-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J7sHW2dN+qn+UcLiwts5z0d9xsTBm2mReS0elJ23pOtwHi/VBo/Tn+v0dstEvaIX uTvacVnrJ55pX3nwxBZRJg== 0000950144-01-003234.txt : 20010307 0000950144-01-003234.hdr.sgml : 20010307 ACCESSION NUMBER: 0000950144-01-003234 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IVY FUND CENTRAL INDEX KEY: 0000052858 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046006759 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01028 FILM NUMBER: 1558990 BUSINESS ADDRESS: STREET 1: 700 SOUTH FEDERAL HIGHWAY STREET 2: SUITE 300 CITY: BOCA RATON STATE: FL ZIP: 33432 BUSINESS PHONE: 407-393-8900 MAIL ADDRESS: STREET 1: P. O. BOX 5007 CITY: BOCA RATON STATE: FL ZIP: 33431-0807 N-30D 1 g65961n-30d.txt IVY FUND ANNUAL REPORT 12-31-2000 1 IVY FUNDS ANNUAL REPORT DECEMBER 31, 2000 This report and the financial statements contained herein are submitted for the general information of the shareholders. This report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. ANNUAL REPORT DECEMBER 31, 2000 IVY DEVELOPING MARKETS FUND IVY EUROPEAN OPPORTUNITIES FUND IVY GLOBAL FUND IVY GLOBAL NATURAL RESOURCES FUND IVY GLOBAL SCIENCE & TECHNOLOGY FUND IVY INTERNATIONAL FUND IVY INTERNATIONAL SMALL COMPANIES FUND IVY INTERNATIONAL VALUE FUND IVY PACIFIC OPPORTUNITIES FUND IVY GROWTH FUND IVY US BLUE CHIP FUND IVY US EMERGING GROWTH FUND IVY BOND FUND IVY MONEY MARKET FUND [LOGO] IVY FUNDS Embracing the world 2 TABLE OF CONTENTS Letter from the President .................................... 1 Worldwide Market Outlook & Review ............................ 2 Corporate Profile ............................................ 5 Management's Discussion and Analysis WORLDWIDE FUNDS Ivy Developing Markets Fund ..................... 6 Ivy European Opportunities Fund ................. 8 Ivy Global Fund ................................. 10 Ivy Global Natural Resources Fund ............... 12 Ivy Global Science & Technology Fund ............ 14 Ivy International Fund .......................... 16 Ivy International Small Companies Fund .......... 18 Ivy International Value Fund .................... 20 Ivy Pacific Opportunities Fund .................. 22 DOMESTIC FUNDS Ivy Growth Fund ................................. 24 Ivy US Blue Chip Fund ........................... 26 Ivy US Emerging Growth Fund ..................... 28 FIXED INCOME FUNDS Ivy Bond Fund ................................... 30 Ivy Money Market Fund ........................... 32 Schedules of Investments ............................ 34 Statements of Assets and Liabilities ................ 50 Statements of Operations ............................ 54 Statements of Change in Net Assets .................. 56 Financial Highlights ................................ 60 Notes to Financial Statements ....................... 68 Report of Independent Certified Public Accountants... 76
This report is intended to be presented as a complete and integrated document. This report and any excerpt of this report may not be copied or reprinted without first obtaining the written permission of Ivy Funds. 3 LETTER FROM THE PRESIDENT [PHOTO] Keith J. Carlson Dear Ivy Funds Investor: "During periods of volatility, we encourage shareholders to remain focused on their long-term goals. Markets change; the basic principles of investing do not. Diversifying your portfolio -- among different asset classes, investment styles and regions of the world -- is still the key strategy of long-term investing." Market performance in 2000 was unsettling for investors worldwide. However, at Ivy Funds, we believe the long-term potential of the world's markets remains high. In Europe, the economic fundamentals look strong. In the US, a slowing economy, while challenging in the short-term, should head off the threat of inflation and lay the foundation for healthy -- and more sustainable -- long-term growth. And in many countries throughout the rest of the world, we are seeing strong corporate profits as economies and markets benefit from deregulation, privatization and a wave of restructuring. During periods of volatility, we encourage shareholders to remain focused on their long-term goals. Studies have shown that timing the market based on short-term trends rarely works. Instead, we believe that investing for the long term in funds and companies of quality and putting day-to-day market fluctuations in the proper perspective is a sounder strategy. Markets change; the basic principles of investing do not. Diversifying your portfolio -- among different asset classes, investment styles and regions of the world -- can help reduce risk and maximize the potential for return. Investing regularly can lend discipline to your investment program. And knowing your risk tolerance, or how much risk you are comfortable in taking on, can better equip you to handle market fluctuations. Having said that, it gives me great pleasure to present you with the Ivy Funds Annual Report 2000. As you can see, we have combined the data and commentary for all the Ivy Funds into one, easy-to-read publication. We feel that this format offers a more comprehensive view of our investment approach and broad range of funds. It also provides the opportunity for our shareholders to see how different regions and funds performed over the year and what their potential might be for the future. Each of our managers has contributed to this publication, and I am sure that you will find their views both insightful and helpful. This report is just one of the many changes that have taken place at Ivy Funds over the last year. In May, we hired a new chief investment officer of international equities, Sheridan Reilly, who has brought his rigorous and disciplined investment process to our suite of international funds. In June, we reopened our flagship offering, Ivy International Fund, to new investors. At the same time, we unveiled a new corporate image -- one that truly reflects our vision and direction as investment managers -- as well as a Web site (www.ivyfunds.com) that accomplishes our goal of being your "worldwide answer center." In the second half of 2000, we focused on enhancing our investment management capabilities by hiring experts with the foresight and experience to take advantage of all that the world of investing has to offer. In 2001, Ivy Funds will continue to grow to better serve your investment needs. We look forward to an exciting year and thank you for your continued support. Sincerely, /s/ Keith J. Carlson ----------------------------------- Keith J. Carlson Chairman 4 A LOOK BACK, A LOOK FORWARD: THE IVY FUNDS The year 2000 was one of sharp contrasts. The first quarter started off well, continuing the outperformance of 1999 with technology stocks driving strong gains for markets throughout the world. By the spring, however, equity markets fell as technology stocks declined, interest rate increases took effect and investors started to scrutinize company fundamentals more closely. As a result of these and other factors (discussed below), most worldwide stock markets showed negative returns for the year. For example, the Morgan Stanley Capital International World Index, a common indicator of stock market performance in the developed world, was down 13.18% in 2000. Here's a closer look at where we've been and where we're going. Although the technology sector experienced volatile performance in 2000, we believe the ultimate result will be a healthier environment for technology stocks -- one not clouded by unrealistic expectations and investor overconfidence. THE UNITED STATES Despite strong performance in the first quarter, the US large-cap market, as measured by the Standard & Poor's 500 Index, showed a negative return of 9.10% in 2000. The technology-heavy NASDAQ, which lists smaller, high-growth stocks and was up over 86% in 1999, fell 39.3%. Internet stocks declined the most, with sectors such as online retail and online information down 40% for the year. However, not all areas of the technology sector suffered: computer storage, for example, was up 20%. We believe that the decline in technology stocks was caused by excessive investor optimism and overconfidence, which drove company valuations to unsustainable levels. As the year progressed, investors also became increasingly concerned about business fundamentals and profitability. As a result, dot-com companies, which were very dependent on investor financing, found it harder to raise capital as investors withdrew money from the market. Disappointing earn- ings preannouncements from high-profile companies such as Intel, Dell, Apple and Nortel also played a role. Although these events led to volatile market performance in 2000, we believe the ultimate result will be a healthier environment for technology stocks -- one not clouded by unrealistic expectations and investor overconfidence. Technology stocks will now be evaluated by the same measures as other stocks are, which may lead to more sustainable performance in the future. We expect to see real GDP grow at 2.0% to 2.5% in 2001, which is lower than last year's 5.2% GDP growth but still in line with the economy's long-term record. Looking at the larger economic picture, the Federal Reserve Board raised interest rates three times in the first half of the year, with the aim of slowing the economy to head off inflation. It accomplished its goal: consumers spent less, retail sales declined and companies estimated slower growth. The Microsoft anti-trust case and election uncertainty in November and December also had a dampening effect. The end result was a shift away from the trends of 1999: in 2000, value stocks in industries such as healthcare strongly outperformed growth stocks in industries such as technology. While overall performance may have been disappointing in 2000, shareholders should keep in mind that, historically, the stock market has always bounced back from short-term setbacks. In fact, fluctuations are a natural, inevitable part of the market cycle. Since 1900, for example, the US stock market has experienced a correction -- a drop in value by 10% or more -- approximately once every two years. But over the long-term, the market has continued its upward growth. We are optimistic about market fundamentals and encourage investors to keep a long-term focus. In the first half of 2001, we expect the market environment to be challenging. Corporate profits may be affected by slower consumer demand and a weaker economy. However, we do not anticipate a recession. We do expect to see real GDP grow at 2.0% to 2.5% in 2001, which is significantly lower than last year's 5.2% GDP growth but still in line with the economy's long-term record. We feel the second half of the year will see significant improvement when and if interest rates are lowered and tax cuts are enacted. The Federal Reserve has already cut interest rates by 1.00% in 2001; we expect them to cut several more times this year. It is our belief that the stock market will eventually benefit from a lower interest rate environment, a recovering economy and stronger corporate earnings. "Technology is still the growth engine of the world economy. Although 2000 was not a great year for technology stocks, investors should keep in mind that we are still early in the buildout of the Internet. We expect developments such as high-speed access and broadband to lead to further consumer demand, and we believe global competition will spur technology spending 2 5 WORLDWIDE MARKET OUTLOOK & REVIEW among companies. In our view, investors should focus on the long-term when it comes to technology." -- Jim Broadfoot, portfolio manager of Ivy Global Science & Technology Fund "Currently, investors are facing uncertainty regarding the economy and corporate earnings. But the market is providing investors with significant opportunities. Those investors who are willing to look beyond the short-term may be rewarded for not waiting on the sidelines until there is nothing left to worry about." -- Paul Baran, portfolio manager of Ivy US Blue Chip Fund EUROPE Economic fundamentals in Europe continued to strengthen in 2000. The markets, however, had a challenging year. Certain countries, such as Denmark, posted positive returns, but many of the major markets were flat or negative. Technology, media and telecom stocks -- the TMT sector -- realized significant declines, falling 53% from their peak. Rising global interest rates and high oil prices also appeared to negatively affect European equity markets. In this environment, investors sought out defensive sectors such as insurance, food and pharmaceutical stocks, which generally outperformed all others. The euro, while weak for much of the year, rebounded in the last quarter and investors captured significant gains on the appreciating currency. Looking at the larger economic picture, tax cuts throughout Europe and a continuing trend of corporate restructuring, initial public offerings and deregulation continued to improve fundamentals throughout the region. In Germany, for example, tax cuts will allow companies to sell shares in other com- panies without paying capital gains tax starting in 2002. In our view, Europe now offers some of the most promising investment opportunities in the world. Going forward, we expect a global economic slowdown to have less of an impact on Europe than on the United States. Consumer and business confidence remain high, and governments in many countries are easing fiscal policy. We expect GDP growth in Europe to stay at about trend levels of 2.5%. If, as we expect, we see a stronger euro, lower interest rates and continuing economic growth, these factors should lay a positive foundation for equities in the second half of 2001. We also expect the euro to continue to appreciate against the US dollar, which should benefit US investors. It is interesting to note that the euro has already risen from a low of $0.8230 on October 26, 2000 to a high (as of this writing) of $0.9594 on January 5, 2001. "The developments we're seeing in Europe -- restructuring, a boom in equity investment, mergers and acquisitions -- are really an echo of what the US went through in the 1980s and 1990s. But while the US has already seen the results of these changes, Europe is just beginning to benefit from them. This provides a US investor with the opportunity to invest in companies and sectors whose best performance may still lie ahead of them." -- Sheridan Reilly, head of the Ivy international equities team and lead manager of Ivy International Fund Tax cuts and a continuing trend of corporate restructuring, initial public offerings and deregulation strengthened economic fundamentals throughout Europe. THE FAR EAST Japan started 2000 off well. The economy showed improvement, technology stocks did well and a wave of bank mergers offered a promising way to solve loan problems. As the year progressed, however, technology stocks around the world declined, a number of companies declared bankruptcy and exacerbated the loan situation, and corporate restructuring did not advance as quickly as many had hoped. The Nikkei 225 Index, the most commonly used measure of Japanese stock performance, fell 27.19%. The long-term outlook looks considerably more positive. Japan still leads the world in areas such as handheld wireless products and miniaturization/digitization, and it is home to some of the strongest companies in the world. We believe that Japan will continue to see slower economic growth in 2001, but many companies may realize strong earnings growth. Japan still leads the world in areas such as handheld wireless products, and it is home to some of the strongest companies in the world. In the rest of Asia, larger developed markets such as Hong Kong showed stronger performance than smaller markets such as Indonesia. Hong Kong offered investors a liquid stock market, a thriving property and banking sector and access to China's huge consumer market. Its Hang Seng Index was 3 6 WORLDWIDE MARKET OUTLOOK & REVIEW - - Continued from page three - down 11% for the year, a relatively good showing. In other Asian countries, however, corporate reform did not advance as planned, and foreign investors reexamined their holdings in the region. For example, South Korea's Composite Stock Price Index was down 50.92%, and the country failed to implement many of the ambitious reforms established after the Asia crisis of 1997-98. If US interest rates are further reduced in 2001, it should benefit financial sectors in Hong Kong and Singapore. While volatility will most likely continue in the struggling financial systems of Korea, Malaysia, Thailand and Taiwan, we believe that the Far East as a region should benefit from high consumer demand, modern manufacturing capabilities, low-cost labor and potentially rapid economic growth. "Future growth in the Far East will most likely be driven by an increase in demand from Mainland China, the expansion in Hong Kong's role as an information-services provider and the growing intra-regional trade between China, Taiwan and Hong Kong." - -- Sean Goldrick, Asian equities specialist and member of the Ivy Pacific Opportunities Fund portfolio management team LATIN AMERICA In Latin America, countries such as Brazil and Mexico offered improved economic fundamentals and significant investment opportunities. Latin America's regional economy grew at an impressive rate of almost 4% last year. Many of its equity markets suffered from slower growth in the developed world and higher US interest rates, but countries such as Brazil and Mexico offered improved fundamentals and significant investment opportunities. Brazil saw very strong economic growth as well as interest rate declines that should stimulate further growth. Corporate restructuring, the passage of a "financial responsibility act," and an upgrade from Moody's Investor Services contributed to competitive stock market performance. Mexico saw a pronounced increase in consumer demand and the landmark election of Vicente Fox, an event that ended 71 years of one-party rule by the incumbent Institutional Revolutionary Party. We believe that this is a good sign for both democracy and the economy in Mexico. Market performance in 2000 serves to remind us, once again, of the value of international diversification. In our view, the fortunes of Latin America in 2001 will largely depend on the economies of the United States, Europe and Japan. As strong exporters of commodities, most Latin American countries are dependent on demand from the developed countries. They are also very dependent on foreign capital, so interest rates will play a large role. If the US economy does indeed experience a "soft landing," Latin America should benefit. "There are two prerequisites for Latin America and other emerging markets to do well: easier global liquidity conditions and robust economic growth in the developed world. Interest rate cuts by the Federal Reserve are a step in the right direction." - -- Moira McLachlan, member of the Ivy Developing Markets Fund portfolio management team IMPLICATIONS FOR INVESTORS Market performance in 2000 serves to remind us, once again, of the value of international diversification. Investors who kept a portion of their portfolios invested internationally often fared better than those who narrowly focused on certain sectors of the domestic market. Going forward, we believe that international markets will continue to offer both diversification benefits and unique investment opportunities. A recent survey of 66 financial organizations conducted by independent industry consultants KPMG illustrates the potential of the world outside our borders: it showed that international markets are expected to outperform the US market over both the next five and 10 years.(*) We believe that Ivy's worldwide funds are well-positioned to take advantage of this trend. - -------------- (*)2000 Survey of Economic and Capital Market Expectations. There is no guarantee these forecasts will be realized. The opinions expressed are those of the portfolio managers and Ivy Funds and are current only through the end of the period of the report as stated on the cover. The views stated herein are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 4 7 CORPORATE PROFILE WHO WE ARE The world is changing. A boom in international trade, new developments in technology and a global economic expansion are creating new investment opportunities every day. At Ivy Funds, we are committed to bringing you the best this world -- the entire world -- has to offer. As investment specialists offering a world-wide perspective, Ivy Funds offers a full range of international and domestic mutual funds that seek to capture opportunity in the new global marketplace. Whether those opportunities are located in Europe, the Far East, Latin America or right here at home, our analysts and portfolio managers use a detailed research and analysis process to pinpoint those that we believe offer the greatest potential for long-term growth. OUR MISSION At Ivy Funds, our mission is three-fold: - - To be the Worldwide Answer Center for investors seeking to learn more about the world's capital markets. Please visit www.ivyfunds.com for our Global Month in Review as well as timely, informative articles about worldwide investment opportunities. - - To generate consistent, competitive investment performance. Our experienced investment experts are committed to providing competitive returns for shareholders. - - To provide our shareholders with the best possible service. At Ivy Funds, we pride ourselves on great client service. We are sure you'll find that our friendly, professional staff will gladly assist you with any questions you may have. OUR HISTORY Ivy Management, Inc. was founded in 1960 and offered its first fund to the public in 1961. In late 1991, Ivy was acquired by Mackenzie Investment Management Inc. (TSE:MCI), an organization that shared our fundamental values and investment philosophy. Our combined firm is a majority-owned subsidiary of Mackenzie Financial Corporation (TSE:MKF;NASDAQ:MKFCF) which has provided investment services to Canadian investors since 1968. With over $37 billion in assets, Mackenzie is the fifth largest mutual fund group in Canada. Ivy Funds is located in Boca Raton, Florida and offers both domestic and international mutual funds to US investors. Our 40-year tradition of employing a sound and disciplined investment approach has been the foundation upon which our business has been built. We believe that the firm's rich heritage and international roots, along with its unique perspective on trends affecting securities markets around the world, can provide investors with the tools they need to build progressive worldwide investment strategies. IVY SHAREHOLDER BENEFITS Ease and Affordability Minimum opening investment for all Ivy Funds accounts: $1,000; additional investments: $100. Minimum opening and additional investments for Automatic Investment Method (AIM): $50. Minimum IRA opening and additional investments (with or without AIM): $25. Liquidity Shareholders may redeem any or all of their shares on any business day at the current net asset value, which may be more or less than the original cost. Free Checkwriting Checks may be written for a minimum of $100 from Ivy Money Market Fund. Exchange Convenience For no additional charge, shareholders may exchange all or part of their shares for other Ivy funds by telephone or mail. Please consult a prospectus for further information. 5 8 IVY DEVELOPING MARKETS FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH PRIMARILY THROUGH INVESTMENT IN EQUITY SECURITIES OF COMPANIES THAT SHOULD BENEFIT FROM THE DEVELOPMENT AND GROWTH OF EMERGING MARKETS. [PHOTO] An interview with Moira McLachlan, vice president at Ivy Management, Inc. and member of the Ivy Developing Markets Fund portfolio management team. Q: MOIRA, HOW DID IVY DEVELOPING MARKETS FUND PERFORM LAST YEAR? A: For the period ending December 31, 2000, Ivy Developing Markets Fund posted a return of -23.79%. The Fund significantly outperformed its benchmark, the Morgan Stanley Capital International Emerging Markets Free Index, which returned - -30.61% for the same period. Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S OUTPERFORMANCE? A: Last year was difficult for emerging market funds because of turmoil in equity markets around the world. However, on a relative basis Ivy Developing Markets Fund benefited from its heavy exposure to Latin America, particularly Brazil and Mexico, as well as underweight positions in Taiwan and South Korea. The Fund also had a significant underweighting in technology stocks at the beginning of the year, as we felt investors were being overly optimistic and underestimating risk. The Fund's holdings in Brazil, which comprise approximately 16% of the portfolio, were the largest contributors to outperformance. Two Brazilian holdings that did well were Petrobras, a large oil producer that benefited from high oil prices and major restructuring, and Ambev, which is the result of a merger between Brazil's two largest brewers. In Mexico, we took advantage of election uncertainty and devaluation fears early in the year to add to our positions in the banking sector, which we think will see significant loan growth going forward. We also anticipated an increase in consumer demand early in the year and added to our retail holdings. A substantial weighting in Hong Kong also helped performance. About a third of our Hong Kong exposure is in China telecom stocks listed in Hong Kong such as China Mobile. With a huge market of 1.2 billion consumers, we feel the sector has strong growth potential, and we took advantage of the technology sell-off to boost exposure to this market. The rest of our Hong Kong holdings are in financial and other interest-rate-sensitive sectors. "In many cases, stocks in emerging markets are trading at valuations last seen in 1998 at the height of the emerging market crisis, and, almost without exception, fundamentals are healthier. While emerging markets will continue to struggle until global economic conditions improve, we feel the Fund is positioned to do well when the global economic turnaround comes." Taiwan and South Korea were underweighted at the beginning of the year because we felt these markets had become inflated toward the end of 1999. This helped to limit losses. In the second half of 2000, we took advantage of weakness to build positions in some of the technology names we felt were being overly punished. Within these markets, we invested in companies with strong long-term potential such as Taiwan Semiconductor and United Microelectronics. Q: WHAT IS YOUR STRATEGY REGARDING THE SMALLER EMERGING MARKET COUNTRIES? A: At the beginning of the year, we made a decision to avoid marginal markets such as Thailand, the Philippines, Indonesia and Colombia because of poor economic fundamentals and bad track records on issues like corporate governance and earnings visibility. The Fund is not heavily invested in Eastern Europe for the same reasons. Most of these smaller markets performed quite poorly in 2000, and the Fund benefited by avoiding them. Q: HOW IS THE FUND POSITIONED GOING FORWARD? A: The Fund has a stronger blend of value and growth stocks than it has had in the past. It is now positioned to take advantage of high-growth sectors that we expect to do better as confidence returns, although we continue to maintain positions in the more defensive, value-oriented names. We have also recently been selectively adding to stocks that we believe are selling at distressed valuations after last year's sell-off. In many cases, stocks in emerging markets are trading at valuations last seen in 1998 at the height of the emerging market crisis, and, almost without exception, fundamentals are healthier. While emerging markets will continue to struggle until global economic conditions improve, we feel Ivy Developing Markets Fund is positioned to do well when the global economic turnaround comes. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 6 9 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (28.18)% (5.45)% N/A (5.72)% w/o Reimb. & 5.75% sales charge (29.32)% (6.34)% N/A (7.29)% B SHARES w/Reimb. & w/ CDSC (28.30)% (5.44)% N/A (5.53)% w/Reimb. & w/o CDSC (24.53)% (5.06)% N/A (5.53)% w/o Reimb. & w/CDSC (29.57)% (6.32)% N/A (7.09)% w/o Reimb. & w/o CDSC (25.85)% (5.94)% N/A (7.09)% C SHARES w/Reimb. & w/ CDSC (25.28)% N/A N/A (7.12)% w/Reimb. & w/o CDSC (24.53)% N/A N/A (7.12)% w/o Reimb. & w/CDSC (27.29)% N/A N/A (8.11)% w/o Reimb. & w/o CDSC (26.55)% N/A N/A (8.11)% ADVISOR SHARES w/Reimb. (23.60)% N/A N/A (3.41)% w/o Reimb. (25.30)% N/A N/A (4.70)%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A and Class B commenced operations November 1, 1994; Class C commenced operations April 30, 1996; Advisor Class commenced operations April 30, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy Developing Markets Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $10.0 Million TOTAL NUMBER OF HOLDINGS 45 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IVCAX CLASS B SHARES IVCBX CLASS C SHARES IVCCX ADVISOR CLASS SHARES IVCVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (11/94) of a $10,000 Investment [CHART] Ivy Developing Markets Fund -- $6,953 MSCI Emerging Markets Free Index -- $6,679
Ivy Developing MSCI Emerging Markets Fund Markets Free Index 01-Nov-94 9425 10000 30-Nov-94 8845 9480 31-Dec-94 8152 8719 31-Jan-95 7459 7791 28-Feb-95 7567 7591 31-Mar-95 7874 7639 30-Apr-95 8059 7982 31-May-95 8518 8407 30-Jun-95 8362 8432 31-Jul-95 8775 8621 31-Aug-95 8705 8418 30-Sep-95 8748 8378 31-Oct-95 8431 8057 30-Nov-95 8389 7914 31-Dec-95 8675 8265 31-Jan-96 9480 8852 29-Feb-96 9317 8711 31-Mar-96 9211 8779 30-Apr-96 9508 9130 31-May-96 9700 9089 30-Jun-96 9786 9146 31-Jul-96 9135 8521 31-Aug-96 9336 8739 30-Sep-96 9432 8815 31-Oct-96 9326 8580 30-Nov-96 9537 8724 31-Dec-96 9701 8763 31-Jan-97 10161 9361 28-Feb-97 10497 9762 31-Mar-97 10257 9505 30-Apr-97 10248 9522 31-May-97 10708 9794 30-Jun-97 11177 10319 31-Jul-97 11149 10473 31-Aug-97 9701 9140 30-Sep-97 9682 9393 31-Oct-97 7861 7852 30-Nov-97 7276 7565 31-Dec-97 7041 7748 31-Jan-98 6710 7140 28-Feb-98 7753 7885 31-Mar-98 7939 8228 30-Apr-98 7722 8138 31-May-98 6649 7023 30-Jun-98 5936 6286 31-Jul-98 6081 6485 31-Aug-98 4419 4610 30-Sep-98 4821 4903 31-Oct-98 5678 5419 30-Nov-98 6359 5870 31-Dec-98 6219 5784 31-Jan-99 5620 5691 28-Feb-99 5444 5747 31-Mar-99 6157 6504 30-Apr-99 7645 7309 31-May-99 7614 7266 30-Jun-99 8358 8091 31-Jul-99 8037 7871 31-Aug-99 8017 7942 30-Sep-99 7676 7674 31-Oct-99 7872 7837 30-Nov-99 8378 8540 31-Dec-99 9124 9626 31-Jan-00 9061 9683 29-Feb-00 8999 9811 31-Mar-00 9197 9859 30-Apr-00 8239 8924 31-May-00 7855 8555 30-Jun-00 8510 8857 31-Jul-00 8427 8401 31-Aug-00 8500 8443 30-Sep-00 7834 7705 31-Oct-00 7199 7147 30-Nov-00 6523 6522 31-Dec-00 6953 6679
For the 12-month period ending December 31, 2000, Ivy Developing Markets Fund returned -23.79%, outperforming its benchmark, the Morgan Stanley Capital International Emerging Markets Free Index, which returned -30.61% for the same period. The Fund's outperformance was due to overweight positions in Brazil and Mexico and underweight positions in Taiwan and Korea. The Morgan Stanley Capital International (MSCI) Emerging Markets Free Index is an unmanaged index of stocks which assumes reinvestment of dividends and, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 7 10 IVY EUROPEAN OPPORTUNITIES FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH BY INVESTING IN COMPANIES LOCATED IN OR DOING BUSINESS IN EUROPE. [PHOTO] The Ivy European Opportunities Fund is managed by London-based Henderson Global Investors. The following is an interview with Stephen Peak, head of Henderson's Continental European Equities Team and portfolio manager of the Ivy European Opportunities Fund. Q: STEPHEN, HOW DID IVY EUROPEAN OPPORTUNITIES FUND PERFORM IN 2000? A: For the 12-month period ending December 31, 2000, Ivy European Opportunities Fund returned 4.51%.The Fund beat its benchmark-- the Morgan Stanley Capital International Europe Index, which had a negative return of 8.39% for the same period -- by a wide margin. Much of this gain was achieved in the first quarter of the year, with a return of 43.8%.The following quarters were disappointing by comparison, but the Fund remained comfortably within positive territory by year-end. "We expect continued volatility as investors contemplate and absorb evidence of the weakening US economy and the likelihood of a soft vs. a hard landing. Our view is that the US will see a bumpy landing -- while it will be painful, it will not lead to a full blown recession. We expect Europe to experience less of a slowdown than the US, a development that should offer good opportunities for the Fund." Q: WHAT FACTORS AFFECTED PERFORMANCE? A: The Fund was heavily exposed to technology, media and telecom stocks (TMT) at the beginning of the year and benefited from strong growth in these sectors. We started to take profits in this area towards the end of the first quarter as valuations in many cases reached what we considered to be over-optimistic levels. Our active selling combined with falling prices helped to reduce the Fund's exposure to the TMT sectors from a high of 40% to a low of 28% by September, which in turn lessened the negative impact of declines in this area. (TMT peaked at gains of 33% in early March, but ended the year returning -31%.) Profits taken in the TMT area were rotated into more defensive, out of favor sectors such as tobacco and oil services. For most of the year performance was negatively impacted by a weak euro, which strongly depreciated in value against the dollar. However, the Fund benefited by a significant rise in the euro toward the end of the year, a move which we believe was most likely prompted by rising doubt over the strength of the US economy and the relative resilience of Europe. Throughout 1999 and the early part of 2000 the Fund achieved substantial returns from its investments in IPOs. If the Fund had not invested in IPOs, its one-year average annual return would have been -10.81% instead of 4.51%. Its since inception average annual return would have been 12.01% versus 105.19%.(*) The availability of IPOs is limited and as the Fund's assets increase IPOs will likely become a smaller component of performance. With the volatility of the markets after March, 2000, the opportunity to participate in IPOs decreased significantly. Q: THE FOURTH QUARTER WAS PARTICULARLY VOLATILE. HOW DID THIS AFFECT THE FUND? A: A number of stock specific events in some of our largest holdings made it a difficult quarter for the Fund. For example, Sagem, a French mobile telecommunications company, fell by over 30% on disappointing quarterly results. Charles Voegele, another core holding, pre-announced in December that the unusually mild winter in Europe had caused sales of winter clothes to be below the historic norms and also fell 30%. Both of these stocks have since bounced back to some extent, although not to previous levels. Q: WHAT IS YOUR STRATEGY FOR 2001? A: We intend to maintain the Fund's exposure to those defensive areas that are still available at good prices. Many defensive stocks now look very expensive as it seems that investors have panicked away from TMT. We also continue to look for opportunities within the heavily sold areas of TMT where we believe negative sentiment has taken share prices to unrealistically low prices. The Fund intends to maintain its relatively tight list of names (approximately 50 stocks at year-end), although we are prepared to consider lengthening this list to respond to opportunities in TMT, allowing us to gain diversified exposure within these sectors. Market-wise, we expect continued volatility as investors contemplate and absorb evidence of the weakening US economy and the likelihood of a soft vs. a hard landing. Our view is that the US will see a bumpy landing -- while it will be painful, it will not lead to a full blown recession. We expect Europe to experience less of a slowdown than the US, a development that should offer good opportunities for the Ivy European Opportunities Fund. (*)Performance is for Class A shares at net asset value as of December 31, 2000. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 8 11
AVERAGE ANNUAL TOTAL RETURNS SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (1.50)% N/A N/A 98.02% w/o Reimb. & 5.75% sales charge (1.50)% N/A N/A 97.58% B SHARES w/Reimb. & w/ CDSC (1.06)% N/A N/A 100.60% w/Reimb. & w/o CDSC 4.12% N/A N/A 102.10% w/o Reimb. & w/CDSC (1.06)% N/A N/A 100.25% w/o Reimb. & w/o CDSC 3.94% N/A N/A 101.76% C SHARES w/Reimb. & w/ CDSC 2.98% N/A N/A 46.92% w/Reimb. & w/o CDSC 3.98% N/A N/A 46.92% w/o Reimb. & w/CDSC 2.98% N/A N/A 46.61% w/o Reimb. & w/o CDSC 3.98% N/A N/A 46.61% I SHARES w/Reimb. N/A N/A N/A (30.40)% w/o Reimb. N/A N/A N/A (30.40)% ADVISOR SHARES w/Reimb. 5.01% N/A N/A 105.18% w/o Reimb. 5.01% N/A N/A 104.30%
CDSC = Contingent Deferred Sales Charge Advisor Class and I Class Shares are not subject to an initial sales charge or a CDSC. Class A commenced operations May 4, 1999; Class B commenced operations May 24, 1999; Class C commenced operations October 24, 1999; Class I commenced operations March 16, 2000; Advisor Class commenced operations May 3, 1999. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy European Opportunities Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $180.7 Million TOTAL NUMBER OF HOLDINGS 52 INVESTMENT STYLE Mid-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IEOAX CLASS B SHARES IEOBX CLASS C SHARES IEOCX ADVISOR CLASS SHARES IEOVX CLASS I SHARES N/A PERFORMANCE OVERVIEW PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (5/99) of a $10,000 Investment Ivy European Opportunities Fund -- $31,084 MSCI Europe Index -- $10,532
Ivy European MSCI Europe Opportunities Fund Index 05-May-99 9425 10000 30-May-99 10969 9520 30-Jun-99 16119 9680 31-Jul-99 17890 9770 31-Aug-99 18812 9870 30-Sep-99 18671 9793 31-Oct-99 19534 10154 30-Nov-99 26034 10428 31-Dec-99 29743 11496 31-Jan-2000 31844 10678 29-Feb-2000 42748 11234 31-Mar-2000 43078 11506 30-Apr-2000 39362 10998 31-May-2000 38182 10908 30-Jun-2000 40404 11142 31-Jul-2000 39067 10964 31-Aug-2000 38702 10835 30-Sep-2000 36167 10328 31-Oct-2000 34171 10249 30-Nov-2000 29569 9853 31-Dec-2000 31084 10532
For the 12-month period ending December 31, 2000, Ivy European Opportunities Fund returned 4.51%, outperforming its benchmark, the Morgan Stanley Capital International Europe Index, which returned -8.39% for the same period. Outperformance was due to the Fund's reduced exposure to technology, media and telecom stocks over the year, which lessened the effects of negative declines in this area. The since-inception cumulative return for Class A shares with a maximum sales charge of 5.75% as of December 31, 2000 was 210.84%. If the Fund had not invested in IPOs, the since-inception cumulative return for Class A shares with a maximum sales charge of 5.75% as of December 31, 2000 would have been 17.10%. The Morgan Stanley Capital International (MSCI) Europe Index is an unmanaged index of stocks which assumes reinvestment of dividends and, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. The Ivy European Opportunities Fund was initially seeded on April 26, 1999, commenced operations on May 3, 1999 received initial subscriptions on May 5, 1999, the date proceeds from share sales were invested according to Ivy European Opportunities Fund's investment objective. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 9 12 IVY GLOBAL FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH BY INVESTING IN STOCKS OF COMPANIES WORLDWIDE -- INCLUDING THE US. [PHOTO] Ivy Global Fund uses a dual management approach. The international portion (50%) Sheridan Reilly is managed by Ivy's international equities team, headed by Sheridan Reilly. The US portion (50%) Paul Baran is managed by Paul Baran, vice president of US equities at Ivy Management, Inc. For the 12-month period ending December 31, 2000, Ivy Global Fund returned - -13.91%, underperforming its benchmark, the Morgan Stanley Capital International World Index, which returned -13.18% for the same period. "The foundation of our style is to gain a solid understanding of the long-term prospects of the best companies in the world, and then to use market inefficiencies to buy them when they are attractively priced" - --Sheridan Reilly "In what we see as a 'winner take all' environment, we're adhering to our long-term strategy of picking the best-of-breed companies - those with dominant market positions and quality management" - --Paul Baron INTERNATIONAL COMMENTARY Q: SHERIDAN, WHAT FACTORS AFFECTED THE PERFORMANCE OF THE INTERNATIONAL PORTION OF THE FUND? A: The international portion benefited from being underweight in communications, a sector that was down 43%. An underweighting in Japan also helped, although most of the portfolio's Japanese holdings were in the volatile electronic technology sector. The largest negative factor affecting performance was our exposure to technology stocks. As most investors know, this sector was hit hard all over the world, and the Fund suffered as a result. Another negative factor was an underweighting in pharmaceuticals, a sector that did very well over the year. Q: YOU'RE KNOWN FOR YOUR DETAILED COMPANY ANALYSIS. DID THIS PROCESS HELP YOU TARGET SUCCESS STORIES IN 2000? A: Yes. One example is Bayer, a German chemical/drug company. Our research, which involved a rigorous study of its annual reports as well as company visits, showed that the company was committed to cost-cutting and reshaping itself into a far more profitable entity. Another was Akzo Nobel, a Dutch chemical company that our analysis also showed to be poised for increased profitability. Both holdings helped performance in 2000. Q: HOW WILL YOU POSITION THE PORTFOLIO TO TAKE ADVANTAGE OF MARKET CONDITIONS IN 2001? A: The foundation of our style is to gain a solid understanding of the long-term prospects of the best companies in the world, and then to use market inefficiencies -- periods when we believe investors are overreacting on the downside -- to buy them when they are attractively priced. We will continue to invest in companies that we feel are becoming unreasonably cheap and whose prices, in our view, reflect a passing market sentiment rather than a correct assessment of the company's prospects. US COMMENTARY Q: PAUL, WHAT FACTORS AFFECTED THE PERFORMANCE OF THE US PORTION? A: The US portion's holdings in the technology sector had the largest negative impact on performance. Most of the underperformance took place in September, October and November, as the NASDAQ collapsed about 40% and some of the portfolio's individual technology names took big hits. In September, Intel and Apple Computer pre-announced weak revenues and earnings. These reports caused a significant decline in both stocks and led to pronounced weakness in other semi-conductor and personal computer-related companies. In October, Nortel lowered its growth outlook, which affected communications chip and optical companies and further exacerbated the decline in technology stocks. On the positive side, the US portion benefited from its holdings in the healthcare sector, particularly in the pharmaceuticals area, with positions in companies such as Merck and Bristol-Myers. The consumer staples sector -- food stocks, household product stocks and more -- was another positive for performance, as holdings in HJ Heinz, William Wrigley, Colgate-Palmolive and Kimberly-Clark did well. However, it was difficult for any sector to compensate for the poor showing of such a large sector as technology. As the year progressed, we added some notable non-technology names to the portfolio such as Gillette and Carnival Corporation. Q: HOW ARE YOU POSITIONING THE US PORTFOLIO GOING FORWARD? A: In what we see as a "winner take all" environment, we're adhering to our long-term strategy of picking the best-of-breed companies -- those with dominant market positions and quality management. The focus is on US industry leaders that, in our judgement, have a proven and consistent record of earnings profitability but whose prices do not adequately reflect their underlying profitability. We've also increased the US portion of the portfolio to take advantage of more domestic opportunities. The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 10 13 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (18.86%) 3.41% N/A 6.28% w/o Reimb. & 5.75% sales charge (19.65%) 2.97% N/A 5.56% B SHARES w/Reimb. & w/ CDSC (18.85%) 3.45% N/A 4.16% w/Reimb. & w/o CDSC (14.58%) 3.80% N/A 4.16% w/o Reimb. & w/CDSC (19.67%) 3.04% N/A 3.81% w/o Reimb. & w/o CDSC (15.44%) 3.38% N/A 3.81% C SHARES w/Reimb. & w/ CDSC (15.73%) N/A N/A 1.34% w/Reimb. & w/o CDSC (14.88%) N/A N/A 1.34% w/o Reimb. & w/CDSC (16.46%) N/A N/A .87% w/o Reimb. & w/o CDSC (15.61%) N/A N/A .87% ADVISOR SHARES w/Reimb. (13.67%) N/A N/A (.65%) w/o Reimb. (14.82%) N/A N/A (1.92%)
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A commenced operations April 18, 1991; Class B commenced operations April 1, 1994; Class C commenced operations April 30, 1996; Advisor Class commenced operations April 30, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy Global Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $13.2 Million TOTAL NUMBER OF HOLDINGS 155 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES MCGLX CLASS B SHARES IVGBX CLASS C SHARES IVGCX ADVISOR CLASS SHARES IVGVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (4/91) of a $10,000 Investment Ivy Global Fund -- $18,066 MSCI World Index -- $28,107 [CHART]
Ivy Global Fund MSCI World Index 15-Apr-91 9425 10000 01-May-91 9331 10075 31-May-91 9472 10300 28-Jun-91 8871 9661 31-Jul-91 9258 10114 30-Aug-91 9465 10079 30-Sep-91 9531 10340 31-Oct-91 9692 10505 30-Nov-91 9277 10044 31-Dec-91 10113 10772 31-Jan-92 10444 10569 29-Feb-92 10614 10384 31-Mar-92 10330 9891 29-Apr-92 10595 10026 29-May-92 10880 10422 30-Jun-92 10637 10069 31-Jul-92 10627 10092 31-Aug-92 10445 10334 30-Sep-92 10274 10236 31-Oct-92 10163 9955 30-Nov-92 10213 10130 31-Dec-92 10389 10209 31-Jan-93 10492 10240 28-Feb-93 10441 10480 31-Mar-93 10800 11084 30-Apr-93 11015 11595 31-May-93 11241 11859 30-Jun-93 11120 11756 31-Jul-93 11120 11995 31-Aug-93 11737 12542 30-Sep-93 11601 12308 31-Oct-93 12334 12644 30-Nov-93 12470 11926 31-Dec-93 13467 12506 31-Jan-94 14240 13328 28-Feb-94 13800 13153 31-Mar-94 13006 12583 30-Apr-94 13312 12969 31-May-94 13492 12999 30-Jun-94 12977 12960 31-Jul-94 13729 13204 31-Aug-94 14301 13598 30-Sep-94 13881 13238 31-Oct-94 13913 13611 30-Nov-94 13232 13018 31-Dec-94 12848 13141 31-Jan-95 12283 12941 28-Feb-95 12451 13126 31-Mar-95 12826 13756 30-Apr-95 13281 14232 31-May-95 13714 14350 30-Jun-95 13654 14343 31-Jul-95 14249 15057 31-Aug-95 14108 14718 30-Sep-95 14370 15144 31-Oct-95 13976 14902 30-Nov-95 14227 15416 31-Dec-95 14400 15864 31-Jan-96 15254 16148 29-Feb-96 15327 16243 31-Mar-96 15447 16509 30-Apr-96 16048 16894 31-May-96 16133 16906 30-Jun-96 16084 16988 31-Jul-96 15230 16384 31-Aug-96 15724 16569 30-Sep-96 16000 17214 31-Oct-96 16145 17331 30-Nov-96 16626 18299 31-Dec-96 16734 18002 31-Jan-97 17242 18216 28-Feb-97 17484 18422 31-Mar-97 17319 18054 30-Apr-97 17281 18641 31-May-97 18157 19788 30-Jun-97 18831 20771 31-Jul-97 19466 21725 31-Aug-97 17674 20268 30-Sep-97 18500 21366 31-Oct-97 16061 20238 30-Nov-97 15400 20592 31-Dec-97 15276 20840 31-Jan-98 15485 21417 28-Feb-98 17288 22862 31-Mar-98 18392 23824 30-Apr-98 18532 24054 31-May-98 17875 23749 30-Jun-98 16799 24309 31-Jul-98 16841 24266 31-Aug-98 13487 21026 30-Sep-98 13361 21395 31-Oct-98 14982 23325 30-Nov-98 16296 24709 31-Dec-98 16588 25912 31-Jan-99 16441 26476 28-Feb-99 16017 25767 31-Mar-99 16808 26837 30-Apr-99 18640 27891 31-May-99 18039 26868 30-Jun-99 19563 28117 31-Jul-99 19314 28029 31-Aug-99 19402 27975 30-Sep-99 18815 27700 31-Oct-99 19226 29136 30-Nov-99 19621 29952 31-Dec-99 20985 32373 31-Jan-00 19515 30515 29-Feb-00 19421 30594 31-Mar-00 20625 32705 30-Apr-00 19875 31318 31-May-00 19703 30522 30-Jun-00 20844 31546 31-Jul-00 20719 30654 31-Aug-00 21141 31647 30-Sep-00 19421 29961 31-Oct-00 19093 29455 30-Nov-00 17748 27663 31-Dec-00 18066 28107
For the 12-month period ending December 31, 2000, Ivy Global Fund returned - -13.91%, underperforming its benchmark, the Morgan Stanley Capital International World Index, which returned -13.18% for the same period. The Fund's US and international technology holdings, as well as an underweighting in international pharmaceutical stocks, negatively impacted performance. The Morgan Stanley Capital International (MSCI) World Index is an unmanaged index of stocks which assumes reinvestment of dividends and, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 11 14 IVY GLOBAL NATURAL RESOURCES FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH BY INVESTING IN EQUITY SECURITIES OF COMPANIES THAT EXPLORE, DEVELOP, PRODUCE AND/OR DISTRIBUTE NATURAL RESOURCES AND OTHER BASIC COMMODITIES, OR IN THOSE THAT SUPPLY GOODS AND SERVICES TO SUCH COMPANIES. [PHOTO] An interview with Fred Sturm, portfolio manager of Ivy Global Natural Resources Fund and member of the Mackenzie Financial Corporation investment team. "These are exciting times for natural resource investors. Commodity prices may be challenged by an apparent slowing of world economic activity, but we believe inventory management should limit the pressure on pricing. Our research indicates that consolidation and capital discipline are refocusing companies on tight inventory management to maintain prices at highly profitable levels." Q: FRED, HOW DID IVY GLOBAL NATURAL RESOURCES FUND PERFORM LAST YEAR? A: For the 12 month-period ending December 31, 2000, the Ivy Global Natural Resources Fund returned 9.86%, underperforming its benchmark, the Morgan Stanley Capital International Commodity-Related Index, which returned 15.54%. Q: WHAT FACTORS AFFECTED PERFORMANCE IN 2000? A: Many of the major industries in which the Fund invests, including chemicals, steel, forest products, base metals, and precious metals, declined in the past year. The exception was energy, which was a big winner. For this reason, pure energy funds and more concentrated energy-heavy funds generally performed better than widely diversified funds such as Ivy Global Natural Resources Fund. The advance of the U.S. dollar also depressed the value of the Fund's foreign holdings and accounted for approximately two-thirds of the performance shortfall. Q: WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO OVER THE YEAR? A: Over the course of the year we began to reduce exposure to platinum and palladium producers. Palladium prices doubled in 2000, rising eight-fold over the past several years. Platinum prices advanced 40%. While companies in these sectors may post strong earnings, these prices are at the higher end of our expectations and we believe that they are unsustainably high. We also scaled back our holdings in diamond producers. These companies have been very successful in a strong economy, but we expect demand will slip in a weaker economic environment. Q: WHAT DO YOU LOOK FOR IN A STOCK, AND WILL THAT CHANGE AS WE MOVE INTO 2001? A: We look for well managed companies with strong balance sheets and the technological capability and expertise to grow independently of commodity prices, and that won't change. For example, last year we anchored the portfolio with companies such as Aracruz, a first-rate Brazilian pulp producer; Bueneventura, a partner in the world class Yanacocha gold deposit in Peru; and Sappi, a leading fine paper producer based in South Africa. The Fund also had core holdings in: - - Maverick Tube, which makes pipes necessary for growing natural gas production in North America, - - Rowan Companies, a leading US driller poised to benefit from the search for more natural gas in the Gulf of Mexico, - - Encal, Penn West and Genesis Exploration, which are all intermediate-sized growth oriented natural gas producers, - - Canadian Natural, a successful large Canadian producer of oil, and - - Lafarge, a world-leading highly profitable cement producer. In our view, these companies are not only profitable and growing, but also attractively priced. Q: WHAT CAN RESOURCE INVESTORS EXPECT IN 2001? A: These are exciting times for natural resource investors. Commodity prices may be challenged by an apparent slowing of world economic activity, but we believe inventory management should limit the pressure on pricing. Our research indicates that consolidation and capital discipline are refocusing companies on tight inventory management to maintain prices at highly profitable levels. Natural gas and palladium have spiked higher by several hundred per cent over the course of 2000, reminding us that as shortages develop companies can earn enormous profits. Despite underperformance in 2000, we remain confident that a well-diversified investment vehicle such as Ivy Global Natural Resources Fund will deliver attractive risk-adjusted returns over time. The Fund is fully invested and we believe it is in a good position for further gains. - ------------ The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 12 15 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge 3.54% N/A N/A 2.48% w/o Reimb. & 5.75% sales charge 1.16% N/A N/A .08% B SHARES w/Reimb. & w/ CDSC 4.27% N/A N/A 2.64% w/Reimb. & w/o CDSC 9.27% N/A N/A 3.33% w/o Reimb. & w/CDSC 2.29% N/A N/A .37% w/o Reimb. & w/o CDSC 7.20% N/A N/A 1.05% C SHARES w/Reimb. & w/ CDSC 8.49% N/A N/A 2.92% w/Reimb. & w/o CDSC 9.49% N/A N/A 2.92% w/o Reimb. & w/CDSC 6.77% N/A N/A .10% w/o Reimb. & w/o CDSC 7.75% N/A N/A .10% ADVISOR SHARES w/Reimb 10.17% N/A N/A 21.45% w/o Reimb. 6.03% N/A N/A 17.75%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A, Class B and Class C commenced operations January 1, 1997; Advisor Class commenced operations April 8, 1999. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy Global Natural Resources Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $9.4 Million TOTAL NUMBER OF HOLDINGS 54 INVESTMENT STYLE Mid-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IGNAX CLASS B SHARES IGNBX CLASS C SHARES IGNCX ADVISOR CLASS SHARES IGNVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (1/97) of a $10,000 Investment Ivy Global Natural Resources Fund - $11,030 MSCI Commodity-Related Index - $11,715 [CHART]
