness is
conditioned upon the satisfaction of certain closing conditions which are
contained in the agreements related to the Transaction including, among other
things, approval of a plan of dissolution of MIMI by its shareholders, so that
if the shareholders of MIMI do not approve the plan of dissolution, the Former
Agreement will remain in effect. If approved, this Proposal will not become
effective until the closing of the Transaction.
The Board unanimously recommends that shareholders of the Fund vote
"FOR" Proposal 1.
7
PROPOSAL 2
APPROVAL OF MASTER BUSINESS MANAGEMENT AGREEMENT WITH IMI
(For Shareholders of Ivy Global Natural Resources Fund Only)
Introduction
Shareholders of Ivy Global Natural Resources Fund are being asked to
approve a new master business management agreement between the Trust, on behalf
of the Fund, and IMI (the "New Management Agreement"). Approval of the New
Management Agreement is sought so that the management of the Fund can continue
uninterrupted because the former master business management agreement (the
"Former Management Agreement") would terminate automatically as a result of the
Transaction. For purposes of this Proposal 2, references to the "Fund" refer
only to Ivy Global Natural Resources Fund.
As stated above, as a result of the Transaction, IMI would become a
wholly-owned subsidiary of IAC and an indirect wholly-owned subsidiary of W&R.
The change in ownership of IMI resulting from the Transaction will be deemed
under the 1940 Act to be an assignment of the Former Management Agreement. The
Former Management Agreement provides for its automatic termination in the event
of an assignment. Accordingly, the New Management Agreement between IMI and the
Trust, on behalf of the Fund, is proposed for approval by shareholders of the
Fund. If the Transaction closes and shareholders of the Fund have not approved
the New Management Agreement, the Former Management Agreement will terminate and
the Board of Trustees will take such action as it deems to be in the best
interests of the Fund and its shareholders. If the Transaction does not close,
the Former Management Agreement will continue in effect.
The Fund's investment advisory agreement with MFC will not be affected
by the Transaction and will continue in effect.
The form of the New Management Agreement is attached as Exhibit B to
this Proxy Statement and the description of its terms in this section is
qualified in its entirety by reference to Exhibit B.
The Fund commenced operations on January 1, 1997. The Former Management
Agreement dated December 31, 1994, as supplemented December 31, 1996, was last
approved by the Board on September 20, 2001 and was last continued to September
30, 2002. The Former Management Agreement was last approved by the shareholders
of the Fund on May 29, 2001 in connection with the acquisition of MFC by IGI./2/
The Former Management Agreement will terminate upon consummation of the
Transaction.
IMI does not anticipate that the Transaction will cause any reduction
in the quality of services now provided to the Fund or have any adverse effect
on the ability of IMI to fulfill its obligations to the Fund.
The New Management Agreement must be voted upon by shareholders of the
Fund. If the New Management Agreement is approved by shareholders of the Fund,
it will take effect upon the consummation of the Transaction. The New Management
Agreement will remain in effect for one year following the consummation of the
Transaction, and, unless earlier terminated, will continue from year to year
thereafter, provided that each such continuance is approved annually with
respect to the Fund (i) by the Board or by the vote of a majority of the
outstanding voting securities of the Fund, and, in either case, (ii) by a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of any party to the New Management Agreement.
- -------------------------
/2/ On April 20, 2001, IGI, a leading Canadian financial services
organization, acquired control of MFC. That change in control
constituted an assignment of the Fund's then-current business
management agreement, resulting in a termination of that agreement.
8
Board Approval and Recommendation
At the September 30, 2002 meeting of the Board, the New Management
Agreement was approved unanimously by the Board, including the Trustees who are
not "interested persons" (as defined in the 1940 Act) of any party to the New
Management Agreement. The New Management Agreement, as approved by the Board, is
submitted for approval by the shareholders of the Fund. The Board unanimously
recommends that shareholders of the Fund approve the New Management Agreement.
Description of the New Management Agreement
Differences between the New Management Agreement and the Former
Management Agreement. The terms of the New Management Agreement are the same in
all material respects as those of the Former Management Agreement, except for
the dates of execution and termination.
IMI's Responsibilities. Under the New Management Agreement, IMI
provides continuing business management services to the Fund. The New Management
Agreement provides that IMI will supervise the Fund's business and affairs and
will provide such services reasonably necessary for the operation of the Fund as
are not provided by employees or other agents engaged by the Fund; provided,
that IMI will not have any obligation to provide under the New Management
Agreement any direct or indirect services to the Fund's shareholders, any
services related to the distribution of the Fund's shares, or any other services
which are the subject of a separate agreement or arrangement between the Fund
and IMI. Subject to the foregoing, in providing business management services
under the New Management Agreement, IMI will, at its expense: (1) review the
activities of the Fund's investment adviser to ensure that the Fund is operated
in compliance with the Fund's investment objective and policies and the 1940
Act; (2) coordinate with the Fund's custodian and transfer agent and monitor the
services they provide to the Fund; (3) coordinate with and monitor any other
third parties furnishing services to the Fund; (4) provide the Fund with the
necessary office space, telephones and other communications facilities as are
adequate for the Fund's needs; (5) provide the services of individuals competent
to perform administrative and clerical functions that are not performed by
employees or other agents engaged by the Fund or by IMI acting in some other
capacity pursuant to a separate agreement or arrangement with the Fund; (6)
maintain or supervise the maintenance by third parties of such books and records
of the Trust as may be required by applicable federal or state law; (7)
authorize and permit IMI's directors, officers and employees who may be elected
or appointed as trustees or officers of the Trust to serve in such capacities;
and (8) take such other action with respect to the Trust, after approval by the
Trust, as may be required by applicable law. The New Management Agreement also
permits IMI to retain third parties to provide the foregoing services to the
Trust, at IMI's own cost and expense.
Fund Expenses. The New Management Agreement provides that, except as
provided in the sections of the New Management Agreement related to the
provision of business management services, or as provided in any separate
agreement between the Fund and IMI, the Trust will be responsible for all of its
expenses and liabilities, including: (1) the fees and expenses of the Trustees
who are not parties to the New Management Agreement or "interested persons" (as
defined in the 1940 Act) of any such party; (2) the salaries and expenses of any
of the Trust's officers or employees who are not affiliated with IMI; (3)
interest expenses; (4) taxes and governmental fees, including any original issue
taxes or transfer taxes applicable to the sale or delivery of shares or
certificates therefor; (5) brokerage commissions and other expenses incurred in
acquiring or disposing of portfolio securities; (6) the expenses of registering
and qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Trust's custodian and transfer agent and any related
services; (10) expenses of obtaining quotations of portfolio securities and of
pricing shares; (11) expenses of maintaining the Trust's legal existence and of
shareholders' meetings; (12) expenses of preparation and distribution to
existing shareholders of periodic reports, proxy materials and prospectuses;
(13) fees and expenses of membership in industry organizations; and (14) such
nonrecurring or extraordinary expenses as may arise, including litigation
affecting the Fund, and any indemnification by the Fund of its officers,
directors, employees and agents with respect thereto. Subsection (14) above is
not included in the Former Management Agreement, and has been added to the New
Management Agreement to make explicit what had previously been implicit in the
Former Management Agreement.
Liability of IMI. Pursuant to the New Management Agreement, IMI will
give the Trust the benefit of IMI's best judgment and efforts in rendering
business management services. The New Management Agreement states that
9
IMI will not be liable under the New Management Agreement for any mistake in
judgment or in any other event whatsoever except for lack of good faith. The New
Management Agreement also states, however, that nothing in the New Management
Agreement will be deemed to protect or purport to protect IMI against any
liability to the Trust or its shareholders to which IMI would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of IMI's duties under the New Management Agreement, or by reason of
IMI's reckless disregard of its obligations and duties under the New Management
Agreement.
Compensation Paid to IMI. The New Management Agreement provides that
for IMI's provision of business management services, the Fund pays IMI a monthly
fee on the first business day of each month, at the annual rate of 0.50% of the
average daily value of the net assets of the Fund during the preceding month.
The fee rate payable by the Fund pursuant to the New Management Agreement is the
same as the Fund's rate payable under the Former Management Agreement.
Termination of the Agreement. The New Management Agreement also
provides that it will continue in effect 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 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. The New Management Agreement
also provides that it may 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 sixty (60) days' written notice to IMI, or by
IMI on sixty (60) days' written notice to the Trust. The New Management
Agreement provides that it will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
Additional Information About the New Management Agreement
The New Management Agreement further provides that nothing contained in
the New Management Agreement will limit the freedom of IMI or any affiliated
person of IMI to render investment supervisory and administrative services to
other investment companies, to act as investment adviser or investment counselor
to other persons, firms or corporations, or to engage in other business
activities.
Finally, the New Management Agreement provides that it will be
construed in accordance with the laws of the State of Florida, provided that
nothing in the New Management Agreement will be construed in a manner
inconsistent with the 1940 Act, and that the obligations of the Trust are not
personally binding upon, nor will resort be had to the private property of, any
of the Trustees, shareholders, officers, employees or agents of the Trust, but
only the Trust's property will be bound.
Information About IMI
Please see "Information about IMI" under Proposal 1 above for a
description of IMI. During the fiscal year ended December 31, 2001, the Fund
paid management fees to IMI in the amount of $62,113. IMI does not act as
manager with respect to any other investment companies with investment
objectives similar to that of the Fund.
Evaluation by the Board
In determining whether to approve the New Management Agreement, the
Board, including the Independent Trustees, considered various materials and
representations provided by IMI, MIMI and W&R and met with senior
representatives of IMI, MIMI and W&R. The Independent Trustees were advised by
independent legal counsel throughout this process. The Board met on September 5
and September 30, 2002 to review and consider, among other things, information
relating to the Transaction and the New Management Agreement.
In preparing for the meetings, the Board was provided with a variety of
information about W&R, the Transaction, IMI, MIMI and IAC. The Board received a
summary of the agreement governing the Transaction, copies of W&R's most recent
financial statements, the Former Management Agreement and the New Management
Agreement. The Board also reviewed information concerning (1) W&R's
organizational structure and senior personnel; (2) W&R's operations and, in
particular, its mutual fund advisory and distribution activities; and (3) the
10
personnel, operations and financial condition, and investment management
capabilities, methodologies, and performance of IMI as manager to the Fund. At
the meetings, the Board was informed that (1) IMI, MIMI, IAC and W&R believe
that the combined organization will continue to provide services that will be at
least equal in scope and quality to those currently being provided to the Fund
by IMI and its affiliates; (2) W&R intends to use its extensive resources to
provide additional support and assistance to IMI in managing the Fund; (3) the
rate of compensation to be received by IMI under the New Management Agreement is
the same as the rate of compensation paid under the Former Management Agreement;
(4) IMI, IAC and W&R will each comply with Section 15(f) of the 1940 Act until
the third anniversary of the closing of the Transaction (see "Section 15(f) of
the 1940 Act" in the "General Information" section below); (5) IMI presently
intends to maintain the expense limitation currently in effect for the period
contemplated by the applicable provision; and operating efficiencies (6) after
the Transaction, it is expected that IMI and W&R will examine opportunities and
consider any steps they might take to achieve operating efficiencies in areas of
administration and other Fund services for the benefit of Fund shareholders.
These might include recommendations to shareholders that they consider combining
one or more of the Funds within the Ivy Fund family as well as inter-fund
combinations with other funds managed by W&R. Neither IMI nor W&R has any
present intention to propose or effect any such transaction.
In the course of their deliberations, the Trustees considered, in
addition to the above information and representations, (1) the commonality of
the terms and provisions of the New Management Agreement and the Former
Management Agreement; (2) W&R's general reputation and its commitment to the
advisory and mutual fund management business; (3) the potential for economies of
scale to be achieved in light of existing W&R businesses; (4) the nature and
quality of the services rendered by IMI under the Former Management Agreement
and the potential for enhanced services offered by W&R under the New Management
Agreement; and (5) the advantages to the Fund of IMI's becoming part of a much
larger U.S. mutual fund organization with significant depth in portfolio
management talent, distribution capabilities and product diversification. In
addition, the Board reviewed the rate of compensation payable to IMI under the
New Management Agreement.
Based upon the foregoing information and considerations, the Trustees,
including the Independent Trustees, unanimously voted to approve the New
Management Agreement for the Fund and to submit the New Management Agreement to
shareholders for approval.
If the shareholders of the Fund should fail to approve the New
Management Agreement the Board will meet to consider appropriate action for the
Fund. Such action may include negotiating a new master business management
agreement for the Fund with a management organization selected by the Board or
making other appropriate arrangements. If the Transaction does not close, the
Former Management Agreement will remain in effect.
Vote Required
Approval of this Proposal 2 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. If
shareholders of the Fund approve the New Management Agreement, its effectiveness
is conditioned upon the satisfaction of certain closing conditions which are
contained in the agreements related to the Transaction including, among other
things, approval of a plan of dissolution of MIMI by its shareholders, so that
if the shareholders of MIMI do not approve the plan of dissolution, the Former
Management Agreement will remain in effect. If approved, this Proposal will not
become effective until the closing of the Transaction.
The Board unanimously recommends that shareholders of the Fund vote
"FOR" Proposal 2.
11
PROPOSALS 3A AND 3B
APPROVAL OF SUBADVISORY AGREEMENTS WITH HGINA AND HENDERSON
(For Shareholders of Ivy European Opportunities Fund
and Ivy International Small Companies Fund Only)
Introduction
Shareholders of Ivy European Opportunities Fund and Ivy International
Small Companies Fund are being asked to approve a new subadvisory agreement
relating to the Funds between IMI and HGINA (the "New HGINA Agreement") and a
new subadvisory agreement relating to the Funds between HGINA and Henderson (the
"New Henderson Agreement," and collectively with the New HGINA Agreement, the
"New Agreements"). For purposes of Proposals 3A and 3B, references to the
"Funds" or to a "Fund" refer to Ivy European Opportunities Fund and Ivy
International Small Companies Fund only. Although neither HGINA nor Henderson is
a party to the Transaction or otherwise affected by the Transaction, approval of
the New HGINA Agreement and the New Henderson Agreement is sought so that the
management of each Fund can continue uninterrupted because the current
subadvisory agreement relating to the Funds between IMI and Henderson (the
"Former Henderson Agreement") would terminate automatically as a result of the
Transaction.
Under the New HGINA Agreement, HGINA will serve as subadviser to IMI
for the Funds; under the New Henderson Agreement, Henderson, the Funds' current
subadviser, will serve as subadviser to HGINA for the Funds. Under the New
Agreements, the Henderson portfolio management team that currently provides
investment subadvisory services to each Fund will continue to do so. The
proposed change is due to growth and structural changes in the North American
business of Henderson Global Investors (Holdings) plc, the parent company of
HGINA and Henderson. Under the New Agreements, the fee rates paid by the Funds
to IMI will not change.
While the Board is seeking shareholder approval of the New Agreements,
neither restricts the Board's ability to terminate or replace HGINA and/or
Henderson as the subadviser for either Fund at any time in the future, subject
to any shareholder approval that may be required.
As stated above, as a result of the Transaction, IMI will become a
wholly-owned subsidiary of IAC and an indirect wholly-owned subsidiary of W&R.
The change in ownership of IMI resulting from the Transaction will be deemed
under the 1940 Act to be an assignment of the Former Henderson Agreement. The
Former Henderson Agreement provides for its automatic termination upon an
assignment. Accordingly, the New HGINA Agreement between IMI and HGINA and the
New Henderson Agreement between HGINA and Henderson are each proposed for
approval by shareholders of each Fund. If the Transaction closes and
shareholders of a Fund have not approved each of the New HGINA Agreement and the
New Henderson Agreement for that Fund, the Former Henderson Agreement will
terminate and the Board of Trustees will take such action as it deems to be in
the best interests of that Fund and its shareholders. If the Transaction does
not close, the Former Henderson Agreement will continue in effect.
The form of the New HGINA Agreement is attached as Exhibit C to this
Proxy Statement and the description of its terms in this section is qualified in
its entirety by reference to Exhibit C. The form of the New Henderson Agreement
is attached as Exhibit D to this Proxy Statement and the description of its
terms in this section is qualified in its entirety by reference to Exhibit D.
Appendix 2 shows the date when each Fund commenced operations. The
Former Henderson Agreement became applicable to each Fund on February 1, 1999.
The Former Henderson Agreement was last approved by the Board with respect to
each Fund on September 20, 2001, and was last continued to September 30, 2002
for each Fund. The Former Henderson Agreement was last approved by the
shareholders of each Fund on May 29, 2001 in
12
connection with the acquisition of MFC by IGI./3/ The Former Henderson Agreement
will terminate upon consummation of the Transaction.
IMI does not anticipate that the Transaction will cause any reduction
in the quality of services now provided to the Funds or have any adverse effect
on the ability of HGINA or Henderson to fulfill their obligations to the Funds.
The New HGINA Agreement and the New Henderson Agreement must be voted
upon separately by the shareholders of each Fund. If the New Agreements are
approved by shareholders, they will take effect upon the closing of the
Transaction. The New Agreements will remain in effect for one year following the
consummation of the Transaction, and, unless earlier terminated, will continue
from year to year thereafter, provided that each such continuance is approved
annually with respect to each Fund (i) by the Board or by the vote of a majority
of the outstanding voting securities of the particular Fund, and, in either
case, (ii) by a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the New Agreements.
Board Approval and Recommendation
At the September 30, 2002 meeting of the Board, the New Agreement was
approved unanimously by the Board, including the Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to the New
Agreements. The New Agreements, as approved by the Board, are submitted for
approval by the shareholders of each Fund. The Board unanimously recommends that
shareholders of the Fund approve each of the New HGINA Agreement and the New
Henderson Agreement.
Description of the New HGINA Agreement
General. Under the New HGINA Agreement, HGINA will serve IMI as
investment subadviser with respect to each Fund. The New HGINA Agreement
provides that HGINA will develop, recommend and implement investment programs
and strategies for each Fund as may from time to time be most appropriate to the
achievement of the Fund's investment objectives; provide research and analysis
relative to the investment program and investments of each Fund; determine what
securities should be purchased and sold; and monitor on a continuing basis the
performance of each Fund's portfolio securities. HGINA will provide the
foregoing services in accordance with its best judgment and subject to the
stated investment objectives, policies and restrictions of each Fund in
accordance with the Trust's Declaration of Trust, as amended, and By-laws
governing the offering of its shares, the 1940 Act and the provisions of the
Code relating to regulated investment companies, and subject to such resolutions
as from time to time may be adopted by the Board. HGINA will pay all of its
expenses arising from the performance of the obligations listed in the first
section of the New HGINA Agreement.
Differences Between the New HGINA Agreement and the Former Henderson
Agreement. The terms of the New HGINA Agreement are the same in all material
respects as those of the Former Henderson Agreement, except as noted below.
Portfolio Transactions. Pursuant to the New HGINA Agreement, HGINA will
determine the securities to be purchased or sold with respect to the portion of
each Fund's portfolio assets being managed by it, and will purchase securities
from or through and sell securities to or through such persons, brokers or
dealers as HGINA deems appropriate in order to carry out the policy with respect
to allocation of portfolio transactions as set forth in the prospectus and
statement of additional information of the Fund or as the Board may direct from
time to time. In providing each Fund with investment management and supervision,
HGINA will seek the best price and execution under the circumstances, and,
consistent with such policy, may give consideration to the research services
furnished by brokers or dealers to HGINA for its use and to such other
considerations as the Board may direct or authorize from time to time.
- -------------------------
/3/ On April 20, 2001, IGI, a leading Canadian financial services
organization, acquired control of MFC. That change in control
constituted an assignment of the Funds' then-current subadvisory
agreements, resulting in a termination of those agreements.
13
The New HGINA Agreement provides that on occasions when HGINA deems the
purchase or sale of a security to be in the best interest of a Fund as well as
other customers, HGINA, to the extent permitted by applicable law, may aggregate
the securities to be so sold or purchased in order to obtain the best execution
under the circumstances or lower brokerage commissions, if any. HGINA 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 HGINA in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the applicable Fund and to such other customers. In no instance, however,
will a Fund's assets be purchased from or sold to IMI, HGINA, the Trust's
principal underwriter, or any affiliated person of either the Trust, IMI, HGINA
or the principal underwriter, acting as principal in the transaction, except to
the extent permitted by the SEC and the 1940 Act.
HGINA's Responsibilities. The New HGINA Agreement provides that HGINA
will furnish IMI monthly, quarterly and annual reports concerning transactions
and performance of each Fund. In addition, HGINA will maintain for the Funds the
records the Funds are required to maintain under Rule 31a-1(b) under the 1940
Act insofar as such records relate to the investment affairs of the Funds and
will preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records it maintains for the Funds.
Furthermore, the New HGINA Agreement provides that HGINA will comply
with all reasonable requests of the Funds for information, including information
required in connection with the Funds' filings with the SEC and state securities
commissions.
Under the New HGINA Agreement, on each business day, HGINA will provide
each Fund's custodian with information relating to all transactions concerning
the Fund's assets and will provide IMI with the same information upon IMI's
request. HGINA will also review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the securities
held in a Fund's portfolio. In addition, HGINA will provide to IMI certain
documents relating to its services under the New HGINA Agreement and such other
documents relating to such services as IMI may reasonably request on a periodic
basis. HGINA will also promptly notify IMI of any financial condition that is
likely to impair HGINA's ability to fulfill its commitment under the New HGINA
Agreement.
The New HGINA Agreement provides that any information or recommendation
supplied by HGINA in connection with the performance of its obligations under
the New HGINA Agreement is to be regarded as confidential and for use only by
IMI, the Trust or such persons as IMI may designate in connection with a Fund.
The New HGINA Agreement also provides that any information supplied to HGINA in
connection with the performance of its obligations under the New HGINA Agreement
is to be regarded as confidential and for use only by HGINA in connection with
its obligation to provide investment advice and other services to the Fund.
Engaging Subadvisers. The New HGINA Agreement states that nothing in it
shall be implied to prevent (i) IMI from engaging other subadvisers to provide
investment advice and other services in relation to series of the Trust, or a
portion of the portfolio assets of any such series, for which HGINA does not
provide such services, or to prevent IMI from providing such services itself in
relation to such series; (ii) HGINA from providing investment advice and other
services to other funds or clients; or (iii) HGINA from engaging as subadviser
an affiliated entity to perform all or part of HGINA's responsibilities under
the New HGINA Agreement, at HGINA's own cost and expense, provided that HGINA
shall have the same responsibilities and liabilities under the New HGINA
Agreement as if it were performing the duties. The Former Henderson Agreement
did not include provision (iii).
Compensation Paid to HGINA. The New HGINA Agreement further provides
that IMI will pay to HGINA for its services under the New HGINA Agreement a fee
payable monthly at an annual rate of 0.45% of first $100,000,000 of net assets
and 0.40% thereafter of the portion of each Fund's average daily net assets
managed by HGINA. The fee rate payable by IMI pursuant to the New HGINA
Agreement is higher than IMI's rate payable under the Former Henderson
Agreement, which was 0.22% of the portion of each Fund's average daily net
assets managed by Henderson. The fee rates paid by the Funds to IMI will not
change.
Termination of the Agreement. The New HGINA Agreement will continue in
full force and effect from year to year if such continuance is approved in the
manner required by the 1940 Act if HGINA shall not have
14
notified IMI in writing at least 60 days prior to [date] of any year that HGINA
does not desire such continuance. The New HGINA Agreement may be terminated at
any time, without payment of penalty by a Fund, by vote of the Board or a
majority of the outstanding voting securities of the applicable Fund (as defined
by the 1940 Act), or by IMI or by HGINA upon 60 days' written notice. The New
HGINA Agreement will automatically terminate in the event of its assignment (as
defined by the 1940 Act) or upon the termination of the Funds' advisory
agreement or if (a) either party is unable to pay its debts or an administrative
or insolvency order is made in respect of a party pursuant to its relevant
governing and applicable laws and regulations or (b) a party commits a material
breach of any of the terms or conditions of the New HGINA Agreement and such
breach continues 30 days after notice in writing, specifying the breach and
requiring the same to be remedied, has been given.
Additional Information about the New HGINA Agreement
Use of Names. The New HGINA Agreement provides that the names of the
Trust and IMI and abbreviations or logos associated with those names, are the
valuable property of IMI and its affiliates and that HGINA shall use the names
Ivy Fund and Ivy Management, Inc., and associated abbreviations and logos, only
in connection with HGINA's performance of its duties under the New HGINA
Agreement. Further, in any communication with the public and in any marketing
communications of any sort, HGINA agrees to obtain prior written approval from
IMI before using or referring to the Trust, IMI, or a Fund, or any abbreviations
or logos associated with those names, to the extent such communications would
constitute "advertising" or "sales literature" (as those terms are defined by
the NASD) for the Funds.
The New HGINA Agreement further provides that "Henderson" and
"Henderson Global Investors" and abbreviations or logos associated with those
names are valuable property of the AMP group of companies and are distinctive in
connection with investment advisory and related services provided by HGINA; that
the "Henderson" name is a property right of Henderson; and that the "Henderson"
and "Henderson Global Investors" names are understood to be used by a Fund upon
the conditions set forth in the New HGINA Agreement. However, a Fund may use
such names only so long as HGINA is retained as the investment subadviser of the
Fund pursuant to the terms of the New HGINA Agreement.
The New HGINA Agreement contains various provisions relating to the
obligations of each party to indemnify the other in connection with certain
losses, claims, damages, liabilities or litigation to which the other party, its
affiliates or control persons become subject under certain circumstances.
Finally, the New HGINA Agreement provides that it will be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
Description of the New Henderson Agreement
General. Pursuant to the terms of the New HGINA Agreement, HGINA will
engage Henderson to perform its responsibilities under the New HGINA Agreement,
as described above, if shareholders approve each of the New HGINA Agreement and
the New Henderson Agreement. The terms of the New Henderson Agreement are the
same in all material respects as those of the New HGINA Agreement and the Former
Henderson Agreement, except as noted below.
Under the New Henderson Agreement, Henderson will serve HGINA as
investment subadviser with respect to each Fund. Under the Former Henderson
Agreement, Henderson served IMI as investment subadviser with respect to each
Fund.
Compensation Paid to Henderson. The New Henderson Agreement provides
that HGINA will pay to Henderson for its services under the New Henderson
Agreement a fee payable monthly at an annual rate of 0.35% of first $100,000,000
of net assets and 0.31% thereafter of the portion of each Funds' average daily
net assets managed by Henderson. Under the Former Henderson Agreement, IMI paid
the fees to Henderson for its services to the Funds. The fee rates paid by the
Funds will not change.
15
Termination of the Agreement. The New Henderson Agreement will continue
in full force and effect from year to year if such continuance is approved in
the manner required by the 1940 Act and so long as Henderson shall not have
notified HGINA in writing at least 60 days prior to [date] of any year that
Henderson does not desire such continuance. The New Henderson Agreement may be
terminated at any time, without payment of penalty by a Fund, by vote of the
Board or a majority of the outstanding voting securities of the applicable Fund
(as defined by the 1940 Act), or by Henderson or by HGINA upon 60 days' written
notice. The New Henderson Agreement will automatically terminate in the event of
its assignment (as defined by the 1940 Act) or upon the termination of the
Funds' advisory agreement or if (a) either party is unable to pay its debts or
an administrative or insolvency order is made in respect of a party pursuant to
its relevant governing and applicable laws and regulations or (b) a party
commits a material breach of any of the terms or conditions of the New Henderson
Agreement and such breach continues 30 days after notice in writing, specifying
the breach and requiring the same to be remedied, has been given.
