N-CSR/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR
(Amendment No. 1)

CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-01028

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Ivy Funds

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(Exact name of registrant as specified in charter)

6300 Lamar Avenue, Overland Park, Kansas 66202

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(Address of principal executive offices) (Zip code)

Kristen A. Richards

6300 Lamar Avenue

Overland Park, Kansas 66202

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(Name and address of agent for service)

Registrant's telephone number, including area code: 913-236-2000

Date of fiscal year end: March 31

Date of reporting period: March 31, 2007

ITEM 1. REPORTS TO STOCKHOLDERS.

Amendment No. 1 to Form N-CSR is being filed to report amounts adjusted to correct an error in previously reported amounts for Ivy Real Estate Securities Fund Class Y financial highlights of $ 0.83 (net investment income), $ 4.80 (total from investment operations), $ 0.80 (distributions from net investment income) and $ 1.77 (total distributions), respectively.




Annual Report
March 31, 2007




Ivy Balanced Fund Ivy Bond Fund
Ivy Cundill Global Value Fund
Ivy Dividend Income Fund
Ivy European Opportunities Fund
Ivy Global Natural Resources Fund
Ivy International Balanced Fund
Ivy International Core Equity Fund
Ivy International Growth Fund
Ivy Mortgage Securities Fund
Ivy Pacific Opportunities Fund
Ivy Real Estate Securities Fund
Ivy Small Cap Value Fund
Ivy Value Fund

3	President's Letter
5	Illustration of Fund Expenses
13	Ivy Balanced Fund
32	Ivy Bond Fund
57	Ivy Cundill Global Value Fund
75	Ivy Dividend Income Fund
91	Ivy European Opportunities Fund
108	Ivy Global Natural Resources Fund
130	Ivy International Balanced Fund
151	Ivy International Core Equity Fund
169	Ivy International Growth Fund
189	Ivy Mortgage Securities Fund
214	Ivy Pacific Opportunities Fund
234	Ivy Real Estate Securities Fund
251	Ivy Small Cap Value Fund
268	Ivy Value Fund
284	Notes to Financial Statements
317	Report of Independent Registered Public Accounting Firm
318	Income Tax Information
327	Trustees and Officers
333	Shareholder Meeting Results
334	Annual Privacy Notice
335	Proxy Voting Information
336	Quarterly Portfolio Schedule Information
337	Householding Notice
338	IRA Disclosure

This report is submitted for the general information of the shareholders of Ivy Funds. It is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by a current Ivy Funds prospectus and current performance information.

President's Letter
      March 31, 2007
Dear Shareholder:

Stock markets around the globe generally provided attractive returns over the past 12 months, even as week to week it seemed the degree of price fluctuation accelerated. Most bond markets, meanwhile, were relatively flat. Concerns regarding monthly inflation reports, energy prices, Federal Reserve policy and increased defaults on housing debt were among the short-term factors that seemed to worry some investors.

Enclosed is our report on Ivy Funds' operations for the 12 months ended March 31, 2007. This past fiscal year the S&P 500 Index advanced 11.83 percent, led by utility and telecommunications stocks. Energy stocks were volatile as the price of oil gyrated. Health care and information technology were generally the weakest stock sectors during the fiscal year.

Seasons change, growth continues

As we enter spring, gasoline prices have risen again to above $2.50 a gallon in many locations. However, the latest round of volatility at the pump pales in comparison to the situation a year ago, when more than $3 a gallon was briefly the norm, and the U.S. seemed threatened with significantly higher inflation. Overall, the economic news of the past year has been good, including:

• Moderate oil prices
• Corporate profits remained solid, rising around 10 percent
• Relatively stable inflation and
• Improving trade and federal deficits.

Our Economic Snapshot chart highlights five selected indicators. As you can see, there's much to be thankful for, as well as a case for optimism about the future. Compared to a year earlier, a slightly smaller percentage of people in the U.S. are unemployed. Inflation is lower. The cost of financing a home is lower. Overall economic growth is slower, however, while oil prices are down slightly.

Economic Snapshot
	3-31-2007			3-31-2006
U.S. unemployment rate		4.40	%		4.70	%
Inflation (U.S. Consumer Price Index)		2.80	%		3.40	%
U.S. GDP		1.30	%		3.70	%
30-year fixed mortgage rate		6.13	%		6.37	%
Oil price per barrel	$	65.87		$	66.63

Source: Bloomberg, U.S. Department of Labor

The U.S. Consumer Price Index is the government's measure of the change in the retail cost of goods and services. Gross domestic product measures year-over-year changes in the output of goods and services. Mortgage rates shown reflect the average rate on a conventional loan with a 60-day lender commitment. Oil prices reflect the market price of West Texas intermediate grade crude.

Stock valuations generally appear reasonable, especially given profit levels and still low U.S. interest rates. We see an attractive path ahead for diversified investors in 2007, although one that might be marked by a few unexpected curves. As always, we believe that maintaining a well-rounded portfolio remains an important component of securing your long-term financial future.

Our expertise

In 2007, an affiliate of the Ivy Funds' distributor marks its 70th anniversary. At the Ivy Funds, we have deep resources focused on helping you achieve your long-term financial goals. We are committed to offering you an investment philosophy that emphasizes participation in positive markets as well as a very strong effort to manage risk. To help accomplish this, we have a research culture focused on fundamental excellence.

Thank you for your continued confidence in us.

Respectfully,

Henry J. Herrmann, CFA
President

The opinions expressed in this letter are those of the President of the Ivy Funds, and are current only through the end of the period of the report, as stated on the cover. The President's views are subject to change at any time, based on market and other conditions, and no forecasts can be guaranteed.

Illustration of Fund Expenses

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution and service fees, and other Fund expenses. The following tables are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six-month period ended March 31, 2007.

Actual Expenses

The first line for each share class in the following tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, a $7,500 account value divided by $1,000 = 7.5), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. There may be additional fees charged to holders of certain accounts that are not included in the expenses shown in the tables. These fees apply to Individual Retirement Accounts (IRAs), IRA Rollovers, Roth IRAs, Conversion Roth IRAs, Simplified Employee Pension (SEP), Simple IRAs, Tax-Sheltered Accounts (TSAs), Keogh Plans, Owner Only 401(k) (Exclusive K) Plans and Final Pay Plans. As of the close of the six months covered by the tables, a customer is charged an annual fee of $15 within each plan type. This fee is waived for IRA Rollovers and Conversion Roth IRAs if the customer owns another type of IRA. Coverdell Education Savings Account plans are charged an annual fee of $10 per customer. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value as such additional expenses are not reflected in the information provided in the expense tables. Additional fees have the effect of reducing investment returns.

Hypothetical Example for Comparison Purposes

The second line for each share class of the following tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the second line of each share class in the tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

Ivy Balanced Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,040.90		1.38	%	$	7.04
Class B		1,000		1,036.00		2.36			12.01
Class C		1,000		1,037.20		2.14			10.90
Class Y		1,000		1,041.60		1.25			6.43
Based on 5% Return (2)
Class A	$	1,000	$	1,018.07		1.38	%	$	6.96
Class B		1,000		1,013.14		2.36			11.88
Class C		1,000		1,014.25		2.14			10.78
Class Y		1,000		1,018.68		1.25			6.36

Ivy Bond Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,026.40		1.18	%	$	5.98
Class B		1,000		1,020.80		2.28			11.52
Class C		1,000		1,022.00		2.04			10.31
Class Y		1,000		1,027.00		0.93			4.76
Based on 5% Return (2)
Class A	$	1,000	$	1,019.04		1.18	%	$	5.96
Class B		1,000		1,013.54		2.28			11.48
Class C		1,000		1,014.76		2.04			10.28
Class Y		1,000		1,020.28		0.93			4.75

Ivy Cundill Global Value Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,109.30		1.54	%	$	8.12
Class B		1,000		1,104.70		2.42			12.73
Class C		1,000		1,105.40		2.19			11.47
Class Y		1,000		1,111.40		1.20			6.33
Class II		1,000		1,111.70		1.01			5.38
Advisor Class		1,000		1,111.90		1.05			5.49
Based on 5% Return (2)
Class A	$	1,000	$	1,017.25		1.54	%	$	7.77
Class B		1,000		1,012.88		2.42			12.18
Class C		1,000		1,014.01		2.19			10.98
Class Y		1,000		1,018.96		1.20			6.06
Class II		1,000		1,019.88		1.01			5.15
Advisor Class		1,000		1,019.71		1.05			5.25

Ivy Dividend Income Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,093.20		1.38	%	$	7.22
Class B		1,000		1,088.10		2.31			12.01
Class C		1,000		1,089.30		2.16			11.28
Class Y		1,000		1,093.40		1.28			6.70
Based on 5% Return (2)
Class A	$	1,000	$	1,018.06		1.38	%	$	6.96
Class B		1,000		1,013.42		2.31			11.58
Class C		1,000		1,014.17		2.16			10.88
Class Y		1,000		1,018.53		1.28			6.46

Ivy European Opportunities Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,200.30		1.62	%	$	8.91
Class B		1,000		1,195.80		2.35			12.85
Class C		1,000		1,196.00		2.28			12.52
Class Y		1,000		1,201.20		1.41			7.70
Advisor Class		1,000		1,203.10		1.15			6.28
Based on 5% Return (2)
Class A	$	1,000	$	1,016.85		1.62	%	$	8.17
Class B		1,000		1,013.22		2.35			11.78
Class C		1,000		1,013.54		2.28			11.48
Class Y		1,000		1,017.91		1.41			7.06
Advisor Class		1,000		1,019.19		1.15			5.75

Ivy Global Natural Resources Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,165.80		1.29	%	$	6.93
Class B		1,000		1,161.40		2.10			11.35
Class C		1,000		1,162.30		2.01			10.81
Class Y		1,000		1,166.70		1.20			6.50
Class R		1,000		1,164.80		1.57			8.44
Advisor Class		1,000		1,168.40		0.87			4.66
Based on 5% Return (2)
Class A	$	1,000	$	1,018.51		1.29	%	$	6.46
Class B		1,000		1,014.46		2.10			10.58
Class C		1,000		1,014.89		2.01			10.07
Class Y		1,000		1,018.95		1.20			6.06
Class R		1,000		1,017.10		1.57			7.87
Advisor Class		1,000		1,020.59		0.87			4.34

Ivy International Balanced Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,110.40		1.34	%	$	7.07
Class B		1,000		1,106.20		2.27			11.90
Class C		1,000		1,106.60		2.06			10.85
Class Y		1,000		1,111.30		1.16			6.12
Based on 5% Return (2)
Class A	$	1,000	$	1,018.26		1.34	%	$	6.76
Class B		1,000		1,013.62		2.27			11.38
Class C		1,000		1,014.67		2.06			10.38
Class Y		1,000		1,019.13		1.16			5.86

Ivy International Core Equity Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,143.70		1.53	%	$	8.15
Class B		1,000		1,139.00		2.33			12.41
Class C		1,000		1,139.90		2.23			11.88
Class Y		1,000		1,145.00		1.33			7.19
Advisor Class		1,000		1,144.10		1.41			7.61
Based on 5% Return (2)
Class A	$	1,000	$	1,017.31		1.53	%	$	7.67
Class B		1,000		1,013.30		2.33			11.68
Class C		1,000		1,013.82		2.23			11.18
Class Y		1,000		1,018.28		1.33			6.76
Advisor Class		1,000		1,017.88		1.41			7.16

Ivy International Growth Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,150.40		1.40	%	$	7.53
Class B		1,000		1,144.80		2.42			12.98
Class C		1,000		1,144.80		2.44			13.08
Class Y		1,000		1,150.70		1.40			7.53
Class II		1,000		1,151.80		1.19			6.35
Advisor Class		1,000		1,132.80		4.45			23.67
Based on 5% Return (2)
Class A	$	1,000	$	1,017.96		1.40	%	$	7.06
Class B		1,000		1,012.88		2.42			12.18
Class C		1,000		1,012.76		2.44			12.28
Class Y		1,000		1,017.96		1.40			7.06
Class II		1,000		1,019.02		1.19			5.96
Advisor Class		1,000		1,002.74		4.45			22.23

Ivy Mortgage Securities Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,027.60		1.12	%	$	5.68
Class B		1,000		1,022.50		2.12			10.72
Class C		1,000		1,023.60		1.90			9.61
Class Y		1,000		1,028.30		0.98			4.97
Based on 5% Return (2)
Class A	$	1,000	$	1,019.36		1.12	%	$	5.65
Class B		1,000		1,014.37		2.12			10.68
Class C		1,000		1,015.47		1.90			9.57
Class Y		1,000		1,020.03		0.98			4.95

Ivy Pacific Opportunities Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,197.60		1.83	%	$	10.00
Class B		1,000		1,191.80		2.87			15.67
Class C		1,000		1,193.70		2.59			14.15
Class Y		1,000		1,199.50		1.56			8.58
Advisor Class		1,000		1,201.60		1.29			7.05
Based on 5% Return (2)
Class A	$	1,000	$	1,015.80		1.83	%	$	9.17
Class B		1,000		1,010.64		2.87			14.38
Class C		1,000		1,012.02		2.59			12.98
Class Y		1,000		1,017.13		1.56			7.87
Advisor Class		1,000		1,018.50		1.29			6.46

Ivy Real Estate Securities Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,109.60		1.54	%	$	8.12
Class B		1,000		1,104.00		2.52			13.26
Class C		1,000		1,105.50		2.34			12.32
Class Y		1,000		1,110.50		1.36			7.18
Class R		1,000		1,108.70		1.66			8.75
Based on 5% Return (2)
Class A	$	1,000	$	1,017.27		1.54	%	$	7.77
Class B		1,000		1,012.38		2.52			12.68
Class C		1,000		1,013.26		2.34			11.78
Class Y		1,000		1,018.16		1.36			6.86
Class R		1,000		1,016.64		1.66			8.37

Ivy Small Cap Value Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,105.10		1.69	%	$	8.95
Class B		1,000		1,099.10		2.76			14.48
Class C		1,000		1,100.60		2.48			13.02
Class Y		1,000		1,106.60		1.37			7.27
Based on 5% Return (2)
Class A	$	1,000	$	1,016.48		1.69	%	$	8.57
Class B		1,000		1,011.15		2.76			13.88
Class C		1,000		1,012.54		2.48			12.48
Class Y		1,000		1,018.08		1.37			6.96

Ivy Value Fund Expenses
For the Six Months Ended       March 31, 2007	Beginning Account Value 9-30-06		Ending Account Value 3-31-07		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,095.50		1.48	%	$	7.75
Class B		1,000		1,090.30		2.44			12.75
Class C		1,000		1,090.70		2.36			12.34
Class Y		1,000		1,096.00		1.28			6.71
Based on 5% Return (2)
Class A	$	1,000	$	1,017.57		1.48	%	$	7.47
Class B		1,000		1,012.74		2.44			12.28
Class C		1,000		1,013.16		2.36			11.88
Class Y		1,000		1,018.55		1.28			6.46

*Fund expenses for each share class are equal to the Fund's annualized expense ratio for each share class (provided in the tables), multiplied by the average account value over the period, multiplied by 182 days in the six-month period ended March 31, 2007, and divided by 365.

(1)This section uses the Fund's actual total return and actual Fund expenses. It is a guide to the actual expenses paid by the Fund in the period. The "Ending Account Value" shown is computed using the Fund's actual return and the "Expenses Paid During Period" column shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. A shareholder may use the information here, together with the dollar amount invested, to estimate the expenses that were paid over the period. For every thousand dollars a shareholder has invested, the expenses are listed in the fourth column.

(2)This section uses a hypothetical 5% annual return and actual Fund expenses. It helps to compare the Fund's ongoing costs with other mutual funds. A shareholder can compare the Fund's ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

The above illustrations are based on ongoing costs only and do not include any transactional costs, such as sales loads, redemption fees or exchange fees.

Manager's Discussion of Ivy Balanced Fund
      March 31, 2007

Below, Cynthia P. Prince-Fox, portfolio manager of the Ivy Balanced Fund, discusses positioning, performance and results for the fiscal year ended March 31, 2007. She has managed the Fund for three years and has 24 years of industry experience.

The Fund increased 7.53 percent (Class A shares at net asset value) for the 12 months ended March 31, 2007. This was less than the S&P 500 Index (reflecting the performance of securities that generally represent the stock market), which increased 11.83 percent for the same period. The Fund outpaced the Citigroup Treasury/Government Sponsored/Credit Index (generally reflecting the performance of funds in the bond market), which increased 6.39 percent for the period. Multiple indices are presented because the Fund invests in both stocks and bonds.

During the fiscal year, Lipper, Inc. recategorized the Fund into a new peer group - the Lipper Mixed-Asset Target Allocation Growth Funds Universe Average (reflecting the performance of funds with similar objectives). This group of funds rose 9.56 percent for the 12 months ended March 31, 2007. The Fund's old peer group - the Lipper Balanced Funds Universe Average - rose 9.04 percent for the fiscal year.

STYLE
VALUE	BLEND	GROWTH
		X	LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

MATURITY
SHORT	INTERMED	LONG
	X		HIGH	CREDIT QUALITY
			MEDIUM
			LOW

This diagram shows the Fund's fixed-income investment style by displaying the average credit quality of the bonds owned and the Fund's interest rate sensitivity, as measured by average maturity. Shaded areas show the past three years of quarterly data. Source: Morningstar

Financial, health care weakened results

We underperformed our peer groups and equity benchmark this past fiscal year primarily because of 1) adverse stock selection in financials, health care and industrials and 2) our positioning in high quality, relatively shorter duration bonds at a time when longer duration, lower quality bonds tended to outperform.

We stayed close to our maximum 75 percent weighting in equities for the majority of the 12 months ended March 31, 2007, and this generally had a positive impact on overall performance. However, the equity portion lagged the S&P 500 primarily as a result of adverse selection as well as an overweighting of the weaker-than-market industrial sector. Meanwhile, the fixed-income portion of the portfolio modestly underperformed its bond market benchmark.

For most of the last few years the Fund has been tilted toward more economically sensitive industries relative to the market. Starting in the first quarter of this last fiscal year we began to transition the portfolio away from these areas. We reasoned there was growing evidence that the economy was slowing and likely would impact stocks in our portfolio that have been some of our best performers over the past several years. At the end of the first fiscal quarter (March 2006), market psychology seemed to shift from a generally "half empty" mentality toward "half full" as investors reacted to a more favorable inflation picture and a drop in the price of oil. Shortly after the second fiscal quarter started, the war between Israel and Hezbollah began and escalated to a point that few had predicted. As the war raged on, the price of oil climbed to a point that threatened the global boom of the last few years. The war ended in conjunction with a rapid deterioration in the housing market, causi ng energy and other commodity prices to experience meaningful declines. The bond market took this as an "all clear" signal that inflation was dead and that the Federal Reserve could take a pause after a two-year tightening campaign.

The equity markets' response was decidedly positive, posting strong gains in the final quarter of the 2006 calendar year. In fact, every sector of the S&P 500 posted positive returns last year in contrast to the last couple of years when much of the gains were clustered in a handful of sectors, specifically energy. While energy finished the year as one of the leading performers, we believe the market will continue to broaden out to other sectors of the market.

We believe as the markets grow more comfortable with the idea that commodity prices likely are not going to spiral upwards to a point that inflation concerns reenter the picture, areas that have been impacted by rising commodity costs also may do better. We have added to our technology and retail holdings, as these stocks looked attractive based on a number of valuation metrics. While we believe the consumer likely will face challenges in the months ahead as housing languishes, we believe that other economic factors, such as relatively moderate energy prices and stable interest rates, should remove some of the pressure.

We also think there are some very exciting developments occurring in technology and telecommunications. Some of the trends that we are beginning to witness are a result of the digitization of content and new forms of content distribution. While these trends were a dream just a few years ago, they are real and happening today. We have exposure to these developments and look to increase those, given ongoing consumer technology adoptions.

Overall, we placed our greatest emphasis on energy, industrials and health care relative to the weightings found in the S&P 500. While the financial sector is the largest weighted sector in the Fund, we were underweight banks for most of the year. We have preferred to invest in financial stocks that we feel should benefit from increasing global wealth management and electronic trading.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Change in weighting
Exxon Mobil Corporation	Increased
General Dynamics Corporation	Increased
General Electric Company	Increased
Cisco Systems, Inc.	New to Top 10
Colgate-Palmolive Company	Increased
Schlumberger Limited	Decreased
Apple Inc.	New to Top 10
Johnson & Johnson	Increased
UBS Ag	New to Top 10
PepsiCo, Inc.	New to Top 10

See your advisor or www.ivyfunds.com for more information on the Fund's most currently reported Top 10 Holdings.

Our outlook

Global liquidity has found its way into just about every asset class, with real estate, stocks, bonds and commodities all posting positive gains this year. An additional kicker has been private equity creating a bid under the market, particularly in value situations. As we enter the new fiscal year, our broad stance on the markets remains positive. Fiscal policy in many countries around the world has been aimed at containing inflation, and it appears, so far, that inflation has stayed under control. Global growth looks to be slowing, but not nearly to the degree as many had feared, given a slowing U.S. consumer. While we remain cautious as global economic growth matures, we feel that investors likely will put more emphasis on quality and pay greater attention to companies that can demonstrate sustainable earnings power. We continue to make adjustments to the portfolio to reflect our most current thinking on the economy and how we anticipate market reaction.

Bond Portfolio Characteristics
As of 3-31-07
Average maturity	4.53 years
Effective duration	3.29 years
Weighted average bond rating	AAA

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Balanced Fund, Class A Shares (1)	$	14,513
S&P 500 Index	$	17,427
Citigroup Treasury/Government Sponsored/Credit Index	$	17,589
Lipper Mixed-Asset Target Allocation Growth Funds Universe Average	$	17,163

		IVY BALANCED FUND.	S&P 500	CITIGROUP TREASURY/ GOVT SPONSORED/	LIPPER MIXED-ASSET TARGET ALLOCATION GROWTH FUNDS
		CLASS A SHARES	INDEX	CREDIT INDEX	UNIVERSE AVERAGE
SEPT	1997	9,425	10,000	10,000	10,000
SEPT	1998	10,491	10,911	11,271	10,208
SEPT	1999	12,178	13,945	11,109	11,776
SEPT	2000	14,152	15,792	11,849	13,298
SEPT	2001	9,574	11,582	13,441	11,488
SEPT	2002	9,009	9,209	14,636	10,277
SEPT	2003	10,555	11,459	15,605	12,062
MARCH	2004	11,617	13,072	16,097	13,419
MARCH	2005	12,303	13,947	16,181	14,131
MARCH	2006	13,497	15,583	16,533	15,666
MARCH	2007	14,513	17,427	17,589	17,163

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A		Class B		Class C		Class Y
1-year period ended 3-31-07	1.35	%	2.49	%	6.67	%	7.67	%
5-year period ended 3-31-07	5.17	%	–		–		–
10-year period ended 3-31-07	5.31	%	–		–		–
Since inception of Class (3) through 3-31-07	–		6.20	%	7.14	%	8.22	%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)12-8-03 for Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

The Advantus Spectrum Fund merged into the Ivy Balanced Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Spectrum Fund Class A shares, restated to reflect current sales charges applicable to Ivy Balanced Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Balanced Fund. If these expenses were reflected, performance shown would differ.

Shareholder Summary of Ivy Balanced Fund

Portfolio Highlights

On March 31, 2007, Ivy Balanced Fund had net assets totaling $93,339,542 invested in a diversified portfolio of:

67.18%	Domestic Common Stocks
15.95%	United States Government and Government Agency Obligations
5.39%	Cash and Cash Equivalents
5.37%	Domestic Corporate Debt Securities
5.06%	Foreign Common Stocks
0.61%	Other Government Securities
0.44%	Foreign Corporate Debt Securities

Asset Allocation

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund owned:

Stocks	$	72.24
Technology	$	14.06
Health Care	$	11.66
Financial Services	$	10.75
Energy	$	6.76
Consumer Nondurables	$	6.35
Miscellaneous	$	6.14
Consumer Services	$	4.73
Multi-Industry	$	3.33
Utilities	$	3.06
Retail	$	2.82
Capital Goods	$	2.58
Bonds	$	22.37
United States Government and Government Agency Obligations	$	15.95
Corporate Debt Securities	$	5.81
Other Government Securities	$	0.61
Cash and Cash Equivalents	$	5.39

The Investments of Ivy Balanced Fund
March 31, 2007
COMMON STOCKS	Shares			Value
Air Transportation - 0.87%
Southwest Airlines Co.		55,300	$	812,910
Aircraft - 1.58%
Boeing Company (The)		16,600		1,475,906
Banks - 3.44%
Bank of America Corporation		16,600		846,932
Northern Trust Corporation		22,600		1,358,373
Wells Fargo & Company		29,100		1,001,913
				3,207,218
Beverages - 3.32%
Anheuser-Busch Companies, Inc.		15,000		756,900
Brown-Forman Corporation, Class B		12,400		812,944
PepsiCo, Inc.		24,000		1,525,440
				3,095,284
Business Equipment and Services - 1.06%
Pitney Bowes Inc.		21,800		989,502
Chemicals - Petroleum and Inorganic - 1.25%
E.I. du Pont de Nemours and Company		23,600		1,166,548
Chemicals - Specialty - 1.18%
Air Products and Chemicals, Inc.		14,900		1,100,961
Communications Equipment - 4.59%
Cisco Systems, Inc.*		69,800		1,779,551
Nokia Corporation, Series A, ADR		56,200		1,288,104
QUALCOMM Incorporated		28,600		1,218,789
				4,286,444
Computers - Micro - 1.73%
Apple Inc.*		17,400		1,616,547
Computers - Peripherals - 1.19%
Microsoft Corporation		39,758		1,107,857
Defense - 2.47%
General Dynamics Corporation		30,200		2,307,280
Electrical Equipment - 1.03%
Emerson Electric Co.		22,400		965,216
Electronic Components - 2.50%
Microchip Technology Incorporated		34,700		1,233,412
Texas Instruments Incorporated		36,500		1,098,650
				2,332,062
Food and Related - 1.15%
Wm. Wrigley Jr. Company		21,100		1,074,623
Health Care - Drugs - 5.41%
Allergan, Inc.		11,100		1,230,102
Amgen Inc.*		13,500		754,042
Gilead Sciences, Inc.*		15,900		1,215,793
Novartis AG, ADR		12,000		655,560
Pfizer Inc.		47,200		1,192,272
				5,047,769
Health Care - General - 3.92%
DENTSPLY International Inc.		35,000		1,146,075
Johnson & Johnson		26,200		1,578,812
Zimmer Holdings, Inc.*		10,900		930,969
				3,655,856
Hospital Supply and Management - 2.33%
Community Health Systems, Inc.*		31,300		1,103,325
Medtronic, Inc.		21,800		1,069,508
				2,172,833
Hotels and Gaming - 1.09%
Las Vegas Sands, Inc.*		11,800		1,021,998
Household - General Products - 1.88%
Colgate-Palmolive Company		26,300		1,756,577
Insurance - Life - 1.16%
Aflac Incorporated		23,000		1,082,380
Insurance - Property and Casualty - 1.17%
Berkshire Hathaway Inc., Class B*		300		1,092,000
Leisure Time Industry - 1.00%
Time Warner Inc.		47,100		928,812
Motion Pictures - 1.57%
News Corporation Limited, Class A		63,400		1,465,808
Multiple Industry - 3.33%
Altria Group, Inc.		9,800		860,538
General Electric Company		63,680		2,251,725
				3,112,263
Non-Residential Construction - 1.55%
Fluor Corporation		16,100		1,444,492
Petroleum - International - 5.01%
BP p.l.c., ADR		19,000		1,230,250
ChevronTexaco Corporation		13,500		998,460
Exxon Mobil Corporation		32,400		2,444,580
				4,673,290
Petroleum - Services - 1.75%
Schlumberger Limited		23,700		1,637,670
Publishing - 1.07%
Meredith Corporation		17,400		998,586
Retail - General Merchandise - 2.05%
Target Corporation		15,000		888,900
Wal-Mart Stores, Inc.		21,900		1,028,205
				1,917,105
Retail - Specialty Stores - 0.77%
Best Buy Co., Inc.		14,800		721,056
Security and Commodity Brokers - 4.98%
American Express Company		17,800		1,003,920
Chicago Mercantile Exchange Holdings Inc.		1,500		798,690
J.P. Morgan Chase & Co.		26,800		1,296,584
UBS AG		26,000		1,545,180
				4,644,374
Timesharing and Software - 1.07%
Paychex, Inc.		26,400		999,504
Trucking and Shipping - 0.71%
Expeditors International of Washington, Inc.		16,100		665,010
Utilities - Electric - 1.45%
Exelon Corporation		19,700		1,353,587
Utilities - Telephone - 1.61%
AT&T Inc.		38,100		1,502,283
TOTAL COMMON STOCKS - 72.24%			$	67,431,611
(Cost: $51,895,168)

CORPORATE DEBT SECURITIES	Principal Amount in Thousands
Banks - 0.29%
Wells Fargo Bank, N.A.,
7.55%, 6-21-10		$250		267,474
Beverages - 0.37%
Diageo Capital plc,
3.5%, 11-19-07		350		346,176
Finance Companies - 2.48%
American International Group,
3.85%, 11-26-07 (A)		500		495,188
Banco Hipotecario Nacional:
7.916%, 7-25-09 (A)		6		65
8.0%, 3-31-11 (A)		223		62,481
First Union-Lehman Brothers-Bank of America       Commercial Mortgage Trust,
6.56%, 11-18-35		360		362,616
General Motors Acceptance Corporation,
6.125%, 8-28-07		300		299,822
Prudential Insurance Company of America,
6.6%, 5-15-08 (A)		750		758,212
Unilever Capital Corporation,
5.9%, 11-15-32		350		340,033
				2,318,417
Food and Related - 1.30%
Archer-Daniels-Midland Company,
7.0%, 2-1-31		700		789,021
Cargill, Inc.,
6.375%, 6-1-12 (B)		400		420,439
				1,209,460
Insurance - Life - 0.51%
StanCorp Financial Group, Inc.,
6.875%, 10-1-12		450		476,982
Real Estate Investment Trust - 0.86%
Vornado Realty L.P.,
5.625%, 6-15-07		800		799,675
TOTAL CORPORATE DEBT SECURITIES - 5.81%			$	5,418,184
(Cost: $5,367,927)

OTHER GOVERNMENT SECURITIES - 0.61%
Canada
Hydro-Quebec
8.0%, 2-1-13	500	$	570,902
(Cost: $569,603)
UNITED STATES GOVERNMENT AND       GOVERNMENT AGENCY OBLIGATIONS
Mortgage-Backed Obligations - 5.25%
Federal National Mortgage Association Fixed Rate       Pass-Through Certificates:
6.23%, 1-1-08	417		416,581
6.0%, 9-1-17	393		400,809
5.0%, 1-1-18	446		441,073
5.5%, 4-1-18	393		394,440
6.5%, 10-1-28	147		151,231
6.5%, 2-1-29	32		32,726
7.0%, 5-1-31	30		31,503
7.5%, 5-1-31	55		58,166
7.0%, 7-1-31	44		46,128
7.0%, 9-1-31	65		68,178
7.0%, 9-1-31	48		50,002
7.0%, 11-1-31	153		159,786
6.5%, 2-1-32	169		175,589
7.0%, 2-1-32	174		182,403
7.0%, 2-1-32	97		101,901
6.5%, 3-1-32	50		51,366
7.0%, 3-1-32	104		108,968
7.0%, 6-1-32	33		34,653
7.0%, 7-1-32	206		216,416
6.5%, 8-1-32	84		87,480
6.0%, 9-1-32	637		645,162
6.5%, 9-1-32	151		156,760
5.5%, 5-1-33	309		306,506
5.5%, 5-1-33	181		179,916
5.5%, 5-1-33	117		115,595
5.5%, 6-1-33	288		285,871
			4,899,209

Treasury Obligations - 10.70%
United States Treasury Bond,
7.5%, 11-15-16	500			607,637
United States Treasury Notes:
3.0%, 2-15-08		900		885,129
4.0%, 3-15-10		800		788,282
4.25%, 10-15-10	2,000			1,982,266
3.875%, 2-15-13	1,250			1,207,372
3.625%, 5-15-13		750		713,379
4.25%, 8-15-13		900		884,637
4.25%, 8-15-15	3,000			2,919,726
				9,988,428
TOTAL UNITED STATES GOVERNMENT AND       GOVERNMENT AGENCY OBLIGATIONS - 15.95%			$	14,887,637
(Cost: $15,069,112)
SHORT-TERM SECURITIES
Aluminum - 1.45%
Alcoa Incorporated,
5.44%, 4-2-07	1,350			1,349,796
Utilities - Gas and Pipeline - 2.68%
Michigan Consolidated Gas Co.,
5.33%, 4-2-07	2,500			2,499,630
Utilities - Telephone - 1.28%
Verizon Communications Inc.,
5.35%, 4-4-07	1,200			1,199,465
TOTAL SHORT-TERM SECURITIES - 5.41%			$	5,048,891
(Cost: $5,048,891)
TOTAL INVESTMENT SECURITIES -100.02%			$	93,357,225
(Cost: $77,950,701)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.02%)				(17,683	)
NET ASSETS - 100.00%			$	93,339,542

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*No dividends were paid during the preceding 12 months.

(A)Illiquid security. At March 31, 2007, the total value of illiquid securities amounted to $1,315,946, or 1.41% of net assets.

(B)Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security has been determined to be liquid under guidelines established by the Board of Trustees. At March 31, 2007, the total value of this security amounted to 0.45% of net assets.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY BALANCED FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $77,951) (Notes 1 and 3)	$	93,357
Receivables:
Dividends and interest		290
Fund shares sold		35
Prepaid and other assets		38
Total assets		93,720
LIABILITIES
Payable to Fund shareholders		180
Due to custodian		57
Accrued management fee (Note 2)		56
Accrued service fee (Note 2)		33
Accrued shareholder servicing (Note 2)		25
Accrued accounting services fee (Note 2)		4
Accrued distribution fee (Note 2)		3
Other		22
Total liabilities		380
Total net assets	$	93,340
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	77,256
Accumulated undistributed income:
Accumulated undistributed net investment income		26
Accumulated undistributed net realized gain on investment transactions		651
Net unrealized appreciation in value of investments		15,407
Net assets applicable to outstanding units of capital	$	93,340
Net asset value per share (net assets divided by shares outstanding):
Class A		$16.18
Class B		$16.14
Class C		$16.15
Class Y		$16.18
Capital shares outstanding:
Class A		3,670
Class B		155
Class C		187
Class Y		1,757

See Notes to Financial Statements.

Statement of Operations
      IVY BALANCED FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	1,301
Dividends (net of foreign withholding taxes of $3)		1,015
Total income		2,316
Expenses (Note 2):
Investment management fee		670
Service fee:
Class A		139
Class B		5
Class C		6
Class Y		83
Shareholder servicing:
Class A		158
Class B		11
Class C		7
Class Y		50
Accounting services fee		48
Distribution fee:
Class A		6
Class B		16
Class C		18
Audit fees		23
Custodian fees		11
Legal fees		3
Other		75
Total expenses		1,329
Net investment income		987
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		3,925
Unrealized appreciation in value of investments during the period		1,967
Net gain on investments		5,892
Net increase in net assets resulting from operations	$	6,879

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY BALANCED FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
DECREASE IN NET ASSETS
Operations:
Net investment income	$	987		$	1,020
Realized net gain on investments		3,925			3,508
Unrealized appreciation		1,967			4,702
Net increase in net assets resulting from operations		6,879			9,230
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A		(661	)		(515	)
Class B		(3	)		(1	)
Class C		(11	)		(1	)
Class Y		(411	)		(423	)
Realized gains on investment transactions:
Class A		(–	)		(–	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(–	)		(–	)
		(1,086	)		(940	)
Capital share transactions (Note 5)	(11,344		)		(9,813	)
Total decrease		(5,551	)		(1,523	)
NET ASSETS
Beginning of period		98,891		100,414
End of period	$	93,340		$	98,891
Undistributed net investment income	$	26		$	125

(1)See "Financial Highlights" on pages 28 - 31.

See Notes to Financial Statements.

Financial Highlights
      IVY BALANCED FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended September 30,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	15.22		$	14.00		$	13.35		$	12.18		$	10.54		$	11.45
Income (loss) from       investment operations:
Net investment income		0.16			0.15			0.14			0.05			0.16			0.23
Net realized and unrealized             gain (loss) on investments		0.98			1.21			0.65			1.16			1.64			(0.89	)
Total from investment operations		1.14			1.36			0.79			1.21			1.80			(0.66	)
Less distributions from:
Net investment income		(0.18	)		(0.14	)		(0.14	)		(0.04	)		(0.16	)		(0.25	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.18	)		(0.14	)		(0.14	)		(0.04	)		(0.16	)		(0.25	)
Net asset value, end of period	$	16.18		$	15.22		$	14.00		$	13.35		$	12.18		$	10.54
Total return(1)		7.53	%		9.71	%		5.90	%		10.06	%		17.17	%(2)		- -5.91	%
Net assets, end of period       (in millions)		$59			$57			$54			$52			$38			$37
Ratio of expenses to average net       assets including voluntary       expense waiver		1.39	%		1.42	%		1.53	%		1.52	%(3)(4)		1.29	%		1.22	%
Ratio of net investment income       to average net assets including       voluntary expense waiver		1.03	%		1.00	%		1.02	%		0.86	%(3)(4)		1.41	%		1.84	%
Ratio of expenses to average net       assets excluding voluntary       expense waiver		1.39	%(5)		1.42	%(5)		1.53	%(5)		1.57	%(3)(4)		1.62	%		1.52	%
Ratio of net investment income       to average net assets excluding       voluntary expense waiver		1.03	%(5)		1.00	%(5)		1.02	%(5)		0.81	%(3)(4)		1.08	%		1.54	%
Portfolio turnover rate		23	%		49	%		37	%		29	%		110	%		129	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.

(2)Advantus Capital reimbursed the Fund for losses related to certain investment trades. With reimbursed losses, the total return for Class A, for the year ended September 30, 2003, would have been 17.26%.

(3)Annualized.

(4)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from October 1, 2003 up to the time of the merger. Actual expenses that applied to Class A shareholders were lower than shown above.

(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY BALANCED FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	15.18		$	13.98		$	13.33		$	12.96
Income from investment operations:
Net investment income		0.01			0.00			0.01			0.01
Net realized and unrealized             gain on investments		0.98			1.21			0.64			0.39
Total from investment operations		0.99			1.21			0.65			0.40
Less distributions from:
Net investment income		(0.03	)		(0.01	)		(0.00	)*		(0.03	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.03	)		(0.01	)		(0.00	)*		(0.03	)
Net asset value, end of period	$	16.14		$	15.18		$	13.98		$	13.33
Total return		6.49	%		8.62	%		4.90	%		3.05	%
Net assets, end of period (in thousands)	$2,506			$1,995			$1,503				$338
Ratio of expenses to average net assets		2.39	%		2.41	%		2.52	%		2.76	%(2)
Ratio of net investment income       (loss) to average net assets		0.03	%		0.01	%		0.06	%		- -0.42	%(2)
Portfolio turnover rate		23	%		49	%		37	%		29	%(3)

*Not shown due to rounding.

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY BALANCED FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	15.20		$	13.98		$	13.34		$	12.96
Income from investment operations:
Net investment income		0.04			0.03			0.03			0.02
Net realized and unrealized             gain on investments		0.97			1.20			0.63			0.39
Total from investment operations		1.01			1.23			0.66			0.41
Less distributions from:
Net investment income		(0.06	)		(0.01	)		(0.02	)		(0.03	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.06	)		(0.01	)		(0.02	)		(0.03	)
Net asset value, end of period	$	16.15		$	15.20		$	13.98		$	13.34
Total return		6.67	%		8.80	%		4.98	%		3.13	%
Net assets, end of period (in thousands)	$3,018			$1,996				$898			$301
Ratio of expenses to average net assets		2.16	%		2.25	%		2.38	%		2.43	%(2)
Ratio of net investment income       (loss) to average net assets		0.27	%		0.21	%		0.19	%		- -0.12	%(2)
Portfolio turnover rate		23	%		49	%		37	%		29	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY BALANCED FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	15.22		$	14.00		$	13.35		$	12.96
Income from investment operations:
Net investment income		0.18			0.17			0.17			0.04
Net realized and unrealized             gain on investments		0.98			1.21			0.65			0.40
Total from investment operations		1.16			1.38			0.82			0.44
Less distributions from:
Net investment income		(0.20	)		(0.16	)		(0.17	)		(0.05	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.20	)		(0.16	)		(0.17	)		(0.05	)
Net asset value, end of period	$	16.18		$	15.22		$	14.00		$	13.35
Total return		7.67	%		9.89	%		6.16	%		3.43	%
Net assets, end of period (in millions)		$28			$38			$44			$53
Ratio of expenses to average net assets		1.26	%		1.26	%		1.30	%		1.36	%(2)
Ratio of net investment income       to average net assets		1.16	%		1.15	%		1.25	%		0.97	%(2)
Portfolio turnover rate		23	%		49	%		37	%		29	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Managers' Discussion of Ivy Bond Fund
      March 31, 2007

The Ivy Bond Fund is subadvised by Advantus Capital Management, Inc.

Below, Thomas B. Houghton, CFA, David W. Land, CFA, and Christopher R. Sebald, CFA, portfolio managers of the Ivy Bond Fund, discuss positioning, performance and results for the fiscal year ended March 31, 2007. Mr. Houghton has 14 years of industry experience. Mr. Land has 16 years of industry experience and Mr. Sebald has 18 years of industry experience.

The Fund rose 6.40 percent (Class A shares at net asset value) for the 12 months ended March 31, 2007, less than its benchmark but slightly ahead of its peer group. The Citigroup Broad Investment Grade Index (reflecting the performance of securities that generally represent the bond market) increased 6.60 percent, while the Lipper Corporate Debt Funds A-Rated Universe Average (reflecting the universe of funds with similar investment objectives) increased 6.10 percent for the same period.

CMBS helped results

Our underweighting in Treasuries and overweighting in collateralized mortgage obligations and commercial mortgage-backed securities (CMBS) benefited the Fund's overall performance. Fueling these results were two primary factors: all non-Treasury sectors outperformed Treasuries during the year (although less so during the most recent quarter), and our security selection within these sectors was very strong. However, our investment in Kinder Morgan bonds detracted from performance as a highly leveraged managed buyout seriously damaged credit quality. This is just one example of the type of activity that made us very cautious toward corporate bonds near the end of calendar year 2006.

MATURITY
SHORT	INTERMED	LONG
			HIGH	CREDIT QUALITY
	X		MEDIUM
			LOW

This diagram shows the Fund's fixed-income investment style by displaying the average credit quality of the bonds owned and the Fund's interest rate sensitivity, as measured by average maturity. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

Interest rates increased a bit, but short-term rates rose more, inverting the yield curve. The somewhat minor changes gave us fewer opportunities to enhance performance through duration positioning. Notably, the housing market slowed substantially in 2006, causing many market participants to position themselves for an economic slowdown late in the year and into 2007. Concerns about the subprime lending market leaked into the CMBS and asset-backed securities (ABS) sectors in the last few weeks of the most recent quarter, widening spreads and increasing risk premiums.