MSCI Ivy Global Natural Commodity-Related Resources Fund Index (1/1/97) 9425 10000 1/97 10151 10053 2/97 11112 9916 3/97 10264 9709 4/97 10452 9621 5/97 11546 10326 6/97 10980 10416 7/97 11376 11218 8/97 11810 11093 9/97 13138 11617 10/97 11536 10788 11/97 9368 10041 12/97 10080 9778 1/98 10315 9714 2/98 10359 10012 3/98 10527 10357 4/98 11232 10600 5/98 9722 9662 6/98 8581 9216 7/98 7865 8359 8/98 5940 6937 9/98 6947 8609 10/98 7719 9126 11/98 7384 8569 12/98 7122 8349 1/99 7279 7937 2/99 6975 7921 3/99 8102 8554 4/99 9668 10152 5/99 8823 9416 6/99 9296 10067 7/99 9657 9815 8/99 9905 10043 9/99 10649 10140 10/99 9815 9761 11/99 9634 9634 12/99 10040 10140 1/00 9725 9308 2/00 9522 8700 3/00 9837 9748 4/00 9849 9752 5/00 10232 10435 6/00 10694 9553 7/00 10198 9286 8/00 11088 9970 9/00 10773 9574 10/00 9995 9845 11/00 9556 10072 12/00 11030 11715
For the 12 month-period ending December 31, 2000, the Ivy Global Natural Resources Fund returned 9.86%, underperforming its benchmark, the Morgan Stanley Capital International Commodity-Related Index, which returned 15.54%. The advance of the US dollar depressed the value of the Fund's holdings and accounted for approximately two-thirds of the performance shortfall. The Morgan Stanley Capital International (MSCI) Commodity-Related Index is an unmanaged index of stocks which assumes reinvestment of dividends and, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 13 16 IVY GLOBAL SCIENCE & TECHNOLOGY FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH BY INVESTING PRIMARILY IN THE COMMON STOCK OF COMPANIES THAT ARE EXPECTED TO BENEFIT FROM THE DEVELOPMENT, ADVANCEMENT AND/OR USE OF SCIENCE AND TECHNOLOGY. [PHOTO] An interview with James W. Broadfoot III, portfolio manager of the Ivy Global Science & Technology Fund. Mr. Broadfoot is president of Ivy Management, Inc. and a member of the global technology and domestic equities teams. "We continue to believe in owning the stocks of leading players in industries with the most attractive investment fundamentals, with a bias against stocks of companies that depend on external financing for survival. The market events of 2000 have done nothing but strengthen our faith in this philosophy, as we have seen scores of "me-too" companies come public and fall flat." Q: JIM, HOW DID IVY GLOBAL SCIENCE & TECHNOLOGY FUND PERFORM IN 2000? A: For the 12-month period ending December 31,2000,Ivy Global Science & Technology Fund returned -42.99%, underperforming its benchmark, the Russell 3000 Technology Index, which returned -34.61% for the same period. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: Technology had a very difficult year, but the Fund's holdings in the computer storage area, such as Brocade and Network Appliance, helped performance. This sector, which is benefiting from the growth of the Internet and the digitization of enormous amounts of data, was one of the few that didn't get hit hard in the tech crash. In a year in which investor sentiment turned very negative, larger companies generally did better than smaller ones, and Fund holdings in large companies such as Applied Micro Circuits and Juniper Networks did well. Personal computer stocks underperformed in 2000 and the Fund's underweighting in this area helped limit losses. The Fund has long been focused on the high-growth area of communications, and its over-weighting in this area greatly benefited performance in the past. But in the second half of the year, this emphasis on communications was a clear detriment to performance. Communications stocks, particularly telecommunications service providers, suffered the most in the tech sell-off that began in September, and they did particularly badly in the fourth quarter. Fund holdings such as Metromedia Fiber Network and McLeod USA, while possessing strong fundamentals and no financing issues, saw significant price declines. Holdings in the communications equipment and communications components areas also hurt performance. The majority of the Fund's underperforming stocks were in these areas as well as in the Internet software and services sector. Q: DID YOU TAKE ADVANTAGE OF VOLATILITY TO ADD TO ANY POSITIONS IN THE FUND? A: We added to the Fund's positions in strong companies when we felt that price declines were caused by investor panic and not by concerns over a company's fundamentals. Q: HAVE YOU CHANGED STRATEGY BECAUSE OF THE EVENTS OF 2000? A: No. We continue to believe in owning the stocks of leading players in industries with the most attractive investment fundamentals, with a bias against stocks of companies that depend on external financing for survival. The market events of 2000 have done nothing but strengthen our faith in this philosophy, as we have seen scores of "me-too" companies come public and fall flat. Who hasn't heard the tale of the cash-burning dot-com gone bankrupt? Our focus is on sustainable earnings growth in companies with strong competitive positions that address markets with a large potential for growth. For example, companies in the storage and security areas can benefit from the ongoing need of corporations to store all the data generated from e-commerce and rising Internet use, as well as the need to protect Internet infrastructures. Q: WHAT CAN INVESTORS EXPECT IN 2001? A: In a slowing economy, the challenge for technology investors is to identify those companies that offer compelling value with a high return on investment that won't have earnings disappointments. But on a larger level, it's important to keep in mind that (a) technology is a long-term investment, and (b) it should continue to be a very important growth area. Volatility will most likely continue in the first half of 2001, but the fundamental growth drivers -- the buildout of the Internet, the expansion of wireless capabilities, marked improvements in bandwidth and speed, rising global competition -- are still firmly in place. With its focus on leading players with strong competitive positions, we believe Ivy Global Science & Technology Fund is positioned to do well in the current market environment. - ---------- The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 14 17 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (46.27)% N/A N/A 26.35% w/o Reimb. & 5.75% sales charge (46.27)% N/A N/A 26.30% B SHARES w/Reimb. & w/ CDSC (46.24)% N/A N/A 27.00% w/Reimb. & w/o CDSC (43.41)% N/A N/A 27.22% w/o Reimb. & w/CDSC (46.24)% N/A N/A 26.97% w/o Reimb. & w/o CDSC (43.41)% N/A N/A 27.17% C SHARES w/Reimb. & w/ CDSC (43.96)% N/A N/A 27.34% w/Reimb. & w/o CDSC (43.40)% N/A N/A 27.34% w/o Reimb. & w/CDSC (43.96)% N/A N/A 27.29% w/o Reimb. & w/o CDSC (43.40)% N/A N/A 27.29% ADVISOR SHARES w/Reimb. (42.88)% N/A N/A 15.74% w/o Reimb. (42.88)% N/A N/A 15.74%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A, Class B and Class C commenced operations July 22, 1996; Advisor Class commenced operations April 15, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy Global Science & Technology Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $71.5 Million TOTAL NUMBER OF HOLDINGS 95 INVESTMENT STYLE Mid-Cap Growth NASDAQ SYMBOLS CLASS A SHARES IVTAX CLASS B SHARES IVTBX CLASS C SHARES IVTCX ADVISOR CLASS SHARES IVTVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (7/96) of a $10,000 Investment Ivy Global Science & Technology Fund -- $28,316 Russell 3000 Technology Index -- $30,187 Russell 2000 Technology Index -- $15,840 [CHART]
Ivy Global Science & Russell 3000 Russell 2000 Technology Fund Technology Index Technology Index 22-Jul-96 9425 10000 10000 31-Jul-96 9491 10000 10000 31-Aug-96 11084 10816 10484 30-Sep-96 14081 11805 11633 31-Oct-96 14467 11436 11610 30-Nov-96 14995 12182 13242 31-Dec-96 15489 12342 12845 31-Jan-97 15905 12783 14233 28-Feb-97 14186 11230 12957 31-Mar-97 12523 9987 12309 30-Apr-97 12420 10068 13241 31-May-97 15017 12238 14569 30-Jun-97 15716 12334 14665 31-Jul-97 16821 13661 17413 31-Aug-97 16981 14384 17143 30-Sep-97 18322 14895 17630 31-Oct-97 17132 13359 16075 30-Nov-97 16764 12956 16331 31-Dec-97 16500 12505 15396 31-Jan-98 16566 12513 16334 28-Feb-98 18030 13829 17994 31-Mar-98 18644 14268 18021 30-Apr-98 18956 14759 19160 31-May-98 17501 13148 17769 30-Jun-98 18634 13383 19304 31-Jul-98 18030 11992 19752 31-Aug-98 14158 9282 16342 30-Sep-98 16037 10609 18784 31-Oct-98 16642 11345 20041 30-Nov-98 19126 12751 22510 31-Dec-98 22318 14101 25902 31-Jan-99 24745 14710 29831 28-Feb-99 22129 13234 26049 31-Mar-99 24736 13683 27671 30-Apr-99 24679 14364 28225 31-May-99 24443 15104 28242 30-Jun-99 27446 16627 31857 31-Jul-99 26625 16173 31885 31-Aug-99 28391 16472 33866 30-Sep-99 30025 17226 33402 31-Oct-99 33774 18756 34060 30-Nov-99 40216 22498 38494 31-Dec-99 49670 28388 46166 31-Jan-2000 49791 28385 44255 29-Feb-2000 64926 38950 52588 31-Mar-2000 60792 34459 55212 30-Apr-2000 49781 29411 50105 31-May-2000 43382 25505 44724 30-Jun-2000 51681 29713 50287 31-Jul-2000 48481 25649 47823 31-Aug-2000 55876 29201 54322 30-Sep-2000 50767 26491 45821 31-Oct-2000 42153 22888 42792 30-Nov-2000 27659 16020 32980 31-Dec-2000 28316 15840 30187
For the 12-month period ending December 31, 2000, Ivy Global Science & Technology Fund returned -42.99%, underperforming its benchmark, the Russell 3000 Technology Index, which returned -34.61% for the same period.(*) Underperformance was primarily due to an overweighting in the communications area and the Fund's investments in the Internet software and services sector. (*)The Fund recently changed its benchmark to one that more accurately reflects the universe of securities in which it invests. Performance for both the old and new benchmark is shown at left. The Russell 2000 Technology Index and the Russell 3000 Technology Index are unmanaged indexes of stocks which assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 15 18 IVY INTERNATIONAL FUND The Fund's goal: to provide long-term capital growth primarily through investing in equity securities traded in European, Pacific Basin and Latin American markets. [PHOTO] The following is an interview with Sheridan Reilly, senior vice president and chief investment officer of international equities at Ivy Management, Inc. Sheridan, who joined Ivy Funds on May 1st, was formerly head of the institutional equities team at Scudder Kemper Investments. He is the lead portfolio manager for Ivy International Fund. Q: SHERIDAN, HOW DID IVY INTERNATIONAL FUND PERFORM IN 2000? A: For the 12-month period ending December 31, 2000, Ivy International Fund returned -17.26%, slightly underperforming its benchmark, the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index, which returned -14.17% for the same period. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: The Fund was underweight in communications, a sector that was down 43%, and that clearly helped performance. An underweighting in Japan also helped, although most of the Fund's Japanese holdings were in the volatile electronic technology sector. On the negative side, nearly all of the equity markets in which the Fund invests were down in 2000, particularly Japan's, which was down nearly 30%. Other Asian markets such as Taiwan, Singapore and South Korea also performed poorly. Europe did a little better, but most European countries still realized negative returns. However, the largest single negative factor affecting performance was the Fund's exposure to technology stocks. As most investors know, this sector was hit very hard all over the world, and the Fund suffered as a result. Another negative factor was the Fund's underweighting in pharmaceuticals, a sector that did very well over the year. "During periods of volatility we will seek to invest in companies that we feel are becoming unreasonably cheap and whose prices, in our view, reflect a passing market sentiment rather than a correct assessment of the company's prospects." Q: HOW DID THE FUND'S BLEND OF GROWTH AND VALUE STOCKS HELP IT NAVIGATE MARKET VOLATILITY? A: This was a year in which value stocks clearly outperformed growth stocks. (Value stocks are those that by fundamental measures are trading for less than their true value, while growth stocks are those viewed to have high earnings potential.) Internationally, value stocks were down about 3%; growth stocks, led by technology, were down over 24%. The Fund's blend style helped it avoid some of the damage from the plummeting growth sector while allowing it to participate in the better-performing value names. In a market in which many international funds lost a third of their value, Ivy International Fund was able to finish in the middle of its Lipper category and come close to the return of its benchmark. Q: YOU'RE KNOWN FOR YOUR DETAILED ANALYSIS OF THE COMPANIES IN WHICH YOU INVEST. DID THIS PROCESS HELP YOU TARGET SUCCESS STORIES IN 2000? A: Yes. One example is Bayer, a German chemical/drug company. Our research, which involved a rigorous study of its annual reports as well as company visits, showed that the company was committed to cost-cutting and reshaping itself into a far more profitable entity. Another was Akzo Nobel, a Dutch chemical company that our analysis also showed to be poised for increased profitability. Both holdings helped performance in 2000. Q: HOW DID THE PERFORMANCE OF THE EURO AFFECT THE FUND? A: The Fund had 75% of its assets in Europe, so for much of the year the declining euro hurt Fund performance. However, the euro's appreciation toward the end of the year helped performance during that period. Q: HOW WILL YOU POSITION THE FUND TO TAKE ADVANTAGE OF MARKET CONDITIONS IN 2001? A: The foundation of our style is to gain a solid understanding of the long-term prospects of the best companies in the world, and then to use market inefficiencies -- periods when we believe investors are overreacting on the downside -- to buy them when they are attractively priced. So during periods of volatility we will seek to invest in companies that we feel are becoming unreasonably cheap and whose prices, in our view, reflect a passing market sentiment rather than a correct assessment of the company's prospects. The markets have been volatile lately, but we believe that some of the best future investment opportunities are being created right now. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 16 19 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES W/Reimb. & 5.75% sales charge (22.02%) 6.01% 10.53% 11.93% w/o Reimb. & 5.75% sales charge (22.02%) 6.01% 10.52% 11.93% B SHARES W/Reimb. & w/ CDSC (22.05%) 5.94% N/A 7.55% w/Reimb. & w/o CDSC (17.95%) 6.41% N/A 7.55% W/O Reimb. & w/CDSC (22.05%) 5.94% N/A 7.55% w/o Reimb. & w/o CDSC (17.95%) 6.41% N/A 7.55% C SHARES W/Reimb. & w/ CDSC (18.79%) N/A N/A 5.44% w/Reimb. & w/o CDSC (17.97%) N/A N/A 5.44% W/O Reimb. & w/CDSC (18.79%) N/A N/A 5.44% w/o Reimb. & w/o CDSC (17.97%) N/A N/A 5.44% I SHARES w/Reimb. (16.92%) 7.71% N/A 8.52% w/o Reimb. (16.92%) 7.71% N/A 8.52% ADVISOR SHARES w/Reimb. N/A N/A N/A (12.09%) w/o Reimb. N/A N/A N/A (12.09%)
CDSC = Contingent Deferred Sales Charge Advisor Class and I Class Shares are not subject to an initial sales charge or a CDSC. Class A commenced operations November 15, 1985 (performance here is calculated based on the date the Fund first became available for sale to the public, April 30, 1986); Class B commenced operations October 22, 1993; Class C commenced operations April 30, 1996; Class I commenced operations October 6, 1994; Advisor Class commenced operations August 31, 2000. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy International Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $960.3 Million TOTAL NUMBER OF HOLDINGS 87 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IVINX CLASS B SHARES IVIBX CLASS C SHARES IVNCX ADVISOR CLASS SHARES N/A CLASS I SHARES IVIIX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (4/86) of a $10,000 Investment [CHART] Ivy International Fund -- $52,329 MSCI EAFE INDEX -- $36,580
Ivy International Fund MSCI EAFE INDEX 30-Apr-86 9425 10000 31-May-86 9155 9555 30-Jun-86 9425 10207 31-Jul-86 9653 10836 31-Aug-86 10279 11904 30-Sep-86 10067 11782 31-Oct-86 9814 10995 30-Nov-86 10084 11628 31-Dec-86 10482 12245 31-Jan-87 11302 13545 28-Feb-87 12341 13951 31-Mar-87 13021 15095 30-Apr-87 14216 16691 31-May-87 14302 16691 30-Jun-87 14285 16159 31-Jul-87 15197 16131 31-Aug-87 15979 17341 30-Sep-87 16203 17068 31-Oct-87 12049 14676 30-Nov-87 11739 14821 31-Dec-87 12518 15261 31-Jan-88 12508 15533 29-Feb-88 13430 16569 31-Mar-88 14206 17588 30-Apr-88 14565 17843 31-May-88 14487 17271 30-Jun-88 14614 16816 31-Jul-88 14662 17343 31-Aug-88 13895 16216 30-Sep-88 14458 16924 31-Oct-88 15584 18373 30-Nov-88 15962 19467 31-Dec-88 16238 19575 31-Jan-89 17029 19920 28-Feb-89 17537 20022 31-Mar-89 17782 19629 30-Apr-89 18632 19811 31-May-89 18241 18733 30-Jun-89 18026 18418 31-Jul-89 19609 20731 31-Aug-89 19677 19799 30-Sep-89 20693 20700 31-Oct-89 19491 19868 30-Nov-89 19824 20867 31-Dec-89 20826 21638 31-Jan-90 20939 20832 28-Feb-90 20323 19378 31-Mar-90 20036 17359 30-Apr-90 19729 17221 31-May-90 21646 19187 30-Jun-90 21913 19018 31-Jul-90 22979 19286 31-Aug-90 20518 17413 30-Sep-90 17955 14986 31-Oct-90 18939 17321 30-Nov-90 18683 16299 31-Dec-90 18124 16564 31-Jan-91 18690 17099 28-Feb-91 20451 18932 31-Mar-91 20067 17795 30-Apr-91 20216 17971 31-May-91 21049 18159 30-Jun-91 19928 16824 31-Jul-91 21113 17651 31-Aug-91 21006 17292 30-Sep-91 21241 18267 31-Oct-91 21358 18525 30-Nov-91 20526 17661 31-Dec-91 21193 18573 31-Jan-92 22123 18176 29-Feb-92 22648 17526 31-Mar-92 22090 16369 30-Apr-92 23206 16446 29-May-92 24377 17547 30-Jun-92 23096 16715 31-Jul-92 22112 16287 31-Aug-92 21619 17309 30-Sep-92 21773 16967 31-Oct-92 20700 16077 30-Nov-92 20492 16228 31-Dec-92 21207 16312 31-Jan-93 21477 16310 28-Feb-93 22004 16803 31-Mar-93 23532 18267 30-Apr-93 24341 20001 31-May-93 25464 20423 30-Jun-93 25273 20105 31-Jul-93 25464 20809 31-Aug-93 27542 21932 30-Sep-93 27868 21438 31-Oct-93 29242 22099 30-Nov-93 28260 20167 31-Dec-93 31465 21623 31-Jan-94 33526 23452 28-Feb-94 32153 23387 31-Mar-94 30541 22379 30-Apr-94 31474 23329 31-May-94 31339 23195 30-Jun-94 30850 23523 31-Jul-94 32380 23749 31-Aug-94 34004 24311 30-Sep-94 33504 23545 31-Oct-94 34513 24330 30-Nov-94 32994 23160 31-Dec-94 32697 23305 31-Jan-95 31063 22410 28-Feb-95 31809 22346 31-Mar-95 32901 23739 30-Apr-95 33758 24632 31-May-95 34485 24249 30-Jun-95 34535 23912 31-Jul-95 35955 25400 31-Aug-95 34708 24431 30-Sep-95 35748 24909 31-Oct-95 35370 24239 30-Nov-95 35719 24914 31-Dec-95 36832 25917 31-Jan-96 37433 26024 29-Feb-96 37889 26112 31-Mar-96 38273 26666 30-Apr-96 39354 27441 31-May-96 39930 26936 30-Jun-96 41324 27088 31-Jul-96 39390 26296 31-Aug-96 40711 26354 30-Sep-96 40999 27054 31-Oct-96 41336 26777 30-Nov-96 43269 27843 31-Dec-96 44095 27484 31-Jan-97 44722 26523 28-Feb-97 45692 26956 31-Mar-97 45692 27054 30-Apr-97 45582 27197 31-May-97 48531 28967 30-Jun-97 50963 30565 31-Jul-97 52204 31059 31-Aug-97 48666 28740 30-Sep-97 52130 30350 31-Oct-97 47609 28017 30-Nov-97 47572 27731 31-Dec-97 48673 27973 31-Jan-98 48374 29252 28-Feb-98 51728 31129 31-Mar-98 54709 32088 30-Apr-98 55644 32342 31-May-98 54135 32185 30-Jun-98 53225 32429 31-Jul-98 54584 32757 31-Aug-98 45879 28699 30-Sep-98 44882 27819 31-Oct-98 49359 30719 30-Nov-98 52240 32293 31-Dec-98 52246 33567 31-Jan-99 52170 33468 28-Feb-99 51181 32670 31-Mar-99 53742 34034 30-Apr-99 56545 35413 31-May-99 54211 33589 30-Jun-99 55949 34899 31-Jul-99 56278 35936 31-Aug-99 56456 36067 30-Sep-99 56291 36430 31-Oct-99 56710 37795 30-Nov-99 58295 39108 31-Dec-99 63243 42618 31-Jan-00 58113 39910 29-Feb-00 59751 40984 31-Mar-00 60974 42573 30-Apr-00 58449 40333 31-May-00 58583 39348 30-Jun-00 61188 40887 31-Jul-00 58449 39172 31-Aug-00 59431 39512 30-Sep-00 54222 37588 31-Oct-00 52629 36701 30-Nov-00 50442 35324 31-Dec-00 52329 36580
For the 12-month period ending December 31, 2000, Ivy International Fund returned -17.26%, underperforming its benchmark, the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index, which returned - -14.17% for the same period. An underweighting in the pharmaceuticals sector and the poor showing of technology stocks negatively affected performance for the year. The Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index is an unmanaged index of stocks which assumes reinvestment of dividends and, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 17 20 IVY INTERNATIONAL SMALL COMPANIES FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH PRIMARILY THROUGH INVESTMENT IN FOREIGN EQUITY SECURITIES OF COMPANIES WITH A TOTAL MARKET CAPITALIZATION OF LESS THAN $2 BILLION. [PHOTO] The Ivy International Small Companies Fund is managed by Henderson Global Investors' smaller companies team. The following is an interview with Miranda Richards, the team's asset allocator and international small-cap strategist. Q: MIRANDA, HOW DID IVY INTERNATIONAL SMALL COMPANIES FUND PERFORM IN 2000? A: For the 12-month period ending December 31, 2000, Ivy International Small Companies Fund returned 4.94%, strongly outperforming its benchmark, the Salomon Smith Barney EMI World ex-US Index, which returned -10.31% for the same period. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: Good stock selection in Europe was key to the Fund's outperformance. Two holdings that did particularly well were Rational, a German manufacturer of professional ovens, and Altedia, a French corporate communications and human resources company. Both are market leaders in niche businesses. The Fund's high cash position during the last six months of the year was another factor that positively affected performance. We deliberately maintained a higher than average level of cash because of our concern over the state of equity markets, and particularly valuations, worldwide. Performance was also helped by the Fund's focus on Europe and other developed markets, as these regions tended to suffer less than many of the smaller, emerging markets did in 2000. On the negative side, we introduced a Pacific weighting (which includes the Far East outside of Japan) to the portfolio at the beginning of the year because we thought that Pacific stocks were undervalued and would benefit from growth in the US economy. And in May, we allocated money to Japan for the first time, concentrating on the service sectors. Unfortunately, both these decisions had a negative impact on performance. Pacific stocks were the worst performers last year, but as the Fund only had a small weighting the consequences were not as negative as they might have been. As of the end of the year, we had reduced the Fund's Pacific exposure to 2% and its Japanese exposure to 16%. "We will continue our focus on small companies with visible products, strong earnings growth and leading positions in niche businesses. And because we feel that continental Europe and the UK show the most potential in the small-cap arena, we expect to continue to favor stocks in these markets." Q: HOW DID VOLATILE MARKET CONDITIONS AFFECT SMALL-CAP STOCKS LAST YEAR? A: Small caps were not immune to concerns over a global economic slowdown, and this was particularly true in regions outside the US. Japan was the worst performing region, falling 17.9%. The decline in Japanese small-caps was consistent throughout the year and reflected increasing concerns about the extent and sustainability of an economic recovery. Small-caps in the rest of Asia fell 13.3% due to fears of a US economic slow-down. In Europe, returns for small caps were negative for the year. This was not helped by the weakness of the euro. December however, saw a 7% appreciation for the currency, which helped Fund performance. Q: THE FUND PREVIOUSLY EMPLOYED A DUAL-MANAGEMENT APPROACH. WHAT CHANGES DID HENDERSON MAKE TO THE PORTFOLIO SINCE ASSUMING FULL MANAGEMENT OF THE FUND IN NOVEMBER? A: Because we wanted to reposition the Fund away from emerging markets and into the more developed markets, we divested many of the stocks in the co-manager's portfolio and reinvested the proceeds into our existing holdings (and a few new ones). As a result, the Fund's European weighting increased. Q: WHAT IS YOUR PORTFOLIO STRATEGY FOR THE COMING YEAR? A: We plan to reduce the Fund's cash level and to review its portfolio to increase the likelihood that the companies it holds are ones that we believe can continue to flourish during a period of economic uncertainty. We will also continue our focus on small companies with visible products, strong earnings growth and leading positions in niche businesses. And because we feel that continental Europe and the UK show the most potential in the small-cap arena, we expect to continue to favor stocks in these markets. As of December 31, 2000, the Fund had 42% of its holdings in continental Europe and 24% in the UK. In 2001, Ivy International Small Companies Fund will focus on providing competitive performance by investing in reasonably priced stocks from leading regional firms that we believe will be unaffected by a slowing global economy. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 18 21 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES W/REIMB. & 5.75% sales charge (1.10%) N/A N/A 6.15% w/o Reimb. & 5.75% sales charge (1.73%) N/A N/A 2.70% B SHARES W/REIMB. & w/ CDSC (.73%) N/A N/A 6.31% w/Reimb. & w/o CDSC 4.27% N/A N/A 6.93% W/O REIMB. & w/ CDSC (1.51%) N/A N/A 3.02% w/o Reimb. & w/o CDSC 3.45% N/A N/A 3.62% C SHARES W/REIMB. & w/ CDSC 3.25% N/A N/A 6.99% w/Reimb. & w/o CDSC 4.25% N/A N/A 6.99% W/O REIMB. & w/ CDSC 2.51% N/A N/A 3.33% w/o Reimb. & w/o CDSC 3.51% N/A N/A 3.33% ADVISOR SHARES W/REIMB. 5.32% N/A N/A 20.61% w/o Reimb. 1.52% N/A N/A 16.40%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A, Class B and Class C commenced operations January 1, 1997; Advisor Class commenced operations July 1, 1999. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy International Small Companies Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $23.2 Million TOTAL NUMBER OF HOLDINGS 70 INVESTMENT STYLE Small-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IYSAX CLASS B SHARES IYSBX CLASS C SHARES IYSCX ADVISOR CLASS SHARES IYSVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (1/97) of a $10,000 Investment [CHART] Ivy International Small Companies Fund -- $12,697 HSBC James Capel World (Excluding-US) Small Company Index -- $10,690 Salomon Smith Barney EMI World ex-US Index -- $11,251
Ivy International HSBC James Capel Salomon Smith Barney Small Companies World (Excluding-US) EMI World ex-US Fund Small Company Index Index 02-Jan-97 9425 10000 10000 31-Jan-97 9585 9938 9784 28-Feb-97 9566 10183 9948 31-Mar-97 9510 10047 9817 30-Apr-97 9331 9736 9670 31-May-97 9548 10209 10290 30-Jun-97 9783 10368 10522 31-Jul-97 9849 10112 10363 31-Aug-97 9274 9819 9921 30-Sep-97 9472 9946 10097 31-Oct-97 8803 9445 9698 30-Nov-97 8369 8950 9265 31-Dec-97 8245 8716 9060 31-Jan-98 8369 8944 9438 28-Feb-98 8997 9672 10142 31-Mar-98 9682 10175 10619 30-Apr-98 9701 10266 10700 31-May-98 9502 10366 10899 30-Jun-98 9102 9862 10581 31-Jul-98 8873 9646 10508 31-Aug-98 7674 8442 9220 30-Sep-98 7740 8204 8980 31-Oct-98 8092 8543 9614 30-Nov-98 8616 8848 9922 31-Dec-98 8677 9004 10162 31-Jan-99 8124 8951 10131 28-Feb-99 8502 9070 9934 31-Mar-99 8764 9332 10307 30-Apr-99 9385 9961 10864 31-May-99 9162 9701 10580 30-Jun-99 9540 10411 10941 31-Jul-99 9782 10779 11350 31-Aug-99 9695 11041 11525 30-Sep-99 9559 11303 11498 31-Oct-99 9588 11250 11383 30-Nov-99 10596 11518 11772 31-Dec-99 12100 12030 12548 31-Jan-2000 12547 12089 12238 29-Feb-2000 14481 12910 12751 31-Mar-2000 14491 12837 12802 30-Apr-2000 13733 11589 12022 31-May-2000 13130 11310 11814 30-Jun-2000 13898 11835 12579 31-Jul-2000 14190 11347 12148 31-Aug-2000 14977 11681 12522 30-Sep-2000 14666 11137 11918 31-Oct-2000 13743 10319 11262 30-Nov-2000 12732 9893 10801 31-Dec-2000 12697 10690 11254
For the 12-month period ending December 31, 2000, Ivy International Small Companies Fund returned 4.94%, outperforming its benchmark, the Salomon Smith Barney EMI World ex-US Index, which returned -10.31% for the same period.(*) Outperformance was due to good stock selection in Europe, the Fund's focus on developed markets and a higher-than-average cash position. (*)The Fund recently changed its benchmark to one that more accurately reflects the universe of securities in which it invests. Performance for both the old and new benchmark is shown at left. The HSBC James Capel World (Excluding-US) Small Company Index and the Salomon Smith Barney EMI World ex-US Index are unmanaged indexes of stocks which assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 19 22 IVY INTERNATIONAL VALUE FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH PRIMARILY THROUGH INVESTING IN EQUITY SECURITIES TRADED IN EUROPE, THE FAR EAST AND LATIN AMERICA. [PHOTO] The following is an interview with Sheridan Reilly, senior vice president and chief investment officer of international equities at Ivy Management, Inc. Sheridan, who joined Ivy Funds on May 1st, was formerly head of the institutional equities team at Scudder Kemper Investments. He is the lead portfolio manager for Ivy International Value Fund. Q: SHERIDAN, HOW DID IVY INTERNATIONAL VALUE FUND PERFORM IN 2000? A: For the 12-month period ending December 31, 2000, Ivy International Value Fund returned -7.25%, strongly outperforming its benchmark, the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index, which returned -14.17% for the same period. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: As a fund that concentrates on value stocks, or those selling at prices lower than we think they are worth, Ivy International Value Fund had very little exposure to the stocks that were hit the hardest in 2000 - those in the technology, media and telecommunications (TMT) sectors. This helped the Fund avoid much of the damage from the technology bear market that began in March. Toward the end of the year, the Fund also benefited from a huge rush by international investors out of growth stocks into more defensive, value-oriented sectors such as food, beverage and utilities stocks, many of which did very well as 2000 came to a close. This stampede into defensive names in the fourth quarter had a large positive impact on performance. However, it's important to remember that most of the equity markets in which the Fund invests were down in 2000. "As a fund that concentrates on value stocks, or those selling at prices lower than we think they are worth, Ivy International Value Fund had very little exposure to the stocks that were hit the hardest in 2000 - those in the technology, media and telecommunications (TMT) sectors. Going forward, the Fund will continue to use a disciplined approach to target investment opportunities in high quality, large-cap companies around the world." Q: WHAT SECTORS AND STOCKS DID PARTICULARLY WELL IN 2000? WHICH DID POORLY? A: The Fund benefited by an overweighting in the consumer non-durables sector, which brought us particularly strong performance from the United Kingdom's Unilever, Germany's Adidas-Salomon AG and France's Pernod Ricard. In the finance area, the Fund realized strong returns from its holdings in Bank of Ireland and the UK's Barclay's Bank and Royal & Sun Alliance. European chemical companies, such as Akzo Nobel and Bayer, also did well. Although the Fund's exposure to TMT was not large, the holdings we did have -- in companies such as British Telecom, Invensys, Telefonica, NEC and Telecom Corp New Zealand -- negatively affected performance. Q: HOW DID THE FUND'S COUNTRY ALLOCATIONS AFFECT PERFORMANCE? A: In the beginning of the year, we made a decision to reduce the Fund's exposure to emerging Asia in favor of more developed markets, such as Japan. While we still see this move as worthwhile, the Fund's holdings in Japanese companies such as Canon and Nomura Securities performed poorly. However, the Fund was still underweighted in Japan compared to its benchmark, and we further reduced its Japanese holdings toward the end of the year. The Fund's holdings in the United Kingdom and Germany, such as Diageo, Gallagher, UBS and the aforementioned consumer non-durable and finance stocks, did well. Q: WILL YOU MAINTAIN THE SAME STRATEGY GOING FORWARD? A: Yes. The Fund will continue to use a disciplined approach to target investment opportunities in high quality, large-cap companies around the world. The goal is to purchase undervalued stocks - not just low-priced ones - in companies that, in our opinion, will rebound and provide potentially high returns. We feel that Ivy International Value Fund is positioned to do well in the current value-oriented market environment. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 20 23 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (12.58%) N/A N/A 1.84% w/o Reimb. & 5.75% sales charge (12.83%) N/A N/A 1.70% B SHARES w/Reimb. & w/CDSC (12.50%) N/A N/A 1.95% w/Reimb. & w/o CDSC (7.94%) N/A N/A 2.73% w/o Reimb. & w/CDSC (12.66%) N/A N/A 1.81% w/o Reimb. & w/o CDSC (8.06%) N/A N/A 2.58% C SHARES w/Reimb. & w/CDSC (8.89%) N/A N/A 2.71% w/Reimb. & w/o CDSC (7.97%) N/A N/A 2.71% w/o Reimb. & w/CDSC (9.06%) N/A N/A 2.57% w/o Reimb. & w/o CDSC (8.14%) N/A N/A 2.57% ADVISOR SHARES w/Reimb. (6.90%) N/A N/A 6.37% w/o Reimb. (7.49%) N/A N/A 6.07%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A, Class B and Class C commenced operations May 13, 1997; Advisor Class commenced operations February 23, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy International Value Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $129.6 Million TOTAL NUMBER OF HOLDINGS 81 INVESTMENT STYLE Large-Cap Value NASDAQ SYMBOLS CLASS A SHARES IVIAX CLASS B SHARES IIFBX CLASS C SHARES IVIFX ADVISOR CLASS SHARES IVIVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (5/97) of a $10,000 Investment [CHART] Ivy International Value Fund--$10,868 MSCI EAFE Index--$13,450
Ivy International MSCI EAFE Value Fund Index 13-May-97 9425 10000 31-May-97 9538 10651 30-Jun-97 9660 11238 31-Jul-97 9896 11420 31-Aug-97 9001 10567 30-Sep-97 9604 11159 31-Oct-97 8615 10301 30-Nov-97 8427 10196 31-Dec-97 8455 10285 31-Jan-98 8540 10756 28-Feb-98 9256 11446 31-Mar-98 9783 11798 30-Apr-98 9868 11892 31-May-98 9783 11834 30-Jun-98 9472 11923 31-Jul-98 9434 12044 31-Aug-98 7806 10552 30-Sep-98 7740 10229 31-Oct-98 8427 11295 30-Nov-98 9001 11874 31-Dec-98 9016 12342 31-Jan-99 8940 12305 28-Feb-99 8854 12012 31-Mar-99 9225 12514 30-Apr-99 10062 13021 31-May-99 9700 12350 30-Jun-99 10043 12832 31-Jul-99 10224 13213 31-Aug-99 10290 13261 30-Sep-99 10138 13395 31-Oct-99 10185 13896 30-Nov-99 10490 14379 31-Dec-99 11521 15670 31-Jan-2000 10599 14674 29-Feb-2000 10676 15069 31-Mar-2000 11127 15653 30-Apr-2000 10695 14830 31-May-2000 10551 14467 30-Jun-2000 11050 15033 31-Jul-2000 10791 14403 31-Aug-2000 10877 14528 30-Sep-2000 10301 13821 31-Oct-2000 10157 13494 30-Nov-2000 10022 12988 31-Dec-2000 10686 13450
For the 12-month period ending December 31, 2000, Ivy International Value Fund returned -7.25%, outperforming its benchmark, the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index, which returned - -14.17% for the same period. Outperformance was primarily due to the Fund's low exposure to the poorly performing technology, media and telecommunications (TMT) sectors. The Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index is an unmanaged index of stocks which assumes reinvestment of dividends and, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 21 24 IVY PACIFIC OPPORTUNITIES FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH BY INVESTING IN SECURITIES TRADED IN PACIFIC REGION MARKETS. EXAMPLES OF PACIFIC REGION COUNTRIES INCLUDE AUSTRALIA, CHINA, HONG KONG, INDIA, KOREA, SINGAPORE, SRI LANKA AND TAIWAN. [PHOTO] Ivy Pacific Opportunities Fund is managed by Ivy's international equities team. The following is an interview with team member and Asian equity specialist Sean Goldrick. Q: SEAN, HOW DID IVY PACIFIC OPPORTUNITIES FUND PERFORM IN 2000? A: For the 12-month period ending December 31, 2000, Ivy Pacific Opportunities Fund returned -18.25%. This compares very favorably with the performance of its benchmark, the Morgan Stanley Capital International Asia Pacific Ex-Japan Index, which returned -28.39% for the same period. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: During the first half of the year, the Fund benefited from a heavy weighting in smaller China listings and an overweight position in Hong Kong. In the second half of the year, the Fund again benefited from its continued strong overweight position in Hong Kong, particularly in banks and property stocks. Within the Hong Kong portion of the portfolio, we maintained a strong bias toward these interest rate-sensitive stocks that we felt would benefit from impending reductions in US interest rates. We also eliminated most of the Fund's holdings in China and the minor markets in the second half of the year, a move that contributed to the Fund's outperformance from the late third quarter on. In addition, we maintained a very underweight position in Korea, a strategy that benefited the Fund as that market's industrial names fell in response to declining US demand, a deterioration in corporate liquidity and waning domestic consumer spending. The two key factors that detracted from performance were our moves into technology shares in the second half of the year and our lack of exposure to banks in Korea and Taiwan. Our investments in Taiwanese technology shares proved premature, although the sector began to rally strongly late in December. Our negative views of Asian banks outside of Hong Kong and Singapore caused us to underweight financial stocks in those markets. Although those sectors declined sharply, the even more dramatic fall in technology shares resulted in financials' slight out-performance versus country indices. "We moved the Fund away from the smaller, troubled economies of Southeast Asia and more toward established markets such as Hong Kong and Taiwan. We also refocused the Fund on stocks from larger companies with strong balance sheets and competitive positions in global industries, particularly those with quality management, a high degree of liquidity and a commitment to enhancing shareholder value." Q: OVER THE COURSE OF THE YEAR, THE FUND WAS RENAMED AND MERGED WITH IVY ASIA PACIFIC FUND. WHAT WAS THE GOAL? A: Our overall strategy was to construct one unified Asian portfolio by concentrating on bottom-up stock selection in markets that we felt would benefit from key economic themes. First, we moved away from the smaller, troubled economies of Southeast Asia and more toward established markets such as Hong Kong and Taiwan. Second, we refocused the Fund on stocks from larger companies with strong balance sheets and competitive positions in global industries, particularly those with quality management, a high degree of liquidity and a commitment to enhancing shareholder value. As a result, we eliminated a lot of the smaller, illiquid stocks in China and Southeast Asia from the portfolio. The Fund now has approximately 30 stocks, with significant holdings in the Hong Kong market. Q:WHAT IS YOUR STRATEGY FOR 2001? A: We intend to adhere to our discipline of investing in what we believe are high quality large-cap stocks with managements strongly committed to maximizing shareholder value. On a more specific level, we are positive on the prospects for top quality Asian technology stocks. Having declined sharply over the past 10 months from their peaks, we believe that they are poised to rise briskly over the coming two years. We believe that the Fund's key technology holdings possess excellent potential to outperform. We also remain convinced that the property and banking sectors in Hong Kong and Singapore may benefit if the downtrend in American interest rates continues. In our view, Ivy Pacific Opportunities Fund is well positioned to benefit from these trends in 2001. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 22 25 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES W/REIMB. & 5.75% sales charge (22.95%) (3.32%) N/A (4.00%) w/o Reimb. & 5.75% sales charge (23.69%) (3.86%) N/A (4.53%) B SHARES W/REIMB. & w/ CDSC (22.86%) (3.29%) N/A (3.93%) w/Reimb. & w/o CDSC (18.80%) (2.89%) N/A (3.93%) W/O REIMB. & w/CDSC (23.52%) (3.80%) N/A (4.42%) w/o Reimb. & w/o CDSC (19.94%) (3.41%) N/A (4.42%) C SHARES W/REIMB. & w/ CDSC (19.60%) N/A N/A (4.89%) w/Reimb. & w/o CDSC (18.79%) N/A N/A (4.89%) W/O REIMB. & w/CDSC (19.99%) N/A N/A (5.37%) w/o Reimb. & w/o CDSC (19.18%) N/A N/A (5.37%) ADVISOR SHARES W/REIMB. (18.77%) N/A N/A (1.55%) w/o Reimb. (19.16%) N/A N/A (1.95%)
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A and Class B commenced operations October 22, 1993; Class C commenced operations April 30, 1996; Advisor Class commenced operations February 10, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy Pacific Opportunities Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $17.1 Million TOTAL NUMBER OF HOLDINGS 29 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IPOAX CLASS B SHARES IPOBX CLASS C SHARES IPOCX ADVISOR CLASS SHARES IPOVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (10/93) of a $10,000 Investment [CHART] Ivy Pacific Opportunities Fund -- $7,455 Hang Seng Index -- $16,181 MSCI Asia Pacific Free (Excluding Japan) Index -- $8,143
Ivy Pacific MSCI Asia Pacific Opportunities Hang Seng Free (Excluding Japan) Fund Index Index 25-Oct-93 9425 10000 10000 31-Oct-93 9652 10000 10000 30-Nov-93 9685 9781 9788 31-Dec-93 10900 12743 11878 31-Jan-94 10426 12313 11493 28-Feb-94 9837 11159 10977 31-Mar-94 9011 9679 9872 30-Apr-94 9111 9611 10255 31-May-94 9392 10241 10669 30-Jun-94 8905 9388 10269 31-Jul-94 9309 10165 10799 31-Aug-94 9647 10643 11597 30-Sep-94 9624 10206 11303 31-Oct-94 9431 10340 11519 30-Nov-94 8620 9075 10622 31-Dec-94 8188 8780 10419 31-Jan-95 7289 7871 9471 28-Feb-95 7760 8926 10150 31-Mar-95 7927 9205 10137 30-Apr-95 7732 8962 10191 31-May-95 8452 10084 11021 30-Jun-95 8352 9869 10858 31-Jul-95 8825 10133 11218 31-Aug-95 8506 9840 10843 30-Sep-95 8722 10340 10937 31-Oct-95 8545 10486 10753 30-Nov-95 8244 10519 10600 31-Dec-95 8318 10798 11053 31-Jan-96 9247 12177 11792 29-Feb-96 9189 11926 11969 31-Mar-96 9044 11745 12035 30-Apr-96 9160 11753 12486 31-May-96 9209 12075 12342 30-Jun-96 9121 11813 12136 31-Jul-96 8782 11450 11341 31-Aug-96 8966 11962 11758 30-Sep-96 9063 12758 11924 31-Oct-96 9131 13375 11840 30-Nov-96 9731 14357 12378 31-Dec-96 10023 14419 12339 31-Jan-97 9935 14280 12457 28-Feb-97 10081 14362 12588 31-Mar-97 9682 13436 12006 30-Apr-97 10198 13831 11926 31-May-97 10967 15819 12413 30-Jun-97 11356 16290 12866 31-Jul-97 11736 17543 12930 31-Aug-97 11463 15152 10924 30-Sep-97 11210 16132 11004 31-Oct-97 8495 11388 8795 30-Nov-97 7970 11284 8296 31-Dec-97 7824 11494 8119 31-Jan-98 6529 9918 7750 28-Feb-98 7989 12306 8924 31-Mar-98 7795 12347 8829 30-Apr-98 7191 11130 8238 31-May-98 6267 9577 7209 30-Jun-98 5498 9157 6634 31-Jul-98 5060 8507 6527 31-Aug-98 4350 7798 5596 30-Sep-98 4953 8450 6071 31-Oct-98 6053 10885 7133 30-Nov-98 6286 11150 7668 31-Dec-98 6215 10771 7760 31-Jan-99 5732 10191 7832 28-Feb-99 5653 10567 7672 31-Mar-99 6176 11729 8377 30-Apr-99 7320 14292 9700 31-May-99 7162 13021 9294 30-Jun-99 8692 14505 10464 31-Jul-99 8366 14135 10302 31-Aug-99 8484 14452 10335 30-Sep-99 7991 13649 9796 31-Oct-99 8090 14210 9974 30-Nov-99 8800 16483 10812 31-Dec-99 9119 18182 11627 31-Jan-00 9009 16649 11467 29-Feb-00 8631 18404 11219 31-Mar-00 9488 18658 11404 30-Apr-00 8969 16635 10538 31-May-00 8551 15772 9750 30-Jun-00 9189 17318 10454 31-Jul-00 9448 18052 9969 31-Aug-00 9169 18327 9928 30-Sep-00 8312 16774 8948 31-Oct-00 7485 15967 8276 30-Nov-00 7116 14990 8083 31-Dec-00 7455 16181 8143
For the 12-month period ending December 31, 2000, Ivy Pacific Opportunities Fund returned -18.25%, outperforming its benchmark, the Morgan Stanley Capital International Asia Pacific Ex-Japan Index, which returned -28.39% for the same period.(*) Outperformance was primarily due to an overweight position in Hong Kong, an underweight position in Korea and the elimination of holdings in minor markets. (*)The Fund recently changed its benchmark to one that more accurately reflects the universe of securities in which it invests. Performance for both the old and new benchmark is shown at left. The Hang Seng Index and the Morgan Stanley Capital International (MSCI) Asia Pacific Free (Excluding-Japan) Index are unmanaged indexes of stocks which assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 23 26 IVY GROWTH FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH BY INVESTING IN US COMPANIES OF ANY SIZE. [PHOTO] Ivy Growth Fund uses a dual-manager approach. The core portion (50%) is managed by Paul Baran and is invested primarily in large-cap US stocks. The US emerging growth portion (50%) is managed by James W. Broadfoot III and is invested primarily in small- and medium-sized US companies in the early stages of their lifecycles. For the 12-month period ending December 31, 2000, Ivy Growth Fund returned - -22.31%, underperforming its benchmarks, the S&P 500 Index and the Russell 2500 Growth Index, which returned -9.10% and -16.09%, respectively. CORE PORTION COMMENTARY Q: PAUL, WHAT FACTORS AFFECTED THE PERFORMANCE OF THE CORE PORTION? A: As part of a growth fund, the core portion is overweight in technology relative to the S&P 500 and underweight in value sectors such as basic materials. Technology was both the largest and worst-performing sector of the S&P last year, and therefore had the greatest negative impact on performance. Most of the underperformance took place in September, October and November, as the NASDAQ collapsed about 40 percent and some of our technology holdings took big hits. In September, Intel and Apple Computer preannounced weak revenues and earnings, which caused a significant decline in both stocks. In October, Nortel lowered its growth outlook, which affected communication chip and optical companies and exacerbated the technology decline. On the positive side, the core portion benefited from its holdings in the healthcare sector, particularly those in the pharmaceuticals area such as Merck and Bristol-Myers. However, it was difficult for any sector to compensate for the poor showing of such a large sector as technology. As the year progressed, we added some notable non-technology growth names to the portfolio such as Tyco and Costco. "Our focus is on US industry leaders that, in our judgement, have a proven and consistent record of earnings profitability but whose prices do not adequately reflect their underlying profitability." - Paul Baran "During the first part of the year, we may be a bit cautious in technology and look toward areas we expect to be more stable such as healthcare, business services and financial stocks." - Jim Broadfoot Q: HOW ARE YOU POSITIONING THE CORE PORTION GOING FORWARD? A: In what we see as a "winner take all" environment, we're adhering to our long-term strategy of picking the best-of-breed companies - those with dominant market positions and quality management. The focus is on US industry leaders that, in our judgement, have a proven and consistent record of earnings profitability but whose prices do not adequately reflect their underlying profitability. US EMERGING GROWTH PORTION COMMENTARY Q: JIM, WHAT FACTORS AFFECTED PERFORMANCE? A: Technology stocks played the biggest role in 2000. In particular, our holdings in telecom service providers, telecom equipment and communications components had the largest negative impact. Although these sectors did reasonably well in the first part of the year, they were hit hard in the last quarter. Internet services and software was another group that hurt performance. The portfolio also had limited exposure to biotechnology, one of the best market sectors in 2000. On the positive side, we gradually built a large position in energy stocks, one of the best performing sectors last year. Quite often, this sector moved counter to technology stocks and helped limit losses. Our largest energy holdings included leading companies in the exploration, natural gas and oil field services areas. We believe these companies are well positioned to benefit if there is a long-term recovery in energy prices and subsequent higher drilling activity. We also increased the Fund's exposure to growth companies that have had dependable, recurring revenues. These included holdings such as Gemstar-TV Guide, which provides the dominant interactive program guide for North American TV viewers; the University of Phoenix Online, the leading Internet-based school of higher learning; and Concord EFS, a leading processor of electronic funds transactions. Q: HOW WILL THE US EMERGING GROWTH PORTFOLIO BE POSITIONED IN 2001? A: During the first part of the year, we may be a bit cautious in technology and look toward areas we expect to be more stable such as healthcare, business services and financial stocks. Then, if market conditions improve, as we believe they will, we'll most likely become more aggressive on technology. The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 24 27 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (26.77%) 7.59% 10.65% 10.35% w/o Reimb. & 5.75% sales charge (26.77%) 7.59% 10.62% 10.34% B SHARES w/Reimb. & w/ CDSC (26.92%) 7.54% N/A 8.59% w/Reimb. & w/o CDSC (23.07%) 7.84% N/A 8.59% w/o Reimb. & w/CDSC (26.92%) 7.54% N/A 8.55% w/o Reimb. & w/o CDSC (23.07%) 7.84% N/A 8.55% C SHARES w/Reimb. & w/ CDSC (23.85%) N/A N/A 6.04% w/Reimb. & w/o CDSC (23.08%) N/A N/A 6.04% w/o Reimb. & w/CDSC (23.85%) N/A N/A 6.04% w/o Reimb. & w/o CDSC (23.08%) N/A N/A 6.04% ADVISOR SHARES w/Reimb. (22.37%) N/A N/A 0.80% w/o Reimb. (22.37%) N/A N/A 0.80%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A commenced operations January 12, 1960; Class B commenced operations October 22, 1993; Class C commenced operations April 30, 1996; Advisor Class commenced operations April 30, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy Growth Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $270.4 Million TOTAL NUMBER OF HOLDINGS 138 INVESTMENT STYLE Multi-Cap Growth NASDAQ SYMBOLS CLASS A SHARES IVYFX CLASS B SHARES IVYBX CLASS C SHARES IVYCX ADVISOR CLASS SHARES IVYVX PERFORMANCE OVERVIEW 10-Year Performance Comparison of the Fund of a $10,000 Investment Ivy Growth Fund -- $27,521 S&P 500 Index -- $49,978 Russell 2500 Growth Index -- $43,063 [CHART]