Additional Information About the New Henderson Agreement
Use of Names. The New Henderson Agreement further provides that
Henderson acknowledges that each Fund and its agents may use the "Henderson" and
"Henderson Global Investors" names in connection with accurately describing the
activities of the Fund, including use with marketing and other promotional and
informational material relating to the Fund with the prior written approval of
HGINA. In the event that Henderson ceases to be the investment subadviser of a
Fund, the Fund at its own or HGINA's expense, upon HGINA's written request, will
cease using Henderson's name for any commercial purpose and use its best efforts
to cause the Fund's officers and trustees to effect the foregoing and to
reconvey to Henderson all rights which a Fund may have to the Henderson name.
The New Henderson Agreement does not contain the various provisions
relating to the obligations of each party to indemnify the other in connection
with certain losses, claims, damages, liabilities or litigation to which the
other party, its affiliates or control persons become subject under certain
circumstances that were present in the Former Henderson Agreement.
Finally, the New Henderson Agreement provides that it will be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
Information About HGINA and Henderson
HGINA is a Delaware corporation founded in 1987 located at 737 North
Michigan Avenue, Suite 1950, Chicago, IL 60611. Henderson, a United Kingdom
corporation organized in 1984, maintains its registered office at 4 Broadgate,
London, England EC2M 2DA. Both HGINA and Henderson are registered with the SEC
as investment advisers and provide international and global investment
management services to institutional and individual investors and investment
companies. As of June 30, 2002, HGINA and Henderson had approximately $1.2
billion and $248 million of assets under management, respectively.
HGINA is an indirect, wholly-owned subsidiary of, and Henderson is a
direct wholly-owned subsidiary of, Henderson Global Investors (Holdings) plc.
Henderson Global Investors (Holdings) plc, which is located at the same address
as Henderson, is a wholly-owned subsidiary of AMP Limited, an Australian life
insurance and financial services company located at AMP Building, 24th Floor, 33
Alfred Street, Sydney, New South Wales 2000 Australia.
Charles H. Wurtzebach is the principal executive officer of HGINA. The
following table lists the directors of HGINA:
- --------------------------------------------------------------------------------
Name* Principal Occupation
- ---- --------------------
- --------------------------------------------------------------------------------
James Darkins Director of HGINA
- --------------------------------------------------------------------------------
Douglas G. Denyer Director, Treasurer and Chief Financial
Officer of HGINA
- --------------------------------------------------------------------------------
Sean Dranfield Director, North American Retail Distribution
of HGINA
- --------------------------------------------------------------------------------
16
- --------------------------------------------------------------------------------
David R. McWhorter Director of HGINA
- --------------------------------------------------------------------------------
Charles H. Wurtzebach Managing Director of HGINA
- --------------------------------------------------------------------------------
* Each person's principal business address is 737 North Michigan Avenue, Suite
1950, Chicago, IL 60611.
Roger Yates is the principal executive officer of Henderson and Ross
Maclean is the Compliance Officer of Henderson. The following table lists the
directors of Henderson:
- --------------------------------------------------------------------------------
Name* Principal Occupation
- ---- --------------------
- --------------------------------------------------------------------------------
Ian Buckley Global Chief Investment Officer of Henderson
Global Investors
- --------------------------------------------------------------------------------
Rupert Carnegie Director of Henderson
- --------------------------------------------------------------------------------
Mike Clare Managing Director - U.K. of Henderson Global
Investors
- --------------------------------------------------------------------------------
James Darkins Global Director of Property of Henderson
Global Investors
- --------------------------------------------------------------------------------
Toby Hiscock Global Director of Finance & Operations of
Henderson Global Investors
- --------------------------------------------------------------------------------
Anne Rein Global Director of Human Resources of
Henderson Global Investors
- --------------------------------------------------------------------------------
Roger Yates Managing Director - Global (Chairman) of
Henderson Global Investors
- --------------------------------------------------------------------------------
* Each person's principal business address is 4 Broadgate, London, England EC2M
2DA.
Please refer to Appendix 6 for a list of other investment companies
with investment objectives similar to that of either Fund for which HGINA or
Henderson acts as subadviser, including the rates of HGINA's or Henderson's
compensation from or with respect to such investment companies and the
approximate net assets of such investment companies.
During the fiscal year ended December 31, 2001, IMI paid subadvisory
fees to Henderson in the amount of $291,013 with respect to Ivy European
Opportunities Fund and in the amount of $37,923 with respect to Ivy
International Small Companies Fund.
Evaluation by the Board
The New HGINA Agreement and the New Henderson Agreement
In determining whether to approve the New HGINA Agreement and the New
Henderson Agreement, the Board, including the Independent Trustees, considered
various materials and representations provided by IMI, HGINA, Henderson and W&R
and met with senior representatives of IMI, HGINA and W&R. The Independent
Trustees were advised by independent legal counsel throughout this process. The
Board met on September 5 and September 30, 2002 to review and consider, among
other things, information relating to the Transaction, and met on September 30,
2002 to review and consider the New HGINA Agreement and the New Henderson
Agreement.
17
In determining whether or not it was appropriate to approve the New
HGINA Agreement and the New Henderson Agreement and to recommend approval of the
New Agreements to shareholders of the Funds, the Board considered, among other
things, the fact that the Funds will continue to be managed by Henderson, that
the adjustments to the rates of compensation to be received by HGINA and
Henderson under the New Agreements will not increase the fee rates paid by the
Funds, that the other terms of the New Agreements are substantially similar to
those of the Former Henderson Agreement and that the Transaction is not
otherwise expected to have any effect on services rendered by Henderson.
Further, the Board considered (1) the nature and quality of the services
rendered by Henderson under the Former Henderson Agreement; (2) the amount of
the compensation payable to HGINA under the New HGINA Agreement and the rate of
compensation payable to Henderson under the New Henderson Agreement; (3) the
results achieved by Henderson for the Funds; and (4) the personnel, operations
and financial condition, and investment management capabilities, methodologies,
and performance of HGINA and Henderson. The Board also noted the factors cited
in Proposal 1 of this Proxy Statement with respect to W&R, MIMI, IAC, IMI and
the approval of the New Agreement discussed in Proposal 1 for the Funds and the
advantages to the Funds of maintaining Henderson as each Fund's subadviser.
Based upon the foregoing information and considerations, the
Trustees, including the Independent Trustees, unanimously voted to approve the
New HGINA Agreement and the New Henderson Agreement for each Fund and to submit
the New Agreements to shareholders for approval.
If the shareholders of a Fund do not approve either the New HGINA
Agreement or the New Henderson Agreement, neither Agreement will take effect,
and the Board may meet to consider appropriate action for that Fund. Such action
may include the Board and IMI negotiating a new subadvisory agreement with an
advisory organization selected by the Board or making other appropriate
arrangements. If the Transaction does not close, the Former Henderson Agreement
will remain in effect.
Vote Required
Shareholders of each Fund must approve the New HGINA Agreement and the
New Henderson Agreement separately. Approval of each of Proposals 3A and 3B by a
Fund 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. If shareholders of the Funds approve each of the
New HGINA Agreement and the New Henderson Agreement, its effectiveness is
conditioned upon the satisfaction of certain closing conditions which are
contained in the agreements related to the Transaction including, among other
things, approval of a plan of dissolution of MIMI by its shareholders, so that
if the shareholders of MIMI do not approve the plan of dissolution, the Former
Henderson Agreement will remain in effect. If approved, each of Proposals 3A and
3B will not become effective until the closing of the Transaction.
The Board unanimously recommends that shareholders vote "FOR" each of
Proposal 3A and Proposal 3B.
PROPOSAL 4
APPROVAL OF SUBADVISORY AGREEMENT WITH CUNDILL
(For Shareholders of Ivy Cundill Global Value Fund Only)
Introduction
Shareholders of Ivy Cundill Global Value Fund are being asked to
approve a new subadvisory agreement relating to the Fund between IMI and Cundill
(the "New Cundill Agreement"). Although Cundill is not a party to the
Transaction or otherwise affected by the Transaction, approval of the New
Cundill Agreement is sought so that the management of the Fund can continue
uninterrupted because the former subadvisory agreement relating to the Fund
between IMI and Cundill (the "Former Cundill Agreement") would terminate
automatically as a result of the Transaction. For purposes of this Proposal 4,
references to the "Fund" refer to Ivy Cundill Global Value Fund only.
18
While the Board is seeking shareholder approval of the New Cundill
Agreement, the New Cundill Agreement does not restrict the Board's ability to
terminate or replace Cundill as the subadviser for the Fund at any time in the
future, subject to any shareholder approval that may be required.
As stated above, as a result of the Transaction, IMI will become a
wholly-owned subsidiary of IAC and an indirect wholly-owned subsidiary of W&R.
The change in ownership of IMI resulting from the Transaction would be deemed
under the 1940 Act to be an assignment of the Former Cundill Agreement. The
Former Cundill Agreement provides for its automatic termination upon an
assignment. Accordingly, the New Cundill Agreement between IMI and Cundill is
proposed for approval by shareholders of the Fund. If the Transaction closes and
shareholders of the Fund have not approved the New Cundill Agreement, the Former
Cundill Agreement will terminate and the Board of Trustees will take such action
as it deems to be in the best interests of the Fund and its shareholders. If the
Transaction does not close, the Former Cundill Agreement will continue in
effect.
The form of the New Cundill Agreement is attached as Exhibit E to this
Proxy Statement and the description of its terms in this section is qualified in
its entirety by reference to Exhibit E.
Appendix 2 shows the date when the Fund commenced operations. The
Former Cundill Agreement is dated March 1, 2000. The Former Cundill Agreement
was last approved by the Board with respect to the Fund on September 20, 2001
and was last continued to September 30, 2002. The Former Cundill Agreement was
approved by the Fund's shareholders on May 29, 2001 in connection with the
acquisition of MFC by IGI./4/ The Former Cundill Agreement will terminate upon
consummation of the Transaction.
IMI does not anticipate that the Transaction will cause any reduction
in the quality of services now provided to the Fund or have any adverse effect
on Cundill's ability to fulfill its obligations to the Fund.
The New Cundill Agreement must be voted upon separately by shareholders
of the Fund. If the New Cundill Agreement is approved by shareholders, it will
take effect upon the closing of the Transaction. The New Cundill Agreement will
remain in effect for one year following the consummation of the Transaction,
and, unless earlier terminated, will continue from year to year thereafter,
provided that each such continuance is approved annually with respect to the
Fund (i) by the Board or by the vote of a majority of the outstanding voting
securities of the Fund, and, in either case, (ii) by a majority of the Trustees
who are not "interested persons" (as defined in the 1940 Act) of any party to
the New Cundill Agreement.
Board Approval and Recommendation
At the September 30, 2002 meeting of the Board, the New Cundill
Agreement was approved unanimously by the Board, including the Trustees who are
not "interested persons" (as defined in the 1940 Act) of any party to the New
Cundill Agreement. The New Cundill Agreement, as approved by the Board, is
submitted for approval by the shareholders of the Fund. The Board unanimously
recommends that shareholders of the Fund approve the New Cundill Agreement.
Description of the New Cundill Agreement
General. Under the New Cundill Agreement, Cundill will serve IMI as
investment subadviser with respect to the Fund. The New Cundill Agreement
provides that Cundill will develop, recommend and implement investment programs
and strategies for the Fund as may from time to time be most appropriate to the
achievement of the Fund's investment objectives; provide research and analysis
relative to the investment program and investments of the Fund; determine what
securities should be purchased and sold; and monitor on a continuing basis the
performance of the Fund's portfolio securities. Cundill will provide the
foregoing services in accordance with its best judgment and subject to the
stated investment objectives, policies and restrictions of the Fund in
accordance
- -----------------------
/4/ On April 20, 2001, IGI, a leading Canadian financial services
organization, acquired control of MFC. This change in change in control
constituted an assignment of the Fund's then current sub-advisory
agreement, resulting in a termination of that agreement.
19
with the Trust's Declaration of Trust, as amended, and By-laws governing the
offering of its shares, the 1940 Act and the provisions of the Code relating to
regulated investment companies, and subject to such resolutions as from time to
time may be adopted by the Board. Cundill agrees to comply with the investment
objective and policies as set out in the Fund's registration statement in
providing its investment advisory services and to notify IMI on a timely basis
of any lapse in compliance with the objective and policies. Cundill will pay all
of its expenses arising from the performance of its obligations under the New
Cundill Agreement.
Differences between the New Cundill Agreement and the Former Cundill
Agreement. The terms of the New Cundill Agreement are the same in all material
respects as those of the Former Cundill Agreement, except for the dates of
execution and termination.
Portfolio Transactions. Pursuant to the New Cundill Agreement, Cundill
will determine the securities to be purchased or sold with respect to the
portion of the Fund's portfolio assets being managed by it, and will purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as Cundill deems appropriate in order to carry out the policy
with respect to allocation of portfolio transactions as set forth in the New
Cundill Agreement and statement of additional information of the Fund. In
providing the Fund with investment management and supervision, Cundill will seek
the most favorable price and execution, and, consistent with such policy, may
give consideration to the research services furnished by brokers or dealers to
Cundill for its use and to such other considerations as the Board may direct or
authorize from time to time.
The New Cundill Agreement provides that on occasions when Cundill deems
the purchase or sale of a security to be in the best interest of the Fund as
well as other customers, Cundill, 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. Cundill 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 Cundill in the manner it considers
to be the most equitable and consistent with its fiduciary obligations to the
applicable Fund and to such other customers. In no instance, however, will the
Fund's assets be purchased from or sold to IMI, Cundill, the Trust's principal
underwriter, or any affiliated person of either the Trust, IMI, Cundill or the
principal underwriter, acting as principal in the transaction, except to the
extent permitted by the SEC and the 1940 Act. Consistent with U.S. securities
laws, Cundill must adopt written trade allocation procedures that are "fair and
equitable" to its clients which are consistent with the investment policies set
out in the Fund's prospectus and statement of additional information or as the
Board may direct from time to time. Cundill must also effect securities
transactions in client accounts consistent with the allocation system described
in such written procedures, keep accurate records of such transactions and fully
disclose such trade allocation procedures and practices to clients.
Cundill's Responsibilities. The New Cundill Agreement provides that
Cundill will furnish IMI monthly, quarterly and annual reports concerning
transactions and performance of the Fund. In addition, Cundill will maintain for
the Trust the records the Trust is required to maintain under Rule 31a-1(b)
under the 1940 Act insofar as such records relate to the investment affairs of
the Fund and will preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records it maintains for the Trust.
Furthermore, the New Cundill Agreement provides that Cundill will: (i)
comply with all reasonable requests of the Trust for information, including
information required in connection with the Trust's filings with the SEC and
state securities commissions; and (ii) provide such other services as Cundill
shall from time to time determine to be necessary or useful to the
administration of the Fund.
Under the New Cundill Agreement, on each business day, Cundill will
provide the Fund's custodian with information relating to all transactions
concerning the Fund's assets and will provide IMI with the same information upon
IMI's request. In addition, Cundill will provide to IMI certain documents
relating to its services under the New Cundill Agreement and such other
documents relating to such services as IMI may reasonably request on a periodic
basis. Cundill will also promptly notify IMI of any financial condition that is
likely to impair Cundill's ability to fulfill its commitment under the New
Cundill Agreement.
The New Cundill Agreement provides that any information or
recommendation supplied by Cundill in connection with the performance of its
obligations under the New Cundill Agreement is to be regarded as
20
confidential and for use only by IMI, the Trust or such persons as IMI may
designate in connection with the Fund. The New Cundill Agreement also provides
that any information supplied to Cundill in connection with the performance of
its obligations under the New Cundill Agreement is to be regarded as
confidential and for use only by Cundill in connection with its obligation to
provide investment advice and other services to the Fund.
Compensation Paid to Cundill. The New Cundill Agreement provides that
IMI will pay to Cundill for its services under the New Cundill Agreement a fee
payable monthly at an annual rate of 0.50% of the portion of the Fund's average
daily net assets managed by Cundill. The fee rate payable by IMI pursuant to the
New Cundill Agreement is the same as IMI's rate payable under the Former Cundill
Agreement.
Termination of the Agreement. The New Cundill Agreement will continue
in full force and effect from year to year if such continuance is approved in
the manner required by the 1940 Act if Cundill shall not have notified IMI in
writing at least 60 days prior to [date] of any year that Cundill does not
desire such continuance. The New Cundill Agreement may be terminated at any
time, without payment of penalty by the Fund, by vote of the Board or a majority
of the outstanding voting securities of the Fund (as defined by the 1940 Act),
or by IMI upon 30 days' written notice or by Cundill upon 120 days' written
notice. The New Cundill Agreement will automatically terminate in the event of
its assignment (as defined by the 1940 Act) or upon the termination of the
Fund's advisory agreement or if either party is unable to pay its debts or an
administrative or insolvency order is made in respect of a party pursuant to its
relevant governing and applicable laws and regulations.
Additional Information About the New Cundill Agreement
Use of Names. The New Cundill Agreement provides that the names of the
Trust and IMI and abbreviations or logos associated with those names, are the
valuable property of IMI and its affiliates and that Cundill shall use the names
Ivy Fund and Ivy Management, Inc., and associated abbreviations and logos, only
in connection with Cundill's performance of its duties under the New Cundill
Agreement. Further, in any communication with the public and in any marketing
communications of any sort, Cundill agrees to obtain prior written approval from
IMI before using or referring to the Trust, IMI, or the Fund, or any
abbreviations or logos associated with those names. The New Cundill Agreement
further provides that the Fund and its agents may use the "Cundill" and "Peter
Cundill" names in connection with accurately describing the activities of the
Fund, including use with marketing and other promotional and informational
material relating to the Fund with prior written approval always of Cundill.
The New Cundill Agreement states that nothing in it shall be implied to
prevent (i) IMI from engaging other subadvisers to provide investment advice and
other services in relation to series of the Trust, or a portion of the portfolio
assets of any such series, for which Cundill does not provide such services, or
to prevent IMI from providing such services itself in relation to such series;
or (ii) Cundill from providing investment advice and other services to other
funds or clients.
The New Cundill Agreement contains various provision relating to the
obligations of each party to indemnify the other in connection with certain
losses, claims, damages, liabilities or litigation to which the other party, or,
in the case of IMI, its affiliates or control persons, become subject under
certain circumstances.
Finally, the New Cundill Agreement provides that it will be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
Information About Cundill
Cundill, P.O. Box 50133, Montecito, CA 93150-0133, is an SEC-registered
investment adviser. The Cundill Group, consisting of Peter Cundill & Associates,
Inc. operating in the United States, Peter Cundill & Associates (Bermuda) Ltd.
operating in Bermuda, and Cundill Investment Research Ltd. operating in Canada,
began operations in 1975 and as of August 31, 2002 had approximately $1.9
billion in assets under management. The provision of professional investment
management services is the sole business of the Group. The Group currently
manages accounts in the United States, Canada, Europe and offshore. The accounts
include public mutual funds, private clients, limited partnerships and
institutional accounts. Please refer to Appendix 4 to this Proxy Statement
21
for information regarding the principal executive officers and directors of
Cundill.
Cundill does not act as subadviser with respect to any other investment
companies with investment objectives similar to that of the Fund.
During the fiscal year ended December 31, 2001, IMI paid subadvisory
fees to Cundill in the amount of $5,078 with respect to the Fund.
Evaluation by the Board
The New Cundill Agreement
In determining whether to approve the New Cundill Agreement, the Board,
including the Independent Trustees, considered various materials and
representations provided by IMI, Cundill and W&R and met with senior
representatives of IMI, Cundill and W&R. The Independent Trustees were advised
by independent legal counsel throughout this process. The Board met on September
5 and September 30, 2002 to review and consider, among other things, information
relating to the Transaction and the New Cundill Agreement.
In determining whether or not it was appropriate to approve the New
Cundill Agreement and to recommend approval of the New Cundill Agreement to
shareholders of the Fund, the Board considered, among other things, the fact
that the Fund will continue to be managed by Cundill, that the compensation to
be received by Cundill under the New Cundill Agreement is the same as the
compensation paid under the Former Cundill Agreement, that the other terms of
the New Cundill Agreement are the same in all material respects as those of the
Former Cundill Agreement and that the Transaction is not otherwise expected to
have any effect on services rendered by Cundill. Further, the Board considered
(1) the nature and quality of the services rendered by Cundill under the Former
Cundill Agreement; (2) the amount of the compensation payable to Cundill under
the New Cundill Agreement; (3) the results achieved by Cundill for the Fund; and
(4) the personnel, operations and financial condition, and investment management
capabilities, methodologies, and performance of Cundill. The Board also noted
the factors cited in Proposal 1 of this Proxy Statement with respect to W&R,
MIMI, IAC, IMI and the approval of the New Agreement discussed in Proposal 1 for
the Fund and the advantages to the Fund of maintaining Cundill as the Fund's
subadviser.
Based upon the foregoing information and considerations, the Trustees,
including the Independent Trustees, unanimously voted to approve the New Cundill
Agreement for the Fund and to submit the New Cundill Agreement to shareholders
for approval.
If the shareholders of the Fund should fail to approve the New Cundill
Agreement, the Board will meet to consider appropriate action for the Fund.
Such action may include the Board and IMI negotiating a new subadvisory
agreement with an advisory organization selected by the Board or making other
appropriate arrangements. If the Transaction does not close, the Former Cundill
Agreement will remain in effect.
Vote Required
Approval of this Proposal 4 by the Fund 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. If shareholders of the Fund approve the New Cundill Agreement, its
effectiveness is conditioned upon the satisfaction of certain closing conditions
which are contained in the agreements related to the Transaction including,
among other things, approval of a plan of dissolution of MIMI by its
shareholders, so that if the shareholders of MIMI do not approve the plan of
dissolution, the Former Cundill Agreement will remain in effect. If approved,
this Proposal will not become effective until the closing of the Transaction.
22
The Board unanimously recommends that shareholders vote "FOR" this
Proposal 4.
PROPOSAL 5
APPROVAL OF NOMINEES TO THE BOARD OF TRUSTEES
(All Funds)
At the Special Meeting, eight Trustees will be proposed for election to
the Trust's Board of Trustees. The Board's Nominating Committee, which is
comprised solely of Independent Trustees, recommended, and the full Board
approved, the nomination of Jarold W. Boettcher, James D. Gressett, Joseph
Harroz, Jr., Henry J. Herrmann, Glendon E. Johnson, Jr., Eleanor B. Schwartz,
Michael G. Smith and Keith A. Tucker. As described more fully below, if elected,
Keith A. Tucker and Henry J. Herrmann would be "interested persons" of the Trust
by virtue of their employment by W&R or its subsidiaries; the other six
nominees, if elected, would be Independent Trustees. W&R, IMI and the current
Trustees believe that the election of the nominees will facilitate the
integration of the Funds into the W&R family of mutual funds. Following the
election of the nominees, it is expected that each of the current Trustees, with
the exception of Edward M. Tighe, will resign from the Board of Trustees.
The persons named as proxies on the enclosed Proxy Card will vote your
shares for the election of the nominees unless you withhold authority to vote
for any or all of the nominees in your proxy. Each Trustee so elected will serve
as a Trustee of the Trust until he or she dies, resigns, is removed or becomes
disqualified, as provided in the Trust's Declaration of Trust.
Each of the nominees has indicated that he or she is willing to serve
as a Trustee. If any or all of the nominees should become unavailable for
election due to events not now known or anticipated, the persons named as
proxies will vote for such other nominee or nominees as the Trustees may
recommend. The following tables set forth certain information concerning the
current Trustees and the nominees. Unless otherwise noted, each of the Trustees
and nominees has engaged in the principal occupation listed in the following
tables for more than five years, but not necessarily in the same capacity.
The address for each nominee in the following tables is 6300 Lamar
Avenue, Overland Park, Kansas 66202, and the address for each Trustee and
officer is 925 South Federal Highway, Suite 600, Boca Raton, Florida 33432.
Nominees Who Would Be Independent Trustees:
- -----------------------------------------------------------------------------------------------------------------
Name and Age Position(s) Principal Occupation(s) Total Other Directorships Held
Held with During Past 5 Years Number
Fund of Ivy
Funds
Overseen
If Elected
- -----------------------------------------------------------------------------------------------------------------
Jarold W. Boettcher Nominee President of Boettcher 16 Director of Guaranty State Bank &
(62) Enterprises, Inc. Trust Co.; Director of Guaranty,
(diversified agricultural Inc.
products and services);
President of Boettcher
Supply, Inc. (electrical
and plumbing supplies
distributor); President of
Boettcher Aerial, Inc.
(small engines and lawn
care products).
- -----------------------------------------------------------------------------------------------------------------
23
- -------------------------------------------------------------------------------------------------------------------
James D. Gressett Nominee CEO of PacPizza, Inc.; 16 Director of Collins Financial
(52) Secretary of Street Homes, Services.
LLP; formerly President of
Alien, Inc. (real estate
development).
- -------------------------------------------------------------------------------------------------------------------
Joseph Harroz, Jr. Nominee General Counsel, 16 Director of Waddell & Reed
(35) University of Oklahoma, Advisors Funds (20 portfolios
Cameron University and overseen); Director of W&R Target
Rogers State University; Funds, Inc. (12 portfolios
University wide Vice overseen); Director of W&R Funds,
President of the University Inc. (12 portfolios overseen);
of Oklahoma; Adjunct Director of Waddell & Reed
Professor of Law, InvestEd Portfolios, Inc.
University of Oklahoma (3 portfolios overseen).
College of Law; Managing
Member, Harroz Investment, LLC
(commercial real estate);
Managing Member, JHJ Investments,
LLC (commercial real estate).
- -------------------------------------------------------------------------------------------------------------------
Glendon E. Johnson, Jr. Nominee Of counsel, Lee & Smith, PC 16 None
(51) (law firm); Member/Manager,
Castle Valley Ranches, LLC.
- -------------------------------------------------------------------------------------------------------------------
Eleanor B. Schwartz Nominee Professor of Business 16 Director of Waddell & Reed
(65) Administration, University Advisors Funds (20 portfolios
of Missouri - Kansas City; overseen); Director of W&R Target
formerly Chancellor of Funds, Inc. (12 portfolios
University of Missouri - overseen); Director of W&R Funds,
Kansas City. Inc. (12 portfolios overseen);
Director of Waddell & Reed
InvestEd Portfolios, Inc.
(3 portfolios overseen).
- -------------------------------------------------------------------------------------------------------------------
Michael G. Smith Nominee Associated with Grave 16 None
(58) Mill Partners, LLC; formerly
Managing Director - Institutional
Sales, Merrill Lynch.
