Stradley Ronon Stevens & Young, LLP
2005 Market Street, Suite 2600
Philadelphia, PA 19103
Telephone 215.564.8000
Fax 215.564.8120
www.stradley.com |
December 22, 2017
Ms. Deborah O’Neal Johnson
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
RE: | Post-Effective Amendment No. 150 (“PEA No. 150”) to Registration |
Statement of Ivy Funds (the “Registrant” or “Trust”)
File Nos.:033-45961 and811-06569
Dear Ms. Johnson:
This correspondence is being provided to you in response to your comments (“Staff Comments”) communicated during your conversation with Don Felice of our office on December 8, 2017 with respect to PEA No. 150 to the Registrant’s Registration Statement filed on October 23, 2017.
For your convenience, we have summarized our understanding of the Staff Comments in bold typeface and set forth our response in the following italicized text. Where helpful, we have also included a copy of the relevant text from PEA No. 150.
1. | Comment: Provide the filing date of the FormN-14 Registration Statement that will be used in connection with the portfolios registered by PEA No. 150. |
Response: The FormN-14 was filed on December 8, 2017.
2. | Text: Summary Section of the Accumulative Fund – Footnote 3 to the Fee Table states: |
Through October 31, 2020, Ivy Investment Management Company (IICO), the Fund’s investment manager, Ivy Distributors, Inc. (IDI), the Fund’s distributor, and/or Waddell & Reed Services Company, doing business as WI Services Company (WISC), the Fund’s transfer agent, have contractually agreed to reimburse sufficient management fees,12b-1 fees and/or shareholder servicing fees to cap the total annual ordinary fund operating expenses for Class B shares at 2.29%, Class C shares at 2.07% and Class I shares at 0.87%. Prior to that date, the expense limitation may not be terminated by IICO, IDI, WISC or the Board of Trustees.
Comment: Either delete the word “ordinary” with respect to “total annual ordinary fund operating expenses” or explain the meaning of that word in an additional footnote along with any exclusions.
Response:The term “ordinary” is used to convey to the reader that the expense reimbursement agreement applies only to those operating expenses that would occur in the normal course of the Fund’s operations. Absent that qualifier, the extent of the reimbursement and what expenses it covers would be unclear, as well as inconsistent with the language contained in the Trust’s Expense Reimbursement agreement. Moreover, the Fund already includes disclosure about the specific fees that the Fund pays. In the section “Investment Advisory and Other Services—Accounting Services,” the Fund spells out such “ordinary” expenses and contrasts them with “extraordinary” expenses:
“Each Fund pays all of its other expenses. These include, for each Fund, the costs of printing and mailing materials sent to shareholders, audit and outside legal fees, taxes, brokerage commissions, interest, insurance premiums, custodian fees, fees payable by the Funds under Federal or other securities laws and to the Investment Company Institute, cost of processing and maintaining shareholder records, costs of systems or services used to price Fund securitiesand nonrecurring and extraordinary expenses, including litigation and indemnification relating to litigation.” (emphasis added)
Because the disclosure already addresses the staff’s comment, the Registrant believes no change is necessary.
3. | Comment: Provide copies of the completed Expense Example Tables with this correspondence. You noted that, as these were new Portfolios, only the one and three year example numbers were required. |
Response:Please see Exhibit A, which is attached to this correspondence.
4. | Comment: Provide more specific “options” and “futures” risk disclosure to be added to the existing “Derivatives Risk” Principal Risks disclosure for the Ivy Accumulative Fund. |
Response:For purposes of the pending reorganization, it is important that the Principal Investment Strategies and Principal Investment Risks disclosure in these shell funds mirror that of the existing predecessor Waddell & Reed Advisors Funds. Accordingly, the Registrant declines to change this disclosure at this time. This comment will, however, be reconsidered the next time the registration statement for these funds is updated after the reorganization.
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Additionally, we note that (i) a more comprehensive discussion of the risks associated with derivatives is found in the “Additional Information about Principal Investment Strategies, Other Investments and Risks — Defining Risks” section of the prospectus, and (ii) detailed disclosure regarding each type of derivative that the Fund may use, and their associated risks, is found in the sections titled “The Fund, Its Investments, Related Risks and Restrictions — Specific Securities and Investment Practices” and “Options, Futures and Other Derivatives Strategies” in the Fund’s Statement of Additional Information.
5. | Comment: Complete the bar charts in the Performance section. |
Response:The disclosure will be completed and will appear in the next post-effective amendment to the Registration Statement.