Portfolio Characteristics
As of 3-31-07
Average maturity	7.72 years
Effective duration	4.37 years
Weighted average bond rating	AA

Avoiding subprime market worked well

The inversion of the yield curve was positive for the Fund because we were positioned for such an occurrence. Also, we took a more positive view on housing and the economy than others, and continued to invest in what we viewed as high-quality, mortgage-related securities that provided bargains. This overweight in ABS, CMBS and mortgage-backed securities (MBS) was of significant benefit to the Fund for the first three quarters of the period, though it did detract from performance slightly in the last quarter. Because we remained in the higher quality portion of these sectors, the concerns in the subprime market at the end of the period did not hurt the Fund as much as other investors. In the corporate sector, we began investing more in bonds that included change-of-control provisions in an effort to protect bond holders in the case of a leveraged buyout.

Our outlook

We expect the Federal Reserve to remain on hold for the next couple of meetings, even though the housing weakness continues to cause concern that it will significantly drag down the economy. We still do not see the subprime problems and potentially broader impact on housing values and consumer confidence as cause for a U.S. recession. We have a positive outlook on higher-rated ABS and CMBS, which we feel have plenty of protection in terms of excess collateral. However, we will be watching closely as this cycle plays out, as we believe it is already creating terrific bond investment values and will likely continue to do so in the future.

We think markets are likely to remain choppy over the next few quarters. In fact, the credit markets are starting to pull back. Whenever this happens, the weakest borrowers are typically the first to be uncovered and then caution enters back into the psychology of the markets. Lending caution will be a welcome return that we hope will lead to higher risk premiums for corporate bonds and structured finance securities. We believe we are well positioned for such an environment and are alert to the potential hazards that can develop along the way. As always, we continue our effort to add value to the Fund through relative value security selection, something that will not change in the future environment envisioned. However, as values change among securities and sectors, we will be sharp to reassess and re-price risk in the markets and take advantage of the potential opportunities that arise.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. Fixed-income securities are subject to interest rate risk and, as such, the Fund's net asset value may fall as interest rates rise.

Certain U.S. government securities in which the Fund may invest, such as Treasury securities and securities issued by the Government National Mortgage Association (Ginnie Mae), are backed by the full faith and credit of the U.S. government. However, other U.S. government securities in which the Fund may invest, such as securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB) are not backed by the full faith and credit of the U.S. government, are not insured or guaranteed by the U.S. government and, instead, may be supported only by the right of the issuer to borrow from the U.S. Treasury or by the credit of the issuer.

These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Bond Fund, Class A Shares (1)	$	15,381
Citigroup Broad Investment Grade Index	$	17,497
Lipper Corporate Debt Funds A-Rated Universe Average	$	16,376

				LIPPER CORPORATE
			CITIGROUP BROAD	DEBT FUNDS
		IVY BOND FUND,	INVESTMENT	A RATED
		CLASS A SHARES	GRADE INDEX	UNIVERSE AVERAGE
SEPT	1997	9,425	10,000	10,000
SEPT	1998	10,278	11,147	11,068
SEPT	1999	10,007	11,117	10,820
SEPT	2000	10,511	11,886	11,411
SEPT	2001	11,949	13,439	12,724
SEPT	2002	12,894	14,564	13,588
SEPT	2003	13,649	15,363	14,544
MARCH	2004	14,063	15,833	15,025
MARCH	2005	14,209	16,028	15,170
MARCH	2006	14,456	16,413	15,434
MARCH	2007	15,381	17,497	16,376

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-07	0.28%	1.22%	5.48%	6.43%
5-year period ended 3-31-07	4.06%	–	–	–
10-year period ended 3-31-07	5.18%	–	–	–
Since inception of Class (3) through 3-31-07	–	1.64%	2.54%	3.55%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)12-8-03 for Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

The Advantus Bond Fund merged into the Ivy Bond Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Bond Fund Class A shares, restated to reflect current sales charges applicable to Ivy Bond Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Bond Fund. If these expenses were reflected, performance shown would differ.

SHAREHOLDER SUMMARY OF IVY BOND FUND

Portfolio Highlights

On March 31, 2007, Ivy Bond Fund had net assets totaling $70,174,918 invested in a diversified portfolio of:

96.55%	Bonds
2.71%	Cash and Cash Equivalents
0.74%	Preferred Stocks

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund owned:

Corporate Bonds	$	66.34
United States Government Agency Mortgage-Backed Obligations	$	23.25
United States Government Treasury Obligations	$	5.32
Cash and Cash Equivalents and Taxable Municipal Bond	$	2.82
United States Government Agency Obligations	$	1.53
Preferred Stocks	$	0.74

On March 31, 2007, the breakdown of bonds (by ratings) held by the Fund was as follows:

AAA	45.72	%
AA	5.35	%
A	9.35	%
BBB	25.64	%
BB	8.98	%
Below B	0.68	%
Non-rated	0.83	%
Cash and Cash Equivalents and Equities	3.45	%

Ratings reflected in the wheel are taken from the following sources in order of preference: Standard & Poor's, Moody's or management's internal ratings, where no other ratings are available.

The Investments of Ivy Bond Fund
March 31, 2007
PREFERRED STOCKS	Shares			Value
Real Estate Investment Trust
PS Business Parks, Inc., 7.0% Cumulative		10,500	$	264,180
Public Storage, Inc., 6.25% Cumulative		10,500		257,460
TOTAL PREFERRED STOCKS - 0.74%			$	521,640
(Cost: $520,050)

CORPORATE DEBT SECURITIES	Principal Amount in Thousands
Aluminum - 0.27%
Steelcase Inc.,
6.5%, 8-15-11	$	185	189,985
Asset-Backed Securities - 4.49%
ABFS Mortgage Loan Trust 2002-4,
7.423%, 12-15-33*		120	120,268
Associates Manufactured Housing Contract       Pass-Through Certificates,
7.725%, 6-15-28		156	157,761
C-Bass 2006-CB2 Trust,
5.86%, 12-25-36		530	535,112
C-Bass 2006-MH1 Trust:
6.24%, 10-25-36 (A)*		105	106,395
6.25%, 10-25-36 (A)*		170	171,298
Centex Home Equity Loan Trust 2005-C,
5.048%, 6-25-35*		370	359,174
Citibank Credit Card Issuance Trust, Class 2005-C1,
5.5%, 3-24-17		200	198,988
CountryPlace Manufactured Housing Contract Trust 2005-1,
5.2%, 12-15-35 (B)*		300	288,642
Green Tree Financial Corporation:
6.4%, 10-15-18		75	76,251
7.35%, 5-15-27		41	42,221
Home Equity Loan Trust 2003-HS2,
5.09%, 7-25-33*		50	49,007
National Collegiate Trust 1997-S2 (The),
7.24%, 9-20-14		188	182,078

Origen Manufactured Housing Contract:
Trust 2004-A,
5.7%, 1-15-35		100		99,130
Trust 2004-B,
5.73%, 11-15-35		50		48,812
Trust 2005-A:
4.49%, 5-15-18		200		197,910
5.86%, 6-15-36*		120		116,938
Trust 2005-B,
5.605%, 5-15-22		80		79,750
Vanderbilt Mortgage and Finance, Inc.:
8.75%, 1-7-16		2		2,134
6.3691%, 3-7-28*		147		146,539
WFS Financial 2005-2 Owner Trust,
4.39%, 11-19-12		175		173,602
				3,152,010
Banks - 0.36%
Wells Fargo Mortgage Backed Securities 2001-14 Trust,
5.6%, 3-15-16		250		251,739
Beverages - 0.90%
SABMiller plc,
6.5%, 7-1-16 (A)		600		634,048
Broadcasting - 1.09%
Cox Communications, Inc.,
7.125%, 10-1-12		450		485,137
Viacom Inc.,
6.875%, 4-30-36		275		277,196
				762,333
Business Equipment and Services - 0.94%
HSBC Finance Corporation,
5.7%, 6-1-11		400		406,100
International Lease Finance Corporation,
5.625%, 9-20-13		250		254,820
				660,920
Collateralized Mortgage Obligations - 7.33%
Banc of America:
Alternative Loan Trust 2005-10:
5.66861%, 11-25-35*		283		278,494
5.66861%, 11-25-35*		137		132,125
Alternative Loan Trust 2005-12:
5.80715%, 1-25-36*		303		297,835
5.80715%, 1-25-36*		220		201,020
Alternative Loan Trust 2006-4,
6.22497%, 5-25-36*		326		324,491
Alternative Loan Trust 2006-8,
6.25129%, 11-25-46*		145		134,168
Mortgage 2007-1 Trust,
6.0%, 3-25-37		170		166,952
Mortgage Trust 2004-7,
5.75%, 8-25-34		96		94,981
Banco Hipotecario Nacional,
7.916%, 7-25-09 (B)		7		74
BlackRock Capital Finance,
7.75%, 9-25-26 (A)		118		117,743
Chase Mortgage Finance Trust, Series 2003-S11,
5.5%, 10-25-33		121		118,800
Credit Suisse First Boston Mortgage Securities Corp.,
6.0%, 11-25-18		48		48,466
Global Mortgage Securitization 2005-A Ltd. and       Global Mortgage Securitization 2005-A LLC:
5.25%, 4-25-32		197		187,120
5.39725%, 4-25-32*		291		263,563
Global Mortgage Securitization Ltd. and Global       Mortgage Securitization, LLC:
5.25%, 11-25-32 (B)		304		294,982
5.25%, 11-25-32 (B)		260		254,212
J.P. Morgan Mortgage:
Trust 2005-S2,
5.66819%, 9-25-35*		514		506,365
Trust 2006-S3,
6.5%, 8-25-36		395		402,140
Lehman XS Trust, Series 2005-8,
5.69%, 12-25-35		585		585,930
MASTR Asset Securitization Trust 2003-10,
5.5%, 11-25-33		187		183,243
Mellon Residential Funding,
6.75%, 6-26-28		58		58,106
RALI Series 2003-QS10 Trust,
5.75%, 5-25-33		245		242,306
Structured Asset Securities Corporation,
5.63%, 5-25-34*		250		247,481
				5,140,597
Conduit - 14.45%
Banc of America Commercial Mortgage Inc., Commercial       Mortgage Pass-Through Certificates, Series 2002-2,
6.2%, 7-11-43 (A)		275		283,538
Banc of America Commercial Mortgage Trust 2007-1,
5.451%, 1-15-49		500		501,588
Bear Stearns Commercial Mortgage Securities Inc.,       Series 1999-WF2:
6.0%, 7-15-31 (A)		500		513,346
6.0%, 7-15-31 (A)		100		103,331
Bear Stearns Commercial Mortgage Securities:
Trust 2002-TOP6,
6.0%, 10-15-36 (A)		320		318,291
Trust 2004-PWR4,
5.468%, 6-11-41*	1,500			1,514,648
CD 2006-CD2 Mortgage Trust,
5.6179%, 1-15-46 (A)*		710		711,048
CD 2007-CD4 Commercial Mortgage Trust,
5.883%, 12-11-49 (A)*		480		476,400
CHL Mortgage Pass-Through Trust 2004-J4,
5.25%, 5-25-34		694		642,242
COMM 2006-CNL2:
5.75556%, 2-5-19 (A)*		225		221,363
5.75556%, 2-5-19 (A)*		95		94,253
Commercial Mortgage Asset Trust,
6.0%, 11-17-32		225		230,655
DLJ Commercial Mortgage Corp. 1998-CG1,
7.16768%, 6-10-31 (A)*		350		383,122
First Horizon Mortgage Pass-Through Trust 2003-8,
5.12334%, 10-25-33*		97		82,411
GE Capital Commercial Mortgage Corp. 2002-2,
6.039%, 8-11-36 (A)	565			584,549
GS Mortgage Securities Corporation II, Commercial Mortgage       Pass-Through Certificates, Series 2001-LI B,
6.733%, 2-14-16 (A)		225		236,548
Hilton Hotel Pool Trust:
5.82%, 10-3-15 (A)*		790		797,398
7.653%, 10-3-15 (A)		430		451,823
Hometown Commercial Capital, LLC Hometown       Commercial Mortgage Pass-Through Notes 2006-1,
5.506%, 11-11-38		528		530,262
Multi Security Asset Trust LP, Commercial Mortgage-Backed       Securities Pass-Through Certificates, Series 2005-RR4:
1.05881%, 11-28-35 (Interest Only) (B)*	6,450			152,205
5.88%, 11-28-35 (B)*		155		148,742
5.88%, 11-28-35 (B)*		105		102,723
Nomura Asset Securities Corporation, Commercial Mortgage       Pass-Through Certificates, Series1998-D6,
6.0%, 3-15-30 (A)		300		310,844
Wachovia Bank Commercial Mortgage Trust (The),
4.942%, 11-15-34 (A)		285		276,167
Wachovia Bank Commercial Mortgage Trust Commercial       Mortgage Pass-Through Certificates Series 2006-C26,
6.011%, 6-15-45*		450		470,073
				10,137,570
Construction Materials - 1.63%
Crane Co.,
6.55%, 11-15-36		540		538,552
USG Corporation,
6.3%, 11-15-16 (A)		600		604,247
				1,142,799
Finance Companies - 18.34%
Allied Capital Corporation,
6.625%, 7-15-11		585		595,600
Asset Securitization Corporation:
1.41211%, 10-13-26 (Interest Only)(A)*		983		45,679
6.88605%, 2-14-43*		170		185,056
CSAB Mortgage-Backed Trust 2006-2,
6.08%, 9-25-36*		650		653,977
CSFB Commercial Mortgage Trust 2003-C4,
5.322%, 8-15-36 (A)*		500		487,860
CWHEQ Home Equity Loan Trust:
Series 2006-S6,
5.962%, 3-25-34		210		210,480
Series 2007-S2,
5.934%, 5-25-37		580		579,971
Caithness Coso Funding Corp.,
5.489%, 6-15-19 (B)		225		221,688
Capital Auto Receivables Asset Trust 2006-1,
7.16%, 1-15-13 (A)		245		247,908
Cendant Mortgage Corporation and Bishop's Gate       Residential Mortgage Trust,
6.25%, 6-25-32		127		124,203
Colonial Bank, N.A.,
6.375%, 12-1-15		500		519,052
ERAC USA Finance Company,
5.9%, 11-15-15 (A)		520		530,508
Flagstar Home Equity Loan Trust 2007-1,
5.997%, 1-25-35 (B)*		415		415,241
Ford Credit Auto Owner Trust:
2006-B,
7.12%, 2-15-13 (A)		140		142,692
2006-C,
6.89%, 5-15-13		200		201,456
Fund American Companies, Inc.,
5.875%, 5-15-13		510		510,147
GMACM Home Equity Loan Trust:
2006-HE3,
6.088%, 10-25-36*		485		489,713
2007-HE1,
5.952%, 8-25-37*		570		567,532
General Motors Acceptance Corporation,
6.75%, 12-1-14		360		353,913
Goldman Sachs Capital I,
6.345%, 2-15-34		610		602,581
J.P. Morgan Alternative Loan Trust 2006-A7,
5.75%, 12-25-36*		645		640,723
J.P. Morgan Mortgage Acquisition Trust:
2006-CW2,
6.337%, 8-25-36*	590			599,147
2006-WF1,
6.41%, 7-25-36*	1,095			1,120,660
JPMorgan Chase Capital XVIII,
6.95%, 8-17-36		425		442,955
Morgan Stanley Capital I, Inc., Commercial Mortgage       Pass-Through Certificates, Series 1998-XL2,
6.65204%, 10-3-34*		500		505,115
PNC Funding Corp,
5.625%, 2-1-17		370		372,655
RASC Series 2003-KS10 Trust,
6.41%, 12-25-33		113		108,496
Selkirk Cogen Funding Corporation,
8.65%, 12-26-07		86		86,712
St. George Funding Company LLC,
8.485%, 12-29-49 (B)		200		209,227
Symetra Financial Corporation,
6.125%, 4-1-16 (A)		400		405,373
TimberStar Trust I,
6.2082%, 10-15-36 (A)		460		463,145
Wells Fargo Mortgage Backed Securities 2003-9 Trust,
5.25%, 8-25-33 (A)		274		232,418
				12,871,883
Health Care - General - 0.50%
Hospira, Inc.,
6.05%, 3-30-17		350		349,725
Hospital Supply and Management - 1.63%
Coventry Health Care, Inc.,
5.95%, 3-15-17		655		651,482
Laboratory Corporation of America Holdings:
5.5%, 2-1-13		215		210,586
5.625%, 12-15-15		285		281,795
				1,143,863
Insurance - Life - 0.68%
StanCorp Financial Group, Inc.,
6.875%, 10-1-12		450		476,982
Insurance - Property and Casualty - 1.37%
Commerce Group, Inc. (The),
5.95%, 12-9-13		305		307,948
Liberty Mutual Holding Company Inc.,
7.8%, 3-15-37 (B)		360		350,989
Willis North America Inc.,
6.2%, 3-28-17		305		305,670
				964,607
Multiple Industry - 1.50%
CRH America, Inc.,
6.0%, 9-30-16		370		375,069
Tyco International Group S.A.,
7.0%, 6-15-28		235		279,103
Western Union Company (The),
5.93%, 10-1-16		395		395,849
				1,050,021
Petroleum - Domestic - 0.63%
Williams Partners L.P. and Williams Partners       Finance Corporation,
7.25%, 2-1-17 (A)		420		444,150
Petroleum - International - 1.32%
Anadarko Petroleum Corporation,
6.45%, 9-15-36		435		430,453
Pioneer Natural Resources Company,
6.65%, 3-15-17		500		494,615
				925,068
Petroleum - Services - 0.29%
Energy Transfer Partners, L.P.,
6.625%, 10-15-36		200		204,588
Real Estate Investment Trust - 3.09%
Equity One, Inc.,
6.25%, 1-15-17		285		291,793
Healthcare Realty Trust Incorporated,
5.125%, 4-1-14		450		432,722
Highwoods Realty Limited Partnership,
5.85%, 3-15-17 (A)		405		402,047
Nationwide Health Properties, Inc.:
6.5%, 7-15-11		175		180,012
6.0%, 5-20-15		265		264,137
Vornado Realty L.P.,
5.625%, 6-15-07		600		599,756
				2,170,467
Security and Commodity Brokers - 1.66%
Janus Capital Group Inc.,
5.875%, 9-15-11		320		323,979
Jefferies Group, Inc.,
6.25%, 1-15-36		400		386,000
Nuveen Investments, Inc.,
5.5%, 9-15-15		465		457,290
				1,167,269
Textile - 0.54%
Mohawk Industries, Inc.,
6.125%, 1-15-16		380		381,364
Utilities - Electric - 1.71%
MidAmerican Energy Holdings Company,
6.125%, 4-1-36		475		473,973
Oncor Electric Delivery Company,
7.0%, 9-1-22		450		482,073
Pennsylvania Electric Company,
5.125%, 4-1-14		250		243,206
				1,199,252
Utilities - Gas and Pipeline - 0.67%
Northwest Pipeline Corporation,
7.0%, 6-15-16		440		471,350
Utilities - Telephone - 0.95%
Sprint Nextel Corporation,
6.0%, 12-1-16		675		664,272
TOTAL CORPORATE DEBT SECURITIES - 66.34%			$	46,556,862
(Cost: $46,550,852)

MUNICIPAL OBLIGATION - TAXABLE - 0.11%
Minnesota
City of Eden Prairie, Minnesota, Taxable Multifamily       Housing Revenue Refunding Bonds (GNMA       Collateralized Mortgage Loan - Parkway       Apartments Project), Series 2000B,
7.35%, 2-20-09		75	$	76,468
(Cost: $75,000)
UNITED STATES GOVERNMENT AND       GOVERNMENT AGENCY OBLIGATIONS
Agency Obligations - 1.53%
Federal National Mortgage Association:
4.25%, 5-15-09		500		493,906
5.125%, 1-2-14		575		575,750
				1,069,656
Mortgage-Backed Obligations - 23.25%
Federal Home Loan Mortgage Corporation Fixed       Rate Participation Certificates:
3.5%, 2-15-30		125		118,839
6.5%, 9-1-32		224		232,807
6.0%, 11-1-33		464		469,490
5.5%, 5-1-34		189		187,685
5.5%, 5-1-34		135		134,198
5.5%, 6-1-34	1,553			1,539,758
5.0%, 9-1-34		42		40,657
5.5%, 9-1-34		155		153,814
5.5%, 10-1-34		365		362,326
5.5%, 7-1-35		441		436,675
5.5%, 7-1-35		227		224,923
5.5%, 10-1-35		582		579,337
Federal National Mortgage Association Fixed Rate       Pass-Through Certificates:
6.23%, 1-1-08		139		138,860
5.5%, 1-1-17		184		185,596
6.0%, 9-1-17		102		104,211
5.5%, 3-1-18		110		110,170
5.0%, 6-1-18		420		415,329
5.0%, 7-1-18		150		148,183
7.5%, 5-1-31		127		134,181

7.0%, 9-1-31	44			46,002
7.0%, 11-1-31		85		88,770
6.5%, 12-1-31		54		55,862
7.0%, 2-1-32		79		82,911
7.0%, 3-1-32		88		92,564
6.5%, 4-1-32		24		24,895
6.5%, 5-1-32		26		27,044
6.5%, 7-1-32		68		70,209
6.5%, 8-1-32		61		63,756
6.5%, 8-1-32		55		56,840
6.5%, 9-1-32		95		98,635
6.5%, 9-1-32		39		40,760
6.0%, 10-1-32		126		128,351
6.5%, 10-1-32		115		119,516
6.0%, 11-1-32		135		137,223
6.0%, 3-1-33		100		101,849
5.5%, 4-1-33		167		165,389
6.0%, 4-1-33		208		210,233
5.5%, 5-1-33		123		122,304
6.0%, 10-1-33		210		212,410
5.5%, 1-1-34		118		116,805
5.5%, 1-1-34		115		113,974
6.0%, 1-1-34		486		491,348
5.5%, 3-1-34		165		163,444
5.5%, 3-1-34		71		70,201
5.5%, 4-1-34		173		171,313
5.5%, 4-1-34		53		52,259
5.0%, 5-1-34		73		70,510
5.5%, 5-1-34		142		140,928
5.5%, 11-1-34	1,323			1,311,166
6.0%, 11-1-34		869		877,525
5.5%, 2-1-35		210		208,414
4.5%, 3-1-35		479		450,397
5.0%, 4-1-35		285		275,292
6.0%, 4-1-35		975		982,008
5.0%, 7-1-35		208		201,460
5.0%, 7-1-35		102		98,818
5.0%, 7-1-35		86		83,487
5.0%, 7-1-35		51		49,092
4.5%, 9-1-35		425		399,320
5.5%, 10-1-35		978		970,216
Government National Mortgage Association Fixed       Rate Pass-Through Certificates,
5.5%, 4-1-35	1,090			1,083,869
Government National Mortgage Association Agency       REMIC/CMO (Interest Only),
0.94562%, 6-17-45*	5,055			273,179
				16,317,587
Treasury Inflation Protected Obligation - 1.71%
United States Treasury Note,
1.875%, 7-15-13 (C)	1,100			1,196,493
Treasury Obligations - 3.61%
United States Treasury Bond,
5.375%, 2-15-31		15		15,991
United States Treasury Notes:
2.75%, 8-15-07		800		793,187
3.375%, 10-15-09 (D)	1,400			1,360,516
4.625%, 2-29-12		365		366,355
				2,536,049
TOTAL UNITED STATES GOVERNMENT AND       GOVERNMENT AGENCY OBLIGATIONS - 30.10%			$	21,119,785
(Cost: $21,255,483)
SHORT-TERM SECURITIES
Aluminum - 2.35%
Alcoa Incorporated,
5.44%, 4-2-07	1,646			1,645,751
Utilities - Telephone - 2.99%
Verizon Communications Inc.,
5.35%, 4-4-07	2,100			2,099,064
TOTAL SHORT-TERM SECURITIES - 5.34%			$	3,744,815
(Cost: $3,744,815)
TOTAL INVESTMENT SECURITIES - 102.63%			$	72,019,570
(Cost: $72,146,200)
`
LIABILITIES, NET OF CASH AND OTHER ASSETS - (2.63%)				(1,844,652	)
NET ASSETS - 100.00%			$	70,174,918

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2007.

(A)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been determined to be liquid under guidelines established by the Board of Trustees. At March 31, 2007, the total value of these securities amounted to $10,797,532, or 15.39% of net assets.

(B)Illiquid security. At March 31, 2007, the total value of illiquid securities amounted to $2,438,725, or 3.48% of net assets.
(C)The interest rate for this security is a stated rate, but the interest payments are determined by multiplying the inflation-adjusted principal by one half of the stated rate for each semiannual interest payment date.
(D)Security serves as collateral for the following open futures contracts at March 31, 2007. (See Note 7 to financial statements):
	Description	Type	Number of Contracts		Expiration Date	Market Value		Unrealized Appreciation
	U.S. 2 Year Treasury Note	Long	19		6-29-07	$3,892,922			$	11,780
	U.S. 5 Year Treasury Note	Long	48		6-29-07	5,078,260				26,385
	U.S. 10 Year Treasury Note	Short	(72	)	6-20-07	(7,784,925	)			10,460
	U.S. 30 Year Treasury Bond	Short	(33	)	6-20-07	(3,671,250	)			33,882
						$(2,484,993	)		$	82,507
See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY BOND FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $72,146) (Notes 1 and 3)	$	72,020
Cash		389
Receivables:
Investment securities sold		628
Dividends and interest		564
Fund shares sold		269
Variation margin		15
Prepaid and other assets		39
Total assets		73,924
LIABILITIES
Payable for investment securities purchased		3,453
Payable to Fund shareholders		174
Accrued management fee (Note 2)		31
Dividends payable		31
Accrued service fee (Note 2)		18
Accrued shareholder servicing (Note 2)		16
Accrued accounting services fee (Note 2)		4
Accrued distribution fee (Note 2)		4
Other		18
Total liabilities		3,749
Total net assets	$	70,175
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	70,806
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		–
Accumulated undistributed net realized loss on investment transactions		(587	)
Net unrealized depreciation in value of investments		(44	)
Net assets applicable to outstanding units of capital	$	70,175
Net asset value per share (net assets divided by shares outstanding):
Class A		$10.46
Class B		$10.46
Class C		$10.46
Class Y		$10.46
Capital shares outstanding:
Class A		6,137
Class B		175
Class C		391
Class Y		4

See Notes to Financial Statements.

Statement of Operations
      IVY BOND FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	3,629
Dividends		34
Total income		3,663
Expenses (Note 2):
Investment management fee		338
Service fee:
Class A		135
Class B		4
Class C		7
Class Y		–	*
Shareholder servicing:
Class A		116
Class B		9
Class C		9
Class Y		–	*
Registration fees		49
Distribution fee:
Class A		15
Class B		12
Class C		21
Accounting services fee		45
Audit fees		21
Custodian fees		15
Legal fees		2
Other		19
Total expenses		817
Net investment income		2,846
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net loss on securities		(82	)
Realized net loss on futures		(104	)
Realized net loss on investments		(186	)
Unrealized appreciation in value of securities during the period		1,178
Unrealized appreciation in value of futures during the period		67
Unrealized appreciation in value of investments during the period		1,245
Net gain on investments		1,059
Net increase in net assets resulting from operations	$	3,905

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY BOND FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	2,846		$	2,230
Realized net loss on investments		(186	)		(230	)
Unrealized appreciation (depreciation)		1,245			(1,046	)
Net increase in net assets resulting from operations		3,905			954
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A		(2,687	)		(2,164	)
Class B		(55	)		(33	)
Class C		(102	)		(33	)
Class Y		(2	)		(1	)
Realized gains on investment transactions:
Class A		(–	)		(–	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(–	)		(–	)
		(2,846	)		(2,231	)
Capital share transactions (Note 5)		10,386			9,284
Total increase		11,445			8,007
NET ASSETS
Beginning of period		58,730			50,723
End of period	$	70,175		$	58,730
Undistributed net investment income (loss)	$	–		$	(–	)*

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 53 - 56.

See Notes to Financial Statements.

Financial Highlights
      IVY BOND FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended September 30,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	10.28		$	10.52		$	10.83		$	10.73		$	10.57		$	10.30
Income (loss) from       investment operations:
Net investment income		0.46			0.42			0.41			0.23			0.45			0.52
Net realized and unrealized             gain (loss) on investments		0.18			(0.24	)		(0.30	)		0.09			0.15			0.27
Total from investment operations		0.64			0.18			0.11			0.32			0.60			0.79
Less distributions from:
Net investment income		(0.46	)		(0.42	)		(0.42	)		(0.22	)		(0.44	)		(0.52	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.46	)		(0.42	)		(0.42	)		(0.22	)		(0.44	)		(0.52	)
Net asset value, end of period	$	10.46		$	10.28		$	10.52		$	10.83		$	10.73		$	10.57
Total return(1)		6.40	%		1.74	%		1.04	%		3.03	%		5.84	%		7.90	%
Net assets, end of period       (in millions)	$64			$56			$49			$23			$18			$17
Ratio of expenses to average       net assets including       reimbursement		1.20	%		1.23	%		1.17	%		1.46	%(2)(3)		1.15	%		1.15	%
Ratio of net investment income       to average net assets       including reimbursement		4.48	%		4.03	%		3.84	%		4.53	%(2)(3)		4.25	%		5.07	%
Ratio of expenses to average       net assets excluding       reimbursement		1.20	%(4)		1.23	%(4)		1.43	%		2.36	%(2)(3)		2.01	%		1.92	%
Ratio of net investment income       to average net assets       excluding reimbursement		4.48	%(4)		4.03	%(4)		3.58	%		3.64	%(2)(3)		3.39	%		4.30	%
Portfolio turnover rate		91	%		126	%		200	%		78	%		119	%		148	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.

(2)Annualized.

(3)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from October 1, 2003 up to the time of merger. Expenses for Class A shares before and after the merger were limited to 1.15% of average net assets.

(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY BOND FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	10.28		$	10.52		$	10.83		$	10.64
Income (loss) from investment operations:
Net investment income		0.34			0.30			0.28			0.11
Net realized and unrealized             gain (loss) on investments		0.18			(0.24	)		(0.31	)		0.19
Total from investment operations		0.52			0.06			(0.03	)		0.30
Less distributions from:
Net investment income		(0.34	)		(0.30	)		(0.28	)		(0.11	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.34	)		(0.30	)		(0.28	)		(0.11	)
Net asset value, end of period	$	10.46		$	10.28		$	10.52		$	10.83
Total return		5.22	%		0.57	%		- -0.23	%		2.77	%
Net assets, end of period (in thousands)	$1,828			$1,451			$744			$287
Ratio of expenses to average net assets		2.32	%		2.38	%		2.45	%		2.76	%(2)
Ratio of net investment income       to average net assets		3.37	%		2.90	%		2.63	%		3.04	%(2)
Portfolio turnover rate		91	%		126	%		200	%		78	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY BOND FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	10.28		$	10.52		$	10.83		$	10.64
Income (loss) from investment operations:
Net investment income		0.37			0.31			0.27			0.11
Net realized and unrealized             gain (loss) on investments		0.18			(0.24	)		(0.31	)		0.19
Total from investment operations		0.55			0.07			(0.04	)		0.30
Less distributions from:
Net investment income		(0.37	)		(0.31	)		(0.27	)		(0.11	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.37	)		(0.31	)		(0.27	)		(0.11	)
Net asset value, end of period	$	10.46		$	10.28		$	10.52		$	10.83
Total return		5.48	%		0.66	%		- -0.40	%		2.77	%
Net assets, end of period (in thousands)	$4,096			$1,737			$547			$115
Ratio of expenses to average net assets		2.06	%		2.28	%		2.59	%		2.61	%(2)
Ratio of net investment income       to average net assets		3.62	%		3.01	%		2.47	%		3.09	%(2)
Portfolio turnover rate		91	%		126	%		200	%		78	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY BOND FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	10.28		$	10.52		$	10.83		$	10.64
Income (loss) from investment operations:
Net investment income		0.46			0.41			0.39			0.13
Net realized and unrealized             gain (loss) on investments		0.18			(0.24	)		(0.31	)		0.19
Total from investment operations		0.64			0.17			0.08			0.32
Less distributions from:
Net investment income		(0.46	)		(0.41	)		(0.39	)		(0.13	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.46	)		(0.41	)		(0.39	)		(0.13	)
Net asset value, end of period	$	10.46		$	10.28		$	10.52		$	10.83
Total return		6.43	%		1.62	%		0.75	%		3.03	%
Net assets, end of period (in thousands)		$42			$20			$34			$25
Ratio of expenses to average net assets		1.09	%		1.34	%		1.46	%		1.54	%(2)
Ratio of net investment income       to average net assets		4.60	%		3.91	%		3.65	%		3.99	%(2)
Portfolio turnover rate		91	%		126	%		200	%		78	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Managers' Discussion of
Ivy Cundill Global Value Fund
      March 31, 2007

Ivy Cundill Global Value Fund is subadvised by Mackenzie Financial Corporation.

Below, F. Peter Cundill, CFA, and Hiok Hhu Ng, CFA, portfolio managers of the Ivy Cundill Global Value Fund, discuss positioning, performance and results for the fiscal year ended March 31, 2007. Mr. Cundill has 30 years of industry experience and has managed the Fund since its inception. Mr. Ng has six years of industry experience and has managed the Fund for three years.

STYLE
VALUE	BLEND	GROWTH
X			LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund returned 10.71 percent (Class A shares at net asset value) for the year ended March 31, 2007, underperforming its benchmark, the Morgan Stanley Capital International World Index (generally reflecting the performance of securities that represent the global stock market), which increased 15.45 percent for the same period.

The Fund slightly outperformed the 10.60 percent return of one peer group, the Lipper Global Small/Mid-Cap Value Funds Universe Average (generally reflecting the performance of small-cap and mid-cap value funds with similar global investment objectives). However, the Fund underperformed a broader peer group, the Lipper Global Funds Universe Average (generally reflecting the performance of the universe of funds with similar investment objectives), which increased 13.78 percent.

Financial sector setbacks

We were blindsided by political risk in the Japanese consumer finance sector this past fiscal year. This impaired our initial estimates of intrinsic values for several stocks and resulted in weak fiscal year results for the Fund. AIFUL Corporation, Takefuji Corporation and ACOM Co., LTD. - among our primary holdings in this sector - were among the three worst performers for the Fund for the 12 months ended March 31, 2007.

Legislation affecting the consumer finance sector is still pending in Japan's Diet (a Congress-like legislative body). However, we remain confident, based on our analysis, that our primary holdings in this sector offer attractive risk/reward profiles as value investments. In our view, AIFUL Corporation, Takefuji Corporation and ACOM CO., LTD. all trade at significant discounts to their adjusted book values and appear, in our eyes, to have a flexible business model capable of adjusting to the lower rates.

We think the two most important aspects of the pending legislation in Japan are 1) the fact that the industry will be given time to adjust to the lower interest rates (charged to consumers) before being implemented in three years and that 2) the ruling government reserves the right to amend them within two and a half years if the new rates end up being too onerous. Given this, we have continued to build our positions in the Japanese consumer finance sector.

Despite the challenges in Japan, we generated positive returns from our holdings in other countries. We continue to predominantly hedge our international currency exposure in order to solely focus our attention on picking stocks. Our currency hedges led to marginal positive impact on the Fund performance as the U.S. dollar continued to strengthen against major international currencies. Overall, we believe volatility has the potential to be a great friend of value investors. Such was the case for Nikko Cordial Corporation, a Japanese stock, as news of an accounting scandal broke out late last year. We took advantage of what we saw as an opportunity to purchase more shares at distressed prices.

During the year, we saw operating improvements at several companies that are among the larger holdings in the portfolio. For example, Munchener Ruckersicherungs-Gesellschaft Aktiengesellshaft continues to strengthen its underlying operations while maintaining underwriting discipline with the mindset of returning excess capital to shareholders. KT&G (Korea Tobacco & Ginseng Corporation) announced their mid-term plan that includes a return of capital to shareholders via continued share buybacks and higher dividends. To us, it appears that First Pacific Company Limited's restructuring efforts of Indofood is finally being rewarded by investors. Finally, Kirin Brewery Company, Limited announced a comprehensive plan to be more efficient. They plan to divest non-core assets and return these proceeds to shareholders and seek to grow their core businesses organically and via merger-and-acquisition activity.

Our outlook

We are always being opportunistic, and our conviction level grows when the discount to what we see as intrinsic value grows. We are intrigued by Steel Partners' recent takeover offer for Sapporo Holdings, which has created speculation that some of the brewery companies in our portfolio might be interested in making a counteroffer as a white knight. While the outcome of the bidding has yet to be determined, we think consolidation in the domestic alcoholic beverage industry could lead to better profit margins in the long term. Finally, during the quarter we added to our position in a German reinsurance company whose price fell during the quarter after a negative analyst review. We felt the drop created an improved value opportunity.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Country	Sector	Change in weighting
Nikko Cordial Corporation	Japan	Financial	Increased
AIFUL Corporation	Japan	Financial	New to Top 10
Takefuji Corporation	Japan	Financial	Increased
Korea Tobacco & Ginseng Corporation	South Korea	Tobacco	Increased
Munchener Ruckersicherungs-       Gesellschaft Aktiengesellshaft	Germany	Financial	New to Top 10
Italmobiliare S.p.A.	Italy	Telecom	Increased
Singapore Press Holdings Limited	Singapore	Media	New to Top 10
Korea Electric Power Corporation	South Korea	Utility	New to Top 10
Mabuchi Motor Co., Ltd.	Japan	Autos	New to Top 10
Asatsu-DK Inc.	Japan	Business Equipment and Services	Increased

See your advisor or www.ivyfunds.com for more information on the Fund's most currently reported Top 10 Holdings.

As of March 31, 2007, the portfolio traded at 76 percent of what we believe is its intrinsic value compared to 79 percent on December 31, 2006. The increase in our perceived margin of safety was due to capital being allocated to existing and new securities. Uncovering value ideas remains challenging, but we feel the pipeline of potential ideas has been growing amid an increase in market volatility. As always, we continue to focus on global value investing through the purchase of holdings that we believe to be trading below their intrinsic value, a bottom-up strategy that focuses on selecting individual securities.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Cundill Global Value Fund, Class A Shares (1)	$	17,480
Morgan Stanley Capital International World Index (2)	$	17,900
Lipper Global Funds Universe Average (2)	$	18,542
Lipper Global Small/Mid-Cap Value Funds Universe Average (2)	$	19,621

		IVY CUNDILL GLOBAL VALUE FUND,	MORGAN STANLEY CAPITAL INTERNATIONAL	LIPPER GLOBAL FUNDS	LIPPER GLOBAL SMALL/ MID-CAP VALUE FUNDS
		CLASS A SHARES	WORLD INDEX	UNIVERSE AVERAGE	UNIVERSE AVERAGE
Inception 9/4/01		9,425	10,000	10,000	10,000
DEC	2001	9,230	10,859	10,978	10,448
DEC	2002	8,107	8,699	9,041	9,153
DEC	2003	11,060	11,580	12,001	12,458
MARCH	2004	12,185	11,883	12,430	13,720
MARCH	2005	13,438	13,138	13,535	15,119
MARCH	2006	15,789	15,505	16,297	17,740
MARCH	2007	17,480	17,900	18,542	19,621

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions

(2)Because the Fund commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the indexes (including income) are not available, investment in the indexes was effected as of September 30, 2001.

Average Annual Total Return(3)
	Class A	Class B	Class C	Class Y	Advisor Class (4)	Class II (4)
1-year period ended 3-31-07	4.35%	5.82%	10.03%	11.14%	11.33%	11.24%
5-year period ended 3-31-07	10.94%	11.26%	11.49%	–	12.82%	–
10-year period ended 3-31-07	–	–	–	–	–	–
Since inception of Class (5)       through 3-31-07	10.54%	12.71%	12.57%	18.43%	10.40%	18.19%

(3)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(4)Advisor Class shares and Class II shares are no longer available for investment.

(5)9-4-01 for Class A shares, 9-26-01 for Class B shares, 10-19-01 for Class C shares, 7-24-03 for Class Y shares, 4-19-00 for Advisor Class shares and 11-5-02 for Class II shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

SHAREHOLDER SUMMARY OF IVY CUNDILL GLOBAL VALUE FUND

Portfolio Highlights

On March 31, 2007, Ivy Cundill Global Value Fund had net assets totaling $997,956,963 invested in a diversified portfolio of:

81.12%	Foreign Common Stocks
12.46%	Cash and Cash Equivalents and Unrealized Loss on       Open Forward Currency Contracts
6.42%	Domestic Common Stocks

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund was invested by country and by industry, respectively, as follows:

Country Weightings

Japan	$	48.28
South Korea	$	13.12
Cash and Cash Equivalents and Unrealized Loss on       Open Forward Currency Contracts	$	12.46
United States	$	6.42
Germany	$	4.71
Italy	$	4.60
Singapore	$	4.57
Hong Kong	$	3.53
Canada	$	2.31

Sector Weightings

Financial Services Stocks	$	36.23
Consumer Services Stocks	$	15.96
Consumer Nondurables Stocks	$	12.57
Cash and Cash Equivalents and Unrealized Loss on       Open Forward Currency Contracts	$	12.46
Capital Goods Stocks	$	4.60
Utilities Stocks	$	4.50
Technology Stocks	$	4.40
Business Equipment and Services Stocks	$	4.29
Multi-Industry Stocks	$	3.53
Shelter Stocks	$	1.46

The Investments of Ivy Cundill Global Value Fund
March 31, 2007
COMMON STOCKS			Shares		Value
Canada - 2.31%
Fairfax Financial Holdings Limited (A)			102,100	$	22,993,504
Germany - 4.71%
Munchener Ruckversicherungs-Gesellschaft       Aktiengesellschaft, Registered Shares (A)			278,707		47,004,046
Hong Kong - 3.53%
First Pacific Company Limited (A)	57,628,000				35,254,603
Italy - 4.60%
Italmobiliare S.p.A., Non-Convertible Savings Shares (A)			471,637		45,891,662
Japan - 48.28%
ACOM CO., LTD. (A)			823,080		34,993,472
AIFUL Corporation (A)			1,823,050		56,467,519
Asatsu-DK Inc. (A)			1,354,800		42,768,635
Coca-Cola West Holdings Company, Limited (A)			1,879,200		40,744,705
Kirin Brewery Company, Limited (A)			2,582,000		37,292,634
Mabuchi Motor Co., Ltd. (A)			709,700		43,904,557
Millea Holdings, Inc. (A)			1,061,600		39,278,479
Nikko Cordial Corporation (A)			5,024,500		71,760,298
Nippon Television Network Corporation (A)			202,420		33,375,939
TV Asahi Corporation (A)			15,304		30,779,430
Takefuji Corporation (A)			1,257,480		50,474,206
					481,839,874
Singapore - 4.57%
Singapore Press Holdings Limited (A)		15,738,000			45,642,949
South Korea - 13.12%
Korea Electric Power Corporation (A)			1,124,104		44,866,183
Korea Investment Holdings Co., Ltd. (A)			734,000		38,619,260
Korea Tobacco & Ginseng Corporation (A)			725,400		47,419,324
					130,904,767
United States - 6.42%
DIRECTV Group, Inc. (The)*			1,458,742		33,653,178
Liberty Media Corporation, Liberty Capital Series A*			143,500		15,868,230
Pfizer Inc.			575,000		14,524,500
					64,045,908
TOTAL COMMON STOCKS - 87.54%				$	873,577,313
(Cost: $729,639,500)

UNREALIZED GAIN (LOSS) ON OPEN       FORWARD CURRENCY CONTRACTS - (0.36%)		Face Amount in Thousands
Euro, 6-22-07 (B)	EUR33,353				(845,565	)
Euro, 9-21-07 (B)			27,197		(245,659	)
Japanese Yen, 6-22-07 (B)	JPY18,289,154				(2,462,419	)
Japanese Yen, 9-21-07 (B)	29,935,225				73,975
Singapore Dollar, 6-22-07 (B)	SGD20,560				(156,759	)
Singapore Dollar, 9-21-07 (B)			39,900		(167,761	)
South Korean Won, 6-22-07 (B)	KRW44,226,207				267,677
South Korean Won, 9-21-07 (B)	62,269,785				(29,222	)
				$	(3,565,733	)
SHORT-TERM SECURITIES		Principal Amount in Thousands
Repurchase Agreements
J.P. Morgan Securities Inc., 5.05% Repurchase
Agreement dated 3-30-07 to be repurchased
at $43,051,110 on 4-2-07 (C)			$43,033		43,033,000
J.P. Morgan Securities Inc., 5.05% Repurchase
Agreement dated 3-30-07 to be repurchased
at $36,427,323 on 4-2-07 (D)			36,412		36,412,000
J.P. Morgan Securities Inc., 5.05% Repurchase
Agreement dated 3-30-07 to be repurchased
at $32,965,867 on 4-2-07 (E)			32,952		32,952,000
J.P. Morgan Securities Inc., 5.05% Repurchase
Agreement dated 3-30-07 to be repurchased
at $14,363,042 on 4-2-07 (F)		14,357			14,357,000
TOTAL SHORT-TERM SECURITIES - 12.70%				$	126,754,000
(Cost: $126,754,000)
TOTAL INVESTMENT SECURITIES - 99.88%				$	996,765,580
(Cost: $856,393,500)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.12%					1,191,383
NET ASSETS - 100.00%				$	997,956,963

Notes to Schedule of Investments

*No dividends were paid during the preceding 12 months.