Ivy Growth S&P 500 Russell 2500 Fund Index Growth Index 12/90 10000 10000 10000 9850 10435 10930 10465 11182 12112 10772 11453 12887 10733 11480 12597 11243 11975 13239 10792 11426 12513 11296 11959 13217 11525 12242 13789 11361 12037 13947 11557 12199 14420 11008 11708 13812 12/91 12325 13047 15502 12135 12803 16158 12339 12969 16317 12062 12717 15386 12295 13090 14584 12171 13155 14610 11844 12959 13815 12274 13488 14352 11895 13212 13929 11946 13367 14142 12150 13414 14743 12798 13870 15930 12/92 12967 14041 16399 13027 14158 16514 12871 14351 15684 13313 14654 16193 12906 14300 15588 13321 14682 16549 13304 14725 16588 13287 14666 16602 14013 15222 17477 13849 15106 17926 14257 15418 18278 14042 15271 17616 12/93 14560 15456 18390 15178 15981 18920 14891 15547 18952 14046 14870 17850 14191 15060 17829 14280 15307 17472 13606 14932 16696 14197 15423 17058 15031 16055 18312 14646 15662 18304 14774 16014 18618 13972 15431 17794 12/94 14128 15660 18155 14018 16066 17977 14578 16692 18955 14925 17185 19690 15253 17691 19913 15754 18398 20218 16195 18825 21445 17045 19449 23136 17131 19498 23329 17656 20321 23828 17117 20248 22986 17745 21137 23927 12/95 17990 21544 24244 18549 22278 24319 18957 22484 25390 19215 22701 25941 19902 23035 27717 20052 23629 28706 19730 23720 27266 18291 22672 24557 19118 23150 26248 20149 24453 27641 20042 25127 26781 21062 27027 27762 12/96 21088 26491 27898 21919 28146 28733 21195 28367 27474 20209 27201 25666 20316 28825 25781 22358 30580 28871 23059 31950 29837 24531 34492 31731 23640 32560 32505 24911 34343 34801 23415 33196 32630 23344 34733 32129 12/97 23553 35329 32015 23421 35720 31597 25352 38297 34309 26583 40258 35583 26940 40663 35907 26186 39964 33601 26636 41587 33847 25710 41144 31327 20946 35196 24209 22097 37450 26331 23407 40497 28109 25472 42951 30109 12/98 26863 45426 33007 27620 47326 33962 25917 45855 31207 27039 47689 32660 28025 49537 35265 27363 48366 35630 29106 51051 38148 28566 49457 37371 28836 49212 36563 28849 47863 36825 30606 50892 38618 32295 51926 43177 12/99 35423 54984 51320 34448 52222 51034 38398 51233 64125 39949 56245 59094 35839 54553 53336 33312 53434 48587 37262 54751 55011 35311 53895 50503 38798 57243 57086 35311 54221 53394 32497 53992 50092 26276 49735 40549 12/00 27521 49978 43063
For the 12-month period ending December 31, 2000, Ivy Growth Fund returned - -22.31%, underperforming its benchmarks, the S&P 500 Index and the Russell 2500 Growth Index, which returned -9.10% and -16.09%, respectively. Underperformance was due primarily to the Fund's investment in technology stocks, particularly those in the communications area. The S&P 500 Index and the Russell 2500 Growth Index are unmanaged indexes of stocks which assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 25 28 IVY US BLUE CHIP FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH PRIMARILY BY INVESTING IN COMMON STOCKS OF ESTABLISHED DOMESTIC COMPANIES THAT EITHER HOLD A LEADING INDUSTRY POSITION OR THAT ARE EXPECTED TO DO SO IN THE FUTURE. An interview with Paul Baran, portfolio manager of the Ivy US Blue Chip Fund. Mr. Baran is a senior vice president and a member of the domestic equities team. Q: PAUL, HOW DID IVY US BLUE CHIP FUND PERFORM IN 2000? A: For the 12-month period ending December 31, 2000, Ivy US Blue Chip Fund returned -12.69%, underperforming its benchmark, the S&P 500 Index, which returned -9.10% for the same period. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: The Fund is sector neutral, which means that our weightings are in line with the market's weightings, as measured by the S&P 500. Technology is now the largest sector of the S&P, and last summer it represented over one-third of the index. Unfortunately, it was also the worst-performing sector last year, and therefore had the greatest negative impact on Fund performance. Most of the underperformance took place in September, October and November, as the NASDAQ collapsed about 40% and some of our individual technology names took big hits. In September, Intel and Apple Computer pre-announced weak revenues and earnings. These reports caused a significant decline in both stocks and led to pronounced weakness in other semiconductor and personal computer-related companies. In October, Nortel lowered its growth outlook, which affected communications chip and optical companies and further exacerbated the decline in technology stocks. On the positive side, the Fund benefited from its holdings in the healthcare sector, particularly in the pharmaceuticals area, with positions in companies such as Merck and Bristol-Myers. The consumer staples sector -- food stocks, household product stocks and more -- was another positive for Fund performance. Holdings in HJ Heinz, William Wrigley, Colgate-Palmolive and Kimberly-Clark helped the Fund. However, it was difficult for any sector to compensate for the poor showing of such a large sector as technology. As the year progressed, we added some notable non-technology names to the portfolio such as Gillette, International Paper, Tyco and Carnival Corporation. "Right now, three significant forces are affecting the market: lower interest rates, low inflation and earnings uncertainty. The first two are positive, while the third may improve as we move into the second half of the year. But looking at the larger picture, it's important to remember that US blue chip stocks have historically delivered strong returns over the long term." Q: HOW ARE YOU POSITIONING THE FUND GOING FORWARD? A: In what we see as a "winner take all" environment, we're adhering to our long-term strategy of picking the best-of-breed companies without making any sector bets. Rather than trying to time the market, we employ a disciplined investment philosophy based on stock selection. The focus is on companies that, in our judgement, have a proven and consistent record of earnings profitability but whose prices do not adequately reflect their underlying profitability. However, we do take market conditions into account when selecting individual stocks within sectors. For example, in the Financials sector, the Fund is aiming to limit its exposure to companies that are dependent solely on large lending portfolios. With the US economy slowing, it is likely that there will be an increase in default rates. Instead, with interest rates declining, the Fund's strategy is to hold financial stocks in strong securities and/or insurance businesses that are likely to benefit from a lower interest rate environment. Q: HOW DOES THE BLUE CHIP MARKET LOOK FOR 2001? A: Right now, three significant forces are affecting the market: lower interest rates, low inflation and earnings uncertainty. The first two are positive, while the third may improve as we move into the second half of the year. But looking at the larger picture, it's important to remember that US blue chip stocks have historically delivered strong returns over the long term. It's been a difficult year, but we believe that remaining fully invested and ignoring fluctuations is the key to realizing good long-term equity returns in the domestic blue chip market. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 26 29 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (17.71%) N/A N/A .89% w/o Reimb. & 5.75% sales charge (17.78%) N/A N/A (.24%) B SHARES w/Reimb. & w/ CDSC (17.71%) N/A N/A 0.21% w/Reimb. & w/o CDSC (13.37%) N/A N/A 1.59% w/o Reimb. & w/CDSC (17.85%) N/A N/A (.96%) w/o Reimb. & w/o CDSC (13.52%) N/A N/A .41% C SHARES w/Reimb. & w/ CDSC (14.23%) N/A N/A 1.63% w/Reimb. & w/o CDSC (13.36%) N/A N/A 1.63% w/o Reimb. & w/CDSC (14.38%) N/A N/A .43% w/o Reimb. & w/o CDSC (13.51%) N/A N/A .43% ADVISOR SHARES w/Reimb. (12.42%) N/A N/A 4.09% w/o Reimb. (12.64%) N/A N/A 2.69%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A and Advisor Class commenced operations November 2, 1998; Class B and Class C commenced operations November 6, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy US Blue Chip Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $85.9 Million TOTAL NUMBER OF HOLDINGS 71 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IBCAX CLASS B SHARES IBCBX CLASS C SHARES IBCCX ADVISOR CLASS SHARES IBCVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (11/98) of a $10,000 Investment [CHART] Ivy US Blue Chip Fund -- $10,194 S&P 500 Index -- $12,341
Ivy US Blue Chip Fund S&P 500 Index 02-Nov-98 9425 10000 30-Nov-98 9905.67 10606.1 31-Dec-98 10122.5 11217.3 31-Jan-99 10376.9 11686.3 28-Feb-99 10094.2 11323.1 31-Mar-99 10358.1 11776.1 30-Apr-99 10763.3 12232.3 31-May-99 10518.3 11943.3 30-Jun-99 11140.3 12606.2 31-Jul-99 10763.3 12212.5 31-Aug-99 10735.1 12152.1 30-Sep-99 10367.5 11819 31-Oct-99 11130.9 12566.9 30-Nov-99 11225.2 12822.4 31-Dec-99 11676 13577.5 31-Jan-2000 11069.4 12895.4 29-Feb-2000 11259 12651.3 30-Mar-2000 12301.4 13888.9 30-Apr-2000 11761.2 13471.1 31-May-2000 11277.9 13194.7 30-Jun-2000 11893.9 13520 31-Jul-2000 11638 13308.6 30-Aug-2000 12310.9 14135.3 30-Sep-2000 11296.9 13389 31-Oct-2000 11211.6 13332.4 30-Nov-2000 10074.3 12281.3 31-Dec-2000 10194 12341.4
For the 12-month period ending December 31,2000, Ivy US Blue Chip Fund returned - -12.69%, underperforming its benchmark, the S&P 500 Index, which returned -9.10% for the same period. Underperformance was primarily due to the Fund's holdings in the technology sector. The S&P 500 Index is an unmanaged index of stocks which assumes reinvestment of dividends and, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 27 30 IVY US EMERGING GROWTH FUND The Fund's goal: to provide long-term capital growth through investment in the common stocks of small- and medium-sized companies that are in the early stages of their lifecycles and that have the potential for rapid growth. [PHOTO] The following is an interview with James W. Broadfoot III, portfolio manager of the Ivy US Emerging Growth Fund. He is the president of Ivy Management, Inc. and author of the recently republished Investing in Emerging Growth Stocks. Q: JIM, HOW DID IVY US EMERGING GROWTH FUND PERFORM IN 2000? A: For the 12-month period ending December 31, 2000, Ivy US Emerging Growth Fund returned -25.81%, underperforming its benchmark, the Russell 2500 Growth Index, which returned -16.09% for the same period. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: Over the course of the year, the Fund built a large position (36% at year-end) in energy stocks, one of the best performing segments of the Russell 2500 Growth Index. Quite often, this sector moved counter to technology stocks and helped us limit losses. Our largest energy holdings included leading companies in the exploration, natural gas and oil field services areas. We believe these companies are well positioned to benefit if there is a long-term recovery in energy prices and subsequent higher drilling activity. The Fund's overweight holdings in technology, particularly in the areas of telecom service providers, telecom equipment and communications components, had the largest negative impact on performance. Although these sectors did reasonably well in the first part of the year, they were all hit hard in the last quarter. For example, communications was one of the worst performing sectors in the Russell 2500 Growth Index, the Fund's benchmark. Internet services and software was another hard-hit group that hurt Fund performance. However, we believe several of its leaders are likely to survive long beyond the "Internet Winter." The Fund also had limited exposure to biotechnology, one of the best market sectors in 2000. We increased our drug and biotech holdings as the year progressed, and we intend to maintain selective holdings in this area. "We believe there will be a more favorable environment for small- and mid-cap growth stocks in 2001. The Federal Reserve Board has begun lowering interest rates, and historically, smaller stocks tend to outperform larger stocks in this type of environment. However, the earnings outlook is still cloudy, so we'll most likely continue to have a volatile market until it clears." Q: WHY DID THE COMMUNICATIONS SECTOR UNDERPERFORM? A: Prior to 2000, strong growth in communications was due in part to the emergence of fast growing new companies. However, the stocks of many emerging carriers were deflated as a falling stock market made it harder to raise capital. When they cut spending, it made a dent in growth throughout the communications supply chain. But we continue to believe in the long-term growth of the communications infrastructure, and the Fund still holds stocks of major companies in this area. Q: DID YOU TAKE ANY "DEFENSIVE" MEASURES AS A RESULT OF MARKET VOLATILITY? A: Defensive, slower-growth sectors such as utilities, transportation and industrial services generally performed best in 2000. By definition, the Fund only invests in high-growth sectors, so our defensive strategy was to increase the Fund's exposure to growth companies that have had dependable, recurring revenues. These included holdings such as Gemstar-TV Guide, which provides the dominant interactive program guide for North American TV viewers; the University of Phoenix Online, the leading Internet-based school of higher learning; and Concord EFS, a leading processor of electronic funds transactions. Q: HOW WILL THE FUND BE POSITIONED IN 2001? A: During the first part of the year, we may be a bit cautious in technology and look toward areas we expect to be more stable such as healthcare, business services and financial stocks. Then, if market conditions improve, as we believe they will, we'll most likely get more aggressive on technology. We do believe there will be a more favorable environment for small- and mid-cap growth stocks in 2001. After an economic slowdown, nimbler, smaller companies can often take advantage of new opportunities more quickly than large companies can. In addition, the Federal Reserve Board has begun lowering interest rates, and historically, smaller stocks tend to outperform larger stocks in this type of environment. However, the earnings outlook is still cloudy, so we'll most likely continue to have a volatile market until it clears. - ----------------- The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 28 31
AVERAGE ANNUAL TOTAL RETURNS SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (30.07%) 10.62% N/A 17.86% w/o Reimb. & 5.75% sales charge (30.07%) 10.62% N/A 17.84% B SHARES w/Reimb. & w/ CDSC (30.06%) 10.85% N/A 13.25% w/Reimb. & w/o CDSC (26.38%) 11.12% N/A 13.25% w/o Reimb. & w/CDSC (30.06%) 10.85% N/A 13.21% w/o Reimb. & w/o CDSC (26.38%) 11.12% N/A 13.21% C SHARES w/Reimb. & w/ CDSC (27.11%) N/A N/A 7.09% w/Reimb. & w/o CDSC (26.37%) N/A N/A 7.09% w/o Reimb. & w/CDSC (27.11%) N/A N/A 7.09% w/o Reimb. & w/o CDSC (26.37%) N/A N/A 7.09% ADVISOR SHARES w/Reimb. (25.70%) N/A N/A 11.79% w/o Reimb. (25.70%) N/A N/A 11.79%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A commenced operations March 3, 1998 (performance here is calculated based on the date the Fund first became available for sale to the public, April 30, 1993); Class B commenced operations October 22, 1993; Class C commenced operations April 30, 1996; Advisor Class commenced operations February 18, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy US Emerging Growth Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $145.9 Million TOTAL NUMBER OF HOLDINGS 101 INVESTMENT STYLE Mid-Cap Growth NASDAQ SYMBOLS CLASS A SHARES IVEGX CLASS B SHARES IVEBX CLASS C SHARES IVGEX ADVISOR CLASS SHARES IVEVX Performance Comparison of the Fund Since Inception (4/93) of a $10,000 Investment [CHART] Ivy US Emerging Growth Fund -- $35,330 Russell 2500 Growth Index -- $27,625 Russell 2000 Growth Index -- $21,525
Ivy US Emerging Russell 2000 Russell 2500 Growth Fund Growth Index Growth Index 30-Apr-93 9425 10000 10000 31-May-93 10304 10600 10616 30-Jun-93 11176 10625 10642 31-Jul-93 11492 10732 10650 31-Aug-93 12785 11246 11211 30-Sep-93 13574 11617 11499 31-Oct-93 13786 11953 11726 30-Nov-93 13377 11469 11300 31-Dec-93 13698 11923 11797 31-Jan-94 14181 12240 12137 28-Feb-94 14137 12187 12158 31-Mar-94 13465 11437 11451 30-Apr-94 13113 11454 11438 31-May-94 12723 11198 11208 30-Jun-94 11811 10716 10710 31-Jul-94 11949 10869 10943 31-Aug-94 13285 11667 11747 30-Sep-94 13792 11717 11742 31-Oct-94 14123 11843 11944 30-Nov-94 13601 11364 11415 31-Dec-94 14148 11633 11646 31-Jan-95 14165 11397 11532 28-Feb-95 14682 11922 12159 31-Mar-95 15385 12271 12631 30-Apr-95 15217 12456 12774 31-May-95 15520 12619 12970 30-Jun-95 16719 13488 13757 31-Jul-95 18144 14540 14842 31-Aug-95 18782 14719 14966 30-Sep-95 19877 15022 15286 31-Oct-95 19278 14283 14746 30-Nov-95 19987 14914 15349 31-Dec-95 20101 15244 15553 31-Jan-96 20034 15118 15601 29-Feb-96 20917 15807 16287 31-Mar-96 21649 16120 16641 30-Apr-96 24772 17357 17780 31-May-96 25571 18247 18415 30-Jun-96 24031 17062 17491 31-Jul-96 20975 14979 15753 31-Aug-96 22757 16088 16838 30-Sep-96 24897 16916 17732 31-Oct-96 23490 16187 17180 30-Nov-96 23290 16637 17810 31-Dec-96 23824 16961 17897 31-Jan-97 24784 17385 18432 28-Feb-97 22387 16335 17624 31-Mar-97 20027 15182 16465 30-Apr-97 19237 15006 16539 31-May-97 22585 17262 18521 30-Jun-97 23267 17847 19141 31-Jul-97 24766 18762 20356 31-Aug-97 24883 19325 20852 30-Sep-97 26992 20867 22325 31-Oct-97 25170 19614 20932 30-Nov-97 24658 19146 20611 31-Dec-97 24838 19157 20538 31-Jan-98 24461 18901 20269 28-Feb-98 26481 20570 22009 31-Mar-98 27621 21433 22827 30-Apr-98 28141 21564 23034 31-May-98 26095 19997 21555 30-Jun-98 27208 20202 21713 31-Jul-98 25772 18515 20096 31-Aug-98 19928 14241 15530 30-Sep-98 22360 15685 16891 31-Oct-98 23474 16503 18032 30-Nov-98 26517 17783 19315 31-Dec-98 29308 19392 21174 31-Jan-99 30996 20264 21787 28-Feb-99 26687 18411 20019 31-Mar-99 27657 19067 20951 30-Apr-99 27800 20750 22623 30-May-99 27432 20783 22857 30-Jun-99 30260 21878 24472 31-Jul-99 29227 21201 23973 31-Aug-99 29649 20408 23455 30-Sep-99 31472 20802 23623 31-Oct-99 34371 21335 24773 30-Nov-99 39936 23591 27698 31-Dec-99 47618 27749 32922 31-Jan-00 47175 27490 32739 29-Feb-00 58010 33887 41136 31-Mar-00 55593 30325 37909 30-Apr-00 46309 27263 34215 31-May-00 42261 24876 31169 30-Jun-00 49521 28089 35290 31-Jul-00 45725 25682 32398 31-Aug-00 50629 28383 36621 30-Sep-00 48142 26973 34252 31-Oct-00 41536 24784 32134 30-Nov-00 30752 20284 26012 31-Dec-00 35330 21525 27625
For the 12-month period ending December 31, 2000, Ivy US Emerging Growth Fund returned -25.81%, underperforming its benchmark, the Russell 2500 Growth Index, which returned -16.0% for the same period. (*)Underperformance was primarily due to the Fund's overweighting in the technology sector, particularly in the area of communications. (*)The Fund recently changed its benchmark to one that more accurately reflects the universe of securities in which it invests. Performance for both the old and new benchmark is shown at left. The Russell 2000 Growth Index and the Russell 2500 Growth Index are unmanaged indexes of stocks which assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 29 32 IVY BOND FUND The Fund's goal: to provide a high level of current income by investing at least 65% of the Fund's total assets in bonds rated in the four highest ratings categories used by Moody's Investor Services and Standard and Poor's Corporation. [PHOTO] An interview with Richard Gluck, senior vice president and head of Ivy Funds' fixed-income team. Q: RICHARD, HOW DID IVY BOND FUND PERFORM IN 2000? A: For the 12-month period ending December 31, 2000, Ivy Bond Fund returned 1.89%, underperforming its benchmark, the Lehman Brothers US Credit Index, which returned 6.10% for the same period. Q: WHAT FACTORS AFFECTED PERFORMANCE IN 2000? A: As a defensive measure in the fourth quarter, we bought government agency and treasury bonds, which did very well.(Long treasuries generally perform well in a declining interest rate environment.) We also held bonds from successful companies such as R&B Falcon and Allied Waste that contributed positively to Fund performance. In addition, some of our international holdings -- the Fund had 8.5% of its portfolio in international bonds at year-end 2000 -- also performed well. Cemex, a Mexican cement company, gave us a return of 15.5%, and Grupo Industrial Durango, a packaging company in Mexico, gave us a 12% return over the year. Bonds from foreign companies can sometimes offer higher return potential with lower credit risk than many US bonds. However, the Fund's focus on corporate credit to the exclusion of other credit products had a negative impact on performance. For much of 2000, credit products such as the bonds of sovereign issuers and mortgages outperformed the corporate credit sector. For example, in the third quarter, corporate issuers returned 2.6%, while sovereign bonds and mortgages returned 3.5% and 3.2%, respectively. The Fund also experienced some credit-related problems within the corporate credit sector. It tended to hold the bonds of less common issuers, which were originally selected for their higher yields relative to other, more frequent, issuers. However, these bonds are also less liquid and involve more risk, and this contributed to underperformance. "As we move forward, the Fund will have more of an emphasis on sectors and less on individual credits. That means we'll be analyzing which sectors are poised to benefit from the current economic environment and adjusting our sector allocations accordingly. Of course, we will still emphasize credit quality, but we also want to target the best-performing sectors, and this should have a positive effect on Fund performance in 2001." Q: HOW WILL THE FUND'S STRATEGY CHANGE AS WE MOVE INTO 2001? A: First, we are increasing the credit quality of the Fund, moving to higher quality bonds from within the AA and A-rated groups. These bonds are issued by larger, more liquid companies such as larger industrial companies and utilities, and they are easier and less expensive to trade. In a slowing economy such as the one we're in now, holding high quality credits is particularly important, since smaller, lower-rated bonds often suffer in this type of environment. As a result, we plan to hold bonds that are more senior in the capital structure (such as senior and senior secured notes) and to invest in more "generic credit" such as government sponsored enterprise bonds and mortgages. Second, as we move forward the Fund will have more of an emphasis on sectors and less on individual credits. That means we'll be analyzing which sectors are poised to benefit from the current economic environment and adjusting our sector allocations accordingly. Of course, we will still emphasize credit quality, but we also want to target the best-performing sectors, and this should have a positive effect on Fund performance in 2001. - ---------------- The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 30 33 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (2.95%) 1.94% 5.88% 6.85% w/o Reimb. & 5.75% sales charge (2.95%) 1.94% 5.87% 1.49% B SHARES w/Reimb. & w/ CDSC (3.97%) 1.76% N/A 3.56% w/Reimb. & w/o CDSC 1.03% 2.13% N/A 3.56% w/o Reimb. & w/CDSC (3.97%) 1.76% N/A 3.56% w/o Reimb. & w/o CDSC 1.03% 2.13% N/A 3.56% C SHARES w/Reimb. & w/ CDSC .07% N/A N/A 2.64% w/Reimb. & w/o CDSC 1.07% N/A N/A 2.64% w/o Reimb. & w/CDSC .07% N/A N/A 2.64% w/o Reimb. & w/o CDSC 1.07% N/A N/A 2.64% ADVISOR SHARES w/Reimb. 2.26% N/A N/A (1.51%) w/o Reimb. 2.26% N/A N/A (1.51%)
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A commenced operations September 6, 1985; Class B commenced operations April 1, 1994; Class C commenced operations April 30, 1996; Advisor Class commenced operations January 20, 1998. Total returns in some periods were higher due to reimbursement of certain Fund expenses. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy Bond Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. FUND STATISTICS ASSETS UNDER MANAGEMENT $75.3 Million TOTAL NUMBER OF HOLDINGS 49 INVESTMENT STYLE Long-Term Bond NASDAQ SYMBOLS CLASS A SHARES MCFIX CLASS B SHARES IVBBX CLASS C SHARES IVBCX ADVISOR CLASS SHARES IVBVX PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (9/85) of a $10,000 Investment [CHART] - -- Ivy Bond Fund -- $27,606 - -- Morningstar Corporate Bond -- General Universe -- $33,398 - -- Lehman Brothers US Credit Index -- $37,786
Morningstar Corporate Bond -- Lehman Brothers US Ivy Bond Fund General Universe Credit Index 09-Sep-85 9525 10000 10000 30-Sep-85 9545 10034 10006 31-Oct-85 9586 10225 10250 30-Nov-85 9627 10474 10515 31-Dec-85 9668 10780 10861 31-Jan-86 9709 10867 10942 28-Feb-86 9761 11350 11465 31-Mar-86 9787 11611 11744 30-Apr-86 9819 11704 11807 31-May-86 9861 11587 11677 30-Jun-86 9897 11792 11897 31-Jul-86 9935 11796 11950 31-Aug-86 10004 12070 12195 30-Sep-86 10004 11968 12160 31-Oct-86 10025 12169 12364 30-Nov-86 10046 12331 12542 31-Dec-86 10100 12414 12655 31-Jan-87 10100 12670 12931 28-Feb-87 10133 12789 13009 31-Mar-87 10198 12763 12956 30-Apr-87 10187 12389 12530 31-May-87 10208 12307 12474 30-Jun-87 10187 12446 12655 31-Jul-87 10307 12432 12621 31-Aug-87 10329 12392 12550 30-Sep-87 10131 12156 12196 31-Oct-87 10860 12375 12603 30-Nov-87 10904 12533 12738 31-Dec-87 11084 12696 12979 31-Jan-88 11524 13081 13488 29-Feb-88 11638 13273 13672 31-Mar-88 11672 13197 13555 30-Apr-88 11695 13147 13459 31-May-88 11684 13092 13386 30-Jun-88 11848 13367 13706 31-Jul-88 11705 13357 13676 31-Aug-88 11753 13386 13733 30-Sep-88 12126 13655 14030 31-Oct-88 12380 13833 14275 30-Nov-88 12234 13746 14138 31-Dec-88 12369 13809 14176 31-Jan-89 12558 13975 14386 28-Feb-89 12400 13929 14306 31-Mar-89 12555 13980 14349 30-Apr-89 12799 14182 14640 31-May-89 13212 14471 15040 30-Jun-89 13758 14846 15485 31-Jul-89 13950 15077 15785 31-Aug-89 13770 14939 15615 30-Sep-89 13827 14979 15686 31-Oct-89 14137 15207 16047 30-Nov-89 14262 15306 16158 29-Dec-89 14238 15339 16176 31-Jan-90 13765 15154 15974 28-Feb-90 13633 15169 16020 31-Mar-90 13594 15204 16034 30-Apr-90 13263 15102 15868 31-May-90 13817 15455 16380 30-Jun-90 14107 15675 16660 31-Jul-90 14235 15875 16848 31-Aug-90 13714 15678 16581 30-Sep-90 13785 15701 16657 31-Oct-90 14062 15797 16732 30-Nov-90 14533 16084 17076 31-Dec-90 14844 16309 17317 31-Jan-91 15007 16470 17537 28-Feb-91 15079 16678 17837 31-Mar-91 15107 16827 18056 30-Apr-91 15275 17049 18291 31-May-91 15288 17155 18417 28-Jun-91 15176 17156 18416 31-Jul-91 15338 17364 18681 30-Aug-91 15755 17730 19103 30-Sep-91 16144 18052 19496 31-Oct-91 16229 18240 19682 30-Nov-91 16314 18400 19875 31-Dec-91 16990 18933 20524 31-Jan-92 16763 18779 20268 29-Feb-92 16851 18876 20462 31-Mar-92 16804 18830 20374 30-Apr-92 16735 18942 20476 30-May-92 17159 19255 20934 30-Jun-92 17418 19513 21261 31-Jul-92 18030 19948 21828 31-Aug-92 18240 20117 21998 30-Sep-92 18346 20341 22265 31-Oct-92 18023 20045 21869 30-Nov-92 18021 20047 21904 31-Dec-92 18375 20335 22308 31-Jan-93 18850 20718 22828 28-Feb-93 19272 21108 23352 31-Mar-93 19456 21220 23433 30-Apr-93 19529 21373 23614 31-May-93 19714 21390 23642 30-Jun-93 20255 21792 24216 31-Jul-93 20391 21931 24391 31-Aug-93 20942 22347 24998 30-Sep-93 20998 22428 25057 31-Oct-93 21204 22546 25183 30-Nov-93 21009 22361 24874 31-Dec-93 21214 22489 25020 31-Jan-94 21738 22794 25506 28-Feb-94 21349 22404 24904 31-Mar-94 20684 21903 24139 30-Apr-94 20436 21690 23907 31-May-94 20399 21650 23819 30-Jun-94 20256 21603 23760 31-Jul-94 20565 21917 24360 31-Aug-94 20724 21978 24388 30-Sep-94 20467 21729 23933 31-Oct-94 20430 21691 23878 30-Nov-94 20369 21627 23839 31-Dec-94 20344 21728 24036 31-Jan-95 20372 22045 24546 28-Feb-95 20767 22508 25254 31-Mar-95 20796 22655 25460 30-Apr-95 21401 22981 25890 31-May-95 22221 23805 27110 30-Jun-95 22368 23969 27354 31-Jul-95 22493 23925 27233 31-Aug-95 22785 24204 27672 30-Sep-95 23069 24441 28000 31-Oct-95 23211 24738 28364 30-Nov-95 23474 25086 28907 31-Dec-95 23885 25429 29384 31-Jan-96 24151 25598 29573 29-Feb-96 23775 25168 28871 31-Mar-96 23647 25013 28625 30-Apr-96 23610 24886 28387 31-May-96 23850 24870 28337 30-Jun-96 24147 25142 28753 31-Jul-96 24243 25197 28809 31-Aug-96 24217 25200 28720 30-Sep-96 24861 25628 29329 31-Oct-96 25371 26145 30130 30-Nov-96 25942 26609 30774 31-Dec-96 25811 26409 30348 31-Jan-97 26035 26490 30391 28-Feb-97 26420 26590 30519 31-Mar-97 25988 26308 30043 30-Apr-97 26307 26640 30499 31-May-97 26674 26894 30844 30-Jun-97 27162 27216 31281 31-Jul-97 28254 27940 32425 31-Aug-97 27867 27689 31947 30-Sep-97 28428 28092 32506 31-Oct-97 28639 28376 32918 30-Nov-97 28717 28480 33104 31-Dec-97 28876 28729 33454 31-Jan-98 29177 29069 33851 28-Feb-98 29177 29075 33840 31-Mar-98 29270 29206 33965 30-Apr-98 29365 29329 34180 31-May-98 29470 29567 34585 30-Jun-98 29539 29771 34841 31-Jul-98 29474 29804 34808 31-Aug-98 28675 29948 34971 30-Sep-98 28782 30543 36104 31-Oct-98 28123 30340 35547 30-Nov-98 29094 30594 36217 31-Dec-98 28876 30718 36322 31-Jan-99 28748 30923 36681 28-Feb-99 27872 30399 35811 31-Mar-99 28300 30646 36064 30-Apr-99 28388 30791 36170 31-May-99 28090 30486 35686 30-Jun-99 27954 30403 35500 31-Jul-99 27821 30306 35303 31-Aug-99 27500 30247 35217 30-Sep-99 27584 30505 35600 31-Oct-99 27405 30564 35764 30-Nov-99 27345 30615 35802 31-Dec-99 27095 30560 35612 31-Jan-00 27057 30465 35487 29-Feb-00 27358 30752 35816 31-Mar-00 27845 31100 36121 30-Apr-00 26804 30847 35804 31-May-00 26236 30754 35670 30-Jun-00 26726 31352 36566 31-Jul-00 27089 31596 37009 30-Aug-00 27446 31997 37491 30-Sep-00 27429 32165 37688 31-Oct-00 27381 32203 37725 30-Nov-00 27390 32806 38214 31-Dec-00 27606 33398 37786
For the 12-month period ending December 31, 2000, Ivy Bond Fund returned 1.89%, underperforming its benchmark, the Lehman Brothers US Credit Index, which returned 6.10% for the same period.(*) Underperformance was due to the Fund's focus on corporate credit as well as credit-related problems within the corporate credit sector. (*)The Fund recently changed its benchmark to one that more accurately reflects the universe of securities in which it invests. Performance for both the old and new benchmark is shown at left. The Morningstar Corporate Bond - General Bond Fund benchmark is a compilation of funds that consists primarily of corporate bonds rated BBB or higher. It is not possible to invest in a benchmark. The Lehman Brothers US Credit Index is an unmanaged index which, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 31 34 IVY MONEY MARKET FUND The Fund's goal: to obtain as high a level of current income as is consistent with the preservation of capital and liquidity by investing in high quality, short-term securities. [PHOTO] The Ivy Money Market Fund is managed by Ivy's fixed-income team. The team is led by Richard Gluck, senior vice president at Ivy Management, Inc. INVESTMENT STRATEGY In pursuit of its objective, Ivy Money Market Fund invests in money market instruments maturing within 13 months or less and maintains a portfolio with a dollar-weighted average maturity of 90 days or less. While there are no guarantees, the Fund's emphasis on securities with relatively short-term maturities is designed to enable the Fund to maintain a constant net asset value of $1.00 per share. However, it is important to note that the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Thus, although the Fund manager seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the Fund. The Fund's management team actively monitors the portfolio on a daily basis, while searching out attractive investments within the money market universe to provide investors with a competitive yield. PORTFOLIO HOLDINGS The Fund's portfolio includes debt securities issued or guaranteed by the US government; obligations of domestic banks and savings and loan associations, including certificates of deposit and bankers' acceptances; high-quality commercial paper; high-quality short-term corporate notes, bonds and debentures; and short-term repurchase agreements involving US government securities. CREDIT QUALITY The value of the Ivy Money Market Fund's investments and the income they generate will vary daily and generally reflect market conditions, interest rates and other issue-specific, political or economic developments. The Fund's debt investments are required to present minimal credit risk and be included in one of the two highest short-term rating categories that apply to debt securities. Within this environment, the Fund's manager actively monitors the portfolio on a daily basis, while searching out attractive investments within the money market universe to provide investors with a competitive yield. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 32 35 Around the globe, the science of investing is being redefined as markets and economies become linked in ways not always obvious to investors. Like circuitry hidden from view, the connections are often evident only by their powerful effects. Ivy Funds explores the circuitry - across countries, asset classes and styles - and from this worldwide perspective builds portfolios that embrace the world. 33 36 IVY DEVELOPING MARKETS FUND SCHEDULES OF INVESTMENTS December 31, 2000
NAME OF SECURITY SHARES VALUE EQUITY SECURITIES - 96.4% AFRICA - 8.5% SOUTH AFRICA - 8.5% Anglo American plc 3,700 $ 199,907 Nampak Limited 87,600 129,027 Nedcor Limited 8,400 189,748 South African Breweries plc 21,800 153,218 Standard Bank Investment Corporation Limited 45,067 181,577 ----------- 853,477 ----------- ASIA/PACIFIC - 42.1% CHINA - 3.5% China Unicom Limited (a) 226,000 346,248 ----------- HONG KONG - 16.2% China Mobile (Hong Kong) Limited (a) 74,300 405,797 Hang Seng Bank 18,000 242,311 Hutchison Whampoa Limited 22,000 274,298 Sun Hung Kai Properties Ltd. 43,000 428,627 Wharf Holdings Ltd. 112,111 272,376 ----------- 1,623,409 ----------- SINGAPORE - 4.9% Capitaland Limited (a) 92,000 159,166 Overseas Union Bank Ltd. 42,254 197,376 Singapore Airlines Limited 14,000 138,867 ----------- 495,409 ----------- SOUTH KOREA - 7.8% Korea Telecom Corporation 4,100 217,154 Pohang Iron & Steel Company Ltd. 4,000 241,897 SK Telecom Co., Ltd. 1,630 326,000 ----------- 785,051 ----------- TAIWAN - 9.7% Hon Hai Precision Industry Co., Ltd. 32,500 165,044 Taiwan Semiconductor Manufacturing Company (a) 186,000 446,980 United Microelectronics Corporation (a) 247,000 359,129 ----------- 971,153 ----------- EUROPE - 10.4% ESTONIA - 2.2% Hansabank Ltd. 26,500 221,552 ----------- GREECE - 2.1% Hellenic Telecommunications Organization SA ADR 28,900 209,525 ----------- HUNGARY - 4.2% Magyar Tavkozlesi Rt 23,600 98,048 MOL Magyar Olaj-es Gazipari Rt 8,800 148,672 Pannonplast Rt 4,700 75,825 Pick Szeged Rt (a) 3,700 94,813 ----------- 417,358 ----------- POLAND - 1.9% Telekomunikacja Polska S.A. 28,200 192,465 ----------- LATIN AMERICA - 35.4% ARGENTINA - 1.4% Grupo Financiero Galicia S.A. (a) 94,853 141,558 ----------- BRAZIL - 16.3% Banco Itau S.A. 970,000 92,026 Cia Brasileira de Distribuicao Grupo Pao de Acucar 5,998,100 219,316 Cia Vale do Rio Doce 13,300 -- Cia Vale do Rio Doce - Preferred A 9,700 236,183 Companhia De Bebidas das Americas (Ambev) - Preferred ADR 6,800 175,100
NAME OF SECURITY SHARES VALUE Embratel Participacoes S.A. 11,100 $ 174,131 Petroleo Brasileiro S.A. (Petrobras) 13,643 320,297 Tele Centro Oeste Celular Part. S.A. 39,000,000 135,401 Tele Norte Leste Participacoes S.A. 12,406 283,012 ----------- 1,635,466 ----------- CHILE - 2.5% Antofagasta Holdings plc 37,263 246,311 ----------- MEXICO - 15.2% Cemex S.A. De C.V. 32,000 115,731 Fomento Economico Mexicano, S.A. Sponsored ADR 8,800 262,900 Grupo Financiero Banamex Accival, S.A. (a) 171,300 281,681 Grupo Televisa S.A. Sponsored GDR (a) 2,800 125,825 Organizacion Soriana S.A. de C.V. 64,500 164,799 Telefonos de Mexico S.A. ADR - Class L 9,900 446,738 Tubos de Acero de Mexico S.A. (TAMSA) Sponsored ADR 9,000 128,700 ----------- 1,526,374 ----------- TOTAL INVESTMENTS - 96.4% (Cost - $10,219,793) $ 9,665,356 (Cost on Federal income tax basis - $10,336,580) OTHER ASSETS, LESS LIABILITIES - 3.6% 365,649 ----------- NET ASSETS - 100% $10,031,005 =========== Other Information: At December 31, 2000, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,532,392 Gross unrealized depreciation (2,086,829) ----------- Net unrealized depreciation for financial statement purposes (554,437) Less: tax basis adjustments (116,787) ----------- Net unrealized depreciation for Federal income tax purposes $ (671,224) =========== Purchases and sale proceeds of securities other than short-term obligations aggregated $10,513,543 and $13,006,568, respectively, for the period ended December 31, 2000. IVY EUROPEAN OPPORTUNITIES FUND EQUITY SECURITIES - 96.9% EUROPE - 95.6% AUSTRIA - 2.7% EMTS Technologie AG (a) 54,500 $ 3,699,480 Yline Internet Business Services AG (a) 26,940 1,188,751 ----------- 4,888,231 ----------- BELGIUM - 1.0% Interbrew (a) 51,200 1,781,438 ----------- FRANCE - 21.1% Altadis, S.A. 600,000 9,294,595 Cie Francaise d'Etudes et de Construction (Technic SA) 35,000 5,080,107 Cyberdeck (a) 552,000 927,657 Essilor International SA 25,000 8,156,242 Imerys 30,000 3,408,018 Sagem SA - Preferred 74,958 6,052,178 Vivendi Environnement (a) 120,000 5,238,772 ----------- 38,157,569 -----------
34 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 37 SCHEDULES OF INVESTMENTS (continued) December 31, 2000
NAME OF SECURITY SHARES VALUE GERMANY - 4.9% ACG AG (a) 48,000 $ 1,689,926 Kamps AG 30,000 318,269 Medion AG 35,000 3,483,126 Microlog Logistics AG (a) 20,000 995,179 Software AG - Registered 31,510 2,428,773 ----------- 8,915,273 ----------- GREECE - 2.5% Folli-Follie SA 144,350 2,868,353 Germanos SA 88,600 1,641,420 ----------- 4,509,773 ----------- ITALY - 9.5% Cairo Communication SpA (a) 50,000 1,779,117 De Rigo SpA Sponsored ADR (a) 114,000 840,750 Luxottica Group SpA 225,000 3,093,750 Saipem SpA 2,100,000 11,454,884 ----------- 17,168,501 ----------- NETHERLANDS - 25.3% Buhrmann NV 350,000 9,381,439 Free Record Shop Holding NV 58,776 904,980 Fugro NV 181,350 11,705,272 Hagemeyer NV 257,239 5,735,823 IHC Caland NV 41,000 1,924,638 Koninklijke (Royal) KPN NV 140,000 1,611,439 Koninklijke Numico NV 45,000 2,264,501 Vedior NV 708,495 8,547,423 VersaTel Telecom International NV (a) 400,000 3,567,622 ----------- 45,643,137 ----------- NORWAY - 1.6% EniTel ASA (a) 126,090 1,143,866 Tandberg Television ASA (a) 250,000 1,686,792 ----------- 2,830,658 ----------- SPAIN - 2.7% Telepizza, S.A. (a) 2,031,000 4,805,137 ----------- SWEDEN - 1.3% Letsbuyit.com (a) 798,500 974,571 Tele1 Europe Holding AB (a) 300,000 1,446,659 ----------- 2,421,230 ----------- SWITZERLAND - 1.6% Selecta Group 978 238,390 Unaxis Holding AG (a) 12,000 2,702,873 ----------- 2,941,263 ----------- UNITED KINGDOM - 21.4% BAE Systems plc 750,000 4,279,740 British American Tobacco plc 1,150,000 8,731,080 Invensys plc 1,500,000 3,506,698 Kidde plc (a) 500,000 537,768 NDS Group plc (a) 35,000 1,911,875 Regus plc (a) 540,800 2,924,408 Rentokil Initial plc 1,000,000 3,458,149 Shell Transport & Trading Co. plc 500,000 4,085,546 Stagecoach Holdings plc 4,500,000 4,705,473 Vodafone AirTouch plc 1,250,000 4,584,102 ----------- 38,724,839 -----------
NAME OF SECURITY SHARES VALUE NORTH AMERICA - 1.3% UNITED STATES - 1.3% Global TeleSystems Group, Inc. (a) 400,000 $ 325,000 MIH Ltd. (a) 150,000 1,950,000 OpenTV Corporation (a) 5,000 51,637 ----------- 2,326,637 ----------- PRINCIPAL* FOREIGN CONVERTIBLE BONDS - 0.4% NETHERLANDS - 0.4% VersaTel Telecom International NV, 4.00%, 12/17/04 630,000 348,408 VersaTel Telecom International NV, 4.00%, 3/30/05 560,000 295,080 ------------ 643,488 ------------ TOTAL INVESTMENTS - 97.3% (Cost - $221,379,608) (d) $175,757,174 OTHER ASSETS, LESS LIABILITIES - 2.7% 4,902,277 ------------ NET ASSETS - 100% $180,659,451 ============ * Principal is denominated in local currency. Other Information: At December 31, 2000, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $21,189,735 Gross unrealized depreciation (66,812,169) ------------ Net unrealized depreciation $(45,622,434) ============ Purchases and sale proceeds of securities other than short-term obligations aggregated $353,287,554 and $154,377,662, respectively, for the period ended December 31, 2000. IVY GLOBAL FUND SHARES EQUITY SECURITIES - 97.6% EUROPE - 34.6% AUSTRIA - 0.3% Telecom Austria AG (a) 7,000 $ 39,694 ----------- FINLAND - 1.4% Nokia Oyj 3,200 142,705 Sonera Oyj 2,500 45,299 ----------- 188,004 ----------- FRANCE - 8.7% Accor SA 2,100 88,721 Alcatel SA Sponsored ADR 1,100 61,531 Altadis, S.A. 6,600 101,001 Aventis SA 1,100 96,561 AXA 700 101,208 Carrefour SA 900 56,528 Credit Lyonnais SA 1,900 66,358 LVMH 1,000 66,189 Schneider Electric SA 1,100 80,243 Scor SA 1,000 51,918 Societe Generale 1,700 105,658 Societe Television Francaise 1 700 37,789 STMicroelectronics NV 1,000 42,812 Suez Lyonnaise des Eaux (a) 654 119,424 TotalFinaElf - B Shares 500 74,357 ----------- 1,150,298 -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 35 38 IVY GLOBAL FUND (CONTINUED) SCHEDULES OF INVESTMENTS December 31, 2000
NAME OF SECURITY SHARES VALUE GERMANY - 5.3% Adidas-Salomon AG 1,100 $ 68,160 Allianz AG-Registered 300 112,859 Bayer AG 2,700 142,207 Deutsche Bank AG 1,500 125,055 Deutsche Lufthansa AG 3,400 86,154 Deutsche Post AG (a) 1,200 25,811 Infineon Technologies AG 500 18,589 SAP AG 300 42,474 Siemens AG 600 78,441 ----------- 699,750 ----------- ITALY - 1.7% Assicurazioni Generali 3,500 138,996 Mediaset SpA 6,700 79,950 ----------- 218,946 ----------- NETHERLANDS - 3.7% AKZO Nobel NV 2,263 121,528 ASM Lithography Holding NV (a) 2,500 56,777 Gucci Group NV 1,000 86,843 ING Groep NV 1,222 97,610 Koninklijke (Royal) Philips Electronics NV 1,434 52,533 Royal Dutch Petroleum Company 1,200 73,523 ----------- 488,814 ----------- SWEDEN - 0.8% Telefonaktiebolaget LM Ericsson AB 9,400 107,095 ----------- SWITZERLAND - 3.1% ABB Ltd. 1,000 106,603 Holderbank Financiere Glaris AG 73 87,843 UBS AG - Registered 700 114,255 Zurich Financial Services AG 172 103,699 ----------- 412,400 ----------- UNITED KINGDOM - 9.6% BAE Systems plc 13,200 75,323 Bank of Scotland 9,700 101,646 BP Amoco plc Sponsored ADR 1,800 86,175 British Telecommunications plc 145 1,235 Cable & Wireless plc 3,300 44,465 Corus Group plc 62,700 65,563 Diageo plc 11,000 122,828 Glaxosmithkline plc (a) 7,624 215,010 Invensys plc 29,700 69,433 Lloyds TSB Group plc 11,900 125,322 Reuters Group plc 4,300 72,712 Rio Tinto plc Sponsored ADR 1,189 85,682 Unilever plc 9,000 76,901 Vodafone AirTouch plc 34,400 126,155 ----------- 1,268,450 ----------- FAR EAST - 15.0% AUSTRALIA - 1.7% BHP Limited 7,700 81,103 Cable & Wireless Optus Limited (a) 25,700 53,122 Commonwealth Bank of Australia 4,900 84,141 ----------- 218,366 -----------
NAME OF SECURITY SHARES VALUE HONG KONG - 2.6% Cheung Kong Holdings Ltd. 8,500 $ 108,703 China Mobile (Hong Kong) Limited (a) 14,000 76,463 HSBC Holdings plc 6,400 94,770 Hutchison Whampoa Limited 5,000 62,341 ----------- 342,277 ----------- JAPAN - 9.4% Asahi Glass Company, Ltd. 10,000 82,575 Bank of Tokyo-Mitsubishi, Ltd. 6,000 59,737 Canon Inc 2,000 70,053 East Japan Railway Company 12 70,403 Fujitsu Limited 2,000 29,492 Kyocera Corporation 500 54,597 Lawson, Inc 1,400 55,412 Matsushita Electric Industrial Co. 3,000 71,716 Mizuho Holdings, Inc. 11 68,196 Murata Manufacturing Company, Ltd. 500 58,669 NEC Corporation 4,000 73,205 Nintendo Co., Ltd. 600 94,518 Nomura Securities Co., Ltd. (The) 3,000 53,984 NTT DoCoMo, Inc. 3 51,751 Sharp Corporation 5,000 60,333 SMC Corporation 600 77,233 Sony Corporation 1,000 69,177 Sumitomo Electric Industries, Ltd. 4,000 65,639 Tokyo Electron Limited 700 38,494 Yamanouchi Pharmaceutical Co., Ltd. 1,000 43,257 ----------- 1,248,441 ----------- NEW ZEALAND - 0.9% Tourism Holdings Limited (a) 150,443 122,491 ----------- TAIWAN - 0.4% Taiwan Semiconductor Manufacturing Company Ltd. Sponsored ADR (a) 3,400 58,650 ----------- LATIN AMERICA - 1.0% BRAZIL - 0.5% Petroleo Brasileiro S.A. (Petrobras) 2,700 63,388 ----------- MEXICO - 0.5% Telefonos de Mexico S.A. ADR - Class L 1,400 63,175 ----------- NORTH AMERICA - 47.0% CANADA - 0.4% Nortel Networks Corporation 1,850 59,316 ----------- UNITED STATES - 46.6% ALLTEL Corporation 1,600 99,900 Altera Corporation (a) 2,500 65,781 American Express Company 1,700 93,394 American International Group, Inc. 1,500 147,844 Analog Devices, Inc. (a) 1,400 71,663 Anheuser-Busch Companies, Inc. 1,800 81,900 Applied Materials, Inc. (a) 1,500 57,281 Bank of America Corporation 1,500 68,812 Bank of New York Company, Inc. (The) 800 44,150 BellSouth Corporation 2,900 118,719 Bristol-Myers Squibb Company 1,800 133,087 Cardinal Health, Inc. 650 64,756 Carnival Corp Class A 1,000 30,812 Caterpillar Inc. 650 30,753 Chase Manhattan Corporation (The) 2,350 106,778
36 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 39 SCHEDULES OF INVESTMENTS (continued) December 31, 2000
NAME OF SECURITY SHARES VALUE Chevron Corporation 1,300 $ 109,769 Cisco Systems, Inc. (a) 4,100 156,825 Citigroup Inc. 3,000 153,187 Colgate-Palmolive Company 1,350 87,142 Corning Incorporated 600 31,687 Dell Computer Corporation (a) 2,000 34,875 Dow Chemical Company 800 29,300 Eli Lilly and Company 1,400 130,287 EMC Corporation (a) 1,200 79,800 Exxon Mobil Corporation 1,500 130,406 FedEx Corp. (a) 2,000 79,920 General Electric Company 5,700 273,244 Gillette Company 1,400 50,575 Heinz (H.J.) Company 1,900 90,131 Home Depot, Inc. 2,400 109,650 Intel Corporation 4,350 131,588 International Business Machines Corp. 500 42,500 International Paper Company 750 30,609 JDS Uniphase Corporation (a) 1,600 66,700 Johnson & Johnson 1,400 147,088 Kimberly-Clark Corporation 1,200 84,828 KLA-Tencor Corporation (a) 1,500 50,531 Lattice Semiconductor Corporation (a) 3,000 55,125 Legg Mason, Inc. 1,500 81,750 Linear Technology Corporation 1,000 46,250 Lowe's Companies, Inc. 2,000 89,000 Maxim Integrated Products, Inc. (a) 700 33,469 Medtronic, Inc. 1,400 84,525 Mellon Financial Corporation 2,000 98,375 Merck & Co, Inc. 1,400 131,075 Merrill Lynch & Co., Inc. 1,800 122,738 Microchip Technology (a) 2,900 63,619 Microsoft Corporation (a) 3,100 134,463 Morgan Stanley Dean Witter & Co. 2,200 174,350 Noble Drilling Corporation (a) 1,000 43,438 Novellus Systems, Inc. (a) 1,600 57,500 PepsiCo, Inc. 1,500 74,344 Pfizer Inc. 2,800 128,800 Phelps Dodge Corporation 500 27,906 S&P 500 Depository Receipts 2,000 262,375 SBC Communications Inc. 2,300 109,825 Schering-Plough Corporation 2,000 113,500 State Street Corporation 500 62,105 Sun Microsystems, Inc. (a) 1,600 44,600 Target Corporation 1,500 48,375 Texaco Inc. 1,800 111,825 Texas Instruments Inc. 2,500 118,438 Tyco International Ltd. 600 33,300 United Technologies Corporation 1,100 86,488 Verizon Communications 2,300 115,288 Walgreen Co. 1,600 66,900 Wal-Mart Stores, Inc. 1,600 85,000 Wrigley (Wm.) Jr. Company 800 76,650 Xilinx, Inc. (a) 1,500 69,188 ----------- 6,166,856 -----------
NAME OF SECURITY SHARES VALUE TOTAL INVESTMENTS - 97.6% (Cost - $12,893,112) $12,916,411 (Cost on Federal income tax basis - $12,910,602) OTHER ASSETS, LESS LIABILITIES - 2.4% 320,018 ----------- NET ASSETS - 100% $13,236,429 =========== Other Information: At December 31, 2000, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,485,679 Gross unrealized depreciation (1,462,380) ----------- Net unrealized appreciation for financial statement purposes 23,299 Less: tax basis adjustments (17,490) ----------- Net unrealized appreciation for Federal income tax purposes $ 5,809 =========== Purchases and sale proceeds of securities other than short-term obligations aggregated $16,168,274 and $20,488,305, respectively, for the period ended December 31, 2000. IVY GLOBAL NATURAL RESOURCES FUND EQUITY SECURITIES - 99.2% ENERGY INTEGRATED AND REFINING - 8.4% Conoco Inc. (a) 4,000 $ 115,750 Hurricane Hydrocarbons Ltd. - Class A (a) 60,000 305,591 Occidental Petroleum Corporation 5,600 135,800 Ultramar Diamond Shamrock Corporation 4,000 123,500 USX- Marathon Group 4,000 111,000 ----------- 791,641 ----------- OIL PRODUCERS - 8.7% Baytex Energy Ltd. (a) 20,000 133,155 Canadian Natural Resources Ltd. (a) 12,900 356,423 Gulf Canada Resources Limited (a) 33,330 169,756 Talisman Energy Inc. (a) 4,500 166,727 ----------- 826,061 ----------- GAS PRODUCERS - 12.2% Encal Energy Ltd. (a) 40,000 283,620 Genesis Exploration Ltd. (a) 50,000 412,781 Niko Resources Ltd. (a) 15,000 69,407 Penn West Petroleum Ltd. (a) 11,000 273,900 Rio Alto Exploration Ltd. (a) 5,000 108,522 ----------- 1,148,230 ----------- ENERGY SERVICES - 12.2% Bonus Resource Services Corporation (a) 45,000 88,382 Maverick Tube Corporation (a) 21,200 479,650 Meridian Gold, Inc. (a) 10,000 67,909 NQL Drilling Tools Inc. - Class A (a) 35,000 180,591 Rowan Companies, Inc. (a) 12,500 337,500 ----------- 1,154,032 ----------- INDUSTRIAL PRODUCTS - 9.0% Aceralia Corporacion Siderurgica, S.A. 10,000 84,590 AK Steel Holding Corporation 15,000 131,250 IPSCO, Inc. 20,000 181,757 Lafarge Corporation 12,500 295,312 Pohang Iron & Steel Company Ltd. Sponsored ADR 10,000 155,625 ----------- 848,534 -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 37 40 IVY GLOBAL NATURAL RESOURCES FUND (CONTINUED) SCHEDULES OF INVESTMENTS December 31, 2000
NAME OF SECURITY SHARES VALUE PAPER AND FOREST - 14.3% Aracruz Celulose S.A. Sponsored ADR 24,200 $ 361,487 Cascades Inc. 30,000 136,817 Norske Skog Canada Limited 5,000 55,759 Pacifica Papers Inc. (a) 10,000 59,920 Sappi Limited 57,900 413,789 Sino-Forest Corp. - Class A (a) 350,000 230,691 Tembec Inc. (a) 10,000 92,876 ----------- 1,351,339 ----------- BASE METALS - 7.8% Freeport-McMoRan Copper & Gold, Inc. 25,000 214,063 Cominco Ltd. 5,571 92,911 Inco Limited (a) 7,500 125,332 Ivernia West Inc. (a) 85,000 41,877 Outokumpu Oyj 13,300 100,518 Pechiney SA - Class A 3,500 159,994 ----------- 734,695 ----------- PLATINUM GROUP METALS - 5.1% Anglo American Platinum Corporation 5,500 255,745 Impala Platinum Holdings Limited (a) 4,500 229,339 ----------- 485,084 ----------- SENIOR PRECIOUS METALS - 11.7% Battle Mountain Gold Company (a) 100,000 168,750 Battle Mountain Canada Inc. (a) 55,000 94,473 Cia de Minas Buenaventura S.A.A. Sponsored ADR 25,000 362,500 Gold Fields Limited 41,249 140,039 Harmony Gold Mining Company Limited 45,000 209,544 Lihir Gold Limited (a) 150,000 50,758 Newcrest Mining Limited 31,900 77,512 ----------- 1,103,576 ----------- JUNIOR PRECIOUS METALS - 9.0% Aber Diamond Corporation (a) 17,500 163,697 Gabriel Resources Ltd. (a) 70,000 139,813 Geomaque Explorations Ltd. (a) 500,000 88,215 IAMGOLD Corporation (a) 100,000 166,444 Orvana Minerals Corporation (a) 850,000 45,273 Randgold & Exploration Company Ltd. (a) 19,000 35,625 Repadre Capital Corporation (a) 151,800 212,236 ----------- 851,303 ----------- FOOD RELATED - 0.8% IMC Global Inc. 4,500 70,031 ----------- TOTAL INVESTMENTS - 99.2% (Cost - $9,947,867) $ 9,364,526 (Cost on Federal income tax basis - $10,122,946) OTHER ASSETS, LESS LIABILITIES - 0.8% 77,794 ----------- NET ASSETS - 100% $ 9,442,320 =========== Other Information: At December 31, 2000, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,437,346 Gross unrealized depreciation (2,020,687) ----------- Net unrealized depreciation for financial statement purposes (583,341) Less: tax basis adjustments (175,079) ----------- Net unrealized depreciation for Federal income tax purposes $ (758,420) =========== Purchases and sale proceeds of securities other than short-term obligations aggregated $11,216,938 and $11,432,281, respectively, for the period ended December 31, 2000.