6. | Text: Summary Section of the Wilshire Global Allocation Fund – Principal Investment Strategies states: “Each Underlying Affiliated Fund, in turn, invests in a diversified portfolio of securities from one or more of the following asset classes: domestic equity securities, foreign equity securities (from issuers in both developed and emerging markets) and bonds (both investment grade and high-yield) issued by domestic and foreign corporations and governments.” |
Comment: The parenthetical “(junk bonds)” should be added after “high-yield.”
Response:The disclosure will be revised as requested.
7. | Text: Summary Section of the Wilshire Global Allocation Fund – Average Annual Total Return Chart |
Comment: Clarify in the names of the benchmark indices whether such indices are gross return or net of foreign source withholding as two versions of some indices are available.
Response:The disclosure will be revised as requested.
8. | Comment: Provide supplementally an explanation for the presence of the Appendix A Hypothetical Investment and Expense Information. |
Response:This disclosure is required by an “Assurance of Discontinuance” (“AoD”) between the Attorney General of the State of New York Bureau of Investment Protection and Waddell & Reed Inc., et al, in July 2006. The AoD was related to a market timing investigation conducted by the New York Attorney General’s office. The AoD relates to
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the Waddell & Reed Advisors Funds. However, because the Waddell & Reed Advisors Funds will reorganize into corresponding Ivy Funds, and because such Waddell & Reed Advisors Funds will be the accounting/performance survivors of the reorganization, the Ivy Funds will continue to provide the disclosure required by the AoD.
If you have any questions or comments regarding this filing, please telephone me at (215)564-8149, or in my absence, please contact, Don Felice at (215)564-8794.
Very truly yours, |
/s/ Kenneth L. Greenberg |
Kenneth L. Greenberg, Esq. |
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Exhibit A
Ivy Accumulative Fund
Shareholder Fees |
| |||||||||||||||||||||||||||
(fees paid directly from your investment) | Class A | Class B | Class C | Class I | Class N | Class R | Class Y | |||||||||||||||||||||
Maximum Sales Charge (Load) Imposed on Purchases(as a % of offering price) | 5.75% | None | None | None | None | None | None | |||||||||||||||||||||
Maximum Deferred Sales Charge (Load)(as a % of lesser of amount invested or redemption value) | 1.00% | 1 | 5.00% | 1 | 1.00% | 1 | None | None | None | None | ||||||||||||||||||
Maximum Account Fee | $ | 20 | 2 | None | $ | 20 | 2 | None | None | None | None | |||||||||||||||||
Annual Fund Operating Expenses |
| |||||||||||||||||||||||||||
(expenses that you pay each year as a % of the value of yourinvestment) | Class A | Class B | Class C | Class I | Class N | Class R | Class Y | |||||||||||||||||||||
Management Fees | 0.68% | 0.68% | 0.68% | 0.68% | 0.68% | 0.68% | 0.68% | |||||||||||||||||||||
Distribution and Service(12b-1) Fees | 0.25% | 1.00% | 1.00% | None | None | 0.50% | 0.25% | |||||||||||||||||||||
Other Expenses | 0.18% | 0.73% | 0.41% | 0.23% | 0.06% | 0.31% | 0.21% | |||||||||||||||||||||
Total Annual Fund Operating Expenses | 1.11% | 2.41% | 2.09% | 0.91% | 0.74% | 1.49% | 1.14% | |||||||||||||||||||||
Fee Waiver and/or Expense Reimbursement3 | 0.00% | 0.12% | 0.02% | 0.04% | 0.00% | 0.00% | 0.03% | |||||||||||||||||||||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 1.11% | 2.29% | 2.07% | 0.87% | 0.74% | 1.49% | 1.11% |
Example
This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the Fund’s operating expenses remain the same and that expenses were capped for a one year period, as indicated above. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year | 3 Years | |||||||
Class A Shares | $682 | $ 908 | ||||||
Class B Shares | 632 | 1,028 | ||||||
Class C Shares | 210 | 651 | ||||||
Class I Shares | 89 | 282 | ||||||
Class N Shares | 76 | 237 | ||||||
Class R Shares | 152 | 471 | ||||||
