N-30D 1 g70487n-30d.txt IVY FUND SEMI-ANNUAL REPORT 6/30/2001 1 IVY FUNDS 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. SEMI-ANNUAL REPORT JUNE 30, 2001 [PHOTO] IVY CUNDILL GLOBAL VALUE FUND IVY DEVELOPING MARKETS FUND IVY EUROPEAN OPPORTUNITIES FUND IVY GLOBAL FUND IVY GLOBAL NATURAL RESOURCES FUND IVY GLOBAL SCIENCE & TECHNOLOGY FUND IVY 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 Chairman....................................................................1 Worldwide Market Outlook & Review...........................................................2 Focus On: The Natural Resources Sector......................................................4 Corporate Profile...........................................................................5 Management's Discussion and Analysis WORLDWIDE FUNDS Ivy Cundill Global Value Fund......................................................6 Ivy Developing Markets Fund........................................................8 Ivy European Opportunities Fund...................................................10 Ivy Global Fund...................................................................12 Ivy Global Natural Resources Fund.................................................14 Ivy Global Science & Technology Fund..............................................16 Ivy International Fund............................................................18 Ivy International Small Companies Fund............................................20 Ivy International Value Fund......................................................22 Ivy Pacific Opportunities Fund....................................................24 DOMESTIC FUNDS Ivy Growth Fund...................................................................26 Ivy US Blue Chip Fund.............................................................28 Ivy US Emerging Growth Fund.......................................................30 FIXED INCOME FUNDS Ivy Bond Fund.....................................................................32 Ivy Money Market Fund.............................................................34 Schedules of Investments...................................................................36 Statements of Assets and Liabilities.......................................................56 Statements of Operations...................................................................60 Statements of Changes in Net Assets........................................................64 Financial Highlights.......................................................................70 Notes to Financial Statements..............................................................84
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 CHAIRMAN June 30, 2001 Dear Ivy Funds Investor: The first six months of the year were certainly challenging for investors. Markets were down around the world, and our shareholders, like others, have felt the impact. During this time, we saw six interest rate cuts by the Federal Reserve, economic reforms in Japan, a slowdown in Europe and, of course, ongoing market volatility. All of these factors contributed to an environment that had many investors reassessing their strategies. At Ivy Funds, however, we firmly believe that focusing on the long term and not getting caught up in the short-term fluctuations of the market is the key to investment success. While 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. [KEITH J. CARLSON PHOTO] "A stronger economy in the first half of next year could bring more encouraging stock market performance to our doorstep at any time. That's why we believe that now may be the best time to focus on your long-term goals." Remember, too, that many experts believe the stock market anticipates an economic recovery by six to nine months. A stronger economy in the first half of next year could bring more encouraging stock performance to our doorstep at any time. That's why we believe that now may be the best time to focus on your long-term goals. Consider the US economy. While it showed signs of slowing in the first half of 2001, it also offered evidence of resilience. First quarter GDP growth, at 2%, was surprisingly strong. Consumer spending, which accounts for two-thirds of GDP, stayed at healthy levels, showing a significant jump in the spring. Unemployment remained low, in historical terms, and interest rates were reduced to levels that we believe are supportive of future economic growth. These factors, as well as reports from other areas of the world, are encouraging and lead us to believe in the fundamental health of our global economy. Having said that, I'd like to welcome you to our Semi-Annual Report. Inside, you'll find a worldwide market outlook, a timely feature on the natural resources sector and commentaries from our portfolio managers on the performance of the Ivy Funds. We hope you find it both interesting and informative. As we move forward in 2001, Ivy Funds will continue to work hard to serve you better. We thank you for your continued support. Sincerely, /s/ Keith J. Carlson Keith J. Carlson Chairman, Ivy Funds 4 WORLDWIDE MARKET OUTLOOK & REVIEW The first half of 2001 saw a continuation of last year's challenging market and economic conditions. But while the global economy slowed and markets experienced ups and downs, some encouraging signs also appeared. Consumer spending, a key driver of the world economy, was surprisingly strong, both in the US and abroad. Central banks around the world lowered interest rates, and second-quarter market performance was the strongest we've seen in quite some time. So while markets will most likely continue to be volatile in the second half of the year, they may also begin to anticipate the stronger worldwide economic conditions we expect to see going forward. "While markets will most likely continue to be volatile in the second half of the year, they may also begin to anticipate the stronger worldwide economic conditions we expect to see going forward." Here's a closer look at where we've been and where we believe world markets are heading. THE UNITED STATES To jumpstart the economy, the Federal Reserve Board cut interest rates six times over the six-month period, reducing rates from 6.5% in January to 3.75% in June. Although the effects of the cuts were not immediately felt -- it's estimated that rate cuts take six to nine months to act on the economy -- they seemed to have a positive effect on investor confidence. Markets rallied on the news of each successive cut, but concerns over corporate earnings dampened the enthusiasm. As a result, markets remained sluggish, with the best performance found in traditionally defensive sectors such as financials, healthcare and consumer staples. "In the US, economic news at the end of the second-quarter was encouraging: initial jobless claims declined, housing activity remained strong, consumer confidence rose and durable goods orders rebounded." Risk-averse investors continued to shy away from technology companies, most of which were impacted by slower capital spending on technology-related products, as well as telecommunications providers. However, the technology-heavy Nasdaq rallied at the end of the second quarter on news of positive developments in Microsoft's anti-trust case, showing its strongest performance since March of 2000. Economic news at the end of the second-quarter was also encouraging: initial jobless claims declined, housing activity remained strong, consumer confidence rose and durable goods orders rebounded. And despite news of corporate cutbacks, consumer spending continued at high levels. The passage of President Bush's tax cut, which should act as a further boost to consumer spending, was, in our opinion, another positive development. Going forward, we believe the domestic economy will gradually start to see signs of a recovery by the end of the year. Key fiscal (a $40 billion tax rebate) and monetary (lower interest rates) factors should fuel this growth. When signs of recovery become apparent, corporations will likely increase capital spending on technology and other areas, which may translate into higher stock prices. A decline in energy prices could also be a key factor. However, we believe it will take quite some time for the stock market to return to the high levels of the late 1990s. It is our belief that investors can expect a moderate turnaround in the fourth quarter of 2001 and gradual improvement throughout 2002. EUROPE Europe started out strong in the beginning of the year, but did not fare as well as expected as the year progressed. The European Central Bank (ECB) cut interest rates by 25 basis points in May in response to weakening economic data, but left rates unchanged at its next three meetings. The ECB is attempting to balance unexpectedly high inflation with slower economic growth, and as a result it has not undertaken an aggressive easing of monetary policy. It also revised its growth forecasts for the year downward. In the UK, manufacturing (a key economic indicator) declined significantly, but consumer demand remained healthy. Retail sales were strong, buoyed by cuts in taxes and interest rates and high confidence levels. The lowest unemployment rate in 25 years and robust housing prices also boosted consumer confidence. Germany and France, however, each saw their economies slow to a greater degree than expected. The fortunes of both will be key factors in Europe's short-term economic picture. Not surprisingly, European markets were volatile, with defensive sectors favored over areas such as technology, telecommunications and media (TMT). In June, investors 2 5 apparently became convinced that the US earnings recession had spread to the Continent, and European equities suffered as a result. In local currency terms, the MSCI Europe index fell 7.9% over the six-month period ending June 30, 2001, comparable to the performance of other regional markets. However, in US dollar terms, the index fell 17% as the weakening euro exacerbated the decline. Ireland was the best performing market, while Portugal was the worst. "We believe the long-term outlook for Europe is still strong, with corporate restructuring and greater savings and investing rates both key factors going forward." We feel that the long-term outlook for Europe is still strong, with corporate restructuring and greater savings and investing rates both key factors going forward. However, equities may have a bumpy ride in the short term until evidence of a recovery in the US appears. Investor sentiment may veer between optimism and pessimism on the economic and earnings outlook, but as economic prospects solidify, we expect a recovering and stable environment to be reflected in the stock market. THE FAR EAST Emerging markets in general showed the best performance during the period, with Thailand the top performer in the Asia Pacific region. South Korea also turned in very strong returns, particularly in the steel, shipping and automobile industries. However, many companies throughout the Pacific region were negatively impacted by the slower demand, both in the US and Europe, for technology-related exports. The weak demand was an outgrowth of slower economic conditions worldwide, and countries such as Taiwan, which was also beleaguered by concerns over falling industrial production, saw their equity markets decline. In Japan, a stream of weak economic data raised concerns that the Japanese economy was falling into a recession. Economic activity in the second quarter fell to a four-year low, the central bank cut interest rates to zero and unemployment rose. However, the election of a new prime minister, Junichiro Koizumi, raised hopes that new structural reforms would reinvigorate the economy. By June, Koizumi had unveiled a plan that called for the elimination of the banking system's bad debt within three years as well as significant deregulation and privatization. We believe that this should benefit the country's economy over the long term, but may cause economic hardships such as significant layoffs in the short term. The government predicts economic growth between zero and one percent for the next few years. Going forward, much will depend on how Koizumi's radical new reforms will unfold. If they proceed as expected, valuable opportunities could arise. In our view, the economies of the other Far East countries should see an upturn when the US economy recovers and the demand for exports increases. LATIN AMERICA Mexico was the star performer in Latin America, bolstered by a continuing flow of foreign direct investment, a robust peso, growing confidence in the new government of Vicente Fox and strong links to the US. The country's Bolsa Index rose 24% for the period ending June 30, 2001. "Mexico was the star performer in Latin America, bolstered by a continuing flow of foreign direct investment, a robust peso, growing confidence in the new government of Vicente Fox and strong links to the US." Outside of Mexico, however, Latin America had a difficult six months. An ongoing financial crisis in Argentina had repercussions throughout the region, and a particularly large impact on neighboring Brazil. In response to currency depreciation and rising inflation (both stemming from the Argentine crisis), the Central Bank of Brazil increased interest rates four times in a four-month period. While this helped the currency problem, it also negatively affected economic growth and the equities markets. Before the crisis, Brazil was in the midst of an economic expansion that had caught the attention of investors around the world, and we feel the country should see positive developments unfold as the Argentine crisis is resolved. The rest of Latin America is in a situation similar to that of the Far East: their economies are largely dependent on export growth to the United States, Europe and Japan. We believe that as the global economy begins to turn around and economic and market conditions in the developed world improve, Latin America should benefit. ------- The opinions expressed are those of Ivy Management, Inc. 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. 3 6 FOCUS ON: THE NATURAL RESOURCES SECTOR Coal, pulp, steel ... the natural resources sector received a lot of attention in the first half of the year. And it's no wonder: While the stock market in general was sluggish, many natural resources stocks outperformed. Why? As companies with "hard assets," they have an advantage over others in that they provide essential materials. In a slowing economy, consumers and corporations can limit spending on technology or luxury items, but they still need oil, gas, paper and other resource products. For more information on the natural resources sector, please see Fred Sturm's Ivy Global Natural Resources Fund commentary on page 14. DIVERSIFICATION & INFLATION Mutual funds specializing in natural resources have little correlation to the Standard & Poor's 500 Index, the most common indicator of large-cap US stock market performance. According to mutual fund researchers Morningstar, Inc., natural resource funds track the S&P only 25% of the time. As a result, many financial advisors recommend keeping 10% to 15% of one's portfolio in resource stocks. This can provide much-needed diversification when equity markets fall, and it may also provide another potential benefit: protection against inflation. As most investors know, inflation has a negative effect on the stock market. However, it also raises the price of commodities, the driving force behind the natural resources sector. (The fact that the resources sector produces essential materials is another advantage in an inflationary environment.) Inflation is not a problem now, but an investment in resource stocks may provide a valuable hedge if it returns. LOW CORRELATION, GREATER DIVERSIFICATION [CHART] Source: Morningstar As you can see by the chart above, the performance of natural resources funds has differed significantly from that of the broader US stock market. Past performance is no guarantee of future results. POWER FROM THE PUMP Our research shows that much of the recent performance of resource stocks can be attributed to investments in energy. While consumers groaned about high prices at the pump, many oil and natural gas companies realized record profits. And although gas prices have decreased in the last few months, demand for other sources of energy is outstripping current capacity. In fact, the US government estimates that it will cost $200 billion over the next 10 years to bring the domestic energy infrastructure up to necessary levels.* The natural resources sector, of course, encompasses a lot more than just energy. DIVERSIFIED RESOURCE FUNDS invest in forest products such as pulp, paper and lumber; precious metals such as gold and platinum; industrial metals such as copper and iron; mining products such as coal and diamonds; and chemicals used in major industries. Resource funds that focus solely on one area can realize high returns during booms in that particular industry, but they are also subject to high volatility. That's why diversification among industries can be an important factor in this sector. Commodity prices are determined by an unpredictable web of supply and demand, and resource producers, many of which are located outside the US, can be affected by politics and regulatory requirements. But by holding investments in many different industries, diversified resource funds try to manage risk while still participating in industry upswings. A GLOBAL VIEW Worldwide trends support the growth of the resources sector. Natural resource stocks currently make up 15% of the world's market capitalization,** and that number may grow as increases in manufacturing lead to higher demand for natural resources. Economic growth in developing countries may also create a greater demand for natural resources. So while they may not seem as exciting as other investments, GLOBAL NATURAL RESOURCE FUNDS may offer a way of capturing some of the world's economic growth while adding valuable diversification to a portfolio. *Source: Report of the US National Energy Policy Development Group, 5/01 **Source: Morgan Stanley Capital International 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. As investment specialists offering a worldwide perspective, Ivy Funds offers a full range of international and domestic mutual funds that seek to capture opportunity in this 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 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, which has provided investment services to Canadian investors since 1968. Ivy Funds is located in Boca Raton, Florida and offers both domestic and international mutual funds to US investors. Our 41-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. Recent developments have made Ivy Funds part of an organization that reaches all corners of the globe. In April of 2001, Mackenzie Financial Corporation was acquired by Investors Group, Inc., making the combined company the largest mutual fund group in Canada with more than $85 billion in assets under management. Investors Group, Inc. is in turn a majority-owned subsidiary of Power Financial Corporation, the core holding of Power Corporation of Canada. Power Corporation has substantial holdings across North America, Europe and the Far East. With this wealth of resources behind us, Ivy Funds is a true international partner for our clients and shareholders -- one that offers strategic alliances with a diverse array of firms across the globe. 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 transaction 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 CUNDILL GLOBAL 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. Q: PETER, HOW DID IVY CUNDILL GLOBAL VALUE FUND DO IN THE FIRST HALF OF 2001? A: The Fund showed strong performance in the first half of the year, outperforming both its benchmark and peer group. For the six-month period ending June 30, 2001, Ivy Cundill Global Value Fund returned 4.57%. For this same period, the MSCI World Index, the Fund's benchmark, returned -10.66%, while its peer group (as measured by the Lipper Global average) returned -11.70%. [PHOTO] Ivy Cundill Global Value Fund is sub-advised by Peter Cundill & Associates, Inc. The following is an interview with Peter Cundill, lead portfolio manager of the Fund. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: Our contrarian and deep-value style of investing allowed us to focus on seeking out undervalued securities with good prospects, regardless of the challenging economic environment. Good stock selection in unfavored and overlooked companies around the world was the key to the Fund's outperformance. The biggest single contributor to performance was De Beers, a leading diamond mining and marketing company that appreciated significantly as the result of a takeover offer by fellow mining giant Anglo American. We later sold the stock to capture the gains. The portfolio's second best performer was Derlan Industries, which benefited from shareholder efforts to focus management on realizing shareholder value. The weakest performance came from Asahi Broadcasting, whose marked decline in the first half resulted from poor economic conditions in Japan. However, we believe that the fundamentals at Asahi Broadcasting remain sound. "Our contrarian and deep-value style of investing allowed us to focus on seeking out undervalued securities with good prospects, regardless of the challenging economic environment. Good stock selection in unfavored and overlooked companies around the world was the key to the Fund's outperformance." Q: WHAT STRATEGIC MOVES DID YOU MAKE OVER THE PERIOD? A: During the first half of the year, price volatility allowed us an opportunity to increase our weightings in a number of attractive companies, notably Fairfax Financial (a Canadian holding company that focuses on insurance), Videsh Sanchar Nigam Limited (an Indian telecommunications provider) and Cable & Wireless. The latter is a UK-based Internet protocol and data service provider that has been caught up in the technology sell off. We took advantage of the favorable prices afforded by this situation to make it a significant portfolio position. While the company has underperformed year-to-date, we believe that a number of factors --strong revenue, a possible takeover scenario, and a move to use capital to selectively invest in assets at a discount to strengthen core operations -- make it a potentially valuable long-term holding. Asia continued to be a focus of the Fund, and we made several company visits in Japan and Hong Kong during the last two weeks of June. We expect the Japanese pharmaceutical sector, in which we have a 5% weighting, to enter a consolidation phase as falling drug prices, increasing research and development costs, and eventual healthcare reform put an increasing pressure on margins. The portfolio also continues to have a significant weighting in the Japanese non-life insurance sector. These companies continue to deliver on their promised cost cutting and restructuring plans. Fund holding Nipponkoa is ahead of schedule in integrating its operations, divesting cross shareholdings and cutting cost. To protect the Japanese portfolio segment from an 8% devaluation of the yen over the period, we fully hedged our Japanese yen exposure. Q: HOW IS THE PORTFOLIO POSITIONED GOING FORWARD? A: We continue to be predominantly invested in Japan and Asia as valuations are more compelling and not as lofty as in North America and Europe. The TMT (technology, media and telecommunications) stocks have started to show up on our value screens amidst the volatility and sell off in the global markets, and we plan to increase our weighting in unfavored and unwanted telecommunications holdings while continuing to develop a more focused portfolio. Our goal, as always, is to discover solid, undervalued companies while seeking to avoid price erosion within areas of speculative excess and overvaluation. In the second half of the year, we will continue to seek out value-oriented stocks that offer strong growth potential. ------- Performance cited is for Advisor Class shares at net asset value. (The Fund has no A, B or C shares outstanding.) 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 FOR THE PERIODS ENDING 6/30/01
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 ADVISOR SHARES w/ Reimb. 6.67% N/A N/A 7.83% w/o Reimb. (9.54)% N/A N/A (9.66)%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Advisor Class commenced operations April 19, 2000. As of June 30, 2001, the Fund had no A, B or C shares outstanding. 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 Global 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 (Advisor Class Shares)
Ivy Cundill Global Value Fund MSCI World Index ----------------------------- ---------------- 4/00 10,000 10,000 10,120 9,576 9,730 9,332 6/00 10,260 9,646 9,840 9,373 10,410 9,677 10,240 9,161 10,090 9,006 10,000 8,458 10,466 8,594 10,362 8,763 10,705 8,022 10,404 7,490 10,788 8,039 11,027 7,927 6/01 10,944 7,678
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $.9 Million TOTAL NUMBER OF HOLDINGS 26 INVESTMENT STYLE Multi-Cap Value NASDAQ CUSIP NUMBER CLASS A SHARES N/A CLASS B SHARES N/A CLASS C SHARES N/A ADVISOR CLASS SHARES 465898765 7 10 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. Q: MOIRA, HOW DID IVY DEVELOPING MARKETS FUND PERFORM IN THE FIRST HALF OF THE YEAR? A: For the period ending June 30, 2001, Ivy Developing Markets Fund returned -5.11%. The Fund underperformed its benchmark, the MSCI Emerging Markets Free Index, which returned -1.78%, and its peer group (as measured by the Lipper Emerging Markets average), which returned -0.45%. [PHOTO] An interview with Moira McLachlan, vice president at Ivy Management, Inc. and member of the Ivy Developing Markets Fund portfolio management team. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: The Fund's overweight positions in Taiwanese and South Korean electronic technology stocks negatively impacted performance. Both countries are feeling the effect of slower US economic growth and the resultant decline in demand for technology-related exports. Two of the Fund's core holdings, United Microelectronics and Hon Hai Precision, have underperformed over the short term, but we believe they will benefit when global technology spending rebounds. Additionally, while the Fund has no exposure to Argentina, it has not escaped the negative impact of that country's financial crisis on its neighbors. Both the Brazilian currency (the real) and equity markets have come under pressure, and the Fund's Brazilian holdings have suffered as a result. Resolution of the Argentine crisis would likely fuel a sharp upward move in Brazilian equities. The Fund's strong overweight position in Mexico made the largest positive contribution to performance. Mexico outperformed the emerging markets universe as well as most other world markets as a result of ongoing structural reforms and close ties with the US. In addition to an overweight position, good stock selection helped capture further gains. Top performers were Fomento Economico Mexicano, the country's second largest brewery; America Movil, a leading wireless provider; and Grupo Financiero Banamex, Mexico's largest bank. The latter, which is one of the Fund's largest holdings, was taken over by Citibank at a 40% premium, a development that made a major contribution to performance. Outside of Mexico, the top performer in the portfolio was Pohang Iron & Steel, a Korean company that is the world's lowest-cost steel exporter. We bought this stock last year when investors were ignoring "old economy" names, and since then it has done very well. Q: WHAT WERE MARKET CONDITIONS LIKE DURING THIS PERIOD? A: Emerging markets continue to be driven by events in the developed world. Volatility was high during the first part of the year as investors continually reassessed the timing of a global economic recovery. In January, distressed markets such as Russia and Turkey did well as investors became confident of a quick recovery. This was followed by panic selling in February and March as investors realized the recovery might take longer than anticipated. Throughout the first half in general we've seen a great deal of sector and market rotation. Q: HOW DOES YOUR INVESTMENT STRATEGY HELP AVOID SOME OF THIS VOLATILITY? "The Fund's holdings are concentrated in the five largest emerging market countries -- Mexico, Brazil, Taiwan, South Korea and South Africa -- as well as Hong Kong, which we use to gain exposure to the growing Chinese economy. We believe that this strategy of investing in large-cap, high quality names in the more liquid emerging markets will position the Fund to do well when the global economic turnaround comes." A: The Fund focuses on larger-cap stocks in larger emerging markets. Holdings are concentrated in the five largest emerging market countries -- Mexico, Brazil, Taiwan, South Korea and South Africa -- as well as Hong Kong, which we use to gain exposure to the growing Chinese economy. We avoid the smaller, more marginal markets because of their troublesome economic fundamentals and bad track records on issues such as corporate governance and earnings visibility. At times, this approach has meant missing out on short-term spikes in countries such as Thailand. However, we believe that over the longer term, it will decrease risk and allow us to concentrate on markets with better long-term growth potential. We believe that this focus on large-cap, high quality names in the more liquid markets will position the Fund to do well when the global economic turnaround comes. ------- Performance cited is for Class A shares at net asset value. 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 FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION ------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (26.93)% (8.67)% N/A (6.04)% w/o Reimb. & 5.75% sales charge (28.12)% (9.63)% N/A (7.60)% B SHARES w/Reimb. & w/ CDSC (27.01)% (8.66)% N/A (5.92)% w/Reimb. & w/o CDSC (23.17)% (8.29)% N/A (5.92)% w/o Reimb. & w/CDSC (28.40)% (9.66)% N/A (7.49)% w/o Reimb. & w/o CDSC (24.62)% (9.29)% N/A (7.49)% C SHARES w/Reimb. & w/ CDSC (23.85)% (8.25)% N/A (7.45)% w/Reimb. & w/o CDSC (23.08)% (8.25)% N/A (7.45)% w/o Reimb. & w/CDSC (25.67)% (9.33)% N/A (8.51)% w/o Reimb. & w/o CDSC (24.92)% (9.33)% N/A (8.51)% ADVISOR SHARES w/Reimb. (22.24)% N/A N/A (4.42)% w/o Reimb. (23.88)% N/A N/A (5.77)%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (11/94) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy Developing Markets Fund MSCI Emerging Markets Free Index --------------------------- -------------------------------- 11/94 9,425 10,000 8,845 9,480 8,152 8,719 7,459 7,791 7,567 7,591 7,874 7,639 8,059 7,982 8,518 8,407 6/95 8,362 8,432 8,775 8,621 8,705 8,418 8,748 8,378 8,431 8,057 8,389 7,914 8,675 8,265 9,480 8,852 9,317 8,711 9,211 8,779 9,508 9,130 9,700 9,089 6/96 9,786 9,146 9,135 8,521 9,336 8,739 9,432 8,815 9,326 8,580 9,537 8,724 9,701 8,763 10,161 9,361 10,497 9,762 10,257 9,505 10,248 9,522 10,708 9,794 6/97 11,177 10,319 11,149 10,473 9,701 9,140 9,682 9,393 7,861 7,852 7,276 7,565 7,041 7,748 6,710 7,140 7,753 7,885 7,939 8,228 7,722 8,138 6,649 7,023 6/98 5,936 6,286 6,081 6,485 4,419 4,610 4,821 4,903 5,678 5,419 6,359 5,870 6,219 5,784 5,620 5,691 5,444 5,747 6,157 6,504 7,645 7,309 7,614 7,266 6/99 8,358 8,091 8,037 7,871 8,017 7,942 7,676 7,674 7,872 7,837 8,378 8,540 9,124 9,626 9,061 9,683 8,999 9,811 9,197 9,859 8,239 8,924 7,855 8,555 6/00 8,510 8,857 8,427 8,401 8,500 8,443 7,834 7,705 7,199 7,147 6,523 6,522 6,953 6,679 7,684 7,597 7,016 7,000 6,337 6,315 6,723 6,619 6,869 6,698 6/01 6,598 6,561
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $7.5 Million TOTAL NUMBER OF HOLDINGS 32 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IVCAX CLASS B SHARES IVCBX CLASS C SHARES IVCCX ADVISOR CLASS SHARES IVCVX 9 12 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. Q: STEPHEN, HOW DID IVY EUROPEAN OPPORTUNITIES FUND PERFORM IN THE FIRST HALF OF THE YEAR? A: It was difficult to escape the general downtrend in markets in Europe over the first six months of 2001. In the initial stages of the year, the European economy held up relatively well, but the region was unable to hold its advantage as the cumulative effect of small pieces of negative economic news began to be felt. In this challenging environment, Ivy European Opportunities Fund returned -19.65% for the six-month period ending June 30, 2001. The Fund slightly underperformed its benchmark, the MSCI Europe Index, which returned -17.54%, and its peer group (as measured by the Lipper European Region average), which returned -18.03%. [PHOTO] The Ivy European Opportunities Fund is sub-advised 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: WHAT FACTORS AFFECTED PERFORMANCE? A: The Fund benefited from significant weightings in oil and tobacco, two sectors that have provided good performance year-to-date. The Fund's tobacco holdings comprise approximately 10% of the portfolio and offer the advantages of strong cashflow and predictable earnings. The Fund's holdings in oil are through both the major oil companies such as Shell, as well as oil services companies such as Saipem and Technip. Companies in the oil services sector have benefited from higher oil prices and from the redeployment of capital expenditure from technology to areas such as oil exploration. We like this sector for both its strong visibility and the likelihood of earnings forecast upgrades despite expected modest declines in oil prices. "We expect significant upside for European equities going forward, generated by currency factors and a recovery in markets from their current low levels. In our view, Ivy European Opportunities Fund is well positioned to benefit when this recovery occurs." The portfolio has been positioned away from the higher-profile areas of 2000, most notably technology, media and telecommunications (TMT), and toward areas of the "old economy" that offer more predictable earnings and attractive valuations. These are areas that we feel are capable of expansion in current market conditions. Despite this shift, however, performance during the period suffered from a disappointing number of profit warnings by companies held in the portfolio. For example, two of the Fund's largest holdings, Buhrmann and Future Network, saw their share prices drop as a result of second-quarter profit warnings. Buhrmann, a Dutch office products distribution company, was impacted to an unexpected degree by the economic slowdown in the US. Future Network, a leading magazine publisher with strong positions in the gaming and consumer technology markets, suffered from the related downturn in global technology spending. Q: WHAT IS YOUR OUTLOOK FOR THE REGION? A: Positive fundamentals in Europe remain intact and are supported by the encouraging changes pervading the savings and capital markets. However, the lack of confidence emanating from the sharp downturn in the US market is still evident in European markets. While there is a current lack of visibility, the negative tone on company prospects is overdone in our view. As economic prospects solidify, we expect a recovering and stable environment to be reflected in the stock market. Q: WHAT INVESTMENT THEMES ARE YOU CONCENTRATING ON GOING FORWARD? A: We are monitoring opportunities in downgraded areas such as TMT, although we expect this sector to remain under financial strain for the near-term. We continue to search for stocks with greater earnings predictability, maintaining our exposure to sectors such as tobacco and oil. On the currency front, we believe the euro remains fundamentally undervalued against the dollar, having been weighed down by large capital flows from Europe to the US. As the eurozone recovery takes a stronger grip in the medium-term, we expect a stronger euro and a weaker US dollar, which should work to the advantage of Fund investors. We expect significant upside for European equities going forward, generated by currency factors and a recovery in markets from their current low levels. In our view, Ivy European Opportunities Fund is well positioned to benefit when this recovery occurs. ------- Performance cited is for Class A shares at net asset value. 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. 10 13 AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION ------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (41.74)% N/A N/A 52.77% w/o Reimb. & 5.75% sales charge (41.74)% N/A N/A 52.51% B SHARES w/Reimb. & w/ CDSC (41.62)% N/A N/A 55.97% w/Reimb. & w/o CDSC (38.54)% N/A N/A 56.79% w/o Reimb. & w/CDSC (41.62)% N/A N/A 55.75% w/o Reimb. & w/o CDSC (38.54)% N/A N/A 56.62% C SHARES w/Reimb. & w/ CDSC (39.15)% N/A N/A 14.89% w/Reimb. & w/o CDSC (38.54)% N/A N/A 14.89% w/o Reimb. & w/CDSC (39.15)% N/A N/A 14.72% w/o Reimb. & w/o CDSC (38.54)% N/A N/A 14.72% I SHARES w/Reimb. (37.87)% N/A N/A (36.30)% w/o Reimb. (37.87)% N/A N/A (36.30)% ADVISOR SHARES w/Reimb. (37.90)% N/A N/A 57.49% w/o Reimb. (37.90)% N/A N/A 56.97%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (5/99) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy European Opportunities Fund MSCI Europe Index ------------------------------- ------------------- 5/99 9,425 10,000 10,969 9,520 6/99 16,119 9,680 17,890 9,770 18,812 9,870 18,671 9,793 19,534 10,154 26,034 10,428 12/99 29,743 11,496 31,844 10,678 42,748 11,234 43,078 11,506 39,362 10,998 38,182 10,908 6/00 40,404 11,142 39,067 10,964 38,702 10,835 36,167 10,328 34,171 10,249 29,569 9,853 12/00 31,084 10,532 31,751 10,546 30,652 9,621 27,156 8,896 27,210 9,517 27,318 9,030 6/01 24,975 8,685
If the Fund had not invested in IPOs, the one-year and since-inception average annual returns would have been (38.46%) and 0.43% respectively. The since-inception cumulative return with sales charge was 149.75%. If the Fund had not invested in IPOs, the since-inception cumulative return would have been 0.92%. 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. The Ivy European Opportunities Fund was initially seeded on April 26, 1999, commenced operations on May 3, 1999 and 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. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $129.1 Million TOTAL NUMBER OF HOLDINGS 47 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 11 14 IVY GLOBAL FUND THE FUND'S GOAL: TO PROVIDE LONG-TERM CAPITAL GROWTH BY INVESTING IN STOCKS OF COMPANIES WORLDWIDE -- INCLUDING THE US. For the six-month period ending June 30, 2001, Ivy Global Fund returned -12.42%. The Fund slightly underperformed its benchmark, the MSCI World Index, which returned -10.66%, and its peer group (as measured by the Lipper Global average), which returned -11.70%. INTERNATIONAL COMMENTARY Q: SHERIDAN, WHAT FACTORS AFFECTED THE PERFORMANCE OF THE INTERNATIONAL PORTION OF THE FUND? A: An overweight position in the consumer non-durables sector (food, beverages and tobacco) made the largest positive contribution to performance. However, the portfolio's top stock performers were found in a variety of sectors and regions and included Swedish Match, a leading tobacco products company; Taiwan Semiconductor, a top player in the semiconductor industry; and Rio Tinto, a UK-based metals and mining company. [PHOTO] Ivy Global Fund uses a dual management approach. The international portion (50%) is managed by Ivy's international equities team, headed by Sheridan Reilly, chief investment officer of international equities. The US portion (50%) is managed by Paul Baran, senior vice president of US equities at Ivy Management, Inc. "We feel that our disciplined approach to building a balanced international portfolio will help the Fund identify opportunities in a number of different styles, sectors and countries." -- Sheridan Reilly "The stock market, in our view, generally anticipates an economic recovery by six to nine months, so we believe that US stocks may start to see an upturn during the second half of 2001." -- Paul Baran Holdings in the engineering, insurance and transportation sectors were the largest drag on performance. These negative factors were mitigated by our active approach to risk management and the portfolio's broad diversification across styles, sectors and regions. Q: ONE OF THE FOUNDATIONS OF YOUR INVESTMENT STRATEGY IS TO CAPITALIZE ON MARKET INEFFICIENCIES. WHAT OPPORTUNITIES DID YOU FIND IN THE FIRST HALF? A: The major market inefficiency -- an overreaction by investors on either the upside or downside -- concerned the shift between growth and value stocks. Traditional defensive stocks such as major food companies became very expensive, while growth stocks such as technology companies saw their valuations drop. We used the opportunity to buy some undervalued technology names while trimming overpriced defensive positions in companies that we felt had reached their peaks. Q: WHAT IS YOUR OUTLOOK FOR THE REST OF THE YEAR? A: We expect international markets to be every bit as lively and volatile in the second half of the year as they were in the first. Globally, we're seeing lower interest rates and more attractive valuations countered by slower economic conditions. Market performance over the next few months will depend on how these forces interact. In this type of environment, we feel that our disciplined approach to building a balanced portfolio will help the Fund identify opportunities in a number of different styles, sectors and countries. US COMMENTARY Q: PAUL, WHAT FACTORS AFFECTED THE PERFORMANCE OF THE US PORTION? A: Holdings in the consumer discretionary area, particularly in homebuilding retailers such as Lowes and Home Depot, made the largest positive contribution to performance. The Fund also benefited from its exposure to bellwether media companies such as AOL Time Warner and Viacom; integrated oil holdings such as Exxon and Chevron; and industrial companies such as aluminum producer Alcoa. The largest negative factor affecting performance was the Fund's investment in the technology sector. Communications and fiber optics companies in particular were hit hard, and we sold a number of these stocks in the second quarter. However, the portfolio's biggest technology holding, Microsoft, did quite well due to higher earnings expectations and news of positive developments in its court case. Q: HOW DOES THE LARGE-CAP US MARKET LOOK FOR THE REST OF THE YEAR? A: The actions of the Federal Reserve Board and the US government regarding interest rates and taxes should lead to a more optimistic economic environment in 2002. The stock market, in our view, generally anticipates an economic recovery by six to nine months, so we believe that stocks may start to see an upturn during the second half of 2001. And because investors generally first return to liquid, high-quality companies before moving into riskier asset classes, blue chips are often the first stocks to move from the bottom. We are confident that our strategy of investing in industry leaders with strong earnings growth, a solid return on equity and proven records of profitability will allow the Fund to benefit from stronger market fundamentals as we move forward. ------- Performance cited is for Class A shares at net asset value. 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. 12 15 AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION -------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (28.46)% (1.50)% 5.33% 4.60% w/o Reimb. & 5.75% sales charge (29.42)% (2.08)% 4.79% 3.83% B SHARES w/Reimb. & w/ CDSC (28.57)% (1.56)% N/A 1.91% w/Reimb. & w/o CDSC (24.81)% (1.17)% N/A 1.91% w/o Reimb. & w/CDSC (29.57)% (2.13)% N/A 1.47% w/o Reimb. & w/o CDSC (25.85)% (1.74)% N/A 1.47% C SHARES w/Reimb. & w/ CDSC (25.81)% (1.55)% N/A (1.47)% w/Reimb. & w/o CDSC (25.06)% (1.55)% N/A (1.47)% w/o Reimb. & w/CDSC (26.81)% (2.16)% N/A (2.06)% w/o Reimb. & w/o CDSC (26.06)% (2.16)% N/A (2.06)% ADVISOR SHARES w/Reimb. (23.98)% N/A N/A (4.61)% w/o Reimb. (25.21)% N/A N/A (5.93)%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (4/91) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy Global Fund MSCI World Index --------------- ---------------- 6/94 12,977 12,960 13,729 13,204 14,301 13,598 13,881 13,238 13,913 13,611 13,232 13,018 12,848 13,141 12,283 12,941 12,451 13,126 12,826 13,756 13,281 14,232 13,714 14,350 6/95 13,654 14,343 14,249 15,057 14,108 14,718 14,370 15,144 13,976 14,902 14,227 15,416 14,400 15,864 15,254 16,148 15,327 16,243 15,447 16,509 16,048 16,894 16,133 16,906 6/96 16,084 16,988 15,230 16,384 15,724 16,569 16,000 17,214 16,145 17,331 16,626 18,299 16,734 18,002 17,242 18,216 17,484 18,422 17,319 18,054 17,281 18,641 18,157 19,788 6/97 18,831 20,771 19,466 21,725 17,674 20,268 18,500 21,366 16,061 20,238 15,400 20,592 15,276 20,840 15,485 21,417 17,288 22,862 18,392 23,824 18,532 24,054 17,875 23,749 6/98 16,799 24,309 16,841 24,266 13,487 21,026 13,361 21,395 14,982 23,325 16,296 24,709 16,588 25,912 16,441 26,476 16,017 25,767 16,808 26,837 18,640 27,891 18,039 26,868 6/99 19,563 28,117 19,314 28,029 19,402 27,975 18,815 27,700 19,226 29,136 19,621 29,952 20,985 32,373 19,515 30,515 19,421 30,594 20,625 32,705 19,875 31,318 19,703 30,522 6/00 20,844 31,546 20,719 30,654 21,141 31,647 19,421 29,961 19,093 29,455 17,748 27,663 18,066 28,107 18,423 28,660 16,655 26,236 15,449 24,494 16,621 26,293 16,366 25,925 6/01 15,823 25,111
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $9.8 Million TOTAL NUMBER OF HOLDINGS 175 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES MCGLX CLASS B SHARES IVGBX CLASS C SHARES IVGCX ADVISOR CLASS SHARES IVGVX 13 16 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. Q: FRED, HOW DID IVY GLOBAL NATURAL RESOURCES FUND PERFORM IN THE FIRST HALF OF 2001? A: The Fund posted strong returns, outperforming both its benchmark and peer group and obtaining the #1 ranking in its Lipper category for the six months ending June 30, 2001.* During this period, Ivy Global Natural Resources Fund returned 18.17%, while the Fund's benchmark, the MSCI Commodity Related Index, returned -4.25%. The Lipper Natural Resources average returned -4.54%. Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG OUTPERFORMANCE? A: We are pleased that outperformance resulted from our disciplined investment approach and diversification strategies. Many resource funds focus primarily on commodity price trends, gaining exposure to a sector by investing in the most liquid "brand name" companies. In contrast, we concentrate on individual stock selection, identifying (a) smaller companies that can grow independently of commodity prices, and (b) international low-cost leaders with trophy assets. This often means investing in companies outside the US that are not typically in the mindset of resource fund managers, and it clearly benefited performance. For example, Sappi, a South African-based paper producer and Fund holding, was up significantly in the first half of the year, while the leading US-based paper company declined. [PHOTO] An interview with Fred Sturm, portfolio manager of Ivy Global Natural Resources Fund and member of the Mackenzie Financial Corporation investment team. "We are pleased that the Fund's outperformance resulted from our disciplined investment approach and diversification strategies. Unlike other resource funds which focus primarily on commodity prices, we concentrate on individual stock selection. We are also willing to take a contrarian approach to commodity price trends. We are also willing to take a contrarian approach to commodity price trends. This strategy was particularly successful in the first half of the year, a period in which many investors chased high oil prices. Our research suggested that oil prices were unsustainably high and that gold prices were beginning to rally, so we shifted some assets from energy into gold. This move allowed the Fund to capture gains elsewhere when energy prices declined. In addition, the Fund is more broadly diversified than the typical resource fund, with investments in the base metals, precious metals, industrial materials, forest products, energy and agricultural-related sectors. The portfolio is also well diversified by country, capitalization and company, a strategy that helps us maintain an attractive balance of risk and reward. Q: WHAT OTHER DEVELOPMENTS HELPED FUND PERFORMANCE? A: Our valuation discipline, which involves maintaining detailed models of hundreds of companies in the resources sector, served us well in a market that became increasingly focused on value. In particular, it helped us successfully target companies that were ultimately taken over at large premiums. Our research indicated that the public valuations of companies such as Genesis and Ultramar Diamond Shamrock underestimated their inherent value, so we bought or added to positions in these holdings. The Fund benefited when companies in the portfolio were later acquired at levels significantly above share prices. Q: HOW DOES THE FUTURE LOOK FOR THE RESOURCES SECTOR? A: The ongoing trend of cost-cutting, mergers and profits based on pricing rather than volume should continue to be positive for the sector. Efficiency is being emphasized over excess production, and this may lead to less volatility in the future. In the energy area, we feel that growth cycles will be "stronger for longer" based on high demand and unprecedented new investment in the energy infrastructure. Other areas, such as base metals and forest products, should also see growth as the world economy recovers from its slowdown. Because of our broad diversification and disciplined approach to stock selection, we believe Ivy Global Natural Resources Fund can continue to benefit investors in the coming years. ------- "Performance is calculated for Class A shares at net asset value. 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. *Lipper rating based on the year-to-date performance (as of 6/30/01) of the 64 funds in the natural resources category. The rating is based on a total return that includes fee waivers and reimbursements without which the results would have been less favorable. This ranking does not take into account the maximum 5.75% sales charge for Class A shares of the Fund. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 14 17 AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION ------ ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge 14.88% N/A N/A 6.08% w/o Reimb. & 5.75% sales charge 12.86% N/A N/A 3.72% B SHARES w/Reimb. & w/ CDSC 16.10% N/A N/A 6.43% w/Reimb. & w/o CDSC 21.10% N/A N/A 6.78% w/o Reimb. & w/CDSC 14.38% N/A N/A 4.20% w/o Reimb. & w/o CDSC 19.31% N/A N/A 4.55% C SHARES w/Reimb. & w/ CDSC 20.21% N/A N/A 6.40% w/Reimb. & w/o CDSC 21.21% N/A N/A 6.40% w/o Reimb. & w/CDSC 18.72% N/A N/A 3.69% w/o Reimb. & w/o CDSC 19.71% N/A N/A 3.69% ADVISOR SHARES w/Reimb. 22.20% N/A N/A 25.40% w/o Reimb. 10.54% N/A N/A 18.00%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (1/97) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy Global Natural Resources Fund MSCI Commodity-Related Index --------------------------------- ---------------------------- 1/97 9,425 10,000 10,151 10,053 11,112 9,916 10,264 9,709 10,452 9,621 11,546 10,326 6/97 10,980 10,416 11,376 11,218 11,810 11,093 13,138 11,617 11,536 10,788 9,368 10,041 10,080 9,778 10,315 9,714 10,359 10,012 10,527 10,357 11,232 10,600 9,722 9,662 6/98 8,581 9,216 7,865 8,359 5,940 6,937 6,947 8,609 7,719 9,126 7,384 8,569 7,122 8,349 7,279 7,937 6,975 7,921 8,102 8,554 9,668 10,152 8,823 9,416 6/99 9,296 10,067 9,657 9,815 9,905 10,043 10,649 10,140 9,815 9,761 9,634 9,634 10,040 10,140 9,725 9,308 9,522 8,700 9,837 9,748 9,849 9,752 10,232 10,435 6/00 10,694 9,553 10,198 9,286 11,088 9,970 10,773 9,574 9,995 9,845 9,556 10,072 11,030 11,715 11,404 11,050 11,958 11,062 11,494 10,378 13,125 11,476 13,861 11,778 6/01 13,034 11,217
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $17.0 Million TOTAL NUMBER OF HOLDINGS 57 INVESTMENT STYLE Mid-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IGNAX CLASS B SHARES IGNBX CLASS C SHARES IGNCX ADVISOR CLASS SHARES IGNVX 15 18 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] The following is 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. Q: JIM, HOW DID IVY GLOBAL SCIENCE & TECHNOLOGY FUND, AND THE TECHNOLOGY SECTOR IN GENERAL, FARE IN THE FIRST SIX MONTHS OF 2001? A: The first half of the year was perhaps the most difficult environment that technology companies have faced in over two decades. A slower US economy caused the demand for technology products, which was already low in the fourth quarter of last year, to decline even further. Technology companies experienced significantly longer selling cycles, lower initial orders and, particularly in the semiconductor and optical components areas, large inventory surpluses. As a result, earnings estimates for a wide range of companies were revised downward. In these challenging market conditions, Ivy Global Science & Technology Fund returned -35.27% for the six-month period ending June 30, 2001. The Fund underperformed its benchmark, the Russell 3000 Technology Index, which returned -20.28%, and its peer group (as measured by the Lipper Science & Technology average), which returned -25.87%. "As the economy recovers and companies become more comfortable in forecasting their future, technology spending will increase and the sector will benefit. We believe this is starting to happen, and it should pick up steam over the next few quarters. Now that the dot-com shakeout has weeded out bad ideas and poor business models, strong firms with good ideas have more room to grow." Q: WHAT FACTORS AFFECTED PERFORMANCE? A: In general, the technology funds that fared best in the first half of the year were those that held larger-cap, slower growth stocks. Ivy Global Science & Technology Fund focuses on smaller-sized, higher growth names, and as a result it underperformed the more conservative technology funds. When the economy and markets move, we believe these smaller, high-growth stocks position the Fund to do well. During this period, the Fund benefited from select holdings in the consumer-related and software areas. Top performers were eBay, the online auction service; TMP Worldwide, the company that runs the "Monster.com" online recruitment service; Quest Software, whose products improve the performance and reliability of other software vendors' products; and SonicWALL, a network security firm that sells inexpensive firewalls to small- and medium-sized businesses. Performance was negatively affected by holdings in communications service providers, storage equipment firms, communications equipment manufacturers and communications component suppliers. The Fund's investments in areas outside out of "pure" technology, such as healthcare and business services, helped offset losses to some degree. Q: WHAT INVESTMENT THEMES ARE YOU FOCUSING ON IN THE SECOND HALF OF THE YEAR? A: We are focusing on two areas that we believe are less vulnerable to the broadbased slowdown in technology spending. The first consists of niche companies with technology products or services that are very early in their lifecycles and that offer the potential for strong growth despite macroeconomic conditions. Genesis Microchip and PixelWorks, two companies that manufacture display processors for the flat-panel display market, are examples of this type of specialized, innovative business. The second area consists of service companies with a recurring revenue base, a factor that offers greater stability and visibility in a difficult economic environment. PEC Solutions, an Internet services company that has done well due to its strong customer base of government agencies, is an example of this latter type of business. Q: WHAT IS YOUR OUTLOOK FOR THE TECHNOLOGY SECTOR? A: As the economy recovers and companies become more comfortable in forecasting their future, technology spending will increase and the sector will benefit. We believe this is starting to happen, and it should pick up steam over the next few quarters. Within the Internet area, it's important to remember that sectors can thrive after shakeouts, emerging bigger and stronger than they were before the period of consolidation. Now that the dot-com shakeout has weeded out bad ideas and poor business models, strong firms with good ideas have more room to grow. The Fund itself is focused on the most dynamic, fastest growing sectors within technology. As technology spending increases and the sector returns to favor, we believe that the companies the Fund holds will provide investors with the greatest upside potential. ------- Performance cited is for Class A shares at net asset value. 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 FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION A SHARES w/Reimb. & 5.75% sales charge (66.57)% N/A N/A 13.05% w/o Reimb. & 5.75% sales charge (66.59)% N/A N/A 13.00% B SHARES w/Reimb. & w/ CDSC (66.55)% N/A N/A 13.40% w/Reimb. & w/o CDSC (64.79)% N/A N/A 13.64% w/o Reimb. & w/CDSC (66.57)% N/A N/A 13.37% w/o Reimb. & w/o CDSC (64.81)% N/A N/A 13.62% C SHARES w/Reimb. & w/ CDSC (65.14)% N/A N/A 13.73% w/Reimb. & w/o CDSC (64.78)% N/A N/A 13.73% w/o Reimb. & w/CDSC (65.12)% N/A N/A 13.70% w/o Reimb. & w/o CDSC (64.80)% N/A N/A 13.70% ADVISOR SHARES w/Reimb. (64.46)% N/A N/A (1.14)% w/o Reimb. (64.48)% N/A N/A (1.15)%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (7/96) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
IVY GLOBAL SCIENCE & TECHNOLOGY FUND RUSSELL 3000 TECHNOLOGY INDEX RUSSELL 2000 TECHNOLOGY INDEX -------------------- ----------------------------- ----------------------------- 7/96 9,425 10,000 10,000 9,491 10,000 10,000 11,084 10,484 10,816 14,081 11,633 11,805 14,467 11,610 11,436 14,995 13,242 12,182 15,489 12,845 12,342 15,905 14,233 12,783 14,186 12,957 11,230 12,523 12,309 9,987 12,420 13,241 10,068 15,017 14,569 12,238 6/97 15,716 14,665 12,334 16,821 17,413 13,661 16,981 17,143 14,384 18,322 17,630 14,895 17,132 16,075 13,359 16,764 16,331 12,956 16,500 15,396 12,505 16,566 16,334 12,513 18,030 17,994 13,829 18,644 18,021 14,268 18,956 19,160 14,759 17,501 17,769 13,148 6/98 18,634 19,304 13,383 18,030 19,752 11,992 14,158 16,342 9,282 16,037 18,784 10,609 16,642 20,041 11,345 19,126 22,510 12,751 22,318 25,902 14,101 24,745 29,831 14,710 22,129 26,049 13,234 24,736 27,671 13,683 24,679 28,225 14,364 24,443 28,242 15,104 6/99 27,446 31,857 16,627 26,625 31,885 16,173 28,391 33,866 16,472 30,025 33,402 17,226 33,774 34,060 18,756 40,216 38,494 22,498 49,670 46,166 28,388 49,791 44,255 28,385 64,926 52,588 38,950 60,792 55,212 34,459 49,781 50,105 29,411 43,382 44,724 25,505 6/00 51,681 50,287 29,713 48,481 47,823 25,649 55,876 54,322 29,201 50,767 45,821 26,491 42,153 42,792 22,888 27,659 32,980 16,020 28,316 30,187 15,840 31,247 34,751 19,022 20,540 24,913 13,717 15,583 21,268 11,518 19,728 25,013 13,378 18,843 23,910 13,262 6/01 18,329 24,066 14,051
Ivy Global Science & Technology Fund recently changed its benchmark to one that more accurately reflects the universe of securities in which it invests. The chart at left shows the growth of both the Fund's prior benchmark (the Russell 2000 Technology Index) and current benchmark (the Russell 3000 Technology Index). 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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $43.2 Million TOTAL NUMBER OF HOLDINGS 73 INVESTMENT STYLE Mid-Cap Growth NASDAQ SYMBOLS CLASS A SHARES IVTAX CLASS B SHARES IVTBX CLASS C SHARES IVTCX ADVISOR CLASS SHARES IVTVX 17 20 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. He is the lead portfolio manager for Ivy International Fund. Q: SHERIDAN, HOW DID IVY INTERNATIONAL FUND PERFORM IN THE FIRST HALF OF 2001? A: For the six-month period ending June 30, 2001, Ivy International Fund returned -15.42%. The Fund slightly underperformed its benchmark, the MSCI Europe, Australasia and Far East (EAFE) Index, which returned -14.87%, and its peer group (as measured by the Lipper International average), which returned -14.25%. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: Despite volatile markets, our strategy of constructing a balanced, well diversified portfolio allowed the Fund to capture opportunities in a wide variety of sectors and regions. Top performers were Swedish Match, a leading tobacco products company; Taiwan Semiconductor, a top player in the semiconductor industry; Delhaize, a Belgo-American food retailer; Rio Tinto, a UK-based metals and mining company; and Telekom Austria, which is now Austria's largest telecommunications provider. The Fund's largest holding, pharmaceutical giant Glaxosmithkline, also did well. An overweight position in the consumer non-durables sector (food, beverages and tobacco) made the largest positive contribution to performance, while the Fund's holdings in the manufacturing, engineering and transportation sectors had the largest negative effect. Performance was also hindered by holdings in the insurance area, particularly in Zurich Financial Services. "We expect stock markets to be every bit as lively and volatile in the second half of the year as they were in the first. In this type of environment, we are confident that our disciplined approach to building a balanced portfolio will help the Fund identify opportunities in a number of different styles, sectors and countries." These negative factors were mitigated somewhat by our active approach to risk management. Because markets were zealously punishing companies that delivered earnings disappointments, we identified holdings likely to disappoint early on and trimmed or sold positions in anticipation of future declines. The Fund's broad diversification also allowed it to manage risk. The portfolio is diversified in three ways: by style (mixing both value and growth stocks), industry and region. Q: ONE OF THE FOUNDATIONS OF YOUR INVESTMENT STRATEGY IS TO CAPITALIZE ON MARKET INEFFICIENCIES. WHAT OPPORTUNITIES DID YOU FIND IN THE FIRST HALF? A: The major market inefficiency -- an overreaction by investors on either the upside or downside -- was the shift between growth and value stocks. Traditional defensive stocks such as major food companies became very expensive, while growth stocks such as technology companies saw their valuations drop. We used the opportunity to buy some undervalued technology names such as Infosys, an Indian software firm with 30% annual growth that we felt was overly punished by the market. At the same time, we trimmed some overpriced defensive positions in companies that we felt had reached their peaks. Q: WHAT IS THE FUND'S CURRENT REGIONAL ALLOCATION? A: The Fund has the majority of its portfolio (67%) invested in Europe, a region that presents an excellent market for our investment approach: it offers attractive companies with exciting prospects and reasonable valuations across a wide range of industries. We are also actively managing the Fund's Japanese weighting, which we reduced due to concerns over its struggling economy. However, we believe that Japan could be a very rewarding market over the next 18 months if new reforms proceed as planned. The Fund has a modest weighting in emerging markets (3%), concentrating on large-cap companies with strong fundamentals. Q: WHAT IS YOUR OUTLOOK FOR THE REST OF THE YEAR? A: We expect stock markets to be every bit as lively and volatile in the second half of the year as they were in the first. Globally, we're seeing lower interest rates and more attractive valuations countered by slower economic conditions and a possible earnings recession. Market conditions over the next few months will depend on how these forces interact. In this type of environment, we are confident that our disciplined approach to building a balanced portfolio will help the Fund identify opportunities in a number of different styles, sectors and countries. ------- Performance cited is for Class A shares at net asset value. 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 FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION -------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (31.82)% 0.19% 7.67% 10.30% w/o Reimb. & 5.75% sales charge (31.82)% 0.19% 7.66% 10.29% B SHARES w/Reimb. & w/ CDSC (31.87)% 0.16% N/A 4.68% w/Reimb. & w/o CDSC (28.28)% 0.56% N/A 4.68% w/o Reimb. & w/CDSC (31.87)% 0.16% N/A 4.68% w/o Reimb. & w/o CDSC (28.28)% 0.56% N/A 4.68% C SHARES w/Reimb. & w/ CDSC (29.01)% 0.57% N/A 1.47% w/Reimb. & w/o CDSC (28.30)% 0.57% N/A 1.47% w/o Reimb. & w/CDSC (29.01)% 0.57% N/A 1.47% w/o Reimb. & w/o CDSC (28.30)% 0.57% N/A 1.47% I SHARES w/Reimb. (27.40)% 1.81% N/A 5.65% w/o Reimb. (27.40)% 1.81% N/A 5.65% ADVISOR SHARES w/Reimb. N/A N/A N/A (25.49)% w/o Reimb. N/A N/A N/A (25.49)%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (4/86) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy International Fund MSCI EAFE Index ---------------------- --------------- 4/86 9,425 10,000 9,155 9,555 9,425 10,207 9,653 10,836 10,279 11,904 10,067 11,782 9,814 10,995 10,084 11,628 10,482 12,245 11,302 13,545 12,341 13,951 13,021 15,095 14,216 16,691 14,302 16,691 6/87 14,285 16,159 15,197 16,131 15,979 17,341 16,203 17,068 12,049 14,676 11,739 14,821 12,518 15,261 12,508 15,533 13,430 16,569 14,206 17,588 14,565 17,843 14,487 17,271 14,614 16,816 14,662 17,343 13,895 16,216 14,458 16,924 15,584 18,373 15,962 19,467 16,238 19,575 17,029 19,920 17,537 20,022 17,782 19,629 18,632 19,811 18,241 18,733 6/89 18,026 18,418 19,609 20,731 19,677 19,799 20,693 20,700 19,491 19,868 19,824 20,867 20,826 21,638 20,939 20,832 20,323 19,378 20,036 17,359 19,729 17,221 21,646 19,187 21,913 19,018 22,979 19,286 20,518 17,413 17,955 14,986 18,939 17,321 18,683 16,299 18,124 16,564 18,690 17,099 20,451 18,932 20,067 17,795 20,216 17,971 21,049 18,159 6/91 19,928 16,824 21,113 17,651 21,006 17,292 21,241 18,267 21,358 18,525 20,526 17,661 21,193 18,573 22,123 18,176 22,648 17,526 22,090 16,369 23,206 16,446 24,377 17,547 23,096 16,715 22,112 16,287 21,619 17,309 21,773 16,967 20,700 16,077 20,492 16,228 21,207 16,312 21,477 16,310 22,004 16,803 23,532 18,267 24,341 20,001 25,464 20,423 6/93 25,273 20,105 25,464 20,809 27,542 21,932 27,868 21,438 29,242 22,099 28,260 20,167 31,465 21,623 33,526 23,452 32,153 23,387 30,541 22,379 31,474 23,329 31,339 23,195 30,850 23,523 32,380 23,749 34,004 24,311 33,504 23,545 34,513 24,330 32,994 23,160 32,697 23,305 31,063 22,410 31,809 22,346 32,901 23,739 33,758 24,632 34,485 24,249 6/95 34,535 23,912 35,955 25,400 34,708 24,431 35,748 24,909 35,370 24,239 35,719 24,914 36,832 25,917 37,433 26,024 37,889 26,112 38,273 26,666 39,354 27,441 39,930 26,936 41,324 27,088 39,390 26,296 40,711 26,354 40,999 27,054 41,336 26,777 43,269 27,843 44,095 27,484 44,722 26,523 45,692 26,956 45,692 27,054 45,582 27,197 48,531 28,967 6/97 50,963 30,565 52,204 31,059 48,666 28,740 52,130 30,350 47,609 28,017 47,572 27,731 48,673 27,973 48,374 29,252 51,728 31,129 54,709 32,088 55,644 32,342 54,135 32,185 53,225 32,429 54,584 32,757 45,879 28,699 44,882 27,819 49,359 30,719 52,240 32,293 52,246 33,567 52,170 33,468 51,181 32,670 53,742 34,034 56,545 35,413 54,211 33,589 6/99 55,949 34,899 56,278 35,936 56,456 36,067 56,291 36,430 56,710 37,795 58,295 39,108 63,243 42,618 58,113 39,910 59,751 40,984 60,974 42,573 58,449 40,333 58,583 39,348 61,188 40,887 58,449 39,172 59,431 39,512 54,222 37,588 52,629 36,701 50,442 35,324 52,329 36,580 52,529 36,592 47,995 33,856 44,000 31,557 47,156 33,723 45,958 32,476 6/01 44,260 31,141
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $677.2 Million TOTAL NUMBER OF HOLDINGS 83 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 19 22 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] Ivy International Small Companies Fund is sub-advised 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 THE FIRST HALF OF 2001? A: For the six-month period ending June 30, 2001, Ivy International Small Companies Fund returned -24.23%. The Fund underperformed its benchmark, the Salomon Smith Barney EMI World ex-US Index, which returned -7.87%, and its peer group (as measured by the Lipper International Small-Cap average), which returned -13.42%. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: The majority of the underperformance during the period has come from stock selection rather than asset allocation. The Fund normally invests in stocks in the higher growth sectors, as opposed to value sectors. As a result, it retained a high technology weighting, which hurt performance as the technology market deteriorated, particularly in Europe. For example, holdings in Stepstone, a Norwegian Internet employment company, and Telegate, a German telecom services provider, were both hit badly by general negative sentiment for the technology and telecommunications sectors, respectively. In contrast to the Fund, the Salomon Smith Barney Index is quite cyclical and contains a large percentage of "old economy" stocks with a value bias which have held up better in the current market conditions. "Going forward, we believe that our strategy of focusing on small companies with visible products, strong earnings growth and leading positions in niche businesses will allow the Fund to capture attractive gains as the global economy improves." On the positive side, the Fund's Japanese holdings performed well. The Fund has been investing in more defensive growth stocks of companies that are consolidators in fragmented market places with innovative products. An example is Hokuto, a Japanese mushroom grower that has been growing its market share both on its own and through consolidation. Smaller companies in Japan have been the best performers year-to-date, but we have taken profits as the economic outlook has deteriorated. In the Pacific, stock selection has also been a positive. Successful holdings have included companies that are leaders in niche markets with strong management and products. Two examples are CSL, which produces products from blood plasma, and Cochlear, the world leader in the manufacture of ear implants. We also continue to maintain exposure to the strongly growing economy of China through Chinese stocks listed in Hong Kong. Q: WHAT IS YOUR STRATEGY FOR THE REST OF 2001? A: The outlook for international small caps remains volatile over the short and medium term, so we recently conducted a thorough review of the portfolio in an effort to protect the Fund against further downside. Consequently, we have reduced the stock list and our overweight position in the technology sector. We have also moved our focus toward stocks that we believe have a visible catalyst for near-term performance, as well as good long-term performance potential. Regionally, we have reduced the Fund's weighting in Japan, where questions remain over the state of the economy. The appointment of new prime minister Junichiro Koizumi will introduce reform measures that may be negative over the short term, but should bring about economic improvements over the longer term. However, in the near future the market is likely to focus on the short-term negatives rather than the long-term positives. We have also reduced the Fund's weighting in the UK, where technology stocks are continuing to experience problems, and increased its weighting in Europe and the Pacific, areas that are most likely to benefit first from a pickup in the US economy. Going forward, we believe that our strategy of focusing on small companies with visible products, strong earnings growth and leading positions in niche businesses will allow the Fund to capture attractive gains as the global economy improves. ------- Performance cited is for Class A shares at net asset value. 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 FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION -------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (34.76)% N/A N/A (0.86)% w/o Reimb. & 5.75% sales charge (35.16)% N/A N/A (3.80)% B SHARES w/Reimb. & w/ CDSC (34.66)% N/A N/A (0.74)% w/Reimb. & w/o CDSC (31.23)% N/A N/A (0.29)% w/o Reimb. & w/CDSC (35.12)% N/A N/A (3.54)% w/o Reimb. & w/o CDSC (31.70)% N/A N/A (3.11)% C SHARES w/Reimb. & w/ CDSC (31.87)% N/A N/A (0.23)% w/Reimb. & w/o CDSC (31.18)% N/A N/A (0.23)% w/o Reimb. & w/CDSC (32.31)% N/A N/A (3.33)% w/o Reimb. & w/o CDSC (31.63)% N/A N/A (3.33)% ADVISOR SHARES w/Reimb. (30.49)% N/A N/A 0.33% w/o Reimb. (31.97)% N/A N/A (2.45)%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (1/97) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy International Small Companies Fund Salomon Smith Barney EMI World ex-US Index -------------------------------------- ------------------------------------------ 1/97 9,425 10,000 9,585 9,784 9,566 9,948 9,510 9,817 9,331 9,670 9,548 10,290 6/97 9,783 10,522 9,849 10,363 9,274 9,921 9,472 10,097 8,803 9,698 8,369 9,265 8,245 9,060 8,369 9,438 8,997 10,142 9,682 10,619 9,701 10,700 9,502 10,899 6/98 9,102 10,581 8,873 10,508 7,674 9,220 7,740 8,980 8,092 9,614 8,616 9,922 8,677 10,162 8,124 10,131 8,502 9,934 8,764 10,307 9,385 10,864 9,162 10,580 6/99 9,540 10,941 9,782 11,350 9,695 11,525 9,559 11,498 9,588 11,383 10,596 11,772 12,100 12,548 12,547 12,238 14,481 12,751 14,491 12,802 13,733 12,022 13,130 11,814 6/00 13,898 12,579 14,190 12,148 14,977 12,522 14,666 11,918 13,743 11,262 12,732 10,801 12,697 11,254 12,967 11,364 12,048 10,925 10,579 10,061 10,969 10,779 11,069 10,754 6/01 9,620 10,369
The Salomon Smith Barney EMI World ex-US 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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $17.4 Million TOTAL NUMBER OF HOLDINGS 66 INVESTMENT STYLE Small-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IYSAX CLASS B SHARES IYSBX CLASS C SHARES IYSCX ADVISOR CLASS SHARES IYSVX 21 24 IVY INTERNATIONAL VALUE 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. He is the lead portfolio manager for Ivy International Value Fund. Q: SHERIDAN, HOW DID IVY INTERNATIONAL VALUE FUND PERFORM IN THE FIRST HALF OF 2001? A: For the six-month period ending June 30, 2001, Ivy International Value Fund returned -12.53%. The Fund outperformed both its benchmark, the MSCI Europe, Australasia and Far East (EAFE) Index, which returned -14.87%, and its peer group (as measured by the Lipper International average), which returned -14.25%. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: As a fund that focuses on value stocks, Ivy International Value Fund benefited from a market that favored traditional value names. International investors continued to shun growth stocks for the perceived "safe haven" of defensive stocks, and the resultant rise in valuations positively impacted performance. Top performers for the period were PowerGen, one of the largest electricity producers and distributors in the UK; Panamerican Beverages, Latin America's largest soft-drink bottler; BHP Billiton, a top Australian mining concern; Unilever, a leading UK/Dutch packaged consumer goods firm; and Fuji Photo Film, Japan's number one photographic film producer. In terms of sectors, the Fund's holdings in mining, banking, automobiles and utilities did quite well, while its holdings in insurance and industrial conglomerates did not. Regionally, the Fund did very well in the United Kingdom, where our stockpicking and a market that heavily favored value stocks led to strong performance. Performance was negatively affected by the Fund's holdings in Japan, a market that was not as value-oriented as others around the world. "Although Ivy International Value Fund is style-specific, its portfolio is constructed to have rich sector exposure and well-balanced country diversification. This helps the Fund capture opportunities in a wide range of companies around the world." Q: WHAT IS THE FUND'S INVESTMENT STRATEGY? A: Although Ivy International Value Fund is style-specific, its portfolio is constructed to have rich sector exposure and well balanced country diversification. This helps us capture opportunities in a wide range of companies around the world. We are rigid on valuations, focusing on companies with price/earnings ratios below the market average, but we are not dogmatic in our approach. If stocks that are traditionally seen as growth names (communications, for example) reach our target valuation levels, we will consider them for the portfolio. By the same token, if classic defensive plays such as utilities or food companies become expensive, we will sell. In the first half of the year, for example, our research showed that a number of the Fund's value names had reached price levels reminiscent of their peaks. Because we did not see much future upside, we took profits from these companies and redirected the money into new holdings such as Amadeus Global Travel Distribution, a Spanish airline reservations firm with strong fundamentals and a reasonable valuation. Q: WHAT IS YOUR OUTLOOK FOR THE REST OF 2001? A: A number of forces are at play right now. On the positive side, interest rates are low around the world, particularly in Japan, and valuations are attractive. Countering this is sluggish global economic growth, increased market volatility and disappointing earnings from companies in many international markets. No one is certain how matters will work themselves out, but investors should keep in mind that stock prices are based on earnings six to nine months in the future. If world markets become convinced of higher 2002 corporate earnings, we could see stocks become less volatile and trend higher in the second half of 2001. For now, it looks likely that value stocks will continue to be favored by international investors, many of whom are still shying away from growth sectors such as technology. We feel that Ivy International Value Fund is positioned to do well in the current market environment. ------- Performance cited is for Class A shares at net asset value. 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 FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION -------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (20.28)% N/A N/A (1.62)% w/o Reimb. & 5.75% sales charge (20.56)% N/A N/A (1.79)% B SHARES w/Reimb. & w/ CDSC (20.22)% N/A N/A (1.45)% w/Reimb. & w/o CDSC (16.03)% N/A N/A (0.96)% w/o Reimb. & w/CDSC (20.47)% N/A N/A (1.62)% w/o Reimb. & w/o CDSC (16.28)% N/A N/A (1.14)% C SHARES w/Reimb. & w/ CDSC (16.87)% N/A N/A (0.98)% w/Reimb. & w/o CDSC (16.03)% N/A N/A (0.98)% w/o Reimb. & w/CDSC (17.12)% N/A N/A (1.15)% w/o Reimb. & w/o CDSC (16.28)% N/A N/A (1.15)% ADVISOR SHARES w/Reimb. (15.21)% N/A N/A 1.31 % w/o Reimb. (15.66)% N/A N/A 1.00 %
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (5/97) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy International Value Fund MSCI EAFE Index ---------------------------- --------------- 5/97 9,425 10,000 9,538 10,651 9,660 11,238 9,896 11,420 9,001 10,567 9,604 11,159 8,615 10,301 8,427 10,196 8,455 10,285 8,540 10,756 9,256 11,446 9,783 11,798 9,868 11,892 9,783 11,834 6/98 9,472 11,923 9,434 12,044 7,806 10,552 7,740 10,229 8,427 11,295 9,001 11,874 9,016 12,342 8,940 12,305 8,854 12,012 9,225 12,514 10,062 13,021 9,700 12,350 6/99 10,043 12,832 10,224 13,213 10,290 13,261 10,138 13,395 10,185 13,896 10,490 14,379 11,521 15,670 10,599 14,674 10,676 15,069 11,127 15,653 10,695 14,830 10,551 14,467 6/00 11,050 15,033 10,791 14,403 10,877 14,528 10,301 13,821 10,157 13,494 10,022 12,988 10,686 13,450 10,647 13,454 10,016 12,448 9,181 11,603 9,706 12,399 9,618 11,941 6/01 9,346 11,450
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $97.0 Million TOTAL NUMBER OF HOLDINGS 80 INVESTMENT STYLE Large-Cap Value NASDAQ SYMBOLS CLASS A SHARES IVIAX CLASS B SHARES IIFBX CLASS C SHARES IVIFX ADVISOR CLASS SHARES IVIVX 23 26 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 THE FIRST HALF OF 2001? A: For the six-month period ending June 30, 2001, Ivy Pacific Opportunities Fund returned -9.70%. The Fund underperformed its benchmark, the MSCI Asia Pacific Ex-Japan Index, which returned -4.31%, and its peer group (as measured by the Lipper Pacific ex-Japan average), which returned -4.74%. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: Asian stock markets experienced a difficult first half of 2001 due to the region's weakening economic environment. Economic growth and industrial production continued to decline as the demand for exports contracted. The US technology slump hit Asian companies particularly hard due to Asian economies' heavy reliance on exports of telecommunications equipment, semiconductors and personal computers. Slower economic activity also resulted in slower demand for both residential and office property, weakening property stocks in Hong Kong and Singapore. In contrast, the Australian economy performed comparatively well due to a sharply weaker currency and relatively buoyant exports of natural resources. "Going forward, we are maintaining our discipline of investing in leading companies with strong balance sheets, globally competitive franchises and technologies, and managements committed to maximizing returns to shareholders." Although individual stocks in the portfolio showed strong performance, the Fund lagged its benchmark due to a significant underweight position in the Australian market, which rebounded over the period. Additionally, in Korea our focus on large capitalization stocks resulted in underperformance as smaller companies drove that market higher. Hong Kong, where the Fund has been overweight, was not able to escape the effects of the region's poor economic conditions and its own deflationary trends. Residential property prices there began to decline again after rallying strongly in 2000 in the wake of the Asian financial crisis. However, positive performance was registered in Taiwan and Singapore, where the Fund avoided weak telecoms and local banks. Q: HOW ARE YOU POSITIONING THE PORTFOLIO GOING FORWARD? A: We are maintaining our discipline of investing in leading companies with strong balance sheets, globally competitive franchises and technologies, and managements committed to maximizing returns to shareholders. Many of these companies have suffered declines during the current downturn due to the cyclical nature of their businesses. However, we are confident that their share prices can outperform as the global cycle turns positive once again. In Australia, we have invested in stocks with leading positions in their industries, including Woolworths, the country's largest and most profitable supermarket operator; Commonwealth Bank, which operates the largest nationwide banking franchise; and BHP, a leading global mining company. We have taken a new position in Infosys Technologies in India, one of the world's largest software services providers. Despite the slowdown in software services, the company managed to achieve a significant year-over-year improvement in net earnings in the second quarter. Q: WHAT IS YOUR OUTLOOK FOR THE REST OF THE YEAR? A: The US economic slowdown and the related decline in demand for technology products have combined with Asia's weakened financial structures to create an economic climate that ranks amongst the most challenging in over two decades. Although it is impossible to predict when a recovery will begin, we are confident that the Fund has invested in many of the strongest stocks in the Asia Pacific region. In particular, we believe that semiconductor production will experience important consolidation that will benefit the industry leaders in which the Fund invests. Overall, we believe the portfolio is well positioned to profit from an economic recovery through its holdings in leading steel, semiconductor, property and resource companies in the Pacific region. ------- Performance cited is for Class A shares at net asset value. 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. 24 27 AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION -------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (30.95)% (7.00)% N/A (5.02)% w/o Reimb. & 5.75% sales charge (31.60)% (7.58)% N/A (5.56)% B SHARES w/Reimb. & w/ CDSC (30.85)% (6.97)% N/A (4.99)% w/Reimb. & w/o CDSC (27.21)% (6.59)% N/A (4.99)% w/o Reimb. & w/CDSC (31.57)% (7.54)% N/A (5.52)% w/o Reimb. & w/o CDSC (27.96)% (7.17)% N/A (5.52)% C SHARES w/Reimb. & w/ CDSC (27.87)% (6.51)% N/A (6.36)% w/Reimb. & w/o CDSC (27.14)% (6.51)% N/A (6.36)% w/o Reimb. & w/CDSC (28.58)% (7.07)% N/A (6.91)% w/o Reimb. & w/o CDSC (27.85)% (7.07)% N/A (6.91)% ADVISOR SHARES w/Reimb. (27.39)% N/A N/A (4.26)% w/o Reimb. (27.39)% N/A N/A (4.68)%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (10/93) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy Pacific Opportunities Fund MSCI Asia Pacific (Excluding Japan) Index ------------------------------ ----------------------------------------- 10/93 9,425 10,000 9,652 10,000 9,685 10,028 10,900 12,298 10,426 12,140 9,837 11,559 9,011 10,502 9,111 10,986 9,392 11,383 6/94 8,905 11,083 9,309 11,735 9,647 12,518 9,624 12,500 9,431 12,530 8,620 11,685 8,188 11,658 7,289 10,544 7,760 11,111 7,927 11,204 7,732 11,092 8,452 11,699 6/95 8,352 11,519 8,825 11,779 8,506 11,306 8,722 11,533 8,545 11,336 8,244 11,073 8,318 11,492 9,247 11,921 9,189 12,077 9,044 12,238 9,160 13,106 9,209 12,802 6/96 9,121 12,715 8,782 11,884 8,966 12,229 9,063 12,401 9,131 12,287 9,731 12,790 10,023 12,699 9,935 12,851 10,081 13,032 9,682 12,519 10,198 12,514 10,967 12,946 6/97 11,356 13,492 11,736 13,602 11,463 11,822 11,210 11,686 8,495 9,277 7,970 8,778 7,824 8,554 6,529 8,235 7,989 9,506 7,795 9,388 7,191 8,755 6,267 7,672 6/98 5,498 7,080 5,060 7,003 4,350 5,979 4,953 6,464 6,053 7,546 6,286 8,081 6,215 8,146 5,732 8,217 5,653 8,150 6,176 8,862 7,320 7,687 7,162 9,968 6/99 8,692 11,326 8,366 11,028 8,484 11,300 7,991 10,659 8,090 10,929 8,800 11,698 9,119 12,646 9,009 12,822 8,631 12,596 9,488 12,807 8,969 11,791 8,551 11,121 6/00 9,189 11,802 9,448 11,278 9,169 11,186 8,312 10,046 7,485 9,253 7,116 9,010 7,455 9,055 8,198 10,076 7,565 9,597 6,932 8,568 6,993 8,779 6,832 8,753 6/01 6,731 8,665
The Morgan Stanley Capital International (MSCI) Asia Pacific (Excluding-Japan) 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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $13.1 Million TOTAL NUMBER OF HOLDINGS 30 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IPOAX CLASS B SHARES IPOBX CLASS C SHARES IPOCX ADVISOR CLASS SHARES IPOVX 25 28 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 six-month period ending June 30, 2001, Ivy Growth Fund returned -10.81%. The Fund outperformed its peer group (as measured by the Lipper Multi-Cap Growth average, which returned -16.25%) and its benchmark, the Russell 3000 Growth Index, which returned -13.24%. The Fund's prior benchmark, the S&P 500 Index, returned -6.70%. CORE PORTION COMMENTARY Q: PAUL, WHAT FACTORS AFFECTED THE PERFORMANCE OF THE CORE PORTION? A: The portfolio's holdings in the consumer discretionary area, particularly in homebuilding retailers such as Lowes and Home Depot, made the largest positive contribution to performance. The Fund also benefited from its exposure to bellwether media companies such as AOL Time Warner and Viacom as well as integrated oil holdings such as Exxon and Chevron. General Electric was one of the portfolio's largest holdings, and its strong performance also had a positive effect. Technology stocks had the largest negative effect on the portfolio. Communications and fiber optics companies in particular were hit hard, and we sold a number of these stocks in the second quarter. However, our biggest technology holding, Microsoft, did quite well. Other technology buys that benefited the Fund were Adobe, the well-known software manufacturer, and LSI Logic, a producer of custom integrated circuits. "We believe that our strategy of investing in industry leaders with strong earnings growth, a solid return on equity and proven records of profitability will allow the Fund to benefit from stronger market fundamentals going forward." -- Paul Baran "We focus on strong companies with good visibility and resilient earnings, and we are confident that this disciplined approach to stock selection will benefit the Fund in the second half of 2001." -- Jim Broadfoot Q: HOW DOES THE LARGE-CAP MARKET LOOK FOR THE REST OF THE YEAR? A: The actions of the Federal Reserve Board and the US government regarding interest rates and taxes should lead to a more optimistic economic environment in 2002. We believe that the stock market anticipates an economic recovery by six to nine months, so it's our view that stocks may start to see an upturn during the second half of 2001. And because investors generally first return to liquid, high-quality companies before moving into riskier asset classes, blue chips are often the first stocks to move from the bottom. We are confident that our strategy of investing in industry leaders with strong earnings growth, a solid return on equity and proven records of profitability will allow the Fund to benefit from stronger market fundamentals as we move forward. US EMERGING GROWTH PORTION Q: JIM, WHAT FACTORS AFFECTED PERFORMANCE? A: The US emerging growth portion benefited from reduced exposure to technology and higher weightings in healthcare, consumer services and business services sectors. Our stock selection in healthcare made the largest positive contribution, as holdings such as Polymedica (medical distribution), Intuitive Surgical (a developer of robotic surgery technology) and Gilead Sciences (biotechnology) offered the strongest performance. Metro-One Telecom, which outsources customer service for wireless carriers, was the strongest performer in the business services sector. Technology continued to be a difficult area, and the portfolio's investments in the communications and Internet equipment areas had the largest negative impact on performance. A heavy weighting in energy helped during the first quarter, but caused a drag on performance in the second. We reduced our holdings in both communications and energy as the second quarter progressed. Q: WHAT IS YOUR OUTLOOK FOR THE REST OF THE YEAR? A: We believe the current environment of falling interest rates should positively affect the emerging growth market. But rather than making short-term bets, we continue to focus the portfolio on what we view as the leading companies in the most attractive sectors of the economy. Going forward, this will most likely involve fewer technology names and more "traditional economy" stocks, but our principal strategy of investing in strong companies with good visibility and resilient earnings has not changed. We are confident that our disciplined approach to stock selection will benefit the Fund in the second half of 2001. ------- Performance cited is for Class A shares at net asset value. 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. 26 29 AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION -------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (37.92)% 3.23% 7.92% 9.90% w/o Reimb. & 5.75% sales charge (37.92)% 3.23% 7.89% 9.89% B SHARES w/Reimb. & w/ CDSC (38.00)% 3.15% N/A 6.36% w/Reimb. & w/o CDSC (34.74)% 3.51% N/A 6.36% w/o Reimb. & w/CDSC (38.00)% 3.15% N/A 6.33% w/o Reimb. & w/o CDSC (34.74)% 3.51% N/A 6.33% C SHARES w/Reimb. & w/ CDSC (35.45)% N/A N/A 3.04% w/Reimb. & w/o CDSC (34.79)% N/A N/A 3.04% w/o Reimb. & w/CDSC (35.45)% N/A N/A 3.04% w/o Reimb. & w/o CDSC (34.79)% N/A N/A 3.04% ADVISOR SHARES w/Reimb. (34.17)% N/A N/A (2.89)% w/o Reimb. (34.17)% N/A N/A (2.89)%
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. PERFORMANCE OVERVIEW 10-Year Performance Comparison of the Fund of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy Growth Fund S&P 500 Index Russell 3000 Growth Index --------------- ------------- ------------------------- 6/91 9,425 10,000 10,000 9,865 10,466 10,532 10,065 10,714 10,889 9,922 10,535 10,720 10,093 10,676 10,903 9,614 10,246 10,608 10,763 11,418 12,080 10,598 11,205 11,856 10,776 11,350 11,881 10,534 11,130 11,535 10,738 11,456 11,572 10,630 11,513 11,651 6/92 10,343 11,341 11,332 10,719 11,805 11,830 10,388 11,563 11,666 10,432 11,699 11,813 10,611 11,739 12,010 11,177 12,139 12,571 11,324 12,288 12,710 11,377 12,391 12,585 11,241 12,560 12,352 11,626 12,825 12,596 11,271 12,515 12,099 11,634 12,849 12,544 6/93 11,619 12,887 12,439 11,604 12,835 12,245 12,238 13,322 12,754 12,095 13,220 12,702 12,452 13,493 13,057 12,264 13,365 12,931 12,716 13,526 13,180 13,256 13,986 13,488 13,005 13,607 13,259 12,267 13,014 12,603 12,394 13,180 12,659 12,471 13,397 12,808 6/94 11,883 13,068 12,415 12,399 13,497 12,815 13,127 14,051 13,551 12,791 13,707 13,390 12,903 14,015 13,688 12,202 13,505 13,239 12,339 13,705 13,470 12,242 14,060 13,701 12,731 14,608 14,281 13,035 15,040 14,699 13,321 15,482 15,010 13,759 16,101 15,503 6/95 14,144 16,475 16,146 14,886 17,022 16,876 14,961 17,064 16,914 15,419 17,784 17,648 14,949 17,721 17,569 15,497 18,499 18,261 15,711 18,855 18,396 16,199 19,497 18,934 16,556 19,678 19,331 16,781 19,867 19,391 17,381 20,160 20,000 17,512 20,680 20,734 6/96 17,231 20,759 20,613 15,974 19,842 19,270 16,696 20,260 19,858 17,597 21,401 21,261 17,503 21,991 21,284 18,394 23,653 22,784 18,417 23,184 22,422 19,142 24,633 23,896 18,510 24,826 23,614 17,649 23,806 22,301 17,743 25,227 23,630 19,526 26,763 25,486 6/97 20,138 27,962 26,492 21,424 30,187 28,741 20,646 28,496 27,295 21,756 30,056 28,724 20,449 29,052 27,592 20,387 30,397 28,575 20,570 30,919 28,866 20,454 31,261 29,608 22,141 33,516 31,871 23,216 35,232 33,148 23,528 35,587 33,582 22,869 34,975 32,491 6/98 23,262 36,396 34,332 22,453 36,008 33,871 18,293 30,802 28,563 19,298 32,776 30,811 20,442 35,442 33,219 22,245 37,590 35,749 23,460 39,756 38,973 24,121 41,418 41,222 22,634 40,131 39,200 23,614 41,736 41,217 24,475 43,353 41,518 23,897 42,329 40,341 6/99 25,419 44,678 43,114 24,947 43,283 41,746 25,183 43,069 42,265 25,195 41,888 41,492 26,729 44,539 44,480 28,204 45,444 47,033 30,936 48,121 52,156 30,084 45,703 49,851 33,534 44,838 52,965 34,889 49,225 55,961 31,299 47,744 53,082 29,093 46,764 50,274 6/00 32,542 47,917 54,263 30,839 47,168 51,834 33,883 50,098 56,578 30,839 47,453 51,396 28,380 47,252 48,842 22,947 43,527 41,531 24,035 43,740 40,465 25,303 45,292 43,294 21,645 41,162 36,044 19,735 38,554 32,168 22,142 41,550 36,227 21,917 41,829 35,795 6/01 21,436 40,825 35,108
Ivy Growth Fund recently changed its benchmark to one that more accurately reflects the universe of securities in which it invests. The chart at left shows the growth of both the Fund's prior benchmark (the S&P 500 Index) and current benchmark (the Russell 3000 Growth Index). The S&P 500 Index and the Russell 3000 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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $229.0 Million TOTAL NUMBER OF HOLDINGS 183 INVESTMENT STYLE Multi-Cap Growth NASDAQ SYMBOLS CLASS A SHARES IVYFX CLASS B SHARES IVYBX CLASS C SHARES IVYCX ADVISOR CLASS SHARES IVYVX 27 30 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. [PHOTO] An interview with Paul Baran, portfolio manager of the Ivy US Blue Chip Fund. Mr. Baran is a senior vice president at Ivy Management, Inc. and a member of the domestic equities team. Q: PAUL, HOW DID IVY US BLUE CHIP FUND PERFORM IN THE FIRST HALF OF 2001? A: For the six-month period ending June 30, 2001, Ivy US Blue Chip Fund returned -6.99%. The Fund outperformed its peer group (as measured by the Lipper Large-Cap Core average, which returned -8.63%), but slightly lagged its benchmark, the S&P 500 Index, which returned -6.70%. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: The Fund's holdings in the consumer discretionary area, particularly in homebuilding retailers such as Lowes and Home Depot, made the largest positive contribution to performance. The Fund also benefited from its exposure to bellwether media companies such as AOL Time Warner and Viacom, integrated oil holdings such as Exxon and Chevron, and industrial companies such as aluminum producer Alcoa. General Electric was the Fund's largest holding during this period, and its strong performance also had a positive effect on the Fund. The largest factor hindering performance was the Fund's investment in the technology sector. Communications and fiber optics companies in particular were hit hard, and we later sold a number of these stocks in the second quarter. However, the Fund's biggest technology holding, Microsoft, did quite well due to higher earnings expectations and positive developments in its anti-trust case. Certain energy holdings hindered performance. The stock prices of El Paso Gas and Enron, two companies that provide natural gas to power producers, were affected by the bad publicity surrounding the electricity crisis in California. "Despite the current weakness of the economy, we believe the actions of the Federal Reserve Board and the US government regarding interest rates and taxes should lead to a more optimistic economic environment in 2002." Q: WHAT STRATEGIC MOVES DID YOU MAKE OVER THE PERIOD? A: Per our investment philosophy, the Fund is fully invested and sector neutral. However, over the last few months we increased the number of holdings to provide greater risk control, a move that we felt was warranted by slower economic conditions and greater market volatility. We have also become more active in seeking out new investment opportunities, taking advantage of price fluctuations as stocks became overvalued or undervalued. On a sector level, the combination of slower economic growth and lower interest rates led us to reassess the Fund's holdings in the financial area. In a weak economy, both corporations and consumers run into problems repaying loans, and this affects the bottom line of large lenders. Lower interest rates benefit lenders in general, but when housing numbers are strong, as they were in the first half of the year, they offer the greatest benefit to mortgage providers. As a result, we trimmed the Fund's exposure to banks with large outstanding corporate loans and redirected the money into financial institutions with strong mortgage businesses such as Washington Mutual (the largest originator of mortgages in the US) and Fannie Mae. Both holdings benefited Fund performance. Q: HOW DOES THE US BLUE CHIP MARKET LOOK FOR THE REST OF THE YEAR? A: Despite the current weakness of the economy, we believe the actions of the Federal Reserve Board and the US government regarding interest rates and taxes should lead to a more optimistic economic environment in 2002. It's our view that the stock market anticipates an economic recovery by six to nine months, so we believe that stocks may start to see an upturn during the second half of 2001. And because investors generally first return to liquid, high-quality companies before moving into riskier asset classes, blue chips are often the first stocks to move from the bottom. We are confident that our strategy of investing in industry leaders with strong earnings growth, a solid return on equity and proven records of profitability will allow the Fund to benefit from stronger market fundamentals as we move forward. ------- Performance cited is for Class A shares at net asset value. 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 FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION -------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (24.87)% N/A N/A (1.98)% w/o Reimb. & 5.75% sales charge (24.97)% N/A N/A (2.91)% B SHARES w/Reimb. & w/ CDSC (24.85)% N/A N/A (2.71)% w/Reimb. & w/o CDSC (20.90)% N/A N/A (1.59)% w/o Reimb. & w/CDSC (25.00)% N/A N/A (3.67)% w/o Reimb. & w/o CDSC (21.05)% N/A N/A (2.55)% C SHARES w/Reimb. & w/ CDSC (21.75)% N/A N/A (1.59)% w/Reimb. & w/o CDSC (20.96)% N/A N/A (1.59)% w/o Reimb. & w/CDSC (21.90)% N/A N/A (2.57)% w/o Reimb. & w/o CDSC (21.11)% N/A N/A (2.57)% ADVISOR SHARES w/Reimb. (20.04)% N/A N/A 0.58% w/o Reimb. (20.23)% N/A N/A (0.56)%
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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (11/98) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy US Blue Chip Fund S&P 500 Index --------------------- ------------- 11/98 9,425 10,000 9,906 10,606 10,122 11,217 10,377 11,686 10,094 11,323 10,358 11,776 10,763 12,232 10,518 11,943 6/99 11,140 12,606 10,763 12,213 10,735 12,152 10,368 11,819 11,131 12,567 11,225 12,822 11,676 13,578 11,069 12,895 11,259 12,651 12,301 13,889 11,761 13,471 11,278 13,195 6/00 11,894 13,520 11,638 13,309 12,311 14,135 11,297 13,389 11,212 13,332 10,074 12,281 10,194 12,341 10,579 12,779 9,530 11,614 9,000 10,878 9,713 11,724 9,751 11,802 6/01 9,482 11,519
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $64.3 Million TOTAL NUMBER OF HOLDINGS 92 INVESTMENT STYLE Large-Cap Blend NASDAQ SYMBOLS CLASS A SHARES IBCAX CLASS B SHARES IBCBX CLASS C SHARES IBCCX ADVISOR CLASS SHARES IBCVX 29 32 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. Q: JIM, HOW DID IVY US EMERGING GROWTH FUND PERFORM IN THE FIRST HALF OF 2001? A: The first half of the year was extremely challenging for high-growth companies across the board, and particularly for those in the technology sector. The fundamental economic environment was weak, and demand for technology products and services hit lows not seen since the early 1970s. Earnings estimates were revised downward for both technology and non-technology companies in a wide range of sectors. In this difficult market environment, Ivy US Emerging Growth Fund returned -11.84% for the six-month period ending June 30, 2001. The Fund outperformed its peer group (as measured by the Lipper Mid-Cap Growth average, which returned -12.58) for this period, but underperformed its benchmark, the Russell 2500 Growth Index, which returned -2.85%. [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: WHAT FACTORS AFFECTED PERFORMANCE? A: We reduced the Fund's exposure to technology in the first half of the year and redirected the proceeds into the healthcare, consumer services and business services sectors -- a move that benefited Fund performance. Our stock selection in healthcare made the largest positive contribution, as holdings such as Polymedica (medical distribution), Intuitive Surgical (a developer of robotic surgery technology) and Gilead Sciences (biotechnology) offered the strongest performance. Metro One Telecom, which outsources customer service for wireless carriers, was the Fund's strongest performer in the business services sector. "We believe the current environment of falling interest rates should positively affect the emerging growth market. But rather than making short-term bets, we continue to focus the portfolio on what we view as the leading companies in the most attractive sectors of the economy." The Fund's investments in the communications and Internet equipment areas were the largest drag on performance. The Fund's heavy weighting in energy (approximately 35% at the beginning of the year) helped during the first quarter, but hindered performance in the second. We reduced the Fund's holdings in both communications and energy as the second quarter progressed. Q: HOW ARE YOU POSITIONING THE PORTFOLIO GOING FORWARD? A: Given the weaker economy and ongoing volatility in the technology sector, we are focusing on companies in sectors such as financial services, education services and, as previously mentioned, healthcare. The companies we are looking at tend to be fairly steady, predictable businesses that are not greatly affected by changes in the macroeconomic environment. People become ill regardless of GDP, and they still need financial services during downturns in the economy. Two new holdings in these areas include Express Scripts, a pharmacy benefits management company that enjoys a recurring revenue stream and stands to benefit from high growth in the healthcare sector; and TMP Worldwide, an online recruitment company with a 70% global market share through its "Monster.com" Web site. Q: WHAT IS YOUR STRATEGY REGARDING THE TECHNOLOGY SECTOR? A: Within technology, we are focusing on areas that we believe are less vulnerable to the broadbased slowdown in technology spending. The first consists of niche companies with technology products or services that are very early in their lifecycles and that offer the potential for strong growth despite macroeconomic conditions. The second area consists of service companies with a recurring revenue base, a factor that offers greater stability and visibility in a difficult economic environment. PEC Solutions, an Internet services company that has done well due to its strong customer base of government agencies, is an example of this latter type of business. Q: WHAT IS YOUR OUTLOOK FOR THE REST OF THE YEAR? A: We believe the current environment of falling interest rates should positively affect the emerging growth market. But rather than making short-term bets, we continue to focus the portfolio on what we view as the leading companies in the most attractive sectors of the economy. Going forward, this will most likely involve fewer technology names and more "traditional economy" stocks, but our principal strategy of investing in strong companies with good visibility and resilient earnings has not changed. We are confident that our disciplined approach to stock selection will benefit the Fund in the second half of 2001. ------- Performance cited is for Class A shares at net asset value. 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 FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION -------- ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge (40.72)% 4.08% N/A 14.92% w/o Reimb. & 5.75% sales charge (40.72)% 4.08% N/A 14.90% B SHARES w/Reimb. & w/ CDSC (40.73)% 4.19% N/A 10.46% w/Reimb. & w/o CDSC (37.61)% 4.53% N/A 10.46% w/o Reimb. & w/CDSC (40.73)% 4.19% N/A 10.44% w/o Reimb. & w/o CDSC (37.61)% 4.53% N/A 10.44% C SHARES w/Reimb. & w/ CDSC (38.23)% 4.53% N/A 3.74% w/Reimb. & w/o CDSC (37.61)% 4.53% N/A 3.74% w/o Reimb. & w/CDSC (38.23)% 4.53% N/A 3.74% w/o Reimb. & w/o CDSC (37.61)% 4.53% N/A 3.74% ADVISOR SHARES w/Reimb. (37.61)% N/A N/A 3.74% w/o Reimb. (37.61)% N/A N/A 3.74%
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, 1993 (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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (4/93) of a $10,000 Investment (Class A shares including 5.75% maximum sales charge)
Ivy US Emerging Growth Fund Russell 2500 Growth Index Russell 2000 Growth Index --------------------------- ------------------------- ------------------------- 4/93 9,425 10,000 10,000 10,304 10,616 10,600 11,176 10,642 10,625 11,492 10,650 10,732 12,785 11,211 11,246 13,574 11,499 11,617 13,786 11,726 11,953 13,377 11,300 11,469 13,698 11,797 11,923 14,181 12,137 12,240 14,137 12,158 12,187 13,465 11,451 11,437 13,113 11,438 11,454 12,723 11,208 11,198 6/94 11,811 10,710 10,716 11,949 10,943 10,869 13,285 11,747 11,667 13,792 11,742 11,717 14,123 11,944 11,843 13,601 11,415 11,364 14,148 11,646 11,633 14,165 11,532 11,397 14,682 12,159 11,922 15,385 12,631 12,271 15,217 12,774 12,456 15,520 12,970 12,619 6/95 16,719 13,757 13,488 18,144 14,842 14,540 18,782 14,966 14,719 19,877 15,286 15,022 19,278 14,746 14,283 19,987 15,349 14,914 20,101 15,553 15,244 20,034 15,601 15,118 20,917 16,287 15,807 21,649 16,641 16,120 24,772 17,780 17,357 25,571 18,415 18,247 6/96 24,031 17,491 17,062 20,975 15,753 14,979 22,757 16,838 16,088 24,897 17,732 16,916 23,490 17,180 16,187 23,290 17,810 16,637 23,824 17,897 16,961 24,784 18,432 17,385 22,387 17,624 16,335 20,027 16,465 15,182 19,237 16,539 15,006 22,585 18,521 17,262 6/97 23,267 19,141 17,847 24,766 20,356 18,762 24,883 20,852 19,325 26,992 22,325 20,867 25,170 20,932 19,614 24,658 20,611 19,146 24,838 20,538 19,157 24,461 20,269 18,901 26,481 22,009 20,570 27,621 22,827 21,433 28,141 23,034 21,564 26,095 21,555 19,997 6/98 27,208 21,713 20,202 25,772 20,096 18,515 19,928 15,530 14,241 22,360 16,891 15,685 23,474 18,032 16,503 26,517 19,315 17,783 29,308 21,174 19,392 30,996 21,787 20,264 26,687 20,019 18,411 27,657 20,951 19,067 27,800 22,623 20,750 27,432 22,857 20,783 6/99 30,260 24,472 21,878 29,227 23,973 21,201 29,649 23,455 20,408 31,472 23,623 20,802 34,371 24,773 21,335 39,936 27,698 23,591 47,618 32,922 27,749 47,175 32,739 27,490 58,010 41,136 33,887 55,593 37,909 30,325 46,309 34,215 27,263 42,261 31,169 24,876 6/00 49,521 35,290 28,089 45,725 32,398 25,682 50,629 36,621 28,383 48,142 34,252 26,973 41,536 32,134 24,784 30,752 26,012 20,284 35,330 27,625 21,525 36,275 29,414 23,267 31,052 24,875 20,078 27,264 22,123 18,252 31,880 25,495 20,487 31,554 26,234 20,961 6/01 31,146 26,847 21,559
Ivy US Emerging Growth Fund recently changed its benchmark to one that more accurately reflects the universe of securities in which it invests. The chart at left shows the growth of both the Fund's prior benchmark (the Russell 2000 Growth Index) and current benchmark (the Russell 2500 Growth Index). 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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $125.8 Million TOTAL NUMBER OF HOLDINGS 103 INVESTMENT STYLE Mid-Cap Growth NASDAQ SYMBOLS CLASS A SHARES IVEGX CLASS B SHARES IVEBX CLASS C SHARES IVGEX ADVISOR CLASS SHARES IVEVX 31 34 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 CATEGORIES USED BY MOODY'S INVESTOR SERVICES AND STANDARD & POOR'S CORPORATION. Q: RICHARD, HOW DID IVY BOND FUND PERFORM IN THE FIRST HALF OF 2001? A: For the six-month period ending June 30, 2001, Ivy Bond Fund returned 4.32%. The Fund outperformed its peer group (as measured by the Lipper Corporate Debt BBB-Rated average, which returned 3.73%), but slightly underperformed its benchmark, the Lehman Brothers US Credit Index, which returned 5.39%. [PHOTO] An interview with Richard Gluck, senior vice president and head of Ivy Funds' fixed-income team. Q: WHAT FACTORS AFFECTED PERFORMANCE? A: The Fund's heavy exposure to higher quality corporate credit, particularly BBB to A-rated corporate bonds, had the largest positive impact on performance. The Fund's holdings in the utilities, consumer-oriented and finance sectors did well. Technology issues significantly underperformed the rest of the market, and our underweight position in this sector also benefited performance. Performance was negatively impacted by an underweight position in the energy sector, an area that outperformed as a result of high oil and gas prices and the improved fundamentals of many energy companies. The Fund's Treasury holdings -- which boosted performance during the fourth quarter of last year -- had a negative effect in the beginning of 2001. With first-quarter returns of 2.4%, these issues lagged behind the corporate bond market, which returned approximately 4.5% during that period. As a result, we sold our Treasury holdings in the second quarter. "The corporate bond market in the first half of 2001 was the best we've seen in quite some time, and we believe that the rest of the year will see a continuation of this strong performance. Going forward, we will keep a keen eye on the sectors that we believe are poised to outperform and adjust our allocations accordingly." Q: WHAT WERE THE FUND'S BEST PERFORMERS DURING THIS PERIOD? A: Two issues that did particularly well in the first half of 2001 were Darden Foods, an operator of casual restaurants such as Olive Garden and Red Lobster, and Pulte, a homebuilder that benefited from the surprisingly strong demand for new homes. The Fund's international investments, which comprise 8% of the portfolio, also did well. The strongest performers outside the US were Abitibi, a Canadian company that is the largest newsprint manufacturer in North America; Grupo Industrial Durango, a leading packaging company in Mexico; and Grupo Televisa, a Mexican communications company. In general, Mexican corporate bonds have done well, benefiting from the country's strong links to the US and Moody's recent decision to rate certain issuers above their countries of origin. Q: CAN YOU DISCUSS THE CURRENT FOCUS OF THE FUND? A: In the first quarter, we continued the restructuring of the Fund's portfolio that began in the last half of 2000. The focus has moved from searching for sudden improvements in unique credit stories toward companies that are solid, liquid and have the strength to effectively weather all kinds of economic conditions. As a result, the Fund has shifted from more obscure names to larger, well known issuers such as Citigroup, Verizon, Hertz Corporation, Household Finance Corporation, Kansas Gas & Electric and other industry leaders. The improved credit quality of the Fund has significantly helped performance. For example, the Fund was overweighted in the sometimes volatile telecom area in the first half of the year, but avoided the riskier names with holdings in AT&T, AOL Time Warner and Viacom -- all large, stable companies that we feel will survive slower economic conditions. Q: HOW DOES THE CORPORATE BOND MARKET LOOK FOR THE REST OF THE YEAR? A: The corporate bond market in the first half of 2001 was the best we've seen in quite some time, and we believe that the rest of the year will see a continuation of this strong performance. Interest rates are low, corporate credit quality is improving and many companies are experiencing greater financial flexibility as a result of refinancing short-term loans as long-term debt. In addition, the volatility in equity markets has made it less likely that companies will take on greater debt, and it has tempered practices that hurt corporate credit quality such as borrowing to buy back corporate equity. Going forward, we will keep a keen eye on the sectors that we believe are poised to outperform and adjust our allocations accordingly. ------- Performance cited is for Class A shares at net asset value. 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 AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 6/30/01
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION ------ ------- -------- --------- A SHARES w/Reimb. & 5.75% sales charge 2.63% 2.58% 6.10% 6.91% w/o Reimb. & 5.75% sales charge 2.63% 2.58% 6.09% 1.71% B SHARES w/Reimb. & w/ CDSC 1.72% 2.40% N/A 3.86% w/Reimb. & w/o CDSC 6.72% 2.76% N/A 3.86% w/o Reimb. & w/CDSC 1.72% 2.40% N/A 3.86% w/o Reimb. & w/o CDSC 6.72% 2.76% N/A 3.86% C SHARES w/Reimb. & w/ CDSC 5.77% 2.79% N/A 3.12% w/Reimb. & w/o CDSC 6.77% 2.79% N/A 3.12% w/o Reimb. & w/CDSC 5.77% 2.79% N/A 3.12% w/o Reimb. & w/o CDSC 6.77% 2.79% N/A 3.12% ADVISOR SHARES w/Reimb. 7.82% N/A N/A (0.10)% w/o Reimb. (1.58)% N/A N/A (2.71)%
CDSC = Contingent Deferred Sales Charge Advisor Class Shares are not subject to an initial sales charge or a CDSC. Class A commenced operations September 9, 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. PERFORMANCE OVERVIEW Performance Comparison of the Fund Since Inception (9/85) of a $10,000 Investment (Class A shares including 4.75% maximum sales charge)
Ivy Bond Fund Lehman Brothers US Credit Index ------------- ------------------------------- 9/85 9,525 10,000 9,545 10,006 9,586 10,250 9,627 10,515 9,668 10,861 9,709 10,942 9,761 11,465 9,787 11,744 9,819 11,807 9,861 11,677 9,897 11,897 9,935 11,950 10,004 12,195 10,004 12,160 10,025 12,364 10,046 12,542 10,100 12,655 10,100 12,931 10,133 13,009 10,198 12,956 10,187 12,530 10,208 12,474 6/87 10,187 12,655 10,307 12,621 10,329 12,550 10,131 12,196 10,860 12,603 10,904 12,738 11,084 12,979 11,524 13,488 11,638 13,672 11,672 13,555 11,695 13,459 11,684 13,386 11,848 13,706 11,705 13,676 11,753 13,733 12,126 14,030 12,380 14,275 12,234 14,138 12,369 14,176 12,558 14,386 12,400 14,306 12,555 14,349 12,799 14,640 13,212 15,040 6/89 13,758 15,485 13,950 15,785 13,770 15,615 13,827 15,686 14,137 16,047 14,262 16,158 14,238 16,176 13,765 15,974 13,633 16,020 13,594 16,034 13,263 15,868 13,817 16,380 14,107 16,660 14,235 16,848 13,714 16,581 13,785 16,657 14,062 16,732 14,533 17,076 14,844 17,317 15,007 17,537 15,079 17,837 15,107 18,056 15,275 18,291 15,288 18,417 6/91 15,176 18,416 15,338 18,681 15,755 19,103 16,144 19,496 16,229 19,682 16,314 19,875 16,990 20,524 16,763 20,268 16,851 20,462 16,804 20,374 16,735 20,476 17,159 20,934 17,418 21,261 18,030 21,828 18,240 21,998 18,346 22,265 18,023 21,869 18,021 21,904 18,375 22,308 18,850 22,828 19,272 23,352 19,456 23,433 19,529 23,614 19,714 23,642 6/93 20,255 24,216 20,391 24,391 20,942 24,998 20,998 25,057 21,204 25,183 21,009 24,874 21,214 25,020 21,738 25,506 21,349 24,904 20,684 24,139 20,436 23,907 20,399 23,819 20,256 23,760 20,565 24,360 20,724 24,388 20,467 23,933 20,430 23,878 20,369 23,839 20,344 24,036 20,372 24,546 20,767 25,254 20,796 25,460 21,401 25,890 22,221 27,110 6/95 22,368 27,354 22,493 27,233 22,785 27,672 23,069 28,000 23,211 28,364 23,474 28,907 23,885 29,384 24,151 29,573 23,775 28,871 23,647 28,625 23,610 28,387 23,850 28,337 24,147 28,753 24,243 28,809 24,217 28,720 24,861 29,329 25,371 30,130 25,942 30,774 25,811 30,348 26,035 30,391 26,420 30,519 25,988 30,043 26,307 30,499 26,674 30,844 6/97 27,162 31,281 28,254 32,425 27,867 31,947 28,428 32,506 28,639 32,918 28,717 33,104 28,876 33,454 29,177 33,851 29,177 33,840 29,270 33,965 29,365 34,180 29,470 34,585 29,539 34,841 29,474 34,808 28,675 34,971 28,782 36,104 28,123 35,547 29,094 36,217 28,876 36,322 28,748 36,681 27,872 35,811 28,300 36,064 28,388 36,170 28,090 35,686 6/99 27,954 35,500 27,821 35,303 27,500 35,217 27,584 35,600 27,405 35,764 27,345 35,802 27,095 35,612 27,057 35,487 27,358 35,816 27,845 36,121 26,804 35,804 26,236 35,670 26,726 36,566 27,089 37,009 27,446 37,491 27,429 37,688 27,381 37,725 27,390 38,214 27,606 37,786 28,166 38,821 28,433 39,159 28,580 39,402 28,368 39,260 28,622 39,621 6/01 28,798 39,819
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. FUND STATISTICS NET ASSETS UNDER MANAGEMENT $62.1 Million TOTAL NUMBER OF HOLDINGS 55 INVESTMENT STYLE Long-Term Bond NASDAQ SYMBOLS CLASS A SHARES MCFIX CLASS B SHARES IVBBX CLASS C SHARES IVBCX ADVISOR CLASS SHARES IVBVX 33 36 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. 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. 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. 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. 34 37 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. 35 38 IVY CUNDILL GLOBAL VALUE FUND SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE EQUITY SECURITIES - 83.5% EUROPE - 8.0% NETHERLANDS - 2.5% N.V. Holdingmaatschappij De Telegraaf 1,300 $ 23,111 ---------------- UNITED KINGDOM - 5.5% Cable & Wireless plc 2,600 15,212 Sibir Energy plc (a) 200,000 34,457 ---------------- 49,669 ---------------- FAR EAST - 50.2% HONG KONG - 3.6% Jardine Strategic Holdings Limited 11,500 32,890 ---------------- INDIA - 3.1% Videsh Sanchar Nigam Ltd. ADR 2,100 28,140 ---------------- JAPAN - 38.7% Asahi Broadcasting Corporation 500 33,276 Coca-Cola West Japan Company Limited 1,400 28,850 Daiichi Pharmaceutical Co., Ltd. 1,000 23,133 Descente, Ltd. 19,000 36,411 Gakken Co., Ltd. (a) 18,000 23,814 Horipro Inc. 4,000 21,970 Lion Corporation 8,000 30,469 Mitsui Marine and Fire Insurance Company, Ltd. 5,000 25,578 Nippon Broadcasting System, Incorporated 1,000 35,280 NIPPONKOA Insurance Company, Limited 13,000 48,783 Sankyo Company, Limited 1,000 18,041 Shiseido Company, Limited 3,000 28,144 ---------------- 353,749 ---------------- SINGAPORE - 4.8% DelGro Corporation Limited 28,000 44,568 ---------------- LATIN AMERICA - 5.2% BRAZIL - 5.2% Companhia Paranaense de Energia-Copel ADS 3,000 22,530 Unibanco Uniao de Bancos Brasileiros S.A. ADR 1,000 25,450 ---------------- 47,980 ----------------
NAME OF SECURITY SHARES VALUE NORTH AMERICA - 20.1% CANADA - 16.6% Brascan Corporation 2,000 $ 34,292 Derlan Industries Limited (a) 25,000 27,182 Fairfax Financial Holdings Limited (a) 400 60,070 PanAfrican Energy Corporation - Class B (a) 23,000 30,463 ---------------- 152,007 ---------------- UNITED STATES - 3.5% IDT Corporation (a) 1,300 17,550 IDT Corporation Class B (a) 1,300 14,300 ---------------- 31,850 ---------------- TOTAL INVESTMENTS - 83.5% (Cost - $782,859) (c) $ 763,964 OTHER ASSETS, LESS LIABILITIES - 16.5% 150,995 ---------------- NET ASSETS - 100% $ 914,959 ================ Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 59,020 Gross unrealized depreciation (77,915) ---------------- Net unrealized depreciation $ (18,895) ================ Purchases and sale proceeds of securities other than short-term obligations aggregated $313,072 and $183,555, respectively, for the period ended June 30, 2001.
36 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 39 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001 Forward foreign currency contracts at June 30, 2001 were:
CONTRACTS TO BUY ------------------------------------- EXPIRATION LOCAL VALUE IN EXCHANGE UNREALIZED CURRENCY DATE CURRENCY IN U.S.$ FOR U.S.$ DEPRECIATION --------------------------------------------------------------------------------------------- British Pound July 11, 2001 2,349,860 $ 9,000 $ 8,862 $ (138) Japanese Yen July 11, 2001 4,477,680 36,000 35,941 (59) ------- $ (197) -------
CONTRACTS TO SELL ------------------------------------- EXPIRATION LOCAL VALUE IN EXCHANGE UNREALIZED CURRENCY DATE CURRENCY IN U.S.$ FOR U.S.$ APPRECIATION --------------------------------------------------------------------------------------------- British Pound July 11, 2001 15,053 $ 22,000 $ 21,215 $ 785 British Pound January 23, 2002 7,705 11,000 10,816 184 British Pound January 23, 2002 15,468 22,000 21,714 286 Japanese Yen July 11, 2002 26,179,280 229,000 210,131 18,869 Japanese Yen January 23, 2002 4,719,600 40,000 38,679 1,321 Japanese Yen January 23, 2002 12,063,540 102,000 98,865 3,135 Singapore Dollar July 11, 2001 60,340 35,000 33,126 1,874 Singapore Dollar January 23, 2002 10,440 6,000 5,775 225 ------- $26,679 ------- Net unrealized appreciation on forward foreign currency contracts $26,482 =======
IVY DEVELOPING MARKETS FUND
NAME OF SECURITY SHARES VALUE EQUITY SECURITIES - 84.9% AFRICA - 7.1% SOUTH AFRICA - 7.1% Nedcor Limited 8,400 $ 164,642 South African Breweries plc 21,800 166,176 Standard Bank Investment Corporation Limited 45,067 196,232 ---------------- 527,050 ---------------- EASTERN EUROPE - 4.3% HUNGARY - 2.6% Magyar Tavkozlesi Rt 23,600 69,281 MOL Magyar Olaj-es Gazipari Rt 8,800 125,195 ---------------- 194,476 ---------------- POLAND - 1.7% Telekomunikacja Polska S.A. 144a GDR (d) 28,200 126,497 ---------------- EUROPE - 3.0% FINLAND - 1.5% Hansabank Ltd. 14,500 115,387 ---------------- GREECE - 1.5% Hellenic Telecommunications Organization SA ADR 17,200 110,252 ---------------- FAR EAST - 37.3% CHINA - 1.7% China Unicom Limited (a) 73,000 127,288 ---------------- HONG KONG - 9.4% China Telecom (Hong Kong) Limited (a) 58,300 307,958 Sun Hung Kai Properties Ltd. 27,000 243,184 Wharf Holdings Ltd. 72,111 150,701 ---------------- 701,843 ----------------
NAME OF SECURITY SHARES VALUE SOUTH KOREA - 13.3% Korea Telecom Corporation 4,100 $ 163,943 Pohang Iron & Steel Company Ltd. 4,000 319,888 Samsung Electronics 2,600 383,866 SK Telecom Co., Ltd. 830 122,223 ---------------- 989,920 ---------------- TAIWAN - 12.9% Hon Hai Precision Industry Co., Ltd. 44,500 233,946 Taiwan Semiconductor Manufacturing Company (a) 215,600 400,781 United Microelectronics Corporation (a) 247,000 327,862 ---------------- 962,589 ---------------- LATIN AMERICA - 33.2% BRAZIL - 14.3% Banco Itau S.A. 970,000 83,583 Cia Brasileira de Distribuicao Grupo Pao de Acucar 5,998,100 138,925 Cia Vale do Rio Doce - Preferred A (with 13,300 non-tradeable debentures) 9,700 220,172 Petroleo Brasileiro S.A. (Petrobras) 13,643 318,945 Tele Centro Oeste Celular Part. S.A. 39,000,000 113,651 Tele Norte Leste Participacoes S.A. 12,406 189,316 ---------------- 1,064,592 ---------------- CHILE - 2.2% Antofagasta Plc 25,063 163,907 ----------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 37 40 IVY DEVELOPING MARKETS FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE MEXICO - 16.7% America Movil S.A. De C.V. 9,900 $ 206,514 Cemex S.A. De C.V. 33,509 177,738 Fomento Economico Mexicano, S.A. Sponsored ADR 7,300 312,513 Grupo Financiero Banamex Accival, S.A. 33,700 86,965 Telefonos de Mexico S.A. ADR - Class L 9,900 347,391 Tubos de Acero de Mexico S.A. (TAMSA) Sponsored ADR 9,000 113,850 ---------------- 1,244,971 ---------------- TOTAL INVESTMENTS - 84.9% (Cost - $6,487,792) (c) $ 6,328,772 OTHER ASSETS, LESS LIABILITIES - 15.1% 1,129,734 ---------------- NET ASSETS - 100% $ 7,458,506 ================ Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,194,783 Gross unrealized depreciation (1,353,803) ---------------- Net unrealized depreciation $ (159,020) ================ Purchases and sales proceeds of securities other than short-term obligations aggregated $628,413 and $3,651,027, respectively, for the period ended June 30, 2001. IVY EUROPEAN OPPORTUNITIES FUND EQUITY SECURITIES - 96.3% EUROPE - 88.2% AUSTRIA - 0.2% Yline Internet Business Services AG (a) 26,940 $ 226,925 ---------------- DENMARK - 1.1% DSV, De Sammensluttede Vognmaend 60,000 1,378,256 ---------------- FINLAND - 1.1% M-real Oyj 235,000 1,362,763 ---------------- FRANCE - 17.4% Alstom 70,000 1,947,276 Cie Francaise d'Etudes et de Construction (Technip SA) 25,000 3,504,791 Cyberdeck 514,101 413,460 Essilor International SA 15,000 4,292,100 Imerys 30,000 2,971,454 JC Decaux SA (a) 300,000 4,012,732 Lafarge 38,080 3,255,968 Sagem SA - Preferred 59,958 2,109,017 ---------------- 22,506,798 ---------------- GREECE - 3.8% Folli-Follie SA 256,350 4,804,772 Germanos SA 12,855 151,486 ---------------- 4,956,258 ----------------
NAME OF SECURITY SHARES VALUE ITALY - 8.5% Cairo Communication SpA (a) 41,584 $ 915,648 De Rigo SpA Sponsored ADR 114,000 983,820 Luxottica Group SpA 225,000 3,600,000 Saipem SpA 1,000,000 5,477,295 ---------------- 10,976,763 ---------------- NETHERLANDS - 15.7% Buhrmann NV 300,000 2,829,230 Free Record Shop Holding NV 43,622 408,065 Fugro NV 87,845 4,893,333 Hagemeyer NV 257,239 4,954,275 IHC Caland NV 41,000 2,065,203 Letsbuyit.com (a) 798,500 155,476 Vedior NV 450,000 4,076,225 VersaTel Telecom International NV (a) 300,000 838,102 ---------------- 20,219,909 ---------------- SPAIN - 8.4% Altadis SA 550,000 7,840,913 Telepizza, S.A. (a) 1,624,394 3,025,352 ---------------- 10,866,265 ---------------- SWITZERLAND - 4.7% Kaba Holdings AG 18,000 3,555,234 Syngenta AG (a) 48,000 2,523,716 ---------------- 6,078,950 ---------------- UNITED KINGDOM - 27.3% BAE Systems plc 350,000 1,674,859 British American Tobacco plc 725,000 5,531,586 Chubb Security 2,250,000 5,237,119 Enodis 750,000 1,492,553 Future Network plc (a) 6,636,631 4,060,214 Invensys plc 1,000,000 1,891,622 Kidde plc (a) 3,500,000 3,974,866 Michael Page International plc (a) 1,050,000 2,160,604 PHS Group plc. (a) 1,997,374 2,387,758 Shell Transport & Trading Co. plc 300,000 2,480,907 Stagecoach Holdings plc 4,000,000 4,402,063 ---------------- 35,294,151 ---------------- MIDDLE EAST - 4.9% ISRAEL - 4.9% Card-Guard Scientific Survival Ltd. (a) 46,324 2,577,350 Oridion Systems Ltd. (a) 156,000 3,688,764 ---------------- 6,266,114 ---------------- NORTH AMERICA - 3.2% UNITED STATES - 3.2% Global TeleSystems Group, Inc. 3,400,000 612,000 MIH Ltd. (a) 242,000 3,448,500 OpenTV Corporation (a) 5,000 69,842 ---------------- 4,130,342 ----------------
38 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 41 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY PRINCIPAL* VALUE FOREIGN CONVERTIBLE BONDS - 0.2% VersaTel Telecom International NV, 4.00%, 12/17/2004 630,000 $ 149,335 VersaTel Telecom International NV, 4.00%, 3/30/2005 560,000 137,933 ---------------- 287,268 ---------------- TOTAL INVESTMENTS - 96.5% (Cost - $181,195,394) (c) $ 124,550,762 OTHER ASSETS, LESS LIABILITIES - 3.5% 4,578,845 ---------------- NET ASSETS - 100% $ 129,129,607 ================ * Principal is denominated in local currency. Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 8,350,679 Gross unrealized depreciation (64,995,311) ---------------- Net unrealized depreciation $ (56,644,632) ================ Purchases and sales proceeds of securities other than short-term obligations aggregated $66,310,301 and $84,366,537, respectively, for the period ended June 30, 2001. IVY GLOBAL FUND SHARES EQUITY SECURITIES - 96.4% EUROPE - 32.4% AUSTRIA - 0.5% Telecom Austria AG (a) 8,000 $ 49,101 ---------------- BELGIUM - 0.7% Delhaize Le Lion SA 1,100 65,046 ---------------- FINLAND - 0.9% Nokia Oyj 3,900 88,384 ---------------- FRANCE - 8.0% Accor SA 2,000 84,403 Alcatel SA ADR 1,100 22,814 Alstom 1,100 30,600 Aventis S.A. 940 75,041 AXA 2,800 79,764 Carrefour SA 900 47,619 Credit Lyonnais SA 1,600 57,729 LVMH 700 35,260 Schneider SA 600 33,168 Scor SA 1,000 44,445 Societe Generale 800 47,374 Societe Television Francaise 1 700 20,421 STMicroelectronics NV 754 25,636 Suez SA 2,770 89,110 Thomson Multimedia (a) 1,200 38,604 TotalFinaElf - B Shares 400 56,009 ---------------- 787,997 ---------------- GERMANY - 4.6% Adidas-Salomon AG 1,000 60,614 Allianz AG 300 88,052 Bayer AG 1,700 66,202 Deutsche Bank AG 900 64,305 Deutsche Lufthansa AG 1,700 27,056 Fresenius AG 600 56,636
NAME OF SECURITY SHARES VALUE SAP AG 400 $ 55,162 Siemens AG 600 36,318 ---------------- 454,345 ---------------- ITALY - 1.2% Assicurazioni Generali S.p.A 2,400 72,127 Enel S.p.A 15,000 45,842 ---------------- 117,969 ---------------- NETHERLANDS - 3.7% AKZO Nobel N.V. 1,763 74,625 ING Groep NV 1,322 86,399 Koninklijke (Royal) Philips Electronicas N.V. 2,034 53,913 Royal Dutch Petroleum Company 1,400 80,570 Royal Dutch Petroleum Company Ny R 1,110 64,680 ---------------- 360,187 ---------------- NORWAY - 0.3% Norsk Hydro A.S. Sponsored ADR 600 25,620 ---------------- SPAIN - 1.6% Altadis SA (a) 5,700 80,295 Amadeus Global Travel Distribution SA 8,500 51,450 Telefonica S.A. Sponsored ADR (a) 700 26,068 ---------------- 157,813 ---------------- SWEDEN - 0.6% Swedish Match AB 13,400 62,784 ---------------- SWITZERLAND - 1.6% Holcim Ltd 280 57,017 UBS AG - Registered 400 57,307 Zurich Financial Services AG 117 39,904 ---------------- 154,228 ---------------- UNITED KINGDOM - 8.7% BAE Systems plc 14,787 70,760 Bank Of Scotland 6,300 71,370 BP Amoco plc Sponsored ADR 1,115 55,583 British Telecommunications plc 145 911 Corus Group plc 62,700 53,130 Diageo plc 8,136 89,138 Glaxosmithkline plc 4,046 113,408 Lloyds TSB Group plc 5,602 55,899 Reuters Group plc 4,700 60,945 Rio Tinto plc Sponsored ADR 1,089 79,116 Royal Bank Of Scotland Group plc (a) 2,037 2,536 Unilever plc 11,900 100,250 Vodafone AirTouch plc 48,479 107,045 ---------------- 860,091 ---------------- FAR EAST - 14.1% AUSTRALIA - 2.0% BHP Billiton Limited (a) 6,284 34,006 BHP Limited 5,900 31,148 Cable & Wireless Optus Limited (a) 25,700 48,447 Commonwealth Bank of Australia 4,680 81,207 ---------------- 194,808 ----------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 39 42 IVY GLOBAL FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE HONG KONG - 2.5% China Telecom (Hong Kong) Limited (a) 14,000 $ 73,952 HSBC Holdings plc 4,800 56,772 Hutchison Whampoa Limited 7,000 70,677 Sun Hung Kai Properties Ltd. 5,000 45,034 ---------------- 246,435 ---------------- JAPAN - 9.1% Asahi Glass Company Limited 6,000 49,841 Bellsystem24, Inc. 130 43,050 East Japan Railway Company 7 40,412 Ito-Yokado Co., Ltd 1,000 46,105 Lawson, Inc 1,000 36,884 Matsushita Electric Industrial Co. 2,000 31,303 Mitsubishi Estate Company, Limited 5,000 45,985 Mitsubishi Tokyo Financial Group, Inc. 4 33,356 Mizuho Holdings, Inc. 8 37,205 Murata Manufacturing Company, Ltd. 500 33,236 NEC Corporation 3,000 40,532 Nintendo Co., Ltd. 400 72,806 Nomura Securities Co., Ltd. (The) 4,000 76,653 NTT DoCoMo, Inc. 2 34,799 Sekisui House, Ltd 6,000 50,948 Sharp Corporation 3,000 40,893 SMC Corporation 400 42,817 Sony Corporation 800 52,600 Sumitomo Electric Industries, Ltd. 5,000 56,689 Yamanouchi Pharmaceutical Co., Ltd. 1,000 28,064 ---------------- 894,178 ---------------- TAIWAN - 0.5% Taiwan Semiconductor Manufacturing Company (a) 28,000 52,049 ---------------- LATIN AMERICA - 0.7% BRAZIL - 0.2% Petroleo Brasileiro S.A. (Petrobras) 779 18,211 ---------------- MEXICO - 0.5% Telefonos de Mexico S.A. ADR - Class L 1,400 49,126 ---------------- NORTH AMERICA - 49.2% UNITED STATES - 49.2% Alcoa Inc. 1,035 40,779 Alltel Corporation 935 57,278 Altera Corporation (a)(d) 860 24,940 American Express Company 1,450 56,260 American International Group Inc 1,355 116,530 Analog Devices Inc (a) 910 39,358 Anheuser-Busch Companies, Inc. 1,310 53,972 AOL Time Warner Inc. (a) 2,320 122,960 Applied Materials Inc. (a)(d) 790 38,789 Bank Of America Corporation 1,355 81,341 Bank of New York Company, Inc. (The) 1,155 55,440 Bank One Corporation 1,040 37,232 BellSouth Corporation 1,410 56,781 Bristol-Myers Squibb Company 1,625 84,987 Calpine Corporation (a) 385 14,553
NAME OF SECURITY SHARES VALUE Cardinal Health, Inc. 545 $ 37,605 Carnival Corp Cl A 960 29,472 Caterpillar Inc. 650 32,533 Chevron Corporation 325 29,413 Cisco Systems, Inc. (a)(d) 3,545 64,519 Citigroup Inc. 2,775 146,625 Colgate-Palmolive Company 685 40,408 Comcast Corporation (a)(d) 770 33,418 Costco Wholesale Corporation (a)(d) 920 37,794 Dell Computer Corporation (a)(d) 1,760 46,024 Dow Chemical Company 840 27,930 Duke Energy Corporation 845 32,963 E.I. du Pont de Nemours and Company 690 33,286 El Paso Corporation 780 40,981 Electronic Data Systems Corporation 650 40,625 Eli Lilly and Company 840 62,160 EMC Corporation (a) 1,200 34,860 Emerson Electric Co. 370 22,385 Enron Corp 605 29,645 Exxon Mobil Corporation 1,775 155,046 Fannie Mae 470 40,021 FedEx Corp. (a) 1,080 43,416 Ford Motor Company 1,150 28,232 Freddie Mac 315 22,050 General Electric Company 4,695 228,881 General Motors Corporation 505 32,497 Gillette Company 1,145 33,194 Heinz (H.J.) Company 1,005 41,094 Hewlett-Packard Company 1,260 36,036 Home Depot, Inc. 1,230 57,257 Honeywell International Inc. 620 21,694 Intel Corporation (d) 3,280 95,940 International Business Machines Corp. 835 94,355 International Paper Company 700 24,990 J.P. Morgan Chase And Co. 1,860 82,956 Johnson & Johnson 1,760 88,000 Kimberly-Clark Corporation 975 54,503 KLA-Tencor Corporation (a)(d) 395 23,096 Lowe's Companies, Inc. 195 14,147 Medtronic, Inc. 950 43,710 Mellon Financial Corporation 1,100 50,600 Merck & Co, Inc. 1,475 94,267 Merrill Lynch & Co., Inc. 885 52,436 Microsoft Corporation (a)(d) 2,445 178,485 Minnesota Mining & Manufacturing Company (3M) 200 22,820 Morgan Stanley Dean Witter & Co. 1,100 70,653 Nasdaq - 100 Shares (a)(d) 2,500 114,850 Nike, Inc. 300 12,597 Novellus Systems, Inc. (a)(d) 375 21,296 Nucor Corporation 150 7,334 Oracle Corp (a)(d) 2,880 54,720 PepsiCo, Inc. 1,290 57,018 Pfizer Inc. 3,115 124,756 Philip Morris Companies Inc. 330 16,748 SBC Communications Inc. 2,020 80,921 Schering-Plough Corporation 875 31,710
40 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 43 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE State Street Corporation 730 $ 36,128 Sun Microsystems, Inc. (a)(d) 1,600 25,152 Target Corporation 1,080 37,368 Texaco Inc. 790 52,614 Texas Instruments Inc. 1,420 44,730 The Boeing Company 605 33,638 The Coca-Cola Company 1,265 56,925 The Procter & Gamble Company 715 45,617 Tyco International Ltd. 1,140 62,130 United Technologies Corporation 615 45,055 UnitedHealth Group Incorporation 310 19,143 Verizon Communications 1,765 94,428 Viacom Inc. Cl B (a) 1,045 54,079 Wal-Mart Stores, Inc. 2,160 105,408 Walt Disney Company 1,515 43,768 Washington Mutual Inc 1,082 40,629 Wells Fargo & Company 1,150 53,395 Xilinx, Inc. (a)(d) 670 27,631 ---------------- 4,834,010 ---------------- TOTAL INVESTMENTS - 96.4% (Cost - $9,927,994) (c) $ 9,472,382 OTHER ASSETS, LESS LIABILITIES - 3.6% 346,225 ---------------- NET ASSETS - 100% $ 9,818,607 ================ Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 810,958 Gross unrealized depreciation (1,266,570) ---------------- Net unrealized depreciation $ (455,612) ================ Purchases and sales proceeds of securities other than short-term obligations aggregated $4,413,538 and $6,376,534, respectively, for the period ended June 30, 2001. IVY GLOBAL NATURAL RESOURCES FUND EQUITY SECURITIES - 100.2% ENERGY INTEGRATED AND REFINING - 3.8% Hurricane Hydrocarbons Ltd. - Class A (a) 65,000 $ 546,107 Valero Energy Corporation 2,500 91,950 ---------------- 638,057 ---------------- OIL PRODUCERS - 5.0% Canadian Natural Resources Ltd. 8,000 236,432 Petroleo Brasileiro S.A. 12,000 312,000 Talisman Energy Inc. 8,000 304,436 ---------------- 852,868 ---------------- GAS PRODUCERS - 2.2% Ketch Energy, Ltd (a) 17,000 70,014 Penn West Petroleum Ltd. (a) 8,000 205,593 Rio Alto Exploration Ltd. (a) 6,000 103,785 ---------------- 379,392 ----------------
NAME OF SECURITY SHARES VALUE ENERGY SERVICES - DRILLERS - 22.2% ENSCO International Incorporated 33,000 $ 772,200 Ensign Resource Service Group, Inc. 36,000 357,020 Global Marine Inc. 25,000 465,750 Noble Drilling Corporation (a) 5,000 163,750 Pride International, Inc. (a) 45,000 855,000 Rowan Companies, Inc. 37,400 826,540 Santa Fe International Corporation 11,100 321,900 ---------------- 3,762,160 ---------------- ENERGY SERVICES - SERVICES/EQUIPMENT - 4.5% Maverick Tube Corporation (a) 24,900 422,055 NQL Drilling Tools Inc. (a) 35,000 219,102 Trican Well Service Ltd. (a) 10,600 130,967 ---------------- 772,124 ---------------- INDUSTRIAL PRODUCTS - 7.6% Cemex S.A. De C.V. 20,000 530,000 Pohang Iron & Steel Company Ltd. Sponsored ADR 15,000 295,800 Slater Steel, Inc. 40,000 465,220 ---------------- 1,291,020 ---------------- PAPER AND FOREST - 18.8% Aracruz Celulose S.A. 35,000 654,500 Cascades Inc. 50,000 276,760 Norske Skogindustrier Asa 20,000 303,143 Pacifica Papers Inc. (a) 35,000 319,427 Sappi Limited 35,000 307,835 Sino-Forest Corp. - Class A (a) 600,000 494,214 Stora Enso Oyj (a) 15,000 160,001 Votorantim Celulose e Papel S.A. 45,000 679,500 ---------------- 3,195,380 ---------------- BASE METALS - 12.0% Cominco Ltd. 7,000 129,155 Companhia Vale Do Rio Doce 12,000 278,400 Freeport-McMoRan Copper & Gold, Inc. 20,000 221,000 Inco Limited 20,000 345,291 M.I.M Holdings Limited 300,000 182,920 Outokumpu Oyj 21,200 171,396 Pechiney SA - Class A 7,800 396,194 WMC Limited (a) 15,000 73,016 Union Miniere SA 6,000 238,224 ---------------- 2,035,596 ---------------- PLATINUM GROUP METALS - 2.4% Anglo American Platinum 4,100 182,592 Impala Platinum Holdings Limited 2,300 115,098 Northam Platinum Limited 56,000 105,940 ---------------- 403,630 ---------------- SENIOR PRECIOUS METALS - 9.7% Barrick Gold Corporation 12,500 190,273 Cia de Minas Buenaventura S.A. Sponsored ADR 20,000 368,800 Gold Fields Limited 50,001 224,848
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 41 44 IVY GLOBAL NATURAL RESOURCES FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE Harmony Gold Mining Company Limited 33,400 $ 194,322 Lihir Gold Limited (a) 400,000 184,953 Newmont Mining Corp 12,000 223,320 Normandy Mining Limited 300,000 189,018 Placer Dome Incorporated 7,000 68,268 ---------------- 1,643,802 ---------------- JUNIOR PRECIOUS METALS - 12.0% Aber Diamond Corporation (a) 40,000 448,088 First Quantum Minerals Ltd. 96,000 243,549 Gabriel Resources Ltd. (a) 194,700 481,118 Geomaque Explorations Ltd. (a) 422,000 93,156 IAMGOLD Corporation (a) 125,000 253,285 Orvana Minerals Corporation (a) 850,000 89,618 Randgold & Exploration Company Ltd. (a)(d) 19,000 68,780 Repadre Capital Corporation (a) 184,100 363,939 ---------------- 2,041,533 ---------------- TOTAL INVESTMENTS - 100.2% (Cost - $17,096,611) (c) $ 17,015,562 OTHER ASSETS, LESS LIABILITIES - (0.2)% (32,719) ---------------- NET ASSETS - 100% $ 16,982,843 ================ Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,958,351 Gross unrealized depreciation (2,039,400) ---------------- Net unrealized depreciation $ (81,049) ================ Purchases and sales of securities other than short-term obligations aggregated $15,345,233 and $9,096,649, respectively, for the period ended June 30, 2001. IVY GLOBAL SCIENCE & TECHNOLOGY FUND EQUITY SECURITIES - 86.5% CONSUMER DISCRETIONARY - 4.9% INTERNET & CATALOG RETAIL - 1.5% eBay Inc. (a)(d) 9,300 $ 636,957 ---------------- MEDIA - 3.4% AOL Time Warner Inc. (a) 16,500 874,500 Gemstar-TV Guide International, Inc. (a)(d) 13,700 583,620 ---------------- 1,458,120 ---------------- ENERGY - 2.2% ENERGY EQUIPMENT & SERVICES - 2.2% Core Laboratories NV (a) 25,300 474,375 Schlumberger Limited Com 9,300 489,645 ---------------- 964,020 ----------------
NAME OF SECURITY SHARES VALUE HEALTH CARE - 2.4% BIOTECHNOLOGY - 2.4% Enzon, Inc. (a)(d) 7,355 $ 459,688 ICOS Corporation (a)(d) 3,300 211,200 MedImmune, Inc. (a)(d) 3,200 151,040 PRAECIS Pharmaceuticals Incorporated. (a)(d) 12,000 197,280 ---------------- 1,019,208 ---------------- INDUSTRIALS - 12.5% COMMERCIAL SERVICES & SUPPLIES - 12.0% Amdocs Ltd (a) 16,400 883,140 Concord EFS, Inc (a)(d) 16,050 834,761 FactSet Research Systems Inc. 19,500 696,150 Forrester Research, Inc. (a)(d) 19,000 429,210 Paychex, Inc. (d) 6,600 264,000 SmartForce Public Limited Company Sponsored ADR (a)(d) 22,800 803,244 TMP Worldwide Inc. (a)(d) 21,300 1,259,043 ---------------- 5,169,548 ---------------- ELECTRICAL EQUIPMENT - 0.5% Power-One, Inc. (a)(d) 12,900 214,656 ---------------- INFORMATION TECHNOLOGY - 61.9% COMMUNICATIONS EQUIPMENT - 15.4% Brocade Communications Systems, Inc. (a)(d) 15,600 686,244 CIENA Corporation (a)(d) 11,600 440,800 Cisco Systems, Inc. (a)(d) 44,000 800,800 Comverse Technology, Inc. (a)(d) 15,000 864,300 Emulex Corporation (a)(d) 10,800 436,320 Extreme Networks, Inc. (a)(d) 8,100 238,950 Juniper Networks, Inc. (a)(d) 17,000 528,700 McData Corporation (a)(d) 9,285 162,952 ONI Systems Corp. (a)(d) 15,200 424,080 SonicWall, Inc. (a)(d) 43,000 1,084,030 Sonus Networks, Inc. (a)(d) 27,900 651,744 UTStarcom, Inc. (a)(d) 14,300 333,190 ---------------- 6,652,110 ---------------- COMPUTERS & PERIPHERALS - 1.6% Network Appliance, Inc. (a)(d) 21,600 295,920 Storagenetworks Inc (a)(d) 23,400 397,566 ---------------- 693,486 ---------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 7.2% Flextronics International Ltd. (a)(d) 47,300 1,235,003 Jabil Circuit, Inc. (a) 21,500 663,490 Newport Corporation (d) 11,700 310,050 Sanmina Corporation (a)(d) 24,000 561,840 Veeco Instruments Inc. (a)(d) 8,400 333,900 ---------------- 3,104,283 ---------------- IT CONSULTING & SERVICES - 1.1% PEC Solutions, Inc. (a)(d) 21,700 479,570 ----------------
42 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 45 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE SEMICONDUCTOR EQUIPMENT & PRODUCTS - 13.4% Applied Materials Inc. (a)(d) 17,009 $ 835,142 Applied Micro Circuits Corporation (a)(d) 13,300 228,760 ASM Lithography Holding N.V. (a)(d) 13,500 300,375 Chartered Semiconductor Manufacturing Limited (a)(d) 7,400 186,850 Genesis Microchip Inc. (a)(d) 10,100 365,115 Integrated Device Technology, Inc. (a)(d) 6,800 215,492 Intersil Holding Corporation (a)(d) 15,700 571,480 Linear Technology Corporation (d) 11,800 521,796 Luminent, Inc. (a)(d) 41,400 173,880 Micrel, Inc. (a)(d) 13,600 448,800 NVIDIA Corporation (a)(d) 5,800 537,950 Pixelworks, Inc. (a)(d) 7,100 253,754 Texas Instruments Inc. 22,000 693,000 Transmeta Corporation (a)(d) 40,800 227,664 Xilinx, Inc. (a)(d) 5,400 222,696 ---------------- 5,782,754 ---------------- SOFTWARE - 23.2% Actuate Corporation (a)(d) 20,600 196,730 BEA Systems, Inc. (a)(d) 27,000 829,170 Check Point Software Technologies Ltd. (a)(d) 12,600 637,182 India Media, Internet and Communications Fund (a)(d) 150,000 249,750 Interwoven, Inc. (a)(d) 20,700 349,830 Intranet Solutions, Inc. (a)(d) 13,200 502,260 MatrixOne, Inc. (a)(d) 15,500 359,445 Mercury Interactive Corporation (a)(d) 9,100 545,090 Micromuse Inc. (a)(d) 25,200 705,348 Netegrity, Inc (a)(d) 16,000 480,000 NetIQ Corporation (a)(d) 16,827 526,517 Openwave Systems, Inc. (a)(d) 19,100 662,770 Peregrine Systems, Inc. (a)(d) 26,100 756,900 Quest Software, Inc. (a)(d) 29,900 1,128,725 VeriSign, Inc. (a)(d) 12,817 769,148 Veritas Software Corp. (a)(d) 16,000 1,064,480 webMethods, Inc. (a)(d) 11,932 252,720 ---------------- 10,016,065 ---------------- TELECOMMUNICATION SERVICES - 2.6% DIVERSIFIED TELECOMMUNICATION SERVICES - 2.6% American Tower Corporation 21,800 450,606 McLeodUSA Incorporated (a)(d) 28,223 129,544 SBA Communications Corp. (a)(d) 13,700 339,075 Time Warner Telecom Inc. (a)(d) 5,700 191,064 ---------------- 1,110,289 ----------------
NAME OF SECURITY SHARES VALUE TOTAL INVESTMENTS - 86.5% (Cost - $38,396,956) (c) $ 37,301,066 OTHER ASSETS, LESS LIABILITIES - 13.5% 5,894,989 ---------------- NET ASSETS - 100% $ 43,196,055 ================ Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 9,025,416 Gross unrealized depreciation (10,121,306) ---------------- Net unrealized depreciation $ (1,095,890) ================ Purchases and sales of securities other than short-term obligations aggregated $16,317,566 and $21,793,879, respectively, for the period ended June 30, 2001. IVY INTERNATIONAL FUND EQUITY SECURITIES - 97.2% EUROPE - 66.8% AUSTRIA - 1.0% Telecom Austria AG (a) 1,121,800 $ 6,885,180 ---------------- BELGIUM - 1.4% Delhaize Le Lion SA 156,100 9,230,626 ---------------- FINLAND - 1.9% Nokia Oyj 564,667 12,796,837 ---------------- FRANCE - 16.3% Accor SA 282,959 11,941,270 Alcatel SA 169,074 3,535,376 Alstom 147,000 4,089,279 Aventis S.A. 135,839 10,844,213 Axa 409,252 11,658,367 Carrefour SA 139,002 7,354,665 Credit Lyonnais SA 231,039 8,336,055 LVMH 98,830 4,978,146 Schneider SA 78,706 4,350,938 Scor SA 162,634 7,228,239 Societe Generale 118,700 7,029,109 Societe Television Francaise 1 109,437 3,192,577 STMicroelectronics NV 115,915 3,941,110 Suez SA 403,470 12,979,462 TotalFinaElf - B Shares 63,467 8,886,798 ---------------- 110,345,604 ---------------- GERMANY - 8.7% Adidas-Salomon AG 137,000 8,304,155 Allianz AG 41,282 12,116,479 Bayer AG 241,100 9,388,947 Deutsche Bank AG 130,700 9,338,559 Deutsche Lufthansa AG 245,094 3,900,788 SAP AG 49,100 6,771,181 Siemens AG 85,862 5,197,193 Volkswagen AG Pfd 119,700 3,648,031 ---------------- 58,665,333 ---------------- ITALY - 2.5% Assicurazioni Generali S.P.A 338,791 10,181,742 Enel S.p.A. 2,246,000 6,864,024 ---------------- 17,045,766 ----------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 43 46 IVY INTERNATIONAL FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE NETHERLANDS - 6.2% AKZO Nobel NV 249,323 $ 10,553,444 ING Groep NV (a) 191,500 12,515,492 Koninklijke (Royal) Philips Electronicas NV 297,023 7,872,905 Royal Dutch Petroleum Company 196,336 11,299,076 ---------------- 42,240,917 ---------------- NORWAY - 0.6% Norsk Hydro A.S. Sponsored ADR 94,000 4,013,800 ---------------- SPAIN - 3.4% Altadis SA 840,500 11,840,033 Amadeus Global Travel Distribution SA 1,232,000 7,457,248 Telefonica S.A. Sponsored ADR 96,100 3,578,764 ---------------- 22,876,045 ---------------- SWEDEN - 1.3% Swedish Match AB 1,930,936 9,047,088 ---------------- SWITZERLAND - 5.0% Cie Financiere Michelin 35,761 11,738,943 Holcim Ltd 41,415 8,433,466 UBS AG - Registered 50,871 7,288,109 Zurich Financial Services AG 17,984 6,133,581 ---------------- 33,594,099 ---------------- UNITED KINGDOM - 18.5% BAE Systems plc 2,209,169 10,571,559 Bank Of Scotland 906,249 10,266,562 BP Amoco plc 1,248,065 10,259,676 Corus Group plc 9,019,013 7,642,369 Diageo plc 1,195,573 13,098,619 Glaxosmithkline plc 583,262 16,348,689 Lloyds TSB Group plc 830,106 8,283,195 Reuters Group plc 687,000 8,908,398 Rio Tinto plc 630,380 11,170,816 Unilever plc 1,600,000 13,479,033 Vodafone AirTouch plc 7,053,578 15,574,750 ---------------- 125,603,666 ---------------- FAR EAST - 28.9% AUSTRALIA - 4.0% BHP Billiton Limited (a) 921,124 4,984,564 BHP Limited 864,824 4,565,651 Cable & Wireless Optus Limited (a) 4,088,225 7,706,695 Commonwealth Bank of Australia 558,142 9,684,894 ---------------- 26,941,804 ---------------- HONG KONG - 5.1% China Telecom (Hong Kong) Limited 1,827,059 9,651,077 HSBC Holdings plc 714,109 8,446,113 Hutchison Whampoa Limited 910,000 9,187,936 Sun Hung Kai Properties Ltd. 810,000 7,295,538 ---------------- 34,580,664 ----------------
NAME OF SECURITY SHARES VALUE JAPAN - 18.7% Asahi Glass Company Limited 847,000 $ 7,035,945 Bellsystem24, Inc. 19,300 6,391,262 East Japan Railway Company 984 5,680,766 Ito-Yokado Co., Ltd 142,000 6,546,897 Lawson, Inc 159,600 5,886,674 Matsushita Electric Industrial Co. 276,000 4,319,845 Mitsubishi Estate Company, Limited 710,000 6,529,818 Mitsubishi Tokyo Financial Group, Inc. 613 5,111,791 Mizuho Holdings, Inc. 1,123 5,222,603 Murata Manufacturing Company, Ltd. 58,300 3,875,274 NEC Corporation 443,000 5,985,259 Nintendo Co., Ltd. 56,200 10,229,195 Nomura Securities Co., Ltd. (The) 498,000 9,543,475 NTT DoCoMo, Inc. 315 5,480,871 Sekisui House, Ltd 875,000 7,429,906 Sharp Corporation 461,000 6,283,898 SMC Corporation 56,100 6,005,144 Sony Corporation 116,000 7,626,954 Sumitomo Electric Industries, Ltd. 656,000 7,437,595 Yamanouchi Pharmaceutical Co., Ltd. 143,000 4,013,131 ---------------- 126,636,303 ---------------- TAIWAN - 1.1% Taiwan Semiconductor Manufacturing Company (a) 4,023,600 7,479,501 ---------------- LATIN AMERICA - 1.5% BRAZIL - 0.4% Petroleo Brasileiro S.A. (Petrobras) 113,483 2,653,001 ---------------- MEXICO - 1.1% Telefonos de Mexico S.A. ADR - Class L 215,000 7,544,350 ---------------- TOTAL INVESTMENTS - 97.2% (Cost - $770,637,507) (c) $ 658,180,584 OTHER ASSETS, LESS LIABILITIES - 2.8% 18,999,593 ---------------- NET ASSETS - 100% $ 677,180,177 ================ Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 51,064,577 Gross unrealized depreciation (163,521,500) ---------------- Net unrealized depreciation $ (112,456,923) ================ Purchases and sales of securities other than short-term obligations aggregated $158,438,341 and $327,150,457, respectively, for the period ended June 30, 2001.
Forward foreign currency contracts at June 30, 2001 were:
CONTRACTS TO SELL --------------------- EXPIRATION LOCAL VALUE IN EXCHANGE UNREALIZED CURRENCY DATE CURRENCY IN U.S.$ FOR U.S.$ DEPRECIATION -------------------------------------------------------------------------------------- Japanese Yen July 3, 2001 6,467,041 $51,831 $51,854 $(23) ====
44 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 47 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE IVY INTERNATIONAL SMALL COMPANIES FUND EQUITY SECURITIES - 92.1% EUROPE - 66.5% AUSTRIA - 1.4% EMTS Technologie AG (a) 5,000 $ 247,587 ---------------- BELGIUM - 1.7% Omega Pharma S.A. (a) 7,500 288,891 ---------------- FINLAND - 0.7% PMJ automec Oyj 150,000 114,287 ---------------- FRANCE - 7.3% Cie Francaise d'Etudes et de Construction (Technip SA) 2,400 336,460 Dalet (a) 36,710 99,137 Financiere Marc de Lacharriere SA (Fimalac) 10,000 355,559 Pinguely-Haulotte 15,000 244,447 Transiciel SA 6,180 231,297 ---------------- 1,266,900 ---------------- GERMANY - 17.4% Beru AG 2,500 96,509 BKN International AG (a) 23,344 395,246 Brainpower NV (a) 88,000 90,887 FJA AG 5,000 289,949 GfK AG 10,000 241,272 Rational AG 10,410 403,625 Roesch Medizintechnik AG 15,000 126,350 Ruecker AG 34,300 301,988 Senator Entertainment AG (a) 25,000 116,403 Tecis Holding AG 1,600 53,842 Telegate AG (a) 1,420 11,661 UMS United Medical Systems International AG (a) 30,000 596,830 Zapf Creaton AG 12,920 317,192 ---------------- 3,041,754 ---------------- IRELAND - 3.2% Parthus Technologies plc (a) 270,000 206,953 Ryanair Holdings plc (a) 33,794 350,459 ---------------- 557,412 ---------------- NETHERLANDS - 2.6% Unit 4 Agresso NV (a) 35,800 453,092 ---------------- NORWAY - 0.6% Stepstone ASA (a) 285,653 61,197 Tandberg Television ASA (a) 5,059 43,624 ---------------- 104,821 ---------------- SPAIN - 7.5% Aldeasa, S.A. 15,000 310,733 Baron de Ley, S.A. (a) 36,500 704,514 Enaco, S.A. (a) 5,000 23,027 Mecalux S.A. 42,090 24,942 Mecalux, S.A. (a) 42,095 254,799 ---------------- 1,318,015 ----------------
NAME OF SECURITY SHARES VALUE SWEDEN - 1.2% Micronic Laser Systems AB (a) 8,700 $ 166,247 Semcon AB 6,400 43,509 ---------------- 209,756 ---------------- SWITZERLAND - 2.4% Kaba Holdings AG 1,800 355,524 Swisslog Holdings AG 1,500 67,182 ---------------- 422,706 ---------------- UNITED KINGDOM - 20.5% Arc International plc (a) 260,000 252,310 Ashtead Group plc 192,400 285,476 BTG plc 26,000 422,345 Domnick Hunter Group plc 25,000 127,456 Euro Sales Finance plc 11,500 78,200 F.I. Group plc 92,400 386,608 Fitness First plc (a) 70,000 575,925 Guardian IT plc 27,200 237,177 Informa Group plc 76,500 328,150 Parity Group plc 178,000 143,946 PizzaExpress plc 41,500 534,049 Trifast plc 150,000 202,523 ---------------- 3,574,165 ---------------- FAR EAST - 25.6% AUSTRALIA - 5.3% Cochlear Limited 9,200 182,311 CSL Limited 5,735 138,999 Beijing Datang Power Generation Company Limited 477,000 163,594 Dah Sing Financial Group 34,800 179,809 Giordano International Limited 86,000 44,656 Mandarin Oriental International Limited 69,000 36,570 Yanzhou Coal Mining Company Limited 372,000 171,700 ---------------- 917,639 ---------------- JAPAN - 17.2% Arrk Corporation 10,800 493,603 C Two-Network Co., Ltd. 6,000 437,796 Cresco, Ltd. 14,420 373,463 Fuji Seal, Inc. 11,000 423,363 Hokuto Corporation 20 779 MKC-Stat Corporation 11,000 150,735 People Co., Ltd. 8,600 410,294 Sotec Company Limited 95 297,838 Tsuruha Co., Ltd. 28,800 413,356 ---------------- 3,001,227 ---------------- NEW ZEALAND - 1.0% Fisher & Paykel Industries Limited 37,000 175,453 ---------------- SINGAPORE - 2.1% DelGro Corporation Limited 113,000 179,862 Sembcorp Marine Limited 351,000 185,908 ---------------- 365,770 ----------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 45 48 IVY INTERNATIONAL SMALL COMPANIES FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE TOTAL INVESTMENTS - 92.1% (Cost - $21,880,995) (c) $ 16,059,475 OTHER ASSETS, LESS LIABILITIES - 7.9% 1,373,782 ---------------- NET ASSETS - 100% $ 17,433,257 ================ Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,167,945 Gross unrealized depreciation (6,989,465) ---------------- Net unrealized depreciation $ (5,821,520) ================ Purchases and sales proceeds of securities other than short-term obligations aggregated $12,108,624 and $9,873,465, respectively, for the period ended June 30, 2001. IVY INTERNATIONAL VALUE FUND EQUITY SECURITIES - 96.0% EUROPE - 66.8% AUSTRIA - 1.4% Telecom Austria AG (a) 220,000 $ 1,350,276 ---------------- FINLAND - 2.1% Metso Oyj 149,882 1,662,198 Nokia Oyj Sponsored ADR 18,700 412,148 ---------------- 2,074,346 ---------------- FRANCE - 14.0% Alcatel SA 15,100 315,744 Alstom 35,000 973,638 BNP Paribas SA 19,619 1,707,386 Cie Generale des Etablissements Michelin - Class B 40,000 1,265,450 Groupe Danone 9,800 1,344,841 Pernod-Ricard 26,500 1,857,540 Schneider SA 9,709 536,722 Scor SA 39,000 1,733,348 Societe Generale 16,900 1,000,775 Suez SA 48,320 1,554,434 TotalFinaElf - B Shares 9,021 1,263,142 ---------------- 13,553,020 ---------------- GERMANY - 7.8% Adidas-Salomon AG 19,600 1,188,040 Bayer AG 30,100 1,172,158 Deutsche Lufthansa AG 35,000 557,042 Merck KGaA 46,555 1,635,597 RWE AG 32,000 1,267,820 Siemens AG 10,650 644,640 Volkswagen AG 23,740 1,109,383 ---------------- 7,574,680 ---------------- IRELAND - 1.7% Bank of Ireland 167,152 1,659,860 ---------------- NETHERLANDS - 6.3% AKZO Nobel N.V 38,502 1,629,728 Fortis (NL) NV 52,910 1,286,424 ING Groep NV 27,100 1,771,122 Koninklijke (Royal) Philips Electronicas N.V 55,274 1,465,095 ---------------- 6,152,369 ----------------
NAME OF SECURITY SHARES VALUE NORWAY - 1.2% Norsk Hydro A.S. Sponsored ADR 27,000 $ 1,152,900 ---------------- SPAIN - 5.4% Altadis SA (a) 132,900 1,872,148 Amadeus Global Travel Distribution SA 170,000 1,029,004 Endesa S.A. Sponsored ADR 64,900 1,030,612 Telefonica S.A. Sponsored ADR (a) 35,576 1,324,850 ---------------- 5,256,614 ---------------- SWEDEN - 1.4% Electrolux AB 59,585 823,842 Investor AB 45,765 582,310 ---------------- 1,406,152 ---------------- SWITZERLAND - 7.2% Cie Financiere Richemont AG 280 716,611 Holcim Ltd 4,635 943,839 Nestle SA 6,680 1,419,735 Novartis AG 27,800 1,006,142 UBS AG - Registered 11,400 1,633,238 Zurich Financial Services AG 3,656 1,246,907 ---------------- 6,966,472 ---------------- UNITED KINGDOM - 18.3% Barclays Bank 44,867 1,374,348 Bass plc 122,000 1,272,281 Billiton plc 247,039 1,220,376 British Airways plc 346,842 1,673,161 Cable & Wireless plc 76,507 447,617 Cadbury Schweppes plc 165,270 1,113,375 Diageo plc 93,404 1,023,328 Hanson plc Sponsored ADR 22,900 853,025 Pilkington plc 702,686 988,265 PowerGen plc 136,881 1,384,153 Rio Tinto plc 36,912 654,109 Rolls-Royce plc 197,000 646,249 Royal & Sun Alliance Insurance Group plc 175,000 1,316,136 Shell Transport & Trading Co. plc 152,539 1,261,450 Unilever plc 129,000 1,086,747 Vodafone AirTouch plc 633,194 1,398,133 ---------------- 17,712,753 ---------------- FAR EAST - 27.2% AUSTRALIA - 4.3% Australia & New Zealand Banking Group 201,700 1,732,427 BHP Billiton Limited (a) 115,244 623,630 BHP Limited 108,200 571,218 Westpac Banking Corp. Ltd. 167,298 1,229,018 ---------------- 4,156,293 ---------------- HONG KONG - 3.2% Cheung Kong Holdings Ltd. 146,000 1,591,101 Hang Seng Bank 92,000 943,635 Sun Hung Kai Properties Ltd. 66,000 594,451 ---------------- 3,129,187 ---------------- JAPAN - 17.3% Canon Inc 13,000 525,355 Fuji Photo Film Co., Ltd. 46,000 1,984,355 Ito-Yokado Co., Ltd 29,800 1,373,926 Matsushita Electric Industrial Co. 89,000 1,392,994
46 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 49 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE Mitsubishi Estate Company, Limited 102,000 $ 938,086 Mitsubishi Tokyo Financial Group, Inc. 115 958,982 Mizuho Holdings, Inc. 300 1,395,174 Nintendo Co., Ltd. 9,300 1,692,732 Nomura Securities Co., Ltd. (The) 64,000 1,226,471 Sankyo Company, Limited 76,000 1,371,120 Sharp Corporation 113,000 1,540,305 Sony Corporation 21,000 1,380,742 Sumitomo Electric Industries, Ltd. 91,000 1,031,740 ---------------- 16,811,982 ---------------- NEW ZEALAND - 0.4% Tourism Holdings Limited 661,168 385,263 ---------------- SOUTH KOREA - 0.7% Samsung Electronics 4,500 664,383 ---------------- TAIWAN - 1.3% United Microelectronics Corporation 923,000 1,225,168 ---------------- LATIN AMERICA - 2.0% BRAZIL - 1.0% Petroleo Brasileiro S.A. (Petrobras) 40,000 935,118 ---------------- MEXICO - 1.0% Panamerican Beverages Inc. 50,700 1,029,210 ---------------- TOTAL INVESTMENTS - 96.0% (Cost - $90,530,296) (c) $ 93,196,046 OTHER ASSETS, LESS LIABILITIES - 4.0% 3,847,135 ---------------- NET ASSETS - 100% $ 97,043,181 ================ Other Information: At June 30, 2001, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 14,034,553 Gross unrealized depreciation (11,368,803) ---------------- Net unrealized appreciation $ 2,665,750 ================ Purchases and sales proceeds of securities other than short-term obligations aggregated $16,836,731 and $30,094,111, respectively, for the period ended June 30, 2001. IVY PACIFIC OPPORTUNITIES FUND EQUITY SECURITIES - 94.3% AUSTRALIA - 11.3% BHP Billiton Limited (a) 24,497 $ 132,565 BHP Limited 23,000 121,424 Commonwealth Bank of Australia 17,000 294,984 National Australia Bank Limited 15,700 279,622 WMC Limited 54,300 264,317 Woolworths Limited 70,000 391,246 ---------------- 1,484,158 ----------------
NAME OF SECURITY SHARES VALUE CHINA - 3.0% China Unicom Limited (a) 224,000 $ 390,583 ---------------- HONG KONG - 39.7% Amoy Properties Limited 928,500 1,065,445 Cheung Kong Holdings Ltd. 36,000 392,326 China Telecom (Hong Kong) Limited (a) 120,200 634,933 Dah Sing Financial Group 114,000 589,028 Hang Seng Bank 43,000 441,047 Henderson Land Development Company Limited 125,000 554,513 Hutchison Whampoa Limited 39,000 393,769 Sun Hung Kai Properties Ltd. 67,000 603,458 Wharf Holdings Ltd. 135,810 283,821 Wing Hang Bank Limited 68,500 261,278 ---------------- 5,219,618 ---------------- INDIA - 3.7% Infosys Technologies Limited 6,000 479,781 ---------------- SINGAPORE - 3.3% Capitaland Limited (a) 312,000 428,113 ---------------- SOUTH KOREA - 9.8% Hyundai Motor Co., Ltd. 13,000 282,901 Pohang Iron & Steel Company Ltd. 3,300 263,908 Samsung Electronics 3,600 531,507 SK Telecom Co., Ltd. 1,378 202,919 ---------------- 1,281,235 ---------------- TAIWAN - 22.1% Asustek Computer 68,150 288,010 Hon Hai Precision Industry Co., Ltd. 106,600 560,420 Pro Mos Technologies Inc. (a) 41,040 31,231 Taiwan Semiconductor Manufacturing Company (a) 421,490 783,510 United Microelectronics Corporation (a) 551,000 731,384 Windbond Electronics Corporation 610,645 512,584 ---------------- 2,907,139 ---------------- THAILAND - 1.4% Advanced Info Service Public Company Limited 17,200 183,098 ---------------- TOTAL INVESTMENTS - 94.3% (Cost - $12,936,349) (c) $ 12,373,725 OTHER ASSETS, LESS LIABILITIES - 5.7% 745,877 ---------------- NET ASSETS - 100% $ 13,119,602 ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 47 50 IVY PACIFIC OPPORTUNITIES FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,152,943 Gross unrealized depreciation (1,715,567) ---------------- Net unrealized depreciation $ (562,624) ================ Purchases and sales proceeds of securities other than short-term obligations aggregated $6,049,141 and $10,097,645, respectively, for the period ended June 30, 2001. IVY GROWTH FUND EQUITY SECURITIES - 95.4% CONSUMER DISCRETIONARY - 10.2% DISTRIBUTORS - 0.4% Costco Wholesale Corporation (d) 21,870 $ 898,420 ---------------- HOTELS, RESTAURANTS & LEISURE - 1.4% Carnival Corp Cl A 8,850 271,695 P.F. Chang's China Bistro, Inc. (a)(d) 37,100 1,406,090 Six Flags, Inc 54,500 1,146,680 The Cheesecake Factory Incorporated (a)(d) 14,700 416,010 ---------------- 3,240,475 ---------------- INTERNET & CATALOG RETAIL - 0.5% eBay Inc. (a)(d) 7,100 486,279 HomeStore.com, Inc. (a)(d) 18,600 650,256 ---------------- 1,136,535 ---------------- MEDIA - 4.1% AOL Time Warner Inc. 70,000 3,710,000 Comcast Corporation 27,070 1,174,838 Crown Media Holdings, Inc. (a)(d) 41,800 775,390 Gemstar-TV Guide International, Inc. (a)(d) 32,300 1,421,200 Viacom Inc. Cl B 23,855 1,234,496 Walt Disney Company 38,230 1,104,465 ---------------- 9,420,389 ---------------- MULTILINE RETAIL - 1.6% Target Corporation 26,950 932,470 Wal-Mart Stores, Inc. 57,805 2,820,884 ---------------- 3,753,354 ---------------- SPECIALTY RETAIL - 2.1% Copart, Inc. (a)(d) 25,500 745,875 Galyan's Trading Company (a)(d) 25,100 512,040 Guitar Center Inc. (a)(d) 37,300 788,149 Home Depot, Inc. 31,685 1,474,937 Lowe's Companies, Inc. 6,055 439,290 Tweeter Home Entertainment Group, Inc. (a)(d) 21,100 744,830 ---------------- 4,705,121 ---------------- TEXTILES & APPAREL - 0.1% Nike, Inc. 7,500 314,925 ----------------
NAME OF SECURITY SHARES VALUE CONSUMER STAPLES - 2.6% BEVERAGES - 1.4% Anheuser-Busch Companies, Inc. 25,000 $ 1,030,000 PepsiCo, Inc. 20,000 884,000 The Coca-Cola Company 27,500 1,237,500 ---------------- 3,151,500 ---------------- HOUSEHOLD PRODUCTS - 1.2% Colgate-Palmolive Company 17,855 1,053,266 Kimberly-Clark Corporation 15,000 838,500 The Procter & Gamble Company 15,000 957,000 ---------------- 2,848,766 ---------------- ENERGY - 9.3% ENERGY EQUIPMENT & SERVICES - 3.9% ATP Oil & Gas Corp. (d) 73,800 829,512 BJ Services Company (a) 37,500 1,064,250 Core Laboratories NV (a)(b) 39,800 746,250 Hanover Compressor Company (a) 43,600 1,442,724 Horizon Offshore, Inc. (a)(d) 35,700 481,950 Key Energy Services, Inc. (a) 57,400 622,216 Nabors Industries, Inc. (a) 9,900 368,280 National-Oilwell, Inc. (a) 18,500 495,800 Oceaneering International Inc. (a) 30,500 632,875 Patterson-UTI Energy, Inc. (d) 22,600 403,862 Weatherford International, Inc. (a) 17,400 835,200 W-H Energy Services, Inc. (a)(d) 57,800 1,098,200 ---------------- 9,021,119 ---------------- OIL & GAS - 5.4% BP Amoco plc Sponsored ADR (b) 25,750 1,283,637 Chevron Corporation 8,020 725,810 Exxon Mobil Corporation 45,095 3,939,048 Mitchell Energy & Development-CL A 23,500 1,086,875 Royal Dutch Petroleum Company Ny R (b) 22,365 1,303,209 Spinnaker Exploration Company (a) 35,100 1,399,086 Swift Energy Company (a) 30,700 924,991 Texaco Inc. 19,750 1,315,350 XTO Energy, Inc. 24,825 356,239 ---------------- 12,334,245 ---------------- FINANCIALS - 11.0% BANKS - 3.1% Bank of America Corporation 28,500 1,710,855 Bank of New York Company, Inc. (The) 29,250 1,404,000 Bank One Corporation 21,650 775,070 Mellon Financial Corporation 24,900 1,145,400 Washington Mutual Inc. COM 24,475 919,036 Wells Fargo & Company 25,795 1,197,662 ---------------- 7,152,023 ---------------- DIVERSIFIED FINANCIALS - 6.8% Citigroup Inc. 60,000 3,170,400 eFunds Corporation (a)(d) 58,200 1,082,520 Fannie Mae 8,200 698,230 Instinet Group Inc. (d) 49,300 918,952 J.P. Morgan Chase and Co. 42,275 1,885,465 Merrill Lynch & Co., Inc. 19,980 1,183,815
48 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 51 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE Morgan Stanley Dean Witter & Co. 20,000 $ 1,284,600 Nasdaq - 100 Shares (a) 90,000 4,135,500 Recources Connection, Inc. (a)(d) 18,600 480,624 State Street Corporation 16,000 791,840 ---------------- 15,631,946 ---------------- INSURANCE - 1.1% American International Group Inc. 30,000 2,580,000 ---------------- HEALTH CARE - 17.0% BIOTECHNOLOGY - 1.3% Alkermes, Inc. (a)(d) 31,900 1,119,690 Amgen Inc. (a)(d) 12,500 758,500 MedImmune, Inc. (a)(d) 20,400 962,880 ---------------- 2,841,070 ---------------- HEALTH CARE EQUIPMENT & SUPPLIES - 1.3% Cytyc Corporation (a)(d) 26,200 603,910 Intuitive Surgical, Inc. (a)(d) 72,900 984,879 Medtronic, Inc. 23,750 1,092,738 Professional Detailing Inc. (a)(d) 3,600 331,200 ---------------- 3,012,727 ---------------- HEALTH CARE PROVIDERS & SERVICES - 4.5% ADVANCEPCS (d) 14,500 928,725 Cardinal Health, Inc. 13,697 945,093 Caremark Rx, Inc (a) 48,100 791,245 Express Scripts Inc Cl A (a)(d) 30,400 1,672,912 Impath, Inc. (a)(d) 13,200 584,760 PolyMedica Corporation (a)(d) 26,500 1,073,250 RehabCare Group, Inc. (a) 55,200 2,660,640 United Surgical Partners International, Inc. (a)(d) 37,800 907,200 UnitedHealth Group Incorporation 10,000 617,500 ---------------- 10,181,325 ---------------- PHARMACEUTICALS - 9.9% Abbott Laboratories 22,500 1,080,225 American Home Products Corporation 20,000 1,168,800 Bristol-Myers Squibb Company 40,400 2,112,920 Eli Lilly and Company 21,835 1,615,790 Enzon, Inc. (a)(d) 13,500 843,750 Gilead Sciences Inc. (a)(d) 8,200 477,158 ICOS Corporation (a)(d) 7,800 499,200 Johnson & Johnson 47,450 2,372,500 Medicis Pharmaceutical Corporation - Class A (a) 38,000 2,014,000 Merck & Co., Inc. 42,500 2,716,175 Pfizer Inc. 100,000 4,005,000 Pharmacia Corporation 20,000 919,000 PRAECIS Pharmaceuticals Incorporated (a)(d) 28,900 475,116 Schering-Plough Corporation 27,500 996,600 Shire Pharmaceuticals Group plc ADR (a)(b)(d) 26,100 1,448,550 ---------------- 22,744,784 ----------------
NAME OF SECURITY SHARES VALUE INDUSTRIALS - 10.2% AEROSPACE & DEFENSE - 0.4% United Technologies Corporation 13,870 $ 1,016,116 ---------------- COMMERCIAL SERVICES & SUPPLIES - 5.6% Administaff, Inc. 30,800 800,800 Concord EFS, Inc (a)(d) 24,300 1,263,843 Corporate Executive Board Company (The) (a)(d) 12,300 516,600 FactSet Research Systems Inc. 35,200 1,256,640 Forrester Research, Inc. (a)(d) 26,700 603,153 Jack Henry & Associates, Inc. (d) 23,400 725,400 Maximus, Inc. (a) 38,400 1,539,456 Paychex, Inc. (d) 13,500 540,000 SmartForce Public Limited Company Sponsored ADR (a)(b)(d) 40,400 1,423,292 The Princeton Review, Inc. (a)(d) 90,900 781,740 TMP Worldwide Inc. (a)(d) 49,600 2,931,856 Waste Connections, Inc. (a)(d) 15,600 561,600 ---------------- 12,944,380 ---------------- CONSTRUCTION & ENGINEERING - 0.3% The Shaw Group Inc. (a) 15,600 625,560 ---------------- INDUSTRIAL CONGLOMERATES - 3.9% General Electric Company 150,000 7,312,500 Tyco International Ltd. 29,400 1,602,300 ---------------- 8,914,800 ---------------- INFORMATION TECHNOLOGY - 26.5% COMMUNICATIONS EQUIPMENT - 4.4% Cisco Systems, Inc. (a)(d) 346,600 6,308,120 Comverse Technology, Inc. (a) 12,600 726,012 ONI Systems Corp. (a)(d) 25,600 714,240 Scientific-Atlanta, Inc. 12,500 507,500 Sonus Networks, Inc. (a)(d) 75,400 1,761,344 ---------------- 10,017,216 ---------------- COMPUTERS & PERIPHERALS - 3.8% Advanced Micro Devices, Inc. 22,500 649,800 Dell Computer Corporation (a)(d) 52,500 1,362,375 EMC Corporation 32,500 944,125 Hewlett-Packard Company 28,210 806,806 International Business Machines Corp. 25,000 2,825,000 Network Appliance, Inc. (a)(d) 10,400 142,480 Storagenetworks Inc (d) 49,400 839,306 Sun Microsystems, Inc. (a)(d) 70,000 1,100,400 ---------------- 8,670,292 ---------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2% Cree, Inc. (a)(d) 20,100 525,515 ----------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 49 52 IVY GROWTH FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE IT CONSULTING & SERVICES - 1.6% Carreker Corporation (d) 57,000 $ 1,225,500 Electronic Data Systems Corporation 20,000 1,250,000 PEC Solutions, Inc. (a)(d) 51,000 1,122,000 ---------------- 3,597,500 ---------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS - 7.9% Altera Corporation (a)(d) 30,000 870,000 Analog Devices Inc 25,000 1,081,250 Applied Materials Inc. (d) 25,000 1,227,500 Applied Micro Circuits Corporation (a)(d) 7,400 127,280 Integrated Circuit Systems, Inc. (a)(d) 30,400 583,680 Integrated Device Technology, Inc. (a)(d) 11,200 354,928 Intel Corporation (d) 105,000 3,071,250 Intersil Holding Corporation (a)(d) 30,100 1,095,640 KLA-Tencor Corporation (a)(d) 15,000 877,050 Lattice Semiconductor Corporation (a)(d) 37,500 915,000 Linear Technology Corporation (d) 41,000 1,813,020 LSI Logic Corporation (a) 20,000 376,000 Maxim Integrated Products, Inc. (a)(d) 9,000 397,890 Microchip Technology (a)(d) 15,000 513,750 Novellus Systems, Inc. (a)(d) 15,000 851,850 Oak Technology, Inc. (a)(d) 78,700 833,433 Pixelworks, Inc. (d) 11,000 393,140 Texas Instruments Inc. 42,500 1,338,750 Transmeta Corporation (a)(d) 90,800 506,664 Xilinx, Inc. (a)(d) 20,000 824,800 ---------------- 18,052,875 ---------------- SOFTWARE - 8.6% Actuate Corporation (d) 34,200 326,610 Check Point Software Technologies Ltd. (a)(d) 13,500 682,695 Intranet Solutions, Inc. (a)(d) 28,100 1,069,205 Mercury Interactive Corporation (a)(d) 19,400 1,162,060 Micromuse Inc. (a)(d) 54,000 1,511,460 Microsoft Corporation (a)(d) 67,500 4,900,500 Netegrity, Inc (a)(d) 41,100 1,233,000 NetIQ Corporation (a)(d) 29,539 924,275 Oracle Corp (d) 88,385 1,679,315 Peregrine Systems, Inc. (a)(d) 58,500 1,696,500 Precise Software Solution Ltd. (a)(d) 14,600 448,220 Quest Software, Inc. (a) 25,300 955,075 RADWARE Ltd. (a)(d) 32,000 577,600 Riverdeep Group plc (a) 18,700 523,600 Saba Software, Inc. (a)(d) 23,900 392,199 VeriSign, Inc. (a)(d) 24,845 1,490,948 ---------------- 19,573,262 ---------------- MISCELLANEOUS - 1.9% S&P 500 Depository Receipts 35,000 4,316,200 ----------------
NAME OF SECURITY SHARES VALUE TELECOMMUNICATION SERVICES - 4.1% DIVERSIFIED TELECOMMUNICATION SERVICES - 3.8% Alltel Corporation 19,435 $ 1,190,588 American Tower Corporation 29,300 605,631 BellSouth Corporation 32,455 1,306,963 Crown Castle International Corp (a) 36,300 595,320 McLeodUSA Incorporated (a)(d) 101,600 466,344 Metro One Telecommunications, Inc. (a)(d) 13,600 882,232 SBA Communications Corp. (a)(d) 31,300 774,675 SBC Communications Inc. 34,475 1,381,068 Verizon Communications 25,635 1,371,473 ---------------- 8,574,294 ---------------- WIRELESS TELECOMMUNICATION SERVICES - 0.3% Western Wireless Corporation (a)(d) 14,200 610,600 ---------------- UTILITIES - 2.6% ELECTRIC UTILITIES - 2.6% Calpine Corporation (a) 56,625 2,140,425 Duke Energy Corporation 21,000 819,210 El Paso Corporation 15,000 788,100 Mirant Corporation (a) 20,800 715,520 NRG Energy Inc. 33,700 744,096 Reliant Resources, Inc. (a) 33,500 827,450 ---------------- 6,034,801 ---------------- TOTAL INVESTMENTS - 95.4% (Cost - $191,011,379) (c) $ 218,442,135 OTHER ASSETS, LESS LIABILITIES - 4.6% 10,585,314 ---------------- NET ASSETS - 100% $ 229,027,449 ================ Other Information: At June 30, 2001, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 41,250,751 Gross unrealized depreciation (13,819,995) ---------------- Net unrealized appreciation $ 27,430,756 ================ Purchases and sales of securities other than short-term obligations aggregated $136,493,629 and $151,079,588, respectively, for the period ended June 30, 2001. IVY US BLUE CHIP FUND EQUITY SECURITIES - 99.3% CONSUMER DISCRETIONARY - 12.1% AOL Time Warner Inc. (a) 30,000 $ 1,590,000 Carnival Corp Cl A 12,500 383,750 Comcast Corporation (a)(d) 10,000 434,000 Costco Wholesale Corporation (a)(d) 11,000 451,880 Ford Motor Company (a) 16,000 392,800
50 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 53 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE General Motors Corporation (a) 6,500 $ 418,275 Home Depot, Inc. (a) 16,000 744,800 Lowe's Companies, Inc. 2,500 181,375 Nike, Inc. 3,850 161,661 Target Corporation 13,250 458,450 Viacom Inc. Cl B 12,325 637,818 Wal-Mart Stores, Inc. 28,155 1,373,964 Walt Disney Company (a) 20,000 577,800 ---------------- 7,806,573 ---------------- CONSUMER STAPLES - 7.7% Anheuser-Busch Companies, Inc. (a) 16,000 659,200 Colgate-Palmolive Company (a) 9,000 530,910 Gillette Company 10,000 289,900 Heinz (H.J.) Company (a) 13,000 531,570 Kimberly-Clark Corporation 12,750 712,725 PepsiCo, Inc. (a) 16,000 707,200 Philip Morris Companies Inc. (a) 4,250 215,688 The Coca-Cola Company (a) 15,000 675,000 The Procter & Gamble Company (a) 9,400 599,720 ---------------- 4,921,913 ---------------- ENERGY - 6.9% BP Amoco plc Sponsored ADR (a)(b) 12,545 625,368 Chevron Corporation 3,500 316,750 Exxon Mobil Corporation 23,000 2,009,050 Royal Dutch Petroleum Company Ny R (a)(b) 14,275 831,804 Texaco Inc. 9,400 626,040 ---------------- 4,409,012 ---------------- FINANCIALS - 17.9% American Express Company (a) 16,000 620,800 American International Group Inc (a) 17,500 1,505,000 Bank Of America Corporation (a) 15,500 930,465 Bank of New York Company, Inc. (The) (a) 14,600 700,800 Bank One Corporation 12,000 429,600 Citigroup Inc. (a) 36,000 1,902,240 Fannie Mae 6,100 519,415 Freddie Mac 4,000 280,000 J.P. Morgan Chase And Co. 24,000 1,070,400 Mellon Financial Corporation 12,430 571,780 Merrill Lynch & Co., Inc. 10,000 592,500 Morgan Stanley Dean Witter & Co. 12,500 802,875 State Street Corporation 8,000 395,920 Washington Mutual Inc 13,250 497,538 Wells Fargo & Company 15,000 696,450 ---------------- 11,515,783 ---------------- HEALTH CARE - 11.9% Bristol-Myers Squibb Company 20,000 1,046,000 Cardinal Health, Inc. 7,230 498,870 Eli Lilly and Company 10,500 777,000 Johnson & Johnson 23,000 1,150,000 Medtronic, Inc. 12,000 552,120 Merck & Co, Inc. 18,000 1,150,380
NAME OF SECURITY SHARES VALUE Pfizer Inc. (a) 45,000 $ 1,802,250 Schering-Plough Corporation 11,500 416,760 UnitedHealth Group Incorporation 4,000 247,000 ---------------- 7,640,380 ---------------- INDUSTRIALS - 10.0% Caterpillar Inc. 8,000 400,400 Emerson Electric Co. 4,800 290,400 FedEx Corp. (a) 12,000 482,400 General Electric Company (a) 60,000 2,925,000 Honeywell International Inc. (a) 8,000 279,920 Minnesota Mining & Manufacturing Company (3M) 2,575 293,808 The Boeing Company 8,000 444,800 Tyco International Ltd. 14,750 803,875 United Technologies Corporation 7,000 512,820 ---------------- 6,433,423 ---------------- INFORMATION TECHNOLOGY - 18.5% Altera Corporation (a)(d) 8,825 255,925 Analog Devices Inc (a) 10,000 432,500 Applied Materials Inc. (a)(d) 8,000 392,800 Cisco Systems, Inc. (a)(d) 46,000 837,200 Dell Computer Corporation (a)(d) 22,000 575,300 Electronic Data Systems Corporation 8,500 531,250 EMC Corporation (a) 15,000 435,750 Hewlett-Packard Company (a) 14,250 407,550 Intel Corporation (a)(d) 42,500 1,243,125 International Business Machines Corp. (a) 11,000 1,243,000 KLA-Tencor Corporation (d) 4,000 233,880 Microsoft Corporation (d) 31,635 2,309,355 Nasdaq - 100 Shares (d) 21,300 978,522 Novellus Systems, Inc. (d) 4,000 227,160 Oracle Corp (a)(d) 33,000 627,000 Sun Microsystems, Inc. (d) 22,500 353,700 Texas Instruments Inc. 16,675 525,263 Xilinx, Inc. (d) 6,500 268,060 ---------------- 11,877,340 ---------------- MATERIALS - 2.6% Alcoa Inc. (a) 12,000 472,800 Dow Chemical Company (a) 10,250 340,813 Du Pont E.I. du Pont de Nemours and Company (a) 9,000 434,160 International Paper Company (a) 9,000 321,300 Nucor Corporation 2,000 97,780 ---------------- 1,666,853 ---------------- MISCELLANEOUS - 3.8% S&P 500 Depository Receipts (d) 20,000 2,464,200 ---------------- TELECOMMUNICATION SERVICES - 5.6% Alltel Corporation (a) 9,750 597,285 BellSouth Corporation 18,000 724,860 SBC Communications Inc. (a) 26,000 1,041,560 Verizon Communications 22,500 1,203,750 ---------------- 3,567,455 ----------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 51 54 IVY US BLUE CHIP FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE UTILITIES - 2.3% Calpine Corporation 5,400 $ 204,120 Duke Energy Corporation (a) 11,000 429,110 El Paso Corporation 9,000 472,860 Enron Corp 8,000 392,000 ---------------- 1,498,090 ---------------- TOTAL INVESTMENTS - 99.3% (Cost - $58,846,462) (c) $ 63,801,022 OTHER ASSETS, LESS LIABILITIES - 0.7% 472,553 ---------------- NET ASSETS - 100% $ 64,273,575 ================ Other Information: At June 30, 2001, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 8,589,747 Gross unrealized depreciation (3,635,187) ---------------- Net unrealized appreciation $ 4,954,560 ================ Purchases and sale proceeds of securities other than short-term obligations aggregated $28,493,882 and $40,923,048, respectively, for the period ended June 30, 2001. IVY US EMERGING GROWTH FUND EQUITY SECURITIES - 92.8% CONSUMER DISCRETIONARY - 11.0% HOTELS, RESTAURANTS & LEISURE - 2.9% P.F. Chang's China Bistro, Inc. (a)(d) 44,400 $ 1,682,760 Six Flags, Inc. (a) 68,300 1,437,032 The Cheesecake Factory Incorporated (a)(d) 18,600 526,380 ---------------- 3,646,172 ---------------- INTERNET & CATALOG RETAIL - 2.6% eBay Inc. (a)(d) 8,900 609,561 HomeStore.com, Inc. (a)(d) 23,300 814,568 University Of Phoenix Online (d) 44,300 1,882,750 ---------------- 3,306,879 ---------------- MEDIA - 2.1% Crown Media Holdings, Inc. (a)(d) 52,400 972,020 Gemstar-TV Guide International, Inc. (a)(d) 38,700 1,648,620 ---------------- 2,620,640 ---------------- SPECIALTY RETAIL - 3.4% Copart, Inc. (a)(d) 32,100 938,925 Galyan's Trading Company (a)(d) 31,600 644,640 Guitar Center Inc. (a)(d) 46,800 988,884 Hibbett Sporting Goods, Inc. (a)(d) 20,600 763,436 Tweeter Home Entertainment Group, Inc. (a)(d) 26,500 935,450 ---------------- 4,271,335 ----------------
NAME OF SECURITY SHARES VALUE ENERGY - 12.7% ENERGY EQUIPMENT & SERVICES - 8.9% ATP Oil & Gas Corp. (a)(d) 87,800 $ 986,872 BJ Services Company (a) 47,000 1,333,860 Core Laboratories NV (b) 46,000 862,500 Hanover Compressor Company (a) 54,800 1,813,332 Horizon Offshore, Inc. (a)(d) 44,700 603,450 Key Energy Services, Inc. (a) 71,900 779,396 Nabors Industries, Inc. (a) 12,410 461,652 National-Oilwell, Inc. (a) 23,200 621,760 Oceaneering International Inc. (a) 36,500 757,375 Patterson-UTI Energy, Inc. (a)(d) 28,400 507,508 Weatherford International, Inc. (a) 21,800 1,046,400 W-H Energy Services, Inc. (a)(d) 72,300 1,373,700 ---------------- 11,147,805 ---------------- OIL & GAS - 3.8% Mitchell Energy & Development 29,700 1,373,625 Spinnaker Exploration Company (a) 44,200 1,761,812 Swift Energy Company (a) 38,300 1,153,979 XTO Energy, Inc. 30,975 444,491 ---------------- 4,733,907 ---------------- FINANCIALS - 2.0% DIVERSIFIED FINANCIALS - 2.0% eFunds Corporation (a)(d) 73,000 1,357,800 Instinet Group Inc. (a)(d) 61,900 1,153,816 ---------------- 2,511,616 ---------------- HEALTH CARE - 18.9% BIOTECHNOLOGY - 2.0% Alkermes, Inc. (a)(d) 38,400 1,347,840 MedImmune, Inc. (a)(d) 25,600 1,208,320 ---------------- 2,556,160 ---------------- HEALTH CARE EQUIPMENT & SUPPLIES - 1.9% Cytyc Corporation (a)(d) 31,500 726,075 Intuitive Surgical, Inc. (a)(d) 91,500 1,236,165 Professional Detailing Inc. (a)(d) 4,600 423,200 ---------------- 2,385,440 ---------------- HEALTH CARE PROVIDERS & SERVICES - 8.4% AdvancePCS (a)(d) 18,200 1,165,710 Caremark Rx, Inc. (a) 60,300 991,935 Express Scripts Inc. (a)(d) 37,000 2,036,110 IMPATH, Inc. (a)(d) 15,700 695,510 PolyMedica Corporation (a)(d) 33,200 1,344,600 RehabCare Group, Inc. (a) 66,000 3,181,200 United Surgical Partners International, Inc. (a)(d) 47,200 1,132,800 ---------------- 10,547,865 ----------------
52 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 55 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE PHARMACEUTICALS - 6.6% Enzon, Inc. (a)(d) 16,900 $ 1,056,250 Gilead Sciences Inc. (a)(d) 10,300 599,357 ICOS Corporation (a)(d) 9,800 627,200 Medicis Pharmaceutical Corporation - Class A (a) 46,100 2,443,300 PRAECIS Pharmaceuticals Incorporated (a)(d) 32,400 532,656 Shire Pharmaceuticals Group plc ADR (a)(b)(d) 55,700 3,091,350 ---------------- 8,350,113 ---------------- INDUSTRIALS - 13.6% COMMERCIAL SERVICES & SUPPLIES - 13.0% Administaff, Inc. (a) 37,000 962,000 Concord EFS, Inc. (a)(d) 30,500 1,586,305 Corporate Executive Board Company (The) (a)(d) 15,400 646,800 FactSet Research Systems Inc. 39,100 1,395,870 Forrester Research, Inc. (a)(d) 33,000 745,470 Henry (Jack) & Associates, Inc. (a)(d) 27,800 861,800 Maximus, Inc. (a) 46,000 1,844,140 Paychex, Inc. (d) 16,800 672,000 ReSources Connection, Inc. (a)(d) 23,300 602,072 SmartForce plc Sponsored ADR (a)(b)(d) 50,600 1,782,638 The Princeton Review, Inc. (a)(d) 114,200 982,120 TMP Worldwide Inc. (a)(d) 60,200 3,558,422 Waste Connections, Inc. (a)(d) 18,600 669,600 ---------------- 16,309,237 ---------------- CONSTRUCTION & ENGINEERING - 0.6% The Shaw Group Inc. (a) 19,500 781,950 ---------------- INFORMATION TECHNOLOGY - 26.7% COMMUNICATIONS EQUIPMENT - 4.7% Comverse Technology, Inc. (a)(d) 15,800 910,396 ONI Systems Corp. (a)(d) 32,100 895,590 SonicWALL, Inc. (a)(d) 73,700 1,857,977 Sonus Networks, Inc. (a)(d) 94,900 2,216,864 ---------------- 5,880,827 ---------------- COMPUTERS & PERIPHERALS - 1.0% Network Appliance, Inc. (a)(d) 12,000 164,400 Storagenetworks Inc. (a)(d) 62,000 1,053,380 ---------------- 1,217,780 ---------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5% CREE, Inc. (a)(d) 25,200 658,854 ---------------- IT CONSULTING & SERVICES - 4.2% Carreker Corporation (a)(d) 71,300 1,532,950 PEC Solutions, Inc. (a)(d) 171,300 3,785,730 ---------------- 5,318,680 ----------------
NAME OF SECURITY SHARES VALUE SEMICONDUCTOR EQUIPMENT & PRODUCTS - 3.8% Applied Micro Circuits Corporation (a)(d) 8,200 $ 141,040 Integrated Circuit Systems, Inc. (a)(d) 38,000 729,600 Integrated Device Technology, Inc. (a)(d) 12,500 396,125 Intersil Holding Corporation (a)(d) 37,800 1,375,920 Oak Technology, Inc. (a)(d) 94,300 998,637 Pixelworks, Inc. (a)(d) 13,800 493,212 Transmeta Corporation (a)(d) 113,900 635,562 ---------------- 4,770,096 ---------------- SOFTWARE - 12.5% Actuate Corporation (a)(d) 38,400 366,720 Check Point Software Technologies Ltd. (d) 16,900 854,633 IntraNet Solutions, Inc. (a)(d) 33,700 1,282,285 Mercury Interactive Corporation (a)(d) 24,400 1,461,560 Micromuse Inc. (a)(d) 67,900 1,900,521 Netegrity, Inc. (a)(d) 49,300 1,479,000 NetIQ Corporation (a)(d) 30,279 947,430 Peregrine Systems, Inc. (a)(d) 73,100 2,119,900 Precise Software Solutions Ltd. (d) 17,500 537,250 Quest Software, Inc. (a)(d) 31,900 1,204,225 RADWARE Ltd. (d) 39,000 703,950 Riverdeep Group plc (a)(b)(d) 22,500 630,000 Saba Software, Inc. (a)(d) 30,000 492,300 VeriSign, Inc. (a)(d) 30,215 1,813,202 ---------------- 15,792,976 ---------------- TELECOMMUNICATION SERVICES - 3.9% DIVERSIFIED TELECOMMUNICATION SERVICES - 3.3% American Tower Corporation 36,800 760,656 Crown Castle International Corp. (a) 45,600 747,840 McLeodUSA Incorporated (a)(d) 127,800 586,602 Metro One Telecommunications, Inc. (a)(d) 17,000 1,102,790 SBA Communications Corp. (a)(d) 39,400 975,150 ---------------- 4,173,038 ---------------- WIRELESS TELECOMMUNICATION SERVICES - 0.6% Western Wireless Corporation (a)(d) 17,000 731,000 ---------------- UTILITIES - 4.0% ELECTRIC UTILITIES - 4.0% Calpine Corporation (a) 57,700 2,181,060 Mirant Corporation (a) 26,100 897,840 NRG Energy Inc. 42,100 929,568 Reliant Resources, Inc. (a) 42,100 1,039,870 ---------------- 5,048,338 ----------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 53 56 IVY US EMERGING GROWTH FUND (CONTINUED) SCHEDULES OF INVESTMENTS (Unaudited) June 30, 2001
NAME OF SECURITY SHARES VALUE TOTAL INVESTMENTS - 92.8% (Cost - $97,158,610) (c) $ 116,760,708 OTHER ASSETS, LESS LIABILITIES - 7.2% 9,081,634 ---------------- NET ASSETS - 100% $ 125,842,342 ================ Other Information: At June 30, 2001, net unrealized appreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 28,231,310 Gross unrealized depreciation (8,629,212) ---------------- Net unrealized appreciation $ 19,602,098 ================ Purchases and sales of securities other than short-term obligations aggregated $85,566,845 and $97,726,229, respectively, for the period ended June 30, 2001. IVY BOND FUND PRINCIPAL VALUE U.S. CORPORATE BONDS - 76.3% Allied Waste, 7.625%, 01/01/2006 (e) $ 500,000 $ 494,375 American Standard, 7.375%, 04/15/2005 (e) 480,000 480,000 AOL-Time Warner Inc., 9.125%, 1/15/2013 1,500,000 1,715,625 AOL-Time Warner Inc., 9.15%, 2/1/2023 1,000,000 1,142,500 AT&T Corp., 9.25%, 1/15/2023 2,000,000 2,110,000 Boeing Cap Corp Ba, 6.1%, 03/01/2011 1,000,000 975,000 Bre Properties Inc., 7.125%, 2/15/2013 2,000,000 1,915,000 Calpine Corp, 8.5%, 02/15/2011 (e) 1,000,000 963,750 CIT Group Inc., 5.625%, 05/17/2004 1,000,000 996,250 Citigroup Inc, 6.50% 01/18/2011 1,000,000 992,500 Continental Airlines, 6.545%, 02/02/2019 1,403,909 1,359,531 Daimlerchrysler, 7.75% 01/18/2011 500,000 514,375 Darden Restaurants Inc., 7.125%, 2/1/2016 1,250,000 1,143,750 Dell Computer Corporation, 6.55%, 4/15/2008 500,000 485,625 Delta Air Lines, 9.59%, 1/12/2017 (d) 1,500,000 1,500,000 France Telecom, 7.75%, 3/1/2011 667,000 679,506 Heller Financial, 6.375% 03/15/2006 425,000 428,187 Hertz Corp, 7.4%, 03/01/2011 1,000,000 1,011,250 Household Financial Corp 1,000,000 1,013,750 Indiantown Cogeneration, 9.77%, 12/15/2020 1,500,000 1,734,375 International Paper Company, 7.625%, 1/15/2007 1,000,000 1,046,250
NAME OF SECURITY PRINCIPAL VALUE Kansas Gas & El Wr, 7.6% 12/15/2003 (e) $ 500,000 $ 507,500 Meritor Automotive, 6.80%, 2/15/2009 1,000,000 886,250 News America Holdings, 7.75%, 01/20/2024 1,000,000 932,500 Northrop Grumman Corp., 9.375%, 10/15/2024 2,000,000 2,145,000 Praxair Inc., 8.70%, 7/15/2022 2,500,000 2,546,875 Pulte Corp., 7.625%, 10/15/2017 1,500,000 1,306,875 R&B Falcon Corporation, 6.50%, 4/15/2003 530,000 538,613 RJ Reynolds Tobacco Holdings Inc., 7.375%, 5/15/2003 2,000,000 2,027,500 Safeway Inc., 7.00%, 9/15/2007 1,000,000 1,022,500 Santa Fe Pacific Gold Corporation, 8.375%, 7/1/2005 650,000 654,875 Spieker Properties, 7.35%, 12/1/2017 1,950,000 1,828,125 Storage USA Partnership L.P., 8.20%, 6/1/2017 2,240,000 2,041,200 Te Products Pipeline Co., 7.51%, 1/15/2028 2,000,000 1,862,500 Tenet Healthcare Corp., 8.00%, 1/15/2005 (e) 507,000 520,309 Unisys Corporation, 7.875%, 4/1/2008 (e) 480,000 462,000 Verizon Global Funding Corp. 144A, 7.25%, 12/1/2010 1,000,000 1,015,000 Viacom, 7.125%, 11/1/2023 1,000,000 973,740 Viacom, 7.15%, 5/20/2005 900,000 937,125 Wal-Mart Stores, Inc., 6.55%, 8/10/2004 1,000,000 1,040,000 Watson Pharmaceuticals, 7.125%, 5/15/2008 1,500,000 1,426,875 ---------------- TOTAL U.S. CORPORATE BONDS 47,376,961 ---------------- (Cost $48,198,584) U.S. GOVERNMENT AGENCY OBLIGATIONS - 11.9% Fannie Mae, 7.00, 07/15/2005 6,000,000 6,360,000 Freddie Mac, 6.25%, 07/15/2004 1,000,000 1,031,250 ---------------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 7,391,250 ---------------- (Cost $7,055,688) U.S. DOLLAR DENOMINATED FOREIGN CORPORATE BONDS - 7.7% Abitibi Consolidated, 7.50% 04/01/2028 950,000 844,303 Cemex S.A., 12.75%, 7/15/2007 725,000 866,375 Grupo Industrial Durango S.A. (GIDUSA), 12.625%, 8/1/2003 (e) 950,000 998,688 Grupo Televisa, 8.625% 8/8/2005 (e) 500,000 528,750
54 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 57 SCHEDULES OF INVESTMENTS (continued) (Unaudited) June 30, 2001