(A)Listed on an exchange outside the United States.

(B)Principal amounts are denominated in the indicated foreign currency, where applicable (EUR - Euro, JPY - Japanese Yen, KRW - South Korean Won, SGD - Singapore Dollar).

(C)Collateralized by $38,000,000 United States Treasury Bond, 6.25% due 8-15-23; market value and accrued interest aggregate $43,985,662.

(D)Collateralized by $28,000,000 United States Treasury Bond, 7.625% due 2-15-25; market value and accrued interest aggregate $37,219,682.

(E)Collateralized by $24,755,000 United States Treasury Bond, 8.125% due 5-15-21; market value and accrued interest aggregate $33,675,827.

(F)Collateralized by $12,000,000 United States Treasury Bond, 6.625% due 2-15-27; market value and accrued interest aggregate $14,679,709.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY CUNDILL GLOBAL VALUE FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (Notes 1 and 3):
Securities (cost - $729,640)		$	870,012
Repurchase agreement (cost - $126,754)			126,754
			996,766
Receivables:
Dividends and interest			2,748
Investment securities sold			2,409
Fund shares sold			1,527
Prepaid and other assets			65
Total assets	1,003,515
LIABILITIES
Payable to Fund shareholders			2,840
Due to custodian			1,000
Accrued management fee (Note 2)			763
Accrued service fee (Note 2)			377
Accrued shareholder servicing (Note 2)			300
Accrued distribution fee (Note 2)			182
Accrued accounting services fee (Note 2)			11
Accrued administrative fee (Note 2)			8
Other			77
Total liabilities			5,558
Total net assets		$	997,957
NET ASSETS
Capital paid in (shares authorized - unlimited)		$	825,534
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss			(1,593	)
Accumulated undistributed net realized gain on investment transactions			33,627
Net unrealized appreciation in value of investments			140,389
Net assets applicable to outstanding units of capital		$	997,957
Net asset value per share (net assets divided by shares outstanding):
Class A			$16.28
Class B			$15.93
Class C			$15.88
Class Y			$16.33
Advisor Class			$16.30
Class II			$16.16
Capital shares outstanding:
Class A			42,250
Class B			3,682
Class C			14,675
Class Y			931
Advisor Class			197
Class II			2

See Notes to Financial Statements.

Statement of Operations
      IVY CUNDILL GLOBAL VALUE FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $1,352)	$	13,325
Interest and amortization		9,031
Total income		22,356
Expenses (Note 2):
Investment management fee		8,796
Shareholder servicing:
Class A		1,784
Class B		231
Class C		423
Class Y		24
Advisor Class		1
Class II		–	*
Service fee:
Class A		1,536
Class B		141
Class C		560
Class Y		36
Distribution fee:
Class A		84
Class B		423
Class C		1,679
Custodian fees		257
Accounting services fee		137
Administrative fee		95
Legal fees		29
Audit fees		18
Other		382
Total		16,636
Less expenses in excess of voluntary limit (Note 2)		(33	)
Total expenses		16,603
Net investment income		5,753

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		66,470
Realized net gain on forward currency contracts		13,672
Realized net loss on foreign currency transactions		(750	)
Realized net gain on investments		79,392
Unrealized appreciation in value of securities during the period		18,681
Unrealized depreciation in value of forward currency contracts during the period		(8,004	)
Unrealized appreciation in value of investments during the period		10,677
Net gain on investments		90,069
Net increase in net assets resulting from operations	$	95,822

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY CUNDILL GLOBAL VALUE FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	5,753		$	6,038
Realized net gain on investments		79,392			27,211
Unrealized appreciation		10,677			80,530
Net increase in net assets resulting from operations		95,822			113,779
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(4,498	)		(5,373	)
Class B		(–	)		(65	)
Class C		(219	)		(616	)
Class Y		(146	)		(252	)
Advisor Class		(37	)		(39	)
Class II		(–	)*		(–	)*
Realized gains on investment transactions:
Class A		(30,521	)		(16,729	)
Class B		(2,704	)		(1,681	)
Class C		(10,901	)		(5,678	)
Class Y		(689	)		(569	)
Advisor Class		(142	)		(99	)
Class II		(1	)		(1	)
		(49,858	)		(31,102	)
Capital share transactions (Note 5)		38,788			363,040
Total increase		84,752			445,717
NET ASSETS
Beginning of period		913,205			467,488
End of period	$	997,957		$	913,205
Undistributed net investment loss	$	(1,593	)	$	(1,773	)

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 69 - 74.

See Notes to Financial Statements.

Financial Highlights
      IVY CUNDILL GLOBAL VALUE FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003				2002
Net asset value, beginning of period	$	15.52		$	13.79		$	12.57		$	11.41		$	8.39			$	9.64
Income (loss) from       investment operations:
Net investment income (loss)		0.13			0.17			0.04			0.01			0.01			(0.00		)(1)
Net realized and unrealized             gain (loss) on investments		1.49			2.21			1.25			1.15			3.05			(1.17		)(1)
Total from investment operations		1.62			2.38			1.29			1.16			3.06			(1.17		)
Less distributions from:
Net investment income		(0.11	)		(0.16	)		(0.07	)		(0.00	)		(0.04	)		(0.00		)
Capital gains		(0.75	)		(0.49	)		(0.00	)		(0.00	)		(0.00	)		(0.08		)
Total distributions		(0.86	)		(0.65	)		(0.07	)		(0.00	)		(0.04	)		(0.08		)
Net asset value, end of period	$	16.28		$	15.52		$	13.79		$	12.57		$	11.41			$	8.39
Total return(2)		10.71	%		17.49	%		10.29	%		10.17	%		36.43	%	- -12.17			%
Net assets, end of period       (in millions)	$688			$625			$321			$59			$30				$1
Ratio of expenses to average net       assets including reimbursement		1.55	%		1.62	%		1.74	%		1.70	%(3)		2.05	%			2.28	%
Ratio of net investment income       (loss) to average net assets       including reimbursement		0.81	%		1.09	%		0.08	%		- -0.09	%(3)		0.18	%			0.02	%
Ratio of expenses to average net       assets excluding reimbursement		1.55	%(4)		1.62	%(4)		1.74	%(4)		1.84	%(3)		2.21	%			4.97	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		0.81	%(4)		1.09	%(4)		0.08	%(4)		- -0.23	%(3)		0.02	%		- -2.67		%
Portfolio turnover rate		42	%		4	%		5	%		1	%		24	%			122	%

(1)Based on average shares outstanding.

(2)Total return calculated without taking into account the sales load deducted on an initial purchase.

(3)Annualized.

(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY CUNDILL GLOBAL VALUE FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003				2002
Net asset value, beginning of period	$	15.23		$	13.54		$	12.38		$	11.26		$	8.32			$	9.61
Income (loss) from       investment operations:
Net investment income (loss)		(0.01	)		0.06			(0.01	)		(0.02	)		(0.06	)		(0.05		)(1)
Net realized and unrealized             gain (loss) on investments		1.46			2.14			1.17			1.14			3.00			(1.16		)(1)
Total from investment operations		1.45			2.20			1.16			1.12			2.94			(1.21		)
Less distributions from:
Net investment income		(0.00	)		(0.02	)		(0.00	)		(0.00	)		(0.00	)		(0.00		)
Capital gains		(0.75	)		(0.49	)		(0.00	)		(0.00	)		(0.00	)		(0.08		)
Total distributions		(0.75	)		(0.51	)		(0.00	)		(0.00	)		(0.00	)		(0.08		)
Net asset value, end of period	$	15.93		$	15.23		$	13.54		$	12.38		$	11.26			$	8.32
Total return		9.82	%		16.43	%		9.37	%		9.95	%		35.34	%	- -12.62			%
Net assets, end of period       (in millions)	$59			$57			$37			$12			$7				$2
Ratio of expenses to average net       assets including reimbursement		2.44	%		2.51	%		2.62	%		2.52	%(2)		3.20	%			2.84	%
Ratio of net investment income       (loss) to average net assets       including reimbursement		- -0.07	%		0.21	%		- -0.86	%		- -1.31	%(2)		- -1.13	%	- -0.54			%
Ratio of expenses to average net       assets excluding reimbursement		2.44	%(3)		2.51	%(3)		2.62	%(3)		2.67	%(2)		3.36	%			5.53	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		- -0.07	%(3)		0.21	%(3)		- -0.86	%(3)		- -1.46	%(2)		- -1.29	%		- -3.23		%
Portfolio turnover rate		42	%		4	%		5	%		1	%		24	%			122	%

(1)Based on average shares outstanding.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY CUNDILL GLOBAL VALUE FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

		For the fiscal year ended March 31,								For the fiscal period ended						For the fiscal year ended December 31,
		2007			2006			2005		3-31-04						2003				2002
Net asset value, beginning of period		$	15.16		$	13.48		$	12.30			$	11.19			$	8.26			$	9.57
Income (loss) from       investment operations:
Net investment income (loss)			0.03			0.08			(0.02	)			(0.01	)			(0.03	)		(0.07		)(1)
Net realized and unrealized             gain (loss) on investments			1.46			2.14			1.20				1.12				2.96			(1.16		)(1)
Total from investment operations			1.49			2.22			1.18				1.11				2.93			(1.23		)
Less distributions from:
Net investment income			(0.02	)		(0.05	)		(0.00	)			(0.00	)			(0.00	)		(0.00		)
Capital gains			(0.75	)		(0.49	)		(0.00	)			(0.00	)			(0.00	)		(0.08		)
Total distributions			(0.77	)		(0.54	)		(0.00	)			(0.00	)			(0.00	)		(0.08		)
Net asset value, end of period		$	15.88		$	15.16		$	13.48			$	12.30			$	11.19			$	8.26
Total return			10.03	%		16.70	%		9.59	%			9.92	%			35.47	%	- -12.88			%
Net assets, end of period       (in thousands)	$233,049			$211,242			$96,375				$23,840				$11,235					$446
Ratio of expenses to average net       assets including reimbursement			2.21	%		2.28	%		2.42	%			2.35	%(2)			2.93	%			3.10	%
Ratio of net investment income       (loss) to average net assets       including reimbursement			0.15	%		0.43	%		- -0.62	%			- -1.09	%(2)			- -0.83	%	- -0.80			%
Ratio of expenses to average net       assets excluding reimbursement			2.21	%(3)		2.28	%(3)		2.42	%(3)			2.50	%(2)			3.10	%			5.79	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement			0.15	%(3)		0.43	%(3)		- -0.62	%(3)			- -1.23	%(2)			- -1.00	%	- -3.49			%
Portfolio turnover rate			42	%		4	%		5	%			1	%			24	%			122	%

(1)Based on average shares outstanding.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY CUNDILL GLOBAL VALUE FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended				For the period from 7-24-03(1) to
	2007			2006			2005			3-31-04				12-31-03
Net asset value, beginning of period	$	15.56		$	13.82		$	12.58			$	11.40		$	9.84
Income (loss) from       investment operations:
Net investment income (loss)		0.19			0.19			0.07				(0.01	)		0.02
Net realized and unrealized             gain on investments		1.49			2.26			1.29				1.19			1.58
Total from investment operations		1.68			2.45			1.36				1.18			1.60
Less distributions from:
Net investment income		(0.16	)		(0.22	)		(0.12	)			(0.00	)		(0.04	)
Capital gains		(0.75	)		(0.49	)		(0.00	)			(0.00	)		(0.00	)
Total distributions		(0.91	)		(0.71	)		(0.12	)			(0.00	)		(0.04	)
Net asset value, end of period	$	16.33		$	15.56		$	13.82			$	12.58		$	11.40
Total return		11.14	%		17.99	%		10.90	%			10.35	%		16.28	%
Net assets, end of period (in millions)	$15			$17			$10				$2			$1
Ratio of expenses to average net       assets including reimbursement		1.20	%		1.19	%		1.20	%			1.20	%(2)		1.76	%(2)
Ratio of net investment income       (loss) to average net assets       including reimbursement		1.18	%		1.46	%		0.52	%			- -0.32	%(2)		0.55	%(2)
Ratio of expenses to average net       assets excluding reimbursement		1.42	%		1.46	%		1.56	%			1.80	%(2)		2.09	%(2)
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		0.96	%		1.19	%		0.16	%			- -0.92	%(2)		0.22	%(2)
Portfolio turnover rate		42	%		4	%		5	%			1	%		24	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

Financial Highlights
      IVY CUNDILL GLOBAL VALUE FUND
      Advisor Class Shares⁽¹⁾
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003				2002
Net asset value, beginning of period	$	15.54		$	13.77		$	12.54		$	11.37		$	8.34			$	9.55
Income (loss) from       investment operations:
Net investment income (loss)		0.21			0.22			0.04			(0.01	)		(0.01	)			0.04	(2)
Net realized and unrealized             gain (loss) on investments		1.49			2.23			1.32			1.18			3.10			(1.17		)(2)
Total from investment operations		1.70			2.45			1.36			1.17			3.09			(1.13		)
Less distributions from:
Net investment income		(0.19	)		(0.19	)		(0.13	)		(0.00	)		(0.06	)		(0.00		)
Capital gains		(0.75	)		(0.49	)		(0.00	)		(0.00	)		(0.00	)		(0.08		)
Total distributions		(0.94	)		(0.68	)		(0.13	)		(0.00	)		(0.06	)		(0.08		)
Net asset value, end of period	$	16.30		$	15.54		$	13.77		$	12.54		$	11.37			$	8.34
Total return		11.33	%		18.09	%		10.86	%		10.29	%		37.11	%	- -11.86			%
Net assets, end of period (in millions)	$3			$3			$3			$3			$3				$2
Ratio of expenses to average net       assets including reimbursement		1.05	%		1.12	%		1.23	%		1.26	%(3)		2.12	%			1.83	%
Ratio of net investment income       (loss) to average net assets       including reimbursement		1.31	%		1.57	%		0.41	%		- -0.17	%(3)		- -0.07	%			0.47	%
Ratio of expenses to average net       assets excluding reimbursement		1.05	%(4)		1.12	%(4)		1.23	%(4)		1.41	%(3)		2.28	%			4.52	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		1.31	%(4)		1.57	%(4)		0.41	%(4)		- -0.32	%(3)	- -0.23		%		- -2.22		%
Portfolio turnover rate		42	%		4	%		5	%		1	%		24	%			122	%

(1)See Note 5 to financial statements.

(2)Based on average shares outstanding.

(3)Annualized.

(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY CUNDILL GLOBAL VALUE FUND
      Class II Shares ⁽¹⁾
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended			For the period from 11-5-02(2) to
	2007			2006			2005		3-31-04				12-31-03			12-31-02
Net asset value,       beginning of period	$	15.41		$	13.70		$	12.49		$	11.33		$	8.31			$	8.85
Income (loss) from       investment operations:
Net investment             income (loss)		0.24			0.25	(3)		0.02			(0.01	)		0.00				0.26
Net realized and             unrealized gain (loss)             on investments		1.44			2.16	(3)		1.30			1.17			3.08			(0.72		)
Total from investment       operations		1.68			2.41			1.32			1.16			3.08			(0.46		)
Less distributions from:
Net investment income		(0.18	)		(0.21	)		(0.11	)		(0.00	)		(0.06	)		(0.00		)
Capital gains		(0.75	)		(0.49	)		(0.00	)		(0.00	)		(0.00	)		(0.08		)
Total distributions		(0.93	)		(0.70	)		(0.11	)		(0.00	)		(0.06	)		(0.08		)
Net asset value, end of period	$	16.16		$	15.41		$	13.70		$	12.49		$	11.33			$	8.31
Total return		11.24	%		17.88	%		10.62	%		10.24	%		37.12	%		- -5.23		%
Net assets, end of period       (in thousands)	$26			$24			$70			$63			$57				$42
Ratio of expenses to average       net assets including       reimbursement		1.08	%		1.28	%		1.49	%		1.39	%(4)		2.03	%		11.51		%(4)
Ratio of net investment income       (loss) to average net assets       including reimbursement		1.28	%		1.20	%		0.16	%		- -0.29	%(4)		0.03	%		2.96		%(4)
Ratio of expenses to average       net assets excluding       reimbursement		1.08	%(5)		1.28	%(5)		1.49	%(5)		1.53	%(4)		2.20	%		28.44		%(4)
Ratio of net investment income       (loss) to average net assets            excluding reimbursement		1.28	%(5)		1.20	%(5)		0.16	%(5)		- -0.44	%(4)		- -0.13	%	- -13.97			%(4)
Portfolio turnover rate		42	%		4	%		5	%		1	%		24	%			122	%(6)

(1)See Note 5 to financial statements.

(2)Commencement of operations of the class.

(3)Based on average weekly shares outstanding.

(4)Annualized.

(5)There was no waiver of expenses during the period.

(6)For the 12 months ended December 31, 2002.

See Notes to Financial Statements.

Manager's Discussion of
Ivy Dividend Income Fund
      March 31, 2007

Below, David P. Ginther, CPA, portfolio manager of the Ivy Dividend Income Fund, discusses positioning, performance and results for the fiscal year ended March 31, 2007. He has managed the Fund since its inception and has 12 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
	X		LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund rose 11.57 percent (Class A shares at net asset value) for the 12 months ended March 31, 2007. By comparison, the Russell 1000 Index (reflecting the performance of stocks that generally represent the equity market) increased 11.86 percent, while the Lipper Equity Income Funds Universe Average (reflecting the universe of funds with similar investment objectives) increased 14.54 percent for the same period.

Energy positioning hurt results

We underperformed our benchmark and peer group primarily because of our positioning in the energy sector. We had close to a triple weighting in energy stocks relative to our benchmark this past fiscal year, but our returns in this area were less than half that of the benchmark for the period. Despite energy price volatility, we believe the sector's long-term growth prospect fundamentals remain positive due to growth in China and other Asian countries.

We believe the global infrastructure cycle is a long-term secular growth theme as emerging economies continue to demand more energy, materials and higher standards of living. Oil and natural gas prices, while volatile this past year, remained much higher than compared to just a few years ago. We focused on the oil service sector that typically benefits from higher capital spending by major oil companies as they try to increase supply capacity.

Staples helped

Our best success in the portfolio was in the consumer staples area, where we had both a substantially higher-than-benchmark weighting and a higher-than-benchmark return for the year. We benefited from this defensive position as we were concerned about slow economic growth and the deteriorating housing market. We remained cautious on the consumer, as we feel that higher energy costs and the slowdown in the housing market could potentially reduce discretionary spending. We remain substantially underweighted in the more cyclical consumer discretionary sector.

Consistent strategy

Our strategy continues to target total returns through dividend growth and capital gains. We focus on what we feel are large-capitalization, high-quality companies with established operating records that we believe can accelerate their dividend payout ratio in the future. We believe companies that can continue to grow earnings and increase cash flow likely will increase their dividend payout ratio. We also attempted to position the Fund to take advantage of attractive, long-term fundamentals associated with global economic growth, primarily in China.

Volatile market conditions

The equity markets over the last fiscal year were influenced by volatility in commodity prices and a perceived change in direction of interest rates due to slower economic growth. Crude oil prices experienced significant price volatility, rising substantially through July, only to retreat later in the third quarter of 2006. The markets began the fiscal year with concern that the deceleration in the housing market and higher interest rates, due to fear of higher inflation, would stop economic growth. Instead, the Federal Reserve moved to a neutral stance on interest rates in August, and has maintained that policy. The markets rallied in the second half of the year on the expectation that the next move in interest rates would be lower and that the problems in subprime mortgages have been contained to the housing markets and related areas.

Our outlook

We believe the economy will continue to grow in 2007, but at a lower stainable growth rate than in 2006. In this environment, we are concerned that profit margins have peaked and revenue growth is slowing as the economic cycle matures. We have become more conservative within the slowing economic growth environment and are focusing on what we feel are high-quality companies with stable growth, strong balance sheet and cash flow that we believe can return excess cash to shareholders by increasing dividends, share repurchases and reinvesting within the company. Also, we continue to be concerned that the meltdown in subprime mortgages could spread into other parts of the economy causing an economic slowdown. We believe the Federal Reserve is on hold for now as economic growth is decelerating and commodity prices moderate. Also, we believe that market valuations will continue to be supported by the high-price merger and acquisition environment in the equity markets. As always, we continue to focus on total return s through dividend growth and capital appreciation.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Change in weighting
AllianceBernstein Holding L.P.	New to Top 10
Deere & Company	New to Top 10
Schlumberger Limited	Decreased
Chicago Mercantile Exchange Holdings Inc.	New to Top 10
Exxon Mobil Corporation	Decreased
General Electric Company	Decreased
Altria Group, Inc.	Unchanged
Boeing Company (The)	New to Top 10
J.P. Morgan Chase & Co.	New to Top 10
Fluor Corporation	Decreased

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Dividend Income Fund:
Class A Shares (1)(2)	$	15,535
Class B Shares (2)	$	15,968
Class C Shares (2)	$	15,987
Class Y Shares (2)	$	16,555
Russell 1000 Index	$	16,001
Lipper Equity Income Funds Universe Average	$	16,524

		IVY DIVIDEND INCOME FUND, CLASS A SHARES	IVY DIVIDEND INCOME FUND, CLASS B SHARES	IVY DIVIDEND INCOME FUND, CLASS C SHARES	CLASS Y SHARES	IVY DIVIDEND INCOME FUND, RUSSELL 1000 INDEX	LIPPER EQUITY INCOME FUNDS UNIVERSE AVERAGE
JUNE	2003	9,425	10,000	10,000	10,000	10,000	10,000
MARCH	2004	10,476	11,056	11,058	11,125	11,783	11,733
MARCH	2005	11,605	12,135	12,137	12,342	12,636	12,940
MARCH	2006	13,924	14,434	14,438	14,828	14,304	14,426
MARCH	2007	15,535	15,968	15,987	16,555	16,001	16,524

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment.

(2)The value of the investment in the Fund is impacted by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(3)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-07	5.15%	6.63%	10.74%	11.65%
5-year period ended 3-31-07	–	–	–	–
10-year period ended 3-31-07	–	–	–	–
Since inception of Class (4)       through 3-31-07	12.45%	12.71%	13.32%	14.37%

(3)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(4)6-30-03 for Class A, Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

SHAREHOLDER SUMMARY OF IVY DIVIDEND INCOME FUND

Portfolio Highlights

On March 31, 2007, Ivy Dividend Income Fund had net assets totaling $138,889,117 invested in a diversified portfolio of:

85.58%	Domestic Common Stocks
7.47%	Foreign Common Stocks
6.95%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund owned:

Sector Weightings

Financial Services Stocks	$	17.67
Energy Stocks	$	14.40
Consumer Nondurables Stocks	$	9.19
Utilities Stocks	$	8.51
Capital Goods Stocks	$	7.70
Technology Stocks	$	6.96
Cash and Cash Equivalents	$	6.95
Raw Materials Stocks	$	6.15
Multi-Industry Stocks	$	6.08
Shelter Stocks	$	5.58
Transportation Stocks	$	3.64
Health Care Stocks	$	3.39
Consumer Services Stocks	$	2.84
Retail Stocks	$	0.94

The Investments of Ivy Dividend Income Fund
March 31, 2007
COMMON STOCKS	Shares			Value
Aircraft - 4.88%
Boeing Company (The)		37,500	$	3,334,125
Goodrich Corporation		29,450		1,516,086
Raytheon Company		36,850		1,933,151
				6,783,362
Banks - 2.48%
Bank of America Corporation		54,350		2,772,937
Mellon Financial Corporation		15,400		664,356
				3,437,293
Beverages - 3.55%
Coca-Cola Company (The)		28,350		1,360,800
Diageo plc, ADR		27,700		2,242,315
PepsiCo, Inc.		20,900		1,328,404
				4,931,519
Capital Equipment - 3.95%
Caterpillar Inc.		18,150		1,216,594
Deere & Company		39,250		4,264,120
				5,480,714
Chemicals - Petroleum and Inorganic - 3.90%
E.I. du Pont de Nemours and Company		44,300		2,189,749
Monsanto Company		31,850		1,750,476
UAP Holding Corp.		57,100		1,475,750
				5,415,975
Chemicals - Specialty - 1.56%
Air Products and Chemicals, Inc.		29,350		2,168,671
Computers - Peripherals - 1.26%
Microsoft Corporation		63,000		1,755,495
Electrical Equipment - 0.41%
Emerson Electric Co.		13,350		575,251
Electronic Components - 0.82%
Microchip Technology Incorporated		31,850		1,132,108
Health Care - Drugs - 2.40%
Abbott Laboratories		24,850		1,386,630
Novartis AG, ADR		9,700		529,911
Pfizer Inc.		56,250		1,420,875
				3,337,416
Hospital Supply and Management - 0.99%
Medtronic, Inc.		28,050		1,376,133
Hotels and Gaming - 2.84%
Harrah's Entertainment, Inc.		17,900		1,511,655
Starwood Hotels & Resorts Worldwide, Inc.		37,600		2,438,360
				3,950,015
Household - General Products - 4.53%
Colgate-Palmolive Company		39,000		2,604,810
Fortune Brands, Inc.		15,250		1,202,005
Procter & Gamble Company (The)		39,450		2,491,662
				6,298,477
Insurance - Life - 0.94%
Aflac Incorporated		27,600		1,298,856
Insurance - Property and Casualty - 2.83%
ACE Limited		20,350		1,161,171
Everest Re Group, Ltd.		13,950		1,341,572
Travelers Companies, Inc. (The)		27,550		1,426,264
				3,929,007
Metal Fabrication - 1.28%
Loews Corporation, Carolina Group		23,500		1,776,835
Mining - 0.69%
Freeport-McMoRan Copper & Gold Inc., Class B		4,355		288,257
Rio Tinto plc, ADR		2,950		672,040
				960,297
Multiple Industry - 6.08%
Altria Group, Inc.		39,500		3,468,495
General Electric Company		99,900		3,532,464
Valero GP Holdings, LLC		51,900		1,440,225
				8,441,184
Non-Residential Construction - 2.06%
Fluor Corporation		31,900		2,862,068
Petroleum - International - 5.40%
Anadarko Petroleum Corporation		40,750		1,751,435
Apache Corporation		18,800		1,329,160
Exxon Mobil Corporation		49,500		3,734,775
Marathon Oil Corporation		6,950		686,868
				7,502,238
Petroleum - Services - 9.00%
Baker Hughes Incorporated		37,950		2,509,633
Grant Prideco, Inc.		30,200		1,505,168
National Oilwell Varco, Inc.		20,700		1,610,253
Schlumberger Limited		58,800		4,063,080
Transocean Inc.*		16,100		1,315,370
Weatherford International Ltd.*		33,100		1,492,810
				12,496,314
Railroad - 2.35%
Burlington Northern Santa Fe Corporation		16,150		1,298,944
Union Pacific Corporation		19,400		1,970,070
				3,269,014
Real Estate Investment Trust - 5.58%
Douglas Emmett, Inc.		71,900		1,835,607
Host Hotels & Resorts, Inc.		40,171		1,056,899
ProLogis		20,750		1,347,298
Simon Property Group, Inc.		20,050		2,230,563
Vornado Realty Trust		10,700		1,276,938
				7,747,305
Restaurants - 0.94%
McDonald's Corporation		28,850		1,299,692
Security and Commodity Brokers - 11.42%
AllianceBernstein Holding L.P.		48,250		4,270,125
Chicago Mercantile Exchange Holdings Inc.		7,250		3,860,335
J.P. Morgan Chase & Co.		64,802		3,135,121
NYMEX Holdings, Inc.*		20,200		2,742,352
UBS AG		31,100		1,848,273
				15,856,206
Tobacco - 1.11%
Reynolds American Inc.		24,700		1,541,527
Trucking and Shipping - 1.29%
United Parcel Service, Inc., Class B		25,600		1,794,560
Utilities - Electric - 2.80%
Dominion Resources, Inc.		20,200		1,793,154
NRG Energy, Inc.*		29,050		2,092,762
				3,885,916
Utilities - Gas and Pipeline - 2.03%
Enbridge Inc.		33,250		1,085,613
Kinder Morgan, Inc.		16,300		1,735,135
				2,820,748
Utilities - Telephone - 3.68%
AT&T Inc.		49,573		1,954,663
Iowa Telecommunications Services, Inc.		76,950		1,539,000
Windstream Corporation	110,550			1,623,980
				5,117,643
TOTAL COMMON STOCKS - 93.05%			$	129,241,839
(Cost: $104,684,410)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Commercial Paper
Aluminum - 2.00%
Alcoa Incorporated,
5.44%, 4-2-07	$	2,771		2,770,581
Utilities - Gas and Pipeline - 2.16%
Michigan Consolidated Gas Co.,
5.33%, 4-2-07		3,000		2,999,556
Utilities - Telephone - 1.87%
Verizon Communications Inc.,
5.35%, 4-4-07		2,600		2,598,841
Total Commercial Paper - 6.03%				8,368,978
Municipal Obligation - Taxable - 0.72%
California
County of Sacramento, Taxable Pension Funding Bonds,            Series 1995B (Bayerische Landesbank Girozentrale,            New York Branch),
5.35%, 4-4-07**		1,000		1,000,000
TOTAL SHORT-TERM SECURITIES - 6.75%			$	9,368,978
(Cost: $9,368,978)
TOTAL INVESTMENT SECURITIES - 99.80%			$	138,610,817
(Cost: $114,053,388)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.20%				278,300
NET ASSETS - 100.00%			$	138,889,117

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*No dividends were paid during the preceding 12 months.

**Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2007.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY DIVIDEND INCOME FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $114,053) (Notes 1 and 3)	$	138,611
Receivables:
Fund shares sold		514
Dividends and interest		292
Prepaid and other assets		36
Total assets		139,453
LIABILITIES
Payable to Fund shareholders		321
Accrued management fee (Note 2)		80
Due to custodian		43
Accrued shareholder servicing (Note 2)		41
Accrued service fee (Note 2)		38
Accrued distribution fee (Note 2)		18
Accrued accounting services fee (Note 2)		6
Other		17
Total liabilities		564
Total net assets	$	138,889
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	112,904
Accumulated undistributed income:
Accumulated undistributed net investment income		23
Accumulated undistributed net realized gain on investment transactions		1,405
Net unrealized appreciation in value of investments		24,557
Net assets applicable to outstanding units of capital	$	138,889
Net asset value per share (net assets divided by shares outstanding):
Class A		$15.70
Class B		$15.63
Class C		$15.63
Class Y		$15.70
Capital shares outstanding:
Class A		6,809
Class B		639
Class C		1,239
Class Y		167

See Notes to Financial Statements.

Statement of Operations
      IVY DIVIDEND INCOME FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $8)	$	2,139
Interest and amortization		578
Total income		2,717
Expenses (Note 2):
Investment management fee		748
Shareholder servicing:
Class A		216
Class B		36
Class C		50
Class Y		2
Service fee:
Class A		195
Class B		21
Class C		41
Class Y		3
Distribution fee:
Class A		8
Class B		63
Class C		121
Accounting services fee		56
Audit fees		16
Custodian fees		8
Legal fees		2
Other		91
Total expenses		1,677
Net investment income		1,040
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		2,663
Realized net gain on swaps		326
Realized net gain on investments		2,989
Unrealized appreciation in value of investments during the period		7,777
Net gain on investments		10,766
Net increase in net assets resulting from operations	$	11,806

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY DIVIDEND INCOME FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	1,040		$	440
Realized net gain (loss) on investments		2,989			(174	)
Unrealized appreciation		7,777			11,630
Net increase in net assets resulting from operations		11,806			11,896
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(963	)		(397	)
Class B		(24	)		(6	)
Class C		(61	)		(13	)
Class Y		(17	)		(10	)
Realized gains on investment transactions:
Class A		(1,058	)		(98	)
Class B		(106	)		(14	)
Class C		(209	)		(25	)
Class Y		(16	)		(2	)
		(2,454	)		(565	)
Capital share transactions (Note 5)		46,283			22,983
Total increase		55,635			34,314
NET ASSETS
Beginning of period		83,254			48,940
End of period	$	138,889		$	83,254
Undistributed net investment income	$	23		$	37

(1)See "Financial Highlights" on pages 87 - 90.

See Notes to Financial Statements.

Financial Highlights
      IVY DIVIDEND INCOME FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the period from 6-30-03(1) to
	2007			2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period	$	14.41		$	12.13		$	11.07		$	11.03		$	10.00
Income from       investment operations:
Net investment income		0.17	(2)		0.12	(2)		0.09			0.01			0.04
Net realized and unrealized             gain on investments		1.49	(2)		2.30	(2)		1.10			0.04			1.03
Total from investment operations		1.66			2.42			1.19			0.05			1.07
Less distributions from:
Net investment income		(0.18	)		(0.11	)		(0.09	)		(0.01	)		(0.04	)
Capital gains		(0.19	)		(0.03	)		(0.04	)		(0.00	)		(0.00	)
Total distributions		(0.37	)		(0.14	)		(0.13	)		(0.01	)		(0.04	)
Net asset value, end of period	$	15.70		$	14.41		$	12.13		$	11.07		$	11.03
Total return(3)		11.57	%		19.99	%		10.78	%		0.41	%		10.70	%
Net assets, end of period       (in millions)		$107			$61			$32			$17			$16
Ratio of expenses to average       net assets including       voluntary expense waiver		1.38	%		1.45	%		1.59	%		2.00	%(4)		1.11	%(4)
Ratio of net investment income       to average net assets including       voluntary expense waiver		1.16	%		0.92	%		0.94	%		0.20	%(4)		1.34	%(4)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.38	%(5)		1.45	%(5)		1.59	%(5)		2.40	%(4)		1.81	%(4)
Ratio of net investment income (loss)       to average net assets excluding       voluntary expense waiver		1.16	%(5)		0.92	%(5)		0.94	%(5)		- -0.20	%(4)		0.64	%(4)
Portfolio turnover rate		24	%		15	%		32	%		12	%		16	%

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Total return calculated without taking into account the sales load deducted on an initial purchase.

(4)Annualized.

(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY DIVIDEND INCOME FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the period from 6-30-03(1) to
	2007			2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period	$	14.34		$	12.09		$	11.05		$	11.03		$	10.00
Income (loss) from       investment operations:
Net investment income (loss)		0.05			0.01			0.02			(0.02	)		0.01
Net realized and unrealized             gain on investments		1.47			2.28			1.06			0.04			1.03
Total from investment operations		1.52			2.29			1.08			0.02			1.04
Less distributions from:
Net investment income		(0.04	)		(0.01	)		(0.00	)		(0.00	)		(0.01	)
Capital gains		(0.19	)		(0.03	)		(0.04	)		(0.00	)		(0.00	)
Total distributions		(0.23	)		(0.04	)		(0.04	)		(0.00	)		(0.01	)
Net asset value, end of period	$	15.63		$	14.34		$	12.09		$	11.05		$	11.03
Total return		10.63	%		18.94	%		9.76	%		0.18	%		10.36	%
Net assets, end of period       (in millions)		$10			$7			$6			$2			$2
Ratio of expenses to average       net assets including       voluntary expense waiver		2.30	%		2.32	%		2.44	%		2.99	%(2)		2.03	%(2)
Ratio of net investment income (loss)       to average net assets including       voluntary expense waiver		0.29	%		0.03	%		0.11	%		- -0.81	%(2)		0.36	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		2.30	%(3)		2.32	%(3)		2.44	%(3)		3.39	%(2)		2.73	%(2)
Ratio of net investment income (loss)       to average net assets excluding       voluntary expense waiver		0.29	%(3)		0.03	%(3)		0.11	%(3)		- -1.21	%(2)		- -0.34	%(2)
Portfolio turnover rate		24	%		15	%		32	%		12	%		16	%

(1)Commencement of operations of the class.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY DIVIDEND INCOME FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the period from 6-30-03(1) to
	2007			2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period	$	14.34		$	12.09		$	11.05		$	11.03		$	10.00
Income (loss) from       investment operations:
Net investment income (loss)		0.07			0.01			0.01			(0.02	)		0.01
Net realized and unrealized             gain on investments		1.47			2.28			1.07			0.04			1.03
Total from investment operations		1.54			2.29			1.08			0.02			1.04
Less distributions from:
Net investment income		(0.06	)		(0.01	)		(0.00	)		(0.00	)		(0.01	)
Capital gains		(0.19	)		(0.03	)		(0.04	)		(0.00	)		(0.00	)
Total distributions		(0.25	)		(0.04	)		(0.04	)		(0.00	)		(0.01	)
Net asset value, end of period	$	15.63		$	14.34		$	12.09		$	11.05		$	11.03
Total return		10.74	%		18.95	%		9.76	%		0.18	%		10.38	%
Net assets, end of period       (in millions)		$19			$14			$10			$6			$5
Ratio of expenses to average       net assets including       voluntary expense waiver		2.17	%		2.27	%		2.42	%		2.88	%(2)		1.98	%(2)
Ratio of net investment income (loss)       to average net assets including       voluntary expense waiver		0.42	%		0.08	%		0.10	%		- -0.68	%(2)		0.45	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		2.17	%(3)		2.27	%(3)		2.42	%(3)		3.28	%(2)		2.68	%(2)
Ratio of net investment income (loss)       to average net assets excluding       voluntary expense waiver		0.42	%(3)		0.08	%(3)		0.10	%(3)		- -1.08	%(2)		- -0.25	%(2)
Portfolio turnover rate		24	%		15	%		32	%		12	%		16	%

(1)Commencement of operations of the class.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY DIVIDEND INCOME FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the period from 6-30-03(1) to
	2007			2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period	$	14.41		$	12.13		$	11.07		$	11.03		$	10.00
Income from       investment operations:
Net investment income		0.12	(2)		0.15	(2)		0.11			0.01			0.05
Net realized and unrealized             gain on investments		1.55	(2)		2.29	(2)		1.10			0.04			1.03
Total from investment operations		1.67			2.44			1.21			0.05			1.08
Less distributions from:
Net investment income		(0.19	)		(0.13	)		(0.11	)		(0.01	)		(0.05	)
Capital gains		(0.19	)		(0.03	)		(0.04	)		(0.00	)		(0.00	)
Total distributions		(0.38	)		(0.16	)		(0.15	)		(0.01	)		(0.05	)
Net asset value, end of period	$	15.70		$	14.41		$	12.13		$	11.07		$	11.03
Total return		11.65	%		20.14	%		10.94	%		0.42	%		10.78	%
Net assets, end of period       (in millions)		$3			$1			$1			$1			$1
Ratio of expenses to average       net assets including       voluntary expense waiver		1.29	%		1.34	%		1.44	%		1.91	%(3)		1.25	%(3)
Ratio of net investment income       to average net assets including       voluntary expense waiver		0.92	%		1.03	%		1.09	%		0.28	%(3)		1.08	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.29	%(4)		1.34	%(4)		1.44	%(4)		2.31	%(3)		1.95	%(3)
Ratio of net investment income (loss)       to average net assets excluding       voluntary expense waiver		0.92	%(4)		1.03	%(4)		1.09	%(4)		- -0.12	%(3)		0.38	%(3)
Portfolio turnover rate		24	%		15	%		32	%		12	%		16	%

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Manager's Discussion of
Ivy European Opportunities Fund
      March 31, 2007

Ivy European Opportunities Fund is subadvised by Henderson Investment Management Ltd.

Below, Paul Casson, portfolio manager of the Ivy European Opportunities Fund, discusses positioning, performance and results for the fiscal year ended March 31, 2007. Mr. Casson has managed the Fund for one year and has nine years of industry experience. He is part of the Pan-European Equities team at Henderson, headed by Stephen Peak, who served as portfolio manager of the Fund for seven years until April 2006. Mr. Peak has 29 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
	X		LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund rose 22.17 percent (Class A shares at net asset value) for the fiscal year. This was less than the 25.38 percent increase in the Morgan Stanley Capital International Europe Index, which reflects the performance of securities that generally represent the European stock market. The Lipper European Region Funds Universe Average (reflecting the universe of funds with similar investment objectives) increased 23.83 percent for the same period.

We faced a turbulent year. Having touched a five-year high in early May 2006, European equity markets became extremely nervous. Concerns included the U.S. dollar, growth rates, interest rate rises and inflation, all of which converged to spark a big sell off. European equity markets recovered strongly during the final quarter of the fiscal year - buoyed by a re-acceleration of global merger and acquistion volumes as well as strong consumer confidence and business sentiment survey results.

The main story of the fourth calendar quarter of 2006 was U.S. dollar weakness, which saw the Euro exchange rate move from US$1.25 to US$1.32 in less than a week. Factors that led to this weakness included an increase in the European Commission's forecast for economic growth, and a divergence in Fed and European Central Bank policy.

Volatility increased

European equity markets have had a volatile first quarter of 2007. After a positive start to the year, with sentiment underpinned by ongoing merger and acquisition activity, February was also shaping up to be another good month for European equities until a sharp sell-off in markets over the last two trading days of the month erased gains as volatility spiked sharply higher. The correction was triggered by a dramatic one-day fall in the Chinese market and growing concerns over the prospects for the U.S. economy. During March, European equities recovered from the sell-off, regaining momentum on the back of continuing M&A activity. Notably, European markets comfortably outperformed the UK, U.S. and Japan over the month.

Energy underperformed

It has been a rocky ride for our energy stocks, where we maintained an overweight position. Our holdings suffered from the weakness in oil and gas prices and a large unwinding of speculative positions. Statoil ASA fell in line with other integrated oil companies despite significant new discoveries and now trades at what we feel is a compelling valuation. SeaDrill Limited continued to execute its business plan and has made positive gains since we began purchasing it, albeit in a volatile manner. OMV Aktiengesellschaft was a big laggard earlier in the year following an ill advised attempted merger with Verbund, which was subsequently abandoned. Performance has since improved.