NAME OF SECURITY SHARES VALUE IVY GLOBAL SCIENCE & TECHNOLOGY FUND EQUITY SECURITIES - 94.2% CONSUMER DISCRETIONARY - 1.7% MEDIA - 1.7% America Online, Inc. (a) 15,100 $ 525,480 Gemstar-TV Guide International, Inc. (a) 15,200 701,100 ----------- 1,226,580 ----------- INDUSTRIALS - 8.6% COMMERCIAL SERVICES & SUPPLIES - 8.6% Amdocs Limited (a) 11,600 768,500 Concord EFS, Inc. (a) 16,050 705,197 Dendrite International, Inc. (a) 29,200 653,350 DiamondCluster International, Inc. (a) 21,700 661,850 FactSet Research Systems Inc. 19,500 722,865 Forrester Research, Inc. (a) 19,000 951,188 SmartForce Public Limited Company Sponsored ADR (a) 21,300 800,081 TMP Worldwide Inc. (a) 16,700 918,500 ----------- 6,181,531 ----------- INFORMATION TECHNOLOGY - 75.8% COMMUNICATIONS EQUIPMENT - 21.1% Advanced Fibre Communications, Inc. (a) 27,000 487,688 Avanex Corporation (a) 4,900 291,856 Brocade Communications Systems, Inc. (a) 15,800 1,450,637 CacheFlow Inc. (a) 13,400 228,638 CIENA Corporation (a) 15,500 1,261,312 Cisco Systems, Inc. (a) 44,000 1,683,000 Clarent Corporation (a) 22,500 254,531 Comverse Technology, Inc. (a) 15,000 1,629,375 Corning Incorporated 18,800 992,875 Corvis Corporation (a) 10,700 254,794 Ditech Communications Corporation (a) 16,400 263,425 Emulex Corporation (a) 10,800 863,325 Extreme Networks, Inc. (a) 20,800 813,800 Floware Wireless Systems Ltd. (a) 32,000 378,000 Juniper Networks, Inc. (a) 8,500 1,071,531 McData Corporation (a) 11,000 602,250 Nortel Networks Corporation 22,600 724,612 Redback Networks Inc. (a) 8,700 356,700 Scientific-Atlanta, Inc. 7,200 234,450 SonicWall, Inc. (a) 43,000 698,750 Sunrise Telecom Incorporated (a) 7,000 27,344 Sycamore Networks, Inc. (a) 14,100 525,225 ----------- 15,094,118 ----------- COMPUTERS & PERIPHERALS - 6.1% EMC Corporation (a) 29,500 1,961,750 Network Appliance, Inc. (a) 20,400 1,310,381 Palm, Inc. (a) 16,500 467,156 Sun Microsystems, Inc. (a) 22,900 638,338 ----------- 4,377,625 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 6.8% Flextronics International Ltd. (a) 47,300 1,348,050 Jabil Circuit, Inc. (a) 21,500 545,563 Newport Corporation (a) 11,700 919,730 Power-One, Inc. (a) 19,400 762,662 Sanmina Corporation (a) 12,000 919,500 Veeco Instruments Inc. (a) 8,400 337,050 ----------- 4,832,555 -----------
38 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 41 SCHEDULES OF INVESTMENTS (continued) December 31, 2000
NAME OF SECURITY SHARES VALUE INTERNET SOFTWARE & SERVICES - 13.6% Agile Software Corp. (a) 9,600 $ 474,000 Ariba, Inc. (a) 13,000 698,750 Art Technology Group, Inc. (a) 8,100 247,556 BEA Systems, Inc. (a) 27,000 1,817,438 Check Point Software Technologies Ltd. (a) 8,400 1,121,925 Critical Path, Inc. (a) 28,000 861,000 Digex, Inc. (a) 18,100 407,250 Exodus Communications, Inc. (a) 21,600 432,000 India Media, Internet and Communications Fund (a) 150,000 393,750 Interwoven, Inc. (a) 7,800 514,313 Openwave Systems, Inc. (a) 5,500 263,656 Packeteer, Inc. (a) 36,600 452,925 VeriSign, Inc. (a) 11,617 861,836 webMethods, Inc. (a) 8,432 749,921 WebTrends Corporation (a) 14,400 416,700 ----------- 9,713,020 ----------- SEMICONDUCTOR EQUIPMENT & PRODUCTS - 17.0% Applied Materials, Inc. (a) 22,209 848,106 Applied Micro Circuits Corporation (a) 19,200 1,440,900 ASM Lithography Holding NV (a) 13,500 304,594 Aware, Inc. (a) 18,200 323,050 Broadcom Corporation (a) 4,200 354,900 Chartered Semiconductor Manufacturing Limited (a) 7,400 195,175 Integrated Device Technology, Inc. (a) 25,600 848,000 Intersil Holding Corporation (a) 34,900 800,519 JDS Uniphase Corporation (a) 23,180 966,316 Linear Technology Corporation 11,800 545,750 Luminent, Inc. (a) 53,400 321,234 Maxim Integrated Products, Inc. (a) 9,600 459,000 Micrel, Inc. (a) 13,600 458,150 Novellus Systems, Inc. (a) 6,900 247,969 PMC-Sierra, Inc. (a) 6,300 495,338 SanDisk Corporation (a) 14,600 405,150 SDL, Inc. (a) 7,700 1,141,044 Texas Instruments Inc. 22,000 1,042,250 Vitesse Semiconductor Corporation (a) 8,800 486,750 Xilinx, Inc. (a) 10,500 484,312 ----------- 12,168,507 ----------- SOFTWARE - 11.2% Actuate Software Corporation (a) 20,600 393,975 E.piphany, Inc. (a) 13,350 720,066 i2 Technologies, Inc. (a) 18,800 1,022,250 Mercury Interactive Corporation (a) 9,100 821,275 Micromuse Inc. (a) 25,200 1,521,056 NetIQ Corporation (a) 10,971 958,591 Peregrine Systems, Inc. (a) 15,600 308,100 Quest Software, Inc. (a) 29,300 822,231 TIBCO Software Inc. (a) 12,400 594,425 Veritas Software Corp. (a) 9,700 848,750 ----------- 8,010,719 ----------- TELECOMMUNICATION SERVICES - 8.1% DIVERSIFIED TELECOMMUNICATION SERVICES - 7.6% American Tower Corporation (a) 31,800 1,204,425 Level 3 Communications, Inc. (a) 16,700 547,969 McLeodUSA Incorporated (a) 102,823 1,452,375 Metromedia Fiber Network, Inc. (a) 49,800 504,225 SBA Communications Corp. (a) 16,000 657,000 WinStar Communications, Inc. (a) 22,350 261,216 XO Communications, Inc. (a) 44,200 787,312 ----------- 5,414,522 -----------
NAME OF SECURITY SHARES VALUE WIRELESS TELECOMMUNICATION SERVICES - 0.5% Nextel Communications, Inc. (a) 13,200 $ 326,700 ----------- TOTAL INVESTMENTS - 94.2% (Cost - $63,676,177) $67,345,877 (Cost on Federal income tax basis - $63,679,682) OTHER ASSETS, LESS LIABILITIES - 5.8% 4,147,154 ----------- NET ASSETS - 100% $71,493,031 =========== Other Information: At December 31, 2000, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $21,109,801 Gross unrealized depreciation (17,440,101) ----------- Net unrealized appreciation for financial statement purposes 3,669,700 Less: tax basis adjustments (3,505) ----------- Net unrealized appreciation for Federal income tax purposes $ 3,666,195 =========== Purchases and sale proceeds of securities other than short-term obligations aggregated $100,753,581 and $71,215,335, respectively, for the period ended December 31, 2000. IVY INTERNATIONAL FUND EQUITY SECURITIES - 100.4% EUROPE - 74.7% AUSTRIA - 0.7% Telecom Austria AG (a) 1,121,800 $ 6,361,326 ----------- FINLAND - 2.6% Nokia Oyj 450,367 20,084,242 Sonera Oyj 250,296 4,535,305 ----------- 24,619,547 ----------- FRANCE - 18.1% Accor SA 325,359 13,745,819 Alcatel 169,074 9,603,455 Altadis, SA 840,500 12,862,358 Aventis SA 182,839 16,050,026 AXA 102,313 14,792,679 Carrefour SA 139,002 8,730,567 Credit Lyonnais SA 291,039 10,164,579 LVMH 154,830 10,248,009 Schneider Electric SA 166,706 12,160,951 Scor SA 162,634 8,443,680 Societe Generale 228,200 14,183,027 Societe Television Francaise 1 109,437 5,907,821 STMicroelectronics NV 167,241 7,160,005 Suez Lyonnaise des Eaux (a) 93,694 17,109,081 TotalFinaElf - B Shares 84,467 12,561,385 ----------- 173,723,442 ----------- GERMANY - 11.7% Adidas-Salomon AG 177,500 10,998,604 Allianz AG-Registered 51,682 19,442,582 Bayer AG 419,200 22,079,001 Deutsche Bank AG 239,400 19,958,707 Deutsche Lufthansa AG 544,094 13,787,074 Deutsche Post AG (a) 187,400 4,030,788 EM.TV & Merchandising AG 201,200 1,106,932 Infineon Technologies AG 77,400 2,877,607 SAP AG 49,100 6,951,493 Siemens AG 86,541 11,313,902 ----------- 112,546,690 -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 39 42 IVY INTERNATIONAL FUND (CONTINUED) SCHEDULES OF INVESTMENTS December 31, 2000
NAME OF SECURITY SHARES VALUE ITALY - 3.2% Assicurazioni Generali 528,791 $21,000,020 Mediaset SpA 854,874 10,201,005 ----------- 31,201,025 ----------- NETHERLANDS - 7.4% AKZO Nobel NV 301,123 16,170,939 ASM Lithography Holding NV (a) 369,700 8,396,158 Gucci Group NV 128,157 11,129,595 ING Groep NV 191,500 15,296,481 Koninklijke (Royal) Philips Electronics NV 232,023 8,499,896 Royal Dutch Petroleum Company 196,336 12,029,354 ----------- 71,522,423 ----------- SWEDEN - 3.2% Swedish Match AB 3,233,936 12,612,838 Telefonaktiebolaget LM Ericsson AB 1,565,297 17,833,590 ----------- 30,446,428 ----------- SWITZERLAND - 7.9% ABB Ltd. 139,549 14,876,346 Cie Financiere Michelin 42,144 15,864,160 Holderbank Financiere Glaris AG 9,983 12,012,881 UBS AG - Registered 100,671 16,431,665 Zurich Financial Services AG 26,984 16,268,683 ----------- 75,453,735 ----------- UNITED KINGDOM - 19.9% BAE Systems plc 2,178,167 12,429,318 Bank of Scotland 1,567,249 16,423,224 BP Amoco plc 1,248,065 10,011,617 Cable & Wireless plc 431,186 5,809,837 Corus Group plc 9,019,013 9,430,827 Diageo plc 1,674,794 18,701,022 Glaxosmithkline plc (a) 1,020,717 28,787,234 Invensys plc 4,169,652 9,747,807 Lloyds TSB Group plc 1,910,400 20,118,990 Reuters Group plc 687,000 11,617,051 Rio Tinto plc 851,880 14,914,159 Unilever plc 1,600,000 13,671,267 Vodafone AirTouch plc 5,309,886 19,472,846 ----------- 191,135,199 ----------- FAR EAST - 23.8% AUSTRALIA - 3.6% BHP Limited 1,195,224 12,589,086 Cable & Wireless Optus Limited (a) 4,088,225 8,450,374 Commonwealth Bank of Australia 756,300 12,986,944 OneSteel Limited (a) 318,806 168,286 ----------- 34,194,690 ----------- HONG KONG - 5.2% Cheung Kong Holdings Ltd. 1,103,000 14,105,843 China Mobile (Hong Kong) Limited (a) 1,827,059 9,978,673 HSBC Holdings plc 1,002,109 14,839,101 Hutchison Whampoa Limited 910,000 11,345,970 ----------- 50,269,587 ----------- JAPAN - 14.0% Asahi Glass Company, Ltd. 1,097,000 9,058,413 Bank of Tokyo-Mitsubishi, Ltd. 684,000 6,810,051 Canon Inc. 266,000 9,316,985 East Japan Railway Company 1,285 7,538,965 Fujitsu Limited 89,000 1,312,399
NAME OF SECURITY SHARES VALUE Kyocera Corporation 49,200 $ 5,372,363 Lawson, Inc. 132,000 5,224,517 Matsushita Electric Industrial Co. 375,000 8,964,534 Mizuho Holdings, Inc. 1,177 7,296,986 Murata Manufacturing Company, Ltd. 58,300 6,840,804 NEC Corporation 443,000 8,107,441 Nintendo Co., Ltd. 59,200 9,325,812 Nomura Securities Co., Ltd. (The) 323,000 5,812,302 NTT DoCoMo, Inc. 315 5,433,887 Sharp Corporation 597,000 7,203,729 SMC Corporation 56,100 7,221,277 Sony Corporation 116,000 8,024,516 Sumitomo Electric Industries, Ltd. 358,000 5,874,710 Tokyo Electron Limited 60,000 3,299,474 Yamanouchi Pharmaceutical Co., Ltd. 143,000 6,185,813 ------------ 134,224,978 ------------ TAIWAN - 1.0% Taiwan Semiconductor Manufacturing Company Ltd. Sponsored ADR (a) 581,000 10,022,250 ------------ LATIN AMERICA - 1.9% BRAZIL - 0.9% Petroleo Brasileiro S.A. (Petrobras) 373,070 8,758,567 ------------ MEXICO - 1.0% Telefonos de Mexico S.A. ADR - Class L 215,000 9,701,875 ------------ TOTAL INVESTMENTS - 100.4% (Cost - $1,001,811,974) $964,181,762 (Cost on Federal income tax basis - $1,007,745,335) LIABILITIES, IN EXCESS OF OTHER ASSETS - (0.4%) (3,869,707) ------------ NET ASSETS - 100% $960,312,055 ============ Other Information: At December 31, 2000, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 99,734,080 Gross unrealized depreciation (137,364,292) ------------ Net unrealized depreciation for financial statement purposes (37,630,212) Less: tax basis adjustments (5,933,361) ------------ Net unrealized depreciation for Federal income tax purposes $(43,563,573) ============ Purchases and sale proceeds of securities other than short-term obligations aggregated $1,476,428,476 and $2,578,175,018, respectively, for the period ended December 31, 2000. IVY INTERNATIONAL SMALL COMPANIES FUND EQUITY SECURITIES - 83.8% EUROPE - 65.3% FINLAND - 1.9% F-Secure Oyj (a) 10,200 $ 49,797 Rapala Normark Corp. 100,000 394,316 ----------- 444,113 ----------- FRANCE - 8.6% Altedia (a) 15,719 664,984 Dalet (a) 37,500 591,474 Himalaya (a) 3,700 52,766 Net2S (a) 3,428 86,896 Transiciel SA 16,680 596,646 ----------- 1,992,766 -----------
40 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 43 SCHEDULES OF INVESTMENTS (continued) December 31, 2000
NAME OF SECURITY SHARES VALUE GERMANY - 14.2% BERU AG 2,500 $ 89,191 BKN International AG (a) 17,456 426,102 Brainpower NV (a) 88,000 495,712 DataDesign AG (a) 33,500 210,724 Genmab A/S (a) 5,000 108,061 Rational AG (a) 10,410 693,912 Ruecker AG (a) 34,300 418,632 Syzygy AG (a) 520 3,613 Tecis Holding AG 1,600 102,147 Telegate AG (a) 1,420 125,317 Zapf Creation AG 14,700 634,849 ----------- 3,308,260 ----------- GREECE - 2.6% Folli-Follie SA 31,000 615,996 ----------- IRELAND - 1.8% Parthus Technologies plc (a) 100,000 260,668 Ryanair Holdings plc (a) 13,794 148,931 ----------- 409,599 ----------- NETHERLANDS - 3.9% Athlon Groep NV 1,577 16,878 Beter Bed Holding NV 1,015 10,435 SNT Group NV (a) 5,700 147,432 Unit 4 (a) 17,900 730,194 ----------- 904,939 ----------- NORWAY - 2.4% Stepstone ASA (a) 300,000 527,300 Tandberg Television ASA (a) 5,059 34,134 ----------- 561,434 ----------- PORTUGAL - 0.2% Impresa - Sociedade Gestora de Participacoes, S.A. (a) 6,913 41,797 ----------- SPAIN - 4.3% Baron de Ley, S.A. (a) 36,500 681,932 Enaco, S.A. (a) 5,000 25,302 Mecalux, S.A. (a) 42,095 288,897 ----------- 996,131 ----------- SWEDEN - 0.8% Micronic Laser Systems AB (a) 3,700 109,405 Semcon AB 6,400 84,786 ----------- 194,191 ----------- SWITZERLAND - 0.6% Swisslog Holding AG 300 131,441 ----------- UNITED KINGDOM - 24.0% Ashtead Group plc 225,000 408,368 BTG plc (a) 23,500 509,013 Capital Radio plc 30,000 536,648 Domnick Hunter Group plc 25,000 129,774 Euro Sales Finance plc 6,500 121,857 F.I. Group plc 7,400 29,736 Fitness First plc (a) 40,000 596,027 Guardian IT plc 19,000 271,050 Informa Group plc 66,500 596,026 Parity Group plc 178,000 304,451 PizzaExpress plc 61,500 581,529 RM plc 12,000 102,176 Tilbury Douglas plc 95,000 702,460 Trifast plc 125,000 364,114 Trinity Mirror plc 45,000 307,536 ----------- 5,560,765 -----------
NAME OF SECURITY SHARES VALUE FAR EAST - 18.5% AUSTRALIA - 1.2% Cochlear Limited 4,200 $ 85,129 CSL Limited 5,735 124,470 Energy Developments Limited 10,768 75,963 ----------- 285,562 ----------- CHINA - 0.1% Beijing Datang Power Generation Company Limited 70,000 18,173 ----------- HONG KONG - 0.8% Giordano International Limited 86,000 39,693 Glorious Sun Enterprises Limited 290,000 41,641 Mandarin Oriental International Limited 69,000 44,850 Yanzhou Coal Mining Company Limited 174,000 47,962 ----------- 174,146 ----------- JAPAN - 16.1% Arrk Corporation 1,800 66,200 Asahi Pretec Corp. 21 310,771 C Two-Network Co., Ltd. 7,200 447,636 Cresco, Ltd. 9,100 438,266 Fuji Seal, Inc. 18,700 504,343 Hokuto Corporation 8,500 295,490 People Co., Ltd. 2,500 155,429 Relocation Services Corporation 8,400 481,786 SKY Perfect Communications Inc. (a) 41 53,853 Sotec Company Limited (a) 70 502,627 Tsuruha Co., Ltd. 38,700 481,208 ----------- 3,737,609 ----------- SINGAPORE - 0.3% Keppel Telecommunications & Transportation Limited 48,000 32,664 Neptune Orient Lines Limited (a) 49,000 38,430 ----------- 71,094 ----------- TOTAL INVESTMENTS - 83.8% (Cost - $20,735,806) $19,448,016 (Cost on Federal income tax basis - $20,799,181) OTHER ASSETS, LESS LIABILITIES - 16.2% 3,767,169 ----------- NET ASSETS - 100% $23,215,185 =========== Other Information: At December 31, 2000, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,282,467 Gross unrealized depreciation (2,570,257) ----------- Net unrealized depreciation for financial statement purposes (1,287,790) Less: tax basis adjustments (63,375) ----------- Net unrealized depreciation for Federal income tax purposes $(1,351,165) =========== Purchases and sale proceeds of securities other than short-term obligations aggregated $29,352,128 and $11,398,010, respectively, for the period ended December 31, 2000. IVY INTERNATIONAL VALUE FUND EQUITY SECURITIES - 94.4% EUROPE - 68.9% AUSTRIA - 0.5% Telecom Austria AG (a) 123,000 $ 697,489 ----------- FINLAND - 2.7% Metso Oyj 149,882 1,674,525 Nokia Oyj Sponsored ADR 42,400 1,844,400 ----------- 3,518,925 -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 41 44 IVY INTERNATIONAL VALUE FUND (CONTINUED) SCHEDULES OF INVESTMENTS December 31, 2000
NAME OF SECURITY SHARES VALUE FRANCE - 15.6% Alcatel 29,100 $ 1,652,889 Altadis, SA 132,900 2,033,798 BNP Paribas SA 25,919 2,275,229 Cie Generale des Etablissements Michelin - Class B 40,000 1,447,704 Groupe Danone 9,800 1,477,634 Pernod-Ricard 28,100 1,939,050 Schneider Electric SA 18,709 1,364,793 Scor SA 39,000 2,024,814 Societe Generale 29,400 1,827,261 Suez Lyonnaise des Eaux (a) 9,664 1,764,704 TotalFinaElf - B Shares 15,421 2,293,311 ----------- 20,101,187 ----------- GERMANY - 8.6% Adidas-Salomon AG 19,600 1,214,494 Bayer AG 42,200 2,222,648 Deutsche Lufthansa AG 40,000 1,013,580 E.On AG 10,000 608,374 Merck KGaA 46,555 2,054,279 RWE AG 14,000 621,048 Siemens AG 16,700 2,183,268 Volkswagen AG 23,740 1,257,057 ----------- 11,174,748 ----------- NETHERLANDS - 6.4% AKZO Nobel NV 41,002 2,201,893 Fortis (NL) NV 52,910 1,718,736 ING Groep NV 27,100 2,164,672 Koninklijke (Royal) Philips Electronics NV 58,774 2,153,118 ----------- 8,238,419 ----------- NORWAY - 0.9% Norsk Hydro A.S. Sponsored ADR 27,000 1,135,688 ----------- SPAIN - 2.2% Endesa S.A. Sponsored ADR 64,900 1,083,019 Telefonica S.A. Sponsored ADR (a) 36,310 1,815,500 ----------- 2,898,519 ----------- SWEDEN - 2.0% Electrolux AB 95,585 1,240,965 Investor AB 91,765 1,371,291 ----------- 2,612,256 ----------- SWITZERLAND - 7.6% Cie Financiere Richemont AG 280 749,029 Holderbank Financiere Glaris AG 927 1,115,490 Nestle AG Registered 668 1,558,188 Novartis AG Registered 1,095 1,935,933 UBS AG - Registered 14,300 2,334,067 Zurich Financial Services AG 3,656 2,204,206 ----------- 9,896,913 ----------- UNITED KINGDOM - 22.4% Bank of Ireland 167,152 1,661,892 Barclay's plc 73,825 2,279,485 Bass plc 172,000 1,873,047 Billiton plc 247,039 958,548 British Airways plc 343,000 1,996,977 Cable & Wireless plc 76,000 1,024,030 Cadbury Schweppes plc 165,270 1,143,674
NAME OF SECURITY SHARES VALUE Diageo plc 156,463 $ 1,747,091 Hanson plc Sponsored ADR 46,900 1,606,325 Invensys plc 491,000 1,147,859 Pilkington plc 1,009,320 1,681,111 PowerGen plc 132,305 1,248,080 Rio Tinto plc 36,912 646,231 Rolls-Royce plc 495,000 1,471,469 Royal & Sun Alliance Insurance Group plc 255,000 2,190,286 Shell Transport & Trading Co. plc 220,539 1,802,044 Unilever plc 262,000 2,238,670 Vodafone AirTouch plc 620,900 2,277,015 ----------- 28,993,834 ----------- FAR EAST - 23.2% AUSTRALIA - 3.1% Australia & New Zealand Banking Group Ltd. 201,700 1,611,621 BHP Limited 108,200 1,139,652 OneSteel Limited (a) 27,050 14,278 Westpac Banking Corp. Ltd. 164,000 1,202,316 ----------- 3,967,867 ----------- HONG KONG - 2.7% Cheung Kong Holdings Ltd. 193,000 2,468,203 HSBC Holdings plc 66,908 990,765 ----------- 3,458,968 ----------- JAPAN - 16.4% Bank of Tokyo-Mitsubishi, Ltd. 151,000 1,503,389 Canon Inc. 59,000 2,066,549 Daiwa Securities Group Inc. 66,000 689,474 Fuji Photo Film Co. Ltd. 41,000 1,716,112 Lawson, Inc. 16,000 633,275 Matsushita Electric Industrial Co. 69,000 1,649,474 Mizuho Holdings, Inc. 250 1,549,912 NEC Corporation 91,000 1,665,411 Nintendo Co., Ltd. 7,900 1,244,492 Nomura Securities Co., Ltd. (The) 78,000 1,403,590 Sankyo Company, Limited 88,000 2,111,383 Sharp Corporation 134,000 1,616,917 Sony Corporation 24,400 1,687,916 Sumitomo Electric Industries, Ltd. 107,000 1,755,849 ----------- 21,293,743 ----------- NEW ZEALAND - 0.4% Tourism Holdings Limited (a) 699,006 569,133 ----------- TAIWAN - 0.6% United Microelectronics Corporation (a) 557,000 809,857 ----------- THAILAND - 0.0% Nava Finance Public Company Limited - Foreign Registered(a)(c) 7,300 -- ----------- LATIN AMERICA - 2.3% BRAZIL - 1.7% Petroleo Brasileiro S.A. (Petrobras) 40,000 939,080 Tele Norte Leste Participacoes S.A. 58,000 1,323,125 ----------- 2,262,205 ----------- MEXICO - 0.6% Panamerican Beverages Inc. 50,700 719,306 -----------
42 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 45 SCHEDULES OF INVESTMENTS (continued) December 31, 2000
NAME OF SECURITY SHARES VALUE TOTAL INVESTMENTS - 94.4% (Cost - $105,265,893) $122,349,057 (Cost on Federal income tax basis - $106,074,986) OTHER ASSETS, LESS LIABILITIES - 5.6% 7,218,737 ------------ NET ASSETS - 100% $129,567,794 ============ Other Information: At December 31, 2000, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 24,020,406 Gross unrealized depreciation (6,937,242) ------------ Net unrealized appreciation for financial statement purposes 17,083,164 Less: tax basis adjustments (809,093) Net unrealized appreciation for Federal income tax purposes $ 16,274,071 ============ Purchases and sale proceeds of securities other than short-term obligations aggregated $51,635,681 and $84,317,680, respectively, for the period ended December 31, 2000. IVY PACIFIC OPPORTUNITIES FUND EQUITY SECURITIES - 103.5% CHINA - 8.3% China Unicom Limited (a) 622,000 $ 952,947 China Southern Airlines Company Limited (a) 1,562,000 475,615 ----------- 1,428,562 ----------- HONG KONG - 62.6% Amoy Properties Limited 718,500 801,413 Cathay Pacific Airways 134,000 247,388 Cheung Kong Holdings Ltd. 86,000 1,099,821 China Mobile (Hong Kong) Limited (a) 166,200 907,719 Dah Sing Financial Group 114,000 613,853 Hang Seng Bank 108,300 1,457,902 HSBC Holdings plc 64,316 952,383 Hutchison Whampoa Limited 93,000 1,159,533 Li & Fung Limited 239,200 435,472 Sun Hung Kai Properties Ltd. 151,800 1,513,153 Swire Pacific Ltd. 98,000 706,739 Wharf Holdings Ltd. 340,810 828,003 ----------- 10,723,379 ----------- SINGAPORE - 4.8% Capitaland Limited (a) 112,000 193,768 DBS Group Holdings Limited 19,943 225,418 Singapore Airlines Limited 20,000 198,381 Singapore Press Holdings Ltd. 14,000 206,686 ----------- 824,253 ----------- SOUTH KOREA - 6.0% Korea Telecom Corporation 4,140 219,273 Korea Telecom Corporation Sponsored ADR 9,500 294,500 SK Telecom Co., Ltd. 2,598 519,600 ----------- 1,033,373 ----------- TAIWAN - 21.5% Asustek Computer Inc. 26,520 79,764 Compal Electronics Inc. 174,698 237,106 Hon Hai Precision Industry Co., Ltd. 143,600 729,242 Pro Mos Technologies Inc. (a) 216,000 190,654 Taiwan Semiconductor Manufacturing Company (a) 463,064 1,112,798
NAME OF SECURITY SHARES VALUE United Microelectronics Corporation (a) 671,000 $ 975,609 Windbond Electronics Corporation (a) 371,000 355,501 ----------- 3,680,674 ----------- THAILAND - 0.3% Advanced Info Service Public Company Limited - Foreign Registered (a) 4,600 44,537 ----------- TOTAL INVESTMENTS - 103.5% (Cost - $17,735,541) $17,734,778 (Cost on Federal income tax basis - $18,063,846) LIABILITIES, IN EXCESS OF OTHER ASSETS - (3.5%) (595,906) ----------- NET ASSETS - 100% $17,138,872 =========== Other Information: At December 31, 2000, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 3,388,042 Gross unrealized depreciation (3,388,805) ----------- Net unrealized depreciation for financial statement purposes (763) Less: tax basis adjustments (328,305) ----------- Net unrealized depreciation for Federal income tax purposes $ (329,068) =========== Purchases and sale proceeds of securities other than short-term obligations aggregated $21,287,982 and $18,844,555, respectively, for the period ended December 31, 2000. IVY GROWTH FUND EQUITY SECURITIES - 96.6% CONSUMER DISCRETIONARY - 3.3% HOTELS, RESTAURANTS AND LEISURE - 0.4% Six Flags, Inc. 54,500 $ 936,718 ----------- MULTILINE RETAIL - 1.1% Target Corporation 30,000 967,500 Wal-Mart Stores, Inc. 40,000 2,125,000 ----------- 3,092,500 ----------- SPECIALTY RETAIL - 1.8% Home Depot, Inc. 57,500 2,627,031 Lowe's Companies, Inc. 50,000 2,225,000 ----------- 4,852,031 ----------- CONSUMER STAPLES - 0.9% HOUSEHOLD PRODUCTS - 0.9% Colgate-Palmolive Company 35,000 2,259,250 ----------- ENERGY - 19.9% ENERGY EQUIPMENT & SERVICES - 10.7% BJ Services Company (a) 43,700 3,009,837 Core Laboratories NV (a)(b) 98,900 2,701,206 ENSCO International Incorporated 20,000 681,250 Global Marine Inc. (a) 45,100 1,279,713 Grant Prideco, Inc. (a) 55,800 1,224,112 Hanover Compressor Company (a) 104,200 4,643,413 Key Energy Services, Inc. (a) 227,600 2,375,575 Lone Star Technologies, Inc. (a) 19,200 739,200 Marine Drilling Companies, Inc. (a) 16,000 428,000 Nabors Industries, Inc. (a) 34,200 2,022,930 Noble Drilling Corporation (a) 75,900 3,296,906 Patterson Energy, Inc. (a) 44,800 1,668,800 Rowan Companies, Inc. (a) 25,600 691,200
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 43 46 IVY GROWTH FUND (CONTINUED) SCHEDULES OF INVESTMENTS December 31, 2000
NAME OF SECURITY SHARES VALUE Weatherford International, Inc. (a) 58,100 $ 2,745,225 W-H Energy Services, Inc. (a) 64,600 1,271,813 ----------- 28,779,180 ----------- OIL & GAS - 9.2% BP Amoco plc Sponsored ADR (b) 41,000 1,962,875 Brown (Tom), Inc. (a) 44,000 1,446,500 Chevron Corporation 25,000 2,110,938 Cross Timbers Oil Company 87,450 2,426,737 Devon Energy Corporation 26,500 1,615,705 EOG Resources, Inc. 39,600 2,165,625 Exxon Mobil Corporation 40,000 3,477,500 Forest Oil Corporation (a) 25,000 921,875 Louis Dreyfus Natural Gas Corp. (a) 41,900 1,919,544 Spinnaker Exploration Company (a) 52,300 2,222,750 Swift Energy Company (a) 54,700 2,058,088 Texaco Inc. 42,500 2,640,312 ----------- 24,968,449 ----------- FINANCIALS - 13.2% BANKS - 2.1% Bank of America Corporation 35,000 1,605,625 Mellon Financial Corporation 50,000 2,459,375 State Street Corporation 12,500 1,552,625 ----------- 5,617,625 ----------- DIVERSIFIED FINANCIALS - 9.8% American Express Company 37,500 2,060,156 Citigroup Inc. 77,500 3,957,344 JP Morgan Chase & Co. 72,500 3,294,219 Legg Mason, Inc. 47,500 2,588,750 Merrill Lynch & Co., Inc. 50,000 3,409,375 Morgan Stanley Dean Witter & Co. 60,000 4,755,000 Nava Finance Public Company Limited - Foreign Registered (a)(c) 40,000 -- S&P 500 Depository Receipts 50,000 6,559,375 ----------- 26,624,219 ----------- INSURANCE - 1.3% American International Group, Inc. 35,000 3,449,687 ----------- HEALTH CARE - 9.9% BIOTECHNOLOGY - 0.3% Alkermes, Inc. (a) 23,300 731,037 ----------- HEALTH CARE EQUIPMENT & SERVICES - 1.0% Medtronic, Inc. 30,000 1,811,250 MiniMed Inc. (a) 24,600 1,033,969 ----------- 2,845,219 ----------- HEALTH CARE PROVIDERS & SERVICES - 1.2% Cardinal Health, Inc. 15,000 1,494,375 RehabCare Group, Inc. (a) 35,000 1,798,125 ----------- 3,292,500 ----------- PHARMACEUTICALS - 7.4% Bristol-Myers Squibb Company 35,000 2,587,812 Johnson & Johnson 30,000 3,151,875 Lilly (Eli) and Company 35,000 3,257,188 Medicis Pharmaceutical Corporation - Class A (a) 43,600 2,577,850 Merck & Co., Inc. 35,000 3,276,875 Pfizer Inc. 50,000 2,300,000 Schering-Plough Corporation 50,000 2,837,500 ----------- 19,989,100 -----------
NAME OF SECURITY SHARES VALUE INDUSTRIALS - 6.5% AIR FREIGHT & COURIERS - 0.7% FedEx Corp. (a) 45,000 $ 1,798,200 ----------- COMMERCIAL SERVICES & SUPPLIES - 3.5% Administaff, Inc. (a) 24,200 658,240 Concord EFS, Inc. (a) 41,900 1,840,981 Corporate Executive Board Company (The) (a) 21,900 870,867 Dendrite International, Inc. (a) 81,200 1,816,850 FactSet Research Systems Inc. 35,200 1,304,864 Forrester Research, Inc. (a) 26,700 1,336,669 SmartForce Public Limited Company Sponsored ADR (a)(b) 28,700 1,078,044 TMP Worldwide Inc. (a) 12,300 676,500 ----------- 9,583,015 ----------- INDUSTRIAL CONGLOMERATES - 2.3% General Electric Company 130,000 6,231,875 ----------- INFORMATION TECHNOLOGY - 36.5% COMMUNICATIONS EQUIPMENT - 8.6% Advanced Fibre Communications, Inc. (a) 34,000 614,125 Avanex Corporation (a) 7,500 446,719 CacheFlow Inc. (a) 20,300 346,369 Clarent Corporation (a) 33,100 374,444 Cisco Systems, Inc. (a) 336,600 12,874,950 Comverse Technology, Inc. (a) 31,300 3,399,963 Corning Incorporated 20,000 1,056,250 Ditech Communications Corporation (a) 25,300 406,381 Efficient Networks, Inc. (a) 22,200 296,925 Extreme Networks, Inc. (a) 28,000 1,095,500 Nortel Networks Corporation (b) 75,000 2,404,687 ----------- 23,316,313 ----------- COMPUTER & PERIPHERALS - 3.5% Dell Computer Corporation (a) 55,000 959,062 EMC Corporation (a) 47,500 3,158,750 International Business Machines Corp. 20,000 1,700,000 Network Appliance, Inc. (a) 20,700 1,329,652 Sun Microsystems, Inc. (a) 80,000 2,230,000 ----------- 9,377,464 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.4% Cree, Inc. (a) 20,900 742,603 Flextronics International Ltd. (a)(b) 88,800 2,530,800 Jabil Circuit, Inc. (a) 30,800 781,550 Power-One, Inc. (a) 17,400 684,038 Sanmina Corporation (a) 17,800 1,363,925 Veeco Instruments Inc. (a) 11,300 453,412 ----------- 6,556,328 ----------- INTERNET SOFTWARE & SERVICES - 3.3% Art Technology Group, Inc. (a) 30,600 935,212 Commerce One, Inc. (a) 24,560 621,675 Critical Path, Inc. (a) 40,600 1,248,450 Digex, Inc. (a) 25,200 567,000 Internap Network Services Corporation (a) 46,400 336,400 Interwoven, Inc. (a) 12,500 824,219 Packeteer, Inc. (a) 54,000 668,250 RADWARE Ltd. (a) 32,000 540,000 VeriSign, Inc. (a) 22,345 1,657,720 WebTrends Corporation (a) 50,300 1,455,556 ----------- 8,854,482 -----------
44 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 47 SCHEDULES OF INVESTMENTS (continued) December 31, 2000