- -------------------------------------------------------------------------------------------------------------------
Nominees Who Would Be "Interested Persons" of the Funds*:
- -------------------------------------------------------------------------------------------------------------------
Name and Age Position(s) Principal Occupation(s) Total Other Directorships Held
Held with During Past 5 Years Number of
Fund Ivy Funds
Overseen
If Elected
- -----------------------------------------------------------------------------------------------------------------
Keith A. Tucker Nominee Chairman of the Board and 16 Chairman of the Board of Waddell
(57) CEO of Waddell & Reed & Reed Advisors Funds (20
Financial, Inc. ("W&R") portfolios overseen); Chairman of
Principal Financial Officer the Board of W&R Target Funds,
of W&R; Chairman of the Inc. (12 portfolios overseen);
Board of Waddell & Reed, Chairman of the Board of W&R
Inc. ("WRI") Funds, Inc. (12
- -----------------------------------------------------------------------------------------------------------------
24
- ---------------------------------------------------------------------------------------------------------------------
(underwriter); Chairman of portfolios overseen); Chairman
the Board and Director of of the Board of Waddell & Reed
Waddell & Reed Investment InvestEd Portfolios, Inc.
Management Co. ("WRIMCO"); (3 portfolios overseen).
Chairman of the Board and
Director of Waddell & Reed
Services Co.; President and
CEO of Waddell & Reed
Financial Services, Inc.;
Chairman of the Board of
Waddell & Reed Financial
Services, Inc.; Chairman of
the Board of Waddell & Reed
Development, Inc.; Chairman
of the Board of Waddell &
Reed Distributors, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Henry J. Herrmann Nominee President, Chief Investment 16 Director of WRI; Director of
(59) Officer and Director of Waddell & Reed Development,
W&R; Treasurer of W&R; Inc.; Director of Waddell & Reed
President and CEO of Advisors Funds (20 portfolios
WRIMCO; Chief Investment overseen); Director of W&R Target
Officer of WRIMCO; Chief Funds, Inc. (12 portfolios
Investment Officer of overseen); Director of W&R Funds,
Waddell & Reed Financial Inc. (12 portfolios overseen);
Services, Inc.; Executive Director of Waddell & Reed
Vice President of Waddell & InvestEd Portfolios, Inc.
Reed Financial Services, (3 portfolios overseen).
Inc.; formerly Chairman of the
Board of Austin, Calvert &
Flavin, Inc.
- ---------------------------------------------------------------------------------------------------------------------
* Nominees considered by the Trust and its counsel to be "interested
persons" (as defined in the 1940 Act) of the Funds or of their investment
manager because of their employment by W&R or its subsidiaries.
The Board of Trustees of the Trust is currently comprised of nine
Trustees who were previously elected by shareholders. As discussed above, it is
expected that these Trustees, who are described below, will resign effective as
of the closing of the Transaction, with the exception of Edward M. Tighe, who
will remain an Independent Trustee. Accordingly, if each of the eight nominees
is elected at the Special Meeting, there will be a total of nine Trustees
(including Mr. Tighe) on the Board, all of whom will have been elected by
shareholders.
Current Independent Trustees Previously Elected by Shareholders:
- ------------------------------------------------------------------------------------------------------------------------
Name and Age Position(s) Term of Office Principal Total Number Other Directorships
Held with Fund and Length of Occupation(s) During of Ivy Funds Held
Time Served Past 5 Years Overseen
- ------------------------------------------------------------------------------------------------------------------------
John S. Anderegg, Jr. Trustee 35 years Chairman Emeritus of 16 None
(78) Dynamics Research
Corp.
- ------------------------------------------------------------------------------------------------------------------------
25
- ------------------------------------------------------------------------------------------------------------------------
(defense contractor)
- ------------------------------------------------------------------------------------------------------------------------
Stanley Channick (78) Trustee 27 years Chairman of Scott 16 None
Management Company;
President of The
Channick Group;
President and CEO of
The Whitestone
Corporation
(Retired) (each,
consultants to
insurance companies
and agencies in the
area of mass
marketing and
worksite payroll
deduction marketing)
- ------------------------------------------------------------------------------------------------------------------------
Roy J. Glauber (77) Trustee 41 years Professor of 16 None
Physics, Harvard
University
- ------------------------------------------------------------------------------------------------------------------------
Joseph G. Rosenthal (68)Trustee 10 years Chartered 16 None
Accountant,
Rosenthal &
Katkauskas
(accountants)
- ------------------------------------------------------------------------------------------------------------------------
Richard Silverman (78) Trustee 29 years President of Van 16 None
Leer USA (Retired)
(manufacturer of
packing materials);
President of Hysil
(Retired) (gift
wrapping business)
- ------------------------------------------------------------------------------------------------------------------------
J. Brendan Swan (72) Trustee 10 years President of 16 None
Airspray
International Inc.
(manufacturer of
aerosol dispensing
systems)
- ------------------------------------------------------------------------------------------------------------------------
Edward M. Tighe (60) Trustee 3 years Chairman, CEO and 16 Director of
Director of Hansberger
JBE Technology Institutional Funds
Group, Inc. (2 portfolios
(telecommunications overseen); Director
and computer network of Asgard Holding,
consulting) LLC.
President of Global
Mutual Fund Services
Inc.; President and
CEO of Global
Technology.
- ------------------------------------------------------------------------------------------------------------------------
26
Current Trustees Previously Elected by Shareholders Who Are "Interested Persons"
of the Funds:*
- ------------------------------------------------------------------------------------------------------------------------
Name and Age Position(s) Term of Office Principal Total Number Other Directorships
Held with Fund and Length of Occupation(s) During of Ivy Funds Held
Time Served Past 5 Years Overseen
- ------------------------------------------------------------------------------------------------------------------------
James W. Broadfoot* Trustee and 6 years President and Chief 16 None
(59) President Investment Officer
-US Equities of IMI;
Director of Senior
Vice President of
Mackenzie Investment
Management Inc.;
Director of Ivy
Mackenzie
Distributors, Inc.;
Director of Ivy
Mackenzie Services
Corp.
- ------------------------------------------------------------------------------------------------------------------------
Keith J. Carlson* (46) Trustee and 8 years Director, Chairman 16 None
Chairman and Senior Vice
President of IMI;
Director, President
and Chief Executive
Officer of Mackenzie
Investment
Management Inc. and
Ivy Mackenzie
Distributors, Inc.;
Director, President
and Chairman of Ivy
Mackenzie Services
Corp.
- ------------------------------------------------------------------------------------------------------------------------
* Trustees considered by the Trust and its counsel to be "interested
persons" (as defined in the 1940 Act) of the Funds or of their investment
manager because of their employment by the investment manager and, in some
cases, holding offices with the Trust.
Fund Officers:
- ------------------------------------------------------------------------------------------------------------------------
Name and Age Position(s) Length of Time Principal Occupation(s) Other Directorships Held
Held with Fund Served During Past 5 Years
- ------------------------------------------------------------------------------------------------------------------------
Kathleen Eckert (35) Vice President 2002-present Chief Compliance Officer None
of Mackenzie Investment
Management Inc.; Director
of Fund Administration of
Mackenzie Investment
Management Inc.; Senior
Vice President of Ivy
Mackenzie Services Corp.
- ------------------------------------------------------------------------------------------------------------------------
27
- ------------------------------------------------------------------------------------------------------------------------
Paula K. Wolfe (40) Assistant 4 years Compliance Manager of None
Secretary Mackenzie Investment
Management Inc.; Assistant
Secretary of Ivy Fund;
Secretary of Ivy Mackenzie
Distributors, Inc.;
Secretary of Ivy Mackenzie
Services Corp.
- ------------------------------------------------------------------------------------------------------------------------
Beverly J. Yanowitch Treasurer 1 year Vice President, Chief None
(52) Financial Officer and
Treasurer of Mackenzie
Investment Management,
Inc.; Vice Present and
Treasurer of IMI; Senior
Vice President and
Treasurer of Ivy Mackenzie
Distributors, Inc. and Ivy
Mackenzie Services Corp.
- ------------------------------------------------------------------------------------------------------------------------
Trustee or Nominee Ownership of Fund Securities
The table below sets forth the dollar range of the value of the shares
of each Fund, and the dollar range of the aggregate value of the shares of all
of the Funds, owned directly or beneficially by the Trustees and nominees to the
Board of Trustees as of September 27, 2002. Funds that are not owned by any
nominees, Trustees or officers are omitted from the table.
- ------------------------------------------------------------------------------------------------------------------------
Name of Trustee or Name of Fund and Dollar Range of Fund Securities Held Aggregate Dollar Range of Equity
Nominee Securities in All Funds Overseen
or to be Overseen by Trustee or
Nominee in Ivy Fund Complex
- ------------------------------------------------------------------------------------------------------------------------
John S. Anderegg, Jr. Ivy Money Market Fund: $10,001 - 50,000 Over $100,000
Ivy US Blue Chip Fund: $10,001 - 50,000
Ivy US Emerging Growth Fund: $50,001 - 100,000
- ------------------------------------------------------------------------------------------------------------------------
James W. Broadfoot Ivy Money Market Fund: $50,001 - 100,000 Over $100,000
Ivy Growth Fund: $50,001 - 100,000
Ivy US Emerging Growth Fund: Over $100,000
Ivy European Opportunities Fund: $50,001 - 100,000
Ivy Global Science & Technology Fund: $10,001 - 50,000
Ivy Bond Fund: $1 - 10,000
Ivy International Fund: $1 - 10,000
Ivy US Blue Chip Fund: $50,001 - 100,000
- ------------------------------------------------------------------------------------------------------------------------
Keith J. Carlson Ivy Money Market Fund: $1 - 10,000 $ 1 - 10,000
Ivy US Emerging Growth Fund: $1 - 10,000
- ------------------------------------------------------------------------------------------------------------------------
Stanley Channick Ivy Money Market Fund: $10,001 - 50,000 $10,001 - 50,000
- ------------------------------------------------------------------------------------------------------------------------
28
- ------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging Growth Fund: $1 - 10,000
- ------------------------------------------------------------------------------------------------------------------------
Roy J. Glauber Ivy International Fund: $10,001 - 50,000 Over $100,000
Ivy US Emerging Growth Fund: $10,001 - 50,000
Ivy Global Science & Technology Fund: $1 - 10,000
Ivy European Opportunities Fund: Over $100,000
- ------------------------------------------------------------------------------------------------------------------------
Joseph G. Rosenthal None None
- ------------------------------------------------------------------------------------------------------------------------
Richard Silverman Ivy International Fund: $10,001 - 50,000 Over $100,000
Ivy US Emerging Growth Fund: $10,001 - 50,000
Ivy Pacific Opportunities Fund: $1 - 10,000
Ivy Developing Markets Fund: $1 - 10,000
Ivy Global Science & Technology Fund: $1 - 10,000
Ivy European Opportunities Fund: $50,001 - 100,000
- ------------------------------------------------------------------------------------------------------------------------
J. Brendan Swan None None
- ------------------------------------------------------------------------------------------------------------------------
Edward M. Tighe Ivy Money Market Fund: $10,001 - 50,000 $10,001 - 50,000
- ------------------------------------------------------------------------------------------------------------------------
Jarold W. Boettcher None None
- ------------------------------------------------------------------------------------------------------------------------
James D. Gressett None None
- ------------------------------------------------------------------------------------------------------------------------
Joseph Harroz, Jr. None None
- ------------------------------------------------------------------------------------------------------------------------
Henry J. Herrmann None None
- ------------------------------------------------------------------------------------------------------------------------
Glendon E. Johnson None None
- ------------------------------------------------------------------------------------------------------------------------
Eleanor B. Schwartz None None
- ------------------------------------------------------------------------------------------------------------------------
Michael G. Smith None None
- ------------------------------------------------------------------------------------------------------------------------
Keith A. Tucker None None
- -------------------------- -------------------------------------------------------- ------------------------------------
Compensation of Trustees of the Trust for the Fiscal Year Ended December 31,
2001:
The following table sets forth information regarding the compensation
paid from the Trust to the Trustees during 2001 for service on the Board of
Trustees:
- ------------------------------------------------------------------------------------------------------------------------
Name and Position Aggregate Pension or Estimated Annual Total
Compensation Retirement Benefits Upon Compensation
from Trust Benefits Accrued as Retirement* from Trust and
Part of Trust Fund Complex
Expenses Paid to Trustee**
- ------------------------------------------------------------------------------------------------------------------------
John S. Anderegg, Jr. $25,000 N/A N/A $25,000
Trustee
- ------------------------------------------------------------------------------------------------------------------------
James W. Broadfoot $ 0 N/A N/A $ 0
Trustee
- --------------------------------------------------------------------------------------------------------------------------
Keith J. Carlson $ 0 N/A N/A $ 0
Trustee
- ------------------------------------------------------------------------------------------------------------------------
Stanley Channick $25,000 N/A N/A $25,000
Trustee
- ------------------------------------------------------------------------------------------------------------------------
Roy J. Glauber $25,000 N/A N/A $25,000
Trustee
- ------------------------------------------------------------------------------------------------------------------------
29
- ------------------------------------------------------------------------------------------------------------------------
Joseph G. Rosenthal $25,000 N/A N/A $25,000
Trustee
- ------------------------------------------------------------------------------------------------------------------------
Richard Silverman $25,000 N/A N/A $25,000
Trustee
- ------------------------------------------------------------------------------------------------------------------------
J. Brendan Swan $25,000 N/A N/A $25,000
Trustee
- ------------------------------------------------------------------------------------------------------------------------
Edward M. Tighe $25,000 N/A N/A $25,000
Trustee
- ------------------------------------------------------------------------------------------------------------------------
* Under the retirement benefit plan adopted by the Board of Trustees in June,
2001, each Independent Trustee who has served Ivy Fund for at least three years
will receive a one-time benefit payment upon retirement equal to the annual
compensation paid to the Independent Trustee at the time of retirement. The
payment will be made by MIMI within 30 days after the date of the Independent
Trustee's retirement.
** The Fund complex consists of Ivy Fund.
The Board of Trustees of the Trust
The Board of Trustees of the Trust is responsible for the overall
management of the Fund, including general supervision and review of the Fund's
investment activities. The Board, in turn, elects the officers who are
responsible for administering the Fund's day-to-day operations. A majority of
the Board's members are Independent Trustees. The Independent Trustees have
primary responsibility for assuring that each Fund is managed in a manner
consistent with the best interests of its shareholders.
The Board of Trustees meets at least quarterly to review the investment
performance of the Funds and other operational matters, including policies and
procedures designed to assure compliance with various regulatory requirements.
At least annually, the Independent Trustees review the fees paid to IMI and its
affiliates for investment advisory services and other administrative and
shareholder services. In connection with this review, the Trustees evaluate,
among other factors, each Fund's investment performance, the quality and
efficiency of the various other services provided, costs incurred by IMI and its
affiliates, and comparative information regarding fees and expenses of
competitive funds. They are assisted in this process by the Funds' independent
public accountants and by independent legal counsel selected by the Independent
Trustees. In addition, the Independent Trustees from time to time have
established and served on task forces and subcommittees focusing on particular
matters such as investment, accounting, insurance and compensation issues.
During the fiscal year ended December 31, 2001, the Board of Trustees
held four regular meetings and one special meeting.
Committees of the Board of Trustees
The Board has an Audit Committee, an Investment Review Committee, a
Valuation Committee, a Corporate Governance Committee and a Nominating
Committee. Each Trustee attended 75% or more of the respective meetings of the
Board and the Committees (if a member thereof) held during 2001.
The function of the Audit Committee is to assist the Board in
fulfilling its responsibilities to shareholders of the Fund relating to
accounting and reporting, internal controls and the adequacy of auditing
relative thereto. The Audit Committee currently consists of Joseph G. Rosenthal,
Edward M. Tighe and J. Brendan Swan. During the fiscal year ended December 31,
2001, the Audit Committee held six meetings.
The function of the Investment Review Committee is to consider the
Fund's investment processes, policies and risks, and the overall performance of
the Fund. The Investment Review Committee currently consists of Edward M. Tighe,
James W. Broadfoot, Keith J. Carlson, Stanley Channick, Joseph G. Rosenthal and
Richard N. Silverman. During the fiscal year ended December 31, 2001, the
Investment Review Committee held four meetings.
30
The function of the Valuation Committee is to consider the valuation of
portfolio securities which may be difficult to price. The Valuation Committee
currently consists of Roy J. Glauber, John S. Anderegg, Jr. and James W.
Broadfoot. During the fiscal year ended December 31, 2001, the Valuation
Committee held four meetings.
The function of the Corporate Governance Committee is to consider the
responsibilities and actions of the Board of Trustees. The Corporate Governance
Committee currently consists of Stanley Channick, Joseph G. Rosenthal, J.
Brendan Swan, Keith J. Carlson and Richard N. Silverman. During the fiscal year
ended December 31, 2001, the Corporate Governance Committee held four meetings.
The function of the Nominating Committee is to nominate Independent
Trustees and consider other related matters. Shareholders' recommendations as to
nominees that are received by management are referred to the Nominating
Committee for its consideration and action. The Nominating Committee currently
consists of Roy J. Glauber, Joseph G. Rosenthal, and J. Brendan Swan, all of
whom are Independent Trustees. During the fiscal year ended December 31, 2001,
the Nominating Committee did not meet.
Required Vote
Election of each of the listed nominees for Trustee requires the
affirmative vote of a plurality of the outstanding voting shares of each Fund
cast at the Special Meeting in person or by proxy. If approved by shareholders,
the effectiveness of this Proposal is contingent upon the closing of the
Transaction, and this Proposal will not become effective until the closing of
the Transaction. If the Transaction is not consummated, the current Trustees
will remain as members of the Board of Trustees, and none of the nominees will
become Trustees.
The Board unanimously recommends that shareholders vote "FOR" each of
the nominees listed in this Proposal 5.
GENERAL INFORMATION
Other Matters to Come Before the Meeting
Management of the Funds 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 Meeting, the proxy holders will vote
thereon in accordance with their best judgment.
Section 15(f) of the 1940 Act
W&R, IMI and IAC have agreed to comply with the conditions of Section
15(f) of the 1940 Act, and to use commercially reasonable efforts to ensure that
the Board of Trustees of the Trust complies with the conditions of Section
15(f), until the third anniversary of the closing of the Transaction. Section
15(f) provides a non-exclusive safe harbor for an investment adviser or any
affiliated persons thereof to receive any amount or benefit in connection with a
transaction that results in a change in control of or identity of the investment
adviser to an investment company as long as two conditions are met. First, no
"unfair burden" may be imposed on the investment company as a result of the
transaction relating to the change in control, or any express or implied terms,
conditions or understandings applicable thereto. As defined in the 1940 Act, the
term "unfair burden" includes any arrangement during the two-year period after
the change in control whereby the investment adviser (or predecessor or
successor adviser), or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services), or from any person in connection with
the purchase or sale of securities or other property to, from, or on behalf of
the investment company (other than bona fide ordinary compensation as principal
underwriter of the investment company). Second, during the three year period
immediately following the change in control, at least 75% of an investment
company's board of directors must not be "interested persons" of the investment
adviser or the predecessor investment adviser within the meaning of the 1940
Act.
31
Affiliated Service Providers
Pursuant to an Administrative Services Agreement, MIMI provides certain
administrative services to each Fund, including, but not limited to, maintenance
of registration and qualification of Fund shares under state Blue Sky laws,
preparation of federal, state and local income tax returns and preparation of
financial and other information for prospectuses, securities regulatory
documents and returns and periodic reports to shareholders, in exchange for a
monthly fee. Pursuant to a Fund Accounting Services Agreement, MIMI provides
certain accounting and pricing services for each Fund. As compensation for these
services, each Fund pays MIMI a monthly fee based upon the net assets of the
Fund during the preceding month plus out-of-pocket expenses as incurred. Prior
to June 30, 2001, Ivy Mackenzie Services Corp. ("IMSC"), 925 South Federal
Highway, Suite 600, Boca Raton, Florida 33432, a wholly-owned subsidiary of
MIMI, served as the transfer agent for each Fund pursuant to a Transfer Agency
and Shareholder Service Agreement. Each Fund paid IMSC a monthly fee as
compensation for these services. Effective June 30, 2001, PFPC Inc. ("PFPC"),
which is not affiliated with MIMI, became the transfer agent for each Fund. MIMI
completed the process of de-registering IMSC as a transfer agent with the SEC on
August 31, 2001. IMSC currently serves as a liaison between MIMI and PFPC.
The Trust's principal underwriter is IMDI, a wholly-owned subsidiary of
MIMI. IMDI distributes shares of the Funds through broker-dealers, financial
planners and registered investment advisers, and to institutional investors such
as retirement plans. With respect to Class A, Class B and Class C shares of each
Fund (other than Ivy Money Market Fund), IMDI is paid a monthly service fee at
the annual rate of up to 0.25% of the value of average daily net assets
attributable to those shares under a Distribution Plan adopted by the Trust
pursuant to Rule 12b-1 under the 1940 Act (each, a "Plan"). With respect to
Class B and Class C shares of each Fund (other than Ivy Money Market Fund), IMDI
is paid a monthly distribution fee at the annual rate of 0.75% of the value of
average daily net assets attributable to those shares under a Plan. Upon
consummation of the Transaction, IMDI will be a wholly-owned subsidiary of IAC
and an indirect wholly-owned subsidiary of W&R.
Appendix 7 to this Proxy Statement identifies fees that have been paid
by the Funds (or classes of the Funds) to MIMI, IMSC and IMDI for
administrative, fund accounting, transfer agency, shareholder and distribution
services, respectively, during the fiscal year ended December 31, 2001. It is
anticipated that IMDI will continue to provide the same services to the Funds
following the Transaction. It is also anticipated that, following the
Transaction, IAC will provide to the Funds the services that MIMI had been
providing. Appendix 7 also sets forth information regarding brokerage
commissions paid by the Funds (or classes of the Funds) to IMDI during the
fiscal year ended December 31, 2001.
Brokerage
IMI, Henderson and Cundill select broker-dealers to execute
transactions and evaluate the reasonableness of commissions on the basis of
quality, quantity, and the nature of the firms' professional services.
Commissions to be charged and the rendering of investment services, including
statistical, research, and counseling services by brokerage firms, are factors
to be considered in the placing of brokerage business. The types of research
services provided by brokers may include general economic and industry data, and
information on securities of specific companies. Research services furnished by
brokers through whom the Trust effects securities transactions may be used by
IMI, Henderson and Cundill in servicing all of their accounts. In addition, not
all of these services may be used by IMI, Henderson and Cundill in connection
with the services they provide to a Fund or the Trust. IMI, Henderson and
Cundill may consider sales of shares of the Funds as a factor in the selection
of broker-dealers and may select broker-dealers who provide them with research
services. IMI, Henderson and Cundill may choose broker-dealers that provide IMI,
Henderson and Cundill with research services and may cause a client to pay such
broker-dealers commissions which exceed those other broker-dealers may have
charged, if IMI, Henderson and Cundill view the commissions as reasonable in
relation to the value of the brokerage and/or research services. IMI, Henderson
and Cundill will not, however, seek to execute brokerage transactions other than
at the best price and execution, taking into account all relevant factors such
as price, promptness of execution and other advantages to clients, including a
determination that the commission paid is reasonable in relation to the value of
the brokerage and/or research services.
32
Voting Rights
Shareholders of record on October 14, 2002 (the "record date") are
entitled to be present and to vote at the Special Meeting or any adjourned
meeting. As of the record date, each Fund offered multiple classes of shares to
the public. Each class of shares has the same rights, privileges and
preferences, except with respect to: (a) the effect of sales charges, if any;
(b) the different distribution and/or service fees, if any, borne by each class;
(c) the expenses allocable exclusively to each class; (d) voting rights on
matters exclusively affecting a single class; and (e) the exchange privilege of
each class. Appendix 8 sets forth the number of shares of each class of each
Fund issued and outstanding as of the record date. Shareholders of each Fund
will vote on each applicable Proposal as a single class regardless of the class
of shares they own.
The presence in person or by proxy of a Fund's shareholders entitled to
cast a majority in number of votes is necessary to constitute a quorum for the
transaction of business. In the event that a quorum of shareholders is not
represented at the Special Meeting with respect to one or more Funds, the
Meeting may be adjourned by a majority of the applicable Fund's shareholders
present in person or by proxy until a quorum exists. If there are insufficient
votes to approve a 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 120 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 proxies 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" will be
treated as shares that are present but which have not been voted in favor of the
Proposal. Broker non-votes are proxies received by a Fund from brokers or
nominees when the broker or nominee has neither received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter. Accordingly, shareholders are urged to forward
their voting instructions promptly. Abstentions and broker non-votes will not be
counted in favor of, but will have no other effect on, Proposal 5, and will have
the effect of a "no" vote on all other Proposals.
The Funds expect that, before the Special Meeting, broker-dealer firms
holding shares of the Funds in "street name" for their customers will request
voting instructions from their customers and beneficial owners. If these
instructions are not received by the date specified in the broker-dealer firms'
proxy solicitation materials, the Funds understand that the broker-dealers that
are members of the New York Stock Exchange may vote on the items to be
considered at the Special Meeting on behalf of their customers and beneficial
owners under rules of the New York Stock Exchange.
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. 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.
If the Proposals are approved by shareholders, the effectiveness of
each is contingent upon the closing of the Transaction, and each Proposal will
not become effective until the closing of the Transaction. If the Transaction is
not consummated, none of the Proposals will become effective.
Beneficial Owners
To the best of the Trust's knowledge, as of September 27, 2002, no
Trustee of the Trust or nominee owned beneficially 1% or more of the outstanding
shares of any class of a Fund, and the Trustees and officers of the Trust and
nominees beneficially owned, as a group, less than 1% of the shares of each
class of each Fund, except as otherwise noted in Appendix 9. Appendix 9 also
sets forth, as of September 27, 2002, information regarding Fund shares owned
beneficially by the Trust's Chief Executive Officer and the Trust's executive
officers, other than the
33
Chief Executive Officer, who served as executive officers of the Trust at end of
last fiscal year or during last fiscal year and who were paid at least $100,000.
To the best of the Trust's knowledge, as of September 30, 2002, no
person owned beneficially more than 5% of any class of a Fund, except as set
forth in Appendix 10.
Expenses
IMI and/or one or more of its affiliates will pay the expenses of the
Funds in connection with this Notice and Proxy Statement and the Special
Meeting, including the printing, mailing, solicitation and vote tabulation
expenses and out-of-pocket expenses. The Funds will not bear the expenses of the
Proxy Statement.
Shareholder Proposals for Future Meetings
The Funds are not required to hold annual meetings of shareholders and
currently do not intend to hold such meetings unless shareholder action is
required in accordance with the 1940 Act. A shareholder proposal to be
considered for inclusion in the proxy statement at any subsequent meeting of
shareholders must be submitted a reasonable time before the proxy statement for
that meeting is mailed. Whether a proposal is 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.
Additional Proxy Solicitation Information
In addition to solicitation by mail, certain officers and
representatives of the Trust, officers and employees of IMI or its affiliates
and certain financial services firms and their representatives, who will receive
no extra compensation for their services, may solicit proxies by telephone,
telegram or personally.