We took the market nervousness and sell off during the second half of 2006 as a buying opportunity for a number of stocks we had been tracking but where valuations were previously unattractive. Key among these was National Bank of Greece S.A.

Health care, real estate woes

Health care was a sector where we had zero exposure for most of 2006. For a while this looked like a mistake but overall the sector underperformed over the year and our stance proved correct in the end. However, our biggest disappointment was Sanofi-Aventis, a health care stock that we thought was cheap, and just got cheaper. We have pragmatically cut the position due to growing uncertainty on key drugs but haven't completely given up. Some stocks in other sectors fell slightly and in a relentlessly rising market this has a marked impact. Hypo Real Estate Holdings AG fell into this camp but we see a lot of value here and we intend to continue to hold the position for the time being.

Our outlook

We anticipate that the forthcoming corporate earnings reporting season has the potential to pave the way for regional capital appreciation, although in the near term it would not be surprising to see a period of consolidation in European equity markets given this past quarter's volatility. During the final quarter of the fiscal year, our exposure to the information technology sector was the biggest drag on performance for the period, affected by SAP Aktiengesellschaft, a German applications software company. For now, we are maintaining our position because we believe the company has a very strong product line-up and a market-leading position in its core markets. The company had released results in January that disappointed investors by forecasting slower revenue growth and a decline in margins.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Country	Sector	Change in weighting
Commerzbank Aktiengesellschaft	Germany	Financial	Increased
National Bank of Greece S.A.	Greece	Financial	New to Top 10
Statoil ASA	Norway	Energy	Decreased
Hypo Real Estate Holding AG	Germany	Financial	New to Top 10
Akzo Nobel N.V.	Netherlands	Chemicals	New to Top 10
Alpha Bank	Greece	Financial	New to Top 10
Peugeot S.A.	France	Autos	New to Top 10
CRH public limited company	Ireland	Building Materials	New to Top 10
Royal Bank of Scotland Group plc (The)	United Kingdom	Financial	New to Top 10
Pfleiderer AG	Germany	Building Materials	Decreased

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy European Opportunities Fund, Class A Shares (1)	$	74,830
Morgan Stanley Capital International Europe Index (2)	$	18,409
Lipper European Region Funds Universe Average (2)	$	24,024

		IVY EUROPEAN OPPORTUNITIES FUND,	MORGAN STANLEY CAPITAL INTERNATIONAL	LIPPER EUROPEAN REGION FUNDS
		CLASS A SHARES	EUROPE INDEX	UNIVERSE AVERAGE
Inception 5/4/99		9,425	10,000	10,000
DEC	1999	29,743	12,077	13,469
DEC	2000	31,084	11,063	12,808
DEC	2001	24,661	8,862	10,327
DEC	2002	23,848	7,233	8,909
DEC	2003	36,016	10,021	12,512
MARCH	2004	40,380	10,110	12,911
MARCH	2005	51,291	12,170	15,522
MARCH	2006	61,249	14,682	19,401
MARCH	2007	74,830	18,409	24,024

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

(2)Because the Fund commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the indexes (including income) are not available, investment in the indexes was effected as of May 31, 1999.

Average Annual Total Return(3)
	Class A	Class B	Class C	Class Y	Advisor Class (4)
1-year period ended 3-31-07	15.15%	17.24%	21.33%	22.38%	22.76%
5-year period ended 3-31-07	21.51%	21.83%	21.95%	–	23.35%
10-year period ended 3-31-07	–	–	–	–	–
Since inception of Class (5)       through 3-31-07	28.96%	28.87%	18.82%	32.24%	30.39%

(3)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(4)Advisor Class shares are no longer available for investment.

(5)5-4-99 for Class A shares, 5-24-99 for Class B shares, 10-24-99 for Class C shares, 7-24-03 for Class Y shares and 5-3-99 for Advisor Class shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

A large portion of the Fund's since inception return is attributable to investments in initial public offerings without which the Fund's return would have been lower.

SHAREHOLDER SUMMARY OF IVY EUROPEAN OPPORTUNITIES FUND

Portfolio Highlights

On March 31, 2007, Ivy European Opportunities Fund had net assets totaling $514,729,057 invested in a diversified portfolio of:

99.05%	Foreign Common Stocks
0.95%	Cash and Cash Equivalents

Country Weightings

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund was invested by country and by industry, respectively, as follows:

United Kingdom	$	23.98
Germany	$	18.70
France	$	9.80
Greece	$	8.76
Other Europe (1)	$	7.53
Spain	$	6.82
Norway	$	6.48
Netherlands	$	5.39
Italy	$	4.97
Austria	$	3.79
Other (2)	$	2.83
Cash and Cash Equivalents	$	0.95

(1)Includes $3.14 Ireland, $1.70 Luxembourg, $1.37 Sweden and $1.32 Switzerland.

(2)Includes $0.97 Argentina and $1.86 Bermuda.

Sector Weightings

Financial Services Stocks	$	29.82
Utilities Stocks	$	11.95
Capital Goods Stocks	$	10.66
Energy Stocks	$	9.98
Consumer Nondurables Stocks	$	9.86
Consumer Durables Stocks	$	5.71
Miscellaneous Stocks	$	3.55
Transportation Stocks	$	3.46
Consumer Services Stocks	$	3.28
Multi-Industry Stocks	$	2.79
Health Care Stocks	$	2.72
Retail Stocks	$	2.67
Raw Materials Stocks	$	2.60
Cash and Cash Equivalents	$	0.95

The Investments of Ivy European Opportunities Fund
March 31, 2007
COMMON STOCKS	Shares		Value
Argentina - 0.97%
NDS Group plc, ADR*		100,000	$	4,989,000
Austria - 3.79%
AGRANA Beteiligungs-AG (A)		47,000		4,711,364
OMV Aktiengesellschaft (A)		180,000		11,337,314
Telekom Austria Aktiengesellschaft (A)		138,000		3,449,124
				19,497,802
Bermuda - 1.86%
SeaDrill Limited (A)*		582,000		9,575,046
France - 9.80%
Amboise Investissement (A)*		180,747		3,090,559
France Telecom (A)		401,768		10,610,552
Gaz de France (A)		242,649		11,260,672
Peugeot S.A. (A)		184,239		12,985,011
Sanofi-Aventis (A)		52,534		4,568,540
TOTAL S.A. (A)		113,376		7,943,696
				50,459,030
Germany - 18.70%
Commerzbank Aktiengesellschaft (A)		410,946		18,198,026
Continental Aktiengesellschaft (A)		82,519		10,663,899
DaimlerChrysler AG, Registered Shares (A)		69,487		5,730,016
Deutsche Post AG (A)		322,362		9,749,363
E.ON AG (A)		87,078		11,774,182
Hypo Real Estate Holding AG (A)		211,260		13,484,020
Pfleiderer Ag, Registered Shares (A)		425,982		12,490,555
SAP Aktiengesellschaft (A)		144,707		6,458,356
Siemens AG (A)		72,000		7,695,427
				96,243,844
Greece - 8.76%
Alpha Bank (A)		422,386		13,372,538
Coca-Cola Hellenic Bottling Company S.A. (A)		223,867		9,420,124
National Bank of Greece S.A. (A)		291,177		15,442,000
Titan Cement Company S.A. (A)		126,954		6,851,470
				45,086,132
Ireland - 3.14%
CRH public limited company (A)		298,738		12,762,181
IAWS Group, plc (A)		146,371		3,406,114
				16,168,295
Italy - 4.97%
AZIMUT HOLDING S.P.A. (A)		567,000		8,369,535
Eni S.p.A. (A)		196,215		6,385,067
Geox S.p.A. (A)(B)		200,000		3,486,555
UniCredito Italiano S.p.A. (A)		769,096		7,320,174
				25,561,331
Luxembourg - 1.70%
SES GLOBAL S.A., Fiduciary Deposit Receipts (A)		458,062		8,744,047
Netherlands - 5.39%
Aalberts Industries N.V. (A)		74,000		7,309,155
Akzo Nobel N.V. (A)		176,166		13,378,534
Trader Media East Limited, GDR*		301,000		3,025,050
Univar N.V. (A)		72,894		4,043,986
				27,756,725
Norway - 6.48%
BW Offshore Limited (A)*	1,049,878			4,404,503
Eitzen Chemical ASA (A)(B)*		847,312		3,652,267
Prosafe ASA (A)		296,065		4,529,892
Statoil ASA (A)		558,894		15,217,570
Subsea 7 Inc. (A)*		291,174		5,532,895
				33,337,127
Spain - 6.82%
Altadis, S.A. (A)		193,581		12,430,621
Banco Bilbao Vizcaya Argentaria, S.A. (A)		323,800		7,950,205
Banco Santander Central Hispano, S.A. (A)		395,731		7,062,566
Enagas, S.A. (A)		297,235		7,679,137
				35,122,529
Sweden - 1.37%
Investor AB, B Shares (A)*		296,404		7,046,323
Switzerland - 1.32%
UBS AG (A)		114,776		6,819,592
United Kingdom - 23.98%
Admiral Group Plc (A)		228,049		5,156,312
Aurora Russia Limited (A)*	1,110,000			1,976,799
British Sky Broadcasting Group plc (A)		461,552		5,122,603
Enterprise Inns plc (A)		320,000		4,209,615
Evolution Group Plc (The) (A)	2,592,416			7,499,167
GlaxoSmithKline plc (A)		342,337		9,411,118
IP Group plc (A)*	1,619,705			4,310,863
Imperial Tobacco Group PLC (A)		230,000		10,296,751
Inmarsat plc (A)		823,761		6,224,772
Investec plc (A)		356,195		4,612,163
Man Group plc (A)		932,526		10,184,622
Old Mutual plc (A)	1,850,000			5,974,084
Omega International Group PLC (A)		270,000		1,696,234
Persimmon plc (A)		100,000		2,766,791
Premier Brands Foods plc (A)		918,000		5,288,476
Punch Taverns plc (A)		194,924		4,783,246
Regal Petroleum plc (A)*		667,000		2,323,219
Regal Petroleum plc (A)(B)*	1,050,000			3,657,241
Royal Bank of Scotland Group plc (The) (A)		325,500		12,708,188
Travis Perkins plc (A)		119,997		4,751,047
Vodafone Group Plc (A)	3,936,885			10,497,430
				123,450,741
TOTAL COMMON STOCKS - 99.05%			$	509,857,564
(Cost: $391,030,944)
SHORT-TERM SECURITIES - 1.88%	Principal Amount in Thousands
Security and Commodity Brokers
Greenwich Capital Holdings Inc.       (Royal Bank of Scotland PLC (The)),
5.39%, 4-2-07	$9,676		$	9,674,551
(Cost: $9,674,551)
TOTAL INVESTMENT SECURITIES - 100.93%			$	519,532,115
(Cost: $400,705,495)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.93%)				(4,803,058	)
NET ASSETS - 100.00%			$	514,729,057

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*No dividends were paid during the preceding 12 months.

(A)Listed on an exchange outside the United States.

(B)Illiquid security. At March 31, 2007, the total value of illiquid securities amounted to $10,796,063 or 2.10% of net assets.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY EUROPEAN OPPORTUNITIES FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $400,705) (Notes 1 and 3)	$	519,532
Receivables:
Dividends and interest		1,054
Fund shares sold		1,036
Prepaid and other assets		46
Total assets		521,668
LIABILITIES
Payable for investment securities purchased		5,413
Payable to Fund shareholders		467
Accrued management fee (Note 2)		388
Due to custodian		188
Accrued shareholder servicing (Note 2)		157
Accrued service fee (Note 2)		153
Accrued distribution fee (Note 2)		72
Accrued accounting services fee (Note 2)		8
Accrued administrative fee (Note 2)		4
Other		89
Total liabilities		6,939
Total net assets	$	514,729
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	386,417
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(881	)
Accumulated undistributed net realized gain on investment transactions		10,346
Net unrealized appreciation in value of investments		118,847
Net assets applicable to outstanding units of capital	$	514,729
Net asset value per share (net assets divided by shares outstanding):
Class A		$40.58
Class B		$39.14
Class C		$39.28
Class Y		$40.61
Advisor Class		$40.96
Capital shares outstanding:
Class A		9,584
Class B		1,318
Class C		1,647
Class Y		179
Advisor Class		56

See Notes to Financial Statements.

Statement of Operations
      IVY EUROPEAN OPPORTUNITIES FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $985)	$	9,523
Interest and amortization		766
Total income		10,289
Expenses (Note 2):
Investment management fee		3,768
Shareholder servicing:
Class A		913
Class B		143
Class C		137
Class Y		8
Advisor Class		3
Service fee:
Class A		702
Class B		113
Class C		136
Class Y		11
Distribution fee:
Class A		28
Class B		338
Class C		410
Custodian fees		155
Accounting services fee		85
Administrative fee		40
Audit fees		37
Legal fees		9
Other		215
Total expenses		7,251
Net investment income		3,038
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		41,929
Realized net gain on foreign currency transactions		225
Realized net gain on investments		42,154
Unrealized appreciation in value of investments during the period		38,366
Net gain on investments		80,520
Net increase in net assets resulting from operations	$	83,558

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY EUROPEAN OPPORTUNITIES FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	3,038		$	503
Realized net gain on investments		42,154			28,234
Unrealized appreciation		38,366			24,816
Net increase in net assets resulting from operations		83,558			53,553
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(3,582	)		(1,364	)
Class B		(171	)		(–	)
Class C		(263	)		(–	)
Class Y		(69	)		(28	)
Advisor Class		(33	)		(36	)
Realized gains on investment transactions:
Class A		(–	)		(–	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(–	)		(–	)
Advisor Class		(–	)		(–	)
		(4,118	)		(1,428	)
Capital share transactions (Note 5)		99,354			20,922
Total increase		178,794			73,047
NET ASSETS
Beginning of period		335,935			262,888
End of period	$	514,729		$	335,935
Undistributed net investment loss	$	(881	)	$	(26	)

(1)See "Financial Highlights" on pages 103 - 107.

See Notes to Financial Statements.

Financial Highlights
      IVY EUROPEAN OPPORTUNITIES FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	33.58		$	28.31		$	22.30		$	19.89		$	13.20		$	13.65
Income (loss) from       investment operations:
Net investment       income (loss)		0.31			0.10			(0.03	)		(0.03	)		0.02			0.01	(1)
Net realized and             unrealized gain (loss)             on investments		7.11			5.37			6.05			2.44			6.71			(0.46	)(2)
Total from investment       operations		7.42			5.47			6.02			2.41			6.73			(0.45	)
Less distributions from:
Net investment income		(0.42	)		(0.20	)		(0.01	)		(0.00	)		(0.04	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.42	)		(0.20	)		(0.01	)		(0.00	)		(0.04	)		(0.00	)
Net asset value, end of period	$	40.58		$	33.58		$	28.31		$	22.30		$	19.89		$	13.20
Total return (3)		22.17	%		19.41	%		27.02	%		12.12	%		51.02	%		- -3.30	%(2)
Net assets, end of period       (in millions)	$389			$235			$170			$79			$38			$20
Ratio of expenses to       average net assets		1.64	%		1.72	%		1.79	%		1.72	%(4)		2.26	%		2.15	%
Ratio of net investment       income (loss) to       average net assets		0.91	%		0.35	%		- -0.07	%		- -0.61	%(4)		0.18	%		0.06	%
Portfolio turnover rate		42	%		62	%		63	%		31	%		123	%		69	%

(1)Based on average shares outstanding.

(2)Includes redemption fees added to capital.

(3)Total return calculated without taking into account the sales load deducted on an initial purchase.

(4)Annualized.

See Notes to Financial Statements.

Financial Highlights
      IVY EUROPEAN OPPORTUNITIES FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	32.40		$	27.32		$	21.66		$	19.36		$	12.93		$	13.54
Income (loss) from       investment operations:
Net investment             income (loss)		0.09			(0.11	)		(0.17	)		(0.09	)		(0.07	)		(0.10	)(1)
Net realized and             unrealized gain (loss)             on investments		6.78			5.19			5.83			2.39			6.50			(0.51	)(1)
Total from investment operations		6.87			5.08			5.66			2.30			6.43			(0.61	)
Less distributions from:
Net investment income		(0.13	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.13	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value, end of period	$	39.14		$	32.40		$	27.32		$	21.66		$	19.36		$	12.93
Total return		21.24	%		18.59	%		26.13	%		11.88	%		49.73	%	-4.51		%
Net assets, end of period       (in millions)		$52			$44			$40			$32			$29			$25
Ratio of expenses to       average net assets		2.40	%		2.45	%		2.53	%		2.58	%(2)		3.00	%		2.92	%
Ratio of net investment       income (loss) to       average net assets		0.27	%		- -0.30	%		- -0.73	%		- -1.57	%(2)		- -0.47	%		- -0.70	%
Portfolio turnover rate		42	%		62	%		63	%		31	%		123	%		69	%

(1)Based on average shares outstanding.

(2)Annualized.

See Notes to Financial Statements.

Financial Highlights
      IVY EUROPEAN OPPORTUNITIES FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	32.52		$	27.42		$	21.74		$	19.43		$	12.98		$	13.59
Income (loss) from       investment operations:
Net investment             income (loss)		0.12			(0.09	)		(0.14	)		(0.08	)		(0.07	)		(0.10	)(1)
Net realized and             unrealized gain (loss)             on investments		6.81			5.19			5.82			2.39			6.52			(0.51	)(1)
Total from investment operations		6.93			5.10			5.68			2.31			6.45			(0.61	)
Less distributions from:
Net investment income		(0.17	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.17	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value, end of period	$	39.28		$	32.52		$	27.42		$	21.74		$	19.43		$	12.98
Total return		21.33	%		18.60	%		26.13	%		11.89	%		49.69	%	-4.49		%
Net assets, end of period       (in millions)	$65			$51			$45			$27			$23			$19
Ratio of expenses to       average net assets		2.32	%		2.42	%		2.51	%		2.56	%(2)		2.98	%		2.92	%
Ratio of net investment       income (loss) to       average net assets		0.32	%		- -0.29	%		- -0.79	%		- -1.54	%(2)		- -0.43	%		- -0.70	%
Portfolio turnover rate		42	%		62	%		63	%		31	%		123	%		69	%

(1)Based on average shares outstanding.

(2)Annualized.

See Notes to Financial Statements.

Financial Highlights
      IVY EUROPEAN OPPORTUNITIES FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended				For the period from 7-24-03(1) to
	2007			2006			2005			3-31-04				12-31-03
Net asset value, beginning of period	$	33.60		$	28.33		$	22.30			$	19.89		$	14.88
Income (loss) from       investment operations:
Net investment income (loss)		0.44			0.18			0.09				(0.02	)		(0.04	)
Net realized and unrealized             gain on investments		7.05			5.34			6.00				2.43			5.12
Total from investment operations		7.49			5.52			6.09				2.41			5.08
Less distributions from:
Net investment income		(0.48	)		(0.25	)		(0.06	)			(0.00	)		(0.07	)
Capital gains		(0.00	)		(0.00	)		(0.00	)			(0.00	)		(0.00	)
Total distributions		(0.48	)		(0.25	)		(0.06	)			(0.00	)		(0.07	)
Net asset value, end of period	$	40.61		$	33.60		$	28.33			$	22.30		$	19.89
Total return		22.38	%		19.60	%		27.32	%			12.12	%		34.14	%
Net assets, end of period       (in millions)	$7			$4			$4				$4			$3
Ratio of expenses to       average net assets		1.44	%		1.55	%		1.61	%			1.75	%(2)		1.51	%(2)
Ratio of net investment income       (loss) to average net assets		1.14	%		0.60	%		0.53	%			- -0.71	%(2)		- -0.58	%(2)
Portfolio turnover rate		42	%		62	%		63	%			31	%		123	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

Financial Highlights
      IVY EUROPEAN OPPORTUNITIES FUND
      Advisor Class Shares ⁽¹⁾
      For a Share of Capital Stock Oustanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	33.88		$	28.55		$	22.48		$	20.03		$	13.34		$	13.80
Income (loss) from       investment operations:
Net investment             income (loss)		0.94			0.35	(2)		0.21			(0.01	)		0.24			0.06	(2)
Net realized and             unrealized gain (loss)             on investments		6.73			5.32	(2)		5.99			2.46			6.58			(0.52	)
Total from investment operations		7.67			5.67			6.20			2.45			6.82			(0.46	)
Less distributions from:
Net investment income		(0.59	)		(0.34	)		(0.13	)		(0.00	)		(0.13	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.59	)		(0.34	)		(0.13	)		(0.00	)		(0.13	)		(0.00	)
Net asset value, end of period	$	40.96		$	33.88		$	28.55		$	22.48		$	20.03		$	13.34
Total return		22.76	%		20.00	%		27.64	%		12.23	%		51.12	%		- -3.33	%
Net assets, end of period       (in millions)	$2			$2			$4			$4			$4			$6
Ratio of expenses to       average net assets		1.19	%		1.25	%		1.36	%		1.41	%(3)		1.96	%		1.81	%
Ratio of net investment       income (loss) to       average net assets		1.60	%		1.13	%		0.51	%		- -0.41	%(3)		1.02	%		0.40	%
Portfolio turnover rate		42	%		62	%		63	%		31	%		123	%		69	%

(1)See Note 5 to financial statements.

(2)Based on average shares outstanding.

(3)Annualized.

See Notes to Financial Statements.

Manager's Discussion of
Ivy Global Natural Resources Fund
      March 31, 2007

Ivy Global Natural Resources Fund is subadvised by Mackenzie Financial Corporation.

Below, Frederick Sturm, CFA, portfolio manager of the Ivy Global Natural Resources Fund, discusses positioning, performance and results for the fiscal year ended March 31, 2007. He has managed the Fund since its inception 10 years ago. He has 25 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
		X	LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of the companies in the Fund, as measured by market capitalization. Shaded areas show quarterly data for the past three years. Source: Morningstar

The Fund climbed 15.47 (Class A shares at net asset value) percent for the 12 months ended March 31, 2007. This was less than the Morgan Stanley Capital International Commodity-Related Index (reflecting the performance of the global natural resource markets), which increased 17.08 percent for the same period. The Lipper Natural Resources Funds Universe Average (reflecting the Fund's peer group of funds with similar investment objectives) advanced 9.34 percent.

A multi-sector approach worked as volatility rose

Natural resources equities confounded skeptics this past fiscal year. Most regional markets except Japan posted solid returns. We are pleased to have provided attractive results relative to our peers that we attribute to our adroit multi-sector positioning across a broad range of natural resources equities. Our results were less than our benchmark this past year because the index benefited to a greater degree than the Fund's portfolio from the strong performance of some commodities this past year.

Our diversification, as well as substantial new commitments from investors, helped us both preserve capital as energy markets weakened in late summer and provided us with additional tactical resources to capitalize on long-term opportunities. We also reached two milestones for our more than quarter-million shareholder accounts this past fiscal year: the Fund grew to more than $5 billion in net assets as the period drew to a close and we marked the Fund's 10-year anniversary of operations.

Overall, this past fiscal year was a volatile, but profitable time. We saw oil reach a record high of more than $75 a barrel in 2006, only to fall back by more than $20 by autumn and close the year at $66 a barrel, about where it began. Gasoline climbed to more than $3 a gallon in many areas, only to drop sharply amid bloated inventories, then rise again in the spring of 2007. Also, the forces of nature in the Gulf of Mexico were calmer than hurricane forecasters expected. Gold prices reached their highest level since the early 1980s, and then retreated amid concerns about global economic growth.

Compared with a year ago, our Top 10 Holdings as of March 31, 2007 show (see table to the right) slightly more representation by U.S.-based energy companies, particularly coal mining firms, and less representation by overseas-based precious metals mining firms. This reflected a repositioning in an effort to take advantage of what we saw as temporary energy and natural resource stock weakness at various points in the fiscal year, and a reduced weighting in gold within the Fund.

Natural resources earnings remained solid

Since global equity markets bottomed in 2002-2003, world stock markets have more than doubled, and in some cases exceed their prior 2000 peak. Since that low, world earnings have advanced at an even larger pace and stand well above their previous peak. The message we see is that equity markets have benefited from a broad improvement in global economic activity.

Resource sectors stand out as an example where earnings have risen faster than share prices. Current P/E (price-to-earnings ratio, or stock price divided by earnings per share) for some of the Fund's largest holdings is much lower than the overall market. We have focused on such low P/E companies, as we believe they have continued attractive growth potential.

M&A helped to lead the way

In 2006, we also saw some leading companies in energy being taken over. The Fund's results benefited from several of these deals. In 2007, we expect more merger and acquisition activity in global energy services, and have invested in several firms (such as Diamond Offshore Drilling, Inc.) partially for this reason.

In the mining sector, we are sticking with our view that gold prices may trade within a wide range of $550-$750 an ounce in coming months. We expect to maintain a neutral weighting. Base metal prices have been of some concern to us, and we have almost no exposure to copper and aluminum. However, we continue to be attracted to iron, an industry where a major firm has already contracted a 9.5 percent production increase for 2007. In other areas, we continue to focus on more specialized companies with volume growth participation rather than commodity price leverage. This remains true of chemicals, with our focus on industrial gases and water companies.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Country	Change in weighting
Companhia Vale do Rio Doce	Brazil	Increased
Diamond Offshore Drilling, Inc.	United States	Decreased
Noble Corporation	Cayman Islands	Increased
Arch Coal, Inc.	United States	Increased
Valero Energy Corporation	United States	Decreased
Gold Fields Limited	South Africa	Decreased
Vallourec	France	New to Top 10
GlobalSantaFe Corporation	United States	New to Top 10
Peabody Energy Corporation	United States	New to Top 10
Smith International, Inc.	United States	New to Top 10

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

Emerging markets lead global growth

The global outlook appears encouraging, in our opinion: inflation risk remains subdued and we think may subside further with easing commodity prices. Global monetary conditions are still supportive with tame interest rate levels and ample money liquidity, and world trade continues to grow. It appears for the first time ever, emerging market economies were responsible for half of the world's total growth last year. We remain steadfast believers in the long-term demand for more resources as consumers in emerging markets seek a more luxurious lifestyle. We believe that new car sales in China, for instance, will likely post their third consecutive year of more than 20 percent annual growth. In short, we think the demand growth story for resources remains intact and may accelerate as commodity prices ease.

In part because of this trend, we expect natural gas prices to be higher a year from now, even with the December 2006 warm weather surprise in many areas of the U.S. We generally expect to add natural gas firms to the Fund after having underweighted this sector for the past two years. Coal companies, a close proxy for natural gas, are likely also to respond to moderating prices by pushing out some of their expansion plans, in our view.

Alternative energy: here comes the sun

Another area of increasing interest for us is alternative energy. We have been steadily increasing exposure to bio-fuels and solar panels, domestically and abroad. In rough numbers, the annual U.S. consumption of gasoline through the middle of the next decade should be 150 billion gallons per year. We think there may be increased political dialogue this year on renewable fuels such as ethanol, partially tied to concerns of global warming. We are also investing in firms involved in solar panels, both through providers of technological improvements and in makers of inputs used in making panels.

Our outlook

Looking out over the next 24 months, we see a broad range of opportunities unfolding. For long-term investors, a generally favorable global economic backdrop suggests more worthwhile gains may be attainable. In our view, resource markets have the potential to post returns in excess of fixed-income alternatives over the balance of the decade. For investors looking to deploy additional assets or rebalance a portfolio, we think potential equity market volatility in 2007 may create an attractive buying opportunity.

The pulse of resource equity markets is slowing - we think the bull needs a little time to recover from its most recent charge. In an idealized cycle based on past history, markets last year should have moderated into early summer (they did), rallied to late summer (they did), and then moderated a second time into late year (this they did only partially).

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment.

Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country and differences in accounting standards and foreign regulations. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Global Natural Resources Fund, Class A Shares (1)	$	40,012
Morgan Stanley Capital International Commodity-Related Index	$	30,851
Lipper Natural Resources Funds Universe Average	$	31,197

		IVY GLOBAL NATURAL RESOURCES FUND,	MORGAN STANLEY CAPITAL INTERNATIONAL	LIPPER NATURAL RESOURCES FUNDS
		CLASS A SHARES	COMMODITY-RELATED INDEX	UNIVERSE AVERAGE
DEC	1997	9,425	10,000	10,000
DEC	1998	6,659	8,539	7,616
DEC	1999	9,388	10,370	9,924
DEC	2000	10,313	11,982	12,589
DEC	2001	11,901	11,802	11,347
DEC	2002	12,456	11,181	10,667
DEC	2003	18,137	16,116	14,130
MARCH	2004	19,159	17,105	14,907
MARCH	2005	24,618	20,544	20,446
MARCH	2006	34,653	26,351	28,531
MARCH	2007	40,012	30,851	31,197

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y	Class R	Advisor Class (3)
1-year period ended 3-31-07	8.82%	10.55%	14.65%	15.63%	15.20 %	15.86%
5-year period ended 3-31-07	20.82%	21.11%	21.27%	–	–	22.35%
10-year period ended 3-31-07	14.67 %	14.47 %	14.30%	–	–	–
Since inception of Class (4)       through 3-31-07	–	–	–	34.21%	25.43 %	23.73%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares and Class R shares are not subject to sales charges.

(3)Advisor Class shares are no longer available for investment.

(4)7-24-03 for Class Y shares, 12-29-05 for Class R shares and 4-8-99 for Advisor Class shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

SHAREHOLDER SUMMARY OF IVY GLOBAL NATURAL RESOURCES FUND

Portfolio Highlights

On March 31, 2007, Ivy Global Natural Resources Fund had net assets totaling $5,085,053,009 invested in a diversified portfolio of:

52.47%	Foreign Common Stocks
46.23%	Domestic Common Stocks
1.30%	Cash and Cash Equivalents, Corporate Debt Securities and Unrealized Loss       on Open Forward Currency Contracts

Country Weightings

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund was invested by country and by industry, respectively, as follows:

North America	$	56.68
United States	$	46.23
Canada	$	8.68
Mexico	$	1.77
Brazil	$	12.71
Pacific Basin	$	9.62
Thailand	$	2.48
China	$	2.13
Hong Kong	$	1.92
Australia	$	1.24
South Korea	$	1.17
Other Pacific Basin (1)	$	0.68
Europe	$	8.80
France	$	3.60
Other Europe (2)	$	2.87
Germany	$	2.33
South Africa	$	5.91
Bahamas/Caribbean	$	5.09
Cayman Islands	$	3.09
Bermuda	$	2.00
Cash and Cash Equivalents and Unrealized Loss on Open       Forward Currency Contracts	$	1.19

(1)Includes $0.08 Japan, $0.02 Philippines and $0.58 Taiwan.
(2)Includes $0.27 Luxembourg, $0.27 Norway, $ 0.67 Russia and $1.66 United Kingdom.

Sector Weightings

Energy Stocks	$	40.25
Raw Materials Stocks	$	31.81
Capital Goods Stocks	$	8.51
Miscellaneous Stocks	$	5.15
Technology Stocks	$	4.08
Shelter Stocks	$	3.63
Utilities Stocks	$	2.88
Multi-Industry Stocks	$	2.39
Cash and Cash Equivalents, Corporate Debt Securities and       Unrealized Loss on Open Forward Currency Contracts	$	1.30

The Investments of Ivy Global Natural Resources Fund
March 31, 2007
COMMON STOCKS			Shares		Value
Australia - 1.24%
Lihir Gold Limited (A)*		24,000,000		$	63,304,044
Bermuda - 2.00%
Weatherford International Ltd.*			2,250,000		101,475,000
Brazil - 12.60%
Aracruz Celulose S.A., ADR			750,000		39,352,500
Bradespar S.A. (A)			1,700,000		50,497,500
Brasil Ecodiesel Industria e Comercio de Biocombustiveis       e Oleos Vegetais S.A. (A)*			600,000		2,664,660
CPFL Energia S.A. (A)			850,000		11,984,905
CPFL Energia S.A., ADR			275,000		11,632,500
Companhia de Saneamento Basico do Estado       de Sao Paulo - SABESP, ADR			850,000		28,721,500
Companhia Energetica de Minas Gerais - CEMIG, ADR			820,600		39,922,190
Companhia Siderurgica Nacional (A)			1,414,800		61,012,950
Companhia Siderurgica Nacional, ADR			1,000,000		42,840,000
Companhia Vale do Rio Doce, ADR			4,500,000		166,455,000
Cosan S.A. Industria e Comercio (A)*			1,000,000		18,104,160
Petroleo Brasileiro S.A. - Petrobras, ADR			225,000		22,389,750
Suzano Bahia Sul Papel E Celulose S.A. (A)		10,525,000			99,615,347
Votorantim Celulose e Papel S.A. (A)			750,000		13,752,852
Votorantim Celulose e Papel S.A., ADR*			1,750,000		32,025,000
					640,970,814
Canada - 8.68%
Barrick Gold Corporation (A)			2,270,000		64,767,259
Bonavista Energy Trust (A)			500,000		13,360,762
Ferus Gas Industries Trust (A)(B)(C)*			615,000		1,864,443
Goldcorp Inc. (A)			1,500,000		36,002,599
IAMGOLD Corporation (A)		10,000,000			77,176,267
Kinross Gold Corporation (A)*			5,200,000		71,795,582
Mullen Group Income Fund (A)			650,000		10,275,011
OPTI Canada Inc. (A)*			1,300,000		22,385,448
Pason Systems Inc. (A)			2,000,000		24,807,276
Progress Energy Trust (A)			1,409,000		15,951,174
Progress Energy Trust (A)(B)			826,900		9,411,404
Pure Energy Services Ltd. (A)*			481,500		4,337,462
Savanna Energy Services Corp. (A)*			800,000		13,380,684
Talisman Energy Inc. (A)			2,250,000		39,484,625
Trican Well Service Ltd. (A)			1,434,700		28,395,751
Xtreme Coil Drilling Corp. (A)(D)*			650,000		5,737,116
zed.i solutions inc. (A)*			2,319,300		1,948,654
zed.i solutions inc. (A)(B)*			500,000		420,095
					441,501,612
Cayman Islands - 3.09%
Noble Corporation			2,000,000		157,360,000
China - 2.13%
China Shenhua Energy Company Limited,       H Shares (A)			7,500,000		18,141,678
Solarfun Power Holdings Co., Ltd., ADR*			300,000		3,766,500
Suntech Power Holdings Co., Ltd., ADR*			2,500,000		86,525,000
					108,433,178
France - 3.60%
L'Air Liquide S.A. (A)*			200,000		48,758,332
Vallourec (A)			525,000		134,358,594
					183,116,926
Germany - 2.33%
Q-Cells AG (A)*			400,000		25,648,219
SGL Carbon AG (A)*			500,000		16,364,098
Siemens AG (A)			175,000		18,704,164
SolarWorld AG (A)			125,000		9,676,525
Wacker Chemie AG (A)*			275,000		47,811,552
					118,204,558
Hong Kong - 1.92%
CNOOC Limited (A)		40,000,000			35,067,511
China Coal Energy Company Limited (A)*		15,000,000			16,029,948
China Gas Holdings Limited (A)	145,001,000				32,476,067
Guangdong Investment Limited (A)		26,000,000			13,875,984
					97,449,510
Japan - 0.08%
Sumitomo Titanium Corporation (A)			36,000		3,998,982
Luxembourg - 0.27%
Tenaris S.A., ADR			300,000		13,770,000
Mexico - 1.77%
Cemex, S.A. de C.V., ADR*			2,750,000		90,062,500
Norway - 0.27%
Statoil ASA (A)			500,000		13,614,004
Phillipines - 0.02%
PNOC Energy Development Corporation (A)*			9,436,300		1,192,983
Russia - 0.67%
OAO LUKOIL, ADR			150,000		12,975,000
OJSC Rosneft Oil Company, GDR*			2,500,000		20,875,000
					33,850,000
South Africa - 5.91%
Gold Fields Limited (A)			5,000,000		92,701,082
Gold Fields Limited, ADR			7,500,000		138,600,000
Impala Platinum Holdings Limited (A)			1,750,000		55,002,757
Mvelaphanda Resources Limited (A)*			2,000,000		14,391,068
					300,694,907
South Korea - 1.17%
GS Holdings Corp. (A)			1,215,940		47,691,524
Korea Electric Power Corporation (A)			300,000		11,973,852
					59,665,376
Taiwan - 0.58%
Everlight Electronics Co., Ltd. (A)			7,500,000		29,236,674
Thailand - 2.48%
Banpu Public Company Limited, Registered       Shares (A)			3,292,800		18,998,732
PTT Public Company Limited (A)		10,000,000			59,411,597
Rayong Refinery Public Company Limited (A)*		15,000,000			7,583,548
Thai Oil Public Company Limited (A)		24,000,000			40,102,828
					126,096,705
United Kingdom - 1.66%
BG Group plc (A)			2,511,700		36,229,531
Randgold Resources Limited, ADR			1,500,000		35,880,000
Titanium Resources Group Ltd. (A)*		10,000,000			12,200,641
					84,310,172
United States - 46.23%
Air Products and Chemicals, Inc.			1,250,000		92,362,500
Allegheny Technologies Incorporated			250,000		26,672,500
Alpha Natural Resources, Inc.*			1,000,000		15,630,000
Andersons, Inc. (The)			328,000		14,553,360
Arch Coal, Inc.			5,000,000		153,450,000
Atwood Oceanics, Inc.*			900,000		52,821,000
Aventine Renewable Energy Holdings, Inc. (D)*			1,760,231		32,071,409
Avery Dennison Corporation			93,800		6,027,588
Baker Hughes Incorporated			500,000		33,065,000
Bunge Limited			700,000		57,554,000
Burlington Northern Santa Fe Corporation			450,000		36,193,500
CONSOL Energy Inc.			2,740,800		107,247,504
Cameron International Corporation*			750,000		47,092,500
Celanese Corporation, Series A			1,500,000		46,260,000
ChevronTexaco Corporation			200,000		14,792,000
ConocoPhillips			1,500,000		102,525,000
Cytec Industries Inc.			1,000,000		56,240,000
Diamond Offshore Drilling, Inc.			2,000,000		161,900,000
Energy Conversion Devices, Inc.*			1,250,000		43,612,500
Exxon Mobil Corporation			325,000		24,521,250
First Solar, Inc.*			90,300		4,692,891
General Electric Company			2,750,000		97,240,000
GlobalSanteFe Corporation			2,000,000		123,360,000
Grant Prideco, Inc.*			1,400,000		69,776,000
Hexcel Corporation*			2,000,000		39,700,000
iShares Silver Trust*			150,000		20,025,000
MEMC Electronic Materials, Inc.*			1,100,000		66,638,000
McDermott International, Inc.*			1,500,000		73,470,000
Nalco Holdings LLC*			750,000		17,925,000
Oceaneering International, Inc.*			1,500,000		63,180,000
Peabody Energy Corporation			3,000,000		120,720,000
Praxair, Inc.			1,600,000		100,736,000
Range Resources Corporation			500,000		16,700,000
Schlumberger Limited			741,000		51,203,100
Smith International, Inc.			2,500,000		120,125,000
Ultra Petroleum Corp.*			1,000,000		53,130,000
Valero Energy Corporation			2,250,000		145,102,500
VeraSun Energy Corporation*			1,700,000		33,779,000
Zoltek Companies, Inc.*			248,500		8,672,650
					2,350,766,752
TOTAL COMMON STOCKS - 98.70%				$	5,019,074,697
(Cost: $4,071,526,055)

CORPORATE DEBT SECURITIES - 0.11%		Principal Amount in Thousands
Brazil
Bahia Sul Celulose S.A.
0.00%, 12-1-12 (B)(E)	BRL10,692			$	5,646,054
(Cost: $5,279,754)
UNREALIZED GAIN (LOSS) ON OPEN       FORWARD CURRENCY CONTRACTS - (0.07%)		Face Amount in Thousands
Canadian Dollar, 4-11-07 (E)	CAD99,800				(825,080	)
Canadian Dollar, 5-9-07 (E)			142,000		(2,837,631	)
South African Rand, 4-18-07 (E)	ZAR311,000				(231,165	)
South African Rand, 5-16-07 (E)			329,300		678,597
South African Rand, 5-30-07 (E)			186,000		(81,718	)
South African Rand, 6-6-07 (E)			129,000		(247,340	)
South African Rand, 6-13-07 (E)			129,000		(244,986	)
				$	(3,789,323	)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Aircraft - 0.04%
United Technologies Corporation,
5.25%, 4-4-07	$	2,000	1,999,125
Beverages - 0.43%
Concentrate Manufacturing Company of Ireland       (The) (PepsiCo, Inc.):
5.25%, 4-5-07		8,000	7,995,333
5.25%, 4-10-07		14,000	13,981,625
			21,976,958
Health Care - Drugs - 0.19%
GlaxoSmithKline Finance plc,
5.32%, 4-10-07		10,000	9,986,700
Security and Commodity Brokers - 0.38%
Greenwich Capital Holdings Inc. (Royal Bank of Scotland       PLC (The)),
5.39%, 4-2-07		9,170	9,168,627
UBS Finance Delaware LLC (UBS AG),
5.3%, 4-2-07		10,000	9,998,528
			19,167,155

Utilities - Telephone - 0.25%
AT&T Inc.,
5.44%, 4-2-07	12,533		12,531,106
TOTAL SHORT-TERM SECURITIES - 1.29%		$	65,661,044
(Cost: $65,661,044)
TOTAL INVESTMENT SECURITIES - 100.03%		$	5,086,592,472
(Cost: $4,142,466,853)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.03%)			(1,539,463	)
NET ASSETS - 100.00%		$	5,085,053,009

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*No dividends were paid during the preceding 12 months.

(A)Listed on an exchange outside the United States.

(B)Illiquid security. At March 31, 2007, the total value of illiquid securities amounted to $17,341,996 or 0.34% of net assets.

(C)Security valued in good faith by the Valuation Committee appointed by the Board of Trustees.

(D)Restricted security. At March 31, 2007, the following restricted securities were owned:

Securtiy	Acquisition Date	Shares	Cost	Market Value
Aventine Renewable Energy Holdings, Inc.	Various	1,760,231	$30,903,678	$32,071,409
Xtreme Coil Drilling Corp.	Various	650,000	5,868,696	5,737,116
Total		2,410,231	$36,772,374	$37,808,525

The total market value of restricted securities represents approximately $37,808,524 or 0.75% of net assets at March 31, 2007.

(E)Principal amounts are denominated in the indicated foreign currency, were applicable (BRL - Brazilian Real, CAD - Canadian Dollar, ZAR - South African Rand).

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY GLOBAL NATURAL RESOURCES FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $4,142,467) (Notes 1 and 3)	$	5,086,592
Cash		5,461
Cash denominated in foreign currencies (cost - $405)		403
Receivables:
Fund shares sold		29,233
Investment securities sold		17,309
Dividends and interest		7,175
Prepaid and other assets		195
Total assets		5,146,368
LIABILITIES
Payable for investment securities purchased		50,615
Accrued management fee (Note 2)		3,372
Payable to Fund shareholders		3,042
Accrued service fee (Note 2)		2,121
Accrued shareholder servicing (Note 2)		1,036
Accrued distribution fee (Note 2)		864
Accrued accounting services fee (Note 2)		14
Accrued administrative fee (Note 2)		8
Other		243
Total liabilities		61,315
Total net assets	$	5,085,053
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	4,025,102
Accumulated undistributed income:
Accumulated undistributed net investment income		4,963
Accumulated undistributed net realized gain on investment transactions		110,904
Net unrealized appreciation in value of investments		944,084
Net assets applicable to outstanding units of capital	$	5,085,053
Net asset value per share (net assets divided by shares outstanding):
Class A		$31.67
Class B		$29.78
Class C		$29.19
Class Y		$31.84
Class R		$31.62
Advisor Class		$31.48
Capital shares outstanding:
Class A		106,085
Class B		9,124
Class C		38,998
Class Y		9,763
Class R		123
Advisor Class		10

See Notes to Financial Statements.