NAME OF SECURITY SHARES VALUE SEMICONDUCTOR EQUIPMENT & PRODUCTS - 14.4% Altera Corporation (a) 77,500 $ 2,039,218 Analog Devices, Inc. (a) 70,000 3,583,125 Applied Materials, Inc. (a) 50,000 1,909,375 Applied Micro Circuits Corporation (a) 16,400 1,230,769 ASM Lithography Holding NV (a)(b) 17,400 392,588 Aware, Inc. (a) 29,600 525,400 Integrated Device Technology, Inc. (a) 35,800 1,185,875 Intel Corporation 130,000 3,932,500 Intersil Holding Corporation (a) 40,900 938,144 JDS Uniphase Corporation (a) 50,000 2,084,375 KLA-Tencor Corporation (a) 65,000 2,189,687 Lattice Semiconductor Corporation (a) 105,000 1,929,375 Linear Technology Corporation 69,500 3,214,375 Maxim Integrated Products, Inc. (a) 48,600 2,323,688 Microchip Technology (a) 105,000 2,303,437 Novellus Systems, Inc. (a) 65,000 2,335,938 PMC-Sierra, Inc. (a) 7,600 597,550 Texas Instruments Inc. 85,000 4,026,875 Xilinx, Inc. (a) 50,000 2,306,250 ------------ 39,048,544 ------------ SOFTWARE - 4.3% Actuate Software Corporation (a) 34,200 654,075 E.piphany, Inc. (a) 21,300 1,148,869 Mercury Interactive Corporation (a) 12,300 1,110,075 Micromuse Inc. (a) 45,200 2,728,244 Microsoft Corporation (a) 80,000 3,470,000 NetIQ Corporation (a) 12,895 1,126,700 Peregrine Systems, Inc. (a) 27,700 547,075 Quest Software, Inc. (a) 29,800 836,263 ------------ 11,621,301 ------------ TELECOMMUNICATION SERVICES - 6.4% DIVERSIFIED TELECOMMUNICATION SERVICES - 6.0% ALLTEL Corporation 35,000 2,185,313 American Tower Corporation (a) 47,000 1,780,125 BellSouth Corporation 50,000 2,046,875 Level 3 Communications, Inc. (a) 16,600 544,687 McLeodUSA Incorporated (a) 107,400 1,517,025 Metromedia Fiber Network, Inc. (a) 62,100 628,763 SBA Communications Corp. (a) 40,800 1,675,350 SBC Communications Inc. 50,000 2,387,500 Verizon Communications 45,000 2,255,625 WinStar Communications, Inc. (a) 31,100 363,481 XO Communications, Inc. (a) 47,500 846,094 ------------ 16,230,838 ------------ WIRELESS TELECOMMUNICATION SERVICES - 0.4% Nextel Communications, Inc. (a) 43,200 1,069,200 ------------ TOTAL INVESTMENTS - 96.6% (Cost - $227,693,909) $261,125,075 (Cost on Federal income tax basis - $228,333,149) OTHER ASSETS, LESS LIABILITIES - 3.4% 9,238,255 ------------ NET ASSETS - 100% $270,363,330 ============
NAME OF SECURITY SHARES VALUE Other Information: At December 31, 2000, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $70,278,781 Gross unrealized depreciation (36,847,615) ----------- Net unrealized appreciation for financial statement purposes 33,431,166 Less: tax basis adjustments (639,240) ----------- Net unrealized appreciation for Federal income tax purposes $32,791,926 =========== Purchases and sale proceeds of securities other than short-term obligations aggregated $323,817,750 and $327,669,732, respectively, for the period ended December 31, 2000. IVY US BLUE CHIP FUND EQUITY SECURITIES - 95.4% CONSUMER DISCRETIONARY - 5.6% Carnival Corp Cl A 15,000 $ 462,187 Home Depot, Inc. 28,500 1,302,094 Lowe's Companies, Inc. 23,500 1,045,750 Target Corporation 21,000 677,250 Wal-Mart Stores, Inc. 25,000 1,328,125 ----------- 4,815,406 ----------- CONSUMER STAPLES - 9.2% Anheuser-Busch Companies, Inc. 23,500 1,069,250 Colgate-Palmolive Company 18,000 1,161,900 Gillette Company 20,000 722,500 Heinz (H.J.) Company 25,000 1,185,938 Kimberly-Clark Corporation 16,500 1,166,385 PepsiCo, Inc. 22,500 1,115,156 Walgreen Co. 17,500 731,719 Wrigley (Wm.) Jr. Company 8,000 766,500 ----------- 7,919,348 ----------- ENERGY - 7.1% BP Amoco plc Sponsored ADR (b) 22,500 1,077,187 Chevron Corporation 15,000 1,266,562 Exxon Mobil Corporation 22,500 1,956,094 Noble Drilling Corporation (a) 10,000 434,375 Texaco Inc. 22,500 1,397,813 ----------- 6,132,031 ----------- FINANCIALS - 21.7% American Express Company 22,500 1,236,094 American International Group, Inc. 20,000 1,971,250 Bank of America Corporation 22,000 1,009,250 Bank of New York Company, Inc. (The) 15,000 827,812 Chase Manhattan Corporation (The) 32,500 1,476,719 Citigroup Inc. 37,500 1,914,844 Legg Mason, Inc. 17,500 953,750 Mellon Financial Corporation 23,000 1,131,313 Merrill Lynch & Co., Inc. 22,000 1,500,125 Morgan Stanley Dean Witter & Co. 24,700 1,957,475 S&P 500 Depository Receipts 30,000 3,935,625 State Street Corporation 6,000 745,260 ----------- 18,659,517 -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 45 48 IVY US BLUE CHIP FUND (CONTINUED) SCHEDULES OF INVESTMENTS December 31, 2000
NAME OF SECURITY SHARES VALUE HEALTH CARE - 14.1% Bristol-Myers Squibb Company 22,500 $ 1,663,594 Cardinal Health, Inc. 7,500 747,187 Eli Lilly and Company 16,000 1,489,000 Johnson & Johnson 16,500 1,733,531 Maxim Integrated Products, Inc. (a) 10,000 478,125 Medtronic, Inc. 17,500 1,056,563 Merck & Co, Inc. 18,000 1,685,250 Pfizer Inc. 40,000 1,840,000 Schering-Plough Corporation 25,000 1,418,750 ----------- 12,112,000 ----------- INDUSTRIALS - 7.5% Caterpillar Inc. 14,000 662,375 FedEx Corp. (a) 22,500 899,100 General Electric Company 68,000 3,259,750 Tyco International Ltd. 7,500 416,250 United Technologies Corporation 15,000 1,179,375 ----------- 6,416,850 ----------- INFORMATION TECHNOLOGY - 21.9% Altera Corporation (a) 29,500 776,219 Analog Devices, Inc. (a) 18,000 921,375 Applied Materials, Inc. (a) 22,500 859,219 Cisco Systems, Inc. (a) 55,000 2,103,750 Corning Incorporated 10,000 528,125 Dell Computer Corporation (a) 26,000 453,375 EMC Corporation (a) 17,000 1,130,500 Intel Corporation 56,000 1,694,000 International Business Machines Corp. 6,000 510,000 JDS Uniphase Corporation (a) 17,500 729,531 KLA-Tencor Corporation (a) 20,000 673,750 Lattice Semiconductor Corporation (a) 34,000 624,750 Linear Technology Corporation 12,500 578,125 Microchip Technology (a) 32,500 712,969 Microsoft Corporation (a) 40,000 1,735,000 Nortel Networks Corporation (b) 27,500 881,719 Novellus Systems, Inc. (a) 22,000 790,625 Sun Microsystems, Inc. (a) 26,000 724,750 Texas Instruments Inc. 32,500 1,539,687 Xilinx, Inc. (a) 18,000 830,250 ----------- 18,797,719 ----------- MATERIALS - 2.1% Dow Chemical Company 14,000 512,750 International Paper Company 15,000 612,187 Phelps Dodge Corporation 11,500 641,844 ----------- 1,766,781 ----------- TELECOMMUNICATION SERVICES - 6.2% ALLTEL Corporation 20,000 1,248,750 BellSouth Corporation 32,500 1,330,469 SBC Communications Inc. 30,000 1,432,500 Verizon Communications 27,500 1,378,437 ----------- 5,390,156 -----------
NAME OF SECURITY SHARES VALUE TOTAL INVESTMENTS - 95.4% (Cost - $75,987,865) $82,009,808 (Cost on Federal income tax basis - $76,053,989) OTHER ASSETS, LESS LIABILITIES - 4.6% 3,914,633 ----------- NET ASSETS - 100% $85,924,441 =========== Other Information: At December 31, 2000, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $13,463,189 Gross unrealized depreciation (7,441,246) ----------- Net unrealized appreciation for financial statement purposes 6,021,943 Less: tax basis adjustments (66,124) ----------- Net unrealized appreciation for Federal income tax purposes $ 5,955,819 =========== Purchases and sale proceeds of securities other than short-term obligations aggregated $97,852,086 and $36,284,081, respectively, for the period ended December 31, 2000. IVY US EMERGING GROWTH FUND EQUITY SECURITIES - 99.6% CONSUMER DISCRETIONARY - 2.8% HOTELS, RESTAURANTS & LEISURE - 0.8% Six Flags, Inc. 68,300 $ 1,173,906 ----------- MEDIA - 0.8% Gemstar-TV Guide International, Inc. (a) 25,700 1,185,413 ----------- SPECIALTY RETAIL - 1.2% Factory 2-U Stores Inc. (a) 30,000 993,750 Hibbet Sporting Goods, Inc. (a) 20,600 741,600 ----------- 1,735,350 ----------- ENERGY - 36.3% ENERGY EQUIPMENT & SERVICES - 23.0% BJ Services Company (a) 58,700 4,042,962 Chiles Offshore, Inc. (a) 29,300 732,500 Core Laboratories NV (a)(b) 109,800 2,998,913 ENSCO International Incorporated 22,700 773,218 Global Marine Inc. (a) 51,100 1,449,963 Grant Prideco, Inc. (a) 62,800 1,377,675 Hanover Compressor Company (a) 115,200 5,133,600 Helmerich & Payne, Inc. 23,300 1,022,288 Key Energy Services, Inc. (a) 238,400 2,488,300 Marine Drilling Companies, Inc. (a) 19,100 510,925 Nabors Industries, Inc. (a) 38,710 2,289,697 Noble Drilling Corporation (a) 51,200 2,224,000 Patterson Energy, Inc. (a) 49,900 1,858,775 Pride International, Inc. (a) 30,200 743,675 Rowan Companies, Inc. (a) 33,700 909,900 Weatherford International, Inc. (a) 71,500 3,378,375 W-H Energy Services, Inc. (a) 79,400 1,563,187 ----------- 33,497,953 ----------- OIL & GAS - 13.3% Brown (Tom), Inc. (a) 51,000 1,676,625 Cross Timbers Oil Company 119,550 3,317,512 Devon Energy Corporation 39,300 2,396,121 EOG Resources, Inc. 59,300 3,242,969 Forest Oil Corporation (a) 32,500 1,198,437 Louis Dreyfus Natural Gas Corp. (a) 56,300 2,579,244 Spinnaker Exploration Company (a) 62,000 2,635,000 Swift Energy Company (a) 62,700 2,359,088 ----------- 19,404,996 -----------
46 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 49 SCHEDULES OF INVESTMENTS (continued) December 31, 2000
NAME OF SECURITY SHARES VALUE HEALTH CARE - 7.8% BIOTECHNOLOGY - 1.4% Alkermes, Inc. (a) 28,000 $ 878,500 Eden Bioscience Corporation (a) 34,300 1,026,856 Introgen Therapeutics, Inc. (a) 18,400 128,800 ----------- 2,034,156 ----------- HEALTH CARE EQUIPMENT & SUPPLIES - 1.1% Bruker Daltronics, Inc. (a) 10,500 247,406 MiniMed Inc. (a) 32,100 1,349,203 ----------- 1,596,609 ----------- HEALTH CARE PROVIDERS & SERVICES - 1.8% RehabCare Group, Inc. (a) 50,600 2,599,575 ----------- PHARMACEUTICALS - 3.5% Medicis Pharmaceutical Corporation - Class A (a) 49,100 2,903,037 Shire Pharmaceuticals Group plc ADR (a)(b) 50,200 2,312,338 ----------- 5,215,375 ----------- INDUSTRIALS - 12.2% COMMERCIAL SERVICES & SUPPLIES - 12.2% Acxiom Corporation (a) 42,800 1,666,525 Administaff, Inc. (a) 28,800 783,360 Concord EFS, Inc. (a) 43,000 1,889,312 Corporate Executive Board Company (The) (a) 26,700 1,061,742 Dendrite International, Inc. (a) 99,700 2,230,788 FactSet Research Systems Inc. 39,100 1,449,437 Forrester Research, Inc. (a) 33,000 1,652,062 Maximus, Inc.(a) 42,200 1,474,363 SmartForce Public Limited Company Sponsored ADR (a)(b) 33,200 1,247,075 TMP Worldwide Inc. (a) 25,400 1,397,000 University Of Phoenix Online (a) 92,000 2,967,000 ----------- 17,818,664 ----------- INFORMATION TECHNOLOGY - 34.5% COMMUNICATIONS EQUIPMENT - 5.9% Advanced Fibre Communications, Inc. (a) 45,500 821,844 Avanex Corporation (a) 11,700 696,881 CacheFlow Inc. (a) 23,200 395,850 Clarent Corporation (a) 40,900 462,681 Comverse Technology, Inc. (a) 27,200 2,954,600 Ditech Communications Corporation (a) 29,200 469,025 Efficient Networks, Inc. (a) 27,200 363,800 Extreme Networks, Inc. (a) 32,700 1,279,388 SonicWall, Inc. (a) 73,700 1,197,625 ----------- 8,641,694 ----------- COMPUTERS & PERIPHERALS - 1.3% Concurrent Computer Corporation (a) 60,000 322,500 Network Appliance, Inc. (a) 23,800 1,528,778 ----------- 1,851,278 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.9% Cree, Inc. (a) 25,100 891,834 Flextronics International Ltd. (a)(b) 93,600 2,667,600 Jabil Circuit, Inc. (a) 27,900 707,963 Power-One, Inc. (a) 21,600 849,150 Sanmina Corporation (a) 20,200 1,547,825 Veeco Instruments Inc. (a) 13,400 537,675 ----------- 7,202,047 -----------
NAME OF SECURITY SHARES VALUE INTERNET SOFTWARE & SERVICES - 8.1% Agile Software Corp (a) 16,100 $ 794,938 Art Technology Group, Inc. (a) 33,600 1,026,900 Critical Path, Inc. (a) 51,300 1,577,475 Digex, Inc. (a) 30,600 688,500 Exodus Communications, Inc. (a) 33,800 676,000 Internap Network Services Corporation (a) 57,300 415,425 Interwoven, Inc. (a) 15,300 1,008,844 Packeteer, Inc. (a) 62,900 778,387 PEC Solutions, Inc. (a) 132,500 1,076,563 RADWARE Ltd. (a) 39,000 658,125 VeriSign, Inc. (a) 27,315 2,026,431 WebTrends Corporation (a) 38,400 1,111,200 ------------ 11,838,788 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS - 8.3% Applied Micro Circuits Corporation (a) 32,200 2,416,509 ASM Lithography Holding NV (a)(b) 51,000 1,150,687 Aware, Inc. (a) 33,100 587,525 Integrated Circuit Systems, Inc. (a) 120,500 1,995,781 Integrated Device Technology, Inc. (a) 44,400 1,470,750 Intersil Holding Corporation (a) 49,000 1,123,938 IXYS Corporation (a) 30,000 438,750 Maxim Integrated Products, Inc. (a) 18,300 874,969 New Focus, Inc. (a) 15,000 521,250 Oak Technology, Inc. (a) 91,100 791,431 PMC-Sierra, Inc. (a) 8,700 684,038 ------------ 12,055,628 ------------ SOFTWARE - 6.0% Actuate Software Corporation (a) 38,400 734,400 Mercury Interactive Corporation (a) 14,900 1,344,725 Micromuse Inc. (a) 45,200 2,728,244 NetIQ Corporation (a) 20,931 1,828,846 Nuance Communications Inc. (a) 9,600 414,000 Peregrine Systems, Inc. (a) 31,900 630,025 Quest Software, Inc. (a) 36,700 1,029,894 ------------ 8,710,134 ------------ TELECOMMUNICATION SERVICES - 6.0% DIVERSIFIED TELECOMMUNICATION SERVICES - 6.0% American Tower Corporation (a) 57,900 2,192,962 Level 3 Communications, Inc. (a) 23,200 761,250 McLeodUSA Incorporated (a) 140,400 1,983,150 Metromedia Fiber Network, Inc. (a) 74,200 751,275 SBA Communications Corp. (a) 50,700 2,081,869 XO Communications, Inc. (a) 56,700 1,009,969 ------------ 8,780,475 ------------ TOTAL INVESTMENTS - 99.6% (Cost - 116,628,429) $145,342,041 (Cost on Federal income tax basis - $116,661,375) OTHER ASSETS, LESS LIABILITIES - 0.4% 568,440 ------------ NET ASSETS - 100% $145,910,481 ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 47 50 IVY US EMERGING GROWTH FUND (CONTINUED) SCHEDULES OF INVESTMENTS December 31, 2000
NAME OF SECURITY SHARES VALUE Other Information: At December 31, 2000, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $50,543,519 Gross unrealized depreciation (21,829,907) ----------- Net unrealized appreciation for financial statement purposes 28,713,612 Less: tax basis adjustments (32,946) ----------- Net unrealized appreciation for Federal income tax purposes $28,680,666 =========== Purchases and sales of securities other than short-term obligations aggregated $156,336,551 and $155,207,781, respectively, for the period ended December 31, 2000. IVY BOND FUND PRINCIPAL U.S. CORPORATE BONDS - 57.0% Allied Waste North America Inc., 7.625%, 01/01/06 (e) $ 500,000 $ 473,750 American Standard Inc., 7.375%, 04/15/05 (e) 480,000 456,000 BRE Properties, 7.125%, 02/15/13 2,000,000 1,927,500 Calpine Corporation, 7.75%, 04/15/09 (e) 900,000 838,125 CBS Corp., 7.125%, 11/01/23 1,000,000 927,500 CBS Corp., 7.15%, 5/20/05 900,000 916,875 Continental Airlines, 6.545%, 02/02/19 1,457,907 1,418,719 Darden Restaurants Inc., 7.125%, 02/01/16 1,250,000 1,139,062 Dell Computer Corporation, 6.55%, 04/15/08 500,000 483,125 Delta Air Lines, 9.59%, 01/12/17 (c) 1,500,000 1,500,000 Indiantown Cogeneration, 9.77%, 12/15/20 1,500,000 1,680,000 International Paper Company, 7.625%, 01/15/07 1,000,000 1,006,250 McDermott Inc., 8.75%, 05/19/23 (c)(e) 2,000,000 1,092,023 Meritor Automotive, 6.80%, 02/15/09 1,000,000 818,750 News America Holdings, 7.70%, 10/30/25 2,000,000 1,847,500 News America Holdings, 7.75%, 01/20/24 1,000,000 908,750 Northrop Grumman Corp., 9.375%, 10/15/24 2,000,000 2,090,000 Praxair Inc., 8.70%, 07/15/22 2,500,000 2,550,000 Pulte Corp., 7.625%, 10/15/17 1,500,000 1,233,750 R&B Falcon Corporation, 6.50%, 04/15/03 (e) 530,000 503,500 R.J. Reynolds Tobacco Holdings, Inc., 7.375%, 05/15/03 2,000,000 1,940,000 Safeway Inc., 7.00%, 09/15/07 1,000,000 1,013,750 Spieker Properties, 7.35%, 12/01/17 1,950,000 1,784,250 Storage USA Partnership L.P., 8.20%, 06/01/17 2,240,000 2,044,000 TE Products Pipeline Co., 7.51%, 01/15/28 2,000,000 1,825,000 Tele Communications Inc., 9.25%, 01/15/23 2,000,000 2,122,500 Tenet Healthcare Corp., 8.00%, 01/15/05 (e) 507,000 513,337 Time Warner Inc., 9.125%, 01/15/13 1,500,000 1,755,000 Time Warner Inc., 9.15%, 02/01/23 1,000,000 1,161,250 Unisys Corporation, 7.875%, 04/01/08 (e) 480,000 445,200 Verizon Global Funding Corp. 144A, 7.25%, 12/01/10 1,000,000 1,015,000 Wal-Mart Stores, Inc., 6.55%, 08/10/04 2,000,000 2,045,000 Watson Pharmaceuticals, 7.125%, 05/15/08 1,500,000 1,404,375 ----------- TOTAL U.S. CORPORATE BONDS (Cost $42,256,948) 42,879,841 -----------
NAME OF SECURITY PRINCIPAL VALUE U.S. GOVERNMENT AGENCY OBLIGATIONS - 21.2% Fannie Mae, 7.00%, 07/15/05 $ 6,000,000 $ 6,300,000 Freddie Mac, 6.25%, 07/15/04 2,000,000 2,035,000 US Treasury Note, 6.5%, 02/15/10 7,000,000 7,661,150 ----------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $18,455,790) 15,996,150 ----------- U.S. DOLLAR DENOMINATED FOREIGN CORPORATE BONDS - 8.5% - --------------------------------------------------- Abitibi Consolidated Inc., 7.50%, 04/01/28 1,950,000 1,589,250 Cemex S.A., 12.75%, 07/15/07 725,000 818,344 Cia Brasileira de Petroleo Ipiranga S.A. 144A, 10.625%, 02/25/03 1,000,000 1,017,500 Grupo Industrial Durango S.A. (GIDUSA), 12.625%, 08/01/03 (e) 950,000 950,000 Grupo Televisa S.A., 8.625%, 08/08/05 500,000 496,250 Polysindo International Finance Co. BV, 11.375%, 06/15/06 (a)(e)(f) 1,000,000 100,000 Telekomunikacja Polska S.A. Finance BV (TPSA) 144A, 7.75%, 12/10/08 1,500,000 1,426,875 ----------- TOTAL U.S. DOLLAR DENOMINATED FOREIGN CORPORATE BONDS (Cost $7,766,425) 6,398,219 ----------- SHARES RIGHTS & WARRANTS - 0.1% Gothic Energy 144A Warrants 14,000 -- Gothic Energy Restricted Warrants 4,767 -- Gothic Energy Warrants 6,941 -- McCaw International Ltd. Warrants (a) 2,000 6,000 RSL Communications Ltd. 144A Warrants (a) 1,000 5,000 Terex Corp. - Appreciation Rights 4,000 65,500 ----------- TOTAL RIGHTS & WARRANTS (Cost $0) 76,500 ----------- TOTAL INVESTMENTS - 86.8% (Cost - $68,479,163) (d) $65,350,710 OTHER ASSETS, LESS LIABILITIES - 13.2% 9,951,193 ----------- NET ASSETS - 100% $75,301,903 =========== Other Information: At December 31, 2000, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,295,631 Gross unrealized depreciation (4,424,084) ----------- Net unrealized depreciation $(3,128,453) =========== Purchases and sale proceeds of securities other than U.S. Government securities and short-term obligations aggregated $21,000,598 and $50,117,726, respectively, for the period ended December 31, 2000.
48 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 51 SCHEDULES OF INVESTMENTS (continued) December 31, 2000
NAME OF SECURITY PRINCIPAL VALUE IVY MONEY MARKET FUND U.S. GOVERNMENT AGENCY OBLIGATIONS - 50.6% Federal Home Loan Bank Discount Note, 6.36%, 1/5/2001 $ 3,500,000 $ 3,500,000 Federal Home Loan Bank Discount Note, 6.33%, 1/10/2001 6,005,000 5,999,721 Federal Home Loan Mortgage Corp., 6.40%, 1/2/2001 4,788,000 4,790,553 ----------- TOTAL INVESTMENTS - 50.6% (Cost - $14,290,274) (d) $14,290,274 OTHER ASSETS, LESS LIABILITIES - 49.4% 13,950,468 ----------- NET ASSETS - 100% $28,240,742 =========== Footnotes - --------------------------------------------------- (a) Non-income producing security. (b) Foreign security in a domestic fund. (c) Security valued in good faith by the Valuation Committee of the Board of Trustees. See Note 1 to the Financial Statements. (d) Cost is approximately the same for Federal income tax purposes. (e) Below investment grade security. (f) Issuer is in default on interest payments. ADR - American Depository Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 49 52 STATEMENTS OF ASSETS AND LIABILITIES December 31, 2000
IVY DEVELOPING IVY EUROPEAN IVY GLOBAL MARKETS FUND OPPORTUNITIES FUND FUND ASSETS Investments, at value (a) $ 9,665,356 $ 175,757,174 $ 12,916,411 Cash 352,130 - 334,469 Receivables Investments sold 25,343 6,376,789 25,463 Fund shares sold 477 334,817 134 Dividends, interest and tax reclaims 26,514 340,513 26,225 Manager for expense reimbursement 29,918 - 25,286 Deferred organization expenses - - - Other assets 6,648 19,569 7,278 ---------------------------------------------------------------- Total assets 10,106,386 182,828,862 13,335,266 ---------------------------------------------------------------- LIABILITIES Payables Investments purchased - - 32,774 Fund shares repurchased 24,019 710,623 9,177 Management fee 8,630 150,052 11,151 12b-1 service and distribution fees 1,650 28,497 1,579 Other payables to related parties 8,520 67,538 8,472 Due to custodian - 1,141,199 - Accrued expenses 32,562 71,502 35,684 ---------------------------------------------------------------- Total liabilities 75,381 2,169,411 98,837 ---------------------------------------------------------------- NET ASSETS $ 10,031,005 $ 180,659,451 $ 13,236,429 ================================================================ CLASS A Net Assets, at value $ 4,213,206 $ 54,655,187 $ 8,134,847 Outstanding shares 632,996 3,168,493 765,072 Net asset value and redemption price per share $ 6.66 $ 17.25 $ 10.63 Maximum offering price per share* $ 7.07 $ 18.30 $ 11.28 ---------------------------------------------------------------- CLASS B Net Assets, at value $ 4,525,191 $ 57,282,555 $ 4,768,576 Outstanding shares 697,035 3,319,510 463,069 Net asset value, offering price and redemption price** per share $ 6.49 $ 17.26 $ 10.30 ---------------------------------------------------------------- CLASS C Net Assets, at value $ 1,172,457 $ 49,526,937 $ 177,859 Outstanding shares 179,766 2,859,413 17,911 Net asset value, offering price and redemption price*** per share $ 6.52 $ 17.32 $ 9.93 ---------------------------------------------------------------- CLASS I Net Assets, at value $ - $ 16,703 $ - Outstanding shares - 962(b) - Net asset value, offering price and redemption price per share $ - $ 17.37 $ - ---------------------------------------------------------------- ADVISOR CLASS Net Assets, at value $ 120,151 $ 19,178,069 $ 155,147 Outstanding shares 17,944 1,102,526 14,464 Net asset value, offering price and redemption price per share $ 6.70 $ 17.39 $ 10.73 ---------------------------------------------------------------- NET ASSETS CONSIST OF Capital paid-in $ 21,225,332 $ 227,927,136 $ 13,243,845 Undistributed net realized (loss) gain on investments and foreign currency transactions (10,637,535) (1,712,313) (30,947) (Accumulated net investment loss)/Undistributed net investment income - - - Net unrealized (depreciation) appreciation on investments and foreign currency transactions (556,792) (45,555,372) 23,531 ---------------------------------------------------------------- NET ASSETS $ 10,031,005 $ 180,659,451 $ 13,236,429 ================================================================ (a) Investments, identified cost $ 10,219,793 $ 221,379,608 $ 12,893,112 ---------------------------------------------------------------- (b) Actual shares outstanding were 961.698. (c) Actual shares outstanding were 164.775.
* On sales of more than $50,000 the offering price is reduced. Maximum sales charge (load) is 5.75% for all Funds except Ivy Bond Fund and Ivy Money Market Fund. Ivy Bond Fund's sales charge is 4.75%; Ivy Money Market Fund does not have a sales charge. ** Subject to a maximum deferred sales charge of 5%. *** Subject to a maximum deferred sales charge of 1%.
50 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 53 STATEMENTS OF ASSETS AND LIABILITIES (continued) December 31, 2000
IVY GLOBAL NATURAL IVY GLOBAL SCIENCE IVY INTERNATIONAL IVY INTERNATIONAL RESOURCES FUND & TECHNOLOGY FUND FUND SMALL COMPANIES FUND $ 9,364,526 $ 67,345,877 $ 964,181,762 $ 19,448,016 53,357 4,181,337 - 3,717,638 - 89,229 - - - 238,996 1,301,457 168,551 39,088 1,714 3,503,164 19,279 18,545 - - 22,525 9,153 6,437 - 9,277 5,290 11,843 215,395 6,520 ------------------------------------------------------------------------------------------ 9,489,959 71,875,433 969,201,778 23,391,806 ------------------------------------------------------------------------------------------ - - - 88,946 7,815 253,241 6,239,805 28,508 7,545 65,661 838,664 18,158 1,262 11,661 105,591 2,862 6,913 33,773 294,290 8,583 - - 1,064,254 - 24,104 18,066 347,119 29,564 ------------------------------------------------------------------------------------------ 47,639 382,402 8,889,723 176,621 ------------------------------------------------------------------------------------------ $ 9,442,320 $ 71,493,031 $ 960,312,055 $ 23,215,185 ========================================================================================== $ 5,548,605 $ 32,015,593 $ 588,281,762 $ 8,975,566 569,460 1,162,804 22,454,346 706,073 $ 9.74 $ 27.53 $ 26.20 $ 12.71 $ 10.33 $ 29.21 $ 27.80 $ 13.49 ------------------------------------------------------------------------------------------ $ 3,156,744 $ 28,675,213 $ 280,781,923 $ 5,552,553 330,118 1,069,829 10,952,106 443,141 $ 9.56 $ 26.80 $ 25.64 $ 12.53 ------------------------------------------------------------------------------------------ $ 715,215 $ 9,976,643 $ 57,336,552 $ 4,521,648 76,118 370,509 2,251,935 358,808 $ 9.40 $ 26.93 $ 25.46 $ 12.60 ------------------------------------------------------------------------------------------ $ - $ - $ 33,907,493 $ - - - 1,287,004 - $ - $ - $ 26.35 $ - ------------------------------------------------------------------------------------------ $ 21,756 $ 825,582 $ 4,325 $ 4,165,418 2,234 29,974 165(c) 326,449 $ 9.74 $ 27.54 $ 26.25 $ 12.76 ------------------------------------------------------------------------------------------ $ 17,973,206 $ 73,557,246 $ 1,040,949,087 $ 25,147,848 (7,946,722) (5,733,915) (42,948,638) (566,170) - - - - (584,164) 3,669,700 (37,688,394) (1,366,493) ------------------------------------------------------------------------------------------ $ 9,442,320 $ 71,493,031 $ 960,312,055 $ 23,215,185 ========================================================================================== $ 9,947,867 $ 63,676,177 $ 1,001,811,974 $ 20,735,806 ------------------------------------------------------------------------------------------
51 54 STATEMENTS OF ASSETS AND LIABILITIES December 31, 2000
IVY INTERNATIONAL IVY PACIFIC IVY GROWTH VALUE FUND OPPORTUNITIES FUND FUND ASSETS Investments, at value (a) $ 122,349,057 $ 17,734,778 $ 261,125,075 Cash 7,031,867 - 9,580,021 Receivables Investments sold - 100,482 39,320 Fund shares sold 21,508 1,310 4,698 Dividends, interest and tax reclaims 438,895 5,830 92,315 Manager for expense reimbursement 31,155 18,439 - Deferred organization expenses 16,577 - - Other assets 13,292 6,880 49,789 ----------------------------------------------------------------- Total assets 129,902,351 17,867,719 270,891,218 ----------------------------------------------------------------- LIABILITIES Payables Distributions to shareholders - - - Investments purchased - - 170,239 Fund shares repurchased 105,244 124,348 22,197 Management fee 103,585 15,601 194,903 12b-1 service and distribution fees 26,182 2,560 5,722 Other payables to related parties 52,171 12,910 92,568 Due to custodian - 534,157 - Accrued expenses 47,375 39,271 42,259 ----------------------------------------------------------------- Total liabilities 334,557 728,847 527,888 ----------------------------------------------------------------- NET ASSETS $ 129,567,794 $ 17,138,872 $ 270,363,330 ================================================================= CLASS A Net Assets, at value $ 23,565,397 $ 9,096,251 $ 261,743,615 Outstanding shares 2,141,115 1,225,476 17,474,862 Net asset value and redemption price per share $ 11.01 $ 7.42 $ 14.98 Maximum offering price per share* $ 11.68 $ 7.87 $ 15.89 ----------------------------------------------------------------- CLASS B Net Assets, at value $ 75,608,512 $ 6,462,308 $ 7,517,341 Outstanding shares 6,914,155 881,505 519,024 Net asset value, offering price and redemption price** per share $ 10.94 $ 7.33 $ 14.48 ----------------------------------------------------------------- CLASS C Net Assets, at value $ 29,726,198 $ 1,538,618 $ 743,699 Outstanding shares 2,717,999 210,395 52,597 Net asset value, offering price and redemption price*** per share $ 10.94 $ 7.31 $ 14.14 ----------------------------------------------------------------- ADVISOR CLASS Net Assets, at value $ 667,687 $ 41,695 $ 358,675 Outstanding shares 60,527 5,715 23,931 Net asset value, offering price and redemption price per share $ 11.03 $ 7.30 $ 14.99 ----------------------------------------------------------------- NET ASSETS CONSIST OF Capital paid-in $ 117,422,412 $ 26,105,774 $ 237,416,011 Undistributed net realized (loss) gain on investments and foreign currency transactions (4,950,062) (8,966,232) (483,012) (Accumulated net investment loss)/Undistributed net investment income - - - Net unrealized appreciation (depreciation) on investments and foreign currency transactions 17,095,444 (670) 33,430,331 ----------------------------------------------------------------- NET ASSETS $ 129,567,794 $ 17,138,872 $ 270,363,330 ================================================================= (a) Investments, identified cost $ 105,265,893 $ 17,735,541 $ 227,693,909 -----------------------------------------------------------------
* Except for Ivy Bond Fund, on sales of more than $50,000 the offering price is reduced. On sales of more than $100,000 for Ivy Bond Fund the offering price is reduced. Maximum sales charge (load) is 5.75% for all Funds except Ivy Bond Fund and Ivy Money Market Fund. Ivy Bond Fund's sales charge is 4.75%; Ivy Money Market Fund does not have a sales charge. ** Subject to a maximum deferred sales charge of 5%. *** Subject to a maximum deferred sales charge of 1%.