Georgeson Shareholder Communications, Inc. ("Georgeson") has been
engaged to assist in the solicitation of proxies, at an estimated cost of $[ ],
plus expenses. As noted above, this cost will be borne by IMI and/or one or more
of its affiliates, not by the Funds. As the Meeting date approaches, certain
shareholders of each Fund may receive a telephone call from a representative of
Georgeson if their votes have not yet been received. Proxies that are obtained
telephonically will be recorded in accordance with the procedures described
below. The Trustees believe that these procedures are reasonably designed to
ensure that both the identity of the shareholder casting the vote and the voting
instructions of the shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the Georgeson
representative is required to ask for the shareholder's full name and address,
or the zip code or employer identification number, and to confirm that the
shareholder has received the proxy materials in the mail. If the shareholder is
a corporation or other entity, the Georgeson representative is required to ask
for the person's title and confirmation that the person is authorized to direct
the voting of the shares. If the information solicited agrees with the
information provided to Georgeson, then the Georgeson representative has the
responsibility to explain the process, read the Proposals listed on the proxy
card, and ask for the shareholder's instructions on each Proposal. Although the
Georgeson representative is permitted to answer questions about the process, he
or she is not permitted to recommend to the shareholder how to vote, other than
to read any recommendation set forth in this Proxy Statement. Georgeson will
record the shareholder's instructions on the card. Within 72 hours, the
shareholder will be sent a letter or mailgram to confirm his or her vote and
asking the shareholder to call Georgeson immediately if his or her instructions
are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Special Meeting, but does
not wish to give a proxy by telephone, the shareholder may still submit the
proxy card(s) originally sent with the Proxy Statement or attend in person.
Should shareholders require additional information regarding the proxy or
replacement proxy card(s), they may contact Georgeson toll-free at [toll-free
number]. As explained above, any proxy given by a shareholder is revocable until
voted at the Special Meeting.
34
Please complete the enclosed proxy card(s) and return the card(s) in
the enclosed self-addressed, postage-paid envelope promptly, or take advantage
of the telephonic or electronic voting procedures described on the proxy
card(s).
By Order of the Board,
[signature]
Paula Wolfe
Secretary
35
EXHIBIT A
FORM OF NEW MASTER BUSINESS MANAGEMENT AND
INVESTMENT ADVISORY AGREEMENT WITH IMI
AGREEMENT made this ___ day of _____, _____, by Ivy Fund (the "Fund")
and Ivy Management, Inc. (the "Manager").
WHEREAS, the Fund is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios (the "Portfolios") as may be established and designated from time to
time;
WHEREAS, the Fund desires the services of the Manager as business
manager and investment adviser with respect to such Portfolios as shall be
designated in supplements to this Agreement as further agreed between the Fund
and the Manager; and
WHEREAS, the Fund engages in the business of investing and reinvesting
the assets of the Portfolios in the manner and in accordance with the investment
objectives and restrictions specified in the currently effective prospectus and
statement of additional information (the "Prospectus") relating to the
Portfolios included in the Fund's Registration Statement, as amended from time
to time, filed by the Fund under the Investment Company Act of 1940 (the "1940
Act") and the Securities Act of 1933;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. The Fund hereby appoints the Manager to provide the
business management and investment advisory services specified in this Agreement
with regard to such Portfolios as shall be designated in supplements to this
Agreement, and the Manager hereby accepts such appointment.
2. Investment Advisory Services.
(a) As investment adviser to the Portfolios, the Manager shall
make investments for the account of each Portfolio in accordance with the
Manager's best judgment and within the investment objectives and restrictions
set forth in the Prospectus applicable to the Portfolios, the 1940 Act and the
provisions of the Internal Revenue Code relating to regulated investment
companies, subject to policy decisions adopted by the Fund's Board of Trustees.
(b) The Manager will determine the securities to be purchased
or sold by each Portfolio and will place orders pursuant to its determinations
with any broker or dealer who deals in such securities. The Manager also shall
(i) comply with all reasonable requests of the Fund for information, including
information required in connection with the Fund's filing with the Securities
and Exchange Commission (the "SEC") and state securities commissions, and (ii)
provide such other services as the Manager shall from time to time determine to
be necessary or useful to the administration of the Portfolios.
(c) The Manager shall furnish to the Fund's Board of Trustees
periodic reports on the investment performance of each Portfolio and on the
performance of its obligations under this Agreement and shall supply such
additional reports and information as the Fund's officers or Board of Trustees
shall reasonably request.
(d) On occasions when the Manager deems the purchase or sale of
a security to be in the best interest of a Portfolio as well as other customers,
the Manager, 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 Manager 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
A-1
the securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Manager in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Portfolio
involved and to such other customers.
3. Business Management Services.
(a) The Manager shall supervise the Portfolios' business and
affairs and shall provide such services reasonably necessary for the operation
of the Portfolios as are not provided by employees or other agents engaged by
the Portfolios; provided, that the Manager shall not have any obligation to
provide under this Agreement any direct or indirect services to the Portfolios'
shareholders, any services related to the distribution of the Portfolios'
shares, or any other services which are the subject of a separate agreement or
arrangement between the Portfolios and the Manager. Subject to the foregoing, in
providing business management services hereunder, the Manager shall, at its
expense, (1) coordinate with the Portfolios' Custodian and monitor the services
it provides to the Portfolios; (2) coordinate with and monitor any other third
parties furnishing services to the Portfolios; (3) provide the Portfolios with
the necessary office space, telephones and other communications facilities as
are adequate for the Portfolios' needs; (4) provide the services of individuals
competent to perform administrative and clerical functions which are not
performed by employees or other agents engaged by the Portfolios or by the
Manager acting in some other capacity pursuant to a separate agreement or
arrangement with the Portfolios; (5) maintain or supervise the maintenance by
third parties of such books and records of the Fund as may be required by
applicable Federal or state law; (6) authorize and permit the Manager's
directors, officers and employees who may be elected or appointed as trustees or
officers of the Fund to serve in such capacities; and (7) take such other action
with respect to the Fund, after approval by the Fund, as may be required by
applicable law, including without limitation the rules and regulations of the
SEC and of state securities commissions and other regulatory agencies.
(b) The Manager may retain third parties to provide these
services to the Fund, at the Manager's own cost and expense. The Manager shall
make periodic reports to the Fund's Board of Trustees on the performance of its
obligations under this Agreement, other than services provided to the Fund by
third parties retained in accordance with the previous sentence.
4. Expenses of the Fund. Except as provided in paragraph 3 or as
provided in any separate agreement between the Portfolios and the Manager, the
Fund shall be responsible for all of its expenses and liabilities, including:
(1) the fees and expenses of the Fund's Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to this Agreement
("Independent Trustees"); (2) the salaries and expenses of any of the Fund's
officers or employees who are not affiliated with the Manager; (3) interest
expenses; (4) taxes and governmental fees, including any original issue taxes or
transfer taxes applicable to the sale or delivery of shares or certificates
therefor; (5) brokerage commissions and other expenses incurred in acquiring or
disposing of portfolio securities; (6) the expenses of registering and
qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Fund's Custodian and Transfer Agent and any related
services; (10) expenses of obtaining quotations of portfolio securities and of
pricing shares; (11) expenses of maintaining the Fund's legal existence and of
shareholders' meetings; (12) expenses of preparation and distribution to
existing shareholders of periodic reports, proxy materials and prospectuses;
(13) fees and expenses of membership in industry organizations; and (14) such
nonrecurring or extraordinary expenses as may arise, including litigation
affecting the Fund, and any indemnification by the Fund of its officers,
directors, employees and agents with respect thereto.
5. Standard of Care. The Manager shall give the Fund the benefit of
the Manager's best judgment and efforts in rendering business management and
investment advisory services pursuant to paragraphs 2 and 3 of this Agreement.
As an inducement to the Manager's undertaking to render these services, the Fund
agrees that the Manager shall not be liable under this Agreement for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this Agreement shall be deemed to protect or purport to
protect the Manager against any liability to the Fund or its shareholders to
which the Manager would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Manager's duties under
this Agreement or by reason of the Manager's reckless disregard of its
obligations and duties hereunder.
A-2
6. Fees. In consideration of the services to be rendered by the
Manager pursuant to paragraphs 2 and 3 of this Agreement, each Portfolio shall
pay the Manager a monthly fee on the first business day of each month, based on
the average daily value (as determined on each business day at the time set
forth in the Prospectus of the Portfolio for determining net asset value per
share) of the net assets of the Portfolio during the preceding month at the
annual rates set forth in a supplement to this Agreement with respect to each
Portfolio. If the fees payable to the Manager pursuant to this paragraph 6 begin
to accrue before the end of any month or if this Agreement terminates before the
end of any month, the fees for the period from that date to the end of that
month or from the beginning of that month to the date of termination, as the
case may be, shall be prorated according to the proportion which the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of a
Portfolio shall be computed in the manner specified in the Portfolio's
Prospectus for the computation of net asset value. For purposes of this
Agreement, a "business day" is any day on which the New York Stock Exchange is
open for trading.
7. Ownership of Records. All records required to be maintained and
preserved by the Portfolios pursuant to the provisions or rules or regulations
of the SEC under Section 31(a) of the 1940 Act and maintained and preserved by
the Manager on behalf of the Portfolios are the property of the Portfolios and
shall be surrendered by the Manager promptly on request by the Portfolios;
provided, that the Manager may at its own expense make and retain copies of any
such records.
8. Duration and Termination.
(a) This Agreement shall become effective as of the date first
written above or such later date as the shareholders may approve this Agreement,
and shall continue in effect until _________, 200__, provided, that the
Agreement will continue in effect with respect to a Portfolio beyond _________,
200__, only so long as the continuance is specifically approved at least
annually (i) by the vote of a majority of the outstanding voting securities of
that Portfolio (as defined in the 1940 Act) or by the Fund's entire Board of
Trustees, and (ii) by the vote, cast in person at a meeting called for that
purpose, of a majority of the Fund's Independent Trustees.
(b) This Agreement may be terminated with respect to a Portfolio
at any time, without the payment of any penalty, by a vote of a majority of the
outstanding voting securities of that Portfolio (as defined in the 1940 Act) or
by a vote of a majority of the Fund's entire Board of Trustees on sixty (60)
days' written notice to the Manager or by the Manager on sixty (60) days'
written notice to the Fund. This Agreement shall terminate automatically in the
event of is assignment (as defined in the 1940 Act).
9. Retention of Sub-Advisers. Subject to a Portfolio's obtaining any
initial and periodic approvals that are required under Section 15 of the 1940
Act, the Manager may retain a sub-adviser with respect to that Portfolio, at the
Manager's own cost and expense.
10. Services to Other Clients. Nothing herein contained shall limit
the freedom of the Manager or any affiliated person of the Manager to render
investment supervisory and administrative services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
11. Miscellaneous.
(a) This Agreement shall be construed in accordance with the
laws of the State of Florida, provided that nothing herein shall be construed in
a manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
(c) The Fund's Declaration of Trust has been filed with the
Secretary of State of The Commonwealth of Massachusetts. The obligations of the
Fund are not personally binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or agents of
the Fund, but only the Fund's property shall be bound. It is further understood
and acknowledged that all persons dealing with
A-3
any Portfolio must look solely to the property of such Portfolio for the
enforcement of any claims against that Portfolio as neither the Trustees,
shareholders, officers, employees or agents assume any personal liability for
obligations entered into on behalf of any Portfolio. No Portfolio shall be
liable for the obligations or liabilities of any other Portfolio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
IVY FUND
By: ______________________________
Title:
IVY MANAGEMENT, INC.
By: ______________________________
Title:
A-4
IVY FUND
MASTER BUSINESS MANAGEMENT AND INVESTMENT ADVISORY
AGREEMENT SUPPLEMENT
Ivy Bond Fund
Ivy Cundill Global Value Fund
Ivy Developing Markets Fund
Ivy European Opportunities Fund
Ivy Global Fund
Ivy Global Science & Technology Fund
Ivy Growth Fund
Ivy International Fund
Ivy International Growth Fund
Ivy International Small Companies Fund
Ivy International Value Fund
Ivy Money Market Fund
Ivy Pacific Opportunities Fund
Ivy US Blue Chip Fund
Ivy US Emerging Growth Fund
AGREEMENT made as of the ___ day of _____, _____, by and between Ivy Fund
(the "Fund") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Fund is an open-end investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established and designated by the Trustees of the Fund
from time to time;
WHEREAS, a separate class of shares of the Fund is offered to investors
with respect to each investment portfolio;
WHEREAS, the Fund has adopted a Master Business Management and Investment
Advisory Agreement dated _______, _____ (the "Master Agreement"), pursuant to
which the Fund has appointed the Manager to provide the business management and
investment advisory services specified in that Master Agreement; and
WHEREAS, Ivy Bond Fund, Ivy Cundill Global Value Fund, Ivy Developing
Markets Fund, Ivy European Opportunities Fund, Ivy Global Fund, Ivy Global
Science & Technology Fund, Ivy Growth Fund, Ivy International Fund, Ivy
International Growth Fund, Ivy International Small Companies Fund, Ivy
International Value Fund, Ivy Money Market Fund, Ivy Pacific Opportunities Fund,
Ivy US Blue Chip Fund and Ivy US Emerging Growth Fund (each a "Portfolio" and,
collectively, the "Portfolios") are separate investment portfolios of the Fund.
NOW, THEREFORE, the Trustees of the Fund hereby take the following actions,
subject to the conditions set forth:
1. As provided for in the Master Agreement, the Fund hereby adopts
the Master Agreement with respect to each Portfolio, and the Manager hereby
acknowledges that the Master Agreement shall pertain to each Portfolio, the
terms and conditions of such Master Agreement being hereby incorporated herein
by reference.
2. The term "Portfolio" as used in the Master Agreement shall, for
purposes of this Supplement, pertain to each Portfolio.
3. As provided in the Master Agreement and subject to further
conditions as set forth therein, each Portfolio shall pay the Manager a monthly
fee on the first business day of each month based upon the average daily value
(as determined on each business day at the time set forth in the Prospectus of
the applicable
A-5
Portfolio for determining net asset value per share) of the net assets of the
Portfolio during the preceding month at the following annual rates:
-------------------------------------------------------------------------------------------
Fee Rate
Portfolio (as a percentage of average net assets)
--------- ---------------------------------------
-------------------------------------------------------------------------------------------
Ivy Bond Fund 0.50% of the first $500 million;
0.40% over $500 million
-------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund 1.00%
-------------------------------------------------------------------------------------------
Ivy Developing Markets Fund 1.00%
-------------------------------------------------------------------------------------------
Ivy European Opportunities Fund 1.00% of the first $250 million;
0.85% of the next $250 million;
0.75% over $500 million
-------------------------------------------------------------------------------------------
Ivy Global Fund 1.00% of the first $500 million;
0.75% over $500 million
-------------------------------------------------------------------------------------------
Ivy Global Science & Technology Fund 1.00%
-------------------------------------------------------------------------------------------
Ivy Growth Fund 0.85% of the first $350 million;
0.75% over $350 million
-------------------------------------------------------------------------------------------
Ivy International Fund 1.00% of the first $2.0 billion;
0.90% of the next $500 million;
0.80% of the next $500 million;
0.70% over $3 billion
-------------------------------------------------------------------------------------------
Ivy International Growth Fund 1.00%
-------------------------------------------------------------------------------------------
Ivy International Small Companies Fund 1.00%
-------------------------------------------------------------------------------------------
Ivy International Value Fund 1.00%
------------------------------------------------------------------------------------------
Ivy Money Market Fund 0.40%
------------------------------------------------------------------------------------------
Ivy Pacific Opportunities Fund 1.00%
------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund 0.75%
------------------------------------------------------------------------------------------
Ivy US Emerging Growth Fund 0.85%
------------------------------------------------------------------------------------------
4. This Supplement and the Master Agreement (together, the
"Agreement") shall become effective with respect to each Portfolio as of the
date first written above or such later date as the shareholders may approve the
Agreement, and unless sooner terminated as hereinafter provided, the Agreement
shall remain in effect with respect to each Portfolio until __________, 200_,
and from year to year thereafter if such continuance is specifically approved at
least annually (a) by the vote of a majority of the outstanding voting
securities of the applicable Portfolio (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")) or by the Fund's entire Board of Trustees
and (b) by the vote, cast in person at a meeting called for that purpose, of a
majority of the Fund's Independent Trustees. This Agreement may be terminated
with respect to each Portfolio at any time, without payment of any penalty, by
vote of a majority of the outstanding voting securities of the applicable
Portfolio (as defined in the 1940 Act) or by vote of a majority of the Fund's
entire Board of Trustees on sixty (60) days' written notice to the Manager or by
the Manager on sixty (60) days' written notice to the Fund. This Agreement shall
terminate automatically in the event of its assignment (as defined in the 1940
Act).
A-6
IN WITNESS WHEREOF, the Fund and the Manager have adopted this Supplement
as of the date first set forth above.
IVY FUND, on behalf of Ivy Bond Fund, Ivy Cundill Global Value
Fund, Ivy Developing Markets Fund, Ivy European Opportunities
Fund, Ivy Global Fund, Ivy Global Science & Technology Fund, Ivy
Growth Fund, Ivy International Fund, Ivy International Growth
Fund, Ivy International Small Companies Fund, Ivy International
Value Fund, Ivy Money Market Fund, Ivy Pacific Opportunities
Fund, Ivy US Blue Chip Fund and Ivy US Emerging Growth Fund
By: __________________________
[Name, Title]
IVY MANAGEMENT, INC.
By: __________________________
[Name, Title]
A-7
EXHIBIT B
FORM OF NEW MASTER BUSINESS
MANAGEMENT AGREEMENT WITH IMI
AGREEMENT made this ___ day of _____, _____, by Ivy Fund (the
"Company") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Company is an open-end investment company organized
as a Massachusetts business trust and consists of one or more separate
investment portfolios (the "Funds") as may be established and designated from
time to time;
WHEREAS, the Company desires the services of the Manager as
business manager with respect to such Funds as shall be designated in
supplements to this Agreement as further agreed between the Company and the
Manager; and
WHEREAS, the Company engages in the business of investing and
reinvesting the assets of the Funds in the manner and in accordance with the
investment objective and restrictions specified in the currently effective
prospectus and statement of additional information (the "Prospectus") relating
to the Funds included in the Company's Registration Statement, as amended from
time to time, filed by the Company under the Investment Company Act of 1940 (the
"1940 Act") and the Securities Act of 1933;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. Appointment. The Company hereby appoints the Manager to
provide the business management services specified in this Agreement with regard
to such Funds as shall be designated in supplements to this Agreement, and the
Manager hereby accepts such appointment.
2. Business Management Services.
(a) The Manager shall supervise the Funds' business and
affairs and shall provide such services reasonably necessary for the operation
of the Funds as are not provided by employees or other agents engaged by the
Funds; provided, that the Manager shall not have any obligation to provide under
this Agreement any direct or indirect services to the Funds' shareholders, any
services related to the distribution of the Funds' shares, or any other services
which are the subject of a separate agreement or arrangement between the Funds
and the Manager. Subject to the foregoing, in providing business management
services hereunder, the Manager shall, at its expense, (1) review the activities
of each Fund's investment adviser to ensure that each Fund is operated in
compliance with the Fund's investment objective and policies and with the 1940
Act; (2) coordinate with the Funds' Custodian and Transfer Agent and monitor the
services they provide to the Funds; (3) coordinate with and monitor any other
third parties furnishing services to the Funds; (4) provide the Funds with the
necessary office space, telephones and other communications facilities as are
adequate for the Funds' needs; (5) provide the services of individuals competent
to perform administrative and clerical functions which are not performed by
employees or other agents engaged by the Funds or by the Manager acting in some
other capacity pursuant to a separate agreement or arrangement with the Funds;
(6) maintain or supervise the maintenance by third parties of such books and
records of the Company as may be required by applicable Federal or state law;
(7) authorize and permit the Manager's directors, officers and employees who may
be elected or appointed as directors or officers of the Company to serve in such
capacities; and (8) take such other action with respect to the Company, after
approval by the Company, as may be required by applicable law, including without
limitation the rules and regulations of the SEC and of state securities
commissions and other regulatory agencies.
(b) The Manager may retain third parties to provide these
services to the Company, at the Manager's own cost and expense. The Manager
shall make periodic reports to the Company's Board of Trustees on the
performance of its obligations under this Agreement, other than services
provided to the Company by third parties retained in accordance with the
previous sentence.
B-1
3. Expenses of the Company. Except as provided in paragraph 2
or as provided in any separate agreement between the Funds and the Manager, the
Company shall be responsible for all of its expenses and liabilities, including:
(1) the fees and expenses of the Company's Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to this Agreement
("Independent Trustees"); (2) the salaries and expenses of any of the Company's
officers or employees who are not affiliated with the Manager; (3) interest
expenses; (4) taxes and governmental fees, including any original issue taxes or
transfer taxes applicable to the sale or delivery of shares or certificates
therefor; (5) brokerage commissions and other expenses incurred in acquiring or
disposing of portfolio securities; (6) the expenses of registering and
qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Company's Custodian and Transfer Agent and any related
services; (10) expenses of obtaining quotations of portfolio securities and of
pricing shares; (11) expenses of maintaining the Company's legal existence and
of shareholders' meetings; (12) expenses of preparation and distribution to
existing shareholders of periodic reports, proxy materials and prospectuses;
(13) fees and expenses of membership in industry organizations; and (14) such
nonrecurring or extraordinary expenses as may arise, including litigation
affecting the Company, and any indemnification by the Company of its officers,
directors, employees and agents with respect thereto.
4. Standard of Care. The Manager shall give the Company the
benefit of the Manager's best judgment and efforts in rendering business
management services pursuant to paragraph 2 of this Agreement. As an inducement
to the Manager's undertaking to render these services, the Company agrees that
the Manager shall not be liable under this Agreement for any mistake in judgment
or in any other event whatsoever except for lack of good faith, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Manager against any liability to the Company or its shareholders to which the
Manager would otherwise be subject by reason of the Manager's reckless disregard
of its obligations and duties hereunder.
5. Fees. In consideration of the services to be rendered by the
Manager pursuant to paragraph 2 of this Agreement, each Fund shall pay the
Manager a monthly fee on the first business day of each month, based on the
average daily value (as determined on each business day at the time set forth in
the Prospectus of the Fund for determining net asset value per share) of the net
assets of the Fund during the preceding month at the annual rates set forth in a
supplement to this Agreement with respect to each Fund. If the fees payable to
the Manager pursuant to this paragraph 5 begin to accrue before the end of any
month or if this Agreement terminates before the end of any month, the fees for
the period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion which the period bears to the full month in which
the effectiveness or termination occurs. For purposes of calculating the monthly
fees, the value of the net assets of a Fund shall be computed in the manner
specified in the Fund's Prospectus for the computation of net asset value. For
purposes of this Agreement, a "business day" is any day on which the New York
Stock Exchange is open for trading.
6. Ownership of Records. All records required to be maintained
and preserved by the Funds pursuant to the provisions or rules or regulations of
the SEC under Section 31(a) of the 1940 Act and maintained and preserved by the
Manager on behalf of the Funds are the property of the Funds and shall be
surrendered by the Manager promptly on request by the Funds; provided, that the
Manager may at its own expense make and retain copies of any such records.
7. Duration and Termination.
(a) This Agreement shall become effective as of the date
first written above or such later date as the shareholders may approve this
Agreement, and shall continue in effect until _________, 200__ provided, that
the Agreement will continue in effect with respect to a Fund beyond _________,
200__ only so long as the continuance is specifically approved at least annually
(i) by the vote of a majority of the outstanding voting securities of that Fund
(as defined in the 1940 Act) or by the Company's entire Board of Trustees, and
(ii) by the vote, cast in person at a meeting called for that purpose, of a
majority of the Company's Independent Trustees.
(b) This Agreement may be terminated with respect to a Fund
at any time, without the payment of any penalty, by a vote of a majority of the
outstanding voting securities of that Fund (as defined in the 1940 Act) or by a
vote of a majority of the Company's entire Board of Trustees on 60 days' written
notice to the
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Manager or by the Manager on 60 days' written notice to the Company. This
Agreement shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).
8. Services to Other Clients. Nothing herein contained shall
limit the freedom of the Manager or any affiliated person of the Manager to
render investment supervisory and administrative services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
9. Miscellaneous.
(a) This Agreement shall be construed in accordance with
the laws of the State of Florida, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
(c) The Company's Declaration of Trust has been filed with
the Secretary of State of The Commonwealth of Massachusetts. The obligations of
the Company are not personally binding upon, nor shall resort be had to the
private property of, any of the Trustees, shareholders, officers, employees or
agents of the Company, but only the Company's property shall be bound. It is
further understood and acknowledged that all persons dealing with any Fund must
look solely to the property of such Fund for the enforcement of any claims
against that Fund as neither the Trustees, shareholders, officers, employees or
agents assume any personal liability for obligations entered into on behalf of
any Fund. No Fund shall be liable for the obligations or liabilities of any
other Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
IVY FUND
By: __________________________________
Title: President
IVY MANAGEMENT, INC.
By: __________________________________
Title: President
B-3
IVY FUND
MASTER BUSINESS MANAGEMENT AGREEMENT SUPPLEMENT
Ivy Global Natural Resources Fund
AGREEMENT made as of the ___ day of _____, _____, by and between Ivy Fund
(the "Trust") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established and designated by the Trustees of the Trust
from time to time;
WHEREAS, a separate class of shares of the Trust is offered to investors
with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Master Business Management Agreement dated
_______, _____ (the "Master Agreement"), pursuant to which the Trust has
appointed the Manager to provide the business management services specified in
that Master Agreement; and
WHEREAS, Ivy Global Natural Resources Fund (the "Fund") is a separate
investment portfolio of the Trust.
NOW, THEREFORE, the Trustees of the Trust hereby take the following
actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust hereby adopts
the Master Agreement with respect to the Fund, and the Manager hereby
acknowledges that the Master Agreement shall pertain to the Fund, the terms and
conditions of such Master Agreement being hereby incorporated herein by
reference.
2. The term "Fund" as used in the Master Agreement shall, for
purposes of this Supplement, pertain to the Fund.
3. As provided in the Master Agreement and subject to further
conditions as set forth therein, the Fund shall pay the Manager a monthly fee on
the first business day of each month based upon the average daily value (as
determined on each business day at the time set forth in the Fund's Prospectus
for determining net asset value per share) of the Fund's net assets during the
preceding month at the annual rate of 0.50%.
4. This Supplement and the Master Agreement (together, the
"Agreement") shall become effective with respect to the Fund as of the date
first written above or such later date as the shareholders may approve the
Agreement, and unless sooner terminated as hereinafter provided, the Agreement
shall remain in effect with respect to the Fund until __________, 200__ and from
year to year thereafter if such continuance is specifically approved at least
annually (a) by the vote of a majority of the outstanding voting securities of
the Fund (as defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) or by the Trust's entire Board of Trustees and (b) by the vote,
cast in person at a meeting called for that purpose, of a majority of the
Trust's Independent Trustees. This Agreement may be terminated with respect to
the Fund at any time, without payment of any penalty, by vote of a majority of
the outstanding voting securities of the Fund (as defined in the 1940 Act) or by
vote of a majority of the Trust's entire Board of Trustees on sixty (60) days'
written notice to the Manager or by the Manager on sixty (60) days' written
notice to the Trust. This Agreement shall terminate automatically in the event
of its assignment (as defined in the 1940 Act).