Statement of Operations
      IVY GLOBAL NATURAL RESOURCES FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $3,721)	$	62,563
Interest and amortization		16,079
Total income		78,642
Expenses (Note 2):
Investment management fee		34,559
Service fee:
Class A		6,740
Class B		616
Class C		2,394
Class Y		467
Class R		2
Distribution fee:
Class A		240
Class B		1,847
Class C		7,181
Class R		2
Shareholder servicing:
Class A		5,041
Class B		604
Class C		1,570
Class Y		289
Class R		2
Advisor Class		–	*
Custodian fees		754
Accounting services fee		167
Administrative fee		100
Audit fees		41
Other		1,170
Total		63,786
Less expenses in excess of voluntary limit (Note 2)		(136	)
Total expenses		63,650
Net investment income		14,992

REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities	$	367,295
Realized net gain on forward currency contracts		3,558
Realized net loss on foreign currency transactions		(1,455	)
Realized net gain on investments		369,398
Unrealized appreciation in value of securities during the period		232,860
Unrealized depreciation in value of forward currency contracts during the period		(6,941	)
Unrealized depreciation in value of foreign currency exchange during the period		(148	)
Unrealized appreciation in value of investments during the period		225,771
Net gain on investments		595,169
Net increase in net assets resulting from operations	$	610,161

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY GLOBAL NATURAL RESOURCES FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	14,992		$	12,286
Realized net gain on investments		369,398			193,237
Unrealized appreciation		225,771			598,047
Net increase in net assets resulting from operations		610,161			803,570
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(14,592	)		(–	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(1,219	)		(–	)
Class R		(4	)		(–	)
Advisor Class		(2	)		(–	)
Realized gains on investment transactions:
Class A		(261,685	)		(88,621	)
Class B		(23,885	)		(10,090	)
Class C		(96,422	)		(33,629	)
Class Y		(17,486	)		(3,474	)
Class R		(115	)		(–	)
Advisor Class		(28	)		(18	)
		(415,438	)		(135,832	)
Capital share transactions (Note 5)		1,406,805			1,476,705
Total increase		1,601,528			2,144,443
NET ASSETS
Beginning of period		3,483,525			1,339,082
End of period	$	5,085,053		$	3,483,525
Undistributed net investment income	$	4,963		$	10,404

(1)See "Financial Highlights" on pages 124 - 129.

See Notes to Financial Statements.

Financial Highlights
      IVY GLOBAL NATURAL RESOURCES FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	30.13		$	22.65		$	17.63		$	16.69		$	11.50		$	11.05
Income (loss) from investment       operations:
Net investment income (loss)		0.17	(1)		0.12			(0.04	)		0.03			0.10			(0.11	)(1)
Net realized and unrealized             gain on investments		4.40	(1)		8.88			5.06			0.91			5.14			0.63	(1)(2)
Total from investment operations		4.57			9.00			5.02			0.94			5.24			0.52
Less distributions from:
Net investment income		(0.16	)		(0.00	)		(0.00	)*		(0.00	)		(0.05	)		(0.00	)
Capital gains		(2.87	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.07	)
Total distributions		(3.03	)		(1.52	)		(0.00	)*		(0.00	)		(0.05	)		(0.07	)
Net asset value, end of period	$	31.67		$	30.13		$	22.65		$	17.63		$	16.69		$	11.50
Total return(3)		15.47	%		40.76	%		28.50	%		5.63	%		45.61	%		4.66	%(2)
Net assets, end of period       (in millions)	$3,360			$2,343				$895			$192			$95			$17
Ratio of expenses to average       net assets including       reimbursement		1.31	%		1.40	%		1.55	%		1.65	%(4)		1.89	%		2.22	%
Ratio of net investment income       (loss) to average net assets       including reimbursement		0.57	%		0.73	%		- -0.52	%		- -0.80	%(4)		- -0.66	%		- -0.91	%
Ratio of expenses to average       net assets excluding       reimbursement		1.31	%(5)		1.40	%(5)		1.55	%(5)		1.65	%(4)(5)		1.89	%(5)		2.38	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		0.57	%(5)		0.73	%(5)		- -0.52	%(5)		- -0.80	%(4)(5)		- -0.66	%(5)		- -1.07	%
Portfolio turnover rate		106	%		104	%		110	%		29	%		58	%		67	%

*Not shown due to rounding.
(1)Based on average shares outstanding.
(2)Includes redemption fees added to capital.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY GLOBAL NATURAL RESOURCES FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	28.57		$	21.72		$	17.04		$	16.16		$	11.19		$	10.81
Income (loss) from       investment operations:
Net investment             income (loss)		(0.05	)		0.03			(0.04	)		(0.01	)		(0.06	)		(0.19	)(1)
Net realized and unrealized             gain on investments		4.13			8.34			4.72			0.89			5.03			0.57	(1)
Total from investment operations		4.08			8.37			4.68			0.88			4.97			0.38
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(2.87	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(2.87	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value,       end of period	$	29.78		$	28.57		$	21.72		$	17.04		$	16.16		$	11.19
Total return		14.55	%		39.59	%		27.46	%		5.45	%		44.42	%		3.52	%
Net assets, end of period       (in millions)		$272			$223			$110			$30			$21			$9
Ratio of expenses to average       net assets including       reimbursement		2.12	%		2.23	%		2.39	%		2.42	%(2)		2.90	%		2.93	%
Ratio of net investment loss       to average net assets       including reimbursement		- -0.24	%		- -0.10	%		- -1.35	%		- -1.59	%(2)		- -1.54	%		- -1.62	%
Ratio of expenses to average       net assets excluding       reimbursement		2.12	%(3)		2.23	%(3)		2.39	%(3)		2.42	%(2)(3)		2.90	%(3)		3.09	%
Ratio of net investment loss       to average net assets       excluding reimbursement		- -0.24	%(3)		- -0.10	%(3)		- -1.35	%(3)		- -1.59	%(2)(3)		- -1.54	%(3)		- -1.78	%
Portfolio turnover rate		106	%		104	%		110	%		29	%		58	%		67	%

(1)Based on average shares outstanding.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY GLOBAL NATURAL RESOURCES FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	28.04		$	21.32		$	16.72		$	15.86		$	10.97		$	10.61
Income (loss) from investment       operations:
Net investment             income (loss)		(0.03	)		0.02			(0.09	)		0.00			0.04			(0.18	)(1)
Net realized and unrealized             gain on investments		4.05			8.22			4.69			0.86			4.85			0.55	(1)
Total from investment operations		4.02			8.24			4.60			0.86			4.89			0.37
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(2.87	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.01	)
Total distributions		(2.87	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.01	)
Net asset value,       end of period	$	29.19		$	28.04		$	21.32		$	16.72		$	15.86		$	10.97
Total return		14.65	%		39.72	%		27.51	%		5.42	%		44.58	%		3.46	%
Net assets, end of period       (in millions)	$1,138				$801			$312			$64			$34			$5
Ratio of expenses to average       net assets including       reimbursement		2.04	%		2.15	%		2.31	%		2.38	%(2)		2.65	%		2.94	%
Ratio of net investment       loss to average net assets       including reimbursement		- -0.16	%		- -0.02	%		- -1.28	%		- -1.54	%(2)		- -1.48	%		- -1.64	%
Ratio of expenses to average       net assets excluding       reimbursement		2.04	%(3)		2.15	%(3)		2.31	%(3)		2.38	%(2)(3)		2.65	%(3)		3.10	%
Ratio of net investment       loss to average net assets       excluding reimbursement		- -0.16	%(3)		- -0.02	%(3)		- -1.28	%(3)		- -1.54	%(2)(3)		- -1.48	%(3)		- -1.80	%
Portfolio turnover rate		106	%		104	%		110	%		29	%		58	%		67	%

(1)Based on average shares outstanding.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY GLOBAL NATURAL RESOURCES FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the period from 7-24-03(1) to
	2007			2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period	$	30.27		$	22.70		$	17.66		$	16.70		$	12.60
Income (loss) from       investment operations:
Net investment             income (loss)		0.21	(2)		0.24	(2)		(0.02	)		0.01			0.00
Net realized and unrealized             gain on investments		4.43	(2)		8.85	(2)		5.13			0.95			4.16
Total from investment       operations		4.64			9.09			5.11			0.96			4.16
Less distributions from:
Net investment income		(0.20	)		(0.00	)		(0.07	)		(0.00	)		(0.06	)
Capital gains		(2.87	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(3.07	)		(1.52	)		(0.07	)		(0.00	)		(0.06	)
Net asset value, end of period	$	31.84		$	30.27		$	22.70		$	17.66		$	16.70
Total return		15.63	%		41.07	%		28.98	%		5.75	%		33.03	%
Net assets, end of period       (in millions)		$311			$116			$21			$4			$1
Ratio of expenses to       average net assets       including reimbursement		1.20	%(4)		1.20	%(4)		1.20	%(4)		1.20	%(3)(4)		1.39	%(3)
Ratio of net investment income       (loss) to average net assets       including reimbursement		0.66	%(4)		0.91	%(4)		- -0.19	%(4)		- -0.35	%(3)(4)		- -0.54	% (3)
Ratio of expenses to       average net assets       excluding reimbursement		1.27	%(4)		1.35	%(4)		1.48	%(4)		1.63	%(3)(4)		1.39	%(3)(5)
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		0.59	%(4)		0.76	%(4)		- -0.47	%(4)		- -0.79	%(3)(4)		- -0.54	%(3)(5)
Portfolio turnover rate		106	%		104	%		110	%		29	%		58	%(6)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)See Note 2.

(5)There was no waiver of expenses during the period.

(6)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

Financial Highlights
      IVY GLOBAL NATURAL RESOURCES FUND
      Class R Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended 3-31-07				For the period from 12-29-05(1) to 3-31-06
Net asset value, beginning of period		$	30.10			$	26.11
Income from investment operations:
Net investment income			0.05	(2)			0.06
Net realized and unrealized gain on investments			4.44	(2)			3.93
Total from investment operations			4.49				3.99
Less distributions from:
Net investment income			(0.10	)			(0.00	)
Capital gains			(2.87	)			(0.00	)
Total distributions			(2.97	)			(0.00	)
Net asset value, end of period		$	31.62			$	30.10
Total return			15.20	%			15.28	%
Net assets, end of period (in thousands)		$3,893					$115
Ratio of expenses to average net assets			1.58	%			1.69	%(3)
Ratio of net investment income to average net assets			0.23	%			0.82	%(3)
Portfolio turnover rate			106	%			104	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the 12 months ended March 31, 2006.

See Notes to Financial Statements.

Financial Highlights
      IVY GLOBAL NATURAL RESOURCES FUND
      Advisor Class Shares⁽¹⁾
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	29.92		$	22.45		$	17.47		$	16.54		$	11.43		$	11.02
Income (loss) from investment       operations:
Net investment             income (loss)		0.31			0.13			(0.14	)		(0.03	)		(0.58	)		(0.07	)
Net realized and unrealized             gain on investments		4.34			8.86			5.14			0.96			5.78			0.56
Total from investment operations		4.65			8.99			5.00			0.93			5.20			0.49
Less distributions from:
Net investment income		(0.22	)		(0.00	)		(0.02	)		(0.00	)		(0.09	)		(0.00	)
Capital gains		(2.87	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.08	)
Total distributions		(3.09	)		(1.52	)		(0.02	)		(0.00	)		(0.09	)		(0.08	)
Net asset value, end of period	$	31.48		$	29.92		$	22.45		$	17.47		$	16.54		$	11.43
Total return		15.86	%		41.09	%		28.63	%		5.62	%		45.55	%		4.46	%
Net assets, end of period       (in thousands)		$322			$368			$476			$512			$484			$570
Ratio of expenses to average       net assets including       reimbursement		0.95	%		1.25	%		1.47	%		1.57	%(2)		2.19	%		1.82	%
Ratio of net investment income       (loss) to average net assets       including reimbursement		0.94	%		0.97	%		- -0.36	%		- -0.74	%(2)		- -0.41	%		- -0.51	%
Ratio of expenses to average       net assets excluding       reimbursement		0.95	%(3)		1.25	%(3)		1.47	%(3)		1.57	%(2)(3)		2.19	%(3)		1.98	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		0.94	%(3)		0.97	%(3)		- -0.36	%(3)		- -0.74	%(2)(3)		- -0.41	%(3)		- -0.67	%
Portfolio turnover rate		106	%		104	%		110	%		29	%		58	%		67	%

(1)See Note 5 to financial statements.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Managers' Discussion of
Ivy International Balanced Fund
      March 31, 2007

Ivy International Balanced Fund is subadvised by Templeton Investment Counsel, LLC.

Below, Michael Hasenstab and E. Tucker Scott, CFA, portfolio managers of the Ivy International Balanced Fund, discuss positioning, performance and results for the fiscal year ended March 31, 2007. Dr. Hasenstab has managed the Fund for one year and has 11 years of industry experience. Mr. Scott has managed the Fund since its inception and has 12 years of industry experience.

The Fund rose 17.48 percent (Class A shares at net asset value) for the 12 months ended March 31, 2007. The Fund's equity benchmark, the Morgan Stanley Capital International All Country World (Excluding USA) Index (an index that generally reflects the performance of international stock markets) increased 20.29 percent for the period. The Fund's international fixed-income benchmark, the J.P. Morgan Non-U.S. Government Bond Index (generally reflecting the performance of international government bonds) rose 8.14 percent. Multiple indexes are presented because the Fund invests in stocks, bonds and other instruments.

During the fiscal year, Lipper, Inc. recategorized the Fund into a new peer group - the Lipper Mixed-Asset Target Allocation Growth Funds Universe Average (reflecting the performance of funds with similar objectives). This group of funds rose 9.56 percent for the 12 months ended March 31, 2007. The Fund's old peer group - the Lipper Global Flexible Portfolio Funds Universe Average - rose 10.49 percent for the fiscal year.

STYLE
VALUE	BLEND	GROWTH
X			LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

MATURITY
SHORT	INTERMED	LONG
X			HIGH	CREDIT QUALITY
			MEDIUM
			LOW

This diagram shows the Fund's fixed-income investment style by displaying the average credit quality of the bonds owned and the Fund's interest rate sensitivity, as measured by average maturity. Shaded areas show the past three years of quarterly data. Source: Morningstar

Global themes influenced returns in the period. Global growth remained strong with increasing evidence of some decoupling of growth in Asia and Europe from moderating growth in the U.S. The International Monetary Fund's (IMF) most recent World Economic Outlook projects global growth at 4.9 percent in 2007, which is down from 5.4 percent in 2006, but the same pace as in 2005. Most notably within that projection, the IMF downgraded its growth forecast for the U.S. while increasing the forecast for Asia and Europe.

Strength across equity sectors

This past year the equity portion of the portfolio benefited from the strong liquidity in global capital markets and profuse merger and acquisition activity. The effect in the portfolio was broad-based, across countries and sectors. Over the 12-month period ended March 31, 2007, all ten major sectors delivered positive total returns, eight of them in the double-digits (the exceptions were health care and information technology). In aggregate, the Fund's equity portion performance exceeded that of the benchmark index, the Morgan Stanley Capital International (MSCI) All Country World (Excluding USA) Index (the index), with stronger returns in six of the ten major sectors. Relative to the index, the Fund's performance was strongest in industrials, consumer discretionary and telecommunications services.

Polish bonds helped fixed-income results

The Fund's fixed income portfolio benefited from an overweight exposure to Poland, which generated a 16.89 percent U.S. dollar return (as measured by the JP Morgan GBI Broad) outperforming the Euroland bonds, which returned 11.95 percent (JP Morgan EMU Index), primarily on Euro strength against the U.S. dollar. Over the past 12 months, European treasury yields rose by more than any other region. Short duration positioning in Europe (outside of Poland) benefited relative performance. Additionally, the Fund benefited from an underweight exposure to Japanese government bonds, which underperformed.

The fixed income portfolio also broadly benefited from currency positioning in Thailand, Australia, Singapore and South Korea. Also, as the Japanese Yen weakened 0.70% against the U.S. dollar, we added to our Yen currency positions. In Europe, exposure to the Swedish Krona benefited relative performance. The Norwegian Krone underperformed the Euro but generated a positive return against the U.S. dollar. Finally, the Canadian dollar lagged other major currencies.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Country	Sector	Change in Weighting
Sanofi-Aventis	France	Health Care	New to Top 10
BP p.l.c.	United Kingdom	Energy	New to Top 10
Royal Bank of Scotland       Group plc (The)	United Kingdom	Financial	Increased
France Telecom	France	Telecom	Increased
ING Groep N.V.,       Certicaaten Van Aandelen	Netherlands	Financial	Increased
GlaxoSmithKline plc	United Kingdom	Health care	New to Top 10
Compass Group PLC	United Kingdom	Consumer Discretionary	Decreased
Group 4 Securicor plc	United Kingdom	Financial	New to Top 10
Mega Financial Holding Company	Taiwan	Financial	New to Top 10
Vestas Wind Systems A/S	Denmark	Energy	Decreased

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

Portfolio Characteristics
As of 3-31-07
Average maturity	2.21 years
Effective duration	1.36 years
Weighted average bond rating	AA

Liquidity supported bond markets

Overall, the mood in the global bond market was predominantly positive, but was interrupted twice, first in late spring 2006 and again during the first quarter of 2007. Although last year's concern centered on inflation, the main concerns this year were slower growth and declining asset quality. Investors worldwide pondered the possibility that troubles in the U.S. subprime mortgage market could spread into the broader bond market and potentially undermine the pace of global economic and corporate profit growth.

Despite these challenges, global liquidity - petrodollars, corporate cash, private equity, household savings and central banks' reserves - was abundant and continued to look for an investment home. Largely as a result, bond yield spreads over U.S. Treasuries narrowed, and equity and commodity markets rose. Narrower corporate credit spreads (the difference in interest rates between high and low quality) globally reflected greater risk tolerance, while abundant cash supplies in the capital markets contributed to record global merger and acquisition activity.

European stocks led performance

Within equity sectors, holdings that delivered strong returns included Compass Group PLC (food services, U.K.), Vestas Wind Systems A/S (wind turbines, Denmark), and telecom services companies such as Telenor ASA (Norway), Vodafone Group Plc (U.K.) and France Telecom. However, the Fund's performance by sector lagged the benchmark in financials, materials and utilities. This was in part a result of the Fund having relative underweight positions in financials, utilities and materials, which performed strongly in the portfolio and the broader market over the reported period.

While this was detrimental to relative returns over the near term, our primary focus has always been on performance over the longer term. Our value-focused, bottom-up process always drives our stock selection and implicitly the Fund's absolute and relative weights, by sector, country or industry.

Valuations tested

Over the past several quarters, we deemed that valuations in certain of our materials-related holdings exceeded what we could justify based on underlying company and industry fundamentals. Despite this, the demand for industrial commodities - and related equities - has remained heightened. Valuations have been stretched further due in part to the abundant liquidity in the capital markets and continued interests from financial players, such as hedge funds, in contrast to actual end-users of the underlying commodity. In the utility sector, our European holdings have performed quite strongly on both absolute and relative terms.

In an environment of protracted global economic growth, there is always the risk that a rising stock market can obscure deteriorating fundamentals for an industry, or company. As stock pickers, we are leery of companies that have watched their stock prices appreciate to new highs, but for which the stock market continues to exude much confidence, despite many of these companies being near or beyond historical peaks of profitability. We have moved to relative underweights in these sectors, as we have trimmed or liquidated positions.

Telecom signaled value

Our analyses of stocks that we felt could offer the biggest potential to unlock value over the longer term led us to increase exposure to global telecommunications companies, including the ones we mentioned above. We did this, despite their apparent unattractiveness in the broader market, which prevailed until a few months ago. As of fiscal year end, the Fund's largest overweight position was in the telecom services industry.

The Fund benefited from having this strong presence in telecom stocks, which resulted from analyzing and determining the undervaluation of these stocks, one company at a time. The strong performance in absolute and relative terms over the reported period is a satisfying validation of our analyses, and although the telecom sector retraced part of earlier gains during the first quarter of calendar year 2007, we remained comfortable as our broad assumptions for the sector and our holdings have remained fairly intact.

Our outlook

The global economy seemed resilient in the face of elevated energy prices, higher global interest rates, a weaker U.S. housing market and restrained U.S. economic growth, and continued to expand over the 12-month reporting period. The economic drivers have remained consistent since the recovery began in 2002: strong consumer and corporate demand, reasonably low inflation, tight or improving labor markets, and a moderate, though higher, global interest rate environment.

We continue to favor exposure to global bond markets in an effort to take advantage of U.S. dollar weakness. We view the structural decline in the U.S. dollar as part of a multi-year cycle. Global imbalances persist, most apparent in the imbalance in U.S. goods and capital flows with Asia. Most striking among the G-7 currencies is the relative value of the Japanese yen. The yen has lagged other major currencies in this year's leg of U.S. dollar weakening, bringing the Japanese currency to the weakest level against the euro since the euro's introduction.

Going forward within the equity markets, we believe that the economic backdrop remains sound, a little uncertain in the U.S. but robust elsewhere, with leading indicators suggesting that activity could potentially pick up in the second half of this year. There are signs that businesses have begun to overcome the caution that has kept capital investment muted. Furthermore, there still appears to be a mismatch between the value placed on businesses by investors and that placed on them by buyout funds that can arbitrage for profit. However, sufficient warning signs do exist to justify a healthy caution, in our view. In particular we are continuously convinced of the importance of investing in businesses that possess clear fundamental strengths and which are attractively valued on their own terms rather than speculating on what they might be worth to a buy-out fund. Subcontracting investment analysis and stock selection to banks and financiers has not often been a winning strategy in the past.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment.

International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. Fixed-income securities are subject to interest rate risk and, as such, the Fund's net asset value may fall as interest rates rise. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy International Balanced Fund, Class A Shares (1)	$	19,587
Morgan Stanley Capital International All Country World       (excluding U.S.A) Index	$	21,195
J.P. Morgan Non-U.S. Government Bond Index	$	16,442
Lipper Mixed-Asset Target Allocation Growth Funds Universe Average	$	17,163

		IVY INTERNATIONAL BALANCED FUND,	MORGAN STANLEY CAPITAL INTERNATIONAL ALL COUNTRY WORLD (EXCLUDING U.S.A.)	J.P. MORGAN NON-U.S. GOVERNMENT	LIPPER MIXED-ASSET TARGET ALLOCATION GROWTH FUNDS
		CLASS A SHARES	INDEX	BOND INDEX	UNIVERSE AVERAGE
SEPT	1997	9,425	10,000	10,000	10,000
SEPT	1998	8,198	8,686	11,182	10,208
SEPT	1999	9,563	11,588	11,213	11,776
SEPT	2000	10,163	12,157	10,293	13,298
SEPT	2001	9,089	8,596	10,771	11,488
SEPT	2002	8,669	7,474	11,901	10,277
SEPT	2003	11,264	9,644	14,025	12,062
MARCH	2004	13,184	11,840	15,213	13,419
MARCH	2005	15,137	13,752	16,266	14,131
MARCH	2006	16,673	17,620	15,204	15,666
MARCH	2007	19,587	21,195	16,442	17,163

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-07	10.72%	12.38%	16.64%	17.61%
5-year period ended 3-31-07	13.75%	–	–	–
10-year period ended 3-31-07	8.14%	–	–	–
Since inception of Class (3)       through 3-31-07	–	13.26%	14.16%	15.23%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)12-8-03 for Class B, Class C, and Class Y shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

The Advantus International Balanced Fund merged into the Ivy International Balanced Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus International Balanced Fund Class A shares, restated to reflect current sales charges applicable to Ivy International Balanced Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy International Balanced Fund. If these expenses were reflected, performance shown would differ.

SHAREHOLDER SUMMARY OF IVY INTERNATIONAL BALANCED FUND

Portfolio Highlights

On March 31, 2007, Ivy International Balanced Fund had net assets totaling $278,943,997 invested in a diversified portfolio of:

62.68%	Foreign Common Stocks
25.11%	Other Government Securities
8.65%	Cash and Cash Equivalents
2.89%	Corporate Debt Securities
0.67%	Domestic Common Stocks

Country Weightings

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund was invested by country and by industry, respectively, as follows:

Europe	$	65.01
United Kingdom	$	18.40
Other Europe (1)	$	14.85
Sweden	$	8.82
France	$	6.93
Germany	$	6.78
Norway	$	4.68
Netherlands	$	4.55
Pacific Basin	$	19.15
Other Pacific Basin (2)	$	7.21
South Korea	$	4.56
Singapore	$	3.94
Taiwan	$	3.44
Cash and Cash Equivalents	$	8.65
Other (3)	$	7.19

(1)Includes $0.21 Austria, $0.93 Belgium, $1.26 Denmark, $1.92 Finland, $0.27 Ireland, $2.17 Italy, $0.10 New Zealand, $3.28 Poland, $2.53 Spain and $2.18 Switzerland.
(2)Includes $1.86 Australia, $0.73 China, $0.82 Hong Kong, $2.51 Japan and $1.29 Thailand.
(3)Includes $1.22 Bermuda, $0.84 Israel, $2.82 North America and $2.31 Supranational.

Sector Weightings

Other Government Securities	$	25.11
Financial Services Stocks	$	14.78
Utilities Stocks	$	8.70
Cash and Cash Equivalents	$	8.65
Technology Stocks	$	5.58
Energy Stocks	$	5.38
Miscellaneous Stocks	$	4.85
Health Care Stocks	$	3.82
Consumer Services Stocks	$	3.81
Consumer Durables Stocks	$	3.66
Retail Stocks	$	3.49
Business Equipment and Services Stocks	$	3.37
Shelter Stocks	$	2.99
Capital Goods Stocks	$	2.92
Corporate Debt Securities	$	2.89

The Investments of Ivy International Balanced Fund
March 31, 2007
COMMON STOCKS		Shares			Value
Australia - 0.64%
National Australia Bank Limited (A)			54,242	$	1,773,045
Belgium - 0.68%
Belgacom SA (A)			42,790		1,900,596
Bermuda - 1.22%
ACE Limited			46,490		2,652,719
XL Capital Ltd, Class A			10,870		760,465
					3,413,184
Canada - 0.18%
Barrick Gold Corporation (A)			17,500		499,307
China - 0.73%
China Telecom Corporation Limited (A)	3,774,000				1,854,759
China Telecom Corporation Limited (A)(B)			360,000		176,925
					2,031,684
Denmark - 1.26%
Vestas Wind Systems A/S (A)*			62,780		3,517,342
Finland - 1.56%
Stora Enso Oyj, Class R (A)			104,960		1,822,733
UPM-Kymmene Corporation (A)			98,830		2,517,651
					4,340,384
France - 6.93%
AXA S.A. (A)			74,920		3,176,586
France Telecom (A)			159,854		4,221,688
Sanofi-Aventis (A)			63,998		5,565,490
THOMSON (A)			179,190		3,449,322
TOTAL S.A. (A)			41,440		2,903,496
					19,316,582
Germany - 3.81%
Bayerische Motoren Werke Aktiengesellschaft (A)			35,590		2,102,814
Deutsche Post AG (A)			70,260		2,124,910
E.ON AG (A)			5,810		785,595
Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft,       Registered Shares (A)			17,210		2,902,473
Siemens AG (A)			25,310		2,705,156
					10,620,948
Hong Kong - 0.82%
Hutchison Whampoa Limited, Ordinary Shares (A)			239,000		2,298,695
Israel - 0.84%
Check Point Software Technologies Ltd.*			105,440		2,347,094
Italy - 2.17%
Eni S.p.A. (A)			83,858		2,728,838
Mediaset S.p.A. (A)			306,131		3,330,845
					6,059,683
Japan - 2.51%
Kabushiki Kaisha Mitsubishi Tokyo Financial Group (A)			155		1,749,406
Konica Minolta Holdings, Inc. (A)*			76,500		1,004,939
Sony Corporation (A)			61,500		3,126,146
Takeda Pharmaceutical Company Limited (A)			16,900		1,108,596
					6,989,087
Netherlands - 4.55%
Akzo Nobel N.V. (A)			16,030		1,217,363
ING Groep N.V., Certicaaten Van Aandelen (A)			98,950		4,183,555
Koninklijke Philips Electronics N.V., Ordinary Shares (A)			40,460		1,545,240
Reed Elsevier NV (A)			183,940		3,253,270
Vedior N.V. (A)			111,960		2,485,707
					12,685,135
Norway - 1.80%
Norske Skogindustrier ASA (A)			124,071		2,122,867
Telenor ASA (A)			163,300		2,901,535
					5,024,402
Singapore - 2.42%
DBS Group Holdings Ltd (A)			33,000		465,478
Flextronics International Ltd.*			192,270		2,102,472
Singapore Telecommunications Limited (A)			931,000		2,012,774
Venture Corporation Limited (A)			226,000		2,174,867
					6,755,591
South Korea - 2.89%
KT Corporation, ADR			48,730		1,091,065
Kookmin Bank, ADR			16,440		1,482,066
SK Telecom Co., Ltd., ADR			41,000		960,220
Samsung Electronics Co., Ltd. (A)			5,514		3,299,726
Samsung Electronics Co., Ltd., GDR (B)			4,010		1,220,042
					8,053,119
Spain - 2.36%
Gamesa Corporacion Tecnologica, S.A. (A)			53,110		1,922,656
Repsol YPF, S.A. (A)			70,566		2,379,254
Telefonica, S.A., ADR			34,285		2,276,524
Telefonica, S.A., Brazilian Depositary Receipts (A)			569		12,428
					6,590,862
Sweden - 1.29%
Nordea Bank AB, Finnish Depositary Receipts (A)			89,560		1,429,677
Securitas AB, Class B (A)			105,270		1,605,553
Securitas Systems AB, Class B (A)*			158,750		552,447
					3,587,677
Switzerland - 2.18%
Lonza Group Ltd, Registered Shares (A)			5,800		557,495
Nestle S.A., Registered Shares (A)			7,930		3,088,403
Swiss Reinsurance Company, Registered Shares (A)			26,800		2,448,093
					6,093,991
Taiwan - 3.44%
Chunghwa Telecom Co., Ltd., ADR			124,989		2,489,773
Compal Electronics Inc., GDR			54,799		231,833
Compal Electronics Inc., GDR (B)			133,829		566,177
Lite-On Technology Corporation, GDR			214,624		2,772,619
Mega Financial Holding Company (A)	5,436,000				3,548,217
					9,608,619
Thailand - 0.00%
Advanced Info Service Public Company Limited (A)			3,000		5,741
United Kingdom - 18.40%
AMVESCAP PLC (A)			26,400		290,926
Alliance Boots plc (A)			155,379		3,138,652
Aviva plc (A)			222,190		3,272,708
BAE SYSTEMS plc (A)			93,350		845,013
BP p.l.c. (A)			424,390		4,609,939
British Sky Broadcasting Group plc (A)			230,870		2,562,345
Cadbury Schweppes plc (A)			72,900		935,333
Compass Group PLC (A)			560,920		3,752,933
Fiberweb plc (A)*			51,523		215,197
GlaxoSmithKline plc (A)			145,100		3,988,915
Group 4 Securicor plc (A)			897,590		3,550,300
HSBC Holdings plc (A)			190,630		3,336,785
Kingfisher plc (A)			264,210		1,446,690
Old Mutual plc (A)	1,010,310				3,262,528
Pearson plc (A)			86,110		1,477,614
Rentokil Initial plc (A)			376,520		1,207,721
Royal Bank of Scotland Group plc (The) (A)			115,790		4,520,679
Royal Dutch Shell plc, Class B (A)			71,241		2,370,634
tesco plc (A)			157,950		1,380,823
Unilever PLC (A)			52,092		1,569,413
Vodafone Group Plc (A)	1,279,188				3,410,865
Vodafone Group Plc, ADR			6,590		177,007
					51,323,020
United States - 0.67%
Domtar Inc. (A)*			206,410		1,879,055
TOTAL COMMON STOCKS - 63.35%				$	176,714,843
(Cost: $141,891,137)

CORPORATE DEBT SECURITIES - 2.89%		Principal Amount in Thousands
Banks
KfW, Frankfurt am Main,
0.325%, 8-08-11 (C)**	JPY950,000			$	8,062,335
(Cost: $8,289,642)
OTHER GOVERNMENT SECURITIES
Australia - 1.22%
New South Wales Treasury Corporation,
8.0%, 3-1-08 (C)	AUD2,950				2,418,368
Queensland Treasury Corporation,
8.0%, 9-14-07 (C)			1,200		977,477
					3,395,845
Austria - 0.21%
Republic of Austria:
5.5%, 10-20-07 (C)	EUR360				484,395
4.0%, 7-15-09 (C)			70		93,454
					577,849
Belgium - 0.25%
Belgium Government Bond:
7.5%, 7-29-08 (C)			405		564,334
5.0%, 9-28-12 (C)			100		139,677
					704,011
Canada - 1.97%
Canadian Government Bond:
4.5%, 9-1-07 (C)	CAD5,540				4,802,357
6.0%, 6-1-11 (C)			748		696,939
					5,499,296
Finland - 0.36%
Finland Government Bond:
3.0%, 7-4-08 (C)	EUR400				527,579
5.0%, 4-25-09 (C)			60		81,670
5.75%, 2-23-11 (C)			280		396,740
					1,005,989
Germany - 0.08%
Deutsche Bundesrepublik,
5.0%, 7-4-11 (C)			170		235,516
Ireland - 0.27%
Ireland Government Bond,
5.0%, 4-18-13 (C)			540		757,496

New Zealand - 0.10%
New Zealand Government Bond,
6.0%, 11-15-11 (C)	NZD410				285,777
Norway - 2.88%
Norway Treasury Bills:
0.0%, 6-20-07 (C)	NOK7,800				1,273,883
0.0%, 9-19-07 (C)			18,200		2,942,907
0.0%, 12-19-07 (C)			23,805		3,804,451
					8,021,241
Poland - 3.28 %
Poland Government Bond:
8.5%, 5-12-07 (C)		PLN5,300			1,838,549
5.75%, 6-24-08 (C)	1,200				420,044
6.0%, 5-24-09 (C)			4,275		1,516,937
6.25%, 10-24-15 (C)			3,250		1,203,587
5.75%, 9-23-22 (C)			11,570		4,158,957
					9,138,074
Singapore - 1.52 %
Singapore Government Bond,
2.625%, 10-1-07 (C)	SGD6,450				4,254,521
South Korea - 1.67 %
South Korea Treasury Bond:
3.75%, 9-10-07 (C)	KRW1,100,000				1,163,614
4.5%, 9-9-08 (C)	1,000,000				1,057,735
4.25%, 9-10-08 (C)	2,300,000				2,424,757
					4,646,106
Spain - 0.17 %
Spain Government Bond,
6.0%, 1-31-08 (C)	EUR350				474,685
Supranational - 2.31%
European Investment Bank:
2.125%, 9-20-07 (C)	JPY645,000				5,511,105
0.50813%, 9-21-11 (C)**			110,000		933,263
					6,444,368
Sweden - 7.53%
Sweden Government Bond:
8.0%, 8-15-07 (C)	SEK24,480				3,560,798
6.5%, 5-5-08 (C)			102,600		15,135,513
Sweden Treasury Bills:
0.0%, 6-20-07 (C)			2,500		355,876
0.0%, 9-19-07 (C)			13,800		1,947,722
					20,999,909
Thailand - 1.29%
Thailand Government Bond:
0.0%, 1-10-08 (C)	THB4,250				117,316
5.5%, 8-10-08 (C)			8,770		255,704
Thailand Treasury Bills:
0.0%, 5-3-07 (C)			27,000		767,936
0.0%, 9-6-07 (C)			70,900		1,983,583
0.0%, 10-4-07 (C)			17,100		476,574
					3,601,113
TOTAL OTHER GOVERNMENT SECURITIES - 25.11%				$	70,041,796
(Cost: $66,684,794)
SHORT-TERM SECURITIES
Commercial Paper
Beverages - 1.43%
Concentrate Manufacturing Company of            Ireland (The) (PepsiCo, Inc.),
5.25%, 4-5-07		$4,000			3,997,667
Finance Companies - 2.39%
BP Capital Markets p.l.c.,
5.42%, 4-2-07			6,665		6,663,996
Health Care - Drugs - 1.79%
GlaxoSmithKline Finance plc,
5.32%, 4-10-07			5,000		4,993,350
Mining - 1.79%
BHP Billiton Finance USA, Inc.,
5.3%, 4-5-07			5,000		4,997,056
TOTAL SHORT-TERM SECURITIES - 7.40%				$	20,652,069
(Cost: $20,652,069)
TOTAL INVESTMENT SECURITIES - 98.75%				$	275,471,043
(Cost: $237,517,642)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.25%					3,472,954
NET ASSETS - 100.00%				$	278,943,997

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*No dividends were paid during the preceding 12 months.

**Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2007.

(A)Listed on an exchange outside the United States.

(B)Illiquid security. At March 31, 2007, the total value of illiquid securities amounted to $1,963,144, or 0.70% of net assets.

(C)Principal amounts are denominated in the indicated foreign currency, where applicable (AUD - Australian Dollar, CAD - Canadian Dollar, EUR - Euro, JPY - Japanese Yen, KRW - South Korean Won, NOK - Norwegian Krone, NZD - New Zealand Dollar, PLN - Polish Zloty, SEK - Swedish Krona, SGD - Singapore Dollar, THB - Thailand Baht).

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY INTERNATIONAL BALANCED FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $237,518) (Notes 1 and 3)	$	275,471
Cash denominated in foreign currencies (cost - $23)		23
Receivables:
Dividends and interest		2,385
Fund shares sold		1,929
Prepaid and other assets		47
Total assets		279,855
LIABILITIES
Due to custodian		341
Payable to Fund shareholders		180
Accrued management fee (Note 2)		160
Accrued service fee (Note 2)		76
Accrued shareholder servicing (Note 2)		68
Accrued distribution fee (Note 2)		25
Accrued accounting services fee (Note 2)		8
Other		53
Total liabilities		911
Total net assets	$	278,944
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	237,158
Accumulated undistributed income:
Accumulated undistributed net investment income		980
Accumulated undistributed net realized gainon investment transactions		2,815
Net unrealized appreciation in value of investments		37,991
Net assets applicable to outstanding units of capital	$	278,944
Net asset value per share (net assets divided by shares outstanding):
Class A		$16.81
Class B		$16.77
Class C		$16.78
Class Y		$16.82
Capital shares outstanding:
Class A		13,996
Class B		719
Class C		1,784
Class Y		99

See Notes to Financial Statements.

Statement of Operations
      IVY INTERNATIONAL BALANCED FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $327)	$	3,159
Interest and amortization		2,273
Total income		5,432
Expenses (Note 2):
Investment management fee		1,316
Shareholder servicing:
Class A		420
Class B		43
Class C		43
Class Y		2
Service fee:
Class A		385
Class B		23
Class C		43
Class Y		2
Distribution fee:
Class A		17
Class B		69
Class C		129
Custodian fees		81
Accounting services fee		77
Audit fees		26
Legal fees		5
Other		129
Total expenses		2,810
Net investment income		2,622
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		6,006
Realized net gain on foreign currency transactions		2,501
Realized net gain on investments		8,507
Unrealized appreciation in value of investments during the period		19,022
Net gain on investments		27,529
Net increase in net assets resulting from operations	$	30,151

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY INTERNATIONAL BALANCED FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	2,622		$	2,184
Realized net gain on investments		8,507			7,222
Unrealized appreciation		19,022			2,100
Net increase in net assets resulting from operations		30,151			11,506
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A		(4,320	)		(2,545	)
Class B		(158	)		(62	)
Class C		(332	)		(125	)
Class Y		(28	)		(14	)
Realized gains on investment transactions:
Class A		(5,577	)		(3,892	)
Class B		(387	)		(186	)
Class C		(669	)		(309	)
Class Y		(38	)		(19	)
		(11,509	)		(7,152	)
Capital share transactions (Note 5)		132,436			18,804
Total increase		151,078			23,158
NET ASSETS
Beginning of period		127,866			104,708
End of period	$	278,944		$	127,866
Undistributed net investment income	$	980		$	695

(1)See "Financial Highlights" on pages 147 - 150.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL BALANCED FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended September 30,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	15.15		$	14.63		$	13.07		$	11.33		$	8.72		$	9.28
Income (loss) from       investment operations:
Net investment income		0.24	(1)		0.29			0.22			0.09			0.21			0.18
Net realized and unrealized             gain (loss) on investments		2.36	(1)		1.14			1.69			1.83			2.40		(0.59		)
Total from investment       operations		2.60			1.43			1.91			1.92			2.61		(0.41		)
Less distributions from:
Net investment income		(0.43	)		(0.36	)		(0.28	)		(0.18	)		(0.00	)	(0.00		)
Capital gains		(0.51	)		(0.55	)		(0.07	)		(0.00	)		(0.00	)	(0.13		)
Tax return of capital		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)	(0.02		)
Total distributions		(0.94	)		(0.91	)		(0.35	)		(0.18	)		(0.00	)	(0.15		)
Net asset value, end of period	$	16.81		$	15.15		$	14.63		$	13.07		$	11.33		$	8.72
Total return(2)		17.48	%		10.14	%		14.81	%		17.05	%		29.93	%	-4.62		%
Net assets, end of period       (in millions)	$235			$112			$97			$60			$46			$36
Ratio of expenses to average       net assets including       reimbursement		1.38	%		1.45	%		1.42	%		1.54	%(3)(4)		1.67	%		1.62	%
Ratio of net investment income       to average net assets       including reimbursement		1.52	%		1.94	%		1.71	%		1.43	%(3)(4)		2.06	%		1.84	%
Ratio of expenses to average       net assets excluding       reimbursement		1.38	%(5)		1.45	%(5)		1.42	%(5)		1.60	%(3)(4)		1.71	%		1.72	%
Ratio of net investment income       to average net assets       excluding reimbursement		1.52	%(5)		1.94	%(5)		1.71	%(5)		1.37	%(3)(4)		2.02	%		1.74	%
Portfolio turnover rate		22	%		27	%		16	%		15	%		39	%		48	%

(1)Based on average weekly shares outstanding.

(2)Total return calculated without taking into account the sales load deducted on an initial purchase.

(3)Annualized.

(4)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from October 1, 2003 up to the time of merger. Actual expenses that applied to Class A shareholders were lower than shown above.