52 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 55 STATEMENTS OF ASSETS AND LIABILITIES (continued) December 31, 2000
IVY US BLUE CHIP IVY US EMERGING IVY BOND IVY MONEY FUND GROWTH FUND FUND MARKET FUND $ 82,009,808 $ 145,342,041 $ 65,350,710 $ 14,290,274 5,290,425 671,800 8,511,924 13,751,297 127,316 267,919 - - 1,949 39,450 280 215,000 63,169 3,161 1,653,412 - 19,778 - - 18,020 - - - - 17,128 32,254 9,636 8,629 --------------------------------------------------------------------------------- 87,529,573 146,356,625 75,525,962 28,283,220 --------------------------------------------------------------------------------- - - 2,036 4,538 1,462,864 156,974 - - 22,421 91,063 122,356 - 53,565 102,727 31,847 9,635 9,358 19,512 8,868 - 34,330 52,432 27,161 12,099 - - - - 22,594 23,436 31,791 16,206 --------------------------------------------------------------------------------- 1,605,132 446,144 224,059 42,478 --------------------------------------------------------------------------------- $ 85,924,441 $ 145,910,481 $ 75,301,903 $ 28,240,742 ================================================================================= $ 57,584,477 $ 78,839,639 $ 52,304,883 $ 20,393,857 5,437,739 2,601,431 6,626,746 20,393,857 $ 10.59 $ 30.31 $ 7.89 $ 1.00 $ 11.24 $ 32.16 $ 8.28 - --------------------------------------------------------------------------------- $ 24,313,842 $ 56,036,082 $ 20,079,250 $ 5,871,580 2,319,341 1,925,660 2,546,643 5,871,580 $ 10.48 $ 29.10 $ 7.88 $ 1.00 --------------------------------------------------------------------------------- $ 2,965,197 $ 9,048,033 $ 2,725,887 $ 1,975,305 282,693 311,171 344,669 1,975,305 $ 10.49 $ 29.08 $ 7.91 $ 1.00 --------------------------------------------------------------------------------- $ 1,060,925 $ 1,986,727 $ 191,883 $ - 99,588 64,995 24,304 - $ 10.65 $ 30.57 $ 7.90 $ - --------------------------------------------------------------------------------- $ 80,454,088 $ 119,275,428 $ 106,186,548 $ 28,240,742 (551,590) (2,078,559) (27,531,147) - - - (225,045) - 6,021,943 28,713,612 (3,128,453) - --------------------------------------------------------------------------------- $ 85,924,441 $ 145,910,481 $ 75,301,903 $ 28,240,742 ================================================================================= $ 75,987,865 $ 116,628,429 $ 68,479,163 $ 14,290,274 ---------------------------------------------------------------------------------
53 56 STATEMENTS OF OPERATIONS For the year ended December 31, 2000
IVY EUROPEAN IVY GLOBAL IVY DEVELOPING OPPORTUNITIES IVY GLOBAL NATURAL MARKETS FUND FUND FUND RESOURCES FUND INVESTMENT INCOME Dividends, net of foreign taxes withheld (a) $ 244,694 $ 2,450,832 $ 359,137 $ 127,881 Interest 29,201 398,120 22,793 7,767 ------------------------------------------------------------------- 273,895 2,848,952 381,930 135,648 ------------------------------------------------------------------- EXPENSES Management fee 147,842 1,937,417 163,977 84,770 Transfer agent 61,668 382,815 54,862 51,605 Administrative services fee 14,784 193,730 16,398 8,477 Custodian fees 77,918 259,559 88,611 55,340 Blue Sky fees 33,651 52,162 29,832 29,597 Auditing and accounting fees 23,888 23,523 24,687 33,951 Shareholder reports 14,184 23,480 13,688 12,090 Amortization of deferred organization expenses - - - 9,853 Amortization of deferred offering costs - 19,361 - - Fund accounting 35,622 102,729 36,009 21,950 Trustees' fees 5,610 11,686 5,779 5,383 12b-1 service and distribution fees 105,640 1,241,065 87,337 43,793 Legal 40,636 46,345 35,019 38,536 Other 26,169 14,065 5,244 4,427 ------------------------------------------------------------------- 587,612 4,307,937 561,443 399,772 Expenses reimbursed by Manager (204,372) - (153,851) (190,682) ------------------------------------------------------------------- Net expenses 383,240 4,307,937 407,592 209,090 ------------------------------------------------------------------- NET INVESTMENT (LOSS) INCOME (109,345) (1,458,985) (25,662) (73,442) ------------------------------------------------------------------- NET (LOSS) GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized (loss) gain (1,786,405) 5,407,056 1,051,095 1,475,067 Net change in unrealized appreciation/depreciation (2,038,411) (49,009,758) (3,408,079) (682,617) ------------------------------------------------------------------- Net (loss) gain on investment transactions (3,824,816) (43,602,702) (2,356,984) 792,450 ------------------------------------------------------------------- NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (3,934,161) $ (45,061,687) $ (2,382,646) $ 719,008 =================================================================== (a) Foreign taxes withheld $ 23,528 $ 331,020 $ 22,487 $ 7,336 ------------------------------------------------------------------- IVY GLOBAL IVY SCIENCE & INTERNATIONAL TECHNOLOGY FUND FUND INVESTMENT INCOME Dividends, net of foreign taxes withheld (a) $ 18,646 $ 32,193,992 Interest 314,166 1,291,474 ----------------------------------- 332,812 33,485,466 ----------------------------------- EXPENSES Management fee 1,119,519 16,525,495 Transfer agent 212,067 2,928,722 Administrative services fee 111,952 1,564,013 Custodian fees 43,620 1,820,728 Blue Sky fees 39,646 47,880 Auditing and accounting fees 23,204 107,789 Shareholder reports 26,669 300,840 Amortization of deferred organization expenses 12,041 - Amortization of deferred offering costs - - Fund accounting 100,718 209,163 Trustees' fees 9,533 85,415 12b-1 service and distribution fees 746,164 7,462,896 Legal 37,690 77,722 Other 8,761 139,719 ----------------------------------- 2,491,584 31,270,382 Expenses reimbursed by Manager - - ----------------------------------- Net expenses 2,491,584 31,270,382 ----------------------------------- NET INVESTMENT (LOSS) INCOME (2,158,772) 2,215,084 ----------------------------------- NET (LOSS) GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized (loss) gain (5,684,935) 532,142,194 Net change in unrealized appreciation/depreciation (50,033,088) (847,790,539) ----------------------------------- Net (loss) gain on investment transactions (55,718,023) (315,648,345) ----------------------------------- NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (57,876,795) $(313,433,261) =================================== (a) Foreign taxes withheld $ - $ 2,111,258 -----------------------------------
54 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 57 STATEMENTS OF OPERATIONS (continued) For the year ended December 31, 2000
IVY INTERNATIONAL IVY PACIFIC IVY US SMALL IVY INTERNATIONAL OPPORTUNITIES IVY GROWTH IVY US BLUE EMERGING IVY BOND COMPANIES FUND VALUE FUND FUND FUND CHIP FUND GROWTH FUND FUND $ 113,953 $ 3,774,331 $ 491,267 $ 1,559,240 $ 507,634 $ 24,992 $ - 108,781 269,269 57,778 640,084 66,669 615,585 6,974,985 - ------------------------------------------------------------------------------------------------------------------------- 222,734 4,043,600 549,045 2,199,324 574,303 640,577 6,974,985 - ------------------------------------------------------------------------------------------------------------------------- 109,655 1,496,637 183,267 3,041,015 390,662 1,711,602 563,599 23,726 415,102 87,770 724,061 130,656 374,528 226,102 10,965 149,664 18,327 360,527 52,088 201,365 83,756 84,316 163,286 77,404 112,202 48,413 59,776 52,581 36,596 40,868 32,609 34,573 37,387 33,862 37,506 20,214 28,437 21,257 63,099 26,516 29,156 52,458 9,316 45,380 15,194 80,938 15,206 43,676 25,962 9,981 13,374 - - - - - - - - - - - - 27,559 105,049 36,878 118,819 70,294 107,966 68,469 5,373 11,859 5,658 20,685 7,464 13,422 8,817 65,076 1,252,790 99,419 297,937 264,872 1,193,755 394,973 41,702 39,550 34,781 43,408 39,420 38,965 36,093 3,461 14,814 10,729 27,378 7,628 12,293 11,194 - ------------------------------------------------------------------------------------------------------------------------- 447,940 3,776,810 623,293 4,924,642 1,090,606 3,820,366 1,561,510 (167,518) (274,726) (172,025) - (126,188) - - - ------------------------------------------------------------------------------------------------------------------------- 280,422 3,502,084 451,268 4,924,642 964,418 3,820,366 1,561,510 - ------------------------------------------------------------------------------------------------------------------------- (57,688) 541,516 97,777 (2,725,318) (390,115) (3,179,789) 5,413,475 - ------------------------------------------------------------------------------------------------------------------------- 275,934 (1,267,887) (672,263) 34,360,096 934,230 16,723,172 (10,033,374) (2,175,582) (12,483,799) (2,384,136) (111,084,428) (13,290,036) (69,310,321) 5,835,424 - ------------------------------------------------------------------------------------------------------------------------- (1,899,648) (13,751,686) (3,056,399) (76,724,332) (12,355,806) (52,587,149) (4,197,950) - ------------------------------------------------------------------------------------------------------------------------- $ (1,957,336) $ (13,210,170) $ (2,958,622) $ (79,449,650) $ (12,745,921) $ (55,766,938) $ 1,215,525 ========================================================================================================================= $ 9,553 $ 283,407 $ 7,926 $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------- IVY MONEY MARKET FUND $ - 1,523,100 - ------------------ 1,523,100 - ------------------ 98,462 101,799 24,615 13,492 28,502 12,720 12,680 - - 31,583 6,058 - 34,968 5,646 - ------------------ 370,525 (162,695) - ------------------ 207,830 - ------------------ 1,315,270 - ------------------ - - - ------------------ - - ------------------ $ 1,315,270 ================== $ - - ------------------
55 58 STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31
IVY DEVELOPING IVY EUROPEAN MARKETS FUND OPPORTUNITIES FUND 2000 1999 2000 1999 (A) (DECREASE) INCREASE IN NET ASSETS Operations Net investment (loss) income $ (109,345) $ (38,471) $ (1,458,985) $ (8,369) Net realized (loss) gain on investments and foreign currency transactions (1,786,405) (904,233) 5,407,056 1,182,131 Net change in unrealized appreciation/ depreciation on investments and foreign currency transactions (2,038,411) 6,508,089 (49,009,758) 3,344,443 ----------------------------------------------------------------- Net (decrease) increase resulting from operations (3,934,161) 5,565,385 (45,061,687) 4,518,205 ----------------------------------------------------------------- Class A distributions Dividends from net investment income - (4,492) - - Dividends in excess of net investment income - - (4,587) (9,491) Distributions from realized gains (14,591) (33,645) (1,908,303) (261,490) ----------------------------------------------------------------- Total distributions to Class A shareholders (14,591) (38,137) (1,912,890) (270,981) ----------------------------------------------------------------- Class B distributions Dividends from net investment income - - - - Dividends in excess of net investment income - - (4,830) (658) Distributions from realized gains (16,053) (15,012) (1,675,847) (203,781) ----------------------------------------------------------------- Total distributions to Class B shareholders (16,053) (15,012) (1,680,677) (204,439) ----------------------------------------------------------------- Class C distributions Dividends from net investment income - - - - Dividends in excess of net investment income - - (4,196) (3,087) Distributions from realized gains (4,135) (8,682) (1,313,582) (152,341) ----------------------------------------------------------------- Total distributions to Class C shareholders (4,135) (8,682) (1,317,778) (155,428) ----------------------------------------------------------------- Class I distributions Dividends from net investment income - - - - Distributions from realized gains - - (642) (9) ----------------------------------------------------------------- Total distributions to Class I shareholders - - (642) (9) ----------------------------------------------------------------- Advisor Class distributions Dividends from net investment income - (2,222) - - Dividends in excess of net investment income - - (1,621) (5,049) Distributions from realized gains (408) (1,949) (727,916) (558,976) ----------------------------------------------------------------- Total distributions to Advisor Class shareholders (408) (4,171) (729,537) (564,025) ----------------------------------------------------------------- Fund share transactions (Note 5) Class A 1,201 (1,654,359) 54,123,742 12,671,199 Class B (1,311,204) (983,723) 68,536,723 5,297,153 Class C (1,683,419) (271,069) 56,291,817 7,546,989 Class I - - 23,667 - Advisor Class (146,993) 195,560 19,232,457 4,315,592 ----------------------------------------------------------------- Net (decrease) increase resulting from Fund share transactions (3,140,415) (2,713,591) 198,208,406 29,830,933 ----------------------------------------------------------------- TOTAL (DECREASE) INCREASE IN NET ASSETS (7,109,763) 2,785,792 147,505,195 33,154,256 Net assets beginning of period 17,140,768 14,354,976 33,154,256 - ----------------------------------------------------------------- NET ASSETS END OF PERIOD $10,031,005 $ 17,140,768 $ 180,659,451 $ 33,154,256 ================================================================= UNDISTRIBUTED NET INVESTMENT INCOME $ - $ - $ - $ 14,512 ----------------------------------------------------------------- IVY GLOBAL FUND 2000 1999 (DECREASE) INCREASE IN NET ASSETS Operations Net investment (loss) income $ (25,662) $ (40,972) Net realized (loss) gain on investments and foreign currency transactions 1,051,095 2,479,642 Net change in unrealized appreciation/ depreciation on investments and foreign currency transactions (3,408,079) 2,250,842 --------------------------------- Net (decrease) increase resulting from operations (2,382,646) 4,689,512 --------------------------------- Class A distributions Dividends from net investment income - - Dividends in excess of net investment income - - Distributions from realized gains (641,619) (738,164) --------------------------------- Total distributions to Class A shareholders (641,619) (738,164) --------------------------------- Class B distributions Dividends from net investment income - - Dividends in excess of net investment income - - Distributions from realized gains (364,126) (468,259) --------------------------------- Total distributions to Class B shareholders (364,126) (468,259) --------------------------------- Class C distributions Dividends from net investment income - - Dividends in excess of net investment income - - Distributions from realized gains (11,341) (17,380) --------------------------------- Total distributions to Class C shareholders (11,341) (17,380) --------------------------------- Class I distributions Dividends from net investment income - - Distributions from realized gains - - --------------------------------- Total distributions to Class I shareholders - - --------------------------------- Advisor Class distributions Dividends from net investment income - - Dividends in excess of net investment income - - Distributions from realized gains (11,745) (11,002) --------------------------------- Total distributions to Advisor Class shareholders (11,745) (11,002) --------------------------------- Fund share transactions (Note 5) Class A (1,628,282) (5,072,125) Class B (1,282,931) (1,283,220) Class C (43,204) (216,719) Class I - - Advisor Class 12,706 (197,021) --------------------------------- Net (decrease) increase resulting from Fund share transactions (2,941,711) (6,769,085) --------------------------------- TOTAL (DECREASE) INCREASE IN NET ASSETS (6,353,188) (3,314,378) Net assets beginning of period 19,589,617 22,903,995 --------------------------------- NET ASSETS END OF PERIOD $13,236,429 $ 19,589,617 ================================= UNDISTRIBUTED NET INVESTMENT INCOME $ - $ - ---------------------------------
(a) For the period from May 3, 1999 (commencement) to December 31, 1999. 56 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 59 STATEMENTS OF CHANGES IN NET ASSETS (continued) For the years ended December 31
IVY GLOBAL NATURAL IVY GLOBAL SCIENCE IVY INTERNATIONAL IVY INTERNATIONAL SMALL RESOURCES FUND & TECHNOLOGY FUND FUND COMPANIES FUND 2000 1999 2000 1999 2000 1999 2000 1999 $ (73,442) $ (12,345) $ (2,158,772) $(1,035,652) $ 2,215,084 $ 10,534,977 $ (57,688) $ (27,208) 1,475,067 (1,827,773) (5,684,935) 9,009,362 532,142,194 149,803,389 275,934 (51,710) (682,617) 4,156,527 (50,033,088) 40,021,044 (847,790,539) 286,502,925 (2,175,582) 1,075,611 - ------------------------------------------------------------------------------------------------------------------------------- 719,008 2,316,409 (57,876,795) 47,994,754 (313,433,261) 446,841,291 (1,957,336) 996,693 - ------------------------------------------------------------------------------------------------------------------------------- - - - - (764,917) (7,591,186) - - - - - - - - - - (26,274) - (394,036) (2,818,813) (261,952,258) (79,453,345) (210,672) (2,645) - ------------------------------------------------------------------------------------------------------------------------------- (26,274) - (394,036) (2,818,813) (262,717,175) (87,044,531) (210,672) (2,645) - ------------------------------------------------------------------------------------------------------------------------------- - - - - (372,082) - - - - - - - - (28,805) - - (7,177) - (367,848) (2,344,250) (117,187,139) (26,528,332) (124,960) (3,066) - ------------------------------------------------------------------------------------------------------------------------------- (7,177) - (367,848) (2,344,250) (117,559,221) (26,557,137) (124,960) (3,066) - ------------------------------------------------------------------------------------------------------------------------------- - - - - (76,122) - - - - - - - - (3,539) - - (3,487) - (126,455) (1,216,600) (25,686,618) (7,061,141) (102,558) (2,646) - ------------------------------------------------------------------------------------------------------------------------------- (3,487) - (126,455) (1,216,600) (25,762,740) (7,064,680) (102,558) (2,646) - ------------------------------------------------------------------------------------------------------------------------------- - - - - (44,012) (1,415,063) - - - - - - (19,644,945) (8,540,450) - - - ------------------------------------------------------------------------------------------------------------------------------- - - - - (19,688,957) (9,955,513) - - - ------------------------------------------------------------------------------------------------------------------------------- - - - - - - - - - - - - (5) - - - (138) - (10,215) (12,840) (1,057) - (119,878) (682) - ------------------------------------------------------------------------------------------------------------------------------- (138) - (10,215) (12,840) (1,062) - (119,878) (682) - ------------------------------------------------------------------------------------------------------------------------------- (753,298) 2,942,391 16,637,842 5,807,495 (529,496,488) (246,372,544) 8,801,905 (219,679) 409,016 481,343 16,632,437 10,548,875 (59,713,955) (71,889,837) 4,858,451 (128,120) 270,730 371,378 (693,142) 1,740,790 (41,016,277) (29,745,075) 3,787,459 (217,497) - - - - (94,569,785) (12,118,396) - - (6,007) 21,786 1,096,760 364,323 5,966 - 4,489,155 239,851 - ------------------------------------------------------------------------------------------------------------------------------- (79,559) 3,816,898 33,673,897 18,461,483 (724,790,539) (360,125,852) 21,936,970 (325,445) - ------------------------------------------------------------------------------------------------------------------------------- 602,373 6,133,307 (25,101,452) 60,063,734 (1,463,952,955) (43,906,422) 19,421,566 662,209 8,839,947 2,706,640 96,594,483 36,530,749 2,424,265,010 2,468,171,432 3,793,619 3,131,410 - ------------------------------------------------------------------------------------------------------------------------------- $9,442,320 $ 8,839,947 $ 71,493,031 $96,594,483 $ 960,312,055 $2,424,265,010 $23,215,185 $3,793,619 =============================================================================================================================== $ - $ - $ - $ - $ 100,368 $ 893,054 $ - $ 24,503 - -------------------------------------------------------------------------------------------------------------------------------
57 60 STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31
IVY INTERNATIONAL IVY PACIFIC VALUE FUND OPPORTUNITIES FUND IVY GROWTH FUND 2000 1999 2000 1999 2000 (DECREASE) INCREASE IN NET ASSETS Operations Net investment income (loss) $ 541,516 $ 433,456 $ 97,777 $ 135,562 $ (2,725,318) Net realized (loss) gain on investments and foreign currency transactions (1,267,887) 2,938,637 (672,263) 924,189 34,360,096 Net change in unrealized appreciation/ depreciation on investments and foreign currency transactions (12,483,799) 34,240,270 (2,384,136) 6,328,151 (111,084,428) ------------------------------------------------------------------------------ Net (decrease) increase resulting from operations (13,210,170) 37,612,363 (2,958,622) 7,387,902 (79,449,650) ------------------------------------------------------------------------------ Class A distributions Dividends from net investment income (75,221) (277,354) (77,451) (116,226) - Dividends in excess of net investment income - - - - - Distributions from realized gains (135,414) (66,770) (2,395) (9,904) (33,539,757) ------------------------------------------------------------------------------ Total distributions to Class A shareholders (210,635) (344,124) (79,846) (126,130) (33,539,757) ------------------------------------------------------------------------------ Class B distributions Dividends from net investment income (57,731) (88,102) (8,761) (17,335) - Dividends in excess of net investment income (12,501) - - - - Distributions from realized gains (126,433) (188,377) (271) (6,000) (956,732) ------------------------------------------------------------------------------ Total distributions to Class B shareholders (196,665) (276,479) (9,032) (23,335) (956,732) ------------------------------------------------------------------------------ Class C distributions Dividends from net investment income (23,757) (36,951) (11,120) (944) - Dividends in excess of net investment income (3,581) - - - - Distributions from realized gains (49,215) (86,889) (344) (623) (100,729) ------------------------------------------------------------------------------ Total distributions to Class C shareholders (76,553) (123,840) (11,464) (1,567) (100,729) ------------------------------------------------------------------------------ Advisor Class distributions Dividends from net investment income (2,742) (44,386) (190) (4,321) - Dividends in excess of net investment income - - - - - Distributions from realized gains (4,936) (7,240) (6) (236) (45,125) ------------------------------------------------------------------------------ Total distributions to Advisor Class shareholders (7,678) (51,626) (196) (4,557) (45,125) ------------------------------------------------------------------------------ Fund share transactions (Note 5) Class A (6,456,808) 814,377 (1,898,677) (759,913) 8,558,057 Class B (11,961,285) (5,763,951) 142,678 (1,087,549) 2,522,576 Class C (10,792,628) (5,870,687) 907,794 (217,633) 501,777 Advisor Class (2,249,563) 1,884,475 (289,376) 313,989 65,791 ------------------------------------------------------------------------------ Net (decrease) increase resulting from Fund share transactions (31,460,284) (8,935,786) (1,137,581) (1,751,106) 11,648,201 ------------------------------------------------------------------------------ TOTAL (DECREASE) INCREASE IN NET ASSETS (45,161,985) 27,880,508 (4,196,741) 5,481,207 (102,443,792) Net assets beginning of period 174,729,779 146,849,271 21,335,613 15,854,406 372,807,122 ------------------------------------------------------------------------------ NET ASSETS END OF PERIOD $129,567,794 $ 174,729,779 $17,138,872 $ 21,335,613 $ 270,363,330 ============================================================================== UNDISTRIBUTED NET INVESTMENT INCOME $ - $ - $ 1,532 $ - $ - ------------------------------------------------------------------------------ IVY GROWTH FUND 1999 (DECREASE) INCREASE IN NET ASSETS Operations Net investment income (loss) $ (488,428) Net realized (loss) gain on investments and foreign currency transactions 58,569,033 Net change in unrealized appreciation/ depreciation on investments and foreign currency transactions 34,926,244 -------------------- Net (decrease) increase resulting from operations 93,006,849 -------------------- Class A distributions Dividends from net investment income - Dividends in excess of net investment income - Distributions from realized gains (56,548,027) -------------------- Total distributions to Class A shareholders (56,548,027) -------------------- Class B distributions Dividends from net investment income - Dividends in excess of net investment income - Distributions from realized gains (1,211,582) -------------------- Total distributions to Class B shareholders (1,211,582) -------------------- Class C distributions Dividends from net investment income - Dividends in excess of net investment income - Distributions from realized gains (54,912) -------------------- Total distributions to Class C shareholders (54,912) -------------------- Advisor Class distributions Dividends from net investment income - Dividends in excess of net investment income - Distributions from realized gains (66,750) -------------------- Total distributions to Advisor Class shareholders (66,750) -------------------- Fund share transactions (Note 5) Class A 10,824,381 Class B 2,569,837 Class C 291,220 Advisor Class 53,759 -------------------- Net (decrease) increase resulting from Fund share transactions 13,739,197 -------------------- TOTAL (DECREASE) INCREASE IN NET ASSETS 48,864,775 Net assets beginning of period 323,942,347 -------------------- NET ASSETS END OF PERIOD $ 372,807,122 ==================== UNDISTRIBUTED NET INVESTMENT INCOME $ - --------------------
58 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 61 STATEMENTS OF CHANGES IN NET ASSETS (continued) For the years ended December 31
IVY US BLUE IVY US EMERGING IVY MONEY CHIP FUND GROWTH FUND IVY BOND FUND MARKET FUND 2000 1999 2000 1999 2000 1999 2000 1999 $ (390,115) $ (60,564) $ (3,179,789) $ (2,390,778) $ 5,413,475 $ 9,369,182 $ 1,315,270 $ 1,105,482 934,230 (169,569) 16,723,172 26,371,155 (10,033,374) (14,598,790) - - (13,290,036) 1,730,573 (69,310,321) 52,034,319 5,835,424 (3,705,523) - - - ------------------------------------------------------------------------------------------------------------------------------- (12,745,921) 1,500,440 (55,766,938) 76,014,696 1,215,525 (8,935,131) 1,315,270 1,105,482 - ------------------------------------------------------------------------------------------------------------------------------- - (18,102) - - (3,934,995) (6,523,088) (986,924) (778,168) - - - - - (106,066) - - (878,778) - (10,359,253) (10,775,090) - - - - - ------------------------------------------------------------------------------------------------------------------------------- (878,778) (18,102) (10,359,253) (10,775,090) (3,934,995) (6,629,154) (986,924) (778,168) - ------------------------------------------------------------------------------------------------------------------------------- - (7,134) - - (1,280,033) (2,391,825) (260,020) (310,429) - - - - - (38,891) - - (367,192) - (7,614,713) (8,243,868) - - - - - ------------------------------------------------------------------------------------------------------------------------------- (367,192) (7,134) (7,614,713) (8,243,868) (1,280,033) (2,430,716) (260,020) (310,429) - ------------------------------------------------------------------------------------------------------------------------------- - (2,157) - - (181,541) (433,785) (68,326) (16,885) - - - - - (7,053) - - (44,905) - (1,250,347) (1,616,149) - - - - - ------------------------------------------------------------------------------------------------------------------------------- (44,905) (2,157) (1,250,347) (1,616,149) (181,541) (440,838) (68,326) (16,885) - ------------------------------------------------------------------------------------------------------------------------------- - (7,101) - - (18,572) (21,268) - - - - - - - (346) - - (16,062) - (234,243) (141,969) - - - - - ------------------------------------------------------------------------------------------------------------------------------- (16,062) (7,101) (234,243) (141,969) (18,572) (21,614) - - - ------------------------------------------------------------------------------------------------------------------------------- 63,404,638 2,307,988 17,498,379 10,324,776 (14,045,320) (27,828,111) 1,869,932 (579,302) 19,746,621 6,883,607 5,006,514 4,662,639 (6,346,933) (9,560,939) (1,614,579) 850,618 1,001,804 2,161,639 (1,617,766) 1,477,323 (1,037,965) (6,392,927) 1,603,183 (50,878) 312,228 273,966 1,922,315 319,095 (127,260) 25,495 - - - ------------------------------------------------------------------------------------------------------------------------------- 84,465,291 11,627,200 22,809,442 16,783,833 (21,557,478) (43,756,482) 1,858,536 220,438 - ------------------------------------------------------------------------------------------------------------------------------- 70,412,433 13,093,146 (52,416,052) 72,021,453 (25,757,094) (62,213,935) 1,858,536 220,438 15,512,008 2,418,862 198,326,533 126,305,080 101,058,997 163,272,932 26,382,206 26,161,768 - ------------------------------------------------------------------------------------------------------------------------------- $85,924,441 $15,512,008 $ 145,910,481 $198,326,533 $ 75,301,903 $ 101,058,997 $28,240,742 $26,382,206 =============================================================================================================================== $ - $ - $ - $ - $ - $ - $ - $ - - -------------------------------------------------------------------------------------------------------------------------------
59 62 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA (LOSS) INCOME FROM INVESTMENT OPERATIONS NET (LOSS) NET ASSET NET GAIN ON VALUE, INVESTMENT SECURITIES TOTAL FROM SHARE BEGINNING (LOSS) (REALIZED AND INVESTMENT FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD INCOME UNREALIZED) OPERATIONS IVY DEVELOPING A 01/01 to 12/31/2000 $ 8.77 $(.02)(c) $(2.07) $(2.09) MARKETS FUND 01/01 to 12/31/1999 6.02 .01(c) 2.80 2.81 01/01 to 12/31/1998 6.82 .06(c)(d) (.86)(d) (.80) 01/01 to 12/31/1997 10.12 .01(c) (2.80) (2.79) 01/01 to 12/31/1996 9.05 (.02)(c)(d) 1.09(d) 1.07 B 01/01 to 12/31/2000 8.63 (.10)(c) (2.02) (2.12) 01/01 to 12/31/1999 5.93 (.04)(c) 2.76 2.72 01/01 to 12/31/1998 6.77 .01(c)(d) (.85)(d) (.84) 01/01 to 12/31/1997 10.04 (.06)(c) (2.76) (2.82) 01/01 to 12/31/1996 9.05 (.06)(c)(d) 1.05(d) .99 C 01/01 to 12/31/2000 8.67 (.14)(c) (1.99) (2.13) 01/01 to 12/31/1999 5.96 (.03)(c) 2.76 2.73 01/01 to 12/31/1998 6.79 .01(c)(d) (.84)(d) (.83) 01/01 to 12/31/1997 10.06 (.07)(c) (2.76) (2.83) 04/30(e) to 12/31/1996 9.89 (.02)(c)(d) .19(d) .17 ADVISOR 01/01 to 12/31/2000 8.80 .02(c) (2.10) (2.08) 01/01 to 12/31/1999 6.05 .03(c) 2.83 2.86 04/30(e) to 12/31/1998 7.48 .04(c)(d) (1.47)(d) (1.43) ----------------------------------------------------------------------------------------------- IVY EUROPEAN A 01/01 to 12/31/2000 17.13 (.07) .82 .75 OPPORTUNITIES FUND 05/04(e) to 12/31/1999 10.01 -(c) 16.35 16.35 B 01/01 to 12/31/2000 17.13 (.18) .83 .65 05/24(e) to 12/31/1999 10.21 (.01)(c) 16.15 16.14 C 01/01 to 12/31/2000 17.13 (.22) .88 .66 10/24(e) to 12/31/1999 11.57 (.01)(c) 6.00 5.99 I 03/16(e) to 12/31/2000 26.00 (.01) (7.92) (7.93) ADVISOR 01/01 to 12/31/2000 17.23 (.02) .85 .83 05/03(e) to 12/31/1999 10.01 -(c) 16.46 16.46 ----------------------------------------------------------------------------------------------- IVY GLOBAL FUND A 01/01 to 12/31/2000 13.42 .02(c) (1.91) (1.89) 01/01 to 12/31/1999 11.32 .01(c) 2.98 2.99 01/01 to 12/31/1998 10.93 .02(c) .91 .93 01/01 to 12/31/1997 13.17 .08 (1.23) (1.15) 01/01 to 12/31/1996 11.97 .08 1.86 1.94 B 01/01 to 12/31/2000 13.14 (.09)(c) (1.85) (1.94) 01/01 to 12/31/1999 11.19 (.10)(c) 2.94 2.84 01/01 to 12/31/1998 10.90 (.09)(c) .92 .83 01/01 to 12/31/1997 13.12 (.02) (1.20) (1.22) 01/01 to 12/31/1996 11.97 (.02) 1.85 1.83 C 01/01 to 12/31/2000 12.75 (.11)(c) (1.81) (1.92) 01/01 to 12/31/1999 10.90 (.16)(c) 2.90 2.74 01/01 to 12/31/1998 10.67 (.16)(c) .93 .77 01/01 to 12/31/1997 12.94 (.02) (1.24) (1.26) 04/30(e) to 12/31/1996 13.31 (.01) .42 .41 ADVISOR 01/01 to 12/31/2000 13.50 .05(c) (1.92) (1.87) 01/01 to 12/31/1999 11.36 .08(c) 2.95 3.03 04/30(e) to 12/31/1998 13.26 .05(c) (1.41) (1.36) ----------------------------------------------------------------------------------------------- IVY GLOBAL NATURAL A 01/01 to 12/31/2000 8.91 (.07)(c) .95 .88 RESOURCES FUND 01/01 to 12/31/1999 6.32 -(c)(d) 2.59(d) 2.59 01/01 to 12/31/1998 9.01 .03(c) (2.68) (2.65) 01/01 to 12/31/1997 10.00 (.11)(c) .70 .59 B 01/01 to 12/31/2000 8.77 (.09)(c) .90 .81 01/01 to 12/31/1999 6.27 (.04)(c)(d) 2.54(d) 2.50 01/01 to 12/31/1998 9.00 (.04)(c) (2.65) (2.69) 01/01 to 12/31/1997 10.00 (.15)(c) .68 .53 C 01/01 to 12/31/2000 8.63 (.07)(c) .89 .82 01/01 to 12/31/1999 6.21 (.04)(c)(d) 2.46(d) 2.42 01/01 to 12/31/1998 9.00 (.14)(c) (2.61) (2.75) 01/01 to 12/31/1997 10.00 (.17)(c) .68 .51 ADVISOR 01/01 to 12/31/2000 8.90 (.05)(c) .95 .90 04/08(e) to 12/31/1999 7.00 .02(c)(d) 1.88(d) 1.90 SELECTED PER SHARE DATA LESS DISTRIBUTIONS DIVIDENDS DIVIDENDS IN FROM NET EXCESS OF NET INVESTMENT INVESTMENT FUND NAME INCOME INCOME IVY DEVELOPING $ - $ - MARKETS FUND .01 - - - - .01 - - - - - - - - - .01 - - - - - - - - - .01 - - - - .06 - - - ----------------------------------------------------------------------------------- IVY EUROPEAN - - OPPORTUNITIES FUND - .01 - - - - - - - .01 - - - - - .02 ----------------------------------------------------------------------------------------------- ------- IVY GLOBAL FUND - - - - - - .05 .05 .08 .18 - - - - - - .05 .05 - .20 - - - - - - .05 .05 - .30 - - - - - - ----------------------------------------------------------------------------------------------- ------- IVY GLOBAL NATURAL - - RESOURCES FUND - - - .04 - .22 - - - - - .04 - .17 - - - - - .04 - .15 - - - -
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding. (b) From 1995 to 1997, total expenses include fees paid (e) Commencement indirectly, if any, through an expense offset (f) Total return represents aggregate total return. arrangement. (g) Annualized (c) Net investment (loss) income is net of expenses reimbursed by Manager. na -- not applicable
60 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 63 FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA LESS DISTRIBUTIONS RATIOS AND SUPPLEMENTAL DATA RATIO OF NET ASSET NET ASSETS, EXPENSES TO DISTRIBUTIONS DISTRIBUTIONS VALUE, TOTAL END OF AVERAGE NET FROM IN EXCESS OF TOTAL END OF RETURN PERIOD ASSETS WITH REALIZED GAINS REALIZED GAINS DISTRIBUTIONS PERIOD (%)(A) (000) REIMBURSEMENT (%)(B) $ .02 $ - $ .02 $ 6.66 (23.79) $4,213 2.12 .05 - .06 8.77 46.70 5,652 2.30 - - - 6.02 (11.67) 5,487 2.18 .30 .20 .51 6.82 (27.42) 8,584 2.31 - - - 10.12 11.83 9,925 2.45 .02 - .02 6.49 (24.53) 4,525 2.90 .02 - .02 8.63 45.82 7,676 2.92 - - - 5.93 (12.35) 6,145 2.96 .28 .16 .45 6.77 (27.93) 8,488 3.09 - - - 10.04 10.95 6,269 3.20 .02 - .02 6.52 (24.53) 1,173 2.85 .02 - .02 8.67 45.84 3,474 2.85 - - - 5.96 (12.16) 2,641 2.96 .27 .16 .44 6.79 (28.01) 2,420 3.12 - - - 10.06 1.73(f) 1,854 3.16(g) .02 - .02 6.70 (23.60) 120 1.71 .05 - .11 8.80 47.38 337 1.74 - - - 6.05 (19.06)(f) 82 1.68(g) - --------------------------------------------------------------------------------------------------------------- .63 - .63 17.25 4.51 54,655 na 9.22 - 9.23 17.13 215.58(f) 13,932 2.22(g) .52 - .52 17.26 4.12 57,283 na 9.22 - 9.22 17.13 209.41(f) 5,900 2.96(g) .47 - .47 17.32 3.98 49,527 na .42 - .43 17.13 51.80(f) 8,076 2.96(g) .70 - .70 17.37 (30.40)(f) 17 na .67 - .67 17.39 5.01 19,178 na 9.22 - 9.24 17.23 217.16(f) 5,246 1.93(g) - --------------------------------------------------------------------------------------------------------------- .90 - .90 10.63 (13.91) 8,135 2.17 .89 - .89 13.42 26.51 11,828 2.17 .54 - .54 11.32 8.59 14,660 2.18 .99 - 1.09 10.93 (8.72) 19,692 na .48 - .74 13.17 16.21 24,152 na .90 - .90 10.30 (14.58) 4,769 2.99 .89 - .89 13.14 25.31 7,316 2.99 .54 - .54 11.19 7.69 7,495 2.97 .90 - 1.00 10.90 (9.33) 10,056 na .48 - .68 13.12 15.30 8,968 na .90 - .90 9.93 (14.88) 178 3.36 .89 - .89 12.75 25.24 267 3.23 .54 - .54 10.90 7.30 428 3.30 .91 - 1.01 10.67 (9.72) 727 na .48 - .78 12.94 3.07(f 71 na .90 - .90 10.73 (13.67) 155 1.95 .89 - .89 13.50 26.77 179 1.96 .54 - .54 11.36 (10.19)(f) 321 1.75(g) - --------------------------------------------------------------------------------------------------------------- .05 - .05 9.74 9.86 5,549 2.29 - - - 8.91 40.98 5,823 2.16 - - .04 6.32 (29.35) 1,345 2.22 1.08 .28 1.58 9.01 6.95 3,907 2.10 .02 - .02 9.56 9.27 3,157 2.80 - - - 8.77 39.87 2,520 2.71 - - .04 6.27 (29.82) 1,320 2.90 1.08 .28 1.53 9.00 6.28 2,706 2.86 .05 - .05 9.40 9.49 715 2.70 - - - 8.63 38.97 472 2.73 - - .04 6.21 (30.49) 41 3.57 1.08 .28 1.51 9.00 6.08 124 3.08 .06 - .06 9.74 10.17 22 2.02 - - - 8.90 27.14(f) 26 1.87(g) RATIOS AND SUPPLEMENTAL DATA RATIO OF RATIO OF EXPENSES TO NET INVESTMENT AVERAGE NET (LOSS) INCOME PORTFOLIO ASSETS WITHOUT TO AVERAGE TURNOVER REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%) 3.50 (.27)(c) 76 3.28 .13(c) 37 3.47 .88(c) 47 2.39 .09(c) 42 2.82 (.23)(c) 27 4.28 (1.04)(c) 76 3.90 (.49)(c) 37 4.25 .10(c) 47 3.17 (.69)(c) 42 3.57 (.98)(c) 27 4.23 (1.00)(c) 76 3.83 (.43)(c) 37 4.25 .10(c) 47 3.20 (.72)(c) 42 3.53(g) (.94)(c)(g) 27 3.09 .14(c) 76 2.72 .69(c) 37 2.97(g) 1.38(c)(g) 47 - --------------------------------------------------------------------------------------------------------------- 1.83 (.36) 46 6.10(g) (.15)(c)(g) 108 2.59 (1.12) 46 6.84(g) (.89)(c)(g) 108 2.58 (1.11) 46 6.84(g) (.89)(c)(g) 108 1.54 (.07) 46 1.55 (.09) 46 5.81(g) .14(c)(g) 108 - --------------------------------------------------------------------------------------------------------------- 3.11 .16(c) 102 2.77 .09(c) 50 2.54 .16(c) 17 2.07 .58 45 2.18 .58 43 3.93 (.66)(c) 102 3.59 (.72)(c) 50 3.33 (.63)(c) 17 2.82 (.18) 45 2.94 (.17) 43 4.30 (1.03)(c) 102 3.83 (.96)(c) 50 3.66 (.96)(c) 17 2.82 (.18) 45 3.77(g) (1.01)(g) 43 2.89 .38(c) 102 2.56 .31(c) 50 2.11(g) .59(c)(g) 17 - --------------------------------------------------------------------------------------------------------------- 4.54 (.69)(c) 134 4.53 .02(c) 157 5.75 .29(c) 98 2.88 (1.10)(c) 199 5.05 (1.20)(c) 134 5.08 (.53)(c) 157 6.43 (.39)(c) 98 3.64 (1.86)(c) 199 4.95 (1.10)(c) 134 5.10 (.55)(c) 157 7.10 (1.06)(c) 98 3.86 (2.08)(c) 199 4.27 (.42)(c) 134 4.24(g) .31(c)(g) 157
61 64 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA (LOSS) INCOME FROM INVESTMENT OPERATIONS NET (LOSS) NET ASSET NET GAIN ON VALUE, INVESTMENT SECURITIES TOTAL FROM SHARE BEGINNING (LOSS) (REALIZED AND INVESTMENT FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD INCOME UNREALIZED) OPERATIONS IVY GLOBAL SCIENCE & A 01/01 to 12/31/2000 $48.90 $ (.64) $(20.38) $(21.02) TECHNOLOGY FUND 01/01 to 12/31/1999 23.63 (.43) 29.27 28.84 01/01 to 12/31/1998 17.47 (.36)(d) 6.52(d) 6.16 01/01 to 12/31/1997 16.40 (.31)(d) 1.38(d) 1.07 07/22(e) to 12/31/1996 10.00 (.06)(c) 6.49 6.43 B 01/01 to 12/31/2000 47.97 (.93) (19.89) (20.82) 01/01 to 12/31/1999 23.31 (.62) 28.67 28.05 01/01 to 12/31/1998 17.37 (.50)(d) 6.44(d) 5.94 01/01 to 12/31/1997 16.44 (.32)(d) 1.25(d) .93 07/22(e) to 12/31/1996 10.00 (.06)(c) 6.52 6.46 C 01/01 to 12/31/2000 48.19 (1.10) (19.81) (20.91) 01/01 to 12/31/1999 23.38 (.70) 28.87 28.17 01/01 to 12/31/1998 17.40 (.48)(d) 6.46(d) 5.98 01/01 to 12/31/1997 16.46 (.42)(d) 1.36(d) .94 07/22(e) to 12/31/1996 10.00 (.05)(c) 6.53 6.48 ADVISOR 01/01 to 12/31/2000 48.82 (.43) (20.50) (20.93) 01/01 to 12/31/1999 23.62 (.24) 29.07 28.83 04/15(e) to 12/31/1998 20.19 (.20)(d) 3.63(d) 3.43 -------------------------------------------------------------------------------------------------- IVY INTERNATIONAL FUND A 01/01 to 12/31/2000 47.09 .19 (12.44) (12.25) 01/01 to 12/31/1999 41.20 .30 8.31 8.61 01/01 to 12/31/1998 39.03 .37 2.50 2.87 01/01 to 12/31/1997 35.89 .24 3.47 3.71 01/01 to 12/31/1996 30.67 .20 5.85 6.05 B 01/01 to 12/31/2000 46.78 (.17) (12.33) (12.50) 01/01 to 12/31/1999 40.97 (.06) 8.27 8.21 01/01 to 12/31/1998 38.82 - 2.50 2.50 01/01 to 12/31/1997 35.73 (.06) 3.44 3.38 01/01 to 12/31/1996 30.67 (.01) 5.76 5.75 C 01/01 to 12/13/2000 46.57 (.19) (12.28) (12.47) 01/01 to 12/31/1999 40.79 (.05) 8.23 8.18 01/01 to 12/31/1998 38.64 - 2.50 2.50 01/01 to 12/31/1997 35.58 (.05) 3.42 3.37 04/30(e) to 12/31/1996 32.68 - 3.74 3.74 I 01/01 to 12/31/2000 47.09 .64 (12.74) (12.10) 01/01 to 12/31/1999 41.21 .52 8.34 8.86 01/01 to 12/31/1998 39.06 .55 2.48 3.03 01/01 to 12/31/1997 35.89 .32 3.56 3.88 01/01 to 12/31/1996 30.67 .27 5.88 6.15 ADVISOR 08/31(e) to 12/31/2000 40.05 .02 (5.18) (5.16) -------------------------------------------------------------------------------------------------- IVY INTERNATIONAL SMALL A 01/01 to 12/31/2000 12.45 (.03)(c)(d) .64(d) .61 COMPANIES FUND 01/01 to 12/31/1999 8.95 (.05)(c) 3.58 3.53 01/01 to 12/31/1998 8.66 .04(c) .41 .45 01/01 to 12/31/1997 10.00 (.01)(c) (1.24) (1.25) B 01/01 to 12/31/2000 12.30 (.13)(c) .65 .52 01/01 to 12/31/1999 8.92 (.13)(c) 3.54 3.41 01/01 to 12/31/1998 8.63 (.03)(c) .41 .38 01/01 to 12/31/1997 10.00 (.05)(c) (1.27) (1.32) C 01/01 to 12/31/2000 12.38 (.12)(c) .64 .52 01/01 to 12/31/1999 8.97 (.12)(c) 3.56 3.44 01/01 to 12/31/1998 8.65 (.03)(c) .42 .39 01/01 to 12/31/1997 10.00 (.06)(c) (1.25) (1.31) ADVISOR 01/01 to 12/31/2000 12.48 .02(c)(d) .64(d) .66 07/01(e) to 12/31/1999 9.94 -(c) 2.57 2.57 SELECTED PER SHARE DATA LESS DISTRIBUTIONS DIVIDENDS DIVIDENDS IN FROM NET EXCESS OF NET INVESTMENT INVESTMENT FUND NAME INCOME INCOME IVY GLOBAL SCIENCE & $ - $ - TECHNOLOGY FUND - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------- IVY INTERNATIONAL FUND .04 - .24 - .35 - .21 - .19 - .04 - - - - - - - - .05 .04 - - - - - .01 - - .20 .04 - .42 - .53 - .32 - .27 .02 - .04 -------------------------------------------------------------------------------------------------- IVY INTERNATIONAL SMALL - - COMPANIES FUND - - - .15 - - - - - - - .08 - - - - - - - .06 - - - - - -
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding. (b) From 1995 to 1997, total expenses include fees paid (e) Commencement indirectly, if any, through an expense offset (f) Total return represents aggregate total return. arrangement. (g) Annualized (c) Net investment (loss) income is net of expenses reimbursed by Manager. na -- not applicable
62 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 65 FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA LESS DISTRIBUTIONS RATIOS AND SUPPLEMENTAL DATA RATIO OF NET ASSET NET ASSETS, EXPENSES TO DISTRIBUTIONS DISTRIBUTIONS VALUE, TOTAL END OF AVERAGE NET FROM IN EXCESS OF TOTAL END OF RETURN PERIOD ASSETS WITH REALIZED GAINS REALIZED GAINS DISTRIBUTIONS PERIOD (%)(A) (000) REIMBURSEMENT (%)(B) $ - $ .35 $ .35 $27.53 (42.99) $ 32,016 na 3.57 - 3.57 48.90 122.56 41,516 na - - - 23.63 35.26 17,888 na - - - 17.47 6.53 12,159 na .03 - .03 16.40 64.34(f) 8,324 2.19(g) - .35 .35 26.80 (43.41) 28,675 na 3.39 - 3.39 47.97 120.82 35,879 na - - - 23.31 34.20 10,197 na - - - 17.37 5.66 8,577 na .02 - .02 16.44 64.59(f) 3,425 2.99(g) - .35 .35 26.93 (43.40) 9,977 na 3.36 - 3.36 48.19 120.98 18,769 na - - - 23.38 34.37 8,431 na - - - 17.40 5.71 6,348 na .02 - .02 16.46 64.84(f) 2,106 2.95(g) - .35 .35 27.54 (42.88) 826 na 3.63 - 3.63 48.82 122.56 431 na - - - 23.62 16.99(f) 15 na ------------------------------------------------------------------------------------------------------------- 8.60 - 8.64 26.20 (17.26) 588,282 na 2.48 - 2.72 47.09 21.05 1,573,615 na .22 .13 .70 41.20 7.34 1,613,797 na .26 .10 .57 39.03 10.38 1,705,772 na .64 - .83 35.89 19.72 989,254 na 8.60 - 8.64 25.64 (17.95) 280,782 na 2.40 - 2.40 46.78 20.15 540,514 na .22 .13 .35 40.97 6.43 542,997 na .21 .08 .29 38.82 9.46 568,521 na .64 - .69 35.73 18.76 312,161 na 8.60 - 8.64 25.46 (17.97) 57,337 na 2.40 - 2.40 46.57 20.16 143,320 na .22 .13 .35 40.79 6.46 154,378 na .21 .09 .31 38.64 9.50 174,880 na .64 - .84 35.58 11.45(f) 44,450 na 8.60 - 8.64 26.35 (16.92) 33,907 na 2.52 - 2.98 47.09 21.66 166,816 na .22 .13 .88 41.21 7.75 156,999 na .28 .11 .71 39.06 10.87 115,046 na .64 - .93 35.89 20.06 53,344 na 8.60 - 8.64 26.25 (12.09)(f) 4 na ------------------------------------------------------------------------------------------------------------- .35 - .35 12.71 4.94 8,976 2.24 .03 - .03 12.45 39.45 1,069 2.33 .01 - .16 8.95 5.24 980 2.47 .09 - .09 8.66 (12.52) 992 2.50 .29 - .29 12.53 4.27 5,553 2.96 .03 - .03 12.30 38.24 1,238 3.10 .01 - .09 8.92 4.46 1,027 3.24 .05 - .05 8.63 (13.19) 1,007 3.31 .30 - .30 12.60 4.25 4,522 2.96 .03 - .03 12.38 38.36 1,196 3.04 .01 - .07 8.97 4.55 1,125 3.16 .04 - .04 8.65 (13.14) 1,574 3.23 .38 - .38 12.76 5.32 4,165 1.89 .03 - .03 12.48 25.87(f) 291 1.83(g) RATIOS AND SUPPLEMENTAL DATA RATIO OF RATIO OF EXPENSES TO NET INVESTMENT AVERAGE NET (LOSS) INCOME PORTFOLIO ASSETS WITHOUT TO AVERAGE TURNOVER REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%) 1.82 (1.53) 69 1.98 (1.80) 62 2.16 (1.88) 73 2.11 (1.91) 54 2.90(g) (2.18)(c)(g) 23 2.55 (2.26) 69 2.74 (2.55) 62 2.95 (2.67) 73 2.92 (2.72) 54 3.70(g) (2.98)(c)(g) 23 2.53 (2.23) 69 2.68 (2.49) 62 2.84 (2.56) 73 2.85 (2.65) 54 3.66(g) (2.94)(c)(g) 23 1.64 (1.34) 69 1.89 (1.71) 62 2.18(g) (1.91)(g) 73 ------------------------------------------------------------------------------------------------------------- 1.66 .37 91 1.66 .63 7 1.58 .83 15 1.59 .68 8 1.65 .76 14 2.50 (.47) 91 2.42 (.13) 7 2.41 (.01) 15 2.42 (.15) 8 2.45 (.04) 14 2.49 (.46) 91 2.42 (.13) 7 2.40 .01 15 2.41 (.14) 8 2.44(g) (.03)(g) 14 1.24 .79 91 1.18 1.11 7 1.18 1.23 15 1.18 1.08 8 1.25 1.16 14 2.10(g) (.08)(g) 91 ------------------------------------------------------------------------------------------------------------- 3.77 (.21)(c) 124 8.56 (.47)(c) 98 6.38 .39(c) 18 4.87 (.11)(c) 10 4.49 (.93)(c) 124 9.33 (1.23)(c) 98 7.15 (.38)(c) 18 5.68 (.91)(c) 10 4.49 (.93)(c) 124 9.27 (1.18)(c) 98 7.07 (.30)(c) 18 5.60 (.83)(c) 10 3.42 .15(c) 124 8.06(g) .03(c)(g) 98
63 66 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA (LOSS) INCOME FROM INVESTMENT OPERATIONS NET (LOSS) NET ASSET NET GAIN ON VALUE, INVESTMENT SECURITIES TOTAL FROM SHARE BEGINNING (LOSS) (REALIZED AND INVESTMENT FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD INCOME UNREALIZED) OPERATIONS IVY INTERNATIONAL A 01/01 to 12/31/2000 $11.99 $ .14 (c) $(1.01) $ (.87) VALUE FUND 01/01 to 12/31/1999 9.48 .09 (c) 2.54 2.63 01/01 to 12/31/1998 8.98 .08 (c) .52 .60 05/13(e) to 12/31/1997 10.01 - (c)(d) (1.03)(d) (1.03) B 01/01 to 12/31/2000 11.91 .02 (c) (.96) (.94) 01/01 to 12/31/1999 9.42 .01 (c) 2.51 2.52 01/01 to 12/31/1998 8.93 .01 (c) .51 .52 05/13(e) to 12/31/1997 10.01 (.02)(c)(d) (1.06)(d) (1.08) C 01/01 to 12/31/2000 11.92 .02 (c) (.97) (.95) 01/01 to 12/31/1999 9.42 .02 (c) 2.51 2.53 01/01 to 12/31/1998 8.93 .01 (c) .51 .52 05/13(e) to 12/31/1997 10.01 (.02)(c)(d) (1.06)(d) (1.08) ADVISOR 01/01 to 12/31/2000 11.99 .50 (c) (1.33) (.83) 01/01 to 12/31/1999 9.48 .04 (c) 2.64 2.68 02/23(e) to 12/31/1998 9.63 .11 (c) (.13) (.02) ------------------------------------------------------------------------------------------------ IVY PACIFIC A 01/01 to 12/31/2000 9.15 .07 (c) (1.74) (1.67) OPPORTUNITIES FUND 01/01 to 12/31/1999 6.30 .08 (c) 2.86 2.94 01/01 to 12/31/1998 8.04 .13 (c) (1.78) (1.65) 01/01 to 12/31/1997 10.30 .02 (c)(d) (2.28)(d) (2.26) 01/01 to 12/31/1996 8.58 .03 (c) 1.74 1.77 B 01/01 to 12/31/2000 9.04 .01 (c) (1.71) (1.70) 01/01 to 12/31/1999 6.24 .02 (c) 2.81 2.83 01/01 to 12/31/1998 7.96 .05 (c) (1.73) (1.68) 01/01 to 12/31/1997 10.28 (.04)(c)(d) (2.28)(d) (2.32) 01/01 to 12/31/1996 8.58 (.04)(c) 1.74 1.70 C 01/01 to 12/31/2000 9.07 .01 (c) (1.71) (1.70) 01/01 to 12/31/1999 6.25 .02 (c) 2.82 2.84 01/01 to 12/31/1998 7.94 .08 (c) (1.75) (1.67) 01/01 to 12/31/1997 10.24 (.03)(c)(d) (2.27)(d) (2.30) 04/30(e) to 12/31/1996 9.44 - (c) .89 .89 ADVISOR 01/01 to 12/31/2000 9.03 .12 (c)(d) (1.82)(d) (1.70) 01/01 to 12/31/1999 6.27 .04 (c) 2.86 2.90 02/10(e) to 12/31/1998 7.89 .08 (c) (1.62) (1.54) ------------------------------------------------------------------------------------------------ IVY GROWTH FUND A 01/01 to 12/13/2000 22.15 (.15) (4.84) (4.99) 01/01 to 12/13/1999 19.88 (.32) 6.61 6.29 01/01 to 12/13/1998 17.80 .01 2.49 2.50 01/01 to 12/13/1997 17.76 .02 1.98 2.00 01/01 to 12/13/1996 16.75 .02 (c) 2.86 2.88 B 01/01 to 12/13/2000 21.72 (.30) (4.76) (5.06) 01/01 to 12/13/1999 19.60 (.21) 6.17 5.96 01/01 to 12/13/1998 17.72 (.16) 2.46 2.30 01/01 to 12/13/1997 17.69 (.14) 1.96 1.82 01/01 to 12/13/1996 16.75 (.13)(c) 2.81 2.68 C 01/01 to 12/13/2000 21.28 (.26) (4.70) (4.96) 01/01 to 12/13/1999 19.27 (.25) 6.08 5.83 01/01 to 12/13/1998 17.47 (.16) 2.38 2.22 01/01 to 12/13/1997 17.59 (.07) 1.86 1.79 04/30(e) to 12/31/1996 18.46 (.06)(c) 1.02 .96 ADVISOR 01/01 to 12/31/2000 22.18 (.15) (4.86) (5.01) 01/01 to 12/31/1999 19.91 (.04) 6.33 6.29 04/30(e) to 12/31/1998 20.36 .03 (.06) (.03) ------------------------------------------------------------------------------------------------ IVY US BLUE CHIP FUND A 01/01 to 12/31/2000 12.32 (.03)(c) (1.54) (1.57) 01/01 to 12/31/1999 10.74 (.01)(c) 1.66 1.65 11/06(e) to 12/31/1998 10.00 - (c)(d) .74(d) .74 B 01/01 to 12/31/2000 12.29 (.09)(c) (1.56) (1.65) 01/01 to 12/31/1999 10.72 (.07)(c) 1.65 1.58 11/06(e) to 12/31/1998 10.30 (.01)(c)(d) .43(d) .42 SELECTED PER SHARE DATA LESS DISTRIBUTIONS DIVIDENDS DIVIDENDS IN FROM NET EXCESS OF NET INVESTMENT INVESTMENT FUND NAME INCOME INCOME IVY INTERNATIONAL $ .04 $ - VALUE FUND .10 - .08 - - - .01 - .01 - .01 - - - .01 - .01 - .01 - - - .05 - .10 - .11 - ------------------------------------------------------------------------------------------------ IVY PACIFIC .06 - OPPORTUNITIES FUND .08 - .09 - - - .03 .02 .01 - .02 - .04 - - - - - .06 - .01 - .02 - - - - .09 .03 - .13 - .08 - ------------------------------------------------------------------------------------------------ IVY GROWTH FUND - - - - .02 - .02 .13 .02 .11 - - - - .02 - - .07 - - - - - - .02 - - .13 - .09 - - - - .02 - ------------------------------------------------------------------------------------------------ IVY US BLUE CHIP FUND - - .07 - - - - - .01 - - -