Class Y Shares | 113 | 356 |
You would pay the following expenses if you did not redeem your shares:
1 Year | 3 Years | |||||||
Class A Shares | $682 | $908 | ||||||
Class B Shares | 232 | 728 | ||||||
Class C Shares | 210 | 651 | ||||||
Class I Shares | 89 | 282 | ||||||
Class N Shares | 76 | 237 | ||||||
Class R Shares | 152 | 471 | ||||||
Class Y Shares | 113 | 356 |
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Ivy Wilshire Global Allocation Fund
Shareholder Fees |
(fees paid directly from your investment) | Class A | Class B | Class C | Class I | Class N | Class R | Class Y | |||||||||||||
Maximum Sales Charge (Load) Imposed on Purchases(as a % of offering price) | 5.75% | None | None | None | None | None | None | |||||||||||||
Maximum Deferred Sales Charge (Load)(as a % of lesser of amount invested or redemption value) | 1.00% | 5.00%1 | 1.00%1 | None | None | None | None | |||||||||||||
Maximum Account Fee | $ 202 | None | $ 202 | None | None | None | None |
Annual Fund Operating Expenses |
(expenses that you pay each year as a % of the value of your investment) | Class A | Class B | Class C | Class I | Class N | Class R | Class Y | |||||||||||||||||||||
Management Fees | 0.07% | 0.07% | 0.07% | 0.07% | 0.07% | 0.07% | 0.07% | |||||||||||||||||||||
Distribution and Service(12b-1) Fees | 0.25% | 1.00% | 1.00% | None | None | 0.50% | 0.25% | |||||||||||||||||||||
Other Expenses | 0.13% | 0.25% | 0.15% | 0.09% | 0.07% | 0.08% | 0.08% | |||||||||||||||||||||
Acquired Fund Fees and Expenses3 | 0.76% | 0.76% | 0.76% | 0.76% | 0.76% | 0.76% | 0.76% | |||||||||||||||||||||
Total Annual Fund Operating Expenses4 | 1.21% | 2.08% | 1.98% | 0.92% | 0.90% | 1.41% | 1.16% | |||||||||||||||||||||
Fee Waiver and/or Expense Reimbursement5 | 0.07% | 0.07% | 0.07% | 0.09% | 0.07% | 0.07% | 0.07% | |||||||||||||||||||||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 1.14% | 2.01% | 1.91% | 0.83% | 0.83% | 1.34% | 1.09% |
Example
This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the Fund’s operating expenses remain the same and that expenses were capped for a one year period, as indicated above. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year | 3 Years | |||||||
Class A Shares | $685 | $924 | ||||||
Class B Shares | 604 | 938 | ||||||
Class C Shares | 194 | 607 | ||||||
Class I Shares | 85 | 275 | ||||||
Class N Shares | 85 | 273 | ||||||
Class R Shares | 136 | 432 | ||||||
Class Y Shares | 111 | 354 |
You would pay the following expenses if you did not redeem your shares:
| 1 Year | 3 Years | ||||||
Class A Shares | $685 | $924 | ||||||
Class B Shares | 204 | 638 | ||||||
Class C Shares | 194 | 607 | ||||||
Class I Shares | 85 | 275 | ||||||
Class N Shares | 85 | 273 | ||||||
Class R Shares | 136 | 432 | ||||||
Class Y Shares | 111 | 354 |
Ivy Cash Management Fund
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Shareholder Fees |
(fees paid directly from your investment) | Class A | Class B | Class C | |||||||||
Maximum Sales Charge (Load) Imposed on Purchases(as a % of offering price) | None | None | None | |||||||||
Maximum Deferred Sales Charge (Load)(as a % of lesser of amount invested or redemption value) | 1.00%1 | 5.00%1 | 1.00%1 | |||||||||
Maximum Account Fee | $ 202 | None | $ 202 |
Annual Fund Operating Expenses |
(expenses that you pay each year as a % of the value of your investment) | Class A | Class B | Class C | |||||||||
Management Fees | 0.34% | 0.34% | 0.34% | |||||||||
Distribution and Service(12b-1) Fees | None | 1.00% | 1.00% | |||||||||
Other Expenses | 0.39% | 0.25% | 0.25% | |||||||||
Total Annual Fund Operating Expenses3 | 0.73% | 1.59% | 1.59% |
Example
This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year | 3 Years | |||||||
Class A Shares | $ 75 | $233 | ||||||
Class B Shares | 562 | 802 | ||||||
Class C Shares | 162 | 502 |
You would pay the following expenses if you did not redeem your shares:
1 Year | 3 Years | |||||||
Class A Shares | $ 75 | $233 | ||||||
Class B Shares | 162 | 502 | ||||||
Class C Shares | 162 | 502 |
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