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IN WITNESS WHEREOF, the Trust and the Manager have adopted this Supplement
as of the date first set forth above.
IVY FUND, on behalf of
Ivy Global Natural Resources Fund
By: _____________________________
Title: President
IVY MANAGEMENT, INC.
By: _____________________________
Title: President
B-5
EXHIBIT C
FORM OF NEW SUBADVISORY AGREEMENT
WITH HENDERSON GLOBAL INVESTORS (NORTH AMERICA) INC.
AGREEMENT made as of the ___ day of _____, _____, between IVY MANAGEMENT,
INC., 925 South Federal Highway, Suite 600, Boca Raton, Florida 33432 U.S.A., a
Massachusetts corporation (hereinafter called the "Manager"), and HENDERSON
GLOBAL INVESTORS (NORTH AMERICA) INC., 737 North Michigan Avenue, Suite 1950,
Chicago, Illinois 60611, a Delaware corporation (hereinafter called the
"Subadviser").
WHEREAS, Ivy Fund (the "Trust") is a Massachusetts business trust organized
with one or more series of shares, and is registered as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Manager has entered into a Master Business Management and
Investment Advisory Agreement dated ________, _____ (the "Advisory Agreement"),
with the Trust, pursuant to which the Manager acts as investment adviser to a
specified portion of the portfolio assets of certain series of the Trust listed
on Schedule A hereto, as amended from time to time (each a "Fund" and,
collectively, the "Funds");
WHEREAS, the Manager desires to utilize the services of the Subadviser as
investment subadviser with respect to certain portfolio assets of each Fund; and
WHEREAS, the Subadviser is willing to perform such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will serve the Manager as
investment subadviser with respect to certain portfolio assets of each Fund, as
set forth on the attached Schedule A.
(a) As investment subadviser to the Funds, the Subadviser is
hereby authorized and directed and hereby agrees, in accordance with the
Subadviser's best judgment and subject to the stated investment objectives,
policies and restrictions of the Funds as set forth in the current prospectuses
and statements of additional information of the Trust (including amendments) and
in accordance with the Trust's Declaration of Trust, as amended, and By-laws
governing the offering of its shares (collectively, the "Trust Documents"), the
1940 Act and the provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), relating to regulated investment companies, and
subject to such resolutions as from time to time may be adopted by the Trust's
Board of Trustees, and provided that the Trust Documents and such resolutions
are all furnished to the Subadviser, to develop, recommend and implement such
investment program and strategy for the Funds as may from time to time be most
appropriate to the achievement of the investment objectives of the Funds as
stated in the aforesaid prospectuses, to provide research and analysis relative
to the investment program and investments of the Funds, to determine what
securities should be purchased and sold and to monitor on a continuing basis the
performance of the portfolio securities of the Funds.
(b) The Subadviser shall comply with all reasonable requests of
the Trust for information, including information required in connection with the
Trust's filings with the Securities and Exchange Commission (the "SEC") and
state securities commissions.
(c) The Subadviser shall furnish to the Trust's Board of Trustees
periodic reports on the investment performance of each 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.
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(d) On occasions when the Subadviser deems the purchase or sale
of a security to be in the best interest of a Fund as well as other customers,
the Subadviser, to the extent permitted by applicable law, may aggregate the
securities to be so sold or purchased in order to obtain the best execution
under the circumstances or lower brokerage commissions, if any. The Subadviser
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 Subadviser in
the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund involved and to such other customers. In no
instance, however, will a Fund's assets be purchased from or sold to the
Manager, the Subadviser, the Trust's principal underwriter, or any affiliated
person of either the Trust, the Manager, the Subadviser or the principal
underwriter, acting as principal in the transaction, except to the extent
permitted by the SEC and the 1940 Act.
(e) The Subadviser shall provide the Funds' custodian on each
business day with information relating to all transactions concerning each
Fund's assets and shall provide the Manager with such information upon request
of the Manager.
(f) The investment advisory services provided by the Subadviser
under this Agreement are not to be deemed exclusive and the Subadviser shall be
free to render similar services to others, as long as such services do not
impair the services rendered to the Manager or the Trust.
(g) The Subadviser shall promptly notify the Manager of any
financial condition that is likely to impair the Subadviser's ability to fulfill
its commitment under this Agreement.
(h) The Subadviser shall review all proxy solicitation materials
and be responsible for voting and handling all proxies in relation to the
securities held in a Fund's portfolio. The Manager shall instruct the custodian
and other parties providing services to the Fund to promptly forward misdirected
proxies to the Subadviser.
2. Delivery of Documents to the Manager. The Subadviser has
furnished the Manager with copies of each of the following documents:
(a) The Subadviser's current Form ADV and any amendments
thereto;
(b) The Subadviser's most recent balance sheet;
(c) Separate lists of persons whom the Subadviser wishes to have
authorized to give written and/or oral instructions to the custodian and the
fund accounting agent of Trust assets for the Funds; and
(d) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager 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 Subadviser will provide
to the Manager such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic basis. Such
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 Subadviser.
3. Expenses. The Subadviser shall pay all of its expenses arising
from the performance of its obligations under Section 1.
4. Compensation. The Manager shall pay to the Subadviser for its
services hereunder, and the Subadviser agrees to accept as full compensation
therefor, a fee with respect to each Fund as set forth on Schedule B. Such fee
shall be accrued daily on the basis of the value of the portion of the average
daily net assets of the applicable Fund as are then being managed by the
Subadviser and shall be payable monthly. If the Subadviser shall serve hereunder
for less than the whole of any month, the fee hereunder shall be prorated
accordingly.
C-2
5. Purchase and Sale of Securities. The Subadviser will determine
the securities to be purchased or sold with respect to the portion of each
Fund's portfolio assets being managed by it, and shall purchase securities from
or through and sell securities to or through such persons, brokers or dealers as
the Subadviser shall deem appropriate in order to carry out the policy with
respect to allocation of portfolio transactions as set forth in the prospectuses
and statements of additional information (including amendments) of the Funds or
as the Trust's Board of Trustees may direct from time to time. In providing the
Funds with investment management and supervision, it is recognized that the
Subadviser will seek the best price and execution under the circumstances, and,
consistent with such policy, may give consideration to the research services
furnished by brokers or dealers to the Subadviser for its use and to such other
considerations as the Trust's Board of Trustees may direct or authorize from
time to time.
Nothing in this Agreement shall be implied to prevent (i) the Manager
from engaging other subadvisers to provide investment advice and other services
in relation to series of the Trust, or a portion of the portfolio assets of any
such series, for which the Subadviser does not provide such services, or to
prevent the Manager from providing such services itself in relation to such
series; (ii) the Subadviser from providing investment advice and other services
to other funds or clients; or (iii) the Subadviser from engaging as subadviser
an affiliated party to perform all or part of the Subadviser's responsibilities
hereunder, at the Subadviser's own cost and expense, provided that the
Subadviser shall have the same responsibilities and liabilities under this
Agreement as if it were performing the duties.
In the performance of its duties hereunder, the Subadviser is and
shall be an independent contractor and except as expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or represent
the Trust, the Funds, any other series of the Trust or the Manager in any way or
otherwise be deemed to be an agent of the Trust, the Funds, any other series of
the Trust or the Manager.
6. Term of Agreement. This Agreement shall become effective as of
the date first written above or such later date as the shareholders may approve
this Agreement, and shall continue in full force and effect until __________,
200__, and from year to year thereafter if such continuance is approved in the
manner required by the 1940 Act, if the Subadviser shall not have notified the
Manager in writing at least 60 days prior to such date or prior to [date] of any
year thereafter that it does not desire such continuance. This Agreement may be
terminated at any time, without payment of penalty by a Fund, by vote of the
Trust's Board of Trustees or a majority of the outstanding voting securities of
the applicable Fund (as defined by the 1940 Act), or by the Manager or by the
Subadviser upon 60 days' written notice. This Agreement will automatically
terminate in the event of its assignment (as defined by the 1940 Act) or upon
the termination of the Advisory Agreement or if (a) either party is unable to
pay its debts or an administrative or insolvency order is made in respect of a
party pursuant to its relevant governing and applicable laws and regulations or
(b) a party commits a material breach of any of the terms or conditions of this
Agreement and such breach shall continue 30 days after notice in writing,
specifying the breach and requiring the same to be remedied, has been given.
7. Amendments. This Agreement may be amended by written consent of
the parties hereto provided that the amendment is approved in a manner
consistent with the 1940 Act and the rules and regulations thereunder and any
applicable SEC exemptive order therefrom, SEC no-action letter or SEC
interpretive guidance.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Manager, the Trust or such persons as the Manager may designate in
connection with the Funds. It is also understood that any information supplied
to the Subadviser 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 Funds, is to be regarded as
confidential and for use only by the Subadviser in connection with its
obligation to provide investment advice and other services to the Funds.
9. Representations and Warranties. The Subadviser hereby represents
and warrants as follows:
(a) The Subadviser is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940, as amended (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;
C-3
(b) The Subadviser has all requisite authority to enter into,
execute, deliver and perform the Subadviser's obligations under this Agreement;
(c) The Subadviser's performance of its obligations under this
Agreement does not conflict with any law, regulation or order to which the
Subadviser is subject; and
(d) The Subadviser has reviewed the portion of (i) the
registration statement filed with the SEC, as amended from time to time, for the
Funds ("Registration Statement"), and (ii) each Fund's prospectuses and
statements of additional information (including amendments) thereto, in each
case in the form received from the Manager, with respect to the disclosure about
the Subadviser and except as advised in writing to the Manager such Registration
Statement, prospectuses and statements of additional information (including
amendments) contain, as of their respective dates, no untrue statement of any
material fact regarding the Subadviser of which the Subadviser has knowledge and
do not omit any statement of a material fact regarding the Subadviser of which
the Subadviser has knowledge which was required to be stated therein or
necessary to make the statements contained therein not misleading.
10. Covenants. The Subadviser hereby covenants and agrees that,
so long as this Agreement shall remain in effect:
(a) The Subadviser shall maintain the Subadviser's registration
as an investment adviser under the Advisers Act, and such registration shall at
all times remain current, complete and in full compliance with all material
applicable provisions of the Advisers Act and the rules and regulations
thereunder;
(b) The Subadviser's performance of its obligations under this
Agreement shall not conflict with any law, regulation or order to which the
Subadviser is then subject;
(c) The Subadviser shall at all times comply with the Advisers
Act and the 1940 Act, and all rules and regulations thereunder, and all other
applicable laws and regulations, and the Registration Statement, prospectuses
and statements of additional information (including amendments) and with any
applicable procedures adopted by the Trust's Board of Trustees, provided that
such procedures are substantially similar to those applicable to similar funds
for which the Trust's Board of Trustees is responsible and that such procedures
are identified in writing to the Subadviser;
(d) The Subadviser shall promptly notify the Manager and the
Fund upon the occurrence of any event that under federal, state or foreign
securities laws might disqualify or prevent the Subadviser from performing its
duties under this Agreement. The Subadviser shall promptly notify the Manager
and the Fund if there are any changes to its ownership structure or the
Subadviser has become the subject of any adverse regulatory action imposed by
any regulatory body or self-regulatory organization. The Subadviser further
agrees to notify the Manager of any changes relating to it or the provision of
services by it that would be required to be disclosed in the Registration
Statement, prospectuses or statements of additional information (including
amendments) for the Funds; and
(e) The Subadviser will manage the portion of each Fund's
portfolio assets for which it serves as subadviser under this Agreement in a
manner consistent with the Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code.
11. Use of Names.
(a) The Subadviser acknowledges and agrees that the names Ivy
Fund and Ivy Management, Inc., and abbreviations or logos associated with those
names, are the valuable property of the Manager and its affiliates; that the
Funds, the Manager and their affiliates have the right to use such names,
abbreviations and logos; and that the Subadviser shall use the names Ivy Fund
and Ivy Management, Inc., and associated abbreviations and logos, only in
connection with the Subadviser's performance of its duties hereunder. Further,
in any communication with the public and in any marketing communications of any
sort, the Subadviser agrees to obtain prior written approval from the Manager
before using or referring to Ivy Fund, and Ivy Management, Inc., or the
C-4
Funds or any abbreviations or logos associated with those names; provided that
nothing herein shall be deemed to prohibit the Subadviser from referring to the
performance of the Funds in the Subadviser's marketing material as long as such
marketing material does not constitute "sales literature" or "advertising" for
the Funds, as those terms are used in the rules, regulations and guidelines of
the SEC and the National Association of Securities Dealers, Inc.
(b) The Manager acknowledges that "Henderson" and "Henderson
Global Investors" and abbreviations or logos associated with those names are
valuable property of the AMP group of companies and are distinctive in
connection with investment advisory and related services provided by the
Subadviser, the "Henderson" name is a property right of the Subadviser, and the
"Henderson" and "Henderson Global Investors" names are understood to be used by
each Fund upon the conditions hereinafter set forth; provided that each Fund may
use such names only so long as the Subadviser shall be retained as the
investment subadviser of the Fund pursuant to the terms of this Agreement.
(c) The Subadviser acknowledges that each Fund and its agents may
use the "Henderson" and "Henderson Global Investors" names in connection with
accurately describing the activities of the Fund, including use with marketing
and other promotional and informational material relating to the Fund with the
prior written approval always of the Subadviser. In the event that the
Subadviser shall cease to be the investment subadviser of a Fund, then the Fund
at its own or the Manager's expense, upon the Subadviser's written request: (i)
shall cease to use the Subadviser's name for any commercial purpose; and (ii)
shall use its best efforts to cause the Fund's officers and trustees to take any
and all actions which may be necessary or desirable to effect the foregoing and
to reconvey to the Subadviser all rights which a Fund may have to such name. The
Manager agrees to take any and all reasonable actions as may be necessary or
desirable to effect the foregoing and Subadviser agrees to allow the Funds and
their agents a reasonable time to effectuate the foregoing.
(d) The Subadviser hereby agrees and consents to the use of the
Subadviser's name upon the foregoing terms and conditions.
12. Reports by the Subadviser and Records of the Funds. The
Subadviser shall furnish the Manager monthly, quarterly and annual reports
concerning transactions and performance of the Funds, including information
required to be disclosed in the Trust's Registration Statement, in such form as
may be mutually agreed. The Subadviser shall permit the financial statements,
books and records with respect to the Funds to be inspected and audited by the
Trust, the Manager or their agents at all reasonable times during normal
business hours. The Subadviser shall immediately notify and forward to both the
Manager and legal counsel for the Trust any legal process served upon it on
behalf of the Manager or the Trust. The Subadviser shall promptly notify the
Manager of any changes in any information concerning the Subadviser of which the
Subadviser 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 Subadviser agrees that all records it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to the Trust or
the Manager any such records upon the Trust's or the Manager's request. The
Subadviser 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 each Fund. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains
for the Trust.
13. Indemnification. The Subadviser agrees to indemnify and hold
harmless the Manager, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Manager 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 Manager, against
any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Manager, 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 Subadviser's responsibilities as subadviser of the
Funds (1) to the extent of and as a result of the willful misconduct, bad faith,
or gross negligence of the Subadviser, any of the Subadviser's employees or
representatives or any affiliate of or any person acting on behalf of the
Subadviser, 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 Funds 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
C-5
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 Subadviser to the Manager, the Trust or any affiliated person
of the Manager or the Trust expressly for use in the Trust's Registration
Statement, or upon verbal information confirmed by the Subadviser 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 Subadviser 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 Subadviser's indemnity
in favor of the Manager or any affiliated person or controlling person of the
Manager 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 Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person of the Subadviser and each controlling person of the
Subadviser against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Subadviser 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 Manager's responsibilities as
investment manager of the Funds (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence of the Manager, any of the
Manager's employees or representatives or any affiliate of or any person acting
on behalf of the Manager, 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 Funds 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 by the Trust other than in reliance upon written
information furnished by the Subadviser, or any affiliated person of the
Subadviser, expressly for use in the Trust's Registration Statement or other
than upon verbal information confirmed by the Subadviser in writing expressly
for use in the Trust's Registration Statement; provided, however, that in no
case is the Manager's indemnity in favor of the Subadviser or any affiliated
person or controlling person of the Subadviser 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.
14. Jurisdiction. The Subadviser consents to the jurisdiction of any
state or U.S. federal court sitting in the Commonwealth of Massachusetts over
any suit, action or proceeding arising out of or relating to this Agreement.
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 Manager: IVY MANAGEMENT, INC.
925 South Federal Highway, Suite 600
Boca Raton, FL 33432, U.S.A.
Attention: [President]
If to the Trust: IVY FUND
925 South Federal Highway, Suite 600
Boca Raton, FL 33432, U.S.A.
Attention: [President]
If to the Subadviser: HENDERSON GLOBAL INVESTORS (NORTH AMERICA)
INC.
737 North Michigan Avenue, Suite 1950
Chicago, IL 60611, U.S.A.
Attention: Michael Andrews and the Company
Secretary
16. Limitation of Liability of the Trust, its Trustees, and
Shareholders. It is understood and expressly stipulated that none of the
trustees, officers, agents, or shareholders of any series of the Trust shall be
C-6
personally liable hereunder. It is understood and acknowledged that all persons
dealing with any series of the Trust must look solely to the property of such
series for the enforcement of any claims against that series as neither the
trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of any series of the Trust. No series of the
Trust shall be liable for the obligations or liabilities of any other series of
the Trust.
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon either of the parties, to do anything in
violation of any applicable laws or regulations.
18. 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.
19. 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, IVY MANAGEMENT, INC. AND HENDERSON GLOBAL
INVESTORS (NORTH AMERICA) INC. have each caused this instrument to be signed in
duplicate on its behalf by the officer designated below thereunto duly
authorized.
IVY MANAGEMENT, INC.
By:________________________________
Title
HENDERSON GLOBAL INVESTORS (NORTH
AMERICA) INC.
By:________________________________
Title
C-7
SCHEDULE A
TO SUBADVISORY AGREEMENT BETWEEN
IVY MANAGEMENT, INC. AND HENDERSON GLOBAL INVESTORS (NORTH AMERICA) INC.
DATED ______________
-----------------------------------
Funds:
Ivy International Small Companies Fund - 100% of Fund's net assets
Ivy European Opportunities Fund - 100% of Fund's net assets
C-8
SCHEDULE B
TO SUBADVISORY AGREEMENT BETWEEN
IVY MANAGEMENT, INC. AND HENDERSON GLOBAL INVESTORS (NORTH AMERICA) INC.
DATED ______________
----------------------------------
Fee schedule:
Ivy International Small Companies Fund: payable monthly at an annual rate of
0.45% of first $100,000,000 of net assets and 0.40% thereafter of that portion
of the Fund's average daily net assets managed by the Subadviser.
Ivy European Opportunities Fund: payable monthly at an annual rate of 0.45% of
first $100,000,000 of net assets and 0.40% thereafter of that portion of the
Fund's average daily net assets managed by the Subadviser.
C-9
EXHIBIT D
FORM OF NEW SUBADVISORY AGREEMENT BETWEEN HENDERSON GLOBAL INVESTORS
(NORTH AMERICA) INC. AND HENDERSON INVESTMENT MANAGEMENT LIMITED
AGREEMENT made as of the ___ day of _____, _____, between
HENDERSON GLOBAL INVESTORS (NORTH AMERICA) INC., 737 North Michigan Avenue,
Suite 1950, Chicago, Illinois, 60611, a Delaware corporation (hereinafter called
"HGINA"), and HENDERSON INVESTMENT MANAGEMENT LIMITED, 4 Broadgate, London,
England EC2M 2DA, an United Kingdom corporation (hereinafter called the
"Subadviser").
WHEREAS, Ivy Fund (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, HGINA has entered into a Subadvisory Agreement dated
________, _____ (the "Subadvisory Agreement"), with Ivy Management, Inc., a
Massachusetts corporation (the "Manager"), pursuant to which HGINA acts as
investment subadviser with respect to certain portfolio assets of certain series
of the Trust listed on Schedule A hereto, as amended from time to time (each a
"Fund" and, collectively, the "Funds");
WHEREAS, HGINA desires to utilize the services of the Subadviser
as investment subadviser with respect to certain portfolio assets of each Fund;
and
WHEREAS, the Subadviser is willing to perform such services on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will serve HGINA as
investment subadviser with respect to certain portfolio assets of each Fund, as
set forth on the attached Schedule A.
(a) As investment subadviser to the Funds, the Subadviser is hereby
authorized and directed and hereby agrees, in accordance with the
Subadviser's best judgment and subject to the stated investment
objectives, policies and restrictions of the Funds as set forth
in the current prospectuses and statements of additional
information of the Trust (including amendments) and in accordance
with the Trust's Declaration of Trust, as amended, and By-laws
governing the offering of its shares (collectively, the "Trust
Documents"), the 1940 Act and the provisions of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"),
relating to regulated investment companies, and subject to such
resolutions as from time to time may be adopted by the Trust's
Board of Trustees, and provided that the Trust Documents and such
resolutions are all furnished to the Subadviser, to develop,
recommend and implement such investment program and strategy for
the Funds as may from time to time be most appropriate to the
achievement of the investment objectives of the Funds as stated
in the aforesaid prospectuses, to provide research and analysis
relative to the investment program and investments of the Funds,
to determine what securities should be purchased and sold and to
monitor on a continuing basis the performance of the portfolio
securities of the Funds.
(b) The Subadviser shall comply with all reasonable requests of HGINA
for information, including information required in connection
with the Trust's filings with the Securities and Exchange
Commission (the "SEC") and state securities commissions.
D-1
(c) The Subadviser shall furnish to the Trust's Board of Trustees and
to HGINA periodic reports on the investment performance of each
Fund and on the performance of its obligations under this
Agreement and shall supply such additional reports and
information as the Trust's officers, Board of Trustees or HGINA
shall reasonably request.
(d) On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of a Fund as well as other
customers, the Subadviser, to the extent permitted by applicable
law, may aggregate the securities to be so sold or purchased in
order to obtain the best execution under the circumstances or
lower brokerage commissions, if any. The Subadviser 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 Subadviser in the manner
it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund involved and to such other
customers. In no instance, however, will a Fund's assets be
purchased from or sold to the Manager, HGINA, the Subadviser, the
Trust's principal underwriter, or any affiliated person of either
the Trust, the Manager, HGINA, the Subadviser or the principal
underwriter, acting as principal in the transaction, except to
the extent permitted by the SEC and the 1940 Act.
(e) The Subadviser shall provide the Funds' custodian on each
business day with information relating to all transactions
concerning each Fund's assets and shall provide HGINA with such
information upon request of HGINA.
(f) The investment advisory services provided by the Subadviser under
this Agreement are not to be deemed exclusive and the Subadviser
shall be free to render similar services to others, as long as
such services do not impair the services rendered to HGINA or the
Trust.
(g) The Subadviser shall promptly notify HGINA of any financial
condition that is likely to impair the Subadviser's ability to
fulfill its commitment under this Agreement.
(h) The Subadviser shall review all proxy solicitation materials and
be responsible for voting and handling all proxies in relation to
the securities held in a Fund's portfolio. HGINA shall promptly
forward proxies to the Subadviser.
2. Delivery of Documents to the Manager and HGINA. The Subadviser
has furnished the Manager and HGINA with copies of each of the following
documents:
(a) The Subadviser's current Form ADV and any amendments thereto;
(b) The Subadviser's most recent balance sheet;
(c) Separate lists of persons whom the Subadviser wishes to have
authorized to give written and/or oral instructions to the
custodian and the fund accounting agent of Trust assets for the
Funds; and
(d) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager and HGINA 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
Subadviser will provide to the Manager and HGINA such other documents relating
to its services under this Agreement as the Manager and HGINA may reasonably
request on a periodic basis. Such 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 Subadviser.
D-2
3. Expenses. The Subadviser shall pay all of its expenses arising
from the performance of its obligations under Section 1.
4. Compensation. HGINA shall pay to the Subadviser for its services
hereunder, and the Subadviser agrees to accept as full compensation therefor, a
fee with respect to each Fund as set forth on Schedule B. Such fee shall be
accrued daily on the basis of the value of the portion of the average daily net
assets of the applicable Fund as are then being managed by the Subadviser and
shall be payable monthly. If the Subadviser shall serve hereunder for less than
the whole of any month, the fee hereunder shall be prorated accordingly.
5. Purchase and Sale of Securities. The Subadviser will determine
the securities to be purchased or sold with respect to the portion of each
Fund's portfolio assets being managed by it, and shall purchase securities from
or through and sell securities to or through such persons, brokers or dealers as
the Subadviser shall deem appropriate in order to carry out the policy with
respect to allocation of portfolio transactions as set forth in the prospectuses
and statements of additional information (including amendments) of the Funds or
as the Trust's Board of Trustees may direct from time to time. In providing the
Funds with investment management and supervision, it is recognized that the
Subadviser will seek the best price and execution under the circumstances, and,
consistent with such policy, may give consideration to the research services
furnished by brokers or dealers to the Subadviser for its use and to such other
considerations as the Trust's Board of Trustees may direct or authorize from
time to time.
Nothing in this Agreement shall be implied to prevent (i) HGINA
from providing such services itself to a portion of the portfolio assets of the
Funds; or (ii) the Subadviser from providing investment advice and other
services to other funds or clients. In addition, nothing in this Agreement shall
be implied to relieve HGINA of liability under the Subadvisory Agreement with
the Manager.
In the performance of its duties hereunder, the Subadviser is and
shall be an independent contractor and except as expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or represent
the Trust, the Funds, any other series of the Trust, the Manager or HGINA in any
way or otherwise be deemed to be an agent of the Trust, the Funds, any other
series of the Trust, the Manager or HGINA.
6. Term of Agreement. This Agreement shall become effective as of
the date first written above or such later date as the shareholders may approve
this Agreement, and shall continue in full force and effect until __________,
200__, and from year to year thereafter if such continuance is approved in the
manner required by the 1940 Act, if the Subadviser shall not have notified HGINA
in writing at least 60 days prior to such date or prior to [date] of any year
thereafter that it does not desire such continuance. This Agreement may be
terminated at any time, without payment of penalty by a Fund, by vote of the
Trust's Board of Trustees or a majority of the outstanding voting securities of
the applicable Fund (as defined by the 1940 Act), or by HGINA or by the
Subadviser upon 60 days' written notice. This Agreement will automatically
terminate in the event of its assignment (as defined by the 1940 Act) or upon
the termination of the Subadvisory Agreement or if (a) either party is unable to
pay its debts or an administrative or insolvency order is made in respect of a
party pursuant to its relevant governing and applicable laws and regulations or
(b) a party commits a material breach of any of the terms or conditions of this
Agreement and such breach shall continue 30 days after notice in writing,
specifying the breach and requiring the same to be remedied, has been given.