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding. (b) From 1995 to 1997, total expenses include fees paid (e) Commencement indirectly, if any, through an expense offset (f) Total return represents aggregate total return. arrangement. (g) Annualized (c) Net investment (loss) income is net of expenses reimbursed by Manager. na -- not applicable
64 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 67 FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA LESS DISTRIBUTIONS RATIOS AND SUPPLEMENTAL DATA RATIO OF NET ASSET NET ASSETS, EXPENSES TO DISTRIBUTIONS DISTRIBUTIONS VALUE, TOTAL END OF AVERAGE NET FROM IN EXCESS OF TOTAL END OF RETURN PERIOD ASSETS WITH REALIZED GAINS REALIZED GAINS DISTRIBUTIONS PERIOD (%)(A) (000) REIMBURSEMENT (%)(B) $ .07 $ - $ .11 $11.01 (7.25) $ 23,565 1.74 .02 - .12 11.99 27.79 32,624 1.72 .02 - .10 9.48 6.63 24,993 1.74 - - - 8.98 (10.29)(f) 16,202 1.80(g) .02 - .03 10.94 (7.94) 75,609 2.51 .02 - .03 11.91 26.81 95,363 2.51 .02 - .03 9.42 5.84 80,938 2.49 - - - 8.93 (10.29)(f) 53,652 2.63(g) .02 - .03 10.94 (7.97) 29,726 2.51 .02 - .03 11.92 26.91 43,995 2.49 .02 - .03 9.42 5.79 40,408 2.52 - - - 8.93 (10.79)(f) 27,074 2.63(g) .08 - .13 11.03 (6.90) 668 1.35 .07 - .17 11.99 28.30 2,748 1.38 .02 - .13 9.48 (.15)(f) 510 1.32(g) -------------------------------------------------------------------------------------------------------------- - - .06 7.42 (18.25) 9,096 2.16 .01 - .09 9.15 46.72 12,738 2.19 - - .09 6.30 (20.56) 9,061 2.30 - - - 8.04 (21.94) 12,020 2.44 - - .05 10.30 20.50 15,290 2.20 - - .01 7.33 (18.80) 6,462 2.92 .01 - .03 9.04 45.33 7,508 2.97 - - .04 6.24 (21.04) 6,080 3.08 - - - 7.96 (22.57) 7,893 3.17 - - - 10.28 19.67 8,995 2.95 - - .06 7.31 (18.79) 1,539 3.03 .01 - .02 9.07 45.41 776 3.03 - - .02 6.25 (21.02) 704 2.98 - - - 7.94 (22.46) 1,129 3.05 - - .09 10.24 9.39(f) 449 2.71(g) - - .03 7.30 (18.77) 42 1.77 .01 - .14 9.03 46.29 313 1.79 - - .08 6.27 (19.56)(f) 10 2.92(g) -------------------------------------------------------------------------------------------------------------- 2.18 - 2.18 14.98 (22.31) 261,744 na 4.02 - 4.02 22.15 31.87 363,723 na .40 - .42 19.88 14.05 318,444 na 1.81 - 1.96 17.80 11.69 320,000 na 1.74 - 1.87 17.76 17.22 314,908 1.45 2.18 - 2.18 14.48 (23.07) 7,517 na 3.84 - 3.84 21.72 30.63 8,070 na .40 - .42 19.60 12.99 4,889 na 1.72 - 1.79 17.72 10.69 4,433 na 1.74 - 1.74 17.69 16.02 3,850 2.37 2.18 - 2.18 14.14 (23.08) 744 na 3.82 - 3.82 21.28 30.43 576 na .40 - .42 19.27 12.72 263 na 1.78 - 1.91 17.47 10.58 400 na 1.74 - 1.83 17.59 5.20(f) 90 2.44(g) 2.18 - 2.18 14.99 (22.37) 359 na 4.02 - 4.02 22.18 31.78 438 na .40 - .42 19.91 (.14)(f) 347 na(g) -------------------------------------------------------------------------------------------------------------- .16 - .16 10.59 (12.69) 57,584 1.57 - - .07 12.32 15.35 3,353 1.46 - - - 10.74 7.40(f) 726 1.43(g) .16 - .16 10.48 (13.37) 24,314 2.31 - - .01 12.29 14.74 8,742 2.15 - - - 10.72 4.08(f) 1,047 2.13(g) RATIOS AND SUPPLEMENTAL DATA RATIO OF RATIO OF EXPENSES TO NET INVESTMENT AVERAGE NET INCOME (LOSS) PORTFOLIO ASSETS WITHOUT TO AVERAGE TURNOVER REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%) 1.92 .96(c) 36 1.87 .92(c) 21 1.88 .80(c) 16 2.11(g) .12(c)(g) 10 2.69 .20(c) 36 2.66 .12(c) 21 2.63 .05(c) 16 2.94(g) (.71)(c)(g) 10 2.69 .19(c) 36 2.64 .14(c) 21 2.66 .03(c) 16 2.94(g) (.71)(c)(g) 10 1.53 1.36(c) 36 1.53 1.25(c) 21 1.45(g) 1.23(c)(g) 16 -------------------------------------------------------------------------------------------------------------- 3.10 .83(c) 108 2.84 1.01(c) 23 2.86 1.60(c) 56 2.51 .28(c) 20 2.48 .32(c) 22 3.86 .07(c) 108 3.62 .24(c) 23 3.64 .82(c) 56 3.24 (.45)(c) 20 3.23 (.43)(c) 22 3.97 (.03)(c) 108 3.68 .18(c) 23 3.54 .92(c) 56 3.12 (.33)(c) 20 2.99(g) (.19)(c)(g) 22 2.71 1.23(c) 108 2.44 1.42(c) 23 3.48(g) .98(c)(g) 56 -------------------------------------------------------------------------------------------------------------- 1.34 (.73) 94 1.38 (.13) 51 1.38 .03 59 1.38 .13 39 1.45 .13(c) 72 2.31 (1.70) 94 2.34 (1.09) 51 2.32 (.90) 59 2.30 (.79) 39 2.37 (.79)(c) 72 2.33 (1.72) 94 2.47 (1.22) 51 2.53 (1.11) 59 2.33 (.82) 39 2.44(g) (.86)(c)(g) 72 1.41 (.80) 94 1.42 (.17) 51 1.18(g) .24(g) 59 -------------------------------------------------------------------------------------------------------------- 1.81 (.47)(c) 69 3.49 (.12)(c) 80 6.34(g) .02(c)(g) 3 2.55 (1.21)(c) 69 4.18 (.81)(c) 80 7.04(g) (.68)(c)(g) 3
65 68 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA (LOSS) INCOME FROM INVESTMENT OPERATIONS NET (LOSS) NET ASSET NET GAIN ON VALUE, INVESTMENT SECURITIES TOTAL FROM SHARE BEGINNING (LOSS) (REALIZED AND INVESTMENT FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD INCOME UNREALIZED) OPERATIONS IVY US BLUE CHIP FUND C 01/01 to 12/31/2000 $12.30 $(.12)(c) $ (1.53) $ (1.65) (CONTINUED) 01/01 to 12/31/1999 10.72 (.07)(c) 1.66 1.59 11/06(e) to 12/31/1998 10.30 (.01)(c)(d) .43(d) .42 ADVISOR 01/01 to 12/31/2000 12.35 (.01)(c) (1.53) (1.54) 01/01 to 12/31/1999 10.74 .02 (c) 1.69 1.71 11/02(e) to 12/31/1998 10.00 .01 (c)(d) .73(d) .74 --------------------------------------------------------------------------------------------- IVY US EMERGING A 01/01 to 12/31/2000 47.29 (.50) (11.94) (12.44) GROWTH FUND 01/01 to 12/31/1999 32.65 (.49) 20.70 20.21 01/01 to 12/31/1998 27.67 (.44)(d) 5.42(d) 4.98 01/01 to 12/31/1997 26.54 (.41)(d) 1.54(d) 1.13 01/01 to 12/31/1996 24.12 (.35) 4.84 4.49 B 01/01 to 12/31/2000 46.01 (.81) (11.56) (12.37) 01/01 to 12/31/1999 31.93 (.77) 20.15 19.38 01/01 to 12/31/1998 27.26 (.65)(d) 5.32(d) 4.67 01/01 to 12/31/1997 26.33 (.33)(d) 1.26(d) .93 01/01 to 12/31/1996 24.12 (.40) 4.68 4.28 C 01/01 to 12/31/2000 45.98 (.92) (11.44) (12.36) 01/01 to 12/31/1999 31.91 (.80) 20.19 19.39 01/01 to 12/31/1998 27.23 (.63)(d) 5.31(d) 4.68 01/01 to 12/31/1997 26.29 (.34)(d) 1.28(d) .94 04/30(e) to 12/31/1996 29.69 (.14) (1.19) (1.33) ADVISOR 01/01 to 12/31/2000 47.57 (.40) (12.06) (12.46) 01/01 to 12/31/1999 32.79 (.44) 20.85 20.41 02/18(e) to 12/31/1998 28.82 (.23)(d) 4.20(d) 3.97 --------------------------------------------------------------------------------------------- IVY BOND FUND A 01/01 to 12/31/2000 8.29 .55 (.40) .15 01/01 to 12/31/1999 9.54 .67 (1.24) (.57) 01/01 to 12/31/1998 10.22 .69 (.69) - 01/01 to 12/31/1997 9.80 .80 .42 1.22 01/01 to 12/31/1996 9.78 .72 .03 .75 B 01/01 to 12/31/2000 8.28 .48 (.40) .08 01/01 to 12/31/1999 9.53 .59 (1.24) (.65) 01/01 to 12/31/1998 10.22 .59 (.67) (.08) 01/01 to 12/31/1997 9.80 .68 .46 1.14 01/01 to 12/31/1996 9.78 .64 .04 .68 C 01/01 to 12/31/2000 8.31 .48 (.40) .08 01/01 to 12/31/1999 9.55 .62 (1.25) (.63) 01/01 to 12/31/1998 10.24 .60 (.68) (.08) 01/01 to 12/31/1997 9.82 .64 .48 1.12 04/30(e) to 12/31/1996 9.44 .39 .43 .82 ADVISOR 01/01 to 12/31/2000 8.28 .56 (.38) .18 01/01 to 12/31/1999 9.54 .67 (1.24) (.57) 01/20(e) to 12/31/1998 10.28 .69 (.72) (.03) --------------------------------------------------------------------------------------------- IVY MONEY MARKET FUND(H) A 01/01 to 12/31/2000 1.00 .05 (c) - .05 01/01 to 12/31/1999 1.00 .04 (c) - .04 01/01 to 12/31/1998 1.00 .05 (c) - .05 01/01 to 12/31/1997 1.00 .05 (c) - .05 01/01 to 12/31/1996 1.00 .04 (c) - .04 B 01/01 to 12/31/2000 1.00 .05 (c) - .05 01/01 to 12/31/1999 1.00 .04 (c) - .04 01/01 to 12/31/1998 1.00 .05 (c) - .05 01/01 to 12/31/1997 1.00 .05 (c) - .05 01/01 to 12/31/1996 1.00 .05 (c) - .05 C 01/01 to 12/31/2000 1.00 .05 (c) - .05 01/01 to 12/31/1999 1.00 .04 (c) - .04 01/01 to 12/31/1998 1.00 .05 (c) - .05 01/01 to 12/31/1997 1.00 .05 (c) - .05 04/30(e) to 12/31/1996 1.00 .03 (c) - .03 SELECTED PER SHARE DATA LESS DISTRIBUTIONS DIVIDENDS DIVIDENDS IN FROM NET EXCESS OF NET INVESTMENT INVESTMENT FUND NAME INCOME INCOME IVY US BLUE CHIP FUND $ - $ - (CONTINUED) .01 - - - - - .10 - - - --------------------------------------------------------------------------------------------- --------- IVY US EMERGING - - GROWTH FUND - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------- --------- IVY BOND FUND .55 - .67 .01 .68 - .80 - .72 .01 .48 - .59 .01 .59 .02 .72 - .64 .02 .48 - .61 - .60 .01 .70 - .39 .05 .56 - .67 .02 .69 .02 --------------------------------------------------------------------------------------------- --------- IVY MONEY MARKET FUND(H) .05 - .04 - .05 - .05 - .04 - .05 - .04 - .05 - .05 - .05 - .05 - .04 - .05 - .05 - .03 -
(a) Total return does not reflect a sales charge. (f) Total return represents aggregate total return. (b) From 1995 to 1997, total expenses include fees paid (g) Annualized indirectly, if any, through an expense offset (h) The seven day and thirty day yield for Class A shares at arrangement. December 31, 2000 was 5.77%. The seven day yield for Class B (c) Net investment (loss) income is net of expenses shares at December 31, 2000 was 5.83% and the thirty day reimbursed by Manager. yield was 5.76%. The seven day yield for Class C shares at (d) Based on average shares outstanding. December 31, 2000 was 5.91% and the thirty day yield was (e) Commencement 5.87% (unaudited). na -- not applicable
66 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 69 FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA LESS DISTRIBUTIONS RATIOS AND SUPPLEMENTAL DATA RATIO OF NET ASSET NET ASSETS, EXPENSES TO DISTRIBUTIONS DISTRIBUTIONS VALUE, TOTAL END OF AVERAGE NET FROM IN EXCESS OF TOTAL END OF RETURN PERIOD ASSETS WITH REALIZED GAINS REALIZED GAINS DISTRIBUTIONS PERIOD (%)(A) (000) REIMBURSEMENT (%)(B) $ 0.16 $ - $ .16 $10.49 (13.36) $ 2,965 2.30 - - .01 12.30 14.84 2,497 2.08 - - - 10.72 4.08(f) 110 2.22(g) 0.16 - .16 10.65 (12.42) 1,061 1.24 - - .10 12.35 15.89 920 1.10 - - - 10.74 7.40(f) 537 1.08(g) -------------------------------------------------------------------------------------------------------------- 4.54 - 4.54 30.31 (25.81) 78,840 na 5.57 - 5.57 47.29 62.47 101,798 na - - - 32.65 18.00 62,961 na - - - 27.67 4.26 64,910 na 2.07 - 2.07 26.54 18.52 55,944 na 4.54 - 4.54 29.10 (26.38) 56,036 na 5.30 - 5.30 46.01 61.27 79,659 na - - - 31.93 17.13 52,940 na - - - 27.26 3.53 47,789 na 2.07 - 2.07 26.33 17.65 35,321 na 4.54 - 4.54 29.08 (26.37) 9,048 na 5.32 - 5.32 45.98 61.32 15,438 na - - - 31.91 17.19 9,664 na - - - 27.23 3.58 9,484 na 2.07 - 2.07 26.29 (4.48)(f) 4,018 na 4.54 - 4.54 30.57 (25.70) 1,987 na 5.63 - 5.63 47.57 62.85 1,432 na - - - 32.79 13.78(f) 740 na -------------------------------------------------------------------------------------------------------------- - - .55 7.89 1.89 52,305 na - - .68 8.29 (6.17) 69,249 na - - .68 9.54 - 109,445 na - - .80 10.22 11.87 106,497 na - - .73 9.80 8.06 97,881 na - - .48 7.88 1.03 20,079 na - - .60 8.28 (6.97) 27,550 na - - .61 9.53 (.81) 42,166 na - - .72 10.22 11.12 18,499 na - - .66 9.80 7.25 5,300 na - - .48 7.91 1.07 2,726 na - - .61 8.31 (6.81) 3,928 na - - .61 9.55 (.81) 11,266 na - - .70 10.24 11.11 6,580 na - - .44 9.82 8.81(f) 618 na - - .56 7.90 2.26 192 na - - .69 8.28 (6.21) 332 na - - .71 9.54 (.30)(f) 347 na -------------------------------------------------------------------------------------------------------------- - - .05 1.00 5.37 20,394 0.85 - - .04 1.00 4.16 18,524 .88 - - .05 1.00 4.51 19,103 .87 - - .05 1.00 4.60 15,385 .88 - - .04 1.00 4.47 21,359 .86 - - .05 1.00 5.35 5,872 .87 - - .04 1.00 4.30 7,486 .77 - - .05 1.00 4.59 6,636 .76 - - .05 1.00 4.77 3,812 .70 - - .05 1.00 4.57 3,474 .77 - - .05 1.00 5.65 1,975 .72 - - .04 1.00 4.14 372 .87 - - .05 1.00 4.55 423 .81 - - .05 1.00 4.78 405 .70 - - .03 1.00 4.78(f) 74 .56(g) RATIOS AND SUPPLEMENTAL DATA RATIO OF RATIO OF EXPENSES TO NET INVESTMENT AVERAGE NET (LOSS) INCOME PORTFOLIO ASSETS WITHOUT TO AVERAGE TURNOVER REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%) 2.54 (1.20)(c) 69 4.11 (.74)(c) 80 7.13(g) (.77)(c)(g) 3 1.48 (.13)(c) 69 3.13 .24(c) 80 5.99(g) .37(c)(g) 3 -------------------------------------------------------------------------------------------------------------- 1.55 (1.23) 83 1.69 (1.53) 107 1.70 (1.48) 67 1.67 (1.37) 65 1.76 (1.31) 68 2.31 (2.00) 83 2.43 (2.27) 107 2.45 (2.23) 67 2.43 (2.13) 65 2.52 (2.07) 68 2.30 (1.98) 83 (2.23) 107 (2.18) 67 2.39 (2.09) 65 2.52(g) (2.07)(g) 68 1.36 (1.04) 83 1.46 (1.30) 107 1.22(g) (1.00)(g) 67 -------------------------------------------------------------------------------------------------------------- 1.62 6.71 26 1.52 7.40 28 1.39 6.88 43 1.47 7.08 71 1.56 7.36 90 2.45 5.88 26 2.36 6.55 28 2.13 6.13 43 2.21 6.35 71 2.19 6.62 90 2.40 5.93 26 2.26 6.65 28 2.12 6.15 43 2.20 6.35 71 2.35(g) 6.56(g) 90 1.49 6.84 26 1.43 7.49 28 1.11(g) 7.16(g) 43 -------------------------------------------------------------------------------------------------------------- 1.52 5.38(c) na 1.40 4.17(c) na 1.42 4.50(c) na 1.57 4.60(c) na 1.86 4.47(c) na 1.54 5.36(c) na 1.29 4.28(c) na 1.31 4.61(c) na 1.39 4.77(c) na 1.77 4.57(c) na 1.39 5.51(c) na 1.39 4.18(c) na 1.36 4.56(c) na 1.39 4.78(c) na 1.56(g) 4.78(c)(g) na
67 70 NOTES TO FINANCIAL STATEMENTS December 31, 2000 Ivy Developing Markets Fund ("Developing Markets") which was formerly Ivy Developing Nations Fund, Ivy European Opportunities Fund ("European Opportunities"), Ivy Global Fund ("Global"), Ivy Global Natural Resources Fund ("Global Natural"), Ivy Global Science & Technology Fund ("Science & Technology"), Ivy International Fund ("International"), Ivy International Small Companies Fund ("Small Companies"), Ivy International Value Fund ("International Value") which was formerly Ivy International Fund II, Ivy Pacific Opportunities Fund ("Pacific Opportunities") which was formerly Ivy China Region Fund, Ivy Growth Fund ("Growth"), Ivy US Blue Chip Fund ("Blue Chip"), Ivy US Emerging Growth Fund ("Emerging Growth"), Ivy Bond Fund ("Bond"), and Ivy Money Market Fund ("Money Market"), (the "Funds"), are each a diversified series of shares of Ivy Fund. The shares of beneficial interest are assigned no par value and an unlimited number of shares of Class A, Class B, Class C, and Advisor Class are authorized. European Opportunities, Science & Technology, International, Small Companies, International Value, Blue Chip and Bond also have an unlimited number of shares of Class I authorized. Ivy Fund was organized as a Massachusetts business trust under a Declaration of Trust dated December 21, 1983 and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. Preparation of the financial statements includes the use of management estimates. Actual results could differ from those estimates. SECURITY VALUATION -- Securities traded on a US or foreign stock exchange, or The Nasdaq Stock Market, Inc. ("Nasdaq") system, are valued at the last quoted sale price reported as of the close of regular trading on the exchange on which the security is traded most extensively. If there were no sales on the exchange on which the security is traded most extensively and the security is traded on more than one exchange, or on one or more exchanges in the over-the-counter market, the exchange reflecting the last quoted sale at the end of regular trading will be used. Otherwise, the security is valued at the calculated mean between the last bid and asked price on the exchange on which the security is traded most extensively. Securities not traded on an exchange or Nasdaq, but traded in another over-the-counter market are valued at the average between the current bid and asked price in such markets. Short-term obligations and commercial paper are valued at amortized cost, which approximates market. Debt securities (other than short-term obligations and commercial paper) are valued on the basis of valuations furnished by a pricing service authorized by the Board of Trustees (the "Board"), which determines valuations based upon market transactions for normal, institutional-size trading units of such securities, or on the basis of dealer quotes. All other securities are valued at their fair value as determined in good faith by the Valuation Committee of the Board. As of December 31, 2000, a security was determined to have no value by the Valuation Committee and has been noted as such in each Fund's respective portfolio of investments for International Value and Growth. As of December 31, 2000, Board valued securities for Bond amounted to $2,592,023 (3.4% of net assets) and have been noted as such in Bond's Portfolio of Investments. There were no other Board valued securities. SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date, and interest income is accrued on a daily basis. Corporate actions on foreign securities, including dividends, are recorded on the ex-dividend date. If such information is not available on the ex-dividend date, corporate actions are recorded as soon as reliable information is available from the Funds' sources. Realized gains and losses from security transactions are calculated on an identified cost basis. CASH -- Cash amounts on deposit with the Funds' custodian earn interest at variable interest rates. At December 31, 2000, the interest rate was 5.25%. Amounts classified as Due to Custodian at year end represent bank overdrafts. FEDERAL INCOME TAXES -- The Funds intend to qualify for tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended (the "Code"), and distribute all of their taxable income to shareholders. Therefore, no provision has been recorded for Federal income or excise taxes. The following Funds earned foreign source dividends that were subject to foreign withholding tax in the amounts noted below. The Funds intend to elect to pass through to their shareholders their proportionate share of such taxes. Shareholders may report their share of foreign taxes paid as either a tax credit or itemized deduction.
FOREIGN FOREIGN SOURCE WITHHOLDING FUND DIVIDENDS TAX Developing Markets $ 270,383 $ 23,528 European Opportunities 2,664,040 331,020 Global 323,791 22,487 International 34,305,250 2,111,258 International Value 4,057,738 283,407
The following Funds have net tax-basis capital loss carryovers as of December 31, 2000 which may be applied against any realized net taxable gain of each succeeding fiscal year until fully utilized or until the expiration date, whichever occurs first. The carryover amounts and expiration dates are as follows: 68 71 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2000
CAPITAL LOSS FUND CARRYOVER EXPIRATION DATE(S) Developing $10,334,000 $155,000 in 2005, $6,822,000 in 2006, Markets* $1,688,000 in 2007 and $1,669,000 in 2008. Global Natural* 7,795,000 $3,663,000 in 2006 and $4,132,000 in 2007. Science & 1,283,000 2008. Technology International 4,168,000 $3,103,000 in 2006 and $1,065,000 in Value 2008. Pacific 8,655,000 $264,000 in 2002, $203,000 in 2003, Opportunities $1,033,000 in 2004, $416,000 in 2005, $5,759,000 in 2006, $128,000 in 2007 and $852,000 in 2008. Bond 25,123,000 $2,215,000 in 2003, $366,000 in 2006, $12,226,000 in 2007 and $10,316,000 in 2008.
* To the extent provided by the Code, the capital losses may be carried forward to offset future taxable gains, if any, which expire on varying dates, if not previously utilized, through the year 2008. Pursuant to Code Section 852, the following Funds designate long-term capital gain distributions for the taxable year ended December 31, 2000:
AMOUNT OF LONG-TERM FUND CAPITAL GAIN DISTRIBUTIONS European Opportunities $ 207,202 Global 991,398 Science & Technology 101,224 International 595,472,295 Small Companies 432,162 Growth 34,435,937 Blue Chip 1,306,937 Emerging Growth 18,668,556
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are declared and paid monthly for Bond and declared daily and paid monthly for Money Market. Distributions from net investment income for all other Funds and capital gains for all Funds, if any, are declared in December. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency transactions from foreign investment activity are translated into US dollars on the following basis: (i) market value of securities, and dividends and interest receivable, are translated at the closing daily rate of exchange; and (ii) purchases and sales of investment securities are translated at the rate at which related foreign contracts are obtained or at the exchange rate prevailing on the date of the transaction. Exchange gains or losses from currency translation of other assets and liabilities, if significant, are reported as a separate component of Net realized and unrealized gain (loss) on investment transactions. Foreign transactions may involve risks not typically associated with domestic transactions including, but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political and economic instability. For foreign securities, the Funds do not isolate that portion of gains and losses on investment securities that is due to changes in the foreign exchange rates from that which is due to changes in market prices of such securities. For tax reporting purposes, Code Section 988 provides that gains and losses on certain transactions attributable to fluctuations in foreign currency exchange rates must be treated as ordinary income or loss. FORWARD FOREIGN CURRENCY CONTRACTS -- Forward foreign currency contracts are agreements to exchange one currency for another at a future date and at a specified price. The Funds may use forward foreign currency contracts to facilitate transactions in foreign securities and to manage the Fund's foreign currency exposure. Forward foreign currency contracts are reflected as both a forward foreign currency contract to buy and a forward foreign currency contract to sell. Forward foreign currency contracts to buy generally are used to gain exposure to foreign currencies, while forward foreign currency contracts to sell are used to hedge a Fund's investments against currency fluctuations. Also, a forward foreign currency contract to buy or sell can offset a previously acquired opposite forward foreign currency contract. Forward foreign currency contracts are marked-to-market daily. The change in a contract's market value is recorded by the Funds as an unrealized gain or loss. When the contract is closed or delivery is taken, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of forward foreign currency contracts does not eliminate fluctuations in the underlying prices of securities, but it does establish a rate of exchange that can be achieved in the future. These forward foreign currency contracts involve market risk in excess of unrealized appreciation (depreciation) of forward foreign currency contracts reflected in each Funds' Statement of Assets and Liabilities. Although forward foreign currency contracts used for hedging purposes limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, a Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. DEFERRED OFFERING COSTS -- Offering costs incurred for European Opportunities have been amortized over a one year period beginning the date the Fund commenced operations which was May 3, 1999. DEFERRED ORGANIZATION EXPENSES -- Certain Funds incurred expenses prior to the effectiveness of Statement of Position 98-5, "Reporting on the Costs of Start-up Activities", in connection with each Funds' organization. Such amounts have been deferred and are being amortized on a straight-line basis over a five year period. RECLASSIFICATIONS -- The timing and characterization of certain income and capital gain distributions are determined annually in accordance with Federal tax regulations which may differ from 69 72 NOTES TO FINANCIAL STATEMENTS December 31, 2000 accounting principles generally accepted in the United States of America. These differences primarily relate to foreign denominated securities, passive foreign investment companies, certain securities sold at a loss, non-deductible organization expenses and non-deductible offering costs, if applicable. As a result, Net investment (loss) income and Net realized (loss) gain on investments and foreign currency transactions for a reporting period may differ significantly in amount and character from distributions during such period. Accordingly, each of the Funds may make reclassifications among certain of their capital accounts without impacting the net asset value of each respective Fund. 2. RELATED PARTIES Ivy Management, Inc. ("IMI") is the Manager and Investment Adviser of the Funds. For its services, IMI receives a fee monthly for European Opportunities at the annual rate of 1.00% on the first $250 million in average net assets, .85% on the next $250 million in average net assets and .75% on average net assets in excess of $500 million, for Growth at the annual rate of .85% of the first $350 million in average net assets, and .75% for average net assets in excess of $350 million, for Blue Chip at the annual rate of .75% of average net assets, for Emerging Growth at the annual rate of .85% of average net assets, for Money Market at the annual rate of .40% of average net assets. The fee for Global is 1.00% on the first $500 million in average net assets, and .75% for average net assets in excess of $500 million. For Bond through August 31, 2000 the fee was .75% of the first $100 million in average net assets and .50% of average net assets in excess of $100 million. Effective September 1, 2000, the fee for Bond changed to .50% of the first $500 million in average net assets and .40% of average net assets over $500 million and .40% of average net assets over $500 million. For International, IMI receives a fee monthly at the annual rate of 1.00% of the Fund's first $2.5 billion in average net assets and .90% of the Fund's average net assets in excess of $2.5 billion. For Global Natural, IMI receives a fee monthly at the annual rate of .50% of the Fund's average net assets. For European Opportunities and Small Companies, Henderson Investment Management Limited is the sub-advisor of the Funds. For Small Companies, Henderson served as sub-advisor with respect to 50% of the net assets from February 1, 1999 to November 6, 2000. Since November 7, 2000, Henderson has served as sub-advisor with respect to 100% of the net assets of Small Companies. IMI, not the Funds is obligated to compensate the sub-advisor. For Global Natural, Mackenzie Financial Corporation ("MFC") is the sub-advisor of the Fund. MFC receives a fee monthly at the annual rate of .50% of the Fund's average net assets. The fee is collected from the Fund and remitted to MFC by MIMI. For all other funds, IMI receives a fee monthly at the annual rate of 1.00% of each Fund's average net assets. Currently, for Developing Markets, Global, Global Natural, Small Companies and Pacific Opportunities, IMI voluntarily limits each Fund's total operating expenses (excluding 12b-1 fees and certain other expenses) to an annual rate of 1.95% of each Fund's average net assets. Currently for International Value, Blue Chip and Money Market, IMI voluntarily limits each Fund's total operating expenses (excluding 12b-1 fees and certain other expenses) to annual rates of 1.50%, 1.34% and .85% of average net assets, respectively. Mackenzie Investment Management Inc. ("MIMI"), of which IMI is a wholly owned subsidiary, provides certain administrative, accounting and pricing services for each Fund. For those services, each Fund pays MIMI fees plus certain out-of-pocket expenses. Such fees and expenses are reflected as Administrative services fee and Fund accounting in each Fund's Statement of Operations. Ivy Mackenzie Distributors, Inc. ("IMDI"), a wholly owned subsidiary of MIMI, is the underwriter and distributor of each Fund's shares, and as such, purchases shares from each Fund at net asset value to settle orders from investment dealers. For the year ended December 31, 2000, the net amount of underwriting discount retained by IMDI is listed below.
FUND AMOUNT Developing Markets $ 498 European Opportunities 301,849 Global 1,131 Global Natural 858 Science & Technology 54,216 International 18,789 Small Companies 17,200 International Value 3,791 Pacific Opportunities 4,040 Growth 15,235 Blue Chip 5,219 Emerging Growth 35,768 Bond 4,302
Under Service and Distribution Plans, each Fund except Growth, Blue Chip and International, reimburses IMDI for service fee payments made to brokers at an annual rate of .25% of its average net assets, excluding Class I and Advisor Class. For Growth, Blue Chip and International, each Fund reimburses IMDI at an annual rate not to exceed .25% of its average net assets of shares issued after December 31, 1991, excluding Class I and Advisor Class. Class B and Class C shares are also subject to an ongoing distribution fee at an annual rate of .75% of the average net assets attributable to Class B and Class C. IMDI may use such distribution fee for purposes of advertising and marketing shares of each Fund. Such fees, detailed below, are reflected as 12b-1 service and distribution fees in each Fund's Statement of Operations.
FUND CLASS A CLASS B CLASS C Developing Markets $ 13,337 $ 66,593 $ 25,710 European Opportunities 151,920 519,860 569,285 Global 24,959 60,454 1,924 Global Natural 13,573 25,521 4,699 Science & Technology 121,280 442,736 182,148 International 2,319,874 4,155,496 987,526 Small Companies 10,289 32,072 22,715 International Value 73,974 828,016 350,800 Pacific Opportunities 27,383 64,124 7,912 Growth 199,396 90,698 7,843 Blue Chip 61,078 176,524 27,270 Emerging Growth 265,060 784,833 143,862 Bond 146,616 217,405 30,952
70 73 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2000 Ivy Mackenzie Services Corp. ("IMSC"), a wholly owned subsidiary of MIMI, is the transfer and shareholder servicing agent for each Fund. For those services, each Fund pays IMSC a monthly fee plus certain out-of-pocket expenses. Such fees and expenses, detailed below, are reflected as Transfer agent in each Fund's Statement of Operations.
ADVISOR FUND CLASS A CLASS B CLASS C CLASS CLASS I Developing Markets $ 22,066 $ 29,041 $ 10,006 $ 555 $ - European Opportunities 121,262 108,028 111,830 41,663 32 Global 30,177 22,669 1,426 590 - Global Natural 37,989 11,748 1,694 174 - Science & Technology 98,764 81,499 29,259 2,545 - International 1,712,090 939,823 216,804 13 59,992 Small Companies 9,996 6,993 4,844 1,893 - International Value 79,109 232,762 100,591 2,640 - Pacific Opportunities 51,737 30,848 4,634 551 - Growth 700,388 20,227 1,947 1,499 - Blue Chip 84,764 38,564 5,792 1,536 - Emerging Growth 189,939 152,916 25,743 5,930 - Bond 145,446 71,039 8,624 993 - Money Market 77,090 21,250 3,459 - -
3. BOARD'S COMPENSATION Trustees who are not affiliated with IMI or MIMI receive compensation from the Fund, which is reflected as Trustees' fees in each Fund's Statement of Operations. 4. FUND MERGERS As noted below, the shareholders of Ivy Canada Fund, Hudson Capital Appreciation Fund, Ivy Pan-Europe Fund, Ivy Growth with Income Fund, Ivy South America Fund and Ivy Asia Pacific Fund (each an "acquired fund") approved Agreements and Plans of Reorganization (the "Reorganizations") providing for the transfer of assets. On each respective merger date Developing Markets, European Opportunities, Global Natural, Pacific Opportunities, Blue Chip and Emerging Growth (each an "acquiring fund") acquired all or substantially all of the assets of each fund as noted below. The transactions were structured for tax purposes to qualify as tax-free reorganizations under the Code.
UNREALIZED (DEPRECIATION) AGGREGATE APPRECIATION COMBINED VALUE OF INCLUDED IN NET ASSETS NET ASSETS NET ASSETS AT COMPLETION MERGER DATE ACQUIRING FUND ACQUIRED FUND CONTRIBUTED CONTRIBUTED OF MERGER April 7, 1999 Global Natural Ivy Canada Fund $ 4,845,256 $ (2,735,535) $ 7,841,856 September 28, 1999 Emerging Growth Hudson Capital $ 20,055,887 $ (613,088) $ 136,344,216 Appreciation Fund June 27, 2000 European Opportunities Ivy Pan-Europe Fund $ 4,637,762 $ 109,943 $ 240,692,178 June 27, 2000 Blue Chip Ivy Growth with Income $ 73,884,252 $ 17,484,201 $ 91,519,890 Fund July 21, 2000 Developing Markets Ivy South America Fund $ 2,377,448 $ 329,267 $ 17,609,857 November 21, 2000 Pacific Opportunities Ivy Asia Pacific Fund $ 5,370,161 $ (187,812) $ 19,018,051
Each Fund's respective exchange ratios were:
GLOBAL EMERGING EUROPEAN BLUE DEVELOPING NATURAL GROWTH OPPORTUNITIES CHIP MARKETS Class A 1=.52 1=.38 1=.53 1=1 1=.95 Class B 1=.53 1=.39 1=.53 1=.99 1=.95 Class C 1=.54 na 1=.53 1=.97 1=.93 Advisor 1=.53 na 1=.53 1=1.01 1=.94 PACIFIC OPPORTUNITIES Class A 1=.72 Class B 1=.72 Class C 1=.72 Advisor 1=.73
All ratios are acquired fund shares to acquiring fund shares. 71 74 NOTES TO FINANCIAL STATEMENTS 5. FUND SHARE TRANSACTIONS Fund share transactions for Class A, Class B, Class C, Advisor Class, and Class I were as follows:
CLASS A FOR THE PERIOD FOR THE PERIOD JANUARY 1, 2000 JANUARY 1, 1999 TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 DEVELOPING MARKETS SHARES AMOUNT SHARES AMOUNT - ------------------ ----------- --------------- ----------- ------------- Sold 1,211,124 $ 9,671,771 403,801 $ 3,110,881 Issued on reinvestment of dividends 1,870 12,258 2,958 25,081 Repurchased (1,376,168) (10,957,941) (673,581) (4,790,321) Issued on acquisition of Ivy South America Fund 151,799 1,275,113 - - ----------- --------------- ----------- ------------- Net (decrease)/increase (11,375) 1,201 (266,822) (1,654,359) =========== =============== =========== ============= EUROPEAN OPPORTUNITIES (A) (A) - ---------------------- ----------- ------------- Sold 5,917,943 131,082,416 848,535 13,288,709 Issued on reinvestment of dividends 91,557 1,515,777 9,961 167,529 Repurchased (3,718,358) (79,953,242) (45,071) (785,039) Issued on acquisition of Ivy Pan-Europe Fund 63,926 1,478,791 - - ----------- --------------- ----------- ------------- Net increase 2,355,068 54,123,742 813,425 12,671,199 =========== =============== =========== ============= GLOBAL - ------ Sold 1,150,883 14,273,014 241,445 3,162,247 Issued on reinvestment of dividends 55,298 573,995 50,936 671,840 Repurchased (1,322,546) (16,475,291) (706,165) (8,906,212) ----------- --------------- ----------- ------------- Net (decrease)/increase (116,365) (1,628,282) (413,784) (5,072,125) =========== =============== =========== ============= GLOBAL NATURAL - -------------- Sold 287,146 2,588,462 202,795 1,722,555 Issued on reinvestment of dividends 2,520 23,536 - - Repurchased (373,451) (3,365,296) (316,732) (2,665,348) Issued on acquisition of Ivy Canada Fund - - 554,442 3,885,184 ----------- --------------- ----------- ------------- Net (decrease)/increase (83,785) (753,298) 440,505 2,942,391 =========== =============== =========== ============= SCIENCE & TECHNOLOGY - -------------------- Sold 1,176,627 57,982,753 505,052 16,958,259 Issued on reinvestment of dividends 13,324 366,448 55,874 2,645,066 Repurchased (876,114) (41,711,359) (468,791) (13,795,830) ----------- --------------- ----------- ------------- Net increase/(decrease) 313,837 16,637,842 92,135 5,807,495 =========== =============== =========== ============= INTERNATIONAL - ------------- Sold 11,601,923 427,069,681 6,826,244 $ 298,269,386 Issued on reinvestment of dividends 5,777,975 174,299,277 1,395,706 64,345,562 Repurchased (28,340,796) (1,130,865,446) (13,975,871) (608,987,492) ----------- --------------- ----------- ------------- Net (decrease)/increase (10,960,898) (529,496,488) (5,753,921) (246,372,544) =========== =============== =========== ============= SMALL COMPANIES - --------------- Sold 715,998 10,154,620 4,001 40,825 Issued on reinvestment of dividends 14,458 182,170 193 2,395 Repurchased (110,293) (1,534,885) (27,755) (262,899) ----------- --------------- ----------- ------------- Net increase/(decrease) 620,163 $ 8,801,905 (23,561) $ (219,679) =========== =============== =========== ============= CLASS B FOR THE PERIOD FOR THE PERIOD JANUARY 1, 2000 JANUARY 1, 1999 TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 DEVELOPING MARKETS SHARES AMOUNT SHARES AMOUNT - ------------------ ---------- ------------- ---------- ------------- Sold 91,222 $ 763,371 156,336 $ 1,112,285 Issued on reinvestment of dividends 1,303 8,318 928 7,752 Repurchased (401,372) (3,040,474) (303,685) (2,103,760) Issued on acquisition of Ivy South America Fund 116,352 957,581 - - ---------- ------------- ---------- ------------- Net (decrease)/increase (192,495) (1,311,204) (146,421) (983,723) ========== ============= ========== ============= EUROPEAN OPPORTUNITIES (B) (B) - ---------------------- ---------- ------------- Sold 3,399,154 76,743,482 340,876 5,238,984 Issued on reinvestment of dividends 69,252 1,150,115 4,266 69,748 Repurchased (597,107) (11,747,830) (686) (11,579) Issued on acquisition of Ivy Pan-Europe Fund 103,755 2,390,956 - - ---------- ------------- ---------- ------------- Net increase 2,975,054 68,536,723 344,456 5,297,153 ========== ============= ========== ============= GLOBAL - ------ Sold 75,284 899,024 62,902 775,522 Issued on reinvestment of dividends 27,503 236,414 29,290 378,431 Repurchased (196,395) (2,418,369) (205,333) (2,437,173) ---------- ------------- ---------- ------------- Net (decrease)/increase (93,608) (1,282,931) (113,141) (1,283,220) ========== ============= ========== ============= GLOBAL NATURAL - -------------- Sold 126,162 1,143,068 51,156 399,377 Issued on reinvestment of dividends 470 4,349 - - Repurchased (83,828) (738,401) (80,968) (654,849) Issued on acquisition of Ivy Canada Fund - - 106,477 736,815 ---------- ------------- ---------- ------------- Net (decrease)/increase 42,804 409,016 76,665 481,343 ========== ============= ========== ============= SCIENCE & TECHNOLOGY - -------------------- Sold 558,748 27,683,197 371,473 11,662,058 Issued on reinvestment of dividends 10,695 285,771 38,614 1,793,612 Repurchased (247,495) (11,336,531) (99,651) (2,906,795) ---------- ------------- ---------- ------------- Net increase/(decrease) 321,948 16,632,437 310,436 10,548,875 ========== ============= ========== ============= INTERNATIONAL - ------------- Sold 1,947,058 59,520,127 581,682 25,766,700 Issued on reinvestment of dividends 2,029,938 57,901,511 284,831 13,050,929 Repurchased (4,579,283) (177,135,593) (2,564,193) (110,707,466) ---------- ------------- ---------- ------------- Net (decrease)/increase (602,287) (59,713,955) (1,697,680) (71,889,837) ========== ============= ========== ============= SMALL COMPANIES - --------------- Sold 401,508 5,664,420 12,882 130,668 Issued on reinvestment of dividends 6,676 82,938 154 1,882 Repurchased (65,660) (888,907) (27,522) (260,670) ---------- ------------- ---------- ------------- Net increase/(decrease) 342,524 $ 4,858,451 (14,486) $ (128,120) ========== ============= ========== =============
(A) For the period May 4, 1999 (commencement) to December 31, 1999 (B) For the period May 24, 1999 (commencement) to December 31, 1999 (C) For the period October 24, 1999 (commencement) to December 31, 1999 (D) For the period May 3, 1999 (commencement) to December 31, 1999 (E) For the period April 8, 1999 (commencement) to December 31, 1999 (F) For the period August 31, 2000 (commencement) to December 31, 2000 (G) For the period July 1, 1999 (commencement) to December 31, 1999 72 75 NOTES TO FINANCIAL STATEMENTS (continued)
CLASS C ADVISOR CLASS FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD JANUARY 1, 2000 JANUARY 1, 1999 JANUARY 1, 2000 JANUARY 1, 1999 TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 28,306 $ 277,767 169,606 $ 1,253,679 21,329 $ 187,837 55,850 $ 426,326 445 2,855 736 6,171 62 408 490 4,171 (266,993) (2,106,591) (213,019) (1,530,919) (42,039) (337,442) (31,508) (234,937) 17,237 142,550 - - 261 2,204 - - ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- (221,005) (1,683,419) (42,677) (271,069) (20,387) (146,993) 24,832 195,560 ========== ============= ========== ============= ========== ============= ========== =============
(C) (C) (D) (D) ---------- ------------- ---------- ------------- 3,509,146 78,670,513 465,614 7,449,188 1,529,373 35,063,282 262,585 3,838,799 42,291 704,055 7,527 127,207 11,480 191,491 42,286 481,911 (1,178,448) (23,433,121) (1,754) (29,406) (761,007) (16,439,961) (306) (5,118) 15,038 350,370 - - 18,115 417,645 - - ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 2,388,027 56,291,817 471,387 7,546,989 797,961 19,232,457 304,565 4,315,592 ========== ============= ========== ============= ========== ============= ========== =============
9,884 109,721 3,127 39,261 3,386 42,188 3,716 44,937 915 8,877 1,153 14,448 1,122 11,745 829 11,002 (13,800) (161,802) (22,661) (270,428) (3,288) (41,227) (19,538) (252,960) ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- (3,001) (43,204) (18,381) (216,719) 1,220 12,706 (14,993) (197,021) ========== ============= ========== ============= ========== ============= ========== =============
(E) (E) ---------- ------------- 97,274 924,455 26,590 229,609 88 800 964 8,253 332 2,984 - - 15 138 - - (76,140) (656,709) (9,236) (67,346) (785) (6,945) (69) (609) - - 30,640 209,115 - - 2,021 14,142 ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 21,466 270,730 47,994 371,378 (682) (6,007) 2,916 21,786 ========== ============= ========== ============= ========== ============= ========== =============
225,287 11,174,785 88,831 3,130,374 25,011 1,270,582 8,734 376,835 4,014 113,134 20,486 955,872 213 5,857 105 4,962 (248,294) (11,981,061) (80,472) (2,345,456) (4,079) (179,679) (640) (17,474) ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- (18,993) (693,142) 28,845 1,740,790 21,145 1,096,760 8,199 364,323 ========== ============= ========== ============= ========== ============= ========== =============
(F) (F) ---------- ------------- 862,175 27,429,484 222,501 9,801,533 123 4,904 - - 317,958 9,241,503 56,781 2,590,305 42 1,062 - - (2,005,702) (77,687,264) (986,391) (42,136,913) - - - - ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- (825,569) (41,016,277) (707,109) (29,745,075) 165 5,966 - - ========== ============= ========== ============= ========== ============= ========== =============
(G) (G) ---------- ------------- 339,870 4,834,943 23,289 264,888 345,465 5,088,965 23,921 246,124 3,193 39,876 48 588 111 1,402 55 682 (80,855) (1,087,360) (52,051) (482,973) (42,413) (601,212) (690) (6,955) ---------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 262,208 $ 3,787,459 (28,714) $ (217,497) 303,163 $ 4,489,155 23,286 $ 239,851 ========== ============= ========== ============= ========== ============= ========== =============
73 76 NOTES TO FINANCIAL STATEMENTS
CLASS A CLASS B FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD JANUARY 1, 2000 JANUARY 1, 1999 JANUARY 1, 2000 TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 TO DECEMBER 31, 2000 INTERNATIONAL VALUE SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------- ------------ ------------- ----------- ------------- ---------- ------------- Sold 5,000,493 $ 54,970,891 7,059,211 $ 73,053,749 1,469,087 $ 16,205,751 Issued on reinvestment of dividends 12,052 128,203 17,489 204,448 6,904 73,238 Repurchased (5,593,181) (61,555,902) (6,992,250) (72,443,820) (2,565,665) (28,240,274) ------------ ------------- ----------- ------------- ---------- ------------- Net (decrease)/increase (580,636) (6,456,808) 84,450 814,377 (1,089,674) (11,961,285) ============ ============= =========== ============= ========== ============= CLASS B FOR THE PERIOD JANUARY 1, 1999 TO DECEMBER 31, 1999 INTERNATIONAL VALUE SHARES AMOUNT - ------------------- ----------- ------------- Sold 1,600,633 $ 16,532,012 Issued on reinvestment of dividends 8,847 102,806 Repurchased (2,197,427) (22,398,769) ----------- ------------- Net (decrease)/increase (587,947) (5,763,951) =========== =============
PACIFIC OPPORTUNITIES - --------------------- Sold 2,224,273 19,578,389 2,892,229 19,961,432 65,243 546,898 Issued on reinvestment of dividends 9,680 70,663 12,715 113,544 856 6,180 Repurchased (2,701,251) (23,825,157) (2,949,520) (20,834,889) (278,026) (2,366,506) Issued on acquisition of Ivy Asia Pacific Fund 300,056 2,277,428 - - 262,565 1,956,106 ------------ ------------- ----------- ------------- ---------- ------------- Net (decrease)/increase (167,242) (1,898,677) (44,576) (759,913) 50,638 142,678 ============ ============= =========== ============= ========== ============= PACIFIC OPPORTUNITIES - --------------------- Sold 147,314 1,099,716 Issued on reinvestment of dividends 1,988 17,556 Repurchased (293,462) (2,204,821) Issued on acquisition of Ivy Asia Pacific Fund - - ----------- ------------- Net (decrease)/increase (144,160) (1,087,549) =========== =============
GROWTH - ------ Sold 1,087,708 23,680,772 767,960 16,672,824 318,451 6,592,326 Issued on reinvestment of dividends 2,122,314 31,094,147 2,388,070 52,346,427 54,362 772,646 Repurchased (2,155,709) (46,216,862) (2,750,549) (58,194,870) (225,425) (4,842,396) ------------ ------------- ----------- ------------- ---------- ------------- Net increase 1,054,313 8,558,057 405,481 10,824,381 147,388 2,522,576 ============ ============= =========== ============= ========== ============= GROWTH - ------ Sold 183,614 3,834,229 Issued on reinvestment of dividends 47,990 1,031,781 Repurchased (109,427) (2,296,173) ----------- ------------- Net increase 122,177 2,569,837 =========== =============
BLUE CHIP - --------- Sold 1,216,791 13,869,645 281,189 3,172,160 543,508 6,359,618 Issued on reinvestment of dividends 73,811 771,431 1,246 15,288 28,993 300,658 Repurchased (580,424) (6,965,245) (77,902) (879,460) (363,250) (4,297,825) Issued on acquisition of Ivy Growth with Income Fund 4,455,447 55,728,807 - - 1,398,527 17,384,170 ------------ ------------- ----------- ------------- ---------- ------------- Net increase 5,165,625 63,404,638 204,533 2,307,988 1,607,778 19,746,621 ============ ============= =========== ============= ========== ============= BLUE CHIP - --------- Sold 678,732 7,639,044 Issued on reinvestment of dividends 483 5,908 Repurchased (65,287) (761,345) Issued on acquisition of Ivy Growth with Income Fund - - ----------- ------------- Net increase 613,928 6,883,607 =========== =============
EMERGING GROWTH - --------------- Sold 1,011,026 47,740,315 458,475 15,397,779 356,193 15,539,341 Issued on reinvestment of dividends 332,775 9,600,855 216,321 9,890,187 202,258 5,607,415 Repurchased (894,950) (39,842,791) (978,798) (33,152,346) (364,168) (16,140,242) Issued on acquisition of Hudson Capital Appreciation Fund - - 528,447 18,189,156 - - ------------ ------------- ----------- ------------- ---------- ------------- Net increase/(decrease) 448,851 17,498,379 224,445 10,324,776 194,283 5,006,514 ============ ============= =========== ============= ========== ============= EMERGING GROWTH - --------------- Sold 301,757 10,453,142 Issued on reinvestment of dividends 136,162 6,058,721 Repurchased (420,088) (13,715,955) Issued on acquisition of Hudson Capital Appreciation Fund 55,773 1,866,731 ----------- ------------- Net increase/(decrease) 73,604 4,662,639 =========== =============
BOND - ---- Sold 8,026,890 63,810,144 3,068,442 27,762,931 772,861 6,184,440 Issued on reinvestment of dividends 258,708 2,292,302 443,025 3,925,441 57,683 462,782 Repurchased (10,013,823) (80,147,766) (6,632,340) (59,516,483) (1,611,149) (12,994,155) ------------ ------------- ----------- ------------- ---------- ------------- Net (decrease)/increase (1,728,225) (14,045,320) (3,120,873) (27,828,111) (780,605) (6,346,933) ============ ============= =========== ============= ========== ============= BOND - ---- Sold 1,149,199 10,430,940 Issued on reinvestment of dividends 106,758 944,576 Repurchased (2,352,740) (20,936,455) ----------- ------------- Net (decrease)/increase (1,096,783) (9,560,939) =========== =============
MONEY MARKET - ------------ Sold 138,629,903 138,629,903 52,099,224 52,099,224 8,101,534 8,101,534 Issued on reinvestment of distributions 790,013 790,013 701,982 701,982 221,898 221,898 Repurchased (137,549,984) (137,549,984) (53,380,508) (53,380,508) (9,938,011) (9,938,011) ------------ ------------- ----------- ------------- ---------- ------------- Net increase/(decrease) 1,869,932 $ 1,869,932 (579,302) $ (579,302) (1,614,579) $ (1,614,579) ============ ============= =========== ============= ========== ============= MONEY MARKET - ------------ Sold 10,516,744 10,516,744 Issued on reinvestment of distributions 342,399 342,399 Repurchased (10,008,525) (10,008,525) ----------- ------------- Net increase/(decrease) 850,618 $ 850,618 =========== =============
IVY EUROPEAN OPPORTUNITIES FUND CLASS I FOR THE PERIOD FOR THE PERIOD MAY 4, 1999 MARCH 16, 2000 (COMMENCEMENT) TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 NOTE: TWO FUNDS HAVE I CLASS SHARES SHARES AMOUNT SHARES AMOUNT - ----------------------------------- ---------- ------------- ----------- ------------- Sold 1,775 $ 42,991 1 $ 10 Issued on reinvestment of dividends 38 642 1 9 Repurchased (851) (19,966) (2) (19) ---------- ------------- ----------- ------------- Net increase/(decrease) 962 $ 23,667 - $ - ========== ============= =========== ============= IVY INTERNATIONAL FUND CLASS I FOR THE PERIOD FOR THE PERIOD JANUARY 1, 2000 JANUARY 1, 1999 TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 NOTE: TWO FUNDS HAVE I CLASS SHARES SHARES AMOUNT SHARES AMOUNT - ----------------------------------- ---------- ------------- ----------- ------------- Sold 531,943 $ 22,613,335 913,209 $ 40,125,637 Issued on reinvestment of dividends 513,260 16,239,348 187,307 8,636,739 Repurchased (3,300,943) (133,422,468) (1,367,227) (60,880,772) ---------- ------------- ----------- ------------- Net increase/(decrease) (2,255,740) $ (94,569,785) (266,711) $ (12,118,396) ========== ============= =========== =============
74 77 NOTES TO FINANCIAL STATEMENTS (continued)
