MASTER BUSINESS MANAGEMENT AND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 31st day of December, 1991, 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 Manage 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 the regulated
investment companies, subject to policy decisions adopted by the Fund's Board of
Trustees.
(b) The Manager will determine the securities to by
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 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 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 Manger'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 parties
to this Agreement or "interested persons" (as defined in the 0000 Xxx) of any
such party ("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; and
(13) fees and expenses of membership in industry organizations.
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 or by reason of
the Manager's reckless disregard of its obligations and duties hereunder.
6. Fees. In consideration of the services to be rendered by
the Manager pursuant to paragraph 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 of 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. Expense Limitation. If the aggregate expenses of every
character incurred by, or allocated to, a Portfolio in any fiscal year, other
than interest, taxes, distribution expenses, brokerage commissions and other
portfolio transaction expenses, other expenditures which are capitalized in
accordance with generally accepted accounting principles and any extraordinary
expense (including, without limitation, litigation and indemnification
expenses), but including the fees provided for in paragraph 6 ("includable
expenses"), shall exceed the expense limitations applicable to the Portfolio
imposed by state securities laws or regulations thereunder, as these limitations
may be raised or lowered from time to time, the Manager shall pay to the
Portfolio an amount equal to that excess. With respect to portion of a fiscal
year in which this agreement shall be in effect, the foregoing limitations shall
be prorated according to the proportion which that portion of the fiscal year
bears to the full fiscal year. At the end of each month of the Fund's fiscal
year, the Manager will review the includable expenses accrued during that fiscal
year to the end of the period and shall estimate the contemplated includable
expenses for the balance of that fiscal year. If, as a result of that review and
estimation, it appears likely that the includable expenses will exceed the
limitations referred to in this paragraph 7 for a fiscal year with respect to a
Portfolio, the Manager shall pay the Portfolio, subject to a later reimbursement
to reflect actual expenses, an amount equal to a pro rata portion (prorated on
the basis of remaining months of the fiscal year, including the month just
ended) of the amount by which the includable expenses for the fiscal year (less
an amount equal to the aggregate of actual reductions made pursuant to this
provision with respect to prior months of the fiscal year) are expected to
exceed the limitations provided in this paragraph 7. For the purposes of the
foregoing, the value of the net assets of the Portfolio shall be computed in the
manner specified in paragraph 6, and any payments required to be made by the
Manager shall be made once a year promptly after the end of the Fund's fiscal
year.
8. 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.
9. Duration and Termination.
(a) This Agreement shall become effective as of the
closing of the acquisition of the capital stock of the Manager by Mackenzie
Investment Management Inc. on December 31, 1991, subject to prior shareholder
approval thereof as required by the 1940 Act, and shall continue in effect for a
period of two (2) years from the that date, provided, that the Agreement will
continue in effect with respect to a Portfolio for more than two (2) years 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 0000 Xxx) 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 0000 Xxx) or by a vote of
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).
10. 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.
11. 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.
12. 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 Agreement and 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
IVY FUND
By: __/S/ XXXXXXX X. PEERS______
TITLE:
IVY MANAGEMENT INC.
By: ___/S/ XXXXXXX X. WATSON___________
TITLE: President