(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL BALANCED FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

		For the fiscal year ended March 31,									For the period from 12-8-03(1) to
		2007			2006			2005			3-31-04
Net asset value, beginning of period		$	15.11		$	14.59		$	13.04		$	12.34
Income from investment operations:
Net investment income			0.07	(2)		0.08			0.03	(2)		0.19
Net realized and unrealized             gain on investments			2.37	(2)		1.18			1.70	(2)		0.69
Total from investment operations			2.44			1.26			1.73			0.88
Less distributions from:
Net investment income			(0.27	)		(0.19	)		(0.11	)		(0.18	)
Capital gains			(0.51	)		(0.55	)		(0.07	)		(0.00	)
Total distributions			(0.78	)		(0.74	)		(0.18	)		(0.18	)
Net asset value, end of period		$	16.77		$	15.11		$	14.59		$	13.04
Total return			16.38	%		8.93	%		13.37	%		7.18	%
Net assets, end of period (in thousands)	$12,056				$5,548			$3,049			$225
Ratio of expenses to average net assets			2.35	%		2.59	%		2.64	%		3.01	%(3)
Ratio of net investment       income to average net assets			0.46	%		0.73	%		0.20	%		1.09	%(3)
Portfolio turnover rate			22	%		27	%		16	%		15	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL BALANCED FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

		For the fiscal year ended March 31,									For the period from 12-8-03(1) to
		2007			2006			2005			3-31-04
Net asset value, beginning of period		$	15.12		$	14.60		$	13.04		$	12.34
Income from investment operations:
Net investment income			0.11	(2)		0.11			0.07	(2)		0.19
Net realized and unrealized             gain on investments			2.37	(2)		1.19			1.69	(2)		0.69
Total from investment operations			2.48			1.30			1.76			0.88
Less distributions from:
Net investment income			(0.31	)		(0.23	)		(0.13	)		(0.18	)
Capital gains			(0.51	)		(0.55	)		(0.07	)		(0.00	)
Total distributions			(0.82	)		(0.78	)		(0.20	)		(0.18	)
Net asset value, end of period		$	16.78		$	15.12		$	14.60		$	13.04
Total return			16.64	%		9.21	%		13.58	%		7.18	%
Net assets, end of period (in thousands)	$29,921				$9,422			$3,968			$307
Ratio of expenses to average net assets			2.12	%		2.29	%		2.44	%		2.86	%(3)
Ratio of net investment       income to average net assets			0.70	%		0.98	%		0.44	%		1.13	%(3)
Portfolio turnover rate			22	%		27	%		16	%		15	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL BALANCED FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	15.15		$	14.63		$	13.07		$	12.34
Income from investment operations:
Net investment income		0.25	(2)		0.29	(2)		0.24	(2)		0.21
Net realized and unrealized             gain on investments		2.37	(2)		1.14	(2)		1.67	(2)		0.70
Total from investment operations		2.62			1.43			1.91			0.91
Less distributions from:
Net investment income		(0.44	)		(0.36	)		(0.28	)		(0.18	)
Capital gains		(0.51	)		(0.55	)		(0.07	)		(0.00	)
Total distributions		(0.95	)		(0.91	)		(0.35	)		(0.18	)
Net asset value, end of period	$	16.82		$	15.15		$	14.63		$	13.07
Total return		17.61	%		10.18	%		14.84	%		7.47	%
Net assets, end of period (in thousands)	$1,665			$662			$397			$185
Ratio of expenses to average net assets		1.24	%		1.41	%		1.40	%		1.79	%(3)
Ratio of net investment       income to average net assets		1.64	%		1.99	%		1.72	%		2.00	%(3)
Portfolio turnover rate		22	%		27	%		16	%		15	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Managers' Discussion of
Ivy International Core Equity Fund
      March 31, 2007

Below, John C. Maxwell, CFA, and Thomas A. Mengel, portfolio managers of the Ivy International Core Equity Fund*, discuss positioning, performance and results for the fiscal year ended March 31, 2007. Mr. Maxwell has managed the Fund for one year and has 14 years of industry experience. Mr. Mengel has managed the Fund for four years and has 20 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
	X		LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund rose 17.35 percent (Class A shares at net asset value) for the 12 months ended March 31, 2007, underperforming its benchmark. The Morgan Stanley Capital International EAFE Index (Europe, Australia, Far East - an index that generally reflects the performance of the international securities markets) increased 20.20 percent for the period. The Lipper International Large-Cap Core Funds Universe Average (reflecting the performance of funds with similar objectives) climbed 17.26 percent for the fiscal year.

Parts of Europe worked, Japan did not

The drivers that caused us to lag the index this past year were country selection and adverse foreign exchange rates versus the index. Countries that worked for us this past year were France and Norway, where we were overweight in markets that outperformed and we had strong stock selection. Underperformance was driven by Germany, where we were overweight and had poor stock selection. In Japan we over stayed our welcome. It was a significant driver of the previous year's strong performance but Japan significantly underperformed the benchmark and we remained market weight. Japan's underperformance was driven by a slowing economy and limited participation in the global mergers and acquisitions (M&A) boom.

From a sector standpoint our best performance was derived from industrials, where we were overweight and had positive stock selection in a sector that outperformed. On the downside consumer discretionary stood out, where we were slightly overweight a sector that performed in line with the benchmark and our stock selection was below average.

Slowdown fears affected results

From a calendar standpoint we were too aggressive in the first fiscal quarter (March-June 2006). During this quarter we experienced the bulk of our underperformance for the year. This was when oil prices spiked to $78/barrel and concerns over the global economy surfaced. The fear at the time was that the oil price spike would either lead to inflation or slow the global economy. At the time we were significantly overweight early business cycle stocks that were disproportionately benefiting from the strong global economy and low interest rates. This strategy worked great in the previous couple of years; where our performance nicely outpaced the index, but stalled in the first quarter. In retrospect, we should have changed our focus to more stable growth and late cycle companies a few months earlier.

After four great years of global expansion and strong stock markets, we feel we are in the second half of a global economic cycle. The oil and commodity spikes in the first half of 2006 were the first scare and the credit tightening in the U.S. housing market in March 2007 was the second scare. We continue to believe that the global economic expansion is intact and that a downturn is more than a year out, but we are watching this closely.

Focus on cash flow strength

Through the year we geared down the beta of the fund and increased our emphasis on companies with above average cash generation. From a top down standpoint we reduced our weighting in infrastructure and asset appreciation plays. At the same time we increased exposure to: 1) companies benefiting from the strengthening emerging market's consumer and 2) companies that we feel are likely to benefit from the M&A environment.

Over the course of the year our largest sector overweights were in financials and industrials while our largest underweights were in health care and telecom services. From an industry standpoint, the financial sector overweight was driven by financials leveraged to the M&A boom - either investment banks or likely company targets. Within the industrials sector we were heavily weighted in aerospace and defense, and construction and engineering. Our underweights in health care and telecom services reflected only modest exposure to large cap pharmaceuticals and large integrated telecom stocks.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Country	Sector	Change in weighting
BAE SYSTEMS plc	United Kingdom	Aerospace	New to Top 10
TOTAL S.A.	France	Energy	New to Top 10
Siemens AG	Germany	Industrial	New to Top 10
Nestle S.A.	Switzerland	Food	New to Top 10
Toyota Motor Corporation	Japan	Autos	Increased
Vivendi Universal	France	Media	New to Top 10
Heineken N.V.	Netherlands	Beverages	New to Top 10
Petroleo Brasileiro S.A. -      Petrobras, ADR	Brazil	Energy	New to Top 10
Prudential plc	United Kingdom	Financial	New to Top 10
L'oreal	France	Consumer Discretionary	New to Top 10

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

Our outlook

Overall, we are moving to companies that we believe possess more stable earnings growth, and attempting to gain exposure to the following themes:

• the growing disposable income of the emerging markets consumer,
• the continued strength of the M&A boom,
• strong growth in infrastructure spending globally (this would have been at the top of the list last year),
• the increasing discretionary income of high-end consumers, globally.

Given the above themes, we are increasing our emphasis on consumer staples, luxury goods, financials (benefiting from mergers and acquisitions) and aerospace/defense. While still a solid overweight, we are likely to put less emphasis on construction & engineering. Pharmaceuticals have a greater weighting than last year but remain materially underweight. Large integrated telecom services stocks remain underweight. Finally, we took Japanese banks from over to underweight.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

*Please note that effective Dec. 6, 2006, the Fund's name changed from Ivy International Value Fund to Ivy International Core Equity Fund.

Comparison of Change in Value of
$10,000 Investment

Ivy International Core Equity Fund, Class A Shares (1)	$	20,013
Morgan Stanley Capital International EAFE Index (with net dividends)	$	21,485
Lipper International Large-Cap Core Funds Universe Average	$	19,142

		IVY INTERNATIONAL CORE EQUITY FUND,	MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX (WITH	LIPPER INTERNATIONAL LARGE-CAP CORE FUNDS
		CLASS A SHARES	NET DIVIDENDS)	UNIVERSE AVERAGE
DEC	1997	9,425	10,000	10,000
DEC	1998	10,050	12,000	11,329
DEC	1999	12,843	15,236	15,779
DEC	2000	11,911	13,077	13,315
DEC	2001	9,866	10,273	10,410
DEC	2002	8,294	8,635	8,553
DEC	2003	10,549	11,968	11,269
MARCH	2004	10,993	12,487	11,653
MARCH	2005	12,587	14,367	13,082
MARCH	2006	17,054	17,874	16,324
MARCH	2007	20,013	21,485	19,142

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y	Advisor Class (3)
1-year period ended 3-31-07	10.60%	12.39%	16.48%	17.47%	17.48%
5-year period ended 3-31-07	13.81%	13.67%	13.78%	–	14.98%
10-year period ended 3-31-07	–	–	–	–	–
Since inception of Class (4) through 3-31-07	6.10%	5.67%	5.66%	24.94%	7.86%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)Advisor Class shares are no longer available for investment.

(4)5-13-97 for Class A, Class B and Class C shares, 7-24-03 for Class Y shares and 2-23-98 for Advisor Class shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

SHAREHOLDER SUMMARY OF IVY INTERNATIONAL CORE EQUITY FUND

Portfolio Highlights

On March 31, 2007, Ivy International Core Equity Fund had net assets totaling $215,434,627 invested in a diversified portfolio of:

94.65%	Foreign Common Stocks
5.35%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund was invested by country and by industry, respectively, as follows:

Country Weightings

Japan	$	17.45
United Kingdom	$	13.28
France	$	12.48
Switzerland	$	11.02
Germany	$	10.88
Other Europe (1)	$	9.37
Other Pacific Basin (2)	$	7.94
Cash and Cash Equivalents	$	5.35
Other (3)	$	4.86
Netherlands	$	3.86
Australia	$	3.51

(1)Includes $1.13 Greece, $1.93 Ireland, $2.02 Italy, $2.31 Norway, $1.05 Spain and $0.93 Sweden.

(2)Includes $2.62 China, $2.93 Hong Kong, $1.30 Singapore and $1.09 South Korea.

(3)Includes $1.56 Brazil, $2.30 Canada and $1.00 Israel.

Sector Weightings

Financial Services Stocks	$	26.51
Consumer Nondurables Stocks	$	13.72
Capital Goods Stocks	$	13.49
Utilities Stocks	$	5.58
Technology Stocks	$	5.53
Cash and Cash Equivalents	$	5.35
Miscellaneous Stocks	$	5.02
Business Equipment and Services Stocks	$	4.72
Consumer Durables Stocks	$	4.01
Energy Stocks	$	3.84
Health Care Stocks	$	3.79
Transportation Stocks	$	3.10
Consumer Services Stocks	$	2.84
Retail Stocks	$	2.50

The Investments of Ivy International Core Equity Fund
March 31, 2007
COMMON STOCKS		Shares			Value
Australia - 3.51%
Metcash Limited (A)			680,050	$	2,712,629
National Australia Bank Limited (A)			73,730		2,410,062
Rio Tinto Limited (A)			38,370		2,446,672
					7,569,363
Brazil - 1.56%
Petroleo Brasileiro S.A. - Petrobras, ADR			33,760		3,359,458
Canada - 2.30%
Agrium Inc. (A)			56,440		2,168,137
Goldcorp Inc. (A)			115,930		2,782,521
					4,950,658
China - 2.62%
China Oilfield Services Limited (A)	1,610,000				1,294,017
Industrial and Commercial Bank of China Limited,       H Shares (A)(B)*	2,700,000				1,513,534
SINA Corporation*			84,750		2,845,057
					5,652,608
France - 12.48%
ALSTOM (A)*			16,380		2,125,752
BNP Paribas (A)			27,260		2,847,299
L'Oreal (A)			29,520		3,222,952
LVMH Moet Hennessy - Louis Vuitton (A)			19,890		2,206,634
SUEZ (A)			44,060		2,323,687
Technip-Coflexip (A)			31,220		2,290,442
TOTAL S.A. (A)			70,020		4,905,955
VINCI (A)			18,450		2,859,468
Vivendi Universal (A)			101,140		4,109,965
					26,892,154
Germany - 10.88%
Beiersdorf Aktiengesellschaft (A)			41,840		2,859,422
Commerzbank Aktiengesellschaft (A)			66,490		2,944,393
Deutsche Bank AG (A)			21,480		2,891,202
Deutsche Borse AG (A)			12,200		2,802,485
Deutsche Post AG (A)			79,910		2,416,760
Fresenius AG (A)			38,830		3,086,316
SAP Aktiengesellschaft (A)			43,690		1,949,910
Siemens AG (A)			42,060		4,495,412
					23,445,900
Greece - 1.13%
Alpha Bank (A)			76,910		2,434,934
Hong Kong - 2.93%
Agile Property Holdings Limited (A)	1,458,000				1,436,821
Cheung Kong (Holdings) Limited (A)			188,000		2,379,625
Esprit Holdings Limited (A)			212,500		2,492,561
					6,309,007
Ireland - 1.93%
Allied Irish Banks, p.l.c. (A)			74,120		2,193,134
Irish Life & Permanent plc (A)			72,120		1,970,176
					4,163,310
Israel - 1.00%
Cellcom Israel Ltd.*			118,280		2,157,427
Italy - 2.02%
Banca Intesa S.p.A. (A)			279,310		2,121,158
UniCredito Italiano S.p.A. (A)			232,910		2,216,813
					4,337,971
Japan - 17.45%
Bridgestone Corporation (A)			115,600		2,310,234
Chubu Electric Power Company, Incorporated (A)			64,600		2,220,214
Daiwa Securities Group Inc. (A)			252,000		3,043,075
East Japan Railway Company (A)			300		2,337,067
Hoya Corporation (A)			69,700		2,312,687
Konica Minolta Holdings, Inc. (A)*			148,500		1,950,764
Kurita Water Industries Ltd. (A)			86,800		2,099,287
Nissin Kogyo Co., Ltd. (A)			99,200		2,432,858
ORIX Corporation (A)			8,700		2,266,548
SUMCO Corporation (A)			61,200		2,544,806
Shimachu Co., Ltd. (A)			97,500		2,887,602
Suzuki Motor Corporation (A)			78,600		2,041,039
Toda Corporation (A)			587,000		2,809,470
Toyota Motor Corporation (A)			67,100		4,299,092
Ushio Inc. (A)			105,200		2,030,974
					37,585,717
Netherlands - 3.86%
Heineken N.V. (A)			78,290		4,095,481
Royal Numico N.V. (A)			44,200		2,279,702
TNT N.V. (A)			42,210		1,935,732
					8,310,915
Norway - 2.31%
Aker Kvaerner ASA (A)*			97,250		2,191,937
Orkla ASA (A)			39,450		2,781,094
					4,973,031
Singapore - 1.30%
Singapore Telecommunications Limited (A)	1,298,000				2,806,209
South Korea - 1.09%
Kookmin Bank (A)			26,250		2,354,911
Spain - 1.05%
Tecnicas Reunidas, S.A. (A)(C)			45,530		2,265,583
Sweden - 0.93%
Rezidor Hotel Group AB (A)*			119,600		959,157
Rezidor Hotel Group AB (A)(B)*			130,000		1,042,562
					2,001,719
Switzerland - 11.02%
Credit Suisse Group, Registered Shares (A)			39,240		2,815,889
Holcim Ltd, Registered Shares (A)			21,770		2,180,314
Nestle S.A., Registered Shares (A)			11,450		4,459,295
Novartis AG, ADR			44,690		2,441,415
Roche Holdings AG, Genussschein (A)			14,990		2,652,224
Swatch Group Ltd (The), Bearer Shares (A)			9,420		2,490,372
Swiss Reinsurance Company, Registered Shares (A)			26,040		2,378,669
UBS AG (A)			37,110		2,204,947
Zurich Financial Services, Registered Shares (A)			7,340		2,118,673
					23,741,798
United Kingdom - 13.28%
BAE SYSTEMS plc (A)			564,540		5,110,266
Barclays PLC (A)			200,250		2,841,180
British American Tobacco p.l.c. (A)			86,180		2,694,768
Intertek Group plc (A)			144,980		2,586,228
Prudential plc (A)			229,370		3,238,542
Royal Bank of Scotland Group plc (The) (A)			66,840		2,609,571
Smiths Group plc (A)			101,190		2,047,018
Standard Chartered PLC (A)			84,410		2,431,789
Vodafone Group Plc (A)			938,179		2,501,588
WPP Group plc (A)			167,640		2,540,150
					28,601,100
TOTAL COMMON STOCKS - 94.65%				$	203,913,773
(Cost: $182,202,743)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Aircraft - 0.46%
United Technologies Corporation,
5.25%, 4-  4-07	$	1,000	999,562

Security and Commodity Brokers - 3.84%
Greenwich Capital Holdings Inc. (Royal Bank of       Scotland PLC (The)),
5.39%, 4-2-07	8,263		8,261,763
TOTAL SHORT-TERM SECURITIES - 4.30%		$	9,261,325
(Cost: $9,261,325)
TOTAL INVESTMENT SECURITIES - 98.95%		$	213,175,098
(Cost: $191,464,068)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.05%			2,259,529
NET ASSETS - 100.00%		$	215,434,627

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*No dividends were paid during the preceding 12 months.

(A)Listed on an exchange outside the United States.

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been determined to be liquid under guidelines established by the Board of Trustees. At March 31, 2007, the total value of these securities amounted to $2,556,096 or 1.19% of net assets.

(C)Illiquid security. At March 31, 2007, the total value of illiquid securities amounted to 1.05% of net assets.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY INTERNATIONAL CORE EQUITY FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $191,464) (Notes 1 and 3)	$	213,175
Receivables:
Investment securities sold		8,110
Fund shares sold		907
Dividends and interest		753
Prepaid and other assets		40
Total assets		222,985
LIABILITIES
Payable for investment securities purchased		6,885
Payable to Fund shareholders		224
Accrued management fee (Note 2)		149
Due to custodian		97
Accrued shareholder servicing (Note 2)		63
Accrued service fee (Note 2)		57
Accrued distribution fee (Note 2)		31
Accrued accounting services fee (Note 2)		6
Accrued administrative fee (Note 2)		2
Other		36
Total liabilities		7,550
Total net assets	$	215,435
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	182,297
Accumulated undistributed income:
Accumulated undistributed net investment income		60
Accumulated undistributed net realized gain on investment transactions		11,364
Net unrealized appreciation in value of investments		21,714
Net assets applicable to outstanding units of capital	$	215,435
Net asset value per share (net assets divided by shares outstanding):
Class A		$17.63
Class B		$16.31
Class C		$16.30
Class Y		$17.70
Advisor Class		$17.54
Capital shares outstanding:
Class A		9,115
Class B		1,045
Class C		2,079
Class Y		217
Advisor Class		–	*

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Operations
      IVY INTERNATIONAL CORE EQUITY FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $311)	$	2,957
Interest and amortization		296
Total income		3,253
Expenses (Note 2):
Investment management fee		1,255
Shareholder servicing:
Class A		290
Class B		44
Class C		56
Class Y		3
Advisor Class		–	*
Service fee:
Class A		254
Class B		36
Class C		58
Class Y		4
Distribution fee:
Class A		17
Class B		108
Class C		173
Accounting services fee		56
Custodian fees		51
Audit fees		35
Administrative fee		15
Legal fees		2
Other		124
Total		2,581
Less expenses in excess of voluntary limit (Note 2)		(–	)*
Total expenses		2,581
Net investment income		672
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		21,913
Realized net loss on foreign currency transactions		(41	)
Realized net gain on investments		21,872
Unrealized appreciation in value of investments during the period		3,107
Net gain on investments		24,979
Net increase in net assets resulting from operations	$	25,651

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY INTERNATIONAL CORE EQUITY FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)	$	672		$	(57	)
Realized net gain on investments		21,872			8,135
Unrealized appreciation		3,107			11,320
Net increase in net assets resulting from operations		25,651			19,398
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A		(435	)		(–	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(7	)		(–	)
Advisor Class		(–	)*		(–	)
Realized gains on investment transactions:
Class A		(5,291	)		(–	)
Class B		(666	)		(–	)
Class C		(1,213	)		(–	)
Class Y		(77	)		(–	)
Advisor Class		(–	)*		(–	)
		(7,689	)		(–	)
Capital share transactions (Note 5)		99,073			34,858
Total increase		117,035			54,256
NET ASSETS
Beginning of period		98,400			44,144
End of period	$	215,435		$	98,400
Undistributed net investment income (loss)	$	60		$	(9	)

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 164 - 168.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL CORE EQUITY FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	15.73		$	11.61		$	10.14		$	9.73		$	7.65		$	9.10
Income (loss) from       investment operations:
Net investment             income (loss)		0.10	(1)		(0.06	)		(0.02	)		(0.01	)	(0.02		)		0.08	(1)
Net realized and unrealized             gain (loss) on investments		2.59	(1)		4.18			1.49			0.42			2.10		(1.53		)(1)
Total from investment       operations		2.69			4.12			1.47			0.41			2.08		(1.45		)
Less distributions from:
Net investment income		(0.06	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)
Capital gains		(0.73	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)
Total distributions		(0.79	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)
Net asset value, end of period	$	17.63		$	15.73		$	11.61		$	10.14		$	9.73		$	7.65
Total return(3)		17.35	%		35.49	%		14.50	%		4.21	%	27.19		%	- -15.93		%(2)
Net assets, end of       period (in millions)	$161			$67			$17			$10			$9			$8
Ratio of expenses to average       net assets including       reimbursement		1.56	%		1.82	%		1.99	%		2.16	%(4)		2.28	%		1.77	%
Ratio of net investment income       (loss) to average net assets       including reimbursement		0.63	%		0.14	%		0.09	%		- -0.41	%(4)	- -0.19		%		0.91	%
Ratio of expenses to average       net assets excluding       reimbursement		1.56	%(5)		1.82	%(5)		1.99	%(5)		2.16	%(4)(5)		2.28	%(5)		2.32	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		0.63	%(5)		0.14	%(5)		0.09	%(5)		- -0.41	%(4)(5)	- -0.19		%(5)		0.36	%
Portfolio turnover rate		108	%		90	%		106	%		23	%		148	%		48	%

(1)Based on average weekly shares outstanding.

(2)Includes redemption fees added to capital.

(3)Total return calculated without taking into account the sales load deducted on an initial purchase.

(4)Annualized.

(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL CORE EQUITY FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	14.67		$	10.91		$	9.60		$	9.24		$	7.32		$	8.97
Income (loss) from       investment operations:
Net investment             income (loss)		(0.00	)(1)		(0.12	)	(0.08		)	(0.03		)	(0.08		)		0.01	(1)
Net realized and unrealized             gain (loss) on investments		2.37	(1)		3.88			1.39			0.39			2.00		(1.66		)(1)
Total from investment       operations		2.37			3.76			1.31			0.36			1.92		(1.65		)
Less distributions from:
Net investment income		(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Capital gains		(0.73	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Total distributions		(0.73	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Net asset value, end of period	$	16.31		$	14.67		$	10.91		$	9.60		$	9.24		$	7.32
Total return		16.39	%		34.46	%	13.65		%		3.90	%	26.23		%	- -18.39		%
Net assets, end of period       (in millions)	$17			$15			$20			$24			$25			$28
Ratio of expenses to average       net assets including       reimbursement		2.35	%		2.62	%		2.76	%		2.91	%(2)		2.95	%		2.50	%
Ratio of net investment       income (loss) to average       net assets including       reimbursement		- -0.03	%		- -0.41	%	- -0.58		%	- -1.20		%(2)	- -0.82		%		0.18	%
Ratio of expenses to average       net assets excluding       reimbursement		2.35	%(3)		2.62	%(3)		2.76	%(3)		2.91	%(2)(3)		2.95	%(3)		3.05	%
Ratio of net investment loss       to average net assets       excluding reimbursement		- -0.03	%(3)		- -0.41	%(3)		- -0.58	%(3)	- -1.20		%(2)(3)	- -0.82		%(3)	- -0.37		%
Portfolio turnover rate		108	%		90	%		106	%		23	%		148	%		48	%

(1)Based on average weekly shares outstanding.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL CORE EQUITY FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	14.65		$	10.90		$	9.59		$	9.23		$	7.32		$	8.97
Income (loss) from       investment operations:
Net investment             income (loss)		(0.01	)(1)		(0.02	)		(0.07	)	(0.03		)	(0.08		)		0.01	(1)
Net realized and unrealized             gain (loss) on investments		2.39	(1)		3.77			1.38			0.39			1.99		(1.66		)(1)
Total from investment       operations		2.38			3.75			1.31			0.36			1.91		(1.65		)
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Capital gains		(0.73	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Total distributions		(0.73	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Net asset value, end of period	$	16.30		$	14.65		$	10.90		$	9.59		$	9.23		$	7.32
Total return		16.48	%		34.40	%		13.66	%		3.90	%	26.09		%	- -18.39		%
Net assets, end of period       (in millions)	$34			$15			$7			$8			$8			$9
Ratio of expenses to average       net assets including       reimbursement		2.29	%		2.58	%		2.79	%		3.01	%(2)		3.01	%		2.50	%
Ratio of net investment       income (loss) to average       net assets including       reimbursement		- -0.08	%		- -0.50	%		- -0.63	%	- -1.30		%(2)	- -0.82		%		0.18	%
Ratio of expenses to average       net assets excluding       reimbursement		2.29	%(3)		2.58	%(3)		2.79	%(3)		3.01	%(2)(3)		3.01	%(3)		3.05	%
Ratio of net investment       loss to average net assets       excluding reimbursement		- -0.08	%(3)		- -0.50	%(3)		- -0.63	%(3)	- -1.30		%(2)(3)	- -0.82		%(3)	- -0.37		%
Portfolio turnover rate		108	%		90	%		106	%		23	%		148	%		48	%

(1)Based on average weekly shares outstanding.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL CORE EQUITY FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the period from 7-24-03(1) to
	2007			2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period	$	15.79		$	11.64		$	10.15		$	9.74		$	8.16
Income (loss) from       investment operations:
Net investment             income (loss)		0.12	(2)		(0.06	)		(0.01	)		(0.01	)	(0.01		)
Net realized and unrealized             gain on investments		2.59	(2)		4.21			1.50			0.42			1.59
Total from investment       operations		2.71			4.15			1.49			0.41			1.58
Less distributions from:
Net investment income		(0.07	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)
Capital gains		(0.73	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)
Total distributions		(0.80	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)
Net asset value, end of period	$	17.70		$	15.79		$	11.64		$	10.15		$	9.74
Total return		17.47	%		35.65	%		14.68	%		4.21	%	19.36		%
Net assets, end of period       (in thousands)	$3,848			$1,025			$294			$145			$125
Ratio of expenses to       average net assets		1.45	%		1.72	%		1.82	%		2.08	%(3)		1.47	%(3)
Ratio of net investment income       (loss) to average net assets		0.76	%		0.13	%		0.29	%		- -0.31	%(3)	- -0.38		%(3)
Portfolio turnover rate		108	%		90	%		106	%		23	%		148	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL CORE EQUITY FUND
      Advisor Class Shares⁽¹⁾
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	15.65		$	11.52		$	10.04		$	9.63		$	7.54		$	9.14
Income (loss) from       investment operations:
Net investment             income (loss)		0.14			0.14	(2)		0.03	(2)		(0.00	)		0.67			0.10	(2)
Net realized and unrealized             gain (loss) on investments		2.56			3.99	(2)		1.45	(2)		0.41			1.42		(1.70		)(2)
Total from investment       operations		2.70			4.13			1.48			0.41			2.09		(1.60		)
Less distributions from:
Net investment income		(0.08	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)
Capital gains		(0.73	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)
Total distributions		(0.81	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)
Net asset value, end of period	$	17.54		$	15.65		$	11.52		$	10.04		$	9.63		$	7.54
Total return		17.48	%		35.85	%		14.74	%		4.26	%	27.72		%	- -17.51		%
Net assets, end of period       (in thousands)	$1			$1			$31			$41			$39			$124
Ratio of expenses to average       net assets including       reimbursement		1.47	%		1.84	%		1.91	%		1.62	%(3)		2.59	%		1.50	%
Ratio of net investment income       to average net assets       including reimbursement		0.85	%		1.15	%		0.29	%		0.11	%(3)		1.43	%		1.18	%
Ratio of expenses to average       net assets excluding       reimbursement		2.48	%		1.84	%(4)		1.91	%(4)		1.62	%(3)(4)		2.59	%(4)		2.05	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		- -0.16	%		1.15	%(4)		0.29	%(4)		0.11	%(3)(4)		1.43	%(4)		0.63	%
Portfolio turnover rate		108	%		90	%		106	%		23	%		148	%		48	%

(1)See Note 5 to financial statements.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Manager's Discussion of
Ivy International Growth Fund
      March 31, 2007


Below, Thomas A. Mengel, portfolio manager of the Ivy International Growth Fund*, discusses positioning, performance and results for the fiscal year ended March 31, 2007. He has managed the Fund for four years and has 20 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
		X	LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund rose 16.51 percent (Class A shares at net asset value) for the 12 months ended March 31, 2007, underperforming its benchmark for the fiscal period. The Morgan Stanley Capital International EAFE Index (Europe, Australia, Far East - an index that generally reflects the performance of the international securities markets) increased 20.20 percent for the period.

In May 2007, we changed the Fund's benchmark to the Morgan Stanley Capital International EAFE Growth Index. We feel this index is more representative of the international growth stock universe in which the Fund typically invests. For the 12 months ended March 31, 2007, the MSCI EAFE Growth Index rose 17.77 percent. For comparison purposes, both indexes will be shown in this year's and next year's reports.

During the fiscal year, Lipper, Inc. recategorized the Fund into a new peer group - the Lipper International Large-Cap Growth Funds Universe Average (reflecting the performance of funds with similar objectives). This group of funds rose 15.61 percent for the 12 months ended March 31, 2007. The Fund's old peer group - the Lipper International Large-Cap Core Funds Universe Average - rose 17.26 percent for the fiscal year.

Stock selection hampers performance

The Fund's performance was impaired primarily by stock selection. We were negatively affected by our positioning in financials, materials and information technology. Our country performance was hurt by some of our selections in smaller markets, as well as our exposure to Japanese consumer stocks.

Early in the fiscal year we made a classical defensive shift in investment policy in response to deteriorating investor confidence. Cash reserves were modestly increased and the Fund's risk profile (as measured by beta) was lowered. We reduced exposure to what we believed were the most vulnerable countries and sectors, particularly luxury goods, consumer financials, exporters and companies heavily exposed to the U. S. consumer. We chose sectors with stability or more defensive characteristics, such as health care, telecommunication services and utilities. In countries with impressive domestic growth we increased positions in domestic demand beneficiaries as a hedge against possibly slower external demand.

We trimmed the Fund's Japanese holdings in mid-2006 as domestic economic activity softened ahead of a September government leadership change. Our exposure was further reduced in the first quarter of 2007 due to gradually rising local interest rates, weak wage growth and potential risk from slower U.S. demand.

First half: Tighter money, higher energy prices

Higher energy prices in the first half of calendar year 2006 were accompanied by much higher bond yields. Equity markets experienced a significant correction beginning in May 2006 as investors raised inflation concerns. Global monetary accommodation was reduced, as most major central banks increased interest rates. Investors began to worry that some monetary authorities might shift to an actual "tight" monetary policy, particularly the U.S. Federal Reserve. At the same time there was a growing concern about the U.S. housing downturn and how a potentially weaker U.S. consumer might impact foreign markets. Although business trends were solid in most of the world, investors began to expect a much slower pace of global growth for the second half of 2006. However, this negative sentiment was short-lived.

Second half: Lower energy prices, growth revival

Energy prices began to retreat after mid-summer, with oil falling nearly $20 a barrel. Economic growth then surprised investors on the upside, particularly in the U.S., Continental Europe and China. The pace of global trade slowed in the second half of calendar year 2006 but was still quite impressive on a historical basis. Business demand and loan growth remained strong in most regions while wage inflation varied from soft to moderate. Corporate profit growth remained generally healthy. Merger and acquisition activity reached a seven-year high late in 2006 and was particularly strong across Europe.

The strong global equity market trend from mid-2006 continued well into the first quarter of 2007. However, in late February renewed concerns over the U.S. consumer again triggered an equity and commodity market correction. Investors became concerned that a sudden rise in U.S. subprime mortgage delinquencies might extend to other financial institutions and could negatively impact U.S. consumer trends.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Country	Sector	Change in weighting
VINCI	France	Construction	Increased
Anglo Irish Bank Corporation plc	Ireland	Financial	Increased
Toyota Motor Corporation	Japan	Autos	Increased
Nestle S.A.	Switzerland	Food	Increased
Roche Holdings AG	Switzerland	Health care	New to Top 10
Mitsubishi Estate Co., Ltd.	Japan	Financial	New to Top 10
Siemens AG	Germany	Industrial	Decreased
Reckitt Benckiser plc	United Kingdom	Health care	New to Top 10
Banca Intesa S.p.A.	Italy	Financial	New to Top 10
Research In Motion Limited	United States	Information Technology	New to Top 10

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

Improved prospects overseas

Although housing indicators in the U.S. have weakened materially from their cycle highs, opinions remain mixed as to the vulnerability of the U.S. economy and the extent of any possible foreign impact. Economic momentum has clearly slowed in the U.S. in early 2007 while GDP trends remain steady to higher in most countries, highlighted by continued impressive economic growth in emerging Asia. Loan growth remains strong in most regions while wage and consumer inflation trends now range from mild to slightly elevated. Corporate profit growth remains generally healthy, particularly in Europe, but with some increased concern for a slowing trend this year.

Our outlook

We have remained aware of the risk of a global economic slowdown due to uncertainties centered around U.S. housing-related and mortgage finance industries. Because of this risk of a coordinated global slowdown, sector volatility has been more of an issue than country volatility. Therefore, our sector selections are now more defined. Financials and information technology remain our major sector choices, along with a preference for consumer staples rather than discretionary consumer stocks.

We believe that financial markets may tend to have periods of higher volatility in coming months as investors' expectations remain somewhat unsettled. We feel that market sentiment may occasionally shift toward risk aversion if U.S. financial and consumer trends become a larger global concern. We feel merger activity is likely to remain strong in 2007, especially in Continental Europe where most companies have abundant cash and low debt. Longer term, infrastructure development and emerging consumer needs remain strong global investment themes. We believe that stable growth companies should continue to outperform, particularly healthy market leaders and those with positive pricing power.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

*Please note that effective Dec. 6, 2006, the Fund's name changed from Ivy International Fund to Ivy International Growth Fund.

Comparison of Change in Value of
$10,000 Investment

Ivy International Growth Fund, Class A Shares (1)	$	13,489
Morgan Stanley Capital International EAFE Growth Index	$	16,860
Morgan Stanley Capital International EAFE Index	$	21,485
Lipper International Large-Cap Growth Funds Universe Average	$	17,088

		IVY INTERNATIONAL GROWTH FUND,	MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX (WITH	MORGAN STANLEY CAPITAL INTERNATIONAL EAFE GROWTH INDEX	LIPPER INTERNATIONAL LARGE-CAP GROWTH FUNDS
		CLASS A SHARES	NET DIVIDENDS)	(WITH NET DIVIDENDS)	UNIVERSE AVERAGE
DEC	1997	9,425	10,000	10,000	10,000
DEC	1998	10,117	12,000	12,221	11,438
DEC	1999	12,246	15,236	15,821	16,077
DEC	2000	10,133	13,077	11,942	13,008
DEC	2001	8,002	10,273	9,007	9,918
DEC	2002	6,325	8,635	7,563	8,018
DEC	2003	7,984	11,968	9,983	10,376
MARCH	2004	8,255	12,487	10,379	10,746
MARCH	2005	8,843	14,367	11,491	11,600
MARCH	2006	11,577	17,874	14,316	14,781
MARCH	2007	13,489	21,485	16,860	17,088

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y	Advisor Class (3)	Class II (3)
1-year period ended 3-31-07	9.81%	11.23%	15.23%	16.50%	12.81%	16.83%
5-year period ended 3-31-07	9.60%	9.48%	9.73%	–	–	11.07%
10-year period ended 3-31-07	3.69%	3.25%	3.30%	–	–	4.58%
Since inception of Class (4) through 3-31-07	–	–	–	20.21%	10.13%	–

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)Advisor Class shares and Class II shares are no longer available for investment.

(4)7-24-03 for Class Y shares and 7-3-02 for Advisor Class shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

SHAREHOLDER SUMMARY OF IVY INTERNATIONAL GROWTH FUND

Portfolio Highlights

On March 31, 2007, Ivy International Growth Fund had net assets totaling $238,232,853 invested in a diversified portfolio of:

94.73%	Foreign Common Stocks
2.71%	Domestic Common Stocks
2.56%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund was invested by country and by industry, respectively, as follows:

Country Weightings

Japan	$	16.78
United Kingdom	$	13.61
Switzerland	$	12.10
Germany	$	11.73
France	$	8.40
Other Pacific Basin (1)	$	5.92
Other Europe (2)	$	5.72
Greece	$	5.54
Italy	$	5.48
Other (3)	$	4.64
Ireland	$	4.39
Hong Kong	$	3.13
Cash and Cash Equivalents	$	2.56

(1)Includes $1.61 Australia, $2.13 China and $2.18 South Korea.

(2)Includes $0.73 Austria, $1.34 Netherlands, $0.90 Norway, $1.58 Russia and $1.17 Sweden.

(3)Includes $0.60 Brazil, $1.33 Canada and $2.71 United States.

Sector Weightings

Financial Services Stocks	$	28.58
Capital Goods Stocks	$	11.69
Consumer Nondurables Stocks	$	11.67
Business Equipment and Services Stocks	$	7.65
Health Care Stocks	$	7.45
Technology Stocks	$	5.87
Consumer Durables Stocks	$	5.20
Energy Stocks	$	4.58
Raw Materials Stocks	$	4.35
Shelter Stocks	$	4.14
Miscellaneous Stocks	$	3.20
Retail Stocks	$	3.06
Cash and Cash Equivalents	$	2.56

The Investments of Ivy International Growth Fund
March 31, 2007
COMMON STOCKS		Shares			Value
Australia - 1.61%
Novogen LTD (A)*			474,580	$	940,758
QBE Insurance Group Limited (A)			113,000		2,883,651
					3,824,409
Austria - 0.73%
Erste Bank der oesterreichischen Sparkassen AG (A)			22,450		1,748,400
Brazil - 0.60%
Petroleo Brasileiro S.A. - Petrobras, ADR			14,300		1,422,993
Canada - 1.33%
Goldcorp Inc. (A)			43,000		1,032,075
Shoppers Drug Mart Corporation (A)(B)			48,450		2,146,572
					3,178,647
China - 2.13%
China Mobile Limited (A)			170,000		1,545,850
Industrial and Commercial Bank of China Limited, H Shares (A)(B)*	2,100,000				1,177,193
SINA Corporation*			70,000		2,349,900
					5,072,943
France - 8.40%
AXA S.A. (A)			57,000		2,416,784
LVMH Moet Hennessy - Louis Vuitton (A)			17,000		1,886,012
Pernod Ricard (A)			11,520		2,336,348
SR.Teleperformance (A)(B)			46,666		2,039,093
TOTAL S.A. (A)			51,000		3,573,318
VINCI (A)			50,000		7,749,235
					20,000,790
Germany - 11.73%
Allianz Aktiengesellschaft, Registered Shares (A)			14,800		3,044,657
Bayer Aktiengesellschaft (A)			30,000		1,915,201
Deutsche Borse AG (A)			15,600		3,583,505
elexis AG (A)			48,000		1,486,956
Fresenius AG (A)			29,550		2,348,716
HOCHTIEF Aktiengesellschaft (A)			25,000		2,538,105
Merck Kommanditgesellschaft auf Aktien (A)			11,400		1,470,020
ProSieben- Sat.1 Meida Aktiengesellschaft (A)			50,000		1,771,998
SAP Aktiengesellschaft (A)			74,700		3,333,904
Siemens AG (A)			42,750		4,569,160
Vossloh AG (A)			19,700		1,884,236
					27,946,458
Greece - 5.54%
Bank of Cyprus Limited (A)			250,000		3,793,799
Greek Postal Savings Bank S.A. (A)*			150,000		3,795,135
Hellenic Exchanges Holding S.A. (A)			150,000		3,442,472
Piraeus Bank S.A. (A)			62,500		2,170,748
					13,202,154
Hong Kong - 3.13%
Agile Property Holdings Limited (A)	2,600,000				2,562,232
Cheung Kong (Holdings) Limited (A)			200,000		2,531,516
Esprit Holdings Limited (A)			201,000		2,357,669
					7,451,417
Ireland - 4.39%
Anglo Irish Bank Corporation plc (Great Britain) (A)			360,000		7,694,466
CRH public limited company (A)			64,700		2,764,004
					10,458,470
Italy - 5.48%
Banca Intesa S.p.A. (A)			594,000		4,511,001
Banca Italease S.p.A. (A)			30,900		1,979,261
Saipem S.p.A. (A)			78,300		2,280,207
UniCredito Italiano S.p.A. (A)			450,001		4,283,062
					13,053,531
Japan - 16.78%
Astellas Pharma Inc. (A)			58,000		2,500,339
Bank of Fukuoka, Ltd. (The) (A)(C)			140,000		1,129,837
Bank of Yokohama, Ltd. (The) (A)			150,000		1,118,890
Canon Inc. (A)			79,200		4,254,379
Central Japan Railway Company (A)			110		1,250,849
CREDIT SAISON CO., LTD. (A)			35,000		1,152,410
DENSO CORPORATION (A)			28,000		1,040,733
Daiwa Securities Group Inc. (A)			145,000		1,750,976
FANUC LTD (A)			14,000		1,303,293
Hoya Corporation (A)			86,000		2,853,530
Japan Tobacco Inc. (A)			550		2,702,393
Kirin Brewery Company, Limited (A)			140,000		2,022,064
Mitsubishi Estate Co., Ltd. (A)			145,000		4,761,965
Nintendo Co., Ltd. (A)			6,000		1,743,890
SUMCO Corporation (A)			65,000		2,702,817
Shin-Etsu Chemical Co., Ltd. (A)			42,000		2,562,627
Toyota Motor Corporation (A)			80,000		5,125,594
					39,976,586
Netherlands - 1.34%
ABN AMRO Holding N.V. (A)			40,000		1,721,637
Royal Numico N.V. (A)			28,600		1,475,101
					3,196,738
Norway - 0.90%
Statoil ASA (A)			79,000		2,151,013
Russia - 1.58%
OAO LUKOIL, ADR			43,500		3,762,750
South Korea - 2.18%
Kookmin Bank (A)			30,000		2,691,327
Samsung Electronics Co., Ltd. (A)			4,200		2,513,393
					5,204,720
Sweden - 1.17%
H & M Hennes & Mauritz AB (A)			48,500		2,792,146
Switzerland - 12.10%
Compagnie Financiere Richemont SA (A)			42,550		2,379,354
Credit Suisse Group, Registered Shares (A)			56,800		4,076,007
Holcim Ltd, Registered Shares (A)			32,700		3,274,978
Nestle S.A., Registered Shares (A)			13,000		5,062,955
Nobel Biocare Holding AG (A)			4,500		1,640,538
Novartis AG, Registered Shares (A)(C)			70,000		3,824,100
Roche Holdings AG, Genussschein (A)			28,500		5,042,587
SGS SA (A)			2,000		2,388,183
Swatch Group Ltd (The), Bearer Shares (A)			4,300		1,136,794
					28,825,496
United Kingdom - 13.61%
BAE SYSTEMS plc (A)			285,000		2,579,845
BHP Billiton Plc (A)			129,200		2,880,603
British American Tobacco p.l.c. (A)			141,000		4,408,938
Diageo plc (A)			85,000		1,722,012
IG Group Holdings plc (A)(B)			272,000		1,591,042
Intertek Group plc (A)			187,000		3,335,803
Michael Page International plc (A)			130,000		1,369,916
Prudential plc (A)			85,500		1,207,199
Reckitt Benckiser plc (A)			87,500		4,556,054
Royal Bank of Scotland Group plc (The) (A)			100,000		3,904,205
Safestore Holdings Limited (A)(B)*			205,000		1,012,555
Standard Chartered PLC (A)			42,500		1,224,393
WPP Group plc (A)			173,000		2,621,367
					32,413,932
United States - 2.71%
Research In Motion Limited*			32,850		4,483,861
streetTRACKS Gold Trust*			30,000		1,972,800
					6,456,661
TOTAL COMMON STOCKS - 97.44%				$	232,140,254
(Cost: $174,096,607)

SHORT-TERM SECURITIES - 1.22%	Principal Amount in Thousands
Security and Commodity Brokers
Greenwich Capital Holdings Inc. (Royal Bank of       Scotland PLC (The)),
5.39%, 4-2-07	$	2,891	$	2,890,567
(Cost: $2,890,567)
TOTAL INVESTMENT SECURITIES - 98.66%			$	235,030,821
(Cost: $176,987,174)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.34%				3,202,032
NET ASSETS - 100.00%			$	238,232,853

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*No dividends were paid during the preceding 12 months.