7. Amendments. This Agreement may be amended by written consent of
the parties hereto provided that the amendment is approved in a manner
consistent with the 1940 Act and rules and regulations thereunder and any
applicable SEC exemptive order therefrom, SEC no-action letter or SEC
interpretive guidance.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
HGINA, the Manager, the Trust or such persons as the Manager may designate in
connection with the Funds. It is also understood that any information supplied
to the Subadviser 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 Funds, is to be regarded as
confidential and for use only by the Subadviser in connection with its
obligation to provide investment advice and other services to the Funds.
D-3
9. Representations and Warranties. The Subadviser hereby represents
and warrants as follows:
(a) The Subadviser is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940, as amended
(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 Subadviser has all requisite authority to enter into,
execute, deliver and perform the Subadviser's obligations under
this Agreement; and
(c) The Subadviser's performance of its obligations under this
Agreement does not conflict with any law, regulation or order to
which the Subadviser is subject.
(d) The Subadviser has reviewed the portion of (i) the registration
statement filed with the SEC, as amended from time to time, for
the Funds ("Registration Statement"), and (ii) each Fund's
prospectuses and statements of additional information (including
amendments) thereto, in each case in the form received from the
Manager, with respect to the disclosure about the Subadviser and
except as advised in writing to the Manager such Registration
Statement, prospectuses and statements of additional information
(including amendments) contain, as of their respective dates, no
untrue statement of any material fact regarding the Subadviser of
which the Subadviser has knowledge and do not omit any statement
of a material fact regarding the Subadviser of which the
Subadviser has knowledge which was required to be stated therein
or necessary to make the statements contained therein not
misleading.
10. Covenants. The Subadviser hereby covenants and agrees that, so
long as this Agreement shall remain in effect:
(a) The Subadviser shall maintain the Subadviser's registration as an
investment adviser under the Advisers Act, and such registration
shall at all times remain current, complete and in full
compliance with all material applicable provisions of the
Advisers Act and the rules and regulations thereunder;
(b) The Subadviser's performance of its obligations under this
Agreement shall not conflict with any law, regulation or order to
which the Subadviser is then subject;
(c) The Subadviser shall at all times comply with the Advisers Act
and the 1940 Act, and all rules and regulations thereunder, and
all other applicable laws and regulations, and the Registration
Statement, prospectuses and statements of additional information
(including amendments) and with any applicable procedures adopted
by the Trust's Board of Trustees, provided that such procedures
are substantially similar to those applicable to similar funds
for which the Trust's Board of Trustees is responsible and that
such procedures are identified in writing to the Subadviser;
(d) The Subadviser shall promptly notify the Manager and HGINA upon
the occurrence of any event that under federal, state or foreign
securities laws might disqualify or prevent the Subadviser from
performing its duties under this Agreement. The Subadviser shall
promptly notify the Manager and HGINA if there are any changes to
its ownership structure or the Subadviser has become the subject
of any adverse regulatory action imposed by any regulatory body
or self-regulatory organization. The Subadviser further agrees to
notify the Manager and HGINA of any changes relating to it or the
provision of services by it that would be required to be
disclosed in the Registration Statement, prospectuses or
statements of additional information (including amendments) for
the Funds; and
D-4
(e) The Subadviser will manage the portion of each Fund's portfolio
assets for which it serves as subadviser under this Agreement in
a manner consistent with the Fund's status as a regulated
investment company under Subchapter M of the Internal Revenue
Code.
11. Use of Names.
(a) The Subadviser acknowledges and agrees that the names Ivy Fund
and Ivy Management, Inc., and abbreviations or logos associated
with those names, are the valuable property of the Manager and
its affiliates; that the Funds, the Manager and their affiliates
have the right to use such names, abbreviations and logos; and
that the Subadviser shall use the names Ivy Fund and Ivy
Management, Inc., and associated abbreviations and logos, only in
connection with the Subadviser's performance of its duties
hereunder. Further, in any communication with the public and in
any marketing communications of any sort, the Subadviser agrees
to cooperate with HGINA in obtaining prior written approval from
the Manager before using or referring to Ivy Fund, and Ivy
Management, Inc., or the Funds or any abbreviations or logos
associated with those names; provided that nothing herein shall
be deemed to prohibit the Subadviser from referring to the
performance of the Funds in the Subadviser's marketing material
as long as such marketing material does not constitute "sales
literature" or "advertising" for the Funds, as those terms are
used in the rules, regulations and guidelines of the SEC and the
National Association of Securities Dealers, Inc.
(b) The Subadviser acknowledges that each Fund and its agents may use
the "Henderson" and "Henderson Global Investors" names in
connection with accurately describing the activities of the Fund,
including use with marketing and other promotional and
informational material relating to the Fund with the prior
written approval always of HGINA. In the event that the
Subadviser shall cease to be the investment subadviser of a Fund,
then the Fund at its own or HGINA's expense, upon HGINA's written
request: (i) shall cease to use the Subadviser's name for any
commercial purpose; and (ii) shall use its best efforts to cause
the Fund's officers and trustees to take any and all actions
which may be necessary or desirable to effect the foregoing and
to reconvey to the Subadviser all rights which a Fund may have to
such name. HGINA agrees to take any and all reasonable actions as
may be necessary or desirable to effect the foregoing and
Subadviser agrees to allow the Funds and their agents a
reasonable time to effectuate the foregoing.
(c) The Subadviser hereby agrees and consents to the use of the
Subadviser's name upon the foregoing terms and conditions.
12. Reports by the Subadviser and Records of the Funds. The
Subadviser shall furnish HGINA monthly, quarterly and annual reports concerning
transactions and performance of the Funds, including information required to be
disclosed in the Trust's Registration Statement, in such form as may be mutually
agreed. The Subadviser shall permit the financial statements, books and records
with respect to the Funds to be inspected and audited by the Trust, the Manager,
HGINA or their agents at all reasonable times during normal business hours. The
Subadviser shall immediately notify and forward to HGINA any legal process
served upon it on behalf of HGINA, the Manager or the Trust. The Subadviser
shall promptly notify the Manager and HGINA of any changes in any information
concerning the Subadviser of which the Subadviser 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 Subadviser agrees that all records it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to the Trust or
HGINA any such records upon the Trust's or HGINA's request. The Subadviser
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 each Fund. The Subadviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records it maintains for the
Trust.
D-5
13. Jurisdiction. The Subadviser consents to the jurisdiction of any
state or U.S. federal court sitting in the Commonwealth of Massachusetts over
any suit, action or proceeding arising out of or relating to this Agreement.
14. 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 HGINA: HENDERSON GLOBAL INVESTORS (NORTH AMERICA),
INC.
737 North Michigan Avenue, Suite 1950
Chicago, Illinois 60611, U.S.A.
Attention: Michael Andrews and the Company
Secretary
If to the Subadviser: HENDERSON INVESTMENT MANAGEMENT LIMITED
4 Broadgate
London EC2M 2DA
United Kingdom
Attention: [ ____________ ] and the Company
Secretary
If to the Trust: IVY FUND
925 South Federal Highway, Suite 600
Boca Raton, FL 33432, U.S.A.
Attention: [President]
15. Limitation of Liability of the Trust, its Trustees, and
Shareholders. It is understood and expressly stipulated that none of the
trustees, officers, agents, or shareholders of any series of the Trust shall be
personally liable hereunder. It is understood and acknowledged that all persons
dealing with any series of the Trust must look solely to the property of such
series for the enforcement of any claims against that series as neither the
trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of any series of the Trust. No series of the
Trust shall be liable for the obligations or liabilities of any other series of
the Trust.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon either of the parties, to do anything in
violation of any applicable laws or regulations.
17. 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.
18. 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.
D-6
IN WITNESS WHEREOF, HENDERSON GLOBAL INVESTORS (NORTH AMERICA) INC.
AND HENDERSON INVESTMENT MANAGEMENT LIMITED have each caused this instrument to
be signed in duplicate on its behalf by the officer designated below thereunto
duly authorized.
HENDERSON GLOBAL INVESTORS (NORTH
AMERICA) INC.
By:______________________________
Title
HENDERSON INVESTMENT MANAGEMENT
LIMITED
By:______________________________
Title
D-7
SCHEDULE A
TO SUBADVISORY AGREEMENT BETWEEN
HENDERSON GLOBAL INVESTORS (NORTH AMERICA) INC. AND HENDERSON INVESTMENT
MANAGEMENT LIMITED
DATED ______________
-----------------------------------
Funds:
Ivy International Small Companies Fund - 100% of Fund's net assets
Ivy European Opportunities Fund - 100% of Fund's net assets
D-8
SCHEDULE B
TO SUBADVISORY AGREEMENT BETWEEN
HENDERSON GLOBAL INVESTORS (NORTH AMERICA) INC. AND HENDERSON INVESTMENT M
ANAGEMENT LIMITED
DATED ______________
----------------------------------
Fee schedule:
Ivy International Small Companies Fund: payable monthly at an annual rate of
0.35% of first $100,000,000 of net assets and 0.31% thereafter of the portion of
the Fund's average daily net assets managed by the Subadviser.
Ivy European Opportunities Fund: payable monthly at an annual rate of 0.35% of
first $100,000,000 of net assets and 0.31% thereafter of the portion of the
Fund's average daily net assets managed by the Subadviser.
D-9
EXHIBIT E
FORM OF NEW SUBADVISORY AGREEMENT
WITH PETER CUNDILL & ASSOCIATES, INC.
AGREEMENT made as of the ___ day of _____, _____, between IVY
MANAGEMENT, INC., 925 South Federal Highway, Suite 600, Boca Raton, Florida
33432 U.S.A., a Massachusetts corporation (hereinafter called the "Manager"),
and PETER CUNDILL & ASSOCIATES, INC., a corporation incorporated under the laws
of Delaware at PO Box 50133, Santa Barbara, CA 93150 USA (hereinafter called the
"Subadviser").
WHEREAS, Ivy Fund (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Manager has entered into a Master Business Management and
Investment Advisory Agreement dated _______, _____, as amended (the "Advisory
Agreement"), with the Trust, pursuant to which the Manager acts as investment
adviser to the portfolio assets of certain series of the Trust listed on
Schedule A hereto, as amended from time to time (each a "Fund" and,
collectively, the "Funds"); and
WHEREAS, the Manager desires to utilize the services of the Subadviser
as investment subadviser with respect to certain portfolio assets of each Fund;
and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will serve the Manager as
investment subadviser with respect to certain portfolio assets of each
Fund, as set forth on the attached Schedule A.
(a) As investment subadviser to the Funds, the Subadviser is hereby
authorized and directed and hereby agrees, in accordance with the Subadviser's
best judgment and subject to the stated investment objectives, policies and
restrictions of the Funds as set forth in the current prospectuses and
statements of additional information of the Trust (including amendments) and in
accordance with the Trust's Declaration of Trust, as amended, and By-laws
governing the offering of its shares (collectively, the "Trust Documents"), the
1940 Act and the provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), relating to regulated investment companies, and
subject to such resolutions as from time to time may be adopted by the Trust's
Board of Trustees, and provided that the Trust Documents are all furnished to
the Subadviser, to develop, recommend and implement such investment program and
strategy for the Funds as may from time to time be most appropriate to the
achievement of the investment objectives of the Funds as stated in the aforesaid
prospectuses, to provide research and analysis relative to the investment
program and investments of the Funds, to determine what securities should be
purchased and sold and to monitor on a continuing basis the performance of the
portfolio securities of the Funds.
(b) The Subadviser agrees to comply with the investment objective
and policies as set out in the Funds registration statement in providing its
investment advisory services and to notify the Manager on a timely basis of any
lapse in compliance with the objective and policies.
(c) The Subadviser shall (i) comply with all reasonable requests of
the Trust (through the Manager) 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 Subadviser shall from time to time determine to be
necessary or useful to the administration of the Funds.
(d) The Subadviser shall furnish to the Manager for distribution to
the Trust's Board of Trustees periodic reports on the investment performance of
each Fund and on the performance of its obligations under this
E-1
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 Subadviser deems the purchase or sale of a
security to be in the best interest of a Fund as well as other customers, the
Subadviser, 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 Subadviser 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 Subadviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund involved and to such other customers. In no instance, however, will
a Fund's assets be purchased from or sold to the Manager, the Subadviser, the
Trust's principal underwriter, or any affiliated person of either the Trust, the
Manager, the Subadviser 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 Subadviser 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 Funds or as the Trust's Board of Trustees may direct from time to time. The
Subadviser 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 Subadviser shall provide the Funds' custodian on each
business day with information relating to all transactions concerning each
Fund's assets and shall provide the Manager with such information upon request
of the Manager.
(h) The investment advisory services provided by the Subadviser
under this Agreement are not to be deemed exclusive and the Subadviser shall be
free to render similar services to others, as long as such services do not
impair the services rendered to the Manager or the Trust.
(i) The Subadviser shall promptly notify the Manager of any
financial condition that is likely to impair the Subadviser's ability to fulfill
its commitment under this Agreement.
2. Delivery of Documents to the Manager. The Subadviser has furnished the
Manager with copies of each of the following documents:
(a) The Subadviser's current Form ADV and any amendments thereto, if
applicable;
(b) The Subadviser's most recent audited balance sheet;
(c) Separate lists of persons whom the Subadviser wishes to have
authorized to give written and/or oral instructions to the custodian and the
fund accounting agent of Trust assets for the Funds; and
(d) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager 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
Subadviser will provide to the Manager such other documents relating to its
services under this Agreement as the Manager may reasonably request on a
periodic basis. Such 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 Subadviser.
3. Expenses. The Subadviser shall pay all of its expenses arising from the
performance of its obligations under this Agreement.
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4. Compensation. The Manager shall pay to the Subadviser for its services
hereunder, and the Subadviser agrees to accept as full compensation
therefor, a fee with respect to each Fund as set forth on Schedule B. Such
fee shall be accrued daily on the basis of the value of the portion of the
average daily net assets of the applicable Fund as are then being managed
by the Subadviser and shall be payable monthly. If the Subadviser shall
serve hereunder for less than the whole of any month, the fee hereunder
shall be prorated accordingly.
5. Purchase and Sale of Securities. The Subadviser will determine the
securities to be purchased or sold with respect to the portion of each
Fund's portfolio assets being managed by it, and shall purchase securities
from or through and sell securities to or through such persons, brokers or
dealers as the Subadviser shall deem appropriate in order to carry out the
policy with respect to allocation of portfolio transactions as described in
section 1.(f) of this Agreement and statements of additional information
(including amendments) of the Funds. In providing the Funds with investment
management and supervision, it is recognized that the Subadviser will seek
the most favorable price and execution, and, consistent with such policy,
may give consideration to the research services furnished by brokers or
dealers to the Subadviser for its use and to such other considerations as
the Trust's Board of Trustees may direct or authorize from time to time.
Nothing in this Agreement shall be implied to prevent: (i) the Manager from
engaging other subadvisers to provide investment advice and other services in
relation to series of the Trust, or a portion of the portfolio assets of any
such series, for which the Subadviser does not provide such services, or to
prevent the Manager from providing such services itself in relation to such
series; or (ii) the Subadviser from providing investment advice and other
services to other funds or clients.
In the performance of its duties hereunder, the Subadviser is and shall be an
independent contractor and except as expressly provided herein or otherwise
authorized in writing, shall have no authority to act for or represent the
Trust, the Funds, any other series of the Trust or the Manager in any way or
otherwise be deemed to be an agent of the Trust, the Funds, any other series of
the Trust or the Manager.
6. Term of Agreement. This Agreement shall become effective as of the date
first written above or such later date as the shareholders may approve the
Agreement, and shall continue in full force and effect until __________,
200__, and from year to year thereafter if such continuance is approved in
the manner required by the 1940 Act, if the Subadviser shall not have
notified the Manager in writing at least 60 days prior to such date or
prior to [date] of any year thereafter that it does not desire such
continuance. This Agreement may be terminated at any time, without payment
of penalty by a Fund, by vote of the Trust's Board of Trustees or a
majority of the outstanding voting securities of the applicable Fund (as
defined by the 1940 Act), or by the Manager upon 30 days' written notice or
by the Subadviser upon 120 days' written notice. This Agreement will
automatically terminate in the event of its assignment (as defined by the
1940 Act) or upon the termination of the Advisory Agreement, or if (a)
either party is unable to pay its debts or an administrative or insolvency
order is made in respect of a party pursuant to its relevant governing and
applicable laws and regulations.
7. Amendments. This Agreement may be amended by consent of the parties hereto
provided that the consent of the applicable Fund is obtained in accordance
with the requirements of the 1940 Act.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the
performance of its obligations hereunder is to be regarded as confidential
and for use only by the Manager, the Trust or such persons as the Manager
may designate in connection with the Funds. It is also understood that any
information supplied to the Subadviser 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
Funds, is to be regarded as confidential and for use only by the Subadviser
in connection with its obligation to provide investment advice and other
services to the Funds.
9. Representations and Warranties. The Subadviser hereby represents and
warrants as follows:
(a) The Subadviser is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940, as amended (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;
E-3
(b) The Subadviser has all requisite authority to enter into,
execute, deliver and perform the Subadviser's obligations under this Agreement;
(c) The Subadviser's performance of its obligations under this
Agreement does not conflict with any law, regulation or order to which the
Subadviser is subject; and
(d) The Subadviser has reviewed the portion of (i) the registration
statement filed with the SEC, as amended from time to time, for the Funds
("Registration Statement"), and (ii) each Fund's prospectuses and statements of
additional information (including amendments) thereto, in each case in the form
received from the Manager with respect to the disclosure about the Subadviser
and the Funds of which the Subadviser has knowledge ("Subadviser and Fund
Information") and except as advised in writing to the Manager 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 Subadviser has knowledge and do not omit any
statement of a material fact of which the Subadviser has knowledge which was
required to be stated therein or necessary to make the statements contained
therein not misleading.
10. Covenants. The Subadviser hereby covenants and agrees that, so long as this
Agreement shall remain in effect:
(a) The Subadviser shall maintain the Subadviser's registration as
an investment adviser under the Advisers Act, and such registration shall at all
times remain current, complete and in full compliance with all material
applicable provisions of the Advisers Act and the rules and regulations
thereunder;
(b) The Subadviser's performance of its obligations under this
Agreement shall not conflict with any law, regulation or order to which the
Subadviser is then subject;
(c) The Subadviser shall at all times comply with the Advisers Act
and the 1940 Act, and all rules and regulations thereunder, and all other
applicable laws and regulations, and the Registration Statement, prospectuses
and statements of additional information (including amendments) and with any
applicable procedures adopted by the Trust's Board of Trustees, provided that
such procedures are substantially similar to those applicable to similar funds
for which the Trust's Board of Trustees is responsible and that such procedures
are identified in writing to the Subadviser;
(d) The Subadviser shall promptly notify the Manager and the Fund
upon the occurrence of any event that might disqualify or prevent the Subadviser
from performing its duties under this Agreement. The Subadviser shall promptly
notify the Manager and the Fund if there are any changes to its organizational
structure or the Subadviser has become the subject of any adverse regulatory
action imposed by any regulatory body or self-regulatory organization. The
Subadviser further agrees to notify the Manager of any changes relating to it or
the provision of services by it that would cause the Registration Statement,
prospectuses or statements of additional information (including amendments) for
the Funds to contain any untrue statement of a material fact or to omit to state
a material fact which is required to be stated therein or is necessary to make
the statements contained therein not misleading, in each case relating to
Subadviser and Fund Information;
(e) The Subadviser will manage the portion of each Fund's portfolio
assets for which it serves as subadviser under this Agreement in a manner
consistent with the Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code; and
(f) The Subadviser shall exercise its powers and discharge its
duties as adviser honestly, in good faith and in the best interests of the Funds
and shall exercise the degree of care, diligence and skill that a reasonably
prudent person would exercise in the circumstances; provided, that if it has
fulfilled its standard of care obligation, the Subadviser will not be liable for
any loss sustained by reason of the adoption or implementation of any investment
objective or policy or the purchase, sale or retention of any portfolio
investment by and on behalf of the Funds.
11. Use of Names.
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(a) The Subadviser acknowledges and agrees that the names Ivy Fund
and Ivy Management, Inc., and abbreviations or logos associated with those
names, are the valuable property of the Manager and its affiliates; that the
Funds, the Manager and their affiliates have the right to use such names,
abbreviations and logos; and that the Subadviser shall use the names Ivy Fund
and Ivy Management, Inc., and associated abbreviations and logos, only in
connection with the Subadviser's performance of its duties hereunder. Further,
in any communication with the public and in any marketing communications of any
sort, the Subadviser agrees to obtain prior written approval from the Manager
before using or referring to Ivy Fund, and Ivy Management, Inc., or the Funds or
any abbreviations or logos associated with those names; provided that nothing
herein shall be deemed to prohibit the Subadviser from referring to the
performance of the Funds in the Subadviser's marketing material as long as such
marketing material does not constitute "sales literature" or "advertising" for
the Funds, as those terms are used in the rules, regulations and guidelines of
the SEC and the National Association of Securities Dealers, Inc.
(b) The Subadviser acknowledges that each Fund and its agents may
use the "Cundill" and "Peter Cundill" names 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 Subadviser
hereby agrees and consents to the use of the Subadviser's name upon the
foregoing terms and conditions.
(c) The Subadviser acknowledges that each Fund and its agents may
use the "Cundill" name in conjunction with accurately describing the activities
of the Fund, including use with marketing and other promotional materials
relating to the Fund with prior written approval always of the Subadviser. In
the event that the Subadviser shall cease to be the Manager's subadviser of a
Fund, then the Fund at its own or the Manager's expense, upon the Subadviser's
written request: (i) shall cease to use the Subadviser's name for any commercial
purpose; and (ii) shall use its best efforts to cause the Fund's officers and
trustees to take any and all actions which may be necessary or desirable to
effect the foregoing and to reconvey to the Subadviser all rights which a Fund
may have to such name. The Manager agrees to take any and all reasonable actions
as may be necessary or desirable to effect the foregoing and the Subadviser
agrees to allow the Funds and their agents a reasonable time to effectuate the
foregoing.
(d) The Subadviser hereby agrees and consents to the use of the
Subadviser's name upon the foregoing terms and conditions.
12. Reports by the Subadviser and Records of the Funds. The Subadviser shall
furnish the Manager monthly, quarterly and annual reports concerning
transactions and performance of the Funds, including information required
to be disclosed in the Trust's Registration Statement, in such form as may
be mutually agreed. The Subadviser shall permit the financial statements,
books and records with respect to the Funds to be inspected and audited by
the Trust, the Manager or their agents at all reasonable times during
normal business hours. The Subadviser shall immediately notify and forward
to both the Manager and legal counsel for the Trust any legal process
served upon it on behalf of the Manager or the Trust. The Subadviser shall
promptly notify the Manager of any changes in any information concerning
the Subadviser of which the Subadviser 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
Subadviser agrees that all records it maintains for the Trust are the property
of the Trust and further agrees to surrender promptly to the Trust or the
Manager any such records upon the Trust's or the Manager's request. The
Subadviser 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 each Fund. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains
for the Trust.
13. Indemnification. The Subadviser agrees to indemnify and hold harmless the
Manager, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of the Manager 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 Manager, against any
and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Manager, 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 Subadviser's responsibilities
as subadviser of the Funds (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence of the Subadviser,
E-5
any of the Subadviser's employees or representatives or any affiliate of or
any person acting on behalf of the Subadviser, 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 Funds 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 Subadviser to the
Manager, the Trust or any affiliated person of the Manager or the Trust
expressly for use in the Trust's Registration Statement, or upon verbal
information confirmed by the Subadviser 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 Subadviser 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 Subadviser's indemnity
in favor of the Manager or any affiliated person or controlling person of
the Manager 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 Manager agrees to indemnify and hold harmless the Subadviser against any and
all losses, claims, damages, liabilities or litigation (including reasonable
legal and other expenses), to which the Subadviser 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 Manager's responsibilities as investment manager of the Funds (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence of the Manager, any of the Manager's employees or representatives or
any affiliate of or any person acting on behalf of the Manager, 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 Funds 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 by the Trust
other than in reliance upon written information furnished by the Subadviser, or
any affiliated person of the Subadviser, expressly for use in the Trust's
Registration Statement or other than upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's Registration Statement;
provided, however, that in no case is the Manager's indemnity in favor of the
Subadviser 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.
14. Assignment by the Subadviser. This Agreement shall not be assigned by the
Subadviser to any other person or company without the Manager's prior
written consent.
15. Jurisdiction. The Subadviser irrevocably submits to the jurisdiction of any
state or U.S. federal court sitting in the Commonwealth of Massachusetts
over any suit, action or proceeding arising out of or relating to this
proposal and the agreement contemplated herein. The Subadviser 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 Subadviser agrees that final judgment in any such suit, action
or proceeding brought in such a court shall be conclusive and binding upon
the Subadviser, and may be enforced to the extent permitted by applicable
law in any court of the jurisdiction of which the Subadviser is subject by
a suit upon such judgment, provided that service of process is effected
upon the Subadviser in the manner specified in the following paragraph or
as otherwise permitted by law.
As long as the agreement contemplated herein remains in effect, the Subadviser
will at all times have an authorized agent in the Commonwealth of Massachusetts
upon whom process may be served in any legal action or proceeding in a state or
U.S. federal court sitting in the Commonwealth of Massachusetts over any suit,
action or proceeding arising out of or relating to this proposal or the
agreement contemplated herein. The Subadviser hereby appoints CT Corporation
System as its agent for such purpose, and covenants and agrees that service of
process in any such legal action or proceeding may be made upon it at the office
of such agent at 2 Oliver Street, Boston, MA 02019 (or at such other address in
the Commonwealth of Massachusetts, as said agent may designate by written notice
to the Subadviser and the Manager). The Subadviser hereby consents to the
process being served in any suit, action or
E-6
proceeding of the nature referred to in the preceding paragraph by service upon
such agent together with the mailing of a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to the address of the
Subadviser set forth in Section 16 below or to any other address of which the
Subadviser shall have given written notice to the Manager. The Subadviser
irrevocably waives, to the fullest extent permitted by law, all claim of error
by reason of any such service (but does not waive any right to assert lack of
subject matter jurisdiction) and agrees that such service (i) shall be deemed in
every respect effective service of process upon the Subadviser in any suit,
action or proceeding and (ii) shall, to the fullest extent permitted by law, be
taken and held to be valid personal service upon and personal delivery to the
Subadviser.
Nothing in this Section 15 shall affect the right of the Manager to serve
process in any manner permitted by law or limit the right of the Manager to
bring proceedings against the Subadviser in the courts of any jurisdiction or
jurisdictions.
16. 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 Manager: IVY MANAGEMENT, INC.
925 South Federal Highway, Suite 600
Boca Raton, FL 33432, U.S.A.
Attention: [President]
If to the Trust: IVY FUND
925 South Federal Highway, Suite 600
Boca Raton, FL 33432, U.S.A.
Attention: [President]
If to the Subadviser: PETER CUNDILL & ASSOCIATES, INC.
PO Box 50133
Santa Barbara, CA 93108 USA
Attn: Brian L. McDermott
With a copy to:
Cundill Investment Research Ltd.
200 1100 Melville Street
Vancouver, British Columbia V6E 4A6
Attn: Lisa M. Pankratz
17. Limitation of Liability of the Trust, its Trustees, and Shareholders. It is
understood and expressly stipulated that none of the trustees, officers,
agents, or shareholders of any series of the Trust shall be personally
liable hereunder. It is understood and acknowledged that all persons
dealing with any series of the Trust must look solely to the property of
such series for the enforcement of any claims against that series as
neither the trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of any series of the
Trust. No series of the Trust shall be liable for the obligations or
liabilities of any other series of the Trust.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts. Anything
herein to the contrary notwithstanding, this Agreement shall not be
construed to require, or to impose any duty upon either of the parties, to
do anything in violation of any applicable laws or regulations.
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.
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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, Ivy Management, Inc. and Peter Cundill &
Associates, Inc. have each caused this instrument to be signed in duplicate on
its behalf by the officer designated below thereunto duly authorized.
IVY MANAGEMENT, INC.
By:_____________________
Title:
PETER CUNDILL & ASSOCIATES, INC.
By:_____________________
Title:
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SCHEDULE A
TO SUBADVISORY AGREEMENT BETWEEN
IVY MANAGEMENT, INC. AND PETER CUNDILL & ASSOCIATES, INC.
DATED ______________
-----------------------------------
Funds:
Ivy Cundill Global Value Fund - 100% of Fund's net assets
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SCHEDULE B
TO SUBADVISORY AGREEMENT BETWEEN
IVY MANAGEMENT, INC. AND PETER CUNDILL & ASSOCIATES, INC.
DATED ______________
-----------------------------------
Fee schedule:
Fund Net Assets (U.S. $millions) Advisory Fee Annual Rate
- -------------------------------- ------------------------
All Net Assets 0.50%
Fees are subject to renegotiation based on assets under management.
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Appendix 1
The Funds
Ivy Bond Fund
Ivy Cundill Global Value Fund
Ivy Developing Markets Fund
Ivy European Opportunities Fund
Ivy Global Fund
Ivy Global Natural Resources Fund
Ivy Global Science & Technology Fund
Ivy Growth Fund
Ivy International Fund
Ivy International Growth Fund
Ivy International Small Companies Fund
Ivy International Value Fund
Ivy Money Market Fund
Ivy Pacific Opportunities Fund
Ivy US Blue Chip Fund
Ivy US Emerging Growth Fund
Appendix 2
Dates Relating to Agreements
- ------------------------------------------------------------------------------------------------------------------------------
Fund Date of Date Former Date Former Date to which Date Former
Commencement of Agreement Became Agreement Last Former Agreement Agreement Was Last
Operations of Fund Applicable to Approved by Board Was Last Continued Approved by
Fund with Respect to for Fund Shareholders*
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Bond Fund 09/06/85 12/31/94 09/20/01 09/30/02 05/29/01
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Cundill Global 04/17/00 04/14/00 09/20/01 09/30/02 05/29/01
Value Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Developing 11/01/94 10/29/94 09/20/01 09/30/02 05/29/01
Markets Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy European 04/30/99 04/30/99 09/20/01 09/30/02 05/29/01
Opportunities
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Global Fund 04/18/91 12/31/94 09/20/01 09/30/02 05/29/01
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Global 07/17/96 07/17/96 09/20/01 09/30/02 05/29/01
Science &
Technology Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Growth Fund 09/01/61 12/31/91 09/20/01 09/30/02 05/29/01
- ------------------------------------------------------------------------------------------------------------------------------
Ivy International 04/01/86 12/31/91 09/20/01 09/30/02 05/29/01
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy International 12/29/00 12/08/00 09/20/01 09/30/02 05/29/01
Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy International 01/01/97 12/31/96 09/20/01 09/30/02 05/29/01
Small Companies
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy International 05/13/97 04/29/97 09/20/01 09/30/02 05/29/01
Value Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Money Market 04/03/87 12/31/91 09/20/01 09/30/02 05/29/01
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Pacific 10/23/93 10/23/93 09/20/01 09/30/02 05/29/01
Opportunities
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip 11/02/98 11/02/98 09/20/01 09/30/02 05/29/01
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging 03/03/93 03/05/93 09/20/01 09/30/02 05/29/01
Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------
* Submitted to a vote of the shareholders because the acquisition of MFC by IGI
caused a "change in control" of IMI.
Appendix 3
Fee Rates Payable under Former Agreement and New Agreement
- ------------------------------------------------------------------------------------------------------------------------------
Fund Fee Rates Payable to IMI under Former and New Agreements
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Bond Fund 0.50% of the first $500 million; and
0.40% of average net assets greater than $500 million
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Developing Markets Fund 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy European Opportunities Fund 1.00% of the first $250 million;
0.85% of the next $250 million; and
0.75% of average net assets greater than $500 million
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Global Fund 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Global Science & Technology Fund 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Growth Fund 0.85% of the first $350 million; and
0.75% of average net assets greater than $350 million
- ------------------------------------------------------------------------------------------------------------------------------
Ivy International Fund 1.00% of the first $2.0 billion;
0.90% of the next $500 million;
0.80% of the next $500 million; and
0.70% of average net assets greater than $3 billion
- ------------------------------------------------------------------------------------------------------------------------------
Ivy International Growth Fund 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy International Small Companies Fund 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy International Value Fund 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Money Market Fund 0.40%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy Pacific Opportunities Fund 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund 0.75%
- ------------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging Growth Fund 0.85%
- ------------------------------------------------------------------------------------------------------------------------------
Appendix 4
Officers and Directors of IMI, MIMI, IAC and Cundill
and
Certain Trustees and Officers of the Trust
- ------------------------------------------------------------------------------------------------------------------------------
Name Position Address Principal Occupation
- ------------------------------------------------------------------------------------------------------------------------------
Paul P. Baran Senior Vice President of 925 South Federal Highway Senior Vice President of
IMI; Vice President of MIMI Suite 600 IMI (1998 to present); Vice
Boca Raton, FL 33432 President of MIMI (1999 to
present); Senior Vice
President and Chief
Investment Officer of
Central Fidelity National
Bank (1987 to 1998).
- ------------------------------------------------------------------------------------------------------------------------------
Stephen Barrett Vice President and Director 925 South Federal Highway Vice President and Director
of Marketing of MIMI Suite 600 of Marketing of MIMI (2001
Boca Raton, FL 33432 to present); Senior Vice
President, Ivy Mackenzie
Distributors, Inc. (2000 to
present).
- ------------------------------------------------------------------------------------------------------------------------------
Thomas H. Bivin, Jr. Vice President of MIMI 925 South Federal Highway Vice President of MIMI
Suite 600 (1999 to present);
Boca Raton, FL 33432 Executive Vice President of
Ivy Mackenzie Distributors,
Inc. (1999 to present);
Senior Vice President, Ivy
Mackenzie Distributors,
Inc. (1996 to 1999;
Regional Vice President,
Ivy Mackenzie Distributors,
Inc. (1994 to 1996).
- ------------------------------------------------------------------------------------------------------------------------------
James W. Broadfoot President and Chief 925 South Federal Highway President and Chief
Investment Officer of IMI; Suite 600 Investment Officer of IMI
Director, Senior Vice Boca Raton, FL 33432 (1992 to present);
President and Chief Director, Senior Vice
Investment Officer - US President and Chief
Equities of MIMI; President Investment Officer - US
and Trustee of Ivy Fund Equities of MIMI (1990 to
present); President and
Trustee of Ivy Fund (1996
to present); Director of
Ivy Mackenzie Distributors,
Inc. (2001 to present);
Director of Ivy Mackenzie
Services Corp. (2001 to
present).
- ------------------------------------------------------------------------------------------------------------------------------
W. Sian B. Brown Secretary of IAC. 150 Bloor Street West Senior Vice-President,
Toronto, Ontario General Counsel and
- ------------------------------------------------------------------------------------------------------------------------------
1
- ------------------------------------------------------------------------------------------------------------------------------
Name Position Address Principal Occupation
- ------------------------------------------------------------------------------------------------------------------------------
Canada M5S 3B5 Secretary, Mackenzie
Financial Corporation.
- ------------------------------------------------------------------------------------------------------------------------------
Keith J. Carlson Chairman and Director of 925 South Federal Highway Chairman and Director of
IMI; President, Chief Suite 600 IMI (1992 to present);
Executive Officer and Boca Raton, FL 33432 President, Chief Executive
Director of MIMI; Chairman Officer and Director of
and Trustee of Ivy Fund; MIMI (1985 to present);
President and Treasurer of Chairman and Trustee of Ivy
IAC. Fund (1994 to present);
President and Treasurer of
IAC (2002); President,
Chief Executive Officer and
Director of Ivy Mackenzie
Distributors, Inc. (1993 to
present); President,
Chairman and Director of
Ivy Mackenzie Services
Corp. (1993 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Francis Peter Cundill President of Peter Cundill 15 Alton Hill President of Peter Cundill
& Associates (Bermuda) Ltd. South Hampton, Bermuda & Associates (Bermuda) Ltd.
SN01 (1984 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Alan J. Dilworth Director of MIMI 925 South Federal Highway Director of MIMI (1996 to
Suite 600 present); Director of
Boca Raton, FL 33432 Mackenzie Financial
Corporation (1999 to
present); President of Alan
J. Dilworth Consulting,
Inc. (1995 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Eckert Chief Compliance officer, 925 South Federal Highway Chief Compliance Officer of
MIMI; Vice President of Ivy Suite 600 MIMI (2001 to present);
Fund Boca Raton, FL 33432 Vice President of Ivy Fund
(2002 to present); Director
of Fund Administration of
MIMI (1997 to present);
Senior Vice President of
Ivy Mackenzie Services
Corp. (2001 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Richard Gluck Senior Vice President and 925 South Federal Highway Senior Vice President and
Portfolio Manager of IMI; Suite 600 Portfolio Manager of IMI
Portfolio Manager of MIMI Boca Raton, FL 33432 (1998 to present);
Portfolio Manager of
MIMI (1998 to
present); Vice
President and
Portfolio Manager
for Oppenheimer
Capital (1993 to
1998).
- ------------------------------------------------------------------------------------------------------------------------------
2
- ------------------------------------------------------------------------------------------------------------------------------
Name Position Address Principal Occupation
- ------------------------------------------------------------------------------------------------------------------------------
James L. Hunter Director of IMI; Director 150 Bloor Street West Director of IMI (1994 to
of MIMI Toronto, Ontario present); Director of MIMI
Canada M5S 3B5 (1994 to present);
President, Chief Executive
Officer and Director of
Mackenzie Financial
Corporation (1992 to
present).
- ------------------------------------------------------------------------------------------------------------------------------
Edward J. Lill Director of MIMI 925 South Federal Highway Director of MIMI (2001 to
Suite 600 present); Consultant,
Boca Raton, FL 33432 Metropolitan Life Insurance
Co. (1995 to present);
Director, Dan River Mills,
Inc. (1997 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Neil Lovatt Director of IMI; Chairman 150 Bloor Street West Director of IMI (1994 to
and Director of MIMI Toronto, Ontario present); Chairman and
Canada M5S 3B5 Director of MIMI (1994 to
present); Vice Chairman and Chief
Investment Officer of Mackenzie
Financial Corporation (1982 to
2002).
- ------------------------------------------------------------------------------------------------------------------------------
Lisa A. Lupi Vice President, Secretary 925 South Federal Highway Vice President, Secretary
and Director of Trading Suite 600 and Director of Trading
Operations of IMI Boca Raton, FL 33432 Operations of IMI (1999 to
present); Portfolio Manager
at Templeton Worldwide
(1994 to 1999).
- ------------------------------------------------------------------------------------------------------------------------------
Keith Maher Vice President and Equity 925 South Federal Highway Vice President and Equity
Analyst of IMI Suite 600 Analyst of IMI (1998 to
Boca Raton, FL 33432 present); Equity Analyst
for MIMI (1996 to
present).
- ------------------------------------------------------------------------------------------------------------------------------
Brian Lyn McDermott Chairman, President and 1470 East Valley Road Chairman, President and
Director of Peter Cundill & Suite A1 Director of Peter Cundill &
Associates, Inc. Montecito, CA 93108 Associates Inc. (1994 to
present).
- ------------------------------------------------------------------------------------------------------------------------------
Alasdair J. McKichan Director of MIMI 150 Bloor Street West Director of MIMI (1994 to
Toronto, Ontario present); Director of
Canada M5S 3B5 Mackenzie Financial
Corporation (1994 to
present); Chief Executive
Officer of McKichan
Associates, Inc. (1994 to
present).
- ------------------------------------------------------------------------------------------------------------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------
Name Position Address Principal Occupation
- ------------------------------------------------------------------------------------------------------------------------------
Moira McLachlan Vice President and 925 South Federal Highway Vice President and
Portfolio Manager of IMI Suite 600 Portfolio Manager of IMI
Boca Raton, FL 33432 (1998 to present); Research
Analyst for MIMI (1995 to
present).
- ------------------------------------------------------------------------------------------------------------------------------
Allan S. Mostoff Director of MIMI 925 South Federal Highway Director of MIMI (1998 to
Suite 600 present); Partner, Dechert
Boca Raton, FL 33432 (law firm) (1976 to
present).
- ------------------------------------------------------------------------------------------------------------------------------
Lisa M. Pankratz Secretary and Treasurer of 200 - 1100 Melville Street President of Cundill
Peter Cundill & Associates, Vancouver, BC Investment Research Ltd.
Inc. Canada V6E 4A6 (2002 to present);
Secretary and Treasurer of
Peter Cundill & Associates,
Inc. (2002 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Michael R. Peers Director of MIMI 925 South Federal Highway Director of MIMI (1996 to
Suite 600 present).
Boca Raton, FL 33432
- ------------------------------------------------------------------------------------------------------------------------------
Robert Perry Vice President and Chief 925 South Federal Highway Vice President and Chief
Technology Officer of MIMI Suite 600 Technology Officer of MIMI
Boca Raton, FL 33432 (1999 to present); CTO of
MIMI (1997 to 1999); Senior
Vice President, Ivy
Mackenzie Distributors,
Inc. (1998 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Barbara Safranek Vice President and Senior 925 South Federal Highway Vice President and Senior
International Equity Suite 600 International Equity
Analyst of IMI Boca Raton, FL 33432 Analyst of IMI (2001 to
present); Director of the
Investment Bank of Credit
Suisse First Boston (2000);
Director of the Investment
Bank of Shroder and Co.,
PLC (1996 to 2000).
- ------------------------------------------------------------------------------------------------------------------------------
Paula K. Wolfe Compliance Manager of MIMI; 925 South Federal Highway Compliance Manager of MIMI
Secretary of Ivy Fund Suite 600 (1997 to present);
Boca Raton, FL 33432 Assistant Secretary of Ivy
Fund (1998 to present);
Secretary of Ivy Mackenzie
Distributors, Inc. (2001 to
present); Secretary of Ivy
Mackenzie Services Corp.
(2001 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Beverly J. Yanowitch Vice President and 925 South Federal Highway Vice President and
Treasurer of IMI; Vice Suite 600 Treasurer of IMI (2000 to
President, Chief Financial Boca Raton, FL 33432 present); Vice President,
Officer and Treasurer of Chief Financial Officer and
MIMI; Treasurer of Ivy Treasurer of MIMI (1999
- ------------------------------------------------------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------------------------------------
Name Position Address Principal Occupation
- ------------------------------------------------------------------------------------------------------------------------------
Fund to present); Senior Vice
President and Treasurer of
Ivy Mackenzie Distributors,
Inc. (1994 to present);
Senior Vice President and
Treasurer of Ivy Mackenzie
Services Corp. (2000 to
present); Treasurer of Ivy
Fund (2001 to present).
- ------------------------------------------------------------------------------------------------------------------------------
Appendix 5
Fees Paid to IMI
- ------------------------------------------------------------------------------------------------------------------------
Fund Fees Paid to IMI under the Former Agreement During Fiscal
Year Ended December 31, 2001
- ------------------------------------------------------------------------------------------------------------------------
Ivy Bond Fund $332,360
- ------------------------------------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund $10,121
- ------------------------------------------------------------------------------------------------------------------------
Ivy Developing Markets Fund $69,023
- ------------------------------------------------------------------------------------------------------------------------
Ivy European Opportunities Fund $1,325,025
- ------------------------------------------------------------------------------------------------------------------------
Ivy Global Fund $97,794
- ------------------------------------------------------------------------------------------------------------------------
Ivy Global Science & Technology Fund $415,731
- ------------------------------------------------------------------------------------------------------------------------
Ivy Growth Fund $1,857,265
- ------------------------------------------------------------------------------------------------------------------------
Ivy International Fund $6,834,910
- ------------------------------------------------------------------------------------------------------------------------
Ivy International Growth Fund $5,080
- ------------------------------------------------------------------------------------------------------------------------
Ivy International Small Companies Fund $172,723
- ------------------------------------------------------------------------------------------------------------------------
Ivy International Value Fund $965,448
- ------------------------------------------------------------------------------------------------------------------------
Ivy Money Market Fund $92,906
- ------------------------------------------------------------------------------------------------------------------------
Ivy Pacific Opportunities Fund $131,439
- ------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund $497,756
- ------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging Growth Fund $902,288
- ------------------------------------------------------------------------------------------------------------------------
Appendix 6
Other Funds Advised by HGINA and/or Henderson
The table below sets forth information regarding investment companies for which
HGINA and/or Henderson acts as adviser or subadviser that have investment
objectives similar to the investment objectives of Ivy European Opportunities
Fund or Ivy International Small Companies Fund.
- ------------------------------------------------------------------------------------------------------------------------
Name of Investment Company Approximate Net Assets Rate of Compensation Rate of Compensation Payable
as of July 31, 2002 Payable to HGINA as of to Henderson as of
July 31, 2002* July 31, 2002
- ------------------------------------------------------------------------------------------------------------------------
Henderson European Focus Fund $10,550,280 1.00% of daily net assets 0.90% of daily net assets
(of which it pays 0.90% (paid by HGINA out of its fee)
to Henderson)
- ------------------------------------------------------------------------------------------------------------------------
Henderson Global Technology $ 864,688 1.20% of daily net assets 1.10% of daily net assets
Fund (of which it pays 1.10% (paid by HGINA out of its fee)
to Henderson)
- ------------------------------------------------------------------------------------------------------------------------
Henderson International $ 5,574,133 1.10% of daily net assets 1.00% of daily net assets
Opportunities Fund (of which it pays 1.00% (paid by HGINA out of its fee)
to Henderson)
- ------------------------------------------------------------------------------------------------------------------------
Henderson Worldwide Growth Fund $ 194,797 1.00% of daily net assets 0.90% of daily net assets
(of which it pays 0.90% (paid by HGINA out of its fee)
to Henderson)
- ------------------------------------------------------------------------------------------------------------------------
* Pursuant to separate Expense Limitation Agreements, HGINA has agreed through
August 31, 2004 to waive or limit its advisory fee and, if necessary, to
reimburse other operating expenses of each fund listed in the table in order to
limit total annual expenses, less distribution and service fees, to 1.75% of
average daily net assets. Until August 31, 2006, HGINA may recover reimbursed
expenses from each fund if the fund's expense ratio falls below the expense
limitation.
Appendix 7
Fees Paid to MIMI, IMSC and IMDI
and Commissions Retained by IMDI
During the Fiscal Year Ended December 31, 2001
- ----------------------------------------------------------------------------------------------------------------------------
Fund Fees Paid to Fees Paid to Fees Paid to Fees Paid to Aggregate Percentage of
MIMI for MIMI for Fund IMSC* IMDI Commissions Fund's
Administrative Accounting Retained by Aggregate
Services Services IMDI Commissions
that were
Retained by
IMDI
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Bond Fund $ 66,472 $ 53,853 $ 50,474 $ 332,489 $ 4,229 20.9%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Cundill Global $ 1,012 $ 18,626 $ 61 $ 1,323 $ 9 14.4%
Value Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Developing $ 6,902 $ 21,247 $ 19,219 $ 46,920 $ 247 15.7%
Markets Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy European $132,508 $114,180 $141,986 $ 876,563 $ 7,323 15.4%
Opportunities Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Global Fund $ 9,779 $ 27,521 $ 15,945 $ 49,625 $ 452 15.9%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Global Natural $ 12,423 $ 31,713 $ 16,564 $ 67,557 $ 8,048 14.0%
Resources Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Global Science & $ 41,573 $ 60,681 $ 80,018 $ 267,276 $10,413 14.6%
Technology Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Growth Fund $218,502 $131,603 $239,296 $ 193,439 $12,010 17.7%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International Fund $663,676 $221,732 $399,828 $3,184,204 $ 7,816 17.0%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International $ 508 $ 18,013 $ 32 -- -- --
Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International $ 17,272 $ 37,413 $ 17,655 $ 96,378 $ 2,017 16.5%
Small Companies
Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International $ 96,545 $104,458 $ 67,840 $ 827,949 $ 883 14.2%
Value Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Money Market $ 23,227 $ 31,959 $ 36,784 -- -- --
Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Pacific $ 13,144 $ 33,955 $ 30,055 $ 78,812 $ 674 14.7%
Opportunities Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip $ 66,368 $ 84,008 $ 77,809 $ 313,810 $ 4,203 14.8%
Fund
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging $106,152 $105,114 $112,220 $ 592,750 $ 4,218 17.9%
Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------
* IMSC served as the Funds' transfer agent prior to June 30, 2001.
Appendix 8
Fund Shares Outstanding on the Record Date
[TO BE PROVIDED]
- --------------------------------------------------------------------------------------------------------
Fund Class Shares Outstanding
---- ----- on Record Date
--------------
- --------------------------------------------------------------------------------------------------------
Ivy Bond Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy Bond Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy Bond Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy Bond Fund Class I
- --------------------------------------------------------------------------------------------------------
Ivy Bond Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund Class I
- --------------------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy Developing Markets Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy Developing Markets Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy Developing Markets Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy Developing Markets Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy European Opportunities Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy European Opportunities Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy European Opportunities Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy European Opportunities Fund Class I
- --------------------------------------------------------------------------------------------------------
Ivy European Opportunities Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy Global Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy Global Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy Global Fund Class C
- --------------------------------------------------------------------------------------------------------
1
- --------------------------------------------------------------------------------------------------------
Fund Class Shares Outstanding
---- ----- on Record Date
--------------
- --------------------------------------------------------------------------------------------------------
Ivy Global Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy Global Natural Resources Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy Global Natural Resources Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy Global Natural Resources Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy Global Natural Resources Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy Global Science & Technology Class A
Fund
- --------------------------------------------------------------------------------------------------------
Ivy Global Science & Technology Class B
Fund
- --------------------------------------------------------------------------------------------------------
Ivy Global Science & Technology Class C
Fund
- --------------------------------------------------------------------------------------------------------
Ivy Global Science & Technology Class I
Fund
- --------------------------------------------------------------------------------------------------------
Ivy Global Science & Technology Advisor Class
Fund
- --------------------------------------------------------------------------------------------------------
Ivy Growth Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy Growth Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy Growth Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy Growth Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy International Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy International Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy International Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy International Fund Class I
- --------------------------------------------------------------------------------------------------------
Ivy International Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy International Growth Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy International Growth Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy International Growth Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy International Growth Fund Class I
- --------------------------------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------------------------------
Fund Class Shares Outstanding
---- ----- on Record Date
--------------
- --------------------------------------------------------------------------------------------------------
Ivy International Growth Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy International Small Companies Class A
Fund
- --------------------------------------------------------------------------------------------------------
Ivy International Small Companies Fund Class B
Fund
- --------------------------------------------------------------------------------------------------------
Ivy International Small Companies Fund Class C
Fund
- --------------------------------------------------------------------------------------------------------
Ivy International Small Companies Fund Class I
Fund
- --------------------------------------------------------------------------------------------------------
Ivy International Small Companies Fund Advisor Class
Fund
- --------------------------------------------------------------------------------------------------------
Ivy International Value Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy International Value Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy International Value Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy International Value Fund Class I
- --------------------------------------------------------------------------------------------------------
Ivy International Value Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy Money Market Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy Money Market Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy Money Market Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy Pacific Opportunities Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy Pacific Opportunities Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy Pacific Opportunities Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy Pacific Opportunities Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund Class A
- --------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund Class B
- --------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund Class C
- --------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund Class I
- --------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund Advisor Class
- --------------------------------------------------------------------------------------------------------
3
- ---------------------------------------------------------------------------------------------
Fund Class Shares Outstanding
---- ----- on Record Date
--------------
- ---------------------------------------------------------------------------------------------
Ivy US Emerging Growth Fund Class A
- ---------------------------------------------------------------------------------------------
Ivy US Emerging Growth Fund Class B
- ---------------------------------------------------------------------------------------------
Ivy US Emerging Growth Fund Class C
- ---------------------------------------------------------------------------------------------
Ivy US Emerging Growth Fund Advisor Class
- ---------------------------------------------------------------------------------------------
4
Appendix 9
Trustee, Nominee and Executive Officer Ownership of Fund Shares
- ----------------------------------------------------------------------------------------------------------------------------
Title of Class of Name of Trustee, Position Amount and Percentage of Shares Owned by
Shares Nominee or Nature of Class Owned Trustees,
Executive Officer Beneficial Nominees and
Ownership Officers as a
Group
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Bond Fund - James W. Broadfoot Trustee and 287.172 0.57% 647.715
Advisor Class President (1.28%)
Paula K. Wolfe Assistant
Secretary 360.543 0.71%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Developing Richard Silverman Trustee 1,029.353 0.25% 1,029.353
Markets Fund -
Class A
- ----------------------------------------------------------------------------------------------------------------------------
Ivy European James W. Broadfoot Trustee and 3,498.800 0.19% 27,316.054
Opportunities President (1.46%)
Fund - Class A
Roy J. Glauber Trustee 18,364.627 0.98%
Richard Silverman Trustee 5,452.627 0.29%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy European James W. Broadfoot Trustee and 1,876.332 0.34% 2,885.688
Opportunities Fund - President (0.52%)
Advisor Class
Paula K. Wolfe Assistant 1,009.356 0.18%
Secretary
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Growth Fund - James W. Broadfoot Trustee and 8,312.437 33.24% 8,352.979
Advisor Class President (33.40%)
Kathleen Eckert Vice President 40.542 0.16%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Global Science & Roy J. Glauber Trustee 554.222 0.07% 1,204.010
Technology Fund - (0.15%)
Class A Richard Silverman Trustee 649.788 0.08%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Global Science & James W. Broadfoot Trustee and 1,622.162 6.70% 1,622.162
Technology Fund - President
Advisor Class
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International James W. Broadfoot Trustee and 536.980 0.01%* 4,114.340
Fund - Class A President (0.05%)
Kathleen Eckert Vice President 642.424 0.01%*
- ----------------------------------------------------------------------------------------------------------------------------
1
- ----------------------------------------------------------------------------------------------------------------------------
Title of Class of Name of Trustee, Position Amount and Percentage of Shares Owned by
Shares Nominee or Nature of Class Owned Trustees,
Executive Officer Beneficial Nominees and
Ownership Officers as a
Group
- ----------------------------------------------------------------------------------------------------------------------------
Roy J. Glauber Trustee 1,334.228 0.02%
Richard Silverman Trustee 1,600.706 0.02%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Money Market Fund John S. Anderegg Trustee 21,804.390 0.16% 139,835.900
- Class A (1.03%)
James W. Broadfoot Trustee and 72,298.040 0.53%
President
Keith J. Carlson Trustee and 140.700 0.01%*
Chairman
Stanley Channick Trustee 25,592.770 0.19%
Edward M. Tighe Trustee 20,000.000 0.15%
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Pacific Richard Silverman Trustee 1,071.528 0.12% 1,071.528
Opportunities Fund -
Class A
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund John S. Anderegg Trustee 1,600.822 0.04% 1,600.822
- Class A
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund James W. Broadfoot Trustee and 8,289.934 8.50% 8,289.934
- Advisor Class President
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging John S. Anderegg Trustee 5,890.297 0.42% 16,961.897
Growth Fund - Class A (1.22%)
James W. Broadfoot Trustee and 6,137.398 0.44%
President
Stanly Channick Trustee 649.146 0.05%
Roy J. Glauber Trustee 3,231.974 0.23%
Richard Silverman Trustee 1,053.082 0.08%`
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging James W. Broadfoot Trustee and 6,971.250 15.62% 7,631.594
Growth Fund - Advisor President (17.10%)
Class
Keith J. Carlson Trustee and 642.302 1.44%
Chairman
Kathleen Eckert Vice President 18.042 0.04%
- ----------------------------------------------------------------------------------------------------------------------------
2
* Actual percentage of shares owned is less than 0.01%.
3
Appendix 10
Beneficial Owners of Fund Shares
- -----------------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Owner* Amount and Nature of Percentage of
of Shares Beneficial Ownership Class Owned
- -----------------------------------------------------------------------------------------------------------------------
Ivy Cundill Global Raymond James & Assoc. Inc. 3,800.900 5.68
Value Fund - Class FBO Payne IRA
A Bin # 74219020
880 Carillon Pkwy.
St. Petersburg, FL 33716
- -----------------------------------------------------------------------------------------------------------------------
Ivy Developing FTC & Co. 35,776.286 8.74
Markets Fund - Account #00570
Class A Datalynx
P.O. Box 173736
Denver, CO 80217-3736
- -----------------------------------------------------------------------------------------------------------------------
Ivy European Merrill Lynch Pierce Fenner & Smith Inc. 271,676.166 14.51
Opportunities Fund For the Sole Benefit of its Customers
- Class A Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
BBH & Co. 99,269.995 5.30
Cust FBO Lifetime Achievement Fund
525 Washington Blvd.
Jersey City, NJ 07310
- -----------------------------------------------------------------------------------------------------------------------
Ivy Global Natural Charles Schwab & Co. Inc. 205,437.648 15.21
Resources Fund - Reinvest Account
Class A Attn: Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104
Merrill Lynch Pierce Fenner & Smith Inc. 74,691.338 5.53
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
Ivy Global Science BBH & Co. 56,657.224 6.65
& Technology Fund Cust FBO Lifetime Achievement Fund
- Class A 525 Washington Blvd.
Jersey City, NJ 07310
Security Trust Company 48,134.930 5.65
as Trustee FBO Local 104 Supplemental Pension
Plan
2390 East Camelback Rd.
Suite 240
Phoenix, AZ 85016
Donaldson Lufkin Jenrette 46,068.538 5.41
Securities Corporation Inc.
- -----------------------------------------------------------------------------------------------------------------------
1
- -----------------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Owner* Amount and Nature of Percentage of
of Shares Beneficial Ownership Class Owned
- -----------------------------------------------------------------------------------------------------------------------
PO Box 2052
Jersey City, NJ 07303-9998
- -----------------------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 2,149,549.066 25.83
Fund - Class A For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Charles Schwab & Co. Inc. 1,091,354.719 13.11
Reinvest Account
Attn: Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 31,515.808 8.91
Small Companies For the Sole Benefit of its Customers
Fund - Class A Attn: Fund Administration
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 464,040.395 39.72
Value Fund - Class For the Sole Benefit of its Customers
A Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
Ivy Money Market Carn & Co. 930354014 751,532.820 5.49
Fund - Class A Cholestech Corp. 401(K) Ret SV Plan
PSIDCX00000E94000000
Attn: Mutual Funds-Star Group
PO Box 96211
Washington, DC 20090-6211
- -----------------------------------------------------------------------------------------------------------------------
Ivy Pacific Merrill Lynch Pierce Fenner & Smith Inc. 76,280.067 8.39
Opportunities Fund For the Sole Benefit of its Customers
- Class A Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
Ivy Bond Fund - Merrill Lynch Pierce Fenner & Smith Inc. 1,015,502.018 46.08
Class B For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
Ivy Cundill Global NFSC FEBO #579-788325 11,513.275 6.44
Value Fund - Class Kishore Sunkara
B Usharani Sunkara
4605 Dartmoore Lane
Colleyville, TX 76034-4263
- -----------------------------------------------------------------------------------------------------------------------
Ivy Developing Merrill Lynch Pierce Fenner & Smith Inc. 81,600.590 26.18
Markets Fund - For the Sole Benefit of its Customers
Class B Attn: Fund Administration
- -----------------------------------------------------------------------------------------------------------------------
2
- -----------------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Owner* Amount and Nature of Percentage of
of Shares Beneficial Ownership Class Owned
- -----------------------------------------------------------------------------------------------------------------------
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
Ivy European Merrill Lynch Pierce Fenner & Smith Inc. 503,786.764 24.97
Opportunities Fund For the Sole Benefit of its Customers
- Class B Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
Ivy Growth Fund - Merrill Lynch Pierce Fenner & Smith Inc. 61,381.140 17.75
Class B For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Donaldson Lufkin Jenrette 18,789.106 5.43
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
- -----------------------------------------------------------------------------------------------------------------------
Ivy Global Fund - Merrill Lynch Pierce Fenner & Smith Inc. 38,914.336 17.59
Class B For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Donaldson Lufkin Jenrette 11,682.085 5.28
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
- -----------------------------------------------------------------------------------------------------------------------
Ivy Global Natural Merrill Lynch Pierce Fenner & Smith Inc. 102,734.929 13.18
Resources Fund - For the Sole Benefit of its Customers
Class B Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Rede & Co. 42,666.000 5.47
4380 SW Macadam, Suite 450
Portland, OR 97239
- -----------------------------------------------------------------------------------------------------------------------
Ivy Global Science Merrill Lynch Pierce Fenner & Smith Inc. 58,895.827 9.30
& Technology Fund Mutual Fund Operations - Service Team
- Class B 4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 2,032,552.298 41.79
Fund - Class B For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- -----------------------------------------------------------------------------------------------------------------------
3
- ----------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Owner* Amount and Nature of Percentage of
of Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 80,851.993 28.80
Small Companies For the Sole Benefit of its Customers
Fund - Class B Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 2,323,921.836 55.84
Value Fund - Class For the Sole Benefit of its Customers
B Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy Pacific Merrill Lynch Pierce Fenner & Smith Inc. 109,605.572 23.57
Opportunities Fund For the Sole Benefit of its Customers
- Class B Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Merrill Lynch Pierce Fenner & Smith Inc. 282,327.604 18.52
Fund - Class B For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy US Emerging Merrill Lynch Pierce Fenner & Smith Inc. 188,037.193 19.55
Growth Fund - For the Sole Benefit of its Customers
Class B Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy Bond Fund - Merrill Lynch Pierce Fenner & Smith Inc. 106,416.047 36.54
Class C For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy Cundill Global NFSC FEBO # OFN-023809 2,183.406 8.58
Value Fund - Class Roy E. Williams
C Barbara C. Williams
PO Box 15
Viola, ID 83872-0015
IBT Cust 1,843.031 7.25
Woodrow Bowman Rollover IRA
52 Francine Avenue
West Caldwell, NJ 07006
IBT Cust IRA 1,759.970 6.92
Luz Cassano Parisien
526 West Street
Reading, MA 01867
- ----------------------------------------------------------------------------------------------------------
4
- ----------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Owner* Amount and Nature of Percentage of
of Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------
Legg Mason Wood Walker Inc. 1,641.138 6.45
405-70743-14
PO Box 1476
Baltimore, MD 21202
Raymond James & Assoc. Inc. 1,458.576 5.73
FBO Williams IRA
Bin #75249775
880 Carillon Pkwy.
St. Petersburg, FL 33716
- ----------------------------------------------------------------------------------------------------------
Ivy Developing Merrill Lynch Pierce Fenner & Smith Inc. 24,634.066 26.91
Markets Fund - For the Sole Benefit of its Customers
Class C Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Donaldson Lufkin Jenrette 7,301.270 7.97
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
- ----------------------------------------------------------------------------------------------------------
Ivy European Merrill Lynch Pierce Fenner & Smith Inc. 665,791.340 42.97
Opportunities Fund For the Sole Benefit of its Customers
- Class C Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy Growth Fund - First Presbyterian Church of McAlester 3,733.190 21.27
Class C A Non Profit Corporation
PO Box 1550
222 E. Washington
McAlester, OK 74502-1550
Merrill Lynch Pierce Fenner & Smith Inc. 2,359.140 13.44
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Salomon Smith Barney Inc. 1,743.389 9.93
00121013039
333 West 34/th/ Street
3/rd/ Floor
New York, NY 10001
Fiduciary Trust Co. of NH Cust 403(B)
FBO Jack L. Ewen 1,613.795 9.19
278 Southside Drive
Oneonta, NY 13820
Painewebber
For the Benefit of UBS Painewebber CDN 1,168.100 6.65
- ----------------------------------------------------------------------------------------------------------
5
- ----------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Owner* Amount and Nature of Percentage of
of Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------
FBO Cynthia N. Young
PO Box 3321
Weehawken, NJ 07086-8154
IBT Trust Cust 403(B)
FBO Nancy H. Allaire
11 Wales Drive 1,123.924 6.40
Norwich, NY 13815
Painewebber for the Benefit of
Charles Sindelar 893.010 5.08
Mary Sindelar JTWROS
115 Southampton Drive
Galloway
Fountain Hills, NJ 08205-6627
- ----------------------------------------------------------------------------------------------------------
Ivy Global Fund - Merrill Lynch Pierce Fenner & Smith Inc. 2,712.501 23.04
Class C For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Salomon Smith Barney Inc. 2,256.265 19.16
00157417165
333 West 34/th/ Street
3/rd/ Floor
New York, NY 10001
Painewebber 1,307.190 11.10
For the Benefit of UBS Painewebber CDN
FBO Eve Garrett
PO Box 3321
Weehawken, NJ 07086-8154
Salomon Smith Barney Inc.
00121066732 1,177.856 10.00
333 West 34/th/ Street
3/rd/ Floor
New York, NY 10001
Smith Barney
00107866133
388 Greenwich Street 1,041.015 8.84
New York, NY 10013
Smith Barney
00112701249
388 Greenwich Street 982.067 8.34
New York, NY 10013
- ----------------------------------------------------------------------------------------------------------
Ivy Global Natural Merrill Lynch Pierce Fenner & Smith Inc. 68,051.493 14.85
Resources Fund - For the Sole Benefit of its Customers
Class C Attn: Fund Administration
4800 Deer Lake Dr., E.
- ----------------------------------------------------------------------------------------------------------
6
- ----------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Owner* Amount and Nature of Percentage of
of Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------
3/rd/ Floor
Jacksonville, FL 32246
Painewebber 31,471.282 6.87
For the Benefit Local 68
Engineers Pension Fund
PO Box 534
W. Caldwell, NJ 07007
- ----------------------------------------------------------------------------------------------------------
Ivy Global Science Merrill Lynch Pierce Fenner & Smith Inc. 22,216.985 13.60
& Technology Fund Mutual Fund Operations - Service Team
- Class C 4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 592,180.060 61.70
Fund - Class C For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 124,032.563 59.42
Small Companies For the Sole Benefit of its Customers
Fund - Class C Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
IBT Cust IRA FBO 11,470.423 5.49
Terry K. Ramnanan
7459 N. Monte Avenue
Fresno, CA 93711
- ----------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 784,891.816 57.48
Value Fund - Class For the Sole Benefit of its Customers
C Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------
Ivy Money Market Salomon Smith Barney Inc. 132,917.800 18.97
Fund - Class C 00142468489
333 West 34/th/ Street
3/rd/ Floor
New York, NY 10001
IBT Trust
FBO Pamela Marchenko Roth IRA 86,200.320 12.30
265 Stubbs Lane
Santa Maria, CA 93455
Robert J. Laws &
Katherine A. Laws TTEES 44,050.830 6.28
The Laws Family Trust
U/A Dtd 11/06/2001
PO Box 723
- ----------------------------------------------------------------------------------------------------------
7
- ----------------------------------------------------------------------------------------------------------------------------
Title of Class of Name and Address of Beneficial Owner* Amount and Nature of Percentage of
Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------------------------
Ramona, CA 92065
Salomon Smith Barney Inc.
00142468490
333 West 34/th/ Street - 3/rd/ Floor 42,860.160 6.11
New York, NY 10001
IBT Cust R/O IRA FBO
Jeanette C. Arnone
14 Lions Street 42,784.050 6.10
East Strousburg, PA 18301
First Trust Corp. Cust IRA
FBO Suzanne Helen Anderson
U/A/D 10-31-95 #135129-0001 35,461.260 5.06
PO Box 173301
Denver, CO 80217-3301
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Pacific Merrill Lynch Pierce Fenner & Smith Inc. 23,865.540 22.74
Opportunities Fund For the Sole Benefit of its Customers
- Class C Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Merrill Lynch Pierce Fenner & Smith Inc. 21,084.640 28.93
Fund - Class C For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
A G Edwards & Sons 5,370.355 7.36
Custodian for
Diana H. Pross
Rollover IRA Account
1705 S. 170/th/ Street
Omaha, NE 68130-1204
A G Edwards & Sons 4,884.873 6.70
Custodian for
Terry D. O'Neall
IRA Account
5 Singleton Circle
Bella Vista, AR 72715-4942
Salomon Smith Barney Inc.
00121018626 4,316.028 5.92
333 West 34/th/ Street
3/rd/ Floor
New York, NY 10001
Painewebber for the Benefit of
Judith T. Katz TTEE
Dtd 3-6-96 3,786.719 5.19
- ----------------------------------------------------------------------------------------------------------------------------
8
- ----------------------------------------------------------------------------------------------------------------------------
Title of Class of Name and Address of Beneficial Owner* Amount and Nature of Percentage of
Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------------------------
22215 Erwin Street
Woodland Hills, CA 91367
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging Merrill Lynch Pierce Fenner & Smith Inc. 40,504.559 31.29
Growth Fund - For the Sole Benefit of its Customers
Class C Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
First Clearing Corporation 9,162.445 7.07
A/C 3109-0705
Robert Feinberg and
Harriet Feinberg JTWROS
1824 Byberry Rd.
Bensalem, PA 19020-4455
- ----------------------------------------------------------------------------------------------------------------------------
Ivy European Donaldson Lufkin Jenrette 4,174.695 65.07
Opportunities Fund Securities Corporation Inc.
- Class I PO Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette 854.139 13.31
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette 744.048 11.59
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
NFSC FEBO #RAS-469041 642.383 10.01
NFSC/FMTC IRA
FBO Charles Peavy
2025 Eagle Nest Bluff
Lawrenceville, GA 30244
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International Lynspen and Company 37,048.066 31.30
Fund - Class I PO Box 830804
Birmingham, AL 35283
Lynspen and Company
For Reinvestment 25,132.667 21.23
PO Box 830804
Birmingham, AL 35283
National City Bank Indiana TTEE of the 16,018.070 13.53
Mechanics Laundry & Supply Inc. Teamster
Attn: Trust Mutual Funds #20-405674227
PO Box 94984
Cleveland, OH 44101-4984
National Investor Services FBO 13,116.639 11.08
821-00546-26
- ----------------------------------------------------------------------------------------------------------------------------
9
- ----------------------------------------------------------------------------------------------------------------------------
Title of Class of Name and Address of Beneficial Owner* Amount and Nature of Percentage of
Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------------------------
55 Water Street, 32/nd/ Floor
New York, NY 10041
Charles Schwab & Co. 7,083.762 5.98
Reinvest Account
Attn Mutual Fund Dept
101 Montgomery Street
San Francisco, CA 94104
- -------------------------------------------------------------------------------------------------------------------------
Ivy Bond Fund - Investec Ernst & Company 23,645.366 46.84
Advisor Class 088-23464-14
Attn: Mutual Funds
One Battery Park Place
New York, NY 10004
NFSC FEBO #279-055662 17,940.747 35.54
C/James Ferris/BRO
B Yanowitch/J Broadfoot TTES
U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
LPL Financial Services 8,890.147 17.61
A/C 7170-5810
9785 Towne Centre Drive
San Diego, CA 92121-1968
- -------------------------------------------------------------------------------------------------------------------------
Ivy Cundill Global Mackenzie Investment Mgmt. Inc. 57,756.571 51.41
Value Fund - Attn: Bev Yanowitch
Advisor Class 925 S. Federal Hwy., Ste. 600
Boca Raton, FL 33432
Peter Cundill Holdings Ltd. 37,266.358 33.17
1100 Melville St., Ste. 200
Vancouver
BC V6E 4A6
IBT Cust IRA FBO 6,135.379 5.46
Marita Regan
One 74/th/ Street, Apt 5G
Brooklyn, NY 11209
- -------------------------------------------------------------------------------------------------------------------------
Ivy Developing NFSC FEBO #279-055662 8,040.150 97.78
Markets Fund - C/James Ferris/BRO
Advisor Class B Yanowitch/J Broadfoot TTES
U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
- -------------------------------------------------------------------------------------------------------------------------
Ivy European Merrill Lynch Pierce Fenner & Smith Inc. 243,132.476 43.43
Opportunities Fund For the Sole Benefit of its Customers
- Advisor Class Attn: Fund Administration
4800 Deer Lake Dr., E.
- -------------------------------------------------------------------------------------------------------------------------
10
- ---------------------------------------------------------------------------------------------------------------------------
Title of Class of Name and Address of Beneficial Owner* Amount and Nature of Percentage of
Shares Beneficial Ownership Class Owned
- ---------------------------------------------------------------------------------------------------------------------------
3/rd/ Floor
Jacksonville, FL 32246
Donaldson Lufkin Jenrette 75,318.881 13.45
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette 62,497.356 11.16
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Growth Fund - NFSC FEBO #279-055662 15,811.198 63.23
Advisor Class C/James Ferris/BRO
B Yanowitch/J Broadfoot TTES
U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
James W. Broadfoot 8,150.114 32.59
117 Thatch Palm Cove
Boca Raton, FL 33432
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Global Fund - NFSC FEBO #279-055662 5,716.909 57.65
Advisor Class C/James Ferris/BRO
B Yanowitch/J Broadfoot TTES
U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
Merrill Lynch Pierce Fenner & Smith Inc. 3,768.327 38.00
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Global Natural Donaldson Lufkin Jenrette 6,255.670 12.06
Resources Fund - Securities Corporation Inc.
Advisor Class PO Box 2052
Jersey City, NJ 07303-9998
Merrill Lynch Pierce Fenner & Smith Inc. 5,202.854 10.03
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Donaldson Lufkin Jenrette 5,035.971 9.71
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
- ---------------------------------------------------------------------------------------------------------------------------
11
- ----------------------------------------------------------------------------------------------------------------------------
Title of Class of Name and Address of Beneficial Owner* Amount and Nature of Percentage of
Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Global Science NFSC FEBO #279-055662 14,939.203 61.66
& Technology Fund C/James Ferris/BRO
- Advisor Class B Yanowitch/J Broadfoot TTES
U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
Robert Chapin & 3,321.388 13.70
Michelle Broadfoot TTEE of the Nella Manes Trust
U/A/D 04-09-92
117 Thatch Palm Cove
Boca Raton, FL 33432
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International IBT Cust IRA FBO 148.063 100.00
Fund - Advisor Nolan C. Zugschwerdt
Class 2150 N. Stafford
Arlington, VA 22207
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International Mackenzie Investment Mgmt. Inc. 51,214.386 99.88
Growth Fund - Attn: Bev Yanowitch
Advisor Class 925 S. Federal Hwy., Ste. 600
Boca Raton, FL 33432
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International Merrill Lynch Pierce Fenner & Smith Inc. 56,507.735 88.69
Small Companies For the Sole Benefit of its Customers
Fund - Advisor Attn: Fund Administration
Class 4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
NFSC FEBO #279-055662 6,461.031 10.14
C/James Ferris/BRO
B Yanowitch/J Broadfoot TTES
U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
- ----------------------------------------------------------------------------------------------------------------------------
Ivy International NFSC FEBO #279-055662 6,772.003 30.40
Value Fund - C/James Ferris/BRO
Advisor Class B Yanowitch/J Broadfoot TTES
U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
LPL Financial Services 3,218.761 14.45
A/C 1572-6093
9785 Towne Centre Drive
San Diego, CA 92121-1968
LPL Financial Services
A/C 3383-3796 2,503.224 11.24
9785 Towne Centre Drive
San Diego, CA 92121-1968
- ----------------------------------------------------------------------------------------------------------------------------
12
- ----------------------------------------------------------------------------------------------------------------------------
Title of Class of Name and Address of Beneficial Owner* Amount and Nature of Percentage of
Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------------------------
LPL Financial Services
A/C 1982-6979 1,900.057 8.53
9785 Towne Centre Drive
San Diego, CA 92121-1968
Merrill Lynch Pierce Fenner & Smith Inc.
For the Sole Benefit of its Customers 1,666.293 7.48
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
Charles Schwab & Co Inc.
Reinvest Account 1,535.769 6.89
Attn: Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104
LPL Financial Services
A/C 7105-6816
9785 Towne Centre Drive 1,310.281 5.88
San Diego, CA 92121-1968
- ----------------------------------------------------------------------------------------------------------------------------
Ivy Pacific Donaldson Lufkin Jenrette 4,512.894 77.93
Opportunities Fund Securities Corporation Inc.
- Advisor Class PO Box 2052
Shares Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette 748.503 12.92
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
Merrill Lynch Pierce Fenner & Smith Inc. 518.000 8.94
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr., E.
3/rd/ Floor
Jacksonville, FL 32246
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Mackenzie Investment Mgmt. Inc. 51,179.697 52.49
Fund - Advisor Attn: Bev Yanowitch
Class 925 S. Federal Hwy., Ste. 600
Boca Raton, FL 33432
NFSC FEBO #279-055662 46,318.144 47.50
C/James Ferris/BRO
B Yanowitch/J Broadfoot TTES
U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
- ----------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging NFSC FEBO #279-055662 25,336.053 56.76
C/James Ferris/BRO
- ----------------------------------------------------------------------------------------------------------------------------
13
- ----------------------------------------------------------------------------------------------------------------------------
Title of Class of Name and Address of Beneficial Owner* Amount and Nature of Percentage of
Shares Beneficial Ownership Class Owned
- ----------------------------------------------------------------------------------------------------------------------------
Growth Fund - B Yanowitch/J Broadfoot TTES
Advisor Class U/A 01/01/98
925 S. Federal Highway
FL 6
Boca Raton, FL 33432-6143
Charles Schwab & Co. Inc. 4,850.696 10.86
Reinvest Account
Attn: Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104
James W. Broadfoot 2,393.086 5.36
117 Thatch Palm Cove
Boca Raton, FL 33432
- ----------------------------------------------------------------------------------------------------------------------------
* Each entity set forth in this column is the shareholder of record and may be
deemed to be the beneficial owner of certain of the shares listed for certain
purposes under the securities laws, although certain of the entities generally
do not have an economic interest in these shares and would ordinarily disclaim
any beneficial ownership therein.
14
Preliminary Copy
Form of Proxy Card
[PROXY TABULATOR]
Please fold and detach card at perforation before mailing
[FUND NAME PRINTS HERE] FORM OF PROXY
A SERIES OF IVY FUND SPECIAL MEETING OF SHAREHOLDERS
December 10, 2002
The undersigned, having received Notice of the December 10, 2002
Special Meeting of Shareholders of the above referenced fund (the "Fund"), a
series of Ivy Fund (the "Trust"), and the related Proxy Statement, hereby
appoints Keith J. Carlson, Beverly J. Yanowitch and Paula K. Wolfe 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 925
South Federal Highway, Boca Raton, Florida 33432 on December 10, 2002 at 10:00
a.m. Eastern time, and any adjournments or postponements thereof.
PLEASE INDICATE VOTE ON OPPOSITE SIDE OF CARD.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED IN FAVOR OF EACH PROPOSAL.
Dated: _________________, 2002
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.
___________________________________
Signature(s) of Shareholder(s)
PLEASE INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW, USING BLUE
OR BLACK INK OR DARK PENCIL (DO NOT USE RED INK). 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.
Please fold and detach card at perforation before mailing.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. THE
BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 1:
(FOR SHAREHOLDERS OF ALL FUNDS EXCEPT
IVY GLOBAL NATURAL RESOURCES FUND).
Approval of a new Master Business
Management and Investment Advisory
Agreement between the Trust, on behalf
of the Fund, and Ivy Management, Inc.
("IMI").
[ ] [ ] [ ]
PROPOSAL 2:
(FOR SHAREHOLDERS OF IVY GLOBAL NATURAL
RESOURCES FUND ONLY). Approval of a new
Master Business Management Agreement
between the Trust, on behalf of the
Fund, and IMI.
1
[ ] [ ] [ ]
PROPOSAL 3A:
(FOR SHAREHOLDERS OF IVY EUROPEAN
OPPORTUNITIES FUND AND IVY INTERNATIONAL
SMALL COMPANIES FUND ONLY). Approval of
a new Subadvisory Agreement between IMI
and Henderson Global Investors (North
America) Inc.
[ ] [ ] [ ]
PROPOSAL 3B:
(FOR SHAREHOLDERS OF IVY EUROPEAN
OPPORTUNITIES FUND AND IVY INTERNATIONAL
SMALL COMPANIES FUND ONLY). Approval of
a new Subadvisory Agreement between
Henderson Global Investors (North
America) Inc. and Henderson Investment
Management Limited.
[ ] [ ] [ ]
PROPOSAL 4:
(FOR SHAREHOLDERS OF IVY CUNDILL GLOBAL
VALUE FUND ONLY). Approval of a new
Subadvisory Agreement between IMI and
Peter Cundill & Associates, Inc.
FOR all nominees listed WITHHOLD authority to vote
(except as noted in space for all nominees listed
provided)
PROPOSAL 5:
(FOR SHAREHOLDERS OF ALL FUNDS). [ ] [ ]
Approval of the election of eight
nominees to serve as Trustees on
the Board of Trustees of the Trust.
NOMINEES: (01) Keith A Tucker, (02) Henry J. Herrmann,
(03) James D. Gressett, (04) Jarold W.
Boettcher, (05) Michael Smith, (06) Joseph
Harroz, Jr., (07) Eleanor B. Schwartz, (08)
Glendon Johnson, Jr.
INSTRUCTION: To withhold authority to vote for any
individual nominee, write the name(s) on the line
immediately below.
- ----------------------------------
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.
PLEASE DO NOT FORGET TO SIGN THE OTHER SIDE OF THIS CARD.
2