CLASS C ADVISOR CLASS FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD JANUARY 1, 2000 JANUARY 1, 1999 JANUARY 1, 2000 JANUARY 1, 1999 TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 TO DECEMBER 31, 2000 TO DECEMBER 31, 1999 SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ----------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 688,406 $ 7,494,303 1,054,307 $ 10,931,588 6,821,117 $ 76,070,250 648,709 $ 7,198,030 2,547 26,945 3,301 38,360 666 7,146 4,023 47,030 (1,664,890) (18,313,876) (1,655,685) (16,840,635) (6,990,394) (78,326,959) (477,410) (5,360,585) ----------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- (973,937) (10,792,628) (598,077) (5,870,687) (168,611) (2,249,563) 175,322 1,884,475 =========== ============= ========== ============= ========== ============= ========== ============= 22,799 195,476 64,217 459,612 68,367 512,789 123,402 1,090,855 1,099 7,894 105 930 2 17 478 4,224 (51,239) (432,203) (91,400) (678,175) (97,303) (802,182) (90,832) (781,090) 152,159 1,136,627 - - - - - - ----------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 124,818 907,794 (27,078) (217,633) (28,934) (289,376) 33,048 313,989 =========== ============= ========== ============= ========== ============= ========== ============= 101,581 2,112,008 16,764 356,582 6,948 154,793 4,549 98,336 4,935 68,245 1,881 39,625 3,078 45,125 3,041 66,750 (80,964) (1,678,476) (5,236) (104,987) (5,846) (134,127) (5,250) (111,327) ----------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 25,552 501,777 13,409 291,220 4,180 65,791 2,340 53,759 =========== ============= ========== ============= ========== ============= ========== ============= 106,978 1,314,878 225,883 2,547,834 14,161 174,873 29,163 329,193 3,875 40,108 163 1,994 1,528 16,062 577 7,101 (73,105) (873,927) (33,182) (388,189) (10,513) (129,237) (5,280) (62,328) 41,859 520,745 - - 19,951 250,530 - - ----------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 79,607 1,001,804 192,864 2,161,639 25,127 312,228 24,460 273,966 =========== ============= ========== ============= ========== ============= ========== ============= 70,319 3,062,362 92,998 3,191,755 700,148 29,794,575 12,808 448,645 27,717 766,924 22,335 993,253 8,031 233,536 3,086 141,967 (122,590) (5,447,052) (82,462) (2,707,685) (673,277) (28,105,796) (8,362) (271,517) - - - - - - - - ----------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- (24,554) (1,617,766) 32,871 1,477,323 34,902 1,922,315 7,532 319,095 =========== ============= ========== ============= ========== ============= ========== ============= 357,336 2,885,050 147,492 1,322,066 15,252 121,678 31,292 277,077 6,640 53,437 13,078 116,032 1,690 13,587 1,794 15,700 (492,275) (3,976,452) (866,732) (7,831,025) (32,756) (262,525) (29,292) (267,282) ----------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- (128,299) (1,037,965) (706,162) (6,392,927) (15,814) (127,260) 3,794 25,495 =========== ============= ========== ============= ========== ============= ========== ============= 12,286,520 12,286,520 2,563,747 2,563,747 - - - - 52,918 52,918 16,085 16,085 - - - - (10,736,255) (10,736,255) (2,630,710) (2,630,710) - - - - ----------- ------------- ---------- ------------- ---------- ------------- ---------- ------------- 1,603,183 $ 1,603,183 (50,878) $ (50,878) - $ - - $ - =========== ============= ========== ============= ========== ============= ========== =============
6. SUBSEQUENT EVENT The Funds' investment adviser, Ivy Management, Inc. ("IMI"), is an indirect subsidiary of Mackenzie Financial Corporation ("MFC"). After the close of the fiscal year ended December 31, 2000, MFC entered into a definitive agreement with Investors Group ("IG"), a leading Canadian financial services organization, whereby IG will acquire MFC through a take over bid for all of the outstanding MFC shares. Consummation of the transaction is subject to a number of contingencies, including the tender of at least two-thirds of MFC shares and other closing conditions. Under the Investment Company Act of 1940, the transaction would result in a change in control of IMI and, therefore, constitute an assignment of each Fund's investment advisory agreement, which would result in a termination of the agreement. Consequently, it is anticipated that IMI will seek approval of a new agreement from the Board of Trustees of Ivy Fund and the shareholders of each Fund within one hundred and fifty (150) days after the consummation of the transaction. The transaction is targeted to close by the end of April 2001. 75 78 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Trustees and Shareholders of Ivy Fund In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Ivy Developing Markets Fund, Ivy European Opportunities Fund, Ivy Global Fund, Ivy Global Natural Resources Fund, Ivy Global Science & Technology Fund, Ivy International Fund, Ivy International Small Companies Fund, Ivy International Value Fund, Ivy Pacific Opportunities Fund, Ivy Growth Fund, Ivy US Blue Chip Fund, Ivy US Emerging Growth Fund, Ivy Bond Fund and Ivy Money Market Fund (constituting portfolios within Ivy Fund, hereafter referred to as the "Fund") at December 31, 2000, and the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2000 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Fort Lauderdale, Florida February 8, 2001 76 79 BOARD OF TRUSTEES John S. Anderegg, Jr. James W. Broadfoot Paul H. Broyhill Keith J. Carlson Stanley Channick Dianne Lister Roy J. Glauber Joseph G. Rosenthal Richard Silverman J. Brendan Swan Edward M.Tighe OFFICERS Keith J. Carlson, Chairman James W. Broadfoot, President Beverly J.Yanowitch, Treasurer LEGAL COUNSEL Dechert Boston, Massachusetts CUSTODIAN Brown Brothers Harriman & Co. Boston, Massachusetts TRANSFER AGENT Ivy Mackenzie Services Corp. PO Box 3022 Boca Raton, Florida 33431-0922 800.777.6472 AUDITORS PricewaterhouseCoopers LLP Ft. Lauderdale, Florida DISTRIBUTOR Ivy Mackenzie Distributors, Inc. Via Mizner Financial Plaza 700 South Federal Highway, Suite 300 Boca Raton, Florida 33432 800.456.5111 INVESTMENT MANAGER IVY MANAGEMENT, INC. Via Mizner Financial Plaza Boca Raton, Florida 33432 800.456.5111 www.ivyfunds.com E-mail: acctinfo@ivyfunds.com [Ivy Logo] 80 IVY CUNDILL VALUE FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH BY INVESTING AT LEAST 65% OF ITS ASSETS IN EQUITY SECURITIES THROUGHOUT THE WORLD. An interview with Andrew Massie, member of the Ivy Cundill Value Fund portfolio management team. "By adhering to our focus on real value in 2000 rather than on hopes, dreams and fads, our portfolio largely avoided the significant weakness that engulfed most of the world stock markets last year." Q: ANDREW, HOW DID IVY CUNDILL VALUE FUND DO IN 2000? A: The Ivy Cundill Value Fund returned 4.66% from April 19,2000,its inception date, through December 31,2000.For this same period, the Morgan Stanley Capital International World Index, its benchmark index, returned -9.37%. Q: WHAT HELPED PERFORMANCE? A: Performance was positively influenced by Jardine Matheson, which bought back 165 million shares of their own stock; we tendered our shares and experienced a 46% return within 6 months. Another holding, diamond producer DeBeers Consolidated Mines, moved up significantly in 2000. Fairfax Financial, a Canadian property and casualty insurance company, also contributed positively to performance. We had previously bought the stock when "growth" style investors became disappointed with below expectation results. Separately, the Fund sold forward the Japanese yen, hedging its long equity holdings and making money on the yen's depreciation of approximately 10% over the year. Q: WHAT HINDERED PERFORMANCE? A: LTV Corp was the biggest disappointment of the year as a result of an unexpected rapid deterioration of the steel industry combined with an expensive acquisition. The confluence of events created a toxic mix and a worthwhile lesson. The position was sold for a tax loss in September. Some of our Japanese names decreased in value over the period in line with the general weakness in the Japanese market, although this was somewhat tempered by our hedge of the yen. Q: WHAT IS YOUR INVESTMENT STRATEGY, AND HOW DID THIS HELP THE FUND IN 2000? A: The Fund's investment approach is based on the "value" philosophy pioneered by Dr. Benjamin Graham. The focus is on value investing on a global basis through the purchase of securities that are believed to be trading below their intrinsic value. This approach is entirely bottom-up and focused on selecting individual securities - no weighting, or "portfolio construction," occurs to achieve predetermined country, sector or industry exposure. We do not rely on economic or company earnings forecasts, nor do we attempt to time markets. All potential holdings must meet specific value criteria regarding purchase price, earnings outlooks, and the financial stability of the issuer. By adhering to our focus on real value in 2000 rather than on hopes, dreams and fads, our portfolio largely avoided the significant weakness that engulfed most of the world stock markets last year. As the benefits of corporate and balance sheet restructuring began to become apparent in several of our holdings, those stocks tended to ignore the otherwise negative market environment. Our contrarian and value-oriented style steered us to significant holdings in Asia where we believed some of the most undervalued companies in the world were to be found. Our focus, as always, was to seek out solid, undervalued companies while, hopefully, avoiding price erosion within areas of speculative excess and overvaluation. In 2001, we will continue to seek out undervalued and unloved investments that offer strong growth potential. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. 81 AVERAGE ANNUAL TOTAL RETURNS
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge N/A N/A N/A N/A w/o Reimb. & 5.75% sales charge N/A N/A N/A N/A B SHARES w/Reimb. & w/ CDSC N/A N/A N/A N/A w/Reimb. & w/o CDSC N/A N/A N/A N/A w/o Reimb. & w/CDSC N/A N/A N/A N/A w/o Reimb. & w/o CDSC N/A N/A N/A N/A C SHARES w/Reimb. & w/ CDSC N/A N/A N/A N/A w/Reimb. & w/o CDSC N/A N/A N/A N/A w/o Reimb. & w/CDSC N/A N/A N/A N/A w/o Reimb. & w/o CDSC N/A N/A N/A N/A I SHARES w/Reimb. N/A N/A N/A N/A w/o Reimb. N/A N/A N/A N/A ADVISOR SHARES w/Reimb. N/A N/A N/A 4.66% w/o Reimb. N/A N/A N/A (9.10%)
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A, Class B, Class C, Class I and Advisor Class commenced operations April 19, 2000. All charts and tables reflect past results and assume reinvestment of dividends and capital gain distributions. Future results will, of course, be different. The investment return and principal value of Ivy Cundill Value Fund will fluctuate and at redemption shares may be worth more or less than the amount of the original investment. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (4/00) of a $10,000 Investment [GRAPH] IVY CUNDILL VALUE FUND - $10,466 MCSI WORLD INDEX - $8,594 The Ivy Cundill Value Fund returned 4.66% from April 19, 2000, its inception date, through December 31,2000. For this same period, the Morgan Stanley Capital International World Index, its benchmark index, returned -9.37%. Outperformance was due to the Fund's focus on securities believed to be trading below their intrinsic value as well as its hedging of the yen. The Morgan Stanley Capital International (MSCI) World Index is an unmanaged index of stocks which assumes reinvestment of dividends and, unlike Fund returns, does not reflect any fees or expenses. It is not possible to invest in an index. Performance is calculated for Class A shares at net asset value unless otherwise noted. The performance of all other share classes will vary relative to that of Class A shares based on differences in their respective sales loads and fees. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS ASSETS UNDER MANAGEMENT $781,000 TOTAL NUMBER OF HOLDINGS 18 INVESTMENT STYLE Multi-Cap Value CUSIP NUMBERS CLASS A SHARES 465898880 CLASS B SHARES 465898799 CLASS C SHARES 465898781 I CLASS SHARES 465898773 ADVISOR CLASS SHARES 465898765 82 IVY CUNDILL VALUE FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 2000
- ------------------------------------------------------------------------------------------------ NAME OF SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------ Equity Securities - 84.9% - ------------------------------------------------- AFRICA - 5.4% - ------------------------------------------------- SOUTH AFRICA - 5.4% DeBeers Consolidated Mines Ltd. ADR 1,500 $ 40,125 ------------- ASIA/PACIFIC - 52.5% - ------------------------------------------------- HONG KONG - 4.4% China Hong Kong Photo Products Holdings, Ltd. 338,000 32,934 ------------- JAPAN - 43.2% Asahi Broadcasting Corporation 500 50,744 Descente, Ltd. 19,000 31,611 Fuji Photo Film Company, Ltd. 1,000 41,856 Gakken Co., Ltd. (a) 18,000 21,909 Horipro Inc. 4,000 22,102 Koa Fire & Marine Insurance Company Limited 13,000 44,851 Mitsui Marine and Fire Insurance Company, Ltd. 9,000 51,620 Sankyo Company, Limited 1,000 23,993 Shiseido Company, Limited 3,000 33,494 ------------- 322,180 ------------- SINGAPORE - 4.9% DelGro Corporation Limited 14,000 36,654 ------------- EUROPE - 5.4% - ------------------------------------------------- UNITED KINGDOM - 5.4% Sibir Energy plc (a) 200,000 40,333 ------------- NORTH AMERICA - 21.6% - ------------------------------------------------- CANADA - 21.6% Intrawest Corporation - Preferred 25,498 31,660 Brascan Corporation 2,500 36,534 Derlan Industries Limited (a) 25,000 21,638 Fairfax Financial Holdings Limited (a) 250 38,033 PanAfrican Energy Corporation - Class B (a) 23,000 33,688 ------------- 161,553 ------------- TOTAL INVESTMENTS - 84.9% (Cost - $628,175) (b) $ 633,779 OTHER ASSETS, LESS LIABILITIES - 15.1% 113,123 ------------- NET ASSETS - 100% $ 746,902 =============
Footnotes: ADR - American Depository Receipt (a) Non-income producing security (b) Cost is approximately the same for Federal income tax purposes. Page 1 83 OTHER INFORMATION: At December 31, 2000, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 63,289 Gross unrealized depreciation (57,685) --------- Net unrealized appreciation $ 5,604 =========
Purchases and sale proceeds of securities other than short-term obligations aggregated $976,355 and $344,814, respectively, for the period ended December 31, 2000. Forward foreign currency exchange contracts at December 31, 2000 were:
CONTRACTS TO BUY - ----------------------------------------------------------------------------------------------------- Expiration Local Value IN EXCHANGE UNREALIZED Currency Date Currency in U.S. $ FOR U.S. $ APPRECIATION - --------------------------------------------------------------------------------------------------------------------- British Pound January 23, 2001 18,012 $ 5,000 $ 5,070 $ 70 ------------
CONTRACTS TO SELL - --------------------------------------------------------------------------------- UNREALIZED Expiration Local Value IN EXCHANGE APPRECIATION Currency Date Currency in U.S. $ FOR U.S. $ (DEPRECIATION) - ---------------------------------------------------------------------------------------------------------------------- British Pound January 23, 2001 18,012 $ 27,000 $ 26,953 $ 47 British Pound March 13, 2001 6,895 10,000 10,327 (327) Japanese Yen January 23, 2001 26,951,590 257,000 236,539 20,461 Japanese Yen March 13, 2001 4,219,310 41,000 37,298 3,702 Singapore Dollar January 23, 2001 56,189 33,000 32,465 535 ------- $24,418 ------- Net unrealized appreciation on forward foreign currency exchange contracts $24,488 =======
The accompanying notes are an integral part of the financial statements. Page 2 84 Ivy Cundill Value Fund Statement of Assets and Liabilities December 31, 2000 ASSETS Investments, at value (identified cost - $628,175) ................... $ 633,779 Cash ................................................................. 107,078 Receivables Dividends and interest ............................................. 461 Manager for expense reimbursement .................................. 10,529 Unrealized appreciation on open forward foreign currency contracts ... 24,815 Deferred offering costs .............................................. 4,133 Other assets ......................................................... 208 --------- Total assets ....................................................... 781,003 --------- LIABILITIES Payables Management fee .................................................... 617 Other payables to related parties ................................. 16,166 Unrealized depreciation on open forward foreign currency contracts ... 327 Accrued expenses ..................................................... 16,991 --------- Total liabilities .................................................. 34,101 --------- NET ASSETS ........................................................... $ 746,902 ========= ADVISOR CLASS Net asset value, offering price and redemption price per share ($746,902 / 74,201 shares outstanding) ..................... $ 10.07 ========= NET ASSETS CONSIST OF Capital paid-in .................................................... $ 732,606 Accumulated net realized loss on investments and foreign currency transactions ............................................ (15,981) Net unrealized appreciation on investments and foreign currency transactions ............................................ 30,277 --------- NET ASSETS ........................................................... $ 746,902 =========
The accompanying notes are an integral part of the financial statements. 85 Ivy Cundill Value Fund Statement of Operations For the period April 19, 2000 (commencement) to December 31, 2000 INVESTMENT INCOME Dividends, net of $799 foreign taxes withheld ................... $ 10,614 Interest ....................................................... 2,658 -------- 13,272 -------- EXPENSES Management fee ................................................. $ 5,011 Transfer agent ................................................. 236 Administrative services fee .................................... 501 Custodian fees ................................................. 24,481 Blue Sky fees .................................................. 907 Auditing and accounting fees ................................... 8,576 Shareholder reports ............................................ 37 Amortization of deferred offering costs ........................ 10,239 Fund accounting ................................................ 13,677 Trustees' fees ................................................. 2,859 Legal .......................................................... 29,409 Other .......................................................... 30 -------- Total expenses ............................................... 95,963 Expenses reimbursed by Manager ................................. (86,191) -------- Net expenses ................................................. 9,772 -------- NET INVESTMENT INCOME ............................................ 3,500 -------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized loss on investments and foreign currency transactions ........................................ (1,884) Net unrealized appreciation on investments and foreign currency transactions ........................................ 30,277 -------- Net gain on investment and foreign currency transactions .... 28,393 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................ $ 31,893 ========
The accompanying notes are an integral part of the financial statements. 86 Ivy Cundill Value Fund Statement of Changes in Net Assets For the period April 19, 2000 (commencement) to December 31, 2000 INCREASE IN NET ASSETS Operations Net investment income ................................................ $ 3,500 Net realized loss on investments and foreign currency transactions ... (1,884) Net change in unrealized appreciation on investments and foreign currency transactions ...................... 30,277 --------- Net increase resulting from operations ........................ 31,893 --------- Advisor Class distributions Dividends From net investment income ......................................... (3,500) In excess of net investment income ................................. (10,234) Distributions from realized gain ..................................... (14,102) --------- Total distributions to Advisor Class shareholders .................. (27,836) --------- Fund share transactions (Note 4) Advisor Class ........................................................ 742,845 --------- Net increase resulting from Fund share transactions ............................................ 742,845 --------- TOTAL INCREASE IN NET ASSETS ........................................... 746,902 --------- NET ASSETS AT END OF PERIOD .......................................... $ 746,902 ========= UNDISTRIBUTED NET INVESTMENT INCOME .................................... $ 15,852 =========
The accompanying notes are an integral part of the financial statements. 87 IVY CUNDILL VALUE FUND Financial Highlights For the period April 19, 2000 (commencement) to December 31, 2000 ADVISOR CLASS SELECTED PER SHARE DATA Net asset value, beginning of period ....................... $ 10.00 ---------- Income from investment operations Net investment income(a) ................................ .05 Net gain on securities (both realized and unrealized) ... .41 ---------- Total from investment operations ....................... .46 ---------- Less distributions Dividends From net investment income ............................. .05 In excess of net investment income ..................... .14 Distributions from realized gain ........................ .20 ---------- Total distributions .................................... .39 ---------- Net asset value, end of period ............................. $ 10.07 ========== Total return (%)(b) ........................................ 4.66 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in thousands) ................... $ 747 Ratio of expenses to average net assets (%)(c) With expense reimbursement (%) ........................... 1.95 Without expense reimbursement (%) ........................ 19.15 Ratio of net investment income to average net assets (%)(a)(c) ........................... .70 Portfolio turnover rate (%) ................................ 53
(a) Net investment income is net of expenses reimbursed by Manager. (b) Total return represents aggregate total return and does not reflect a sales charge. (c) Annualized The accompanying notes are an integral part of the financial statements. 88 IVY CUNDILL VALUE FUND NOTES TO FINANCIAL STATEMENTS Ivy Cundill Value Fund (the "Fund"), is a diversified series of shares of Ivy Fund. The shares of beneficial interest are assigned no par value and an unlimited number of shares of Class A, Class B, Class C, Class I and Advisor Class are authorized. Ivy Fund was organized as a Massachusetts business trust under a Declaration of Trust dated December 21, 1983 and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principals generally accepted in the United States of America. Preparation of the financial statements includes the use of management estimates. Actual results could differ from those estimates. SECURITY VALUATION - Securities traded on a U.S. or foreign stock exchange, or The Nasdaq Stock Market Inc. ("Nasdaq") system, are valued at the last quoted sale price reported as of the close of regular trading on the exchange on which the security is traded most extensively. If there were no sales on the exchange on which the security is traded most extensively and the security is traded on more than one exchange, or on one or more exchanges in the over-the-counter market, the exchange reflecting the last quoted sale at the end of regular trading will be used. Otherwise, the security is valued at the calculated mean between the last bid and asked price on the exchange on which the security is traded most extensively. Securities not traded on an exchange or Nasdaq, but traded in another over-the-counter market are valued at the average between the current bid and asked price in such markets. Short-term obligations and commercial paper are valued at amortized cost, which approximates market. Debt securities (other than short-term obligations and commercial paper) are valued on the basis of valuations furnished by a pricing service authorized by the Board of Trustees (the "Board"), which determines valuations based upon market transactions for normal, institutional-size trading units of such securities, or on the basis of dealer quotes. All other securities are valued at their fair value as determined in good faith by the Valuation Committee of the Board; as of December 31, 2000, there were no Board valued securities. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date, and interest income is accrued on a daily basis. Corporate actions on foreign securities, including dividends, are recorded on the ex-dividend date. If such information is not available on the ex-dividend date, corporate actions are recorded as soon as reliable information is available from the Fund's sources. Realized gains and losses from security transactions are calculated on an identified cost basis. CASH - The Fund classifies as cash amounts on deposit with the Fund's custodian. These amounts earn interest at variable interest rates. At December 31, 2000, the interest rate was 5.25%. 89 IVY CUNDILL VALUE FUND NOTES TO FINANCIAL STATEMENTS FEDERAL INCOME TAXES - The Fund intends to qualify for tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended (the "Code"), and distribute all of its taxable income to its shareholders. Therefore, no provision has been recorded for Federal income or excise taxes. The Fund earned foreign source dividends of $10,439. These dividends were subject to foreign withholding tax in the amount of $799. The Fund intends to elect to pass through to its shareholders their proportionate share of such taxes. Shareholders may report their share of foreign taxes paid as either a tax credit or itemized deduction. DISTRIBUTIONS TO SHAREHOLDERS - Distributions from net investment income and realized gain, if any, are declared in December. FOREIGN CURRENCY TRANSLATIONS - Foreign currency transactions from foreign investment activity are translated into U.S. dollars on the following basis: (i) market value of securities, and dividends and interest receivable, are translated at the closing daily rate of exchange; and (ii) purchases and sales of investment securities are translated at the rate at which related foreign contracts are obtained or at the exchange rate prevailing on the date of the transaction. Exchange gains or losses from currency translation of other assets and liabilities, if significant, are reported as a separate component of Net realized and unrealized gain (loss) on investment transactions. Foreign transactions may involve risks not typically associated with domestic transactions including, but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political and economic instability. For foreign securities, the Fund does not isolate that portion of gains and losses on investment securities that is due to changes in the foreign exchange rates from that which is due to changes in market prices of such securities. For tax reporting purposes, Code Section 988 provides that gains and losses on certain transactions attributable to fluctuations in foreign currency exchange rates must be treated as ordinary income or loss. FORWARD FOREIGN CURRENCY CONTRACTS - Forward foreign currency contracts are agreements to exchange one currency for another at a future date and at a specified price. The Fund may use forward foreign currency contracts to facilitate transactions in foreign securities and to manage the Fund's foreign currency exposure. The U.S. dollar market value, contract value and the foreign currencies the Fund has committed to buy or sell are shown in the Schedule of Investments. These amounts represent the aggregate exposure to each foreign currency the Fund has acquired or hedged through forward foreign currency contracts at December 31, 2000. Forward foreign currency contracts are reflected as both a forward foreign currency contract to buy and a forward foreign currency contract to sell. Forward foreign currency contracts to buy generally are used to acquire exposure to foreign currencies, while forward foreign currency contracts to sell are used to hedge the Fund's investments against currency fluctuations. Also, a forward foreign currency 90 IVY CUNDILL VALUE FUND NOTES TO FINANCIAL STATEMENTS contract to buy or sell can offset a previously acquired opposite forward foreign currency contract. Forward foreign currency contracts are marked-to-market daily. The change in a contract's market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed or delivery is taken, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of forward foreign currency contracts does not eliminate fluctuations in the underlying prices of the Fund's securities, but it does establish a rate of exchange that can be achieved in the future. These forward foreign currency contracts involve market risk in excess of the unrealized appreciation (depreciation) of forward foreign currency contracts reflected in the Fund's Statement of Assets and Liabilities. Although forward foreign currency contracts used for hedging purposes limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. DEFERRED OFFERING COSTS - Offering costs are being amortized over a one year period beginning April 19, 2000, the date the Fund commenced operations. Offering costs have been paid by Mackenzie Investment Management Inc. ("MIMI") and will be reimbursed by the Fund. 2. RELATED PARTIES Ivy Management, Inc. ("IMI") is the Manager and Investment Adviser of the Fund. For its services, IMI receives a fee monthly at the annual rate of 1.00% of the Fund's average net assets. Peter Cundill & Associates, Inc. is the sub-advisor of the Fund. IMI, not the Fund, is obligated to compensate the sub-advisor. Currently, IMI limits the Fund's total operating expenses (excluding 12b-1 fees and certain other expenses) to an annual rate of 1.95% of the Fund's average net assets. MIMI, of which IMI is a wholly owned subsidiary, provides certain administrative, accounting and pricing services for the Fund. For those services, the Fund pays MIMI fees plus certain out-of-pocket expenses. Such fees and expenses are reflected as Administrative services fee and Fund accounting in the Statement of Operations. At December 31, 2000, MIMI owned 70% of the Fund's shares outstanding. Ivy Mackenzie Services Corp. ("IMSC"), a wholly owned subsidiary of MIMI, is the transfer and shareholder servicing agent for the Fund. For those services, the Fund pays a monthly fee plus certain out-of-pocket expenses. Such fees and expenses of $236 for Advisor Class shares are reflected as Transfer agent in the Statement of Operations. 3. BOARD'S COMPENSATION 91 IVY CUNDILL VALUE FUND NOTES TO FINANCIAL STATEMENTS Trustees who are not affiliated with IMI or MIMI receive compensation from the Fund, which is reflected as Trustees' fees in the Statement of Operations. 4. FUND SHARE TRANSACTIONS Fund share transactions for Advisor Class were as follows: 92
FOR THE PERIOD FROM APRIL 19, 2000 (COMMENCEMENT) TO DECEMBER 31, 2000 - ----------------------------------------------- ADVISOR CLASS SHARES AMOUNT - ----------------------------------------------- Sold................... 71,392 $ 715,009 Issued on reinvestment of dividends......... 2,809 27,836 -------- --------- Net increase........... 74,201 $ 742,845 ======== =========
93 IVY CUNDILL VALUE FUND NOTES TO FINANCIAL STATEMENTS 5. SUBSEQUENT EVENT The Fund's investment advisor, IMI, is an indirect subsidiary of Mackenzie Financial Corporation ("MFC"). After the close of the fiscal year ended December 31, 2000, MFC entered into a definitive agreement with Investors Group ("IG"), a leading Canadian financial services organization, whereby IG will acquire MFC through a take over bid for all of the outstanding MFC shares. Consummation of the transaction is subject to a number of contingencies, including the tender of at least two-thirds of the MFC shares and other closing conditions. Under the Investment Company Act of 1940, the transaction would result in a change of control of IMI and, therefore, constitute an assignment of each Fund's investment advisory agreement, which would result in a termination of the agreement. Consequently, it is anticipated that IMI will seek approval of a new agreement from the Board of Trustees of Ivy Fund and the shareholders of each Fund within one hundred and fifty (150) days after the consummation of the transaction. The transaction is targeted to close by the end of April 2001. 94 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Trustees and Shareholders of Ivy Cundill Value Fund In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Ivy Cundill Value Fund (one of the portfolios constituting Ivy Fund, hereafter referred to as the "Fund") at December 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the period April 19, 2000 (commencement of operations) through December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at December 31, 2000 by correspondence with the custodian, provides a reasonable basis for our opinion. PricewaterhouseCoopers LLP Fort Lauderdale, Florida February 8, 2001 95 IVY INTERNATIONAL GROWTH FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 2000
- ------------------------------------------------------------------------------------------------------------------------- NAME OF SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------- EQUITY SECURITIES - 86.1% - ------------------------------------------------------------------------------------------------------------------------- EUROPE - 67.9% - ------------------------------------------------------------------------------------------------------------------------- FINLAND - 7.6% Nokia Oyj 400 $ 17,838 Sonera Oyj 1,100 19,932 -------- 37,770 -------- FRANCE - 14.9% Altadis, S.A. 1,200 18,364 Aventis SA 200 17,556 Carrefour SA 300 18,843 LVMH 300 19,857 -------- 74,620 -------- GERMANY - 17.9% Adidas-Salomon AG 300 18,589 Allianz AG-Registered 100 37,620 Deutsche Post AG (a) 900 19,358 SAP AG 100 14,158 -------- 89,725 -------- NETHERLANDS - 8.5% ING Groep NV 300 23,963 Koninklijke (Royal) Philips Electronics NV 500 18,317 -------- 42,280 -------- SWEDEN - 3.9% Telefonaktiebolaget LM Ericsson AB 1,700 19,368 -------- SWITZERLAND - 3.6% Zurich Financial Services AG 30 18,087 -------- UNITED KINGDOM - 11.5% Glaxosmithkline plc (a) 700 19,742 Reuters Group plc 1,100 18,601 Vodafone AirTouch plc 5,300 19,436 -------- 57,779 -------- FAR EAST - 18.2% - ------------------------------------------------------------------------------------------------------------------------- HONG KONG - 4.7% HSBC Holdings plc 1,600 23,692 -------- JAPAN - 9.7% Nintendo Co., Ltd. 100 15,753 Sharp Corporation 1,000 12,067 Sony Corporation 300 20,753 -------- 48,573 -------- TAIWAN - 3.8% Taiwan Semiconductor Manufacturing Company Ltd. Sponsored ADR (a) 1,100 18,975 -------- TOTAL INVESTMENTS - 86.1% (Cost - $426,390) (b) $430,869 OTHER ASSETS, LESS LIABILITIES - 13.9% 69,592 -------- NET ASSETS - 100% $500,461 ========
Page 1 96 Footnotes: ADR - American Depository Receipt (a) Non-income producing security (b) Cost is approximately the same for Federal income tax purposes. OTHER INFORMATION: At December 31, 2000, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 6,217 Gross unrealized depreciation (1,738) ------- Net unrealized appreciation $ 4,479 =======
Purchases of securities other than short-term obligations aggregated $426,390 for the period ended December 31, 2000. Forward foreign currency exchange contracts at December 31, 2000 were:
CONTRACTS TO BUY ----------- UNREALIZED EXPIRATION LOCAL VALUE IN EXCHANGE APPRECIATION CURRENCY DATE CURRENCY IN U.S.$ FOR U.S.$ (DEPRECIATION) - --------------------------------------------------------------------------------------------------- British Pound January 8, 2001 38,773 $ 57,913 $ 57,920 $ 7 Euro January 4, 2001 258,564 242,491 242,752 261 Hong Kong Dollar January 3, 2001 185,951 23,841 23,840 (1) Swedish Krona January 4, 2001 184,059 19,477 19,507 30 Swiss Franc January 5, 2001 29,599 18,262 18,265 3 Japanese Yen January 9, 2001 5,665,456 49,491 49,610 119 ------ Net unrealized appreciation on forward foreign currency exchange contracts $ 419 ======
The accompanying notes are an integral part of the financial statements. Page 2 97 Ivy International Growth Fund Statement of Assets and Liabilities December 31, 2000 ASSETS Investments, at value (identified cost - $426,390) ........................ $430,869 Cash ...................................................................... 500,000 Receivable from Manager for expense reimbursement ......................... 12,109 Unrealized appreciation on open forward foreign currency contracts ........ 419 Deferred offering costs ................................................... 14,878 -------- Total assets ............................................................ 958,275 -------- LIABILITIES Payables Investments purchased .................................................. 430,787 Management fee ......................................................... 27 Auditing and accounting fees ........................................... 10,000 Other payables to related parties ...................................... 15,000 Accrued expenses .......................................................... 2,000 -------- Total liabilities ....................................................... 457,814 -------- NET ASSETS ................................................................ $500,461 ======== ADVISOR CLASS Net asset value, offering price and redemption price per share ($500,461/50,000 shares outstanding) ...................................... $ 10.01 ======== NET ASSETS CONSIST OF Capital paid-in ......................................................... $499,959 Net unrealized appreciation on investments and foreign currency transactions ......................................... 502 -------- NET ASSETS ................................................................ $500,461 ========
The accompanying notes are an integral part of the financial statements. 98 Ivy International Growth Fund Statement of Operations For the Period December 29, 2000 (commencement) to December 31, 2000 EXPENSES Management fee .................................................... $ 27 Auditing and accounting fees ...................................... 10,000 Amortization of deferred offering costs ........................... 123 Legal ............................................................. 2,000 -------- 12,150 Expenses reimbursement by Manager ................................. (12,109) -------- Net expenses .................................................... 41 -------- NET INVESTMENT LOSS ................................................. (41) -------- NET UNREALIZED GAIN ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net change in unrealized appreciation on investments and foreign currency transactions ............................... 502 -------- Net gain on investment and foreign currency transactions ....... 502 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................... $ 461 ========
The accompanying notes are an integral part of the financial statements. 99 Ivy International Growth Fund Statement of Changes in Net Assets For the Period December 29, 2000 (commencement) to December 31, 2000 INCREASE IN NET ASSETS Operations Net investment loss ........................................................................ (41) Net change in unrealized appreciation on investments and foreign currency transactions ............................................ 502 -------- Net increase resulting from operations ................................................ 461 -------- Fund share transactions (Note 3) Advisor Class .............................................................................. 500,000 -------- Net increase resulting from Fund share transactions ............................................................. 500,000 -------- NET ASSETS AT END OF PERIOD .................................................................. $500,461 ========
The accompanying notes are an integral part of the financial statements. 100 IVY INTERNATIONAL GROWTH FUND Financial Highlights For the period December 29, 2000 (commencement) to December 31,2000 ADVISOR CLASS SELECTED PER SHARE DATA Net asset value, beginning of period .............................. $ 10.00 ------- Income from investment operations Net investment loss (a) ........................................ -- Net gain on securities (both realized and unrealized) ......... .01 ------- Total from investment operations ................................ .01 ------- Net asset value, end of period .................................... $ 10.01 ======= Total return (%)(b) ............................................... 0.10 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in thousands) .......................... $ 500 Ratio of expenses to average net assets (%)(c) With expense reimbursement (%) .................................. 1.50 Without expense reimbursement (%) ............................... 444.30 Ratio of net investment loss to average net assets (%)(a)(c) ...... (1.50) Portfolio turnover rate (%) ....................................... 0
(a) Net investment loss is net of expenses reimbursed by Manager. (b) Total return represents aggregate total return and does not reflect a sales charge. (c) Annualized The accompanying notes are an integral part of the financial statements. 101 IVY INTERNATIONAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS Ivy International Growth Fund (the "Fund"), is a diversified series of shares of Ivy Fund. The shares of beneficial interest are assigned no par value and an unlimited number of shares of Class A, Class B, Class C, Class I and Advisor Class are authorized. Ivy Fund was organized as a Massachusetts business trust under a Declaration of Trust dated December 21, 1983 and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principals generally accepted in the United States of America. Preparation of the financial statements includes the use of management estimates. Actual results could differ from those estimates. SECURITY VALUATION - Securities traded on a U.S. or foreign stock exchange, or The Nasdaq Stock Market Inc. ("Nasdaq") system, are valued at the last quoted sale price reported as of the close of regular trading on the exchange on which the security is traded most extensively. If there were no sales on the exchange on which the security is traded most extensively and the security is traded on more than one exchange, or on one or more exchanges in the over-the-counter market, the exchange reflecting the last quoted sale at the end of regular trading will be used. Otherwise, the security is valued at the calculated mean between the last bid and asked price on the exchange on which the security is traded most extensively. Securities not traded on an exchange or Nasdaq, but traded in another over-the-counter market are valued at the average between the current bid and asked price in such markets. Short-term obligations and commercial paper are valued at amortized cost, which approximates market. Debt securities (other than short-term obligations and commercial paper) are valued on the basis of valuations furnished by a pricing service authorized by the Board of Trustees (the "Board"), which determines valuations based upon market transactions for normal, institutional-size trading units of such securities, or on the basis of dealer quotes. All other securities are valued at their fair value as determined in good faith by the Valuation Committee of the Board; as of December 31, 2000, there were no Board valued securities. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date, and interest income is accrued on a daily basis. Corporate actions on foreign securities, including dividends, are recorded on the ex-dividend date. If such information is not available on the ex-dividend date, corporate actions are recorded as soon as reliable information is available from the Fund's sources. Realized gains and losses from security transactions are calculated on an identified cost basis. CASH - The Fund classifies as cash amounts on deposit with the Fund's custodian. These amounts earn interest at variable interest rates. At December 31, 2000, the interest rate was 5.25%. 102 IVY INTERNATIONAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS FEDERAL INCOME TAXES - The Fund intends to qualify for tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended (the "Code"), and distribute all of its taxable income to its shareholders. Therefore, no provision has been recorded for Federal income or excise taxes. DISTRIBUTIONS TO SHAREHOLDERS - Distributions from net investment income and realized gain, if any, are declared in December. FOREIGN CURRENCY TRANSLATIONS - Foreign currency transactions from foreign investment activity are translated into U.S. dollars on the following basis: (i) market value of securities, and dividends and interest receivable, are translated at the closing daily rate of exchange; and (ii) purchases and sales of investment securities are translated at the rate at which related foreign contracts are obtained or at the exchange rate prevailing on the date of the transaction. Exchange gains or losses from currency translation of other assets and liabilities, if significant, are reported as a separate component of Net realized and unrealized gain (loss) on investment transactions. Foreign transactions may involve risks not typically associated with domestic transactions including, but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political and economic instability. For foreign securities, the Fund does not isolate that portion of gains and losses on investment securities that is due to changes in the foreign exchange rates from that which is due to changes in market prices of such securities. For tax reporting purposes, Code Section 988 provides that gains and losses on certain transactions attributable to fluctuations in foreign currency exchange rates must be treated as ordinary income or loss. FORWARD FOREIGN CURRENCY CONTRACTS - Forward foreign currency contracts are agreements to exchange one currency for another at a future date and at a specified price. The Fund may use forward foreign currency contracts to facilitate transactions in foreign securities and to manage the Fund's foreign currency exposure. The U.S. dollar market value, contract value and the foreign currencies the Fund has committed to buy or sell are shown in the Schedule of Investments. These amounts represent the aggregate exposure to each foreign currency the Fund has acquired or hedged through forward foreign currency contracts at December 31, 2000. Forward foreign currency contracts are reflected as both a forward foreign currency contract to buy and a forward foreign currency contract to sell. Forward foreign currency contracts to buy generally are used to acquire exposure to foreign currencies, while forward foreign currency contracts to sell are used to hedge the Fund's investments against currency fluctuations. Also, a forward foreign currency contract to buy or sell can offset a previously acquired opposite forward foreign currency contract. Forward foreign currency contracts are marked-to-market daily. The change in a contract's market 103 IVY INTERNATIONAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS value is recorded by the Fund as an unrealized gain or loss. When the contract is closed or delivery is taken, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of forward foreign currency contracts does not eliminate fluctuations in the underlying prices of the Fund's securities, but it does establish a rate of exchange that can be achieved in the future. These forward foreign currency contracts involve market risk in excess of the unrealized appreciation (depreciation) of forward foreign currency contracts reflected in the Fund's Statement of Assets and Liabilities. Although forward foreign currency contracts used for hedging purposes limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. DEFERRED OFFERING COSTS - Offering costs are being amortized over a one year period beginning December 29, 2000, the date the Fund commenced operations. Offering costs have been paid by Mackenzie Investment Management Inc ("MIMI") and will be reimbursed by the Fund. 2. RELATED PARTIES Ivy Management, Inc. ("IMI") is the Manager and Investment Adviser of the Fund. For its services, IMI receives a fee monthly at the annual rate of 1.00% of the Fund's average net assets. Currently, IMI limits the Fund's total operating expenses (excluding 12b-1 fees and certain other expenses) to an annual rate of 1.50% of the Fund's average net assets. MIMI, of which IMI is a wholly owned subsidiary, provides certain administrative, accounting and pricing services for the Fund. For those services, the Fund pays MIMI fees plus certain out-of-pocket expenses. At December 31, 2000, MIMI owned 100% of the Fund's shares outstanding. 3. FUND SHARE TRANSACTIONS Fund share transactions for Advisor Class were as follows: 104
FOR THE PERIOD FROM DECEMBER 29, 2000 (COMMENCEMENT) TO DECEMBER 31, 2000 - ----------------------------------------------- ADVISOR CLASS SHARES AMOUNT - ----------------------------------------------- Sold................... 50,001 $ 500,010 Repurchased............ (1) (10) -------- --------- Net increase........... 50,000 $ 500,000 ======== =========
105 IVY INTERNATIONAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS 4. SUBSEQUENT EVENT The Fund's investment advisor, IMI, is an indirect subsidiary of Mackenzie Financial Corporation ("MFC"). After the close of the fiscal year ended December 31, 2000, MFC entered into a definitive agreement with Investors Group ("IG"), a leading Canadian financial services organization, whereby IG will acquire MFC through a take over bid for all of the outstanding MFC shares. Consummation of the transaction is subject to a number of contingencies, including the tender of at least two-thirds of the MFC shares and other closing conditions. Under the Investment Company Act of 1940, the transaction would result in a change of control of IMI and, therefore, constitute an assignment of each Fund's investment advisory agreement, which would result in a termination of the agreement. Consequently, it is anticipated that IMI will seek approval of a new agreement from the Board of Trustees of Ivy Fund and the shareholders of each Fund within one hundred and fifty (150) days after the consummation of the transaction. The transaction is targeted to close by the end of April 2001. 106 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Trustees and Shareholders of Ivy International Growth Fund In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Ivy International Growth Fund (one of the portfolios constituting Ivy Fund, hereafter referred to as the "Fund") at December 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the period December 29, 2000 (commencement of operations) through December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at December 31, 2000 by correspondence with the custodian, provides a reasonable basis for our opinion. PricewaterhouseCoopers LLP Fort Lauderdale, Florida February 8, 2001 -----END PRIVACY-ENHANCED MESSAGE-----