NAME OF SECURITY PRINCIPAL VALUE Polysindo International Finance Co. BV, 11.375%, 6/15/2006 (a)(e)(f) $1,000,000 $ 80,000 Telekomunikacja Polska S.A. Finance BV (TPSA) 144A, 7.75%, 12/10/2008 1,500,000 1,468,125 ---------------- TOTAL U.S. DOLLAR DENOMINATED FOREIGN CORPORATE BONDS 4,786,241 ---------------- (Cost $5,752,768) SHARES RIGHTS & WARRANTS - 0.2% Gothic Energy 144A Warrants 14,000 -- Gothic Energy Restricted Warrants 4,767 -- Gothic Energy Warrants 6,941 -- Mccaw International Ltd. Warrants (a) 2,000 14,000 RSL Communications Ltd. 144A Warrants (a) 1,000 -- Terex Corp. - Appreciation Rights 4,000 83,500 ---------------- TOTAL RIGHTS & WARRANTS 97,500 (Cost - $0) ---------------- TOTAL INVESTMENTS - 96.1% $ 59,651,952 (Cost - $61,007,040) (c) OTHER ASSETS, LESS LIABILITIES - 3.9% 2,412,518 ---------------- NET ASSETS - 100% $ 62,064,470 ================ Other Information: At June 30, 2001, net unrealized depreciation based on cost for financial statement and Federal income tax purposes is as follows: Gross unrealized appreciation $ 1,343,375 Gross unrealized depreciation (2,698,463) ---------------- Net unrealized depreciation $ (1,355,088) ================ Purchases and sales proceeds of securities other than U.S. Government securities and short-term obligations aggregated $8,742,059 and $15,562,363, respectively, for the period ended June 30, 2001. IVY MONEY MARKET FUND U.S. GOVERNMENT AGENCY OBLIGATIONS - 102.3% Farm Credit Discount Note, 3.68%, 7/20/2001 $3,000,000 $ 2,994,173 Federal Home Loan Bank Discount Note, 3.65%, 8/22/2001 3,000,000 2,984,184
NAME OF SECURITY PRINCIPAL VALUE Federal Home Loan Bank Discount Note, 3.66%, 8/31/2001 $3,000,000 $ 2,981,395 Federal Home Loan Bank Discount Note, 3.94%, 7/2/2001 4,082,000 4,081,553 Federal Home Loan Mortgage Corp., 3.66%, 8/2/2001 3,000,000 2,990,240 Federal Home Loan Mortgage Corp., 3.88%, 7/3/2001 2,000,000 1,999,569 Federal Home Loan Mortgage Corp., 3.91%, 7/3/2001 2,006,000 2,005,564 Federal Home Loan Mortgage Corp., 3.85%, 7/10/2001 3,270,000 3,266,853 ---------------- TOTAL INVESTMENTS - 102.3% (Cost - $23,303,531) (c) $ 23,303,531 OTHER LIABILITIES, LESS ASSETS - (2.3)% (375,921) ---------------- NET ASSETS - 100% $ 22,927,610 ================ Footnotes ---------------------------- (a) Non-income producing security. (b) Foreign security. (c) Cost is approximately the same for Federal income tax purposes. (d) Security valued in good faith by the Valuation Sub- Committee of the Board of Trustees. See Note 1 to the Financial Statements. (e) Below investment grade security. (f) Issuer is in default on interest payments. ADR - American Depository Receipt ADS - American Depository Share GDR - Global Depository Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 55 58 STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) June 30, 2001
IVY CUNDILL GLOBAL IVY DEVELOPING IVY EUROPEAN IVY GLOBAL VALUE FUND MARKETS FUND OPPORTUNITIES FUND FUND ASSETS Investments, at value (a) $763,964 $ 6,328,772 $124,550,762 $ 9,472,382 Cash 122,303 242,366 1,179,108 373,859 Receivables Investments sold - - 3,537,745 - Fund shares sold - 899,381 3,134,939 425 Dividends, interest and tax reclaims 2,117 23,311 230,321 17,974 Manager for expense reimbursement 8,492 8,605 - 22,188 Unrealized appreciation on forward currency contracts 26,679 - - - Deferred organization expenses - - - - Other assets 24,108 11,333 38,986 22,527 ------------------------------------------------------------------------------ Total assets 947,663 7,513,768 132,671,861 9,909,355 ------------------------------------------------------------------------------ LIABILITIES Payables Investments purchased - - 2,247,301 - Fund shares repurchased - 19,124 1,041,158 32,113 Management fee 755 5,676 113,932 8,524 12b-1 service and distribution fees - 998 18,199 1,090 Other payables to related parties 15,684 5,109 52,009 5,912 Unrealized depreciation on forward currency contracts 197 - - - Due to custodian - - - - Accrued expenses 16,068 24,355 69,655 43,109 ------------------------------------------------------------------------------ Total liabilities 32,704 55,262 3,542,254 90,748 ------------------------------------------------------------------------------ NET ASSETS $914,959 $ 7,458,506 $129,129,607 $ 9,818,607 ============================================================================== CLASS A Net Assets $ - $ 3,576,836 $ 42,942,282 $ 6,305,919 Outstanding shares - 565,611 3,099,342 677,610 Net asset value and redemption price per share $ - $ 6.32 $ 13.86 $ 9.31 Maximum offering price per share* $ - $ 6.71 $ 14.71 $ 9.87 ------------------------------------------------------------------------------ CLASS B Net Assets $ - $ 3,008,315 $ 41,602,330 $ 3,227,167 Outstanding shares - 489,615 3,012,380 359,700 Net asset value, offering price and redemption price** per share $ - $ 6.14 $ 13.81 $ 8.97 ------------------------------------------------------------------------------ CLASS C Net Assets $ - $ 781,442 $ 31,757,378 $ 146,855 Outstanding shares - 126,631 2,291,290 16,990 Net asset value, offering price and redemption price*** per share $ - $ 6.17 $ 13.86 $ 8.64 ------------------------------------------------------------------------------ ADVISOR CLASS Net Assets $914,959 $ 91,913 $ 12,814,175 $ 138,666 Outstanding shares 86,902 14,425 915,701 14,759 Net asset value, offering price and redemption price per share $ 10.53 $ 6.37 $ 13.99 $ 9.40 ------------------------------------------------------------------------------ CLASS I Net Assets $ - $ - $ 13,442 $ - Outstanding shares - - 962(b) - Net asset value, offering price and redemption price per share $ - $ - $ 13.98 $ - ------------------------------------------------------------------------------ NET ASSETS CONSIST OF Capital paid-in $861,695 $ 18,952,099 $209,962,698 $11,351,637 Undistributed net realized gain (loss) on investments and foreign currency transactions 43,430 (11,349,477) (23,797,739) (1,045,655) Undistributed net investment income (Accumulated net investment loss) 2,155 16,777 (263,473) (30,999) Net unrealized appreciation (depreciation) on investments and foreign currency transactions 7,679 (160,893) (56,771,879) (456,376) ------------------------------------------------------------------------------ NET ASSETS $914,959 $ 7,458,506 $129,129,607 $ 9,818,607 ============================================================================== (a) Investments, identified cost $782,859 $ 6,487,792 $181,195,394 $ 9,927,994 ------------------------------------------------------------------------------ (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%.
56 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 59 STATEMENTS OF ASSETS AND LIABILITIES (continued) (Unaudited) June 30, 2001
IVY GLOBAL NATURAL IVY GLOBAL SCIENCE IVY INTERNATIONAL IVY INTERNATIONAL RESOURCES FUND & TECHNOLOGY FUND FUND SMALL COMPANIES FUND $17,015,562 $ 37,301,066 $ 658,180,584 $16,059,475 - 6,278,612 16,135,443 2,077,271 1,684,293 169,904 847,866 439,251 177,040 57,809 4,549,782 31,897 17,927 1,861 3,256,260 50,775 17,672 9,272 - 13,721 - - - - 4,280 482 - 4,341 16,659 16,886 33,796 22,647 ------------------------------------------------------------------------------------------ 18,933,433 43,835,892 683,003,731 18,699,378 ------------------------------------------------------------------------------------------ 720,107 462,200 - 1,171,104 157,248 89,592 4,680,996 39,714 14,756 35,720 576,374 15,697 2,040 5,746 66,186 2,209 7,290 23,445 164,702 8,215 - - 23 - 1,021,946 - - - 27,203 23,134 335,273 29,182 ------------------------------------------------------------------------------------------ 1,950,590 639,837 5,823,554 1,266,121 ------------------------------------------------------------------------------------------ $16,982,843 $ 43,196,055 $ 677,180,177 $17,433,257 ========================================================================================== $10,282,160 $ 20,139,745 $ 440,107,832 $ 6,222,593 893,712 1,130,172 19,860,688 646,016 $ 11.51 $ 17.82 $ 22.16 $ 9.63 $ 12.21 $ 18.91 $ 23.51 $ 10.22 ------------------------------------------------------------------------------------------ $ 3,857,085 $ 17,776,096 $ 181,108,940 $ 4,842,656 342,563 1,028,269 8,390,047 511,863 $ 11.26 $ 17.29 $ 21.59 $ 9.46 ------------------------------------------------------------------------------------------ $ 2,820,390 $ 4,776,944 $ 35,697,383 $ 3,412,387 254,810 275,090 1,665,261 358,640 $ 11.07 $ 17.37 $ 21.44 $ 9.51 ------------------------------------------------------------------------------------------ $ 23,208 $ 503,270 $ 3,666 $ 2,955,621 2,014 28,199 165(c) 305,163 $ 11.52 $ 17.85 $ 22.25 $ 9.69 ------------------------------------------------------------------------------------------ $ - $ - $ 20,262,356 $ - - - 907,958 - $ - $ - $ 22.32 $ - ------------------------------------------------------------------------------------------ $24,139,258 $ 70,332,030 $ 894,359,186 $25,175,401 (7,126,543) (25,536,821) (106,865,897) (1,777,539) (11,519) (503,264) 2,451,648 (149,460) (18,353) (1,095,890) (112,764,760) (5,815,145) ------------------------------------------------------------------------------------------ $16,982,843 $ 43,196,055 $ 677,180,177 $17,433,257 ========================================================================================== $17,096,611 $ 38,396,956 $ 770,637,507 $21,880,995 ------------------------------------------------------------------------------------------
57 60 STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) June 30, 2001
IVY INTERNATIONAL IVY PACIFIC IVY GROWTH VALUE FUND OPPORTUNITIES FUND FUND ASSETS Investments, at value (a) $ 93,196,046 $12,373,725 $218,442,135 Cash 1,003,863 659,397 9,413,762 Receivables Investments sold 3,464,682 5,677,165 Fund shares sold 567,270 339,071 339 Dividends, interest and tax reclaims 594,570 13,322 70,375 Manager for expense reimbursement 16,621 2,619 - Unrealized appreciation on forward currency contracts - - - Deferred organization expenses 9,963 - - Other assets 26,819 10,874 54,365 ------------------------------------------------------------- Total assets 98,879,834 13,990,008 233,658,141 ------------------------------------------------------------- LIABILITIES Payables Distributions to shareholders - - - Investments purchased 958,050 - 4,195,441 Fund shares repurchased 699,115 247,536 164,906 Management fee 82,430 11,153 162,048 12b-1 service and distribution fees 18,290 1,710 4,103 Other payables to related parties 37,575 8,929 65,192 Accrued expenses 41,193 10,078 39,002 ------------------------------------------------------------- Total liabilities 1,836,653 279,406 4,630,692 ------------------------------------------------------------- NET ASSETS $ 97,043,181 $13,119,602 $229,027,449 ============================================================= CLASS A Net Assets $ 18,050,252 $ 6,823,130 $220,948,323 Outstanding shares 1,875,141 1,017,870 16,532,969 Net asset value and redemption price per share $ 9.63 $ 6.70 $ 13.36 Maximum offering price per share* $ 10.22 $ 7.11 $ 14.18 ------------------------------------------------------------- CLASS B Net Assets $ 58,037,168 $ 4,994,106 $ 7,047,219 Outstanding shares 6,089,923 756,825 548,061 Net asset value, offering price and redemption price** per share $ 9.53 $ 6.60 $ 12.86 ------------------------------------------------------------- CLASS C Net Assets $ 20,485,213 $ 1,155,594 $ 721,712 Outstanding shares 2,149,369 175,504 57,502 Net asset value, offering price and redemption price*** per share $ 9.53 $ 6.58 $ 12.55 ------------------------------------------------------------- ADVISOR CLASS Net Assets $ 470,548 $ 146,772 $ 310,195 Outstanding shares 48,698 22,270 23,208 Net asset value, offering price and redemption price per share $ 9.66 $ 6.59 $ 13.37 ------------------------------------------------------------- NET ASSETS CONSIST OF Capital paid-in $100,523,399 $23,388,157 $224,765,343 Undistributed net realized (loss) gain on investments and foreign currency transactions (6,579,164) (9,712,901) (22,579,583) Undistributed net investment income (Accumulated net investment loss) 473,438 (18,807) (587,188) Net unrealized appreciation (depreciation) on investments and foreign currency transactions 2,625,508 (536,847) 27,428,877 ------------------------------------------------------------- NET ASSETS $ 97,043,181 $13,119,602 $229,027,449 ============================================================= (a) Investments, identified cost $ 90,530,296 $12,936,349 $191,011,379 ------------------------------------------------------------- * 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%.
58 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 61 STATEMENTS OF ASSETS AND LIABILITIES (continued) (Unaudited) June 30, 2001
IVY US BLUE CHIP IVY US EMERGING IVY BOND IVY MONEY FUND GROWTH FUND FUND MARKET FUND $63,801,022 $116,760,708 $ 59,651,952 $23,303,531 40,534 12,040,879 912,414 100,073 613,605 886,227 - - 2,468 7,113 489,149 191,139 42,668 3,556 1,462,749 - 25,938 - - 15,919 - - - - - - - - 16,757 39,034 21,402 18,886 ----------------------------------------------------------------------- 64,542,992 129,737,517 62,537,666 23,629,548 ----------------------------------------------------------------------- - - 287,954 34,920 - 3,139,618 - - 168,560 586,647 114,073 628,821 40,509 88,110 25,972 8,212 6,638 14,109 6,963 - 23,562 37,115 16,773 9,892 30,148 29,576 21,461 20,093 ----------------------------------------------------------------------- 269,417 3,895,175 473,196 701,938 ----------------------------------------------------------------------- $64,273,575 $125,842,342 $ 62,064,470 $22,927,610 ======================================================================= $40,451,309 $ 75,737,168 $ 40,342,609 $16,560,678 4,108,637 2,834,165 5,047,917 16,560,678 $ 9.85 $ 26.72 $ 7.99 $ 1.00 $ 10.45 $ 28.35 $ 8.39 $ - ----------------------------------------------------------------------- $21,246,945 $ 41,891,879 $ 18,778,836 $ 5,833,256 2,188,119 1,639,814 2,353,363 5,833,256 $ 9.71 $ 25.55 $ 7.98 $ 1.00 ----------------------------------------------------------------------- $ 1,575,309 $ 6,500,057 $ 2,748,226 $ 533,676 162,190 254,634 343,434 533,676 $ 9.71 $ 25.53 $ 8.00 $ 1.00 ----------------------------------------------------------------------- $ 1,000,012 $ 1,713,238 $ 194,799 $ - 100,811 63,525 24,381 - $ 9.92 $ 26.97 $ 7.99 $ - ----------------------------------------------------------------------- $64,751,248 $116,512,483 $ 92,038,124 $22,927,610 (5,263,827) (9,388,997) (28,406,303) - (168,406) (883,242) (212,263) - 4,954,560 19,602,098 (1,355,088) - ----------------------------------------------------------------------- $64,273,575 $125,842,342 $ 62,064,470 $22,927,610 ======================================================================= $58,846,462 $ 97,158,610 $ 61,007,040 $23,303,351 -----------------------------------------------------------------------
59 62 STATEMENTS OF OPERATIONS (Unaudited) For the Six Months Ended June 30, 2001
IVY EUROPEAN IVY CUNDILL GLOBAL IVY DEVELOPING OPPORTUNITIES VALUE FUND MARKETS FUND FUND INVESTMENT INCOME Dividends, net of foreign taxes withheld (a) $ 7,368 $ 113,627 $ 1,624,789 Interest 2,729 11,302 91,601 ----------------------------------------------------------- 10,097 124,929 1,716,390 ----------------------------------------------------------- EXPENSES Management fee 4,073 40,959 792,441 Transfer agent 334 27,952 283,224 Administrative services fee 407 4,096 79,340 Custodian fees 1,094 18,430 138,359 Blue Sky fees 13,956 16,870 22,269 Auditing and accounting fees 8,467 13,220 11,352 Shareholder reports 112 2,374 21,868 Amortization of deferred offering and organization expenses 4,133 - - Fund accounting 10,259 12,706 55,897 Trustees' fees 2,366 2,828 7,163 12b-1 service and distribution fees - 28,143 522,999 Legal 19,510 20,261 19,601 Other 2,341 1,028 25,350 ----------------------------------------------------------- 67,052 188,867 1,979,863 Expenses reimbursed by Manager (59,110) (80,715) - ----------------------------------------------------------- Net expenses 7,942 108,152 1,979,863 ----------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 2,155 16,777 (263,473) ----------------------------------------------------------- NET GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) 59,411 (711,942) (22,085,426) Net change in unrealized (depreciation) appreciation (22,598) 395,899 (11,216,507) ----------------------------------------------------------- Net gain (loss) on investment and foreign currency transactions 36,813 (316,043) (33,301,933) ----------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 38,968 $(299,266) $(33,565,406) =========================================================== (a) Foreign taxes withheld $ 807 $ 10,080 $ 228,320 -----------------------------------------------------------
60 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 63 STATEMENTS OF OPERATIONS (continued) (Unaudited) For the Six Months Ended June 30, 2001
IVY GLOBAL IVY GLOBAL IVY IVY GLOBAL NATURAL SCIENCE & INTERNATIONAL FUND RESOURCES FUND TECHNOLOGY FUND FUND $ 102,002 $ 119,679 $ 8,330 $ 9,830,822 6,096 17,593 172,157 375,652 ---------------------------------------------------------------------- 108,098 137,272 180,487 10,206,474 ---------------------------------------------------------------------- 56,252 60,380 263,543 3,970,779 23,397 37,410 124,502 1,021,609 5,625 6,038 26,354 385,438 51,849 22,159 3,467 146,361 14,832 16,253 19,251 21,346 11,304 12,204 10,936 36,023 1,998 2,068 11,873 67,135 - 4,873 5,955 - 18,377 14,415 38,747 98,167 2,896 2,786 4,846 30,159 29,101 31,047 169,822 1,870,364 20,282 20,646 20,646 24,584 1,117 657 3,852 82,861 ---------------------------------------------------------------------- 237,030 230,936 703,794 7,754,826 (97,933) (82,145) (20,043) - ---------------------------------------------------------------------- 139,097 148,791 683,751 7,754,826 ---------------------------------------------------------------------- (30,999) (11,519) (503,264) 2,451,648 ---------------------------------------------------------------------- (1,014,708) 820,179 (19,802,906) (63,917,259) (479,907) 565,811 (4,765,590) (75,076,366) ---------------------------------------------------------------------- (1,494,615) 1,385,990 (24,568,496) (138,993,625) ---------------------------------------------------------------------- $(1,525,614) $1,374,471 $(25,071,760) $(136,541,977) ====================================================================== $ 6,693 $ 3,992 $ 106 $ 973,012 ----------------------------------------------------------------------
61 64 STATEMENTS OF OPERATIONS (Unaudited) For the Six Months Ended June 30, 2001
IVY INTERNATIONAL IVY PACIFIC SMALL IVY INTERNATIONAL OPPORTUNITIES IVY GROWTH COMPANIES FUND VALUE FUND FUND FUND INVESTMENT INCOME Dividends, net of foreign taxes withheld(a) $ 85,136 $ 1,704,377 $ 135,850 $ 681,619 Interest 34,473 75,150 38,636 554,480 ---------------------------------------------------------------------------- 119,609 1,779,527 174,486 1,236,099 ---------------------------------------------------------------------------- EXPENSES Management fee 107,924 555,633 75,829 1,026,681 Transfer agent 33,161 199,196 40,062 372,529 Administrative services fee 10,792 55,563 7,583 120,786 Custodian fees 39,611 62,804 21,958 18,190 Blue Sky fees 18,944 19,020 16,357 17,189 Auditing and accounting fees 7,634 12,816 15,991 24,305 Shareholder reports 843 13,133 4,109 32,855 Amortization of organization expenses 4,936 6,614 - - Fund accounting 18,493 54,996 18,084 62,954 Trustees' fees 2,359 6,302 2,837 10,916 12b-1 service and distribution fees 58,611 473,281 45,864 106,927 Legal 15,787 21,064 14,233 22,031 Other 6,648 426 5,256 7,924 ---------------------------------------------------------------------------- 325,743 1,480,848 268,163 1,823,287 Expenses reimbursed by Manager (56,674) (174,759) (74,870) - ---------------------------------------------------------------------------- Net expenses 269,069 1,306,089 193,293 1,823,287 ---------------------------------------------------------------------------- NET INVESTMENT (LOSS) INCOME (149,460) 473,438 (18,807) (587,188) ---------------------------------------------------------------------------- NET (LOSS) GAIN ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized (loss) gain (1,211,369) (1,629,102) (746,669) (22,096,571) Net change in unrealized (depreciation) appreciation (4,448,652) (14,469,936) (536,177) (6,001,454) ---------------------------------------------------------------------------- Net (loss) gain on investment and foreign currency transactions (5,660,021) (16,099,042) (1,282,846) (28,098,025) ---------------------------------------------------------------------------- NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $(5,809,481) $(15,625,600) $(1,301,653) $(28,685,213) ============================================================================ (a) Foreign taxes withheld $ 10,047 $ 178,961 $ 12,686 $ 7,634 ----------------------------------------------------------------------------
62 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 65 STATEMENTS OF OPERATIONS (continued) (Unaudited) For the Six Months Ended June 30, 2001
IVY US IVY US BLUE EMERGING IVY BOND IVY MONEY CHIP FUND GROWTH FUND FUND MARKET FUND $ 441,343 $ 15,406 $ - $ - 47,796 405,199 2,604,042 600,296 ------------------------------------------------------------- 489,139 420,605 2,604,042 600,296 ------------------------------------------------------------- 273,154 540,239 175,504 48,449 123,695 194,228 105,236 52,388 36,420 63,558 35,101 12,112 20,408 15,039 323 9,724 18,867 16,830 18,842 13,628 11,126 14,138 19,855 3,568 10,873 16,806 6,594 3,737 - - - - 44,379 55,491 30,991 16,817 5,132 6,806 4,725 3,271 169,492 354,313 170,341 - 21,763 21,159 20,737 18,229 2,775 5,240 3,094 904 ------------------------------------------------------------- 738,084 1,303,847 591,343 182,827 (80,539) - - (79,555) ------------------------------------------------------------- 657,545 1,303,847 591,343 103,272 ------------------------------------------------------------- (168,406) (883,242) 2,012,699 497,024 ------------------------------------------------------------- (4,712,237) (7,310,438) (875,156) - (1,067,383) (9,111,514) 1,773,365 - ------------------------------------------------------------- (5,779,620) (16,421,952) 898,209 - ------------------------------------------------------------- $(5,948,026) $(17,305,194) $2,910,908 $497,024 ============================================================= $ 2,410 $ - $ - $ - -------------------------------------------------------------
63 66 STATEMENTS OF CHANGES IN NET ASSETS
IVY CUNDILL GLOBAL VALUE FUND FOR THE SIX MONTHS FOR THE PERIOD ENDED APRIL 19, 2000 JUNE 30, 2001 (COMMENCEMENT) (UNAUDITED) THROUGH DECEMBER 31, 2000 INCREASE (DECREASE) IN NET ASSETS Operations Net investment income (loss) $ 2,155 $ 3,500 Net realized gain (loss) on investments and foreign currency transactions 59,411 (1,884) Net change in unrealized (depreciation) appreciation on investments and foreign currency transactions (22,598) 30,277 -------------------------------------------------- Net increase (decrease) resulting from operations 38,968 31,893 -------------------------------------------------- Class A distributions Dividends from net investment income - - Distributions from capital gains - - -------------------------------------------------- Total distributions to Class A shareholders - - -------------------------------------------------- Class B distributions Dividends from net investment income - - Distributions from capital gains - - -------------------------------------------------- Total distributions to Class B shareholders - - -------------------------------------------------- Class C distributions Dividends from net investment income - - Distributions from capital gains - - -------------------------------------------------- Total distributions to Class C shareholders - - -------------------------------------------------- Advisor Class distributions Dividends from net investment income - (3,500) Dividends in excess of net investment income - (10,234) Distributions from capital gains - (14,102) -------------------------------------------------- Total distributions to Advisor Class shareholders - (27,836) -------------------------------------------------- Class I distributions Distributions from capital gains - - -------------------------------------------------- Total distributions to Class I shareholders - - -------------------------------------------------- Fund share transactions (Note 5) Class A - - Class B - - Class C - - Class I - - Class Advisor 129,089 742,845 -------------------------------------------------- Net increase (decrease) resulting from Fund share transactions 129,089 742,845 -------------------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 168,057 746,902 Net assets beginning of period 746,902 - -------------------------------------------------- NET ASSETS END OF PERIOD $914,959 $746,902 ================================================== UNDISTRIBUTED NET INVESTMENT INCOME $ 2,155 $ - -------------------------------------------------- IVY DEVELOPING MARKETS FUND FOR THE SIX MONTHS ENDED YEAR ENDED JUNE 30, 2001 DECEMBER 31, (UNAUDITED) 2000 INCREASE (DECREASE) IN NET ASSETS Operations Net investment income (loss) $ 16,777 $ (109,345) Net realized gain (loss) on investments and foreign currency transactions (711,942) (1,786,405) Net change in unrealized (depreciation) appreciation on investments and foreign currency transactions 395,899 (2,038,411) ------------------------------------- Net increase (decrease) resulting from operations (299,266) (3,934,161) ------------------------------------- Class A distributions Dividends from net investment income - - Distributions from capital gains - (14,591) ------------------------------------- Total distributions to Class A shareholders - (14,591) ------------------------------------- Class B distributions Dividends from net investment income - - Distributions from capital gains - (16,053) ------------------------------------- Total distributions to Class B shareholders - (16,053) ------------------------------------- Class C distributions Dividends from net investment income - - Distributions from capital gains - (4,135) ------------------------------------- Total distributions to Class C shareholders - (4,135) ------------------------------------- Advisor Class distributions Dividends from net investment income - - Dividends in excess of net investment income - - Distributions from capital gains - (408) ------------------------------------- Total distributions to Advisor Class shareholders - (408) ------------------------------------- Class I distributions Distributions from capital gains - - ------------------------------------- Total distributions to Class I shareholders - - ------------------------------------- Fund share transactions (Note 5) Class A (584,002) 1,201 Class B (1,320,835) (1,311,204) Class C (343,955) (1,683,419) Class I - - Class Advisor (24,441) (146,993) ------------------------------------- Net increase (decrease) resulting from Fund share transactions (2,273,233) (3,140,415) ------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (2,572,499) (7,109,763) Net assets beginning of period 10,031,005 17,140,768 ------------------------------------- NET ASSETS END OF PERIOD $ 7,458,506 $10,031,005 ===================================== UNDISTRIBUTED NET INVESTMENT INCOME $ 16,777 $ - -------------------------------------
64 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 67 STATEMENTS OF CHANGES IN NET ASSETS (continued)
IVY EUROPEAN IVY GLOBAL NATURAL OPPORTUNITIES FUND IVY GLOBAL FUND RESOURCES FUND FOR THE SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, (UNAUDITED) 2000 (UNAUDITED) 2000 (UNAUDITED) 2000 $ (263,473) $ (1,458,985) $ (30,999) $ (25,662) $ (11,519) $ (73,442) (22,085,426) 5,407,056 (1,014,708) 1,051,095 820,179 1,475,067 (11,216,507) (49,009,758) (479,907) (3,408,079) 565,811 (682,617) ----------------------------------------------------------------------------------------------------------------- (33,565,406) (45,061,687) (1,525,614) (2,382,646) 1,374,471 719,008 ----------------------------------------------------------------------------------------------------------------- - (4,587) - - - - - (1,908,303) - (641,619) - (26,274) ----------------------------------------------------------------------------------------------------------------- - (1,912,890) - (641,619) - (26,274) ----------------------------------------------------------------------------------------------------------------- - (4,830) - - - - - (1,675,847) - (364,126) - (7,177) ----------------------------------------------------------------------------------------------------------------- - (1,680,677) - (364,126) - (7,177) ----------------------------------------------------------------------------------------------------------------- - (4,196) - - - - - (1,313,582) - (11,341) - (3,487) ----------------------------------------------------------------------------------------------------------------- - (1,317,778) - (11,341) - (3,487) ----------------------------------------------------------------------------------------------------------------- - (1,621) - - - - - - - - - - - (727,916) - (11,745) - (138) ----------------------------------------------------------------------------------------------------------------- - (729,537) - (11,745) - (138) ----------------------------------------------------------------------------------------------------------------- - (642) - - - - ----------------------------------------------------------------------------------------------------------------- - (642) - - - - ----------------------------------------------------------------------------------------------------------------- (1,301,883) 54,123,742 (910,864) (1,628,282) 3,769,570 (753,298) (4,599,346) 68,536,723 (977,280) (1,282,931) 252,316 409,016 (9,077,799) 56,291,817 (8,826) (43,204) 2,104,320 270,730 - 23,667 - - - - (2,985,410) 19,232,457 4,762 12,706 39,846 (6,007) ----------------------------------------------------------------------------------------------------------------- (17,964,438) 198,208,406 (1,892,208) (2,941,711) 6,166,052 (79,559) ----------------------------------------------------------------------------------------------------------------- (51,529,844) 147,505,195 (3,417,822) (6,353,188) 7,540,523 602,373 180,659,451 33,154,256 13,236,429 19,589,617 9,442,320 8,839,947 ----------------------------------------------------------------------------------------------------------------- $129,129,607 $180,659,451 $ 9,818,607 $ 13,236,429 $ 16,982,843 $ 9,442,320 ================================================================================================================= $ - $ - $ - $ - $ - $ - -----------------------------------------------------------------------------------------------------------------
65 68 STATEMENTS OF CHANGES IN NET ASSETS
IVY GLOBAL SCIENCE IVY INTERNATIONAL & TECHNOLOGY FUND FUND FOR THE SIX MONTHS FOR THE SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, (UNAUDITED) 2000 (UNAUDITED) 2000 (DECREASE) INCREASE IN NET ASSETS Operations Net investment (loss) income $ (503,264) $ (2,158,772) $ 2,451,648 $ 2,215,084 Net realized (loss) gain on investments and foreign currency transactions (19,802,906) (5,684,935) (63,917,259) 532,142,194 Net change in unrealized (depreciation)appreciation on investments and foreign currency transactions (4,765,590) (50,033,088) (75,076,366) (847,790,539) -------------------------------------------------------------------------------- Net (decrease) increase resulting from operations (25,071,760) (57,876,795) (136,541,977) (313,433,261) -------------------------------------------------------------------------------- Class A distributions Dividends from net investment income - - - (764,917) Dividends in excess of net investment income - - - - Distributions from capital gains - (394,036) - (261,952,258) -------------------------------------------------------------------------------- Total distributions to Class A shareholders - (394,036) - (262,717,175) -------------------------------------------------------------------------------- Class B distributions Dividends from net investment income - - - - Dividends in excess of net investment income - - - (372,082) Distributions from capital gains - (367,848) - (117,187,139) -------------------------------------------------------------------------------- Total distributions to Class B shareholders - (367,848) - (117,559,221) -------------------------------------------------------------------------------- Class C distributions Dividends from net investment income - - - - Dividends in excess of net investment income - - - (76,122) Distributions from capital gains - (126,455) - (25,686,618) -------------------------------------------------------------------------------- Total distributions to Class C shareholders - (126,455) - (25,762,740) -------------------------------------------------------------------------------- Advisor Class distributions Dividends from net investment income - - - - Dividends in excess of net investment income - - - (5) Distributions from capital gains - (10,215) - (1,057) -------------------------------------------------------------------------------- Total distributions to Advisor Class shareholders - (10,215) - (1,062) -------------------------------------------------------------------------------- Class I distributions Dividends from net investment income - - - (44,012) Distributions from capital gains - - - (19,644,945) -------------------------------------------------------------------------------- Total distributions to Class I shareholders - - - (19,688,957) -------------------------------------------------------------------------------- Fund share transactions (Note 5) Class A (459,569) 16,637,842 (64,452,690) (529,496,488) Class B (818,041) 16,632,437 (59,613,040) (59,713,955) Class C (1,912,612) (693,142) (13,666,357) (41,016,277) Class I - - (8,857,814) (94,569,785) Class Advisor (35,004) 1,096,760 - 5,966 -------------------------------------------------------------------------------- Net (decrease) increase resulting from Fund share transactions (3,225,226) 33,673,897 (146,589,901) (724,790,539) -------------------------------------------------------------------------------- TOTAL (DECREASE) INCREASE IN NET ASSETS (28,296,986) (25,101,452) (283,131,878) (1,463,952,955) Net assets beginning of period 71,493,041 96,594,483 960,312,055 2,424,265,010 -------------------------------------------------------------------------------- NET ASSETS END OF PERIOD $ 43,196,055 $ 71,493,031 $ 677,180,177 $ 960,312,055 ================================================================================ UNDISTRIBUTED NET INVESTMENT INCOME $ - $ - $ 2,451,648 $ 100,368 --------------------------------------------------------------------------------
66 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 69 STATEMENTS OF CHANGES IN NET ASSETS (continued)
IVY INTERNATIONAL SMALL COMPANIES FUND IVY INTERNATIONAL VALUE FUND IVY PACIFIC OPPORTUNITIES FUND FOR THE SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, (UNAUDITED) 2000 (UNAUDITED) 2000 (UNAUDITED) 2000 $ (149,460) $ (57,688) $ 473,438 $ 541,516 $ (18,807) $ 97,777 (1,211,369) 275,934 (1,629,102) (1,267,887) (746,669) (672,263) (4,448,652) (2,175,582) (14,469,936) (12,483,799) (536,177) (2,384,136) ----------------------------------------------------------------------------------------------------------------- (5,809,481) (1,957,336) (15,625,600) (13,210,170) (1,301,653) (2,958,622) ----------------------------------------------------------------------------------------------------------------- - - - (75,221) - (77,451) - - - - - - - (210,672) - (135,414) - (2,395) ----------------------------------------------------------------------------------------------------------------- - (210,672) - (210,635) - (79,846) ----------------------------------------------------------------------------------------------------------------- - - - (57,731) - (8,761) - - - (12,501) - - - (124,960) - (126,433) - (271) ----------------------------------------------------------------------------------------------------------------- - (124,960) - (196,665) - (9,032) ----------------------------------------------------------------------------------------------------------------- - - - (23,757) - (11,120) - - - (3,581) - - - (102,558) - (49,215) - (344) ----------------------------------------------------------------------------------------------------------------- - (102,558) - (76,553) - (11,464) ----------------------------------------------------------------------------------------------------------------- - - - (2,742) - (190) - - - - - - - (119,878) - (4,936) - (6) ----------------------------------------------------------------------------------------------------------------- - (119,878) - (7,678) - (196) ----------------------------------------------------------------------------------------------------------------- - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------- - - - - - - ----------------------------------------------------------------------------------------------------------------- (627,385) 8,801,905 (2,754,211) (6,456,808) (1,692,240) (1,898,677) 841,396 4,858,451 (8,232,894) (11,961,285) (883,413) 142,678 63,365 3,787,459 (5,792,392) (10,792,628) (253,671) 907,794 - - - - - - (249,823) 4,489,155 (119,516) (2,249,563) 111,707 (289,376) ----------------------------------------------------------------------------------------------------------------- 27,553 21,936,970 (16,899,013) (31,460,284) (2,717,617) (1,137,581) ----------------------------------------------------------------------------------------------------------------- (5,781,928) 19,421,566 (32,524,613) (45,161,985) (4,019,270) (4,196,741) 23,215,185 3,793,619 129,567,794 174,729,779 17,138,872 21,335,613 ----------------------------------------------------------------------------------------------------------------- $ 17,433,257 $ 23,215,185 $ 97,043,181 $129,567,794 $ 13,119,602 $ 17,138,872 ================================================================================================================= $ - $ - $ 473,438 $ - $ - $ 1,532 -----------------------------------------------------------------------------------------------------------------
67 70 STATEMENTS OF CHANGES IN NET ASSETS
IVY GROWTH FUND IVY US BLUE CHIP FUND FOR THE SIX MONTHS FOR THE SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, (UNAUDITED) 2000 (UNAUDITED) 2000 (DECREASE) INCREASE IN NET ASSETS Operations Net investment (loss) income $ (587,188) $ (2,725,318) $ (168,406) $ (390,115) Net realized (loss) gain on investments and foreign currency transactions (22,096,571) 34,360,096 (4,712,237) 934,230 Net change in unrealized (depreciation) appreciation on investments and foreign currency transactions (6,001,454) (111,084,428) (1,067,383) (13,290,036) ------------------------------------------------------------------------------ Net (decrease) increase resulting from operations (28,685,213) (79,449,650) (5,948,026) (12,745,921) ------------------------------------------------------------------------------ Class A distributions Dividends from net investment income - - - - Distributions from capital gains - (33,539,757) - (878,778) ------------------------------------------------------------------------------ Total distributions to Class A shareholders - (33,539,757) - (878,778) ------------------------------------------------------------------------------ Class B distributions Dividends from net investment income - - - - Distributions from capital gains - (956,732) - (367,192) ------------------------------------------------------------------------------ Total distributions to Class B shareholders - (956,732) - (367,192) ------------------------------------------------------------------------------ Class C distributions Dividends from net investment income - - - - Distributions from capital gains - (100,729) - (44,905) ------------------------------------------------------------------------------ Total distributions to Class C shareholders - (100,729) - (44,905) ------------------------------------------------------------------------------ Advisor Class distributions Dividends from net investment income - - - - Distributions from capital gains - (45,125) - (16,062) ------------------------------------------------------------------------------ Total distributions to Advisor Class shareholders - (45,125) - (16,062) ------------------------------------------------------------------------------ Fund share transactions (Note 5) Class A (13,059,512) 8,558,057 (13,309,507) 63,404,638 Class B 369,029 2,552,576 (1,285,968) 19,746,621 Class C 50,314 501,777 (1,117,214) 1,001,804 Class I - - - - Class Advisor (10,499) 65,791 9,849 312,228 ------------------------------------------------------------------------------ Net (decrease) increase resulting from Fund share transactions (12,650,668) 11,648,201 (15,702,840) 84,465,291 ------------------------------------------------------------------------------ TOTAL (DECREASE) INCREASE IN NET ASSETS (41,335,881) (102,443,792) (21,650,866) 70,412,433 Net assets beginning of period 270,363,330 372,807,122 85,924,441 15,512,008 ------------------------------------------------------------------------------ NET ASSETS END OF PERIOD $229,027,449 $ 270,363,330 $ 64,273,575 $ 85,924,441 ============================================================================== UNDISTRIBUTED NET INVESTMENT INCOME $ - $ - $ - $ - ------------------------------------------------------------------------------
68 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 71 STATEMENTS OF CHANGES IN NET ASSETS (continued)
IVY US EMERGING GROWTH FUND IVY BOND FUND IVY MONEY MARKET FUND FOR THE SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, (UNAUDITED) 2000 (UNAUDITED) 2000 (UNAUDITED) 2000 $ (883,242) $ (3,179,789) $ 2,012,699 $ 5,413,475 $ 497,024 $ 1,315,270 (7,310,438) 16,723,172 (875,156) (10,033,374) - - (9,111,514) (69,310,321) 1,773,365 5,835,424 - - ----------------------------------------------------------------------------------------------------------------- (17,305,194) (55,766,938) 2,910,908 1,215,525 497,024 1,315,270 ----------------------------------------------------------------------------------------------------------------- - - (1,423,701) (3,934,995) (356,867) (986,924) - (10,359,253) - - - - ----------------------------------------------------------------------------------------------------------------- - (10,359,253) (1,423,701) (3,934,995) (356,867) (986,924) ----------------------------------------------------------------------------------------------------------------- - - (498,921) (1,280,033) (119,629) (260,020) - (7,614,713) - - - - ----------------------------------------------------------------------------------------------------------------- - (7,614,713) (498,921) (1,280,033) (119,629) (260,020) ----------------------------------------------------------------------------------------------------------------- - - (71,676) (181,541) (20,528) (68,326) - (1,250,347) - - - - ----------------------------------------------------------------------------------------------------------------- - (1,250,347) (71,676) (181,541) (20,528) (68,326) ----------------------------------------------------------------------------------------------------------------- - - (5,619) (18,572) - - - (234,243) - - - - ----------------------------------------------------------------------------------------------------------------- - (234,243) (5,619) (18,572) - - ----------------------------------------------------------------------------------------------------------------- 6,210,489 17,498,379 (12,622,368) (14,045,320) (3,833,179) 1,869,932 (7,456,651) 5,006,514 (1,529,455) (6,346,933) (38,324) (1,614,579) (1,469,911) (1,617,766) 2,508 (1,037,965) (1,441,629) 1,603,183 - - - - - - (46,872) 1,922,315 891 (127,260) - - ----------------------------------------------------------------------------------------------------------------- (2,762,945) 22,809,442 (14,148,424) (21,557,478) (5,313,132) 1,858,536 ----------------------------------------------------------------------------------------------------------------- (20,068,139) (52,416,052) (13,237,433) (25,757,094) (5,313,132) 1,858,536 145,910,481 198,326,533 75,301,903 101,058,997 28,240,742 26,382,206 ----------------------------------------------------------------------------------------------------------------- $125,842,342 $145,910,481 $ 62,064,470 $ 75,301,903 $ 22,927,610 $ 28,240,742 ================================================================================================================= $ - $ - $ - $ - $ - $ - -----------------------------------------------------------------------------------------------------------------
69 72 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INCOME (LOSS) FROM INVESTMENT OPERATIONS NET GAIN NET ASSET NET (LOSS) ON VALUE, INVESTMENT SECURITIES TOTAL FROM SHARE BEGINNING INCOME (REALIZED AND INVESTMENT FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) OPERATIONS IVY CUNDILL GLOBAL VALUE ADVISOR 01/01 to 06/30/2001(h) $10.07 $ .02 $ .44 $ .46 FUND 04/19(e) to 12/31/2000 10.00 .05(c) .41 .46 ------------------------------------------------------------------------------------------------ IVY DEVELOPING A 01/01 to 06/30/2001(h) 6.66 .03(c) (.37) (.34) MARKETS FUND 01/01 to 12/31/2000 8.77 (.02)(c) (2.07) (2.09) 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 06/30/2001(h) 6.49 -(c) (.35) (.35) 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 06/30/2001(h) 6.52 -(c) (.35) (.35) 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 06/30/2001(h) 6.70 (.04)(c) (.37) (.33) 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 06/30/2001(h) 17.25 .01 (3.40) (3.39) OPPORTUNITIES FUND 01/01 to 12/31/2000 17.13 (.07) .82 .75 05/04(e) to 12/31/1999 10.01 -(c) 16.35 16.35 B 01/01 to 06/30/2001(h) 17.26 (.06) (3.39) (3.45) 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 06/30/2001(h) 17.32 (.06) (3.40) (3.46) 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 01/01 to 06/30/2001(h) 17.37 .04 (3.43) (3.39) 03/16(e) to 12/31/2000 26.00 (.01) (7.92) (7.93) ADVISOR 01/01 to 06/30/2001(h) 17.39 .03 (3.43) (3.40) 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 06/30/2001(h) 10.63 (.01)(c) (1.31) (1.32) 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 06/30/2001(h) 10.30 (.06)(c) (1.27) (1.33) 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 06/31/2001(h) 9.93 (.06)(c) (1.23) (1.29) 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 06/30/2001(h) 10.73 (.01)(c) (1.32) (1.33) 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) SELECTED PER SHARE DATA LESS DISTRIBUTIONS DIVIDENDS DIVIDENDS IN FROM NET EXCESS OF NET INVESTMENT INVESTMENT FUND NAME INCOME INCOME IVY CUNDILL GLOBAL VALUE $ - $ - FUND .05 .14 ------------------------------------------------------------------------------------------- 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 - - - - - - - -
(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 income (loss) is net of expenses (h) Unaudited. reimbursed by Manager. na -- not applicable
70 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 73 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)(F) (000) REIMBURSEMENT (%)(B) $ - $ - $ - $10.53 4.57 $ 915 1.95 .20 - .39 10.07 4.66 747 1.95 ---------------------------------------------------------------------------------------------------------------- - - - 6.32 (5.11) 3,577 2.19 .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 - - - 6.14 (5.39) 3,008 2.96 .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 - - - 6.17 (5.37) 781 3.02 .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 1,854 3.16(g) - - - 6.37 (4.93) 92 1.86 .02 - .02 6.70 (23.60) 120 1.71 .05 - .11 8.80 47.38 337 1.74 - - - 6.05 (19.06) 82 1.68(g) ---------------------------------------------------------------------------------------------------------------- - - - 13.86 (19.65) 42,942 na .63 - .63 17.25 4.51 54,655 na 9.22 - 9.23 17.13 215.58 13,932 2.22(g) - - - 13.81 (19.99) 41,602 na .52 - .52 17.26 4.12 57,283 na 9.22 - 9.22 17.13 209.41 5,900 2.96(g) - - - 13.86 (19.98) 31,757 na .47 - .47 17.32 3.98 49,527 na .42 - .43 17.13 51.80 8,076 2.96(g) - - - 13.98 (19.52) 13 na .70 - .70 17.37 (30.40) 17 na - - - 13.99 (19.55) 12,814 na .67 - .67 17.39 5.01 19,178 na 9.22 - 9.24 17.23 217.16 5,246 1.93(g) ---------------------------------------------------------------------------------------------------------------- - - - 9.31 (12.42) 6,306 2.15 .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 - - - 8.97 (12.91) 3,227 3.04 .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 - - - 8.64 (12.99) 147 3.25 .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 71 na - - - 9.40 (12.40) 139 2.02 .90 - .90 10.73 (13.67) 155 1.95 .89 - .89 13.50 26.77 179 1.96 .54 - .54 11.36 (10.19) 321 1.75(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 (%) 16.46 .53(c) 26 19.15 .70(c) 53 ------------------------------------------------------------------------------------------------- - 4.15 .87(c) 8 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 4.93 .09(c) 8 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 4.99 .04(c) 8 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 3.83 1.19(c) 8 3.09 .14(c) 76 2.72 .69(c) 37 2.97(g) 1.38(c)(g) 47 ------------------------------------------------------------------------------------------------- - 2.10 .07 42 1.83 (.36) 46 6.10(g) (.15)(c)(g) 108 2.83 (.67) 42 2.59 (1.12) 46 6.84(g) (.89)(c)(g) 108 2.86 (.70) 42 2.58 (1.11) 46 6.84(g) (.89)(c)(g) 108 1.71 .45 42 1.54 (.07) 46 1.78 .38 42 1.55 (.09) 46 5.81(g) .14(c)(g) 108 ------------------------------------------------------------------------------------------------- - 3.89 (.23)(c) 40 3.11 .16(c) 102 2.77 .09(c) 50 2.54 .16(c) 17 2.07 .58 45 2.18 .58 43 4.78 (1.12)(c) 40 3.93 (.66)(c) 102 3.59 (.72)(c) 50 3.33 (.63)(c) 17 2.82 (.18) 45 2.94 (.17) 43 4.99 (1.32)(c) 40 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 3.76 (.10)(c) 40 2.89 .38(c) 102 2.56 .31(c) 50 2.11(g) .59(c)(g) 17
71 74 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INCOME (LOSS) FROM INVESTMENT OPERATIONS NET GAIN NET ASSET NET (LOSS) ON VALUE, INVESTMENT SECURITIES TOTAL FROM SHARE BEGINNING INCOME (REALIZED AND INVESTMENT FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) OPERATIONS IVY GLOBAL NATURAL A 01/01 to 06/30/2001(h) $ 9.74 $ -(c) $ 1.77 $ 1.77 RESOURCES FUND 01/01 to 12/31/2000 8.91 (.07)(c) .95 .88 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 06/30/2001(h) 9.56 (.03)(c) 1.73 1.70 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 06/30/2001(h) 9.40 (.01)(c) 1.68 1.67 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 06/30/2001(h) 9.74 .40(c) 1.38 1.78 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 ------------------------------------------------------------------------------------------------------ IVY GLOBAL SCIENCE & A 01/01 to 06/30/2001(h) 27.53 (.16)(c) (9.55) (9.71) TECHNOLOGY FUND 01/01 to 12/31/2000 48.90 (.64) (20.38) (21.02) 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 06/30/2001(h) 26.80 (.24)(c) (9.27) (9.51) 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 06/30/2001(h) 26.93 (.27)(c) (9.29) (9.56) 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 06/30/2001(h) 27.54 (.15)(c) (9.54) (9.69) 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 SELECTED PER SHARE DATA LESS DISTRIBUTIONS DIVIDENDS DIVIDENDS IN FROM NET EXCESS OF NET INVESTMENT INVESTMENT FUND NAME INCOME INCOME IVY GLOBAL NATURAL $ -(c) $ - RESOURCES FUND - - - - - .04 - .22 - - - - - - - .04 - .17 - - - - - - - .04 - .15 - - - - - - ------------------------------------------------------------------ IVY GLOBAL SCIENCE & - - TECHNOLOGY FUND - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(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 income (loss) is net of expenses (h) Unaudited. reimbursed by Manager. na -- not applicable.
72 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 75 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)(F) (000) REIMBURSEMENT (%)(B) $ - $ - $ - $11.51 18.17 $10,282 2.26 .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 - - - 11.26 17.78 3,857 2.69 .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 - - - 11.07 17.77 2,820 2.79 .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 - - - 11.52 18.28 23 1.71 .06 - .06 9.74 10.17 22 2.02 - - - 8.90 27.14 26 1.87(g) ---------------------------------------------------------------------------------------------------------------- - - - 17.82 (35.27) 20,140 2.19 - .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 8,324 2.19(g) - - - 17.29 (35.49) 17,776 2.95 - .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 3,425 2.99(g) - - - 17.37 (35.50) 4,777 2.98 - .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 2,106 2.95(g) - - - 17.85 (35.19) 503 2.03 - .35 .35 27.54 (42.88) 826 na 3.63 - 3.63 48.82 122.56 431 na - - - 23.62 16.99 15 na 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 (%) 3.62 .01(c) 79 4.54 (.69)(c) 134 4.53 .02(c) 157 5.75 .29(c) 98 2.88 (1.10)(c) 199 4.25 (.61)(c) 79 5.05 (1.20)(c) 134 5.08 (.53)(c) 157 6.43 (.39)(c) 98 3.64 (1.86)(c) 199 4.15 (.51)(c) 79 4.95 (1.10)(c) 134 5.10 (.55)(c) 157 7.10 (1.06)(c) 98 3.86 (2.08)(c) 199 3.07 .57(c) 79 4.27 (.42)(c) 134 4.24(g) .31(c)(g) 157 -------------------------------------------------------------- ------------------------------------ 2.27 (1.51)(c) 35 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 3.03 (2.27)(c) 35 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 3.04 (2.28)(c) 35 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 2.11 (1.35)(c) 35 1.64 (1.34) 69 1.89 (1.71) 62 2.18(g) (1.91)(g) 73
73 76 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INCOME (LOSS) FROM INVESTMENT OPERATIONS NET (LOSS) NET ASSET NET GAIN ON VALUE, INVESTMENT SECURITIES TOTAL FROM SHARE BEGINNING INCOME (REALIZED AND INVESTMENT FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) OPERATIONS IVY INTERNATIONAL FUND A 01/01 to 06/30/2001(h) $26.20 $ .12 $ (4.16) $ (4.04) 01/01 to 12/31/2000 47.09 .19 (8.18) (7.99) 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 06/30/2001(h) 25.64 - (4.05) (4.05) 01/01 to 12/31/2000 46.78 (.17) (8.07) (8.24) 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 06/30/2001(h) 25.45 - (4.02) (4.02) 01/01 to 12/13/2000 46.57 (.19) (8.02) (8.21) 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 06/30/2001(h) 26.35 .18 (4.21) (4.03) 01/01 to 12/31/2000 47.09 .64 (8.48) (7.84) 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 01/01 to 06/30/2001(h) 26.25 .15 (4.15) (4.00) 08/31(e) to 12/31/2000 40.05 .02 (5.18) (5.16) -------------------------------------------------------------------------------------------------- IVY INTERNATIONAL SMALL A 01/01 to 06/30/2001(h) 12.71 (.07)(c) (3.01) (3.08) COMPANIES FUND 01/01 to 12/31/2000 12.45 (.03)(c)(d) .64(d) .61 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 06/30/2001(h) 12.53 (.10)(c) (2.97) (3.07) 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 06/30/2001(h) 12.60 (.11)(c) (2.98) (3.09) 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 06/30/2001(h) 12.76 (.05)(c) (3.02) (3.07) 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 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 (h) Unaudited. reimbursed by Manager. na -- not applicable
74 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 77 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)(F) (000) REIMBURSEMENT (%)(B) $ - $ - $ - $22.16 (15.42) $ 440,108 na 12.86 - 12.90 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 - - - 21.59 (15.80) 181,109 na 12.86 - 12.90 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 - - - 21.44 (15.79) 35,697 na 12.86 - 12.90 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 44,450 na - - - 22.32 (15.29) 20,262 na 12.86 - 12.90 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 - - - 22.25 (15.24) 4 na 8.60 - 8.64 26.25 (12.09) 4 na ---------------------------------------------------------------------------------------------------------------- - - - 9.63 (24.23) 6,223 2.27 .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 - - - 9.46 (24.50) 4,843 2.95 .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 - - - 9.51 (24.44) 3,412 2.96 .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 - - - 9.69 (24.06) 2,956 1.88 .38 - .38 12.76 5.32 4,165 1.89 .03 - .03 12.48 25.87 291 1.83(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 (%) 1.65 .92 20 1.66 .37 91 1.66 .63 7 1.58 .83 15 1.59 .68 8 1.65 .76 14 2.58 (.01) 20 2.50 (.47) 91 2.42 (.13) 7 2.41 (.01) 15 2.42 (.15) 8 2.45 (.04) 14 2.59 (.02) 20 2.49 (.46) 91 2.42 (.13) 7 2.40 .01 15 2.41 (.14) 8 2.44(g) (.03)(g) 14 1.29 1.28 20 1.24 .79 91 1.18 1.11 7 1.18 1.23 15 1.18 1.08 8 1.25 1.16 14 1.27 1.31 20 2.10(g) (.08)(g) 91 ------------------------------------------------------------------------------------------------ 2.75 (1.12)(c) 50 3.77 (.21)(c) 124 8.56 (.47)(c) 98 6.38 .39(c) 18 4.87 (.11)(c) 10 3.47 (1.84)(c) 50 4.49 (.93)(c) 124 9.33 (1.23)(c) 98 7.15 (.38)(c) 18 5.68 (.91)(c) 10 3.48 (1.85)(c) 50 4.49 (.93)(c) 124 9.27 (1.18)(c) 98 7.07 (.30)(c) 18 5.60 (.83)(c) 10 2.41 (.77)(c) 50 3.42 .15(c) 124 8.06(g) .03(c)(g) 98
75 78 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INCOME (LOSS) FROM INVESTMENT OPERATIONS NET (LOSS) NET ASSET NET GAIN ON VALUE, INVESTMENT SECURITIES TOTAL FROM SHARE BEGINNING INCOME (REALIZED AND INVESTMENT FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) OPERATIONS IVY INTERNATIONAL A 01/01 to 06/30/2001(h) $11.01 $ .08 (c) $(1.46) $(1.38) VALUE FUND 01/01 to 12/31/2000 11.99 .14 (c) (1.01) (.87) 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 06/30/2001(h) 10.94 .04 (c) (1.45) (1.41) 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 06/30/2001(h) 10.94 .04 (c) (1.45) (1.41) 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 06/30/2001(h) 11.03 .11 (c) (1.48) (1.37) 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 06/30/2001(h) 7.42 - (c) (.72) (.72) OPPORTUNITIES FUND 01/01 to 12/31/2000 9.15 .07 (c) (1.74) (1.67) 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 06/30/2001(h) 7.33 (.02)(c) (.71) (.73) 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 06/30/2001(h) 7.31 (.02)(c) (.71) (.73) 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 06/30/2001(h) 7.30 - (c) (.71) (.71) 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) SELECTED PER SHARE DATA LESS DISTRIBUTIONS DIVIDENDS DIVIDENDS IN FROM NET EXCESS OF NET INVESTMENT INVESTMENT FUND NAME INCOME INCOME IVY INTERNATIONAL $ - $ - VALUE FUND .04 - .10 - .08 - - - - - .01 - .01 - .01 - - - - - .01 - .01 - .01 - - - - - .05 - .10 - .11 - ------------------------------------------------------------------ IVY PACIFIC - - OPPORTUNITIES FUND .06 - .08 - .09 - - - .03 .02 - - .01 - .02 - .04 - - - - - - - .06 - .01 - .02 - - - - .09 - - .03 - .13 - .08 -
(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 income (loss) is net of expenses (h) Unaudited. reimbursed by Manager. na -- not applicable
76 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 79 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)(F) (000) REIMBURSEMENT (%)(B) $ - $ - $ - $ 9.63 (12.53) $18,050 1.76 .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) 16,202 1.80(g) - - - 9.53 (12.89) 58,037 2.49 .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) 53,652 2.63(g) - - - 9.53 (12.89) 20,485 2.51 .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) 27,074 2.63(g) - - - 9.66 (12.50) 471 1.46 .08 - .13 11.03 (6.90) 668 1.35 .07 - .17 11.99 28.30 2,748 1.38 .02 - .13 9.48 (.15) 510 1.32(g) ----------------------------------------------------------------------------------------------------------------- - - - 6.70 (9.70) 6,823 2.21 - - .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 - - - 6.60 (9.96) 4,994 2.94 - - .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 - - - 6.58 (9.99) 1,156 2.88 - - .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 9.39 449 2.71(g) - - - 6.59 (9.73) 147 2.12 - - .03 7.30 (18.77) 42 1.77 .01 - .14 9.03 46.29 313 1.79 - - .08 6.27 (19.56) 10 2.92(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 (%) 2.07 1.45(c) 16 1.92 .96(c) 36 1.87 .92(c) 21 1.88 .80(c) 16 2.11(g) .12(c)(g) 10 2.81 .71(c) 16 2.69 .20(c) 36 2.66 .12(c) 21 2.63 .05(c) 16 2.94(g) (.71)(c)(g) 10 2.83 .69(c) 16 2.69 .19(c) 36 2.64 .14(c) 21 2.66 .03(c) 16 2.94(g) (.71)(c)(g) 10 1.78 1.74(c) 16 1.53 1.36(c) 36 1.53 1.25(c) 21 1.45(g) 1.23(c)(g) 16 ------------------------------------------------------------------------------------------------- 3.20 .09(c) 41 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 3.92 (.64)(c) 41 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 3.86 (.57)(c) 41 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 3.11 .18(c) 41 2.71 1.23(c) 108 2.44 1.42(c) 23 3.48(g) .98(c)(g) 56
77 80 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 GROWTH FUND A 01/01 to 06/30/2001(h) $14.98 $(.03) $(1.59) $(1.62) 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 06/30/2001(h) 14.48 (.09) (1.53) (1.62) 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 06/30/2001(h) 14.14 (.09) (1.50) (1.59) 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 06/30/2001(h) 14.99 (.04) (1.58) (1.62) 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 06/30/2001(h) 10.59 (.01)(c) (.73) (.74) 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 11/02(e) to 12/31/1998 10.00 - (c)(d) .74(d) .74 B 01/01 to 06/30/2001(h) 10.48 (.05)(c) (.72) (.77) 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 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 (h) Unaudited. reimbursed by Manager. na -- not applicable
78 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 81 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)(F) (000) REIMBURSEMENT (%)(B) $ - $ - $ - $13.36 (10.81) $220,948 na 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 - - - 12.86 (11.19) 7,047 na 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 - - - 12.55 (11.24) 722 na 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 90 2.44(g) - - - 13.37 (10.81) 310 na 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) 347 na(g) ----------------------------------------------------------------------------------------------------------------- - - - 9.85 (6.99) 40,451 1.56 .16 - .16 10.59 (12.69) 57,584 1.57 - - .07 12.32 15.35 3,353 1.46 - - - 10.74 7.40 726 1.43(g) - - - 9.71 (7.35) 21,247 2.31 .16 - .16 10.48 (13.37) 24,314 2.31 - - .01 12.29 14.74 8,742 2.15 - - - 10.72 4.08 1,047 2.13(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 (%) 1.48 (.45) 61 1.34 (.73) 94 1.38 (.13) 51 1.38 .03 59 1.38 .13 39 1.45 .13(c) 72 2.47 (1.44) 61 2.31 (1.70) 94 2.34 (1.09) 51 2.32 (.90) 59 2.30 (.79) 39 2.37 (.79)(c) 72 2.51 (1.48) 61 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 1.58 (.58) 61 1.41 (.80) 94 1.42 (.17) 51 1.18(g) .24(g) 59 -------------------------------------------------------------------------------------------------- 1.78 (.21)(c) 40 1.81 (.47)(c) 69 3.49 (.12)(c) 80 6.34(g) .02(c)(g) 3 2.53 (.97)(c) 40 2.55 (1.21)(c) 69 4.18 (.81)(c) 80 - 7.04(g) (.68)(c)(g) 3
79 82 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 06/30/2001(h) $10.49 $(.07)(c) $ (.71) $ (.78) (CONTINUED) 01/01 to 12/31/2000 12.30 (.12)(c) (1.53) (1.65) 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 06/30/2001(h) 10.65 - (c) (.73) (.73) 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 06/30/2001(h) 30.31 (.14) (3.45) (3.59) GROWTH FUND 01/01 to 12/31/2000 47.29 (.50) (11.94) (12.44) 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 06/30/2001(h) 29.10 (.26) (3.29) (3.55) 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 06/30/2001(h) 29.08 (.26) (3.29) (3.55) 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 06/30/2001(h) 30.57 (.12) (3.48) (3.60) 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 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 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(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 (h) Unaudited. reimbursed by Manager. na -- not applicable
80 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 83 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)(F) (000) REIMBURSEMENT (%)(B) $ - $ - $ - $ 9.71 (7.44) $ 1,575 2.34 .16 - .16 10.49 (13.36) 2,965 2.30 - - .01 12.30 14.84 2,497 2.08 - - - 10.72 4.08 110 2.22(g) - - - 9.92 (6.85) 1,000 1.29 .16 - .16 10.65 (12.42) 1,061 1.24 - - .10 12.35 15.89 920 1.10 - - - 10.74 7.40 537 1.08(g) ----------------------------------------------------------------------------------------------------------------- - - - 26.72 (11.84) 75,737 na 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 - - - 25.55 (12.20) 41,892 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 - - - 25.53 (12.21) 6,500 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) 4,018 na - - - 26.97 (11.78) 1,713 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 13.78 740 na 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 (%) 2.56 (.99)(c) 40 2.54 (1.20)(c) 69 4.11 (.74)(c) 80 7.13(g) (.77)(c)(g) 3 1.51 .08(c) 40 1.48 (.13)(c) 69 3.13 .24(c) 80 5.99(g) .37(c)(g) 3 -------------------------------------------------------------- 1.72 (1.06) 74 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 2.53 (1.87) 74 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 2.53 (1.87) 74 2.30 (1.98) 83 2.39 (2.23) 107 2.40 (2.18) 67 2.39 (2.09) 65 2.52(g) (2.07)(g) 68 1.54 (.88) 74 1.36 (1.04) 83 1.46 (1.30) 107 - 1.22(g) (1.00)(g) 67
81 84 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INCOME (LOSS) FROM INVESTMENT OPERATIONS NET GAIN NET ASSET NET (LOSS) ON VALUE, INVESTMENT SECURITIES SHARE BEGINNING INCOME (REALIZED AND FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) IVY BOND FUND A 01/01 to 06/30/2001(h) $ 7.89 $ .28 $ .06 01/01 to 12/31/2000 8.29 .55 (.40) 01/01 to 12/31/1999 9.54 .67 (1.24) 01/01 to 12/31/1998 10.22 .69 (.69) 01/01 to 12/31/1997 9.80 .80 .42 01/01 to 12/31/1996 9.78 .72 .03 B 01/01 to 06/30/2001(h) 7.88 .21 .09 01/01 to 12/31/2000 8.28 .48 (.40) 01/01 to 12/31/1999 9.53 .59 (1.24) 01/01 to 12/31/1998 10.22 .59 (.67) 01/01 to 12/31/1997 9.80 .68 .46 01/01 to 12/31/1996 9.78 .64 .04 C 01/01 to 06/30/2001(h) 7.91 .21 .09 01/01 to 12/31/2000 8.31 .48 (.40) 01/01 to 12/31/1999 9.55 .62 (1.25) 01/01 to 12/31/1998 10.24 .60 (.68) 01/01 to 12/31/1997 9.82 .64 .48 04/30(e) to 12/31/1996 9.44 .39 .43 ADVISOR 01/01 to 06/30/2001(h) 7.90 .24 .09 01/01 to 12/31/2000 8.28 .56 (.38) 01/01 to 12/31/1999 9.54 .67 (1.24) 01/20(e) to 12/31/1998 10.28 .69 (.72) -------------------------------------------------------------------------------------- IVY MONEY MARKET FUND(I) A 01/01 to 06/30/2001(h) 1.00 .02 (c) - 01/01 to 12/31/2000 1.00 .05 (c) - 01/01 to 12/31/1999 1.00 .04 (c) - 01/01 to 12/31/1998 1.00 .05 (c) - 01/01 to 12/31/1997 1.00 .05 (c) - 01/01 to 12/31/1996 1.00 .04 (c) - B 01/01 to 06/30/2001(h) 1.00 .02 (c) - 01/01 to 12/31/2000 1.00 .05 (c) - 01/01 to 12/31/1999 1.00 .04 (c) - 01/01 to 12/31/1998 1.00 .05 (c) - 01/01 to 12/31/1997 1.00 .05 (c) - 01/01 to 12/31/1996 1.00 .05 (c) - C 01/01 to 06/30/2001(h) 1.00 .02 (c) - 01/01 to 12/31/2000 1.00 .05 (c) - 01/01 to 12/31/1999 1.00 .04 (c) - 01/01 to 12/31/1998 1.00 .05 (c) - 01/01 to 12/31/1997 1.00 .05 (c) - 04/30(e) to 12/31/1996 1.00 .03 (c) - SELECTED PER SHARE DATA INCOME (LOSS) FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS DIVIDENDS DIVIDENDS IN TOTAL FROM FROM NET EXCESS OF NET INVESTMENT INVESTMENT INVESTMENT FUND NAME OPERATIONS INCOME INCOME IVY BOND FUND $ .34 $ .24 $ - .15 .55 - (.57) .67 .01 - .68 - 1.22 .80 - .75 .72 .01 .30 .20 - .08 .48 - (.65) .59 .01 (.08) .59 .02 1.14 .72 - .68 .64 .02 .30 .21 - .08 .48 - (.63) .61 - (.08) .60 .01 1.12 .70 - .82 .39 .05 .33 .24 - .18 .56 - (.57) .67 .02 (.03) .69 .02 -------------------------------------------------------------------------------------------------------- IVY MONEY MARKET FUND(I) .02 .02 - .05 .05 - .04 .04 - .05 .05 - .05 .05 - .04 .04 - .02 .02 - .05 .05 - .04 .04 - .05 .05 - .05 .05 - .05 .05 - .02 .02 - .05 .05 - .04 .04 - .05 .05 - .05 .05 - .03 .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) Unaudited. arrangement. (i) The seven day and thirty day yield for Class A shares at (c) Net investment income (loss) is net of expenses June 30, 2001 was 3.17 and 3.12, respectively. The seven day reimbursed by Manager. yield for Class B shares at June 30, 2001 was 3.24% and the (d) Based on average shares outstanding. thirty day yield was 3.18%. The seven day yield for Class C (e) Commencement. shares at June 30, 2001 was 3.12% (unaudited). na -- not applicable
82 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 85 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)(F) (000) REIMBURSEMENT (%)(B) $ - $ - $ .24 $ 7.99 4.32 $ 40,343 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 - - .20 7.98 3.89 18,779 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 - - .21 8.00 3.79 2,748 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 8.81 618 na - - .24 7.99 4.23 195 na - - .56 7.90 2.26 192 na - - .69 8.28 (6.21) 332 na - - .71 9.54 (.30) 347 na ----------------------------------------------------------------------------------------------------------------- - - .02 1.00 2.02 16,561 .86 - - .05 1.00 5.37 20,394 .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 - - .02 1.00 2.05 5,833 .81 - - .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 - - .02 1.00 2.04 534 .83 - - .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 74 .56(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 (%) 1.42 6.00 13 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 2.28 5.14 13 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 2.21 5.21 13 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 1.35 6.06 13 1.49 6.84 26 1.43 7.49 28 1.11(g) 7.16(g) 43 -------------------------------------------------------------- 1.52 4.08(c) na 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 1.47 4.13(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 1.49 4.11(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
83 86 NOTES TO FINANCIAL STATEMENTS (Unaudited) June 30, 2001 Ivy Cundill Global Value Fund ("Cundill"), Ivy Developing Markets Fund ("Developing Markets"), Ivy European Opportunities Fund ("European Opportunities"), Ivy Global Fund ("Global"), Ivy Global Natural Resources Fund ("Natural Resources"), 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"), 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 (except for Money Market) Advisor Class are authorized. Cundill, 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 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 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. For Money Market, short-term obligations and commercial paper are valued at amortized cost, which approximates market. All other securities are valued at their fair value as determined in good faith by the Valuation Committee of the Board. As of June 30, 2001, Board valued securities amounted to the following and have been noted as such in each Fund's schedule of investments:
PERCENT OF FUND AMOUNT NET ASSETS Developing Markets $ 126,497 1.7% Global 786,653 8.0 Natural Resources 68,780 0.4 Science & Technology 32,076,158 73.7 Growth 91,725,441 40.0 Blue Chip 11,652,107 18.1 Emerging Growth 84,756,265 67.4 Bond 1,500,000 2.4
On June 29, 2001, Nasdaq experienced an interruption during the day and the market was forced to close for a period of time. Upon resuming operations, Nasdaq decided to extend trading until 5:00 p.m. EST to compensate for the previously lost trading time. Under the Funds' Declaration of Trust, the Nasdaq regular trading close (4:00 p.m. EST) is the time at which all securities are to be valued by the Funds. On June 29, 2001, the Valuation Sub-Committee of the Board of Trustees (the "Committee") imposed its board value procedures and utilized the extended trading close of 5:00 p.m. as the cutoff for security valuation. Had the Nasdaq interruption not occurred, the Board valued securities as of June 30, 2001 would have amounted to:
PERCENT OF FUND AMOUNT NET ASSETS Developing Markets $ 126,497 1.7% Science & Technology 249,750 0.6 Bond 1,500,000 2.4
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 -- The Funds classify as cash amounts on deposit with the Funds' custodian. These amounts earn interest at variable interest rates. At June 30, 2001, the interest rate was 3.25%. Amounts classified as Due to Custodian at period 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 its taxable income to its shareholders. Therefore, no provision has been recorded for Federal income or excise taxes. 84 87 NOTES TO FINANCIAL STATEMENTS (continued) (Unaudited) June 30, 2001 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:
CAPITAL LOSS FUND CARRYOVER EXPIRATION DATE(S) Developing Markets* $10,334,000 $ 155,000 2005 6,822,000 2006 1,688,000 2007 1,669,000 2008 ----------------------------------------------------------- Natural Resources* 7,795,000 3,663,000 2006 4,132,000 2007 ----------------------------------------------------------- Science & Technology 1,283,000 1,283,000 2008 ----------------------------------------------------------- International Value 4,168,000 3,103,000 2006 1,065,000 2008 ----------------------------------------------------------- Pacific Opportunities 8,655,000 264,000 2002 203,000 2003 1,033,000 2004 416,000 2005 5,759,000 2006 128,000 2007 852,000 2008 ----------------------------------------------------------- Bond 25,123,000 2,215,000 2003 366,000 2006 12,226,000 2007 10,316,000 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. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are declared and paid monthly for Bond. Distributions from net investment income are 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 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 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 (excluding Money Market) 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 that each fund has committed to buy or sell are shown in the Schedule of Investments, as applicable. These amounts represent the aggregate exposure to each foreign currency acquired or hedged through forward foreign currency contracts at June 30, 2001. 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 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 a fund as an unrealized gain or loss. When the contract is closed or delivery is taken, a 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 a 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 unrealized appreciation (depreciation) of forward foreign currency contracts reflected in a 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, 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 Cundill have been amortized over a one-year period beginning the date the fund commenced operations which was April 19, 2000. DEFERRED ORGANIZATION EXPENSES -- Organization expenses incurred prior to the effectiveness of Statement of Position 98-5, "Reporting on the Costs of Start-up Activities", for Natural Resources, Science & Technology, Small Companies, and International Value 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 accounting principles generally accepted in the United States of America. These differences primarily relate to foreign denominated securities, passive foreign investment companies, certain securities 85 88 NOTES TO FINANCIAL STATEMENTS (Unaudited) June 30, 2001 sold at a loss, non-deductible organization expenses and non-deductible offering costs, if applicable. As a result, Net investment income (loss) and Net realized gain (loss) 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") provides business management services to the Funds and is the Investment Adviser to all Funds. For its services, IMI receives a fee paid monthly based on average daily net assets ("ADNA") at the following annual rates: Cundill (1) 1.00% Developing Markets 1.00 Natural Resources (2) 1.00 Science & Technology 1.00 Small Companies (3) 1.00 International Value 1.00 Pacific Opportunities 1.00 Blue Chip 0.75 Emerging Growth 0.85 Money Market 0.40
For certain funds, the annual rates decrease as overall ADNA increases. The following chart summarizes those funds and relevant rate and asset sizes: European Opportunities (3) 1.00% of the first $250 million of ADNA 0.85% next $250 million of ADNA 0.75% excess ------------------------------------------------------------ Global 1.00% of the first $500 million of ADNA 0.75% excess ------------------------------------------------------------ International 1.00% of the first $2.0 billion of ADNA 0.90% next $500 million 0.80% next $500 million 0.70% excess ------------------------------------------------------------ Growth 0.85% of the first $350 million of ADNA 0.75% excess ------------------------------------------------------------ Bond 0.50% of the first $500 million of ADNA 0.40% excess
(1) Peter Cundill & Associates, Inc. is the subadvisor of the Fund. IMI, not the Fund, is obligated to compensate the sub-advisor. (2) For Natural Resources, Mackenzie Financial Corporation ("MFC") is the investment advisor of the Fund. MFC receives a fee paid monthly at the annual rate of 0.50% of ADNA. The fee is collected from the Fund and remitted to MFC by Mackenzie Investment Management Inc. ("MIMI"). (3) Henderson Investment Management Limited is the sub-advisor of the Funds. IMI, not the Funds, is obligated to compensate the sub-advisor. Currently, for Cundill, Development Markets, Global, Natural Resources, Science & Technology, Small Companies, Pacific Opportunities and Blue Chip, IMI contractually 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 (1.34% in the case of Blue Chip). Currently for International Value and Money Market, IMI contractually limits each Fund's total operating expenses (excluding 12b-1 fees and certain other expenses) to annual rates of 1.50% and .85%, respectively. 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. At June 30, 2001, MIMI owned 64% of Cundill's shares outstanding. 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 six months ended June 30, 2001, the net amount of underwriting discount retained by IMDI is described below.
FUND AMOUNT Developing Markets $ 117 European Opportunities 6,053 Global 321 Natural Resources 5,227 Science & Technology 6,170 International 5,843 Small Companies 1,773 International Value 615 Pacific Opportunities 506 Growth 8,455 Blue Chip 2,593 Emerging Growth 725 Bond 1,857
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 the Statement of Operations. 86 89 NOTES TO FINANCIAL STATEMENTS (continued) (Unaudited) June 30, 2001
FUND CLASS A CLASS B CLASS C Developing Markets $ 4,098 $ 19,033 $ 5,012 European Opportunities 62,801 254,917 205,281 Global 8,803 19,506 792 Natural Resources 9,303 15,946 5,798 Science & Technology 30,192 106,769 32,861 International 535,430 1,111,509 223,425 Small Companies 10,395 27,600 20,616 International Value 26,464 326,576 120,241 Pacific Opportunities 9,897 29,190 6,777 Growth 68,098 35,360 3,469 Blue Chip 47,335 111,310 10,847 Emerging Growth 90,862 227,490 35,961 Bond 59,912 96,910 13,520
Until June 30, 2001, Ivy Mackenzie Services Corp. ("IMSC"), a wholly owned subsidiary of MIMI, was the transfer and shareholder servicing agent for each Fund. As of June 30, 2001, PFPC Inc. ("PFPC") is the transfer and shareholder servicing agent for each Fund. For those services, each Fund paid a monthly fee plus certain out-of-pocket expenses. Such fees and expenses, detailed below, are reflected as Transfer agent in the Statement of Operations.
ADVISOR FUND CLASS A CLASS B CLASS C CLASS CLASS I Cundill $ -- $ -- $ -- $ 334 $ -- Developing Markets 10,852 13,063 3,730 307 -- European Opportunities 91,750 90,153 76,594 24,702 25 Global 12,758 9,719 560 360 -- Natural Resources 25,377 8,844 2,652 537 -- Science & Technology 56,366 50,525 15,872 1,739 -- International 527,283 393,789 81,345 4 19,188 Small Companies 13,831 8,460 6,471 4,399 -- International Value 38,822 114,892 44,530 952 -- Pacific Opportunities 21,565 15,192 3,113 192 -- Growth 357,912 12,490 1,366 761 -- Blue Chip 84,271 34,295 3,656 1,473 -- Emerging Growth 101,825 77,161 12,201 3,041 -- Bond 64,164 36,501 4,147 424 -- Money Market 38,852 11,486 2,050 -- --
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 the Statement of Operations. 4. FUND MERGERS As noted below, the shareholders of 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, European Opportunities, Blue Chip, Developing Markets and Pacific Opportunities (each "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 APPRECIATION AGGREGATE (DEPRECIATION) COMBINED VALUE OF INCLUDED IN NET ASSETS NET ASSETS NET ASSETS AT COMPLETION MERGER DATE ACQUIRING FUND ACQUIRED FUND CONTRIBUTED CONTRIBUTED OF MERGER 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:
EUROPEAN BLUE DEVELOPING PACIFIC OPPORTUNITIES CHIP MARKETS OPPORTUNITIES Class A I=.53 I=1.00 I=.95 I=.72 Class B I=.53 I=0.99 I=.95 I=.72 Class C I=.53 I=0.97 I=.93 I=.72 Advisor I=.53 I=1.01 I=.94 I=.73
All ratios are acquired fund shares to acquiring fund shares. 87 90 NOTES TO FINANCIAL STATEMENTS (Unaudited) 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 SIX MONTHS FOR THE PERIOD ENDED JANUARY 1, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 CUNDILL (A) SHARES AMOUNT SHARES AMOUNT ----------- ------------ ------------- ------------ --------------- Sold - $ - 1 $ 10 Issued on reinvestment of dividends - - - - Repurchased - - (1) (10) ------------ ------------- ------------ --------------- Net increase (decrease) - - - - ============ ============= ============ =============== DEVELOPING MARKETS ------------------ Sold 279,650 1,810,422 1,211,124 9,671,771 Issued on reinvestment of dividends - - 1,870 12,258 Repurchased (347,035) (2,394,424) (1,376,168) (10,957,941) Issued on acquisition of Ivy South America Fund - - 151,799 1,275,113 ------------ ------------- ------------ --------------- Net (decrease) increase (67,385) (584,002) (11,375) 1,201 ============ ============= ============ =============== EUROPEAN OPPORTUNITIES ---------------------- Sold 3,247,800 50,954,750 5,917,943 131,082,416 Issued on reinvestment of dividends - - 91,557 1,515,777 Repurchased (3,316,951) (52,256,633) (3,718,358) (79,953,242) Issued on acquisition of Ivy Pan-Europe Fund - - 63,926 1,478,791 ------------ ------------- ------------ --------------- Net (decrease) increase (69,151) (1,301,883) 2,355,068 54,123,742 ============ ============= ============ =============== GLOBAL ------ Sold 681,062 6,765,984 1,150,883 14,273,014 Issued on reinvestment of dividends - - 55,298 573,995 Repurchased (768,524) (7,676,848) (1,322,546) (16,475,291) ------------ ------------- ------------ --------------- Net decrease (87,462) (910,864) (116,365) (1,628,282) ============ ============= ============ =============== NATURAL RESOURCES ----------------- Sold 608,123 6,985,765 287,146 2,588,462 Issued on reinvestment of dividends - - 2,520 23,536 Repurchased (283,871) (3,216,195) (373,451) (3,365,296) ------------ ------------- ------------ --------------- Net increase (decrease) 324,252 3,769,570 (83,785) (753,298) ============ ============= ============ =============== SCIENCE & TECHNOLOGY -------------------- Sold 488,928 10,281,199 1,176,627 57,982,753 Issued on reinvestment of dividends - - 13,324 366,448 Repurchased (521,560) (10,740,768) (876,114) (41,711,359) ------------ ------------- ------------ --------------- Net (decrease) increase (32,632) (459,569) 313,837 16,637,842 ============ ============= ============ =============== INTERNATIONAL ------------- Sold 8,927,718 210,817,372 11,601,923 427,069,681 Issued on reinvestment of dividends - - 5,777,975 174,299,277 Repurchased (11,521,376) (275,270,062) (28,340,796) (1,130,865,446) ------------ ------------- ------------ --------------- Net decrease (2,593,658) (64,452,690) (10,960,898) (529,496,488) ============ ============= ============ =============== SMALL COMPANIES --------------- Sold 358,174 4,119,988 715,998 10,154,620 Issued on reinvestment of dividends - - 14,458 182,170 Repurchased (418,231) (4,747,373) (110,293) (1,534,885) ------------ ------------- ------------ --------------- Net (decrease) increase (60,057) $ (627,385) 620,163 $ 8,801,905 ============ ============= ============ =============== (a) For prior year activity, the period was from April 19, 2000 (Commencement of Operations) to December 31, 2000.
88 91 NOTES TO FINANCIAL STATEMENTS (continued) (Unaudited)
CLASS B CLASS C FOR THE SIX MONTHS FOR THE PERIOD FOR THE SIX MONTHS FOR THE PERIOD ENDED JANUARY 1, 2000 ENDED JANUARY 1, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ - $ - 1 $ 10 - $ - 1 $ 10 - - - - - - - - - - (1) (10) - - (1) (10) ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ - - - - - - - - ========== ============ ========== ============= ========== ============ ========== ============ 22,165 149,816 91,222 763,371 4,517 30,956 28,306 277,767 - - 1,303 8,318 - - 445 2,855 (229,585) (1,470,651) (401,372) (3,040,474) (57,652) (374,911) (266,993) (2,106,591) - - 116,352 957,581 - - 17,237 142,550 ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ (207,420) (1,320,835) (192,495) (1,311,204) (53,135) (343,955) (221,005) (1,683,419) ========== ============ ========== ============= ========== ============ ========== ============ 228,342 3,804,320 3,399,154 76,743,482 485,603 8,139,586 3,509,145 78,670,513 - - 69,252 1,150,115 - - 42,291 704,055 (535,472) (8,403,666) (597,107) (11,747,830) (1,053,726) (17,217,385) (1,178,448) (23,433,121) - - 103,755 2,390,956 - - 15,038 350,370 ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ (307,130) (4,599,346) 2,975,054 68,536,723 (568,123) (9,077,799) 2,388,026 56,291,817 ========== ============ ========== ============= ========== ============ ========== ============ 13,609 128,454 75,284 899,024 1,450 13,116 9,884 109,721 - - 27,503 236,414 - - 915 8,877 (116,978) (1,105,734) (196,395) (2,418,369) (2,371) (21,942) (13,800) (161,802) ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ (103,369) (977,280) (93,608) (1,282,931) (921) (8,826) (3,001) (43,204) ========== ============ ========== ============= ========== ============ ========== ============ 94,575 1,088,266 126,162 1,143,068 231,441 2,644,105 97,274 924,455 - - 470 4,349 - - 332 2,984 (82,130) (835,950) (83,828) (738,401) (52,749) (539,785) (76,140) (656,709) ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ 12,445 252,316 42,804 409,016 178,692 2,104,320 21,466 270,730 ========== ============ ========== ============= ========== ============ ========== ============ 151,753 3,016,515 558,748 27,683,197 19,503 396,275 225,287 11,174,785 - - 10,695 285,771 - - 4,014 113,134 (193,313) (3,834,556) (247,495) (11,336,531) (114,922) (2,308,887) (248,294) (11,981,061) ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ (41,560) (818,041) 321,948 16,632,437 (95,419) (1,912,612) (18,993) (693,142) ========== ============ ========== ============= ========== ============ ========== ============ 146,802 3,537,342 1,947,058 59,520,127 361,045 8,261,020 862,175 27,429,484 - - 2,029,938 57,901,511 - - 317,958 9,241,503 (2,708,861) (63,150,382) (4,579,283) (177,135,593) (947,719) (21,927,377) (2,005,702) (77,687,264) ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ (2,562,059) (59,613,040) (602,287) (59,713,955) (586,674) (13,666,357) (825,569) (41,016,277) ========== ============ ========== ============= ========== ============ ========== ============ 124,772 1,462,573 401,507 5,664,420 76,596 892,255 339,870 4,834,943 - - 6,676 82,938 - - 3,193 39,876 (56,050) (621,177) (65,660) (888,907) (76,764) (828,890) (80,855) (1,087,360) ---------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ 68,722 $ 841,396 342,523 $ 4,858,451 (168) $ 63,365 262,208 $ 3,787,459 ========== ============ ========== ============= ========== ============ ========== ============
89 92 NOTES TO FINANCIAL STATEMENTS (Unaudited)
ADVISOR CLASS FOR THE SIX MONTHS FOR THE PERIOD ENDED JANUARY 1, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 CUNDILL(A) SHARES AMOUNT SHARES AMOUNT ---------- -------- ------------ --------- ------------ Sold 13,375 $ 140,000 71,392 $ 715,009 Issued on reinvestment of dividends - - 2,809 27,836 Repurchased (1,034) (10,911) - - -------- ------------ --------- ------------ Net increase 12,341 129,089 74,201 742,845 ======== ============ ========= ============ DEVELOPING MARKETS ------------------ Sold 2,118 13,871 21,329 187,837 Issued on reinvestment of dividends - - 62 408 Repurchased (5,637) (38,312) (42,039) (337,442) Issued on acquisition of Ivy South America Fund - - 261 2,204 -------- ------------ --------- ------------ Net decrease (3,519) (24,441) (20,387) (146,993) ======== ============ ========= ============ EUROPEAN OPPORTUNITIES ---------------------- Sold 562,314 9,083,788 1,529,373 35,063,282 Issued on reinvestment of dividends - - 11,480 191,491 Repurchased (749,139) (12,069,198) (761,007) (16,439,961) Issued on acquisition of Ivy Pan-Europe Fund - - 18,115 417,645 -------- ------------ --------- ------------ Net (decrease) increase (186,825) (2,985,410) 797,961 19,232,457 ======== ============ ========= ============ GLOBAL ------ Sold 4,391 46,652 3,386 42,188 Issued on reinvestment of dividends - - 1,122 11,745 Repurchased (4,095) (41,890) (3,288) (41,227) -------- ------------ --------- ------------ Net increase 296 4,762 1,220 12,706 ======== ============ ========= ============ NATURAL RESOURCES ----------------- Sold 194,375 2,105,081 88 800 Issued on reinvestment of dividends - - 15 138 Repurchased (194,595) (2,065,235) (785) (6,945) -------- ------------ --------- ------------ Net (decrease) increase (220) 39,846 (682) (6,007) ======== ============ ========= ============ SCIENCE & TECHNOLOGY -------------------- Sold 7,976 165,193 25,011 1,270,582 Issued on reinvestment of dividends - - 213 5,857 Repurchased (9,750) (200,197) (4,079) (179,679) -------- ------------ --------- ------------ Net (decrease) increase (1,774) (35,004) 21,145 1,096,760 ======== ============ ========= ============ INTERNATIONAL ------------- Sold - - 123 4,904 Issued on reinvestment of dividends - - 42 1,062 Repurchased - - - - -------- ------------ --------- ------------ Net increase (decrease) - - 165 5,966 ======== ============ ========= ============ SMALL COMPANIES --------------- Sold 40,819 495,447 345,465 5,088,965 Issued on reinvestment of dividends - - 111 1,402 Repurchased (62,105) (745,270) (42,413) (601,212) -------- ------------ --------- ------------ Net (decrease) increase (21,286) $ (249,823) 303,163 $ 4,489,155 ======== ============ ========= ============ (a) For prior year activity, the period was from April 19, 2000 (Commencement of Operations) to December 31, 2000.
90 93 NOTES TO FINANCIAL STATEMENTS (continued) (Unaudited)
CLASS 1 FOR THE SIX MONTHS FOR THE PERIOD ENDED JANUARY 1, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------- - $ - 1 $ 10 - - - - - - (1) (10) ---------- ------------ ---------- ------------- - - - - ========== ============ ========== ============= - - - - - - - - - - - - - - - - ---------- ------------ ---------- ------------- - - - - ========== ============ ========== ============= - - 1,775 42,991 - - 38 642 - - (851) (19,966) - - - - ---------- ------------ ---------- ------------- - - 962 23,667 ========== ============ ========== ============= - - - - - - - - - - - - ---------- ------------ ---------- ------------- - - - - ========== ============ ========== ============= - - - - - - - - - - - - ---------- ------------ ---------- ------------- - - - - ========== ============ ========== ============= - - - - - - - - - - - - ---------- ------------ ---------- ------------- - - - - ========== ============ ========== ============= 213,712 5,286,607 531,943 22,613,335 - - 513,260 16,239,348 (592,758) (14,144,421) (3,300,943) (133,422,468) ---------- ------------ ---------- ------------- (379,046) (8,857,814) (2,255,740) (94,569,785) ========== ============ ========== ============= - - - - - - - - - - - - ---------- ------------ ---------- ------------- - $ - - $ - ========== ============ ========== =============
91 94 NOTES TO FINANCIAL STATEMENTS (Unaudited)
CLASS A FOR THE SIX MONTHS FOR THE PERIOD ENDED JANUARY 1, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 INTERNATIONAL VALUE SHARES AMOUNT SHARES AMOUNT ------------------- ----------- ------------ ------------ ------------- Sold 2,902,171 $ 29,663,819 5,000,493 $ 54,970,891 Issued on reinvestment of dividends - - 12,052 128,203 Repurchased (3,168,145) (32,418,030) (5,593,181) (61,555,902) ----------- ------------ ------------ ------------- Net decrease (265,974) (2,754,211) (580,636) (6,456,808) =========== ============ ============ ============= PACIFIC OPPORTUNITIES --------------------- Sold 601,102 4,297,197 2,224,273 19,578,389 Issued on reinvestment of dividends - - 9,680 70,663 Repurchased (808,708) (5,989,437) (2,701,251) (23,825,157) Issued on acquisition of Ivy Asia Pacific Fund - - 300,056 2,277,428 ----------- ------------ ------------ ------------- Net (decrease) increase (207,606) (1,692,240) (167,242) (1,898,677) =========== ============ ============ ============= GROWTH ------ Sold 452,950 6,226,398 1,087,708 23,680,772 Issued on reinvestment of dividends - - 2,122,314 31,094,147 Repurchased (1,394,843) (19,285,910) (2,155,709) (46,216,862) ----------- ------------ ------------ ------------- Net (decrease) increase (941,893) (13,059,512) 1,054,313 (8,558,057) =========== ============ ============ ============= BLUE CHIP --------- Sold 424,623 4,472,844 1,216,791 13,869,645 Issued on reinvestment of dividends - - 73,811 771,431 Repurchased (1,753,725) (17,782,351) (580,424) (6,965,245) Issued on acquisition of Ivy Growth with Income Fund - - 4,455,447 55,728,807 ----------- ------------ ------------ ------------- Net (decrease) increase (1,329,102) (13,309,507) 5,165,625 63,404,638 =========== ============ ============ ============= EMERGING GROWTH --------------- Sold 749,011 20,552,676 1,011,026 47,740,315 Issued on reinvestment of dividends - - 332,775 9,600,855 Repurchased (516,277) (14,342,187) (894,950) (39,842,791) ----------- ------------ ------------ ------------- Net increase (decrease) 232,734 6,210,489 448,851 17,498,379 =========== ============ ============ ============= BOND ---- Sold 4,078,141 32,740,775 8,026,890 63,810,144 Issued on reinvestment of dividends 105,526 844,840 258,708 2,292,302 Repurchased (5,762,496) (46,207,983) (10,013,823) (80,147,766) ----------- ------------ ------------ ------------- Net (decrease) increase (1,578,829) (12,622,368) (1,728,225) (14,045,320) =========== ============ ============ ============= MONEY MARKET ------------ Sold 44,520,671 44,520,671 138,629,903 138,629,903 Issued on reinvestment of dividends 307,022 307,022 790,013 790,013 Repurchased (48,660,872) (48,660,872) (137,549,984) (137,549,984) ----------- ------------ ------------ ------------- Net (decrease) increase (3,833,179) $ (3,833,179) 1,869,932 $ 1,869,932 =========== ============ ============ =============
92 95 NOTES TO FINANCIAL STATEMENTS (continued) (Unaudited)
CLASS B CLASS C FOR THE SIX MONTHS FOR THE PERIOD FOR THE SIX MONTHS FOR THE PERIOD ENDED JANUARY 1, 2000 ENDED JANUARY 1, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ----------- ------------ ----------- ------------ ---------- ----------- ----------- ------------ 342,269 $ 3,489,577 1,469,087 $ 16,205,751 221,793 $ 2,301,715 688,406 $ 7,494,303 - - 6,904 73,238 - - 2,547 26,945 (1,166,501) (11,722,471) (2,565,665) (28,240,274) (790,423) (8,094,107) (1,664,890) (18,313,876) ----------- ------------ ----------- ------------ ---------- ----------- ----------- ------------ (824,232) (8,232,894) (1,089,674) (11,961,285) (568,630) (5,792,392) (973,937) (10,792,628) =========== ============ =========== ============ ========== =========== =========== ============ 24,935 183,169 65,243 546,898 30,080 218,482 22,799 195,476 - - 856 6,180 - - 1,099 7,894 (149,615) (1,066,582) (278,026) (2,366,506) (64,971) (472,153) (51,239) (432,203) - - 262,565 1,956,106 - - 152,159 1,136,627 ----------- ------------ ----------- ------------ ---------- ----------- ----------- ------------ (124,680) (883,413) 50,638 142,678 (34,891) (253,671) 124,818 907,794 =========== ============ =========== ============ ========== =========== =========== ============ 117,505 1,549,861 318,451 6,592,326 14,093 174,004 101,581 2,112,008 - - 54,362 772,646 - - 4,935 68,245 (88,468) (1,180,832) (225,425) (4,842,396) (9,188) (123,690) (80,964) (1,678,476) ----------- ------------ ----------- ------------ ---------- ----------- ----------- ------------ 29,037 369,029 147,388 2,522,576 4,905 50,134 25,552 501,777 =========== ============ =========== ============ ========== =========== =========== ============ 207,379 2,068,797 543,508 6,359,618 52,186 530,541 106,978 1,314,878 - - 28,993 300,658 - - 3,875 40,108 (338,601) (3,354,765) (363,250) (4,297,825) (172,689) (1,647,755) (73,105) (873,927) - - 1,398,527 17,384,170 - - 41,859 520,745 ----------- ------------ ----------- ------------ ---------- ----------- ----------- ------------ (131,222) (1,285,968) 1,607,778 19,746,621 (120,503) (1,117,214) 79,607 1,001,804 =========== ============ =========== ============ ========== =========== =========== ============ 88,948 2,286,442 356,193 15,539,341 15,943 425,785 70,319 3,062,362 - - 202,258 5,607,415 - - 27,717 766,924 (374,794) (9,743,093) (364,168) (16,140,242) (72,480) (1,895,696) (122,590) (5,447,052) ----------- ------------ ----------- ------------ ---------- ----------- ----------- ------------ (285,846) (7,456,651) 194,283 5,006,514 (56,537) (1,469,911) (24,554) (1,617,766) =========== ============ =========== ============ ========== =========== =========== ============ 455,899 3,664,037 772,861 6,184,440 267,717 2,163,317 357,336 2,885,050 23,071 184,390 57,683 462,782 2,852 22,857 6,640 53,437 (672,250) (5,377,882) (1,611,149) (12,994,155) (271,804) (2,183,666) (492,275) (3,976,452) ----------- ------------ ----------- ------------ ---------- ----------- ----------- ------------ (193,280) (1,529,455) (780,605) (6,346,933) (1,235) 2,508 (128,299) (1,037,965) =========== ============ =========== ============ ========== =========== =========== ============ 3,193,732 3,193,732 8,101,534 8,101,534 4,836,400 4,836,400 12,286,520 12,286,520 108,006 108,006 221,898 221,898 10,286 10,286 52,918 52,918 (3,340,062) (3,340,062) (9,938,011) (9,938,011) (6,288,315) (6,288,315) (10,736,255) (10,736,255) ----------- ------------ ----------- ------------ ---------- ----------- ----------- ------------ (38,324) $ (38,324) (1,614,579) $ (1,614,579) (1,441,629) $(1,441,629) 1,603,183 $ 1,603,183 =========== ============ =========== ============ ========== =========== =========== ============
93 96 NOTES TO FINANCIAL STATEMENTS (Unaudited)
ADVISOR CLASS FOR THE SIX MONTHS FOR THE PERIOD ENDED JANUARY 1, 2000 JUNE 30, 2001 TO DECEMBER 31, 2000 INTERNATIONAL VALUE SHARES AMOUNT SHARES AMOUNT ------------------- ----------- ------------- ----------- ------------ Sold 5,691 $ 57,179 6,821,117 $ 76,070,250 Issued on reinvestment of dividends - - 666 7,146 Repurchased (17,520) (176,695) (6,990,394) (78,326,959) ----------- ------------- ----------- ------------ Net decrease (11,829) (119,516) (168,611) (2,249,563) =========== ============= =========== ============ PACIFIC OPPORTUNITIES --------------------- Sold 16,889 114,000 68,367 512,789 Issued on reinvestment of dividends - - 2 17 Repurchased (334) (2,293) (97,303) (802,182) Issued on acquisition of Ivy Asia Pacific Fund - - - - ----------- ------------- ----------- ------------ Net increase (decrease) 16,555 111,707 (28,934) (289,376) =========== ============= =========== ============ GROWTH ------ Sold 3,460 47,179 6,948 154,793 Issued on reinvestment of dividends - - 3,078 45,125 Repurchased (4,183) (57,678) (5,846) (134,127) ----------- ------------- ----------- ------------ Net (decrease) increase (723) (10,499) 4,180 65,791 =========== ============= =========== ============ BLUE CHIP --------- Sold 8,751 86,583 14,161 174,873 Issued on reinvestment of dividends - - 1,528 16,062 Repurchased (7,528) (76,734) (10,513) (129,237) Issued on acquisition of Ivy Growth with Income Fund - - 19,951 250,530 ----------- ------------- ----------- ------------ Net increase 1,223 9,849 25,127 312,228 =========== ============= =========== ============ EMERGING GROWTH --------------- Sold 6,673 177,361 700,148 29,794,575 Issued on reinvestment of dividends - - 8,031 233,536 Repurchased (8,143) (224,233) (673,277) (28,105,796) ----------- ------------- ----------- ------------ Net (decrease) increase (1,470) (46,872) 34,902 1,922,315 =========== ============= =========== ============ BOND ---- Sold 4,361 35,169 15,252 121,678 Issued on reinvestment of dividends 434 3,474 1,690 13,587 Repurchased (4,718) (37,752) (32,756) (262,525) ----------- ------------- ----------- ------------ Net increase (decrease) 77 $ 891 (15,814) $ (127,260) =========== ============= =========== ============
94 97 SHAREHOLDER MEETING RESULTS (UNAUDITED) IMI is an indirect subsidiary of MFC. On April 20, 2001, Investors Group, Inc. ("IGI"), a leading Canadian financial services organization, acquired control of MFC. Under the Investment Company Act of 1940, the transaction resulted in a change in control of MFC and IMI and, therefore, constituted an assignment of the Fund's business management and investment advisory agreements, resulting in a termination of the agreements. At a Special Meeting of the Shareholders ("Special Meeting") of each Ivy Fund held at the offices of MIMI, Boca Raton, Florida on May 29, 2001, shareholders were asked to approve new agreements, as applicable, via the various proposals presented below. PROPOSAL 1: -- The shareholders of each eligible Ivy Fund (except Ivy Global Natural Resources Fund) voted to approve a new Master Business Management and Investment Advisory Agreement with IMI as follows:
FUND FOR: AGAINST: ABSTAIN: Ivy Cundill Global Value Fund 77,167 -- -- Ivy Developing Markets Fund 841,757 30,052 21,979 Ivy European Opportunities Fund 6,238,623 66,506 108,498 Ivy Global Fund 576,467 4,017 20,093 Ivy Global Science & Technology Fund 1,500,146 15,922 23,295 Ivy International Fund 22,817,707 827,391 1,167,236 Ivy International Small Companies Fund 1,169,879 4,890 10,026 Ivy International Value Fund 9,586,431 162,653 180,595 Ivy Pacific Opportunities Fund 1,302,577 21,993 29,060 Ivy Growth Fund 8,741,305 401,689 564,318 Ivy US Blue Chip Fund 3,680,971 90,627 169,897 Ivy US Emerging Growth Fund 2,699,835 43,554 56,987 Ivy Bond Fund 5,214,824 159,302 364,360 Ivy Money Market Fund 11,990,987 248,232 499,463
PROPOSAL 2: -- The shareholders of Ivy Global Natural Resources Fund voted to approve a new Master Business Management Agreement between the Trust, on behalf of the Fund, and IMI as follows:
FUND FOR: AGAINST: ABSTAIN: Ivy Global Natural Resources Fund 433,201 5,897 30,237
PROPOSAL 3: -- The shareholders of Ivy Global Natural Resources Fund voted to approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and MFC as follows:
FUND FOR: AGAINST: ABSTAIN: Ivy Global Natural Resources Fund 435,713 5,636 27,986
PROPOSAL 4: -- The shareholders of Ivy European Opportunities Fund and Ivy International Small Companies Fund voted to approve a new Subadvisory Agreement between IMI and Henderson Investment Management Limited as follows:
FUND FOR: AGAINST: ABSTAIN: Ivy European Opportunities Fund 6,253,640 60,908 99,078 Ivy International Small Companies Fund 1,168,255 5,802 10,737
PROPOSAL 5: -- The shareholders of Ivy Cundill Global Value Fund (formerly "Ivy Cundill Value Fund") voted to approve a new Subadvisory Agreement between IMI and Peter Cundill & Associates, Inc. as follows:
FUND FOR: AGAINST: ABSTAIN: Ivy Cundill Global Value Fund 77,167 -- --
95 98 NOTES ---------------------------------------------------------------------------- 96 99 BOARD OF TRUSTEES John S. Anderegg, Jr. James W. Broadfoot Keith J. Carlson Stanley Channick 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 PFPC Inc. 4400 Computer Drive Westborough, MA 01581 AUDITORS PricewaterhouseCoopers LLP Ft. Lauderdale, Florida DISTRIBUTOR Ivy Mackenzie Distributors, Inc. 925 South Federal Highway, Suite 600 Boca Raton, Florida 33432 800.456.5111 INVESTMENT MANAGER Ivy Management, Inc. 925 South Federal Highway, Suite 600 Boca Raton, Florida 33432 800.456.5111 www.ivyfunds.com E-mail: acctinfo@ivyfunds.com