(A)Listed on an exchange outside the United States.

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been determined to be liquid under guidelines established by the Board of Trustees. At March 31, 2007, the total value of these securities amounted to $7,966,455, or 3.34% of net assets at March 31, 2007.

(C)Securities valued in good faith by the Valuation Committee appointed by the Board of Tustees.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY INTERNATIONAL GROWTH FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $176,987) (Notes 1 and 3)	$	235,031
Receivables:
Investment securities sold		4,565
Dividends and interest		1,018
Fund shares sold		189
Prepaid and other assets		43
Total assets		240,846
LIABILITIES
Payable for investment securities purchased		1,444
Payable to Fund shareholders		592
Accrued management fee (Note 2)		169
Due to custodian		98
Accrued service fee (Note 2)		81
Accrued shareholder servicing (Note 2)		76
Accrued distribution fee (Note 2)		43
Accrued accounting services fee (Note 2)		6
Accrued administrative fee (Note 2)		2
Other		102
Total liabilities		2,613
Total net assets	$	238,233
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	451,365
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		251
Accumulated undistributed net realized loss on investment transactions		(271,471	)
Net unrealized appreciation in value of investments		58,088
Net assets applicable to outstanding units of capital	$	238,233
Net asset value per share (net assets divided by shares outstanding):
Class A		$34.60
Class B		$31.79
Class C		$31.71
Class Y		$34.59
Advisor Class		$32.66
Class II		$34.98
Capital shares outstanding:
Class A		4,770
Class B		360
Class C		1,780
Class Y		143
Advisor Class		–	*
Class II		9

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Operations
      IVY INTERNATIONAL GROWTH FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $403)	$	4,249
Interest and amortization		324
Total income		4,573
Expenses (Note 2):
Investment management fee		1,934
Shareholder servicing:
Class A		336
Class B		58
Class C		270
Class Y		9
Advisor Class		–	*
Class II		–	*
Distribution fee:
Class A		12
Class B		89
Class C		413
Service fee:
Class A		298
Class B		30
Class C		138
Class Y		11
Custodian fees		129
Accounting services fee		71
Audit fees		51
Administrative fee		23
Other		166
Total expenses		4,038
Net investment income		535
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		34,557
Realized net gain on foreign currency transactions		27
Realized net gain on investments		34,584
Unrealized depreciation in value of investments during the period		(1,366	)
Net gain on investments		33,218
Net increase in net assets resulting from operations	$	33,753

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY INTERNATIONAL GROWTH FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	535		$	212
Realized net gain on investments		34,584			21,213
Unrealized appreciation (depreciation)		(1,366	)		19,510
Net increase in net assets resulting from operations		33,753			40,935
Distributions to shareholders from (Note 1F):(1 )
Net investment income:
Class A		(236	)		(831	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(8	)		(3	)
Advisor Class		(–	)		(–	)
Class II		(1	)		(2	)
Realized gains on investment transactions:
Class A		(–	)		(–	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(–	)		(–	)
Advisor Class		(–	)		(–	)
Class II		(–	)		(–	)
		(245	)		(836	)
Capital share transactions (Note 5)		(26,372	)		41,908
Total increase		7,136			82,007
NET ASSETS
Beginning of period		231,097			149,090
End of period	$	238,233		$	231,097
Undistributed net investment income (loss)	$	251		$	(66	)

(1)See "Financial Highlights" on pages 183 - 188.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL GROWTH FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	29.74		$	22.86		$	21.34		$	20.64		$	16.35		$	20.69
Income (loss) from       investment operations:
Net investment             income (loss)		0.19			0.08			(0.02	)		(0.01	)		(0.02	)		0.06	(1)
Net realized and             unrealized gain (loss)             on investments		4.72			6.97			1.54			0.71			4.31			(4.40	)(1)
Total from investment       operations		4.91			7.05			1.52			0.70			4.29			(4.34	)
Less distributions from:
Net investment income		(0.05	)		(0.17	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.05	)		(0.17	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value, end of period	$	34.60		$	29.74		$	22.86		$	21.34		$	20.64		$	16.35
Total return(2)		16.51	%		30.92	%		7.12	%		3.39	%		26.24	%	- -20.96		%
Net assets, end of period       (in millions)	$165			$156			$122			$125			$124			$127
Ratio of expenses to average       net assets		1.46	%		1.59	%		1.61	%		1.69	%(3)		1.81	%		1.89	%
Ratio of net investment income       (loss) to average net assets		0.55	%		0.25	%		- -0.15	%		- -0.26	%(3)		- -0.07	%		0.32	%
Portfolio turnover rate		97	%		75	%		76	%		27	%		136	%		34	%

(1)Based on average weekly shares outstanding.

(2)Total return calculated without taking into account the sales load deducted on an initial purchase.

(3)Annualized.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL GROWTH FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	27.58		$	21.30		$	20.12		$	19.52		$	15.62		$	20.03
Income (loss) from       investment operations:
Net investment loss		(0.15	)(1)		(0.17	)(1)		(0.22	)(1)		(0.07	)		(0.23	)		(0.12	)(1)
Net realized and             unrealized gain (loss)             on investments		4.36	(1)		6.45	(1)		1.40	(1)		0.67			4.13			(4.29	)(1)
Total from investment       operations		4.21			6.28			1.18			0.60			3.90			(4.41	)
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value, end of period	$	31.79		$	27.58		$	21.30		$	20.12		$	19.52		$	15.62
Total return		15.23	%		29.48	%		5.87	%		3.08	%		24.97	%	- -22.00		%
Net assets, end of period       (in millions)	$11			$13			$17			$49			$55			$68
Ratio of expenses to average       net assets		2.55	%		2.74	%		2.75	%		2.75	%(2)		2.84	%		2.85	%
Ratio of net investment       loss to average net assets		- -0.53	%		- -0.72	%		- -1.09	%		- -1.35	%(2)		- -1.06	%		- -0.64	%
Portfolio turnover rate		97	%		75	%		76	%		27	%		136	%		34	%

(1)Based on average weekly shares outstanding.

(2)Annualized.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL GROWTH FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	27.52		$	21.20		$	20.00		$	19.39		$	15.52		$	19.90
Income (loss) from       investment operations:
Net investment loss		(0.15	)(1)		(0.09	)(1)		(0.32	)		(0.07	)		(0.20	)		(0.11	)(1)
Net realized and             unrealized gain (loss)             on investments		4.34	(1)		6.41	(1)		1.52			0.68			4.07			(4.27	)(1)
Total from investment       operations		4.19			6.32			1.20			0.61			3.87			(4.38	)
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value, end of period	$	31.71		$	27.52		$	21.20		$	20.00		$	19.39		$	15.52
Total return		15.23	%		29.81	%		6.00	%		3.15	%		24.94	%	- -22.00		%
Net assets, end of period       (in millions)	$57			$56			$9			$11			$12			$14
Ratio of expenses to average       net assets		2.54	%		2.43	%		2.64	%		2.67	%(2)		2.80	%		2.83	%
Ratio of net investment       loss to average net assets		- -0.53	%		- -0.39	%		- -1.14	%		- -1.25	%(2)		- -0.94	%		- -0.62	%
Portfolio turnover rate		97	%		75	%		76	%		27	%		136	%		34	%

(1)Based on average weekly shares outstanding.

(2)Annualized.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL GROWTH FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the period from 7-24-03(1) to
	2007			2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period	$	29.74		$	22.86		$	21.35		$	20.65		$	17.69
Income (loss) from       investment operations:
Net investment             income (loss)		0.28			0.18	(2)		(0.09	)		(0.02	)		0.02
Net realized and             unrealized gain             on investments		4.63			6.87	(2)		1.60			0.72			2.94
Total from investment       operations		4.91			7.05			1.51			0.70			2.96
Less distributions from:
Net investment income		(0.06	)		(0.17	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.06	)		(0.17	)		(0.00	)		(0.00	)		(0.00	)
Net asset value, end of period	$	34.59		$	29.74		$	22.86		$	21.35		$	20.65
Total return		16.50	%		30.95	%		7.07	%		3.39	%		16.73	%
Net assets, end of period       (in thousands)	$4,960			$6,144			$229			$140			$135
Ratio of expenses to       average net assets		1.46	%		1.58	%		1.66	%		1.76	%(3)		0.59	%(3)
Ratio of net investment income       (loss) to average net assets		0.65	%		0.81	%		- -0.33	%		- -0.32	%(3)		0.24	%(3)
Portfolio turnover rate		97	%		75	%		76	%		27	%		136	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL GROWTH FUND
      Advisor Class Shares⁽¹⁾
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002(2)
Net asset value,       beginning of period	$	28.96		$	22.84		$	21.66		$	21.00		$	16.85		$	20.67
Income (loss) from       investment operations:
Net investment loss		(0.79	)		(0.75	)		(0.38	)		(0.08	)		(1.00	)		(0.24	)
Net realized and             unrealized gain (loss)             on investments		4.49			6.87			1.56			0.74			5.15			(3.58	)
Total from investment       operations		3.70			6.12			1.18			0.66			4.15			(3.82	)
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value, end of period	$	32.66		$	28.96		$	22.84		$	21.66		$	21.00		$	16.85
Total return		12.81	%		26.80	%		5.45	%		3.14	%		25.00	%	- -18.71		%
Net assets, end of period       (in thousands)	$1			$1			$1			$1			$1			$2
Ratio of expenses to average       net assets		4.66	%		4.71	%		3.11	%		2.35	%(3)		2.72	%		3.46	%
Ratio of net investment       loss to average net assets		- -2.68	%		- -3.03	%		- -1.75	%		- -1.58	%(3)		- -0.98	%		- -1.24	%
Portfolio turnover rate		97	%		75	%		76	%		27	%		136	%		34	%

(1)See Note 5 to financial statements.

(2)Advisor Class Shares were outstanding for the period from 1-1-02 through 6-11-02 and from 7-3-02 through 12-31-02.

(3)Annualized.

See Notes to Financial Statements.

Financial Highlights
      IVY INTERNATIONAL GROWTH FUND
      Class II Shares⁽¹⁾
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended December 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	30.07		$	23.13		$	21.58		$	20.86		$	16.48		$	20.85
Income (loss) from       investment operations:
Net investment       income (loss)		0.39			0.15	(2)		0.29			(0.00	)		(0.08	)		0.14	(2)
Net realized and             unrealized gain (loss)             on investments		4.66			7.02	(2)		1.26			0.72			4.46		(4.51)		(2)
Total from investment       operations		5.05			7.17			1.55			0.72			4.38			(4.37	)
Less distributions from:
Net investment income		(0.14	)		(0.23	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.14	)		(0.23	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value, end of period	$	34.98		$	30.07		$	23.13		$	21.58		$	20.86		$	16.48
Total return		16.83	%		31.12	%		7.18	%		3.45	%		26.58	%	- -20.95		%
Net assets, end of period       (in thousands)		$303			$299			$345			$669			$684		$1,304
Ratio of expenses to average       net assets		1.20	%		1.39	%		1.47	%		1.38	%(3)		1.66	%		1.51	%
Ratio of net investment income       to average net assets		0.81	%		0.51	%		0.20	%		0.04	%(3)		0.06	%		0.70	%
Portfolio turnover rate		97	%		75	%		76	%		27	%		136	%		34	%

(1)See Note 5 to financial statements.

(2)Based on average weekly shares outstanding.

(3)Annualized.

See Notes to Financial Statements.

Managers' Discussion of
Ivy Mortgage Securities Fund
      March 31, 2007

Ivy Mortgage Securities Fund is subadvised by Advantus Capital Management, Inc.

Below, Christopher R. Sebald, CFA, and David W. Land, CFA, the Fund's portfolio managers, discuss the Fund's positioning, performance and results for the fiscal year ended March 31, 2007. Mr. Sebald has 18 years of industry experience and has managed the Fund for four years. Mr. Land has 16 years of industry experience and has managed the Fund for three years.

MATURITY
SHORT	INTERMED	LONG
X			HIGH	CREDIT QUALITY
			MEDIUM
			LOW

This diagram shows the Fund's fixed-income investment style by displaying the average credit quality of the bonds owned and the Fund's interest rate sensitivity, as measured by average maturity. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund increased 6.52 percent (Class A shares at net asset value), less than its benchmark index and slightly more than the average of its peer group (based on net asset value returns) for the 12 months ended March 31, 2007. In comparison, the Lehman Brothers Mortgage-Backed Securities Index (reflecting the performance of securities that generally represent the mortgage-backed securities market) increased 6.92 percent, while the Lipper U.S. Mortgage Funds Universe Average (reflecting the performance of the universe of funds with similar investment objectives) increased 6.00 percent.

Subprime mortgage market affected results

This past fiscal year we took a more positive view on housing and the economy than others and continued to invest in what we felt were high-quality securities that provided bargains. While this worked for most of the fiscal period, it did not work in the final fiscal quarter, and this contributed negatively to our results. We are typically overweight in asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS), and that strategy worked to our benefit for the first three quarters of the fiscal year.

However, concerns about the subprime lending market leaked into the CMBS and ABS sectors in the last few weeks of the final quarter of the fiscal year, widening spreads, increasing risk premiums and detracting from our performance. We remained in the higher quality portion of these sectors, so the concerns in the subprime market did not hurt the Fund's portfolio as much as others in our peer group.

High interest rates, sagging housing prices

Interest rates increased a bit, but short-term rates rose more, inverting the yield curve. The somewhat minor changes gave us fewer opportunities to enhance performance through duration positioning. Notably, the housing market slowed substantially in 2006, causing many market participants to position themselves for an economic slowdown late in the year and into 2007. We continued to invest in the ABS and CMBS sectors; this is a core strategy of ours. We believe this diversification will enhance the return of the portfolio throughout market cycles.

Our outlook

We expect that the Federal Reserve will remain on hold for the next couple of meetings, even though the housing weakness continues to cause concern that it will significantly drag down the economy. We still do not see the subprime problems and potentially broader impact on housing values and consumer confidence as cause for a U.S. recession. We have a positive outlook on higher-rated ABS and CMBS, which we feel have plenty of protection in terms of excess collateral. However, we will be watching closely as this cycle plays out.

In our view, the bond market is likely to remain choppy over the next few quarters. The credit markets are starting to pull back. Whenever this happens, the weakest borrowers are often the first to be uncovered and then caution enters back into the psychology of the markets. Lending caution will be a welcome return that we hope will lead to higher risk premiums for structured finance securities. We believe we are well positioned for such an environment and are alert to the potential hazards that can develop along the way. As always, we will attempt to add value in the portfolio through relative value security selection and this will not change in the future environment we envision. However, as values change among securities and sectors, we will attempt to be sharp to reassess and re-price risk in the markets and take advantage of the opportunities that arise.

Portfolio Characteristics
As of 3-31-07
Average maturity	5.65 years
Effective duration	3.71 years
Weighted average bond rating	AAA

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. The risks incurred by mortgage securities include, but are not limited to, reinvestment of pre-paid loans at lower rates of return. In addition, the net asset value of mortgage securities may fluctuate in response to changes in interest rates and are not guaranteed. Fixed-income securities are subject to interest rate risk and, as such, the Fund's net asset value may fall as interest rates rise. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

Certain U.S. government securities in which the Fund may invest, such as Treasury securities and securities issued by the Government National Mortgage Association (Ginnie Mae), are backed by the full faith and credit of the U.S. government. However, other U.S. government securities in which the Fund may invest, such as securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB) are not backed by the full faith and credit of the U.S. government, are not insured or guaranteed by the U.S. government and, instead, may be supported only by the right of the issuer to borrow from the U.S. Treasury or by the credit of the issuer.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Mortgage Securities Fund, Class A Shares (1)	$	16,508
Lehman Brothers Mortgage-Backed Securities Index	$	17,263
Lipper U.S. Mortgage Funds Universe Average	$	16,253

		IVY MORTGAGE SECURITIES FUND,	LEHMAN BROTHERS MORTGAGE-BACKED	LIPPER U.S. MORTGAGE FUNDS
		CLASS A SHARES	SECURITIES INDEX	UNIVERSE AVERAGE
SEPT	1997	9,425	10,000	10,000
SEPT	1998	10,277	10,863	10,863
SEPT	1999	10,480	11,110	10,960
SEPT	2000	11,286	11,934	11,670
SEPT	2001	12,855	13,407	13,024
SEPT	2002	13,868	14,394	13,959
SEPT	2003	14,452	14,898	14,396
MARCH	2004	14,843	15,326	14,754
MARCH	2005	15,158	15,724	15,015
MARCH	2006	15,498	16,145	15,333
MARCH	2007	16,508	17,263	16,253

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-07	0.40%	1.45%	5.69%	6.66%
5-year period ended 3-31-07	3.79%	–	–	–
10-year period ended 3-31-07	5.88%	–	–	–
Since inception of Class (3)      through 3-31-07	–	2.11%	3.13%	4.05%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)12-8-03 for Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

The Advantus Mortgage Securities Fund merged into the Ivy Mortgage Securities Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Mortgage Securities Fund Class A shares, restated to reflect current sales charges applicable to Ivy Mortgage Securities Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Mortgage Securities Fund. If these expenses were reflected, performance shown would differ.

SHAREHOLDER SUMMARY OF IVY MORTGAGE SECURITIES FUND

Portfolio Highlights

On March 31, 2007, Ivy Mortgage Securities Fund had net assets totaling $321,503,458 invested in a diversified portfolio of:

56.38%	Corporate Bonds
41.62%	United States Government Agency Obligations
2.00%	Cash and Cash Equivalents

On March 31, 2007, the breakdown of bonds (by ratings) held by the Fund was as follows:

AAA	66.23	%
AA	11.91	%
A	5.87	%
BBB	8.60	%
BB	4.67	%
Non-Rated	0.72	%
Cash and Cash Equivalents	2.00	%

Ratings reflected in the wheel are taken from the following sources in order of preference: Standard & Poor's, Moody's or management's internal ratings, where no other ratings are available.

The Investments of Ivy Mortgage Securities Fund
March 31, 2007
CORPORATE DEBT SECURITIES	Principal Amount in Thousands				Value
Finance Companies
ABFS Mortgage Loan Trust:       2001-2,
6.99%, 12-25-31**	$	1,309		$	1,335,402
2002-4,
7.423%, 12-15-33**		1,485			1,488,323
Aames Mortgage Trust 2001-4,
6.65%, 1-25-32**		634			637,241
Asset Securitization Corporation:
1.41211%, 10-13-26 (Interest Only) (A)**		4,255			197,685
2.39226%, 8-13-29 (Interest Only)**		7,236			394,505
6.88605%, 2-14-43**		1,430			1,556,648
Associates Manufactured Housing Contract       Pass-Through Certificates,
7.9%, 3-15-27		1,712			1,749,668
Auburn Funding, LLC,
6.92%, 1-25-12 (B)**		1,920			1,854,000
Banc of America Alternative Loan Trust:       2004-11,
6.0%, 12-25-34		1,220			1,213,772
2005-6,
6.0%, 7-25-35		926			923,260
2005-8:
5.57424%, 9-25-35**		2,072			2,020,163
5.57424%, 9-25-35**		411			395,968
2005-10,
5.66861%, 11-25-35**		1,168			1,054,244
2005-12,
5.80715%, 1-25-36**		1,651			1,602,353
2006-4:
6.22497%, 5-25-36**		903			840,847
6.22497%, 5-25-36**		646			644,066
2006-6,
6.0%, 6-25-46		3,070			3,098,962
Banc of America Commercial Mortgage Inc.,       Commercial Mortgage Pass-Through Certificates:       Series 2002-2,
6.2%, 7-11-43 (A)		1,200			1,237,255
Series 2003-1,
4.9%, 9-11-36 (A)		1,000			971,422
Series 2004-6,
5.104%, 12-10-42 (A)**		800			780,830
Banc of America Commercial Mortgage       Trust 2007-1,
5.451%, 1-15-49		1,000			1,003,177
Banc of America Funding 2004-2 Trust,
6.5%, 7-20-32		1,228			1,250,335
Banc of America Funding Corporation,
5.01027%, 9-20-34**		1,374			1,337,976
Banc of America Mortgage 2005-J Trust,
5.09274%, 11-25-35**		2,372			2,351,645
Banc of America Mortgage 2007-1 Trust,
6.0%, 3-25-37		3,640			3,628,409
Banc of America Mortgage Alternative Loan       Trust 2003-5,
5.5%, 7-25-33 (B)		1,288			1,174,888
Banc of America Mortgage Trust:       2003-9,
5.5%, 12-25-33		823			737,848
2004-2:
5.0%, 3-25-19		309			301,716
5.0%, 3-25-19		241			231,692
2004-3:
4.875%, 4-25-19		417			404,749
4.875%, 4-25-19		223			213,756
2004-7,
5.75%, 8-25-34		1,177			1,166,908
Banc of America Structured Securities Trust       2002-X1 F,
6.274%, 10-11-33 (A)		1,750			1,802,559
Banco Hipotecario Nacional:
7.916%, 7-25-09 (B)		23			233
2.57%, 3-25-11 (B)		10			100
7.54%, 5-31-17 (B)		-	*		1
Bank of America, N.A.-First Union National Bank       Commercial Mortgage Trust,
6.25%, 4-11-37 (A)		1,750			1,802,809
BankAmerica Manufactured Housing Contract Trust:
7.8%, 10-10-26		2,000			2,040,853
7.015%, 1-10-28		1,256			1,270,260
Bear Stearns Commercial Mortgage Securities Inc.:       Series 2001-TOP2 Trust Fund:
7.25921%, 2-15-35 (A)**		3,000			3,202,143
7.59921%, 2-15-35 (A)**		795			867,054
Series 2000-WF1 Trust Fund,
6.5%, 2-15-32		1,015			1,042,587
Bear Stearns Commercial Mortgage Securities       Trust 2002-TOP6,
6.0%, 10-15-36 (A)		938			932,494
Bear Stearns Mortgage Securities Inc.,
8.0%, 11-25-29		473			471,104
BlackRock Capital Finance,
7.75%, 9-25-26 (A)		629			627,961
C-Bass:       2005-CB3 Trust,
5.109%, 12-25-34**		1,254			1,187,397
2006-CB2 Trust,
5.717%, 12-25-36 **		562			559,899
2006-MH1 Trust,
5.97%, 9-25-36 (A)**		1,445			1,461,495
CHL Mortgage Pass-Through Trust:       2002-32,
5.52488%, 1-25-33**		1,420			1,352,645
2003-28,
4.15%, 8-25-33		1,500			1,428,345
2003-HYB2,
3.96079%, 7-19-33**		2,156			2,078,797
COMM 2006-CNL2,
5.75556%, 2-5-19 (A)**		925			917,732
CSAB Mortgage-Backed Trust 2006-2,
6.08%, 9-25-36**		3,540			3,561,660
CSFB Commercial Mortgage Trust 2003-C4,
5.322%, 8-15-36 (A)**		1,000			975,721
CWHEQ Home Equity Loan Trust, Series 2006-S3,
6.518%, 1-25-29**		2,135			2,185,744
Capital Auto Receivables Asset Trust 2006-1,
7.16%, 1-15-13 (A)		1,140			1,153,531
Centex Home Equity Loan Trust 2005-C,
5.048%, 6-25-35**		2,301			2,233,676
Chase Mortgage Finance Trust:       Series 2003-S2,
5.0%, 3-25-18		1,847			1,830,706
Series 2003-S11,
5.5%, 10-25-33		909			890,997
CitiMortgage Alternative Loan Trust, Series 2006-A7,
0.0%, 12-25-36 **		3,417			3,237,880
Collateralized Mortgage Obligation Trust,
5.0%, 7-1-18		35			34,469
Conseco Finance Securitizations Corp.,
6.981%, 6-15-32		1,200			1,203,442
CountryPlace Manufactured Housing Contract Trust 2005-1,
4.8%, 12-15-35 (B)**		1,275			1,254,455
Countrywide Home Loans, Inc. Asset-Backed Certificates,       Series 2005-10,
4.915%, 2-25-36**		5,000			4,885,393
Credit Suisse Commercial Mortgage Trust Series       2006-C5,
5.311%, 12-15-39		1,000			993,545
Credit Suisse First Boston Mortgage Securities Corp.,
6.0%, 11-25-18		531			533,130
DLJ Commercial Mortgage Corp. 1998-CG1,
7.16768%, 6-10-31 (A)**		1,640			1,795,201
FFCA Secured Lending Corporation:
6.42%, 2-18-22 (B)**		1,500			1,419,482
6.67%, 2-18-22 (B)**		1,000			937,786
First Horizon Mortgage Pass-Through Trust 2003-8,
5.12334%, 10-25-33**		374			317,872
Flagstar Home Equity Loan Trust 2007-1,
5.997%, 1-25-35 (B)**		1,630			1,630,945
Ford Credit Auto Owner Trust 2006-B,
7.12%, 2-15-13 (A)		635			647,209
GMAC Commercial Mortgage Securities,
5.94%, 7-1-13 (A)		200			198,525
Global Mortgage Securitization 2005-A Ltd. and       Global Mortgage Securitization 2005-A LLC:
5.39725%, 4-25-32**		1,255			1,135,350
5.25%, 4-25-32		807			765,492
Global Mortgage Securitization Ltd. and Global       Mortgage Securitization, LLC:
5.25%, 11-25-32 (B)		520			508,423
5.25%, 11-25-32 (B)		1,116			1,084,692
Green Tree Financial Corporation:
7.65%, 4-15-19		778			807,539
8.3%, 11-15-19		605			629,041
9.1%, 4-15-25		1,075			1,173,607
9.0%, 6-15-25		1,052			1,110,903
Hilton Hotel Pool Trust:
5.82%, 10-3-15 (A)**		500			504,682
7.653%, 10-3-15 (A)		1,955			2,054,218
Home Equity Loan Trust 2003-HS2,
5.09%, 7-25-33**		248			245,035
Hometown Commercial Capital, LLC Hometown       Commercial Mortgage Pass-Through Notes 2006-1,
5.506%, 11-11-38		2,380			2,391,179
Impac CMB Trust Series 2003-2F,
6.0%, 1-25-33**		949			938,075
J.P. Morgan Alternative Loan Trust 2006-A6,
5.95%, 11-25-36**		2,500			2,529,327
J.P. Morgan Chase Commercial Mortgage Securities Corp.,
6.2207%, 10-12-37 (A)		2,300			2,395,942
J.P. Morgan Mortgage Acquisition Trust:       2006-CW2,
6.337%, 8-25-36**		2,725			2,767,247
2006-WF1,
6.41%, 7-25-36**		2,510			2,568,819
J.P. Morgan Mortgage Trust:       2004-A3,
4.29613%, 7-25-34**		1,500			1,460,169
2005-S2:
5.66819%, 9-25-35**		2,254			2,219,311
6.5%, 9-25-35		2,610			2,673,352
2006-A2,
3.81639%, 8-25-34**		2,153			2,081,091
2006-S3:
6.187%, 8-25-36		1,211			1,216,532
6.5%, 8-25-36		1,810			1,842,720
2007-A1,
4.81906%, 7-25-35**		2,197			2,133,154
2007-A2,
5.732%, 4-25-37**		4,000			4,003,920
LB-UBS Commercial Mortgage Trust 2003-C3,
4.846%, 2-15-37 (A)**		300			290,628
Lehman Mortgage Trust Mortgage Pass-Through       Certificates, Series 2006-5,
6.89049%, 9-25-36**		2,014			2,076,405
Lehman XS Trust, Series 2005-8,
5.69%, 12-25-35		3,057			3,061,858
MASTR Asset Securitization Trust:       2003-6,
5.5%, 7-25-33		1,722			1,694,946
2003-10,
5.5%, 11-25-33		1,502			1,472,485
Metropolitan Asset Funding, Inc.,
6.98%, 5-20-12 (A)		23			23,131
Mid-State Capital Corporation 2004-1 Trust:
6.005%, 8-15-37		363			369,813
6.497%, 8-15-37		1,319			1,333,376
Morgan Stanley Dean Witter Capital I Inc. Trust       2002-WL1,
6.52157%, 4-25-17**		284			287,907
Morgan Stanley Dean Witter Capital I Trust 2002-IQ3,
6.45164%, 9-15-37 (A)**		768			802,753
Multi Security Asset Trust LP, Commercial Mortgage-Backed       Securities Pass-Through Certificates,       Series 2005-RR4:
1.05881%, 11-28-35 (Interest Only) (B)**	33,100				781,128
5.88%, 11-28-35 (B)**		680			652,543
5.88%, 11-28-35 (B)**		340			332,626
NationsLink Funding Corporation, Commercial       Mortgage Pass-Through Certificates,       Series 1998-2,
5.0%, 8-20-30 (A)		1,000			958,076
Nomura Asset Securities Corporation, Commercial       Mortgage Pass-Through Certificates,       Series 1998-D6,
6.0%, 3-15-30 (A)		1,650			1,709,639
Oakwood Mortgage Investors, Inc.;
8.1%, 10-15-21 (A)		393			395,470
7.375%, 8-15-27		351			354,215
Origen Manufactured Housing Contract Trust:       2004-A:
5.7%, 1-15-35		543			538,279
5.91%, 1-15-35		1,600			1,593,135
2004-B,
4.75%, 8-15-21		400			387,151
2005-A,
4.97%, 10-15-21		935			915,078
2005-B:
5.605%, 5-15-22		360			358,877
5.91%, 1-15-37		600			592,354
PHH Alternative Mortgage Trust, Series 2007-1,       Class II-B-2,
6.0%, 2-25-37		1,572			1,531,124
Prudential Home Mortgage Securities:
6.97999%, 9-28-08 (A)**		6			6,399
6.73%, 4-28-24 (B)**		3			3,357
8.04625%, 9-28-24 (A)**		26			26,156
RALI Series:       2003-QS10 Trust,
5.5%, 5-25-33		2,202			2,168,634
2003-QS11 Trust,
5.75%, 6-25-33		2,517			2,491,553
RAMP Series 2005-RS1 Trust,
5.145%, 1-25-35**		1,075			1,046,497
RASC Series 2003-KS10 Trust,
6.41%, 12-25-33		351			336,336
RESI Finance Limited Partnership 2003-C and RESI       Finance DE Corporation 2003-C,
6.72%, 9-10-35 (B)**		1,441			1,464,694
RFMSI Series 2004-S5 Trust:
4.5%, 5-25-19		349			333,064
4.5%, 5-25-19		174			163,651
Salomon Brothers Mortgage Securities VII, Inc., Mortgage       Pass-Through Certificates, Series 1997-HUD1
7.75%, 12-25-30**		1,373			1,412,080
Structured Adjustable Rate Mortgage Loan Trust,       Series 2005-21
5.4%, 11-25-35**		1,575			1,510,395
Structured Asset Mortgage Investments, Inc.:
5.93982%, 4-30-30**		21			20,692
5.93982%, 4-30-30**		9			9,638
Structured Asset Securities Corporation:
5.54%, 11-25-32**		275			272,617
5.25%, 8-25-33		1,320			1,254,703
5.25%, 8-25-33		575			539,741
5.63%, 5-25-34**		1,100			1,088,918
6.0%, 6-25-34**		2,750			2,737,937
Vanderbilt Mortgage and Finance, Inc.:
7.955%, 12-7-24		766			804,336
7.525%, 11-7-26		915			921,610
Wachovia Bank Commercial Mortgage Trust (The),
4.942%, 11-15-34 (A)		964			934,124
Washington Mutual MSC Mortgage Pass-Through       Certificates Series 2002-MS11 Trust,
5.60223%, 12-25-32 **		975			960,599
Wells Fargo Mortgage Backed Securities:       2003-2 Trust,
5.25%, 2-25-18		280			263,765
2003-4 Trust,
5.5%, 6-25-33		947			878,958
2003-9 Trust,
5.25%, 8-25-33 (A)		1,145			969,746
2004-1 Trust (The),
5.5%, 2-25-34		1,651			1,618,673
2005-16 Trust,
5.75%, 1-25-36		500			499,123
TOTAL CORPORATE DEBT SECURITIES - 56.38%				$	181,258,363
(Cost: $182,846,651)

UNITED STATES GOVERNMENT       AGENCY OBLIGATIONS	Principal Amount in Thousands
Agency Obligations - 0.22%
Federal Home Loan Mortgage Corporation,
2.75%, 3-15-08 (C)	$ 200			195,754
Federal National Mortgage Association,
5.0%, 9-15-08 (C)		500		500,542
				696,296
Mortgage-Backed Obligations - 41.40%
Federal Home Loan Mortgage Corporation Agency       REMIC/CMO,
5.0%, 6-15-31		2,000		1,941,707
Federal Home Loan Mortgage Corporation Fixed       Rate Participation Certificates:
9.85668%, 3-15-09**		456		476,998
5.5%, 12-1-17		734		737,621
5.5%, 9-1-19		1,296		1,299,828
5.5%, 5-1-20		1,722		1,726,443
5.5%, 6-1-20		1,380		1,383,654
3.5%, 2-15-30		2,000		1,901,422
6.5%, 9-1-32		1,202		1,247,182
5.3%, 1-15-33		207		203,951
5.0%, 7-15-33		2,268		2,222,373
5.5%, 5-1-34		1,340		1,330,858
5.5%, 5-1-34		947		939,383
6.5%, 5-1-34		911		932,830
5.5%, 10-1-34		1,102		1,092,602
5.5%, 3-1-35		1,000		989,375
5.0%, 5-15-35		2,196		2,057,778
5.5%, 7-1-35		3,028		2,998,967
5.0%, 8-1-35		942		911,345
5.5%, 10-1-35		1,724		1,716,553
5.0%, 12-1-35		896		866,964
Federal National Mortgage Association Fixed Rate       Pass-Through Certificates:
5.5%, 1-1-17		1,496		1,505,103
6.0%, 1-1-18		447		454,628
5.5%, 2-1-18		471		473,959
5.5%, 3-1-18		2,189		2,199,611
5.5%, 4-1-18		1,110		1,112,429
5.0%, 5-1-18		1,451		1,435,424
5.0%, 10-1-18		1,426		1,410,329
5.5%, 9-1-19		374		375,514
5.5%, 2-1-24		554		552,428
6.0%, 8-1-29		443		449,786
7.0%, 11-1-31		212		221,926
6.5%, 2-1-32	195			202,603
6.5%, 2-1-32		157		162,211
6.5%, 2-1-32		134		139,218
7.0%, 2-1-32		272		285,323
7.0%, 3-1-32		377		396,032
6.5%, 4-1-32		83		85,167
6.5%, 5-1-32		156		162,262
6.5%, 5-1-32		93		95,178
6.5%, 7-1-32		725		752,241
6.0%, 9-1-32		159		161,582
6.5%, 9-1-32		93		95,396
6.0%, 10-1-32		1,045		1,061,928
6.0%, 10-1-32		1,031		1,049,456
6.5%, 10-1-32		70		72,434
6.0%, 11-1-32		899		915,235
6.0%, 11-1-32		526		535,103
6.0%, 3-1-33		1,355		1,379,032
6.0%, 3-1-33		1,251		1,273,111
6.0%, 3-1-33		884		899,884
6.0%, 3-1-33		263		267,976
5.5%, 4-1-33		1,806		1,791,714
5.5%, 5-1-33		579		574,141
5.5%, 5-1-33		308		305,760
6.0%, 6-1-33		1,913		1,935,379
6.0%, 6-1-33		915		926,196
6.5%, 8-1-33		49		50,239
6.0%, 10-1-33		316		319,631
5.0%, 11-1-33		1,799		1,743,104
6.0%, 12-1-33		529		536,088
5.0%, 1-1-34		1,732		1,677,402
5.5%, 1-1-34		895		887,999
5.5%, 1-1-34		722		715,583
5.5%, 2-1-34		3,650		3,611,219
5.0%, 3-1-34		1,018		986,279
5.0%, 3-1-34		421		407,768
5.5%, 3-1-34		2,481		2,463,097
5.5%, 4-1-34		2,070		2,055,754
5.5%, 4-1-34		1,711		1,696,169
5.5%, 4-1-34		660		653,781
5.0%, 5-1-34		196		189,461
5.5%, 7-1-34		1,914		1,900,723
6.0%, 8-1-34		668		675,121
5.5%, 9-1-34		1,419		1,407,176
6.0%, 9-1-34		929		938,050
6.5%, 9-1-34		1,209		1,239,557
5.5%, 10-1-34		2,083		2,065,981
5.5%, 11-1-34		764		757,645
6.0%, 11-1-34		434		438,762
6.5%, 11-1-34		88		89,968
6.0%, 12-1-34		5,136		5,188,159
5.5%, 1-1-35		724		717,565
4.5%, 2-1-35		479		451,190
5.5%, 2-1-35		2,635		2,623,042
5.5%, 2-1-35		2,050		2,033,472
5.5%, 2-1-35		1,263		1,252,202
6.5%, 3-1-35		1,343		1,381,012
5.0%, 4-1-35		1,000		965,938
6.0%, 4-1-35		1,781		1,795,638
5.141%, 6-1-35**		1,150		1,146,024
6.0%, 6-1-35		2,923		2,951,950
4.656%, 7-1-35**		1,375		1,371,327
5.0%, 7-1-35		855		827,205
5.5%, 7-1-35		848		839,534
5.5%, 10-1-35		1,786		1,771,137
5.5%, 10-1-35		999		990,650
5.5%, 2-1-36		1,762		1,736,405
6.5%, 2-1-36		723		738,269
6.5%, 6-1-36		1,331		1,357,909
6.0%, 8-1-36		2,132		2,148,263
6.0%, 11-1-36		2,433		2,451,201
Government National Mortgage Association Fixed       Rate Pass-Through Certificates:
7.875%, 5-15-17		642		653,114
6.25%, 7-15-24		286		293,607
5.5%, 3-16-32		4,575		4,595,011
5.0%, 7-15-34		959		934,071
5.5%, 12-15-34		1,143		1,137,852
5.5%, 12-15-34		668		664,977
5.0%, 1-15-35		1,922		1,870,855
5.5%, 4-1-35		4,000		3,977,500
6.0%, 4-1-37		1,875		1,899,023
Government National Mortgage Association Agency       REMIC/CMO (Interest Only):
1.15857%, 3-16-34**		7,776		341,471
0.87693%, 7-16-40**		4,291		150,457
0.30261%, 3-16-42**	18,432			254,979
0.94562%, 6-17-45**	19,829			1,071,541
United States Department of Veterans Affairs,       Guaranteed REMIC Pass-Through Certificates,       Vendee Mortgage Trust:       1995-1 Class 1,
7.21129%, 2-15-25**		239		248,925
1995-1 Class 2,
7.7925%, 2-15-25		79		83,040
				133,114,605
TOTAL UNITED STATES GOVERNMENT       AGENCY OBLIGATIONS - 41.62%			$	133,810,901
(Cost: $135,723,591)
SHORT-TERM SECURITIES
Capital Equipment - 2.18%
Caterpillar Inc.,
5.3%, 4-9-07		7,000		6,991,756
Finance Companies - 1.64%
ED&F Man Treasury Management PLC       (Rabobank Nederland),
5.35%, 4-5-07		5,290		5,286,855
Utilities - Telephone - 1.66%
AT&T Inc.
5.41%, 4-2-07		5,344		5,343,197
TOTAL SHORT-TERM SECURITIES - 5.48%			$	17,621,808
(Cost: $17,621,808)
TOTAL INVESTMENT SECURITIES - 103.48%			$	332,691,072
(Cost: $336,192,050)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (3.48%)				(11,187,614	)
NET ASSETS - 100.00%			$	321,503,458

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*Not shown due to rounding.

**Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2007.

(A)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been determined to be liquid under guidelines established by the Board of Trustees. At March 31, 2007, the total value of these securities amounted to $30,642,590, or 9.53% of net assets.

(B)Illiquid security. At March 31, 2007, the total value of illiquid securities amounted to $13,099,353, or 4.07% of net assets.
(C)Securities serve as collateral for the following open futures contracts at March 31, 2007. (See Note 7 to financial statements):
	Description	Type	Number of Contracts	Expiration Date	Market Value	Unrealized Appreciation (Depreciation			)
	United States 5 Year       Treasury Note	Short	7	6-29-07	$ 740,578		$	2,012
	United States 10 Year       Treasury Note	Short	108	6-20-07	11,677,500		(11,509		)
					$12,418,078		$	(9,497	)
See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY MORTGAGE SECURITIES FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $336,192) (Notes 1 and 3)	$	332,691
Receivables:
Interest		1,489
Investment securities sold		991
Fund shares sold		969
Variation margin receivable		14
Prepaid and other assets		54
Total assets		336,208
LIABILITIES
Payable for investment securities purchased		13,599
Payable to Fund shareholders		515
Dividends payable		151
Accrued management fee (Note 2)		136
Accrued shareholder servicing (Note 2)		105
Accrued service fee (Note 2)		72
Due to custodian		43
Accrued distribution fee (Note 2)		19
Accrued accounting services fee (Note 2)		8
Other		57
Total liabilities		14,705
Total net assets	$	321,503
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	325,953
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		–
Accumulated undistributed net realized loss on investment transactions		(940	)
Net unrealized depreciation in value of investments		(3,510	)
Net assets applicable to outstanding units of capital	$	321,503
Net asset value per share (net assets divided by shares outstanding):
Class A		$10.59
Class B		$10.59
Class C		$10.59
Class Y		$10.59
Capital shares outstanding:
Class A		26,208
Class B		1,085
Class C		1,821
Class Y		1,246

See Notes to Financial Statements.

Statement of Operations
      IVY MORTGAGE SECURITIES FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	17,780
Expenses (Note 2):
Investment management fee		1,472
Shareholder servicing:
Class A		741
Class B		58
Class C		59
Class Y		14
Service fee:
Class A		564
Class B		27
Class C		47
Class Y		23
Distribution fee:
Class A		75
Class B		81
Class C		140
Accounting services fee		97
Custodian fees		26
Audit fees		24
Legal fees		7
Other		153
Total expenses		3,608
Net investment income		14,172
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net loss on securities		(153	)
Realized net gain on futures		42
Realized net loss on investments		(111	)
Unrealized appreciation in value of securities during the period		3,643
Unrealized depreciation in value of futures contracts during the period		(9	)
Unrealized appreciation in value of investments during the period		3,634
Net gain on investments		3,523
Net increase in net assets resulting from operations	$	17,695

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY MORTGAGE SECURITIES FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	14,172		$	11,152
Realized net loss on investments		(111	)		(761	)
Unrealized appreciation (depreciation)		3,634			(5,078	)
Net increase in net assets resulting from operations		17,695			5,313
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(12,512	)		(9,905	)
Class B		(422	)		(323	)
Class C		(765	)		(623	)
Class Y		(473	)		(301	)
Realized gains on investment transactions:
Class A		(–	)		(–	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(–	)		(–	)
		(14,172	)		(11,152	)
Capital share transactions (Note 5)		38,091			72,999
Total increase		41,614			67,160
NET ASSETS
Beginning of period		279,889			212,729
End of period	$	321,503		$	279,889
Undistributed net investment income (loss)	$	–		$	(–	)*

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 210 - 213.

See Notes to Financial Statements.

Financial Highlights
      IVY MORTGAGE SECURITIES FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended September 30,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	10.44		$	10.68		$	10.96		$	10.97		$	11.07		$	10.99
Income (loss) from       investment operations:
Net investment income		0.51			0.48			0.49			0.25			0.59			0.70
Net realized and unrealized             gain (loss) on investments		0.15			(0.24	)		(0.27	)		0.03			(0.12	)		0.11
Total from investment operations		0.66			0.24			0.22			0.28			0.47			0.81
Less distributions from:
Net investment income		(0.51	)		(0.48	)		(0.49	)		(0.25	)		(0.57	)		(0.72	)
Capital gains		(0.00	)		(0.00	)		(0.01	)		(0.04	)		(0.00	)		(0.00	)
Tax return of capital		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.01	)
Total distributions		(0.51	)		(0.48	)		(0.50	)		(0.29	)		(0.57	)		(0.73	)
Net asset value, end of period	$	10.59		$	10.44		$	10.68		$	10.96		$	10.97		$	11.07
Total return(1)		6.52	%		2.24	%		2.12	%		2.70	%		4.19	%(2)		7.88	%
Net assets, end of period       (in millions)	$278			$243			$188			$134			$91			$67
Ratio of expenses to average       net assets including       reimbursement		1.14	%		1.05	%		0.95	%		1.05	%(3)(4)		0.97	%		0.95	%
Ratio of net investment income       to average net assets       including reimbursement		4.90	%		4.51	%		4.59	%		4.56	%(3)(4)		5.27	%		6.24	%
Ratio of expenses to average       net assets excluding       reimbursement		1.14	% (5)		1.16	%		1.23	%		1.38	%(3)(4)		1.12	%		1.21	%
Ratio of net investment income       to average net assets       excluding reimbursement		4.90	% (5)		4.40	%		4.31	%		4.22	%(3)(4)		5.12	%		5.98	%
Portfolio turnover rate		121	%		154	%		200	%		57	%		83	%		99	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.

(2)Advantus Capital reimbursed the Fund for losses related to certain investment trades. With reimbursed losses, the total return for Class A, for the year ended September 30, 2003, would have been 4.28%.

(3)Annualized.

(4)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown reflect a blended rate that includes income and expenses for those Class B and Class C shares before October 1, 2003 up to the time of merger. Expenses for Class A shares before and after the merger were limited to 0.95% of average net assets.

(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY MORTGAGE SECURITIES FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	10.44		$	10.68		$	10.96		$	10.87
Income (loss) from       investment operations:
Net investment income		0.40			0.36			0.37			0.12
Net realized and unrealized             gain (loss) on investments		0.15			(0.24	)		(0.27	)		0.13
Total from investment operations		0.55			0.12			0.10			0.25
Less distributions from:
Net investment income		(0.40	)		(0.36	)		(0.37	)		(0.12	)
Capital gains		(0.00	)		(0.00	)		(0.01	)		(0.04	)
Total distributions		(0.40	)		(0.36	)		(0.38	)		(0.16	)
Net asset value, end of period	$	10.59		$	10.44		$	10.68		$	10.96
Total return		5.45	%		1.12	%		0.92	%		2.32	%
Net assets, end of period (in millions)	$12			$11			$7			$1
Ratio of expenses to average net assets		2.16	%		2.16	%		2.16	%		1.89	%(2)
Ratio of net investment income       to average net assets		3.88	%		3.41	%		3.29	%		3.59	%(2)
Portfolio turnover rate		121	%		154	%		200	%		57	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY MORTGAGE SECURITIES FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	10.44		$	10.68		$	10.96		$	10.87
Income (loss) from       investment operations:
Net investment income		0.42			0.38			0.38			0.12
Net realized and unrealized             gain (loss) on investments		0.15			(0.24	)		(0.27	)		0.13
Total from investment operations		0.57			0.14			0.11			0.25
Less distributions from:
Net investment income		(0.42	)		(0.38	)		(0.38	)		(0.12	)
Capital gains		(0.00	)		(0.00	)		(0.01	)		(0.04	)
Total distributions		(0.42	)		(0.38	)		(0.39	)		(0.16	)
Net asset value, end of period	$	10.59		$	10.44		$	10.68		$	10.96
Total return		5.69	%		1.34	%		1.05	%		2.32	%
Net assets, end of period (in millions)		$19			$19			$12			$2
Ratio of expenses to average net assets		1.93	%		1.93	%		2.03	%		1.86	%(2)
Ratio of net investment income       to average net assets		4.11	%		3.63	%		3.41	%		3.61	%(2)
Portfolio turnover rate		121	%		154	%		200	%		57	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY MORTGAGE SECURITIES FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	10.44		$	10.68		$	10.96		$	10.87
Income (loss) from       investment operations:
Net investment income		0.52			0.48			0.48			0.15
Net realized and unrealized             gain (loss) on investments		0.15			(0.24	)		(0.27	)		0.13
Total from investment operations		0.67			0.24			0.21			0.28
Less distributions from:
Net investment income		(0.52	)		(0.48	)		(0.48	)		(0.15	)
Capital gains		(0.00	)		(0.00	)		(0.01	)		(0.04	)
Total distributions		(0.52	)		(0.48	)		(0.49	)		(0.19	)
Net asset value, end of period	$	10.59		$	10.44		$	10.68		$	10.96
Total return		6.66	%		2.26	%		1.95	%		2.56	%
Net assets, end of period (in millions)	$13			$7			$6			$3
Ratio of expenses to average net assets		1.00	%		1.03	%		1.12	%		1.09	%(2)
Ratio of net investment income       to average net assets		5.04	%		4.53	%		4.41	%		4.38	%(2)
Portfolio turnover rate		121	%		154	%		200	%		57	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

Manager's Discussion of
Ivy Pacific Opportunities Fund
      March 31, 2007


Below, Frederick Jiang, CFA, CPA, portfolio manager of the Ivy Pacific Opportunities Fund, discusses positioning, performance and results for the fiscal year ended March 31, 2007. He has managed the Fund for two years and has 12 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
	X		LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund rose 22.60 percent (Class A shares at net asset value) for the fiscal year. This was less than the 23.55 percent increase of the Morgan Stanley Capital International Asia Free (Excluding Japan) Index (an index that generally reflects the performance of the Asian stock markets). The Lipper Pacific Ex-Japan Funds Universe Average (reflecting the universe of funds with similar investment objectives) increased 23.98 percent for the same period.

We believe that specific stock selection was the primary factor affecting our relative results. During the period, many of our stock selections in the Greater China Region (China, Hong Kong, Taiwan and Singapore) served us well, as we recorded strong relative returns in those markets. Some, however, did not. We generally benefited from our stock selections in financials, consumer stables and materials more than other sectors.

Liquidity abundant

The biggest surprise for Asian equity markets during the fiscal period was that the rising inflation and interest rate profile in developed economies did not slow the money flow into emerging markets, as typically seen in previous economic cycles. Liquidity remained abundant in the Asian market throughout the year, so much that some local markets reported record-high inflows including China and India, the two largest and fastest growing economies in the region. These delivered strong positive returns relative to the global market. Smaller markets such as the Philippines and Malaysia also recorded strong capital inflows and robust performance for investors. Only one market, Pakistan, recorded a negative return in the fiscal year, after rising exponentially in the previous year. We believe that the strong capital inflow into Asia was the result of high economic growth and cheap stock valuations in the region.

Returns not tied to regional politics

Another surprise was that emerging market investors were not discouraged by the political turmoil and capital controls initiated in Thailand. We believe that foreign investors now have a better understanding and higher confidence in the Asian market, and realize that problems in one specific country no longer easily spread to the rest of the region.

Over the past 12 months, Asia Pacific markets continued to be heavily influenced by strong Chinese macroeconomic factors. China managed to grow its economy at an accelerated speed. The reported 2006 GDP growth rate of 10.5 percent was once again much higher than market expectations. Strong Chinese demand boosted export growth throughout Asia. At the same time, Chinese currency appreciation helped to attract more capital inflow into Asian markets. Most Asian currencies have since appreciated against major world currencies, adding to the positive return of Asian equities when valued in U.S. dollar terms.

The political situation in the region remained relatively stable in the fiscal year, with the exception of Thailand and Taiwan, where political uncertainties reduced positive equity returns. Indonesia and the Philippines saw the biggest improvement in the region as a return to political stability and a more balanced fiscal situation helped reduce inflation and interest rate levels in both countries. As a result, the two markets gained 36 percent and 56 percent, respectively, in U.S. dollar terms, outperforming the regional markets by a large margin.

Great consumer demand continues

Consistent with the last two years, we continued to focus on selecting companies in the region that we felt would likely benefit from growing demand in China and India. While many investors were worried about overcapacity and the risk of a "hard landing" in the Chinese economy, we continued to believe in the Chinese consumption story and therefore added more names to our portfolio when the market corrected in May and June 2006. We also did very well in Singapore and Taiwan, the other two markets which we view as part of the Greater China Region. We reduced our positions in India when we believed those equity valuations were stretched in the market. This strategy served us well as the Indian market underperformed the regional market. We also focused on selecting undervalued stocks where we could identify stock prices that we felt were much lower than intrinsic values. This strategy worked well as most of the positive portfolio return was derived from individual stock selection during the fiscal year .

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Country	Sector	Change in weighting
Kookmin Bank	South Korea	Financial	Decreased
Samsung Electronics Co., Ltd.	South Korea	Industrial	Decreased
Xinhua Finance Media, ADR	China	Media	New to Top 10
iShares MSCI Singapore Index Fund	Singapore	Exchange Traded Fund	New to Top 10
Wistron Corporation	Taiwan	Information Technology	New to Top 10
Korea Investment Holdings Co., Ltd.	South Korea	Financial	New to Top 10
China Mobile Limited	China	Telecommunications	New to Top 10
Taiwan Semiconductor Manufacturing      Company Ltd.	Taiwan	Information Technology	Decreased
Keppel Land Limited	Singapore	Financial	New to Top 10
AU Optronics Corp., ADR	Taiwan	Information Technology	New to Top 10

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

We emphasized the energy, materials and industrials sectors throughout the year, as we believed they would benefit most from the fast-growing Chinese and Indian economies. We underweighted the telecommunication services and utilities sectors, because we believed those sectors were less exposed to strong final demand growth in the region. We also were underweight the consumer discretionary and the financial sectors early in the period, but subsequently increased weightings in these sectors toward the end of the fiscal year.

Our outlook

We expect regional demand to continue to be healthy in the new fiscal year, so we are likely to continue to focus on sectors that performed well over the last year. For country allocation, we may increase positions in China and India if we see a healthy correction in these two markets. We believe that these two markets still have great potential as we believe that their economies are likely to remain robust over the next few years. We may choose to raise our low exposure to South Korea because of what we feel are attractively low valuations and expectations for improved earnings growth momentum. Overall, we remain generally bullish on the Asian market, a belief that we feel has been well supported by rapid economic growth, reasonable valuations, high dividend yields and healthy corporate balance sheets relative to other international markets. In addition, we remain bullish on Asian currencies as we believe they are likely to correlate with the Chinese Yuan and outperform the U.S. Dollar. Therefore, we are li kely to maintain an unhedged position on our exposure to Asian currencies.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Pacific Opportunities Fund, Class A Shares (1)	$	21,528
Morgan Stanley Capital International Asia Free (excluding Japan) Index	$	24,975
Lipper Pacific Ex-Japan Funds Universe Average	$	31,309

		IVY PACIFIC OPPORTUNITIES FUND,	MORGAN STANLEY CAPITAL INTERNATIONAL ASIA FREE (EXCLUDING JAPAN)	LIPPER PACIFIC EX-JAPAN FUNDS
		CLASS A SHARES	INDEX	UNIVERSE AVERAGE
DEC	1997	9,425	10,000	10,000
DEC	1998	7,487	9,221	9,588
DEC	1999	10,985	15,185	16,445
DEC	2000	8,981	9,836	11,399
DEC	2001	8,146	9,459	11,856
DEC	2002	7,225	8,671	11,027
DEC	2003	11,044	12,745	15,784
MARCH	2004	11,577	13,747	16,970
MARCH	2005	12,862	15,238	18,931
MARCH	2006	17,559	20,215	25,253
MARCH	2007	21,528	24,975	31,309

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y	Advisor Class (3)
1-year period ended 3-31-07	15.56%	17.33%	21.68%	22.95%	23.33%
5-year period ended 3-31-07	18.44%	18.36%	18.85%	–	20.28%
10-year period ended 3-31-07	5.69%	5.22%	5.42%	–	–
Since inception of Class (4) through 3-31-07	–	–	–	29.87%	9.57%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)Advisor Class shares are no longer available for investment.

(4)7-24-03 for Class Y shares and 2-10-98 for Advisor Class shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

SHAREHOLDER SUMMARY OF IVY PACIFIC OPPORTUNITIES FUND

Portfolio Highlights

On March 31, 2007, Ivy Pacific Opportunities Fund had net assets totaling $437,129,909 invested in a diversified portfolio of:

94.07%	Foreign Common Stocks
3.70%	Cash and Cash Equivalents
2.23%	Domestic Common Stocks

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund was invested by country and by industry, respectively, as follows:

Country Weightings

China	$	19.08
South Korea	$	18.46
Taiwan	$	17.75
Hong Kong	$	12.58
Singapore	$	8.07
Other Pacific Basin (1)	$	6.92
India	$	5.78
Other (2)	$	4.36
Cash and Cash Equivalents	$	3.70
Malaysia	$	3.30

(1)Includes $2.28 Australia, $1.92 Indonesia, $0.79 Pakistan, $0.24 Philippines and $1.69 Thailand.
(2)Includes $0.95 Bermuda, $1.18 United Kingdom and $2.23 United States.

Sector Weightings

Financial Services Stocks	$	20.54
Technology Stocks	$	14.42
Capital Goods Stocks	$	9.76
Raw Materials Stocks	$	8.35
Business Equipment and Services Stocks	$	7.81
Miscellaneous Stocks	$	6.65
Utilities Stocks	$	6.44
Shelter Stocks	$	6.22
Multi-Industry Stocks	$	4.76
Energy Stocks	$	4.64
Cash and Cash Equivalents	$	3.70
Consumer Nondurables Stocks	$	3.64
Retail Stocks	$	3.07

The Investments of Ivy Pacific Opportunities Fund
March 31, 2007
COMMON STOCKS		Shares		Value
Australia - 2.28%
Macquarie Bank Limited (A)		35,000	$	2,343,358
Macquarie Infrastructure Group (A)		600,000		1,864,168
Rio Tinto Limited (A)		90,000		5,738,871
				9,946,397
Bermuda - 0.95%
Enerchina Holdings Limited (A)	56,718,000			4,137,616
China - 19.08%
Actions Semiconductor Co., Ltd.*		220,800		1,630,608
Beijing Enterprises Holdings Limited (A)		1,200,000		3,056,249
Canadian Solar Inc.*		250,000		2,441,250
China GrenTech Corporation Limited, ADR*		110,924		1,250,113
China Medical Technologies, Inc., ADR*		150,000		3,456,750
China Mobile Limited (A)		700,000		6,365,265
China Oilfield Services Limited (A)		7,300,000		5,867,281
China Petroleum & Chemical Corporation, H Shares (A)		7,106,000		6,011,475
China Shenhua Energy Company Limited, H Shares (A)		888,000		2,147,975
China Shenhua Energy Company Limited, H shares (A)(B)		1,200,000		2,902,668
China Yurun Food Group Limited (A)		5,000,000		5,445,703
Heng Tai Consumables Group Limited (A)*	18,000,000			3,317,335
Industrial and Commercial Bank of China Limited,       H Shares (A)(B)*		8,858,000		4,965,514
KongZhong Corporation, ADR*		128,900		904,878
Mindray Medical International Limited, ADR*		85,000		2,023,850
PetroChina Company Limited, H Shares (A)		4,300,000		5,101,555
PetroChina Company Limited, H Shares (A)(C)		1,526,000		1,810,459
SINA Corporation*		144,570		4,853,215
Shanghai Forte Land Co., Ltd., H Shares (A)		5,000,000		2,092,532
Tencent Holdings Limited (A)		1,600,000		5,221,732
Vimicro International Corporation, ADR*		168,700		1,090,645
Wah Sang Gas Holdings Limited (A)(D)*		736,000		15,071
Xinhua Finance Media, ADR*		700,000		7,679,000
ZTE Corporation, H Shares (A)		800,000		3,757,599
				83,408,722
Hong Kong - 12.58%
Agile Property Holdings Limited (A)		2,380,000		2,345,428
Anhui Conch Cement Company Limited, H Shares (A)		54,000		192,475
Cheung Kong (Holdings) Limited (A)		450,000		5,695,911
China Agri-Industries Holdings Limited (A)(B)*		1,505,000		1,325,194
China BlueChemical Ltd., H Shares (A)*		7,604,000		3,328,301
China Merchants Bank Co., Limited (A)(B)*		2,000,000		4,034,044
DVN (Holdings) Limited (A)*		5,270,000		1,544,545
DVN (Holdings) Limited (A)(B)*		3,500,000		1,025,789
Hunan Nonferrous Metals Corporation Limited (A)*		3,516,000		2,335,450
Hutchison Whampoa Limited, Ordinary Shares (A)		370,000		3,558,648
Intime Department Store (Group) Company Limited (A)(B)*		650,000		527,420
Lee & Man Paper Manufacturing Limited (A)		1,658,000		3,929,885
Melco International Development Limited (A)		2,000,000		3,598,899
Neo-Neon Holdings Limited (A)*		1,834,500		3,423,179
Panva Gas Holdings Limited (A)*		3,694,000		2,032,917
REXCAPITAL Financial Holdings Limited (A)*	49,575,000			4,758,591
Shimao Property Holdings Limited (A)*		2,429,000		4,812,302
Sinolink Worldwide Holdings Limited (A)	15,000,000			3,263,582
Sun Hung Kai Properties Limited (A)		283,000		3,274,230
				55,006,790
India - 5.78%
Bharat Heavy Electricals Limited (A)		100,000		5,202,692
Gujarat Ambuja Cements Limited (A)		1,699,734		4,172,590
ICICI Bank Limited, ADR		118,050		4,338,337
Idea Cellular Limited (A)(B)*		567,707		1,235,594
Infosys Technologies Limited (A)		120,000		5,573,174
Satyam Computer Services Limited (A)		440,000		4,761,394
				25,283,781
Indonesia - 1.92%
PT Bank Rakyat Indonesia (A)		4,000,000		2,213,699
PT Perusahaan Gas Negara (Persero) Tbk (A)		1,500,000		1,536,986
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia       Tbk., Series B Shares (A)		4,300,000		4,641,644
				8,392,329
Malaysia - 3.30%
Genting Berhad (A)		360,000		4,138,829
IOI Corporation Berhad (A)		368,200		2,353,498
LION DIVERSIFIED HOLDINGS BERHAD (A)		1,700,000		3,859,725
Malayan Banking Berhad (A)		1,100,000		4,072,307
				14,424,359
Pakistan - 0.79%
Oil and Gas Development Company Limited, GDR (B)		175,000		3,435,250
Philippines - 0.24%
Filinvest Land, Inc. (A)(B)*	30,000,000			1,044,560
Singapore - 8.07%
DBS Group Holdings Ltd (A)		266,000		3,752,035
iShares MSCI Singapore Index Fund		573,260		7,079,761
K-REIT Asia (A)		1,205,940		2,543,590
Keppel Corporation Limited (A)		362,540		4,540,263
Keppel Land Limited (A)		1,000,000		6,261,741
SembCorp Industries Ltd (A)		1,424,000		4,786,870
Singapore Telecommunications Limited (A)		1,209,350		2,614,552
Wilmar International Limited (A)		2,050,000		3,715,849
				35,294,661
South Korea - 18.46%
Daegu Bank, Ltd. (A)*		310,000		5,634,566
Daelim Industrial Co., Ltd. (A)		60,000		5,746,173
Dongkuk Steel Mill Co., Ltd. (A)*		190,000		5,250,850
HYUNDAI MOBIS (A)		46,190		3,966,998
Hana Financial Group, Inc. (A)		100,000		5,176,446
Hynix Semiconductor Inc. (A)*		71,300		2,455,485
Hyundai Department Store Co., Ltd. (A)		40,000		3,358,844
Hyundai Motor Company (A)		36,700		2,578,518
Kookmin Bank (A)		151,380		13,580,434
Korea Investment Holdings Co., Ltd. (A)		125,000		6,576,849
Kyeryong Construction Industrial Co. Ltd (A)		102,500		4,156,436
LG Chem, Ltd. (A)		85,000		4,278,008
SK Telecom Co., Ltd. (A)		15,000		3,053,253
Samsung Electronics Co., Ltd. (A)		20,040		11,992,474
Shinsegae Co., Ltd. (A)		5,000		2,869,898
				80,675,232
Taiwan - 17.75%
AU Optronics Corp., ADR		436,580		6,243,094
Asustek Computer Inc. (A)		653,500		1,540,342
Cathay Financial Holding Co., Ltd. (A)		2,145,662		4,454,460
Chunghwa Telecom Co., Ltd., ADR		228,310		4,547,935
E.Sun Financial Holding Co., Ltd. (A)		5,100,000		3,059,199
Far Eastern Textile Ltd. (A)		3,816,000		3,286,474
Foxconn Technology Co., Ltd. (A)		335,900		3,811,509
Fubon Financial Holding Co., Ltd. (A)		5,573,000		5,018,597
High Tech Computer Corp. (A)		330,000		5,085,821
Himax Technologies, Inc., ADR*		500,000		2,682,500
Hon Hai Precision Ind. Co., Ltd. (A)		744,000		4,991,176
MediaTek Incorporation (A)		380,000		4,363,592
Nan Ya Plastics Corporation (A)		2,214,000		4,148,072
Nan Ya Printed Circuit Board Corporation (A)		260,000		1,720,658
TSRC Corporation (A)		3,195,000		2,495,792
Taiwan Fertilizer Co., Ltd. (A)		2,220,000		3,689,714
Taiwan Semiconductor Manufacturing Company Ltd. (A)		3,077,367		6,314,313
Wistron Corporation (A)		4,634,470		7,030,412
Yuanta Core Pacific Securities Co., Ltd. (A)		4,000,000		3,123,414
				77,607,074
Thailand - 1.69%
Bangkok Bank Public Company Limited (A)		552,200		1,782,308
Banpu Public Company Limited, Registered Shares (A)		650,000		3,750,357
PTT Public Company Limited (A)		315,000		1,871,465
				7,404,130
United Kingdom - 1.18%
Standard Chartered PLC (A)		180,350		5,133,402
United States - 2.23%
Comtech Group, Inc.*		220,000		3,843,400
streetTRACKS Gold Trust*		90,000		5,918,400
				9,761,800
TOTAL COMMON STOCKS - 96.30%			$	420,956,103
(Cost: $338,641,333)

PUT OPTIONS - 0.04%		Number of Contracts
Industrial and Commercial Bank of China Limited,       H Shares, June 3.59,
Expires 6-4-07	71,996,000			$	147,429
(Cost: $1,469,113)
SHORT-TERM SECURITIES		Principal Amount in Thousands
Beverages - 0.96%
Concentrate Manufacturing Company of Ireland       (The) (PepsiCo, Inc.),
5.25%, 4-5-07		$	4,200		4,197,550
Utilities - Telephone - 2.14%
AT&T Inc.,
5.41%, 4-2-07			9,370		9,368,592
TOTAL SHORT-TERM SECURITIES - 3.10%				$	13,566,142
(Cost: $13,566,142)
TOTAL INVESTMENT SECURITIES - 99.44%				$	434,669,674
(Cost: $353,676,588)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.56%					2,460,235
NET ASSETS - 100.00%				$	437,129,909

Notes to Schedule of Investments

Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.

*No dividends were paid during the preceding 12 months.

(A)Listed on an exchange outside the United States.

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been determined to be liquid under guidelines established by the Board of Trustees. At March 31, 2007, the total value of these securities amounted to $20,496,033, or 4.69% of net assets.

(C)Illiquid security. At March 31, 2007, the total value of illiquid securities amounted to 0.41% of net assets.

(D)Securities valued in good faith by the Valuation Committee appointed by the Board of Trustees.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY PACIFIC OPPORTUNITIES FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $353,677) (Notes 1 and 3)	$	434,670
Cash		18
Cash denominated in foreign currencies (cost - $1,886)		1,890
Receivables:
Fund shares sold		1,405
Dividends and interest		798
Prepaid and other assets		52
Total assets		438,833
LIABILITIES
Payable to Fund shareholders		847
Accrued management fee (Note 2)		356
Accrued shareholder servicing (Note 2)		159
Accrued service fee (Note 2)		90
Accrued distribution fee (Note 2)		33
Accrued accounting services fee (Note 2)		8
Accrued administrative fee (Note 2)		4
Other		206
Total liabilities		1,703
Total net assets	$	437,130
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	338,632
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(678)
Accumulated undistributed net realized gain on investment transactions		18,187
Net unrealized appreciation in value of investments		80,989
Net assets applicable to outstanding units of capital	$	437,130
Net asset value per share (net assets divided by shares outstanding):
Class A		$16.91
Class B		$15.49
Class C		$15.73
Class Y		$17.03
Advisor Class		$16.54
Capital shares outstanding:
Class A		22,202
Class B		1,279
Class C		2,140
Class Y		476
Advisor Class		5

See Notes to Financial Statements.

Statement of Operations
      IVY PACIFIC OPPORTUNITIES FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends (net of foreign withholding taxes of $723)	$	4,707
Interest and amortization		718
Total income		5,425
Expenses (Note 2):
Investment management fee		3,181
Shareholder servicing:
Class A		1,057
Class B		100
Class C		96
Class Y		10
Advisor Class		–	*
Service fee:
Class A		625
Class B		38
Class C		62
Class Y		12
Distribution fee:
Class A		56
Class B		113
Class C		185
Custodian fee		313
Accounting services fee		77
Administrative fee		32
Audit fees		18
Legal fees		9
Other		209
Total expenses		6,193
Net investment loss		(768	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		26,997
Realized net loss on foreign currency transactions		(540	)
Realized net gain on investments		26,457
Unrealized appreciation in value of investments during the period		41,957
Net gain on investments		68,414
Net increase in net assets resulting from operations	$	67,646

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY PACIFIC OPPORTUNITIES FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)	$	(768	)	$	171
Realized net gain on investments		26,457			10,443
Unrealized appreciation		41,957			32,645
Net increase in net assets resulting from operations		67,646			43,259
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(189	)		(427	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(18	)		(14	)
Advisor Class		(–	)*		(1	)
Realized gains on investment transactions:
Class A		(11,514	)		(977	)
Class B		(669	)		(71	)
Class C		(1,077	)		(102	)
Class Y		(239	)		(19	)
Advisor Class		(3	)		(1	)
		(13,709	)		(1,612	)
Capital share transactions (Note 5)		159,167			103,589
Total increase		213,104			145,236
NET ASSETS
Beginning of period		224,026			78,790
End of period	$	437,130		$	224,026
Undistributed net investment loss	$	(678	)	$	(244	)

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 229 - 233.

See Notes to Financial Statements.

Financial Highlights
      IVY PACIFIC OPPORTUNITIES FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	14.32		$	10.61		$	9.55		$	9.11		$	5.96		$	6.72
Income (loss) from       investment operations:
Net investment             income (loss)		(0.02	)		0.02	(1)		(0.07	)		0.00		(0.02		)		0.01	(1)
Net realized and unrealized             gain (loss) on investments		3.23			3.83	(1)		1.13			0.44			3.17		(0.77		)(2)
Total from investment       operations		3.21			3.85			1.06			0.44			3.15		(0.76		)
Less distributions from:
Net investment income		(0.01	)		(0.04	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Capital gains		(0.61	)		(0.10	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Total distributions		(0.62	)		(0.14	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Net asset value, end of period	$	16.91		$	14.32		$	10.61		$	9.55		$	9.11		$	5.96
Total return(3)		22.60	%		36.51	%		11.10	%		4.83	%	52.85		%	- -11.31		%(2)
Net assets, end of period       (in millions)	$375			$191			$64			$29			$18			$5
Ratio of expenses to average       net assets including       reimbursement		1.84	%		1.95	%		2.22	%		2.07	%(4)		2.64	%		2.21	%
Ratio of net investment income       (loss) to average net assets       including reimbursement		- -0.14	%		0.24	%		- -0.80	%	- -1.07		%(4)	- -0.39		%		0.20	%
Ratio of expenses to average       net assets excluding       reimbursement		1.84	%(5)		1.95	%(5)		2.22	%(5)		2.07	%(4)(5)		2.73	%		3.52	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		- -0.14	%(5)		0.24	%(5)		- -0.80	%(5)	- -1.07		%(4)(5)	- -0.48		%	- -1.11		%
Portfolio turnover rate		74	%		87	%		87	%		61	%		187	%		16	%

(1)Based on average shares outstanding.

(2)Includes redemption fees added to capital.

(3)Total return calculated without taking into account the sales load deducted on an initial purchase.

(4)Annualized.

(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY PACIFIC OPPORTUNITIES FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	13.29		$	9.91		$	9.01		$	8.61		$	5.75		$	6.56
Income (loss) from       investment operations:
Net investment loss		(0.07	)	(0.06)		(1)	(0.13		)	(0.04		)	(0.06		)	(0.04		)(1)
Net realized and unrealized             gain (loss) on investments		2.88			3.54	(1)		1.03			0.44			2.92		(0.77		)
Total from investment       operations		2.81			3.48			0.90			0.40			2.86		(0.81		)
Less distributions from:
Net investment income	(0.00		)		(0.00	)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Capital gains	(0.61		)		(0.10	)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Total distributions	(0.61		)		(0.10	)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Net asset value, end of period	$	15.49		$	13.29		$	9.91		$	9.01		$	8.61		$	5.75
Total return		21.33	%		35.26	%		9.99	%		4.65	%	49.74		%	- -12.35		%
Net assets, end of period       (in millions)	$20			$11			$6			$6			$6			$3
Ratio of expenses to average       net assets including       reimbursement		2.88	%		2.91	%		3.06	%		2.86	%(2)		3.46	%		2.96	%
Ratio of net investment loss       to average net assets       including reimbursement		- -1.15	%		- -0.51	%	- -1.57		%	- -1.92		%(2)	- -1.15		%	- -0.55		%
Ratio of expenses to average       net assets excluding       reimbursement		2.88	%(3)		2.91	%(3)		3.06	%(3)		2.86	%(2)(3)		3.55	%		4.27	%
Ratio of net investment loss       to average net assets       excluding reimbursement		- -1.15	%(3)		- -0.51	%(3)	- -1.57		%(3)	- -1.92		%(2)(3)	- -1.24		%	- -1.86		%
Portfolio turnover rate		74	%		87	%		87	%		61	%		187	%		16	%

(1)Based on average shares outstanding.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY PACIFIC OPPORTUNITIES FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	13.45		$	10.01		$	9.09		$	8.68		$	5.75		$	6.55
Income (loss) from       investment operations:
Net investment loss		(0.08	)		(0.06	)(1)		(0.09	)	(0.02		)	(0.05		)	(0.03		)(1)
Net realized and unrealized             gain (loss) on investments		2.97			3.60	(1)		1.01			0.43			2.98		(0.77		)
Total from investment operations		2.89			3.54			0.92			0.41			2.93		(0.80		)
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Capital gains		(0.61	)		(0.10	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Total distributions		(0.61	)		(0.10	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Net asset value, end of period	$	15.73		$	13.45		$	10.01		$	9.09		$	8.68		$	5.75
Total return		21.68	%		35.51	%		10.12	%		4.72	%	50.96		%	- -12.21		%
Net assets, end of period       (in millions)	$34			$18			$7			$3			$2			$1
Ratio of expenses to average       net assets including       reimbursement		2.60	%		2.75	%		3.06	%		2.57	%(2)		3.48	%		2.94	%
Ratio of net investment loss       to average net assets       including reimbursement		- -0.87	%		- -0.50	%		- -1.68	%	- -1.59		%(2)	- -1.14		%	- -0.53		%
Ratio of expenses to average       net assets excluding       reimbursement		2.60	%(3)		2.75	%(3)		3.06	%(3)		2.57	%(2)(3)		3.57	%		4.25	%
Ratio of net investment loss       to average net assets       excluding reimbursement		- -0.87	%(3)		- -0.50	%(3)		- -1.68	%(3)	- -1.59		%(2)(3)	- -1.23		%	- -1.84		%
Portfolio turnover rate		74	%		87	%		87	%		61	%		187	%		16	%

(1)Based on average shares outstanding.

(2)Annualized.

(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY PACIFIC OPPORTUNITIES FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended				For the period from 7-24-03(1) to
	2007			2006			2005			3-31-04				12-31-03
Net asset value,       beginning of period	$	14.41		$	10.67		$	9.58			$	9.13		$	6.85
Income (loss) from       investment operations:
Net investment             income (loss)		0.02			0.04	(2)		(0.04	)		(0.00		)	(0.01		)
Net realized and unrealized             gain on investments		3.26			3.87	(2)		1.13				0.45			2.29
Total from investment       operations		3.28			3.91			1.09				0.45			2.28
Less distributions from:
Net investment income		(0.05	)		(0.07	)		(0.00	)		(0.00		)	(0.00		)
Capital gains		(0.61	)		(0.10	)		(0.00	)		(0.00		)	(0.00		)
Total distributions		(0.66	)		(0.17	)		(0.00	)		(0.00		)	(0.00		)
Net asset value, end of period	$	17.03		$	14.41		$	10.67			$	9.58		$	9.13
Total return		22.95	%		36.90	%		11.38	%			4.93	%	33.28		%
Net assets, end of period       (in thousands)	$8,101			$3,790			$1,100				$707			$497
Ratio of expenses to       average net assets       including reimbursement		1.58	%		1.68	%		1.88	%			1.64	%(3)		2.01	%(3)
Ratio of net investment income       (loss) to average net assets       including reimbursement		0.11	%		0.46	%		- -0.47	%		- -0.68		%(3)	- -0.40		%(3)
Ratio of expenses to       average net assets       excluding reimbursement		1.58	%(4)		1.68	%(4)		1.88	%(4)			1.64	%(3)(4)		2.18	%(3)
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		0.11	%(4)		0.46	%(4)		- -0.47	%(4)		- -0.68		%(3)(4)	- -0.57		%(3)
Portfolio turnover rate		74	%		87	%		87	%			61	%		187	%(5)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)There was no waiver of expenses during the period.

(5)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

Financial Highlights
      IVY PACIFIC OPPORTUNITIES FUND
      Advisor Class Shares⁽¹⁾
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended December 31,
	2007			2006			2005		3-31-04				2003			2002
Net asset value,       beginning of period	$	14.01		$	10.38		$	9.28		$	8.85		$	5.81		$	6.59
Income (loss) from       investment operations:
Net investment             income (loss)		0.09			0.14	(2)		(0.01	)	(0.01		)	(0.01		)		0.04	(2)
Net realized and unrealized             gain (loss) on investments		3.15			3.70	(2)		1.11			0.44			3.05		(0.82		)
Total from investment operations		3.24			3.84			1.10			0.43			3.04		(0.78		)
Less distributions from:
Net investment income		(0.10	)		(0.11	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Capital gains		(0.61	)		(0.10	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Total distributions		(0.71	)		(0.21	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Net asset value, end of period	$	16.54		$	14.01		$	10.38		$	9.28		$	8.85		$	5.81
Total return		23.33	%		37.28	%		11.85	%		4.86	%	52.32		%	- -11.84		%
Net assets, end of       period (in thousands)	$89			$76			$64			$58			$55			$34
Ratio of expenses to       average net assets       including reimbursement		1.28	%		1.42	%		1.56	%		1.82	%(3)		2.49	%		1.74	%
Ratio of net investment income       (loss) to average net assets       including reimbursement		0.55	%		1.12	%		- -0.06	%	- -0.88		%(3)	- -0.09		%		0.67	%
Ratio of expenses to       average net assets       excluding reimbursement		1.28	%(4)		1.42	%(4)		1.56	%(4)		1.82	%(3)(4)		2.65	%		3.05	%
Ratio of net investment income       (loss) to average net assets       excluding reimbursement		0.55	%(4)		1.12	%(4)		- -0.06	%(4)	- -0.88		%(3)(4)	- -0.25		%	- -0.64		%
Portfolio turnover rate		74	%		87	%		87	%		61	%		187	%		16	%

(1)See Note 5 to financial statements.

(2)Based on average shares outstanding.

(3)Annualized.

(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Managers' Discussion of
Ivy Real Estate Securities Fund
      March 31, 2007


Ivy Real Estate Securities Fund is subadvised by Advantus Capital Management, Inc.

Below, Joseph R. Betlej, CFA, and Lowell R. Bolken, the Fund's portfolio managers, discuss positioning, performance and results for the fiscal year ended March 31, 2007. Mr. Betlej has managed the Fund since its inception and has 22 years of industry experience. Mr. Bolken has managed the Fund for one year and has 17 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
			LARGE	CAPITALIZATION
X			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund advanced 18.09 percent (Class A shares at net asset value) for the 12 months ended March 31, 2007, less than its benchmark index and less than the average of its peer group. The Dow Jones Wilshire Real Estate Securities Index (an unmanaged group of securities generally representative of the commercial real estate market) climbed 21.96 percent for the fiscal year while the Lipper Real Estate Funds Universe Average (a group of funds with similar investment objectives) rose 22.12 percent.

We are disappointed we did not keep pace with the Fund's benchmark by a significant margin. However, commercial real estate was one of the strongest performing sectors in the overall domestic equity market for the 12-month period ended March 31, 2007, and we benefited from this trend. Investors in real estate stocks enjoyed a rise in occupancy and increased rental rates for most property types. These strong business fundamentals for landlords, as well as merger and acquisition activity, attracted substantial investor interest, even as new residential real estate development sagged and single-family home resales plunged.

Growth outpaced value

We did not do as well as we had hoped because we positioned the portfolio with the expectation that the real estate sector's seven calendar year period of outperformance versus the overall equity market (as measured by the Standard & Poor's 500 Index) would cease. We held more value-oriented stocks in the earlier part of the year with the expectation that the valuation gap between these stocks and the higher growth, higher multiple companies would narrow. Instead, the momentum stocks continued to surge while value languished in the market.

The strength of underlying operating fundamentals for real estate companies continued despite disruptive market influences such as the inverted yield curve in the bond market, a dramatic slowdown in residential real estate, a depreciating dollar and negative geopolitical events. Earnings for real estate companies reflected strong demand for U.S. office, retail, industrial and hotel space.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Change in weighting
Simon Property Group, Inc.	Increased
ProLogis	Decreased
Vornado Realty Trust	Increased
Boston Properties, Inc.	New to Top 10
Host Hotels & Resorts, Inc.	New to Top 10
Public Storage, Inc.	New to Top 10
Archstone-Smith Trust	New to Top 10
Brookfield Properties Corporation	Decreased
Equity Residential	Decreased
AvalonBay Communities, Inc.	New to Top 10

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

Costs constrained new construction

Inflation remained persistent in the overall economy, but was dramatically higher in the real estate market. The cost of steel, concrete, copper and oil-based building materials increased at a multiple factor of the consumer price index. Typically, strength in fundamentals translates into a new wave of development. Today, however, development remains quite restrained as rental rates have not risen enough to make new building at the higher costs feasible. As long as the economy continues to slowly improve, we believe real estate should continue to generate strong rental rate growth without new development ruining the party.

While valuation of real estate stocks has risen dramatically in the past few years, the very favorable financing markets for real estate have brought on a surge of merger and acquisition activity for the public real estate companies. With more than $70 billion of real estate merger activity occurring in calendar year 2006, private market investors voted with their checkbook, suggesting that the public real estate markets were undervalued. The Fund, however, did not participate significantly in this wave of privatizations; many of the companies taken over were weaker operators -- the kind that we typically have underweighted in the portfolio. We were also underweight in the office subsector, which had substantial merger activity. In fact, our results were negatively affected by having a much smaller-than-index position in Equity Office Properties, a company that was the subject of takeover activity.

Hotels, industrial space were points of focus

We positioned the portfolio defensively at the beginning of the fiscal year, reflecting our expectation of a slowing of the economic growth. When it appeared that economic growth would be sustained, we shifted emphasis to what we felt were high quality growth companies operating in supply-constrained markets or in operating niches that would be expected to generate high quality earnings growth.

During the year, hotel and industrial companies were emphasized due to earnings growth potential and individual company stories. Hotel companies are benefiting from the strength of the business traveler and, more specifically, hotel managers are seeing a significant upswing in incentive management fees at this point in the cycle. Industrial companies saw significant increases in occupancy in the past year, allowing for very profitable growth driven by rent increases.

Our outlook

In the coming year, we believe that office companies have the greatest potential for rental increases. Their markets are improving, in our opinion, allowing for increases in rents and declining costs to lease out properties. We also feel that regional mall companies should continue to have strong results as tenants continue to seek space in malls that generate sales growth and serve more affluent consumers.

Supply-constrained markets, such as Southern California, New York and Seattle, continue to be favorites for investment as new development is difficult due to high land and building costs. These markets should maintain the best fundamentals and investor interest, in our view.

We believe that positive performance should continue for these stocks, subject to continued growth in the economy and jobs. Valuations, however, have pushed the high end of historic norms -- news, both positive and negative, can stir emotions of investors, so one should expect volatility going forward. Still, we feel that strong fundamentals should drive these stocks upward in the long run.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. Investment risks associated with real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values. Real estate securities are subject to interest rate risk and, as such, the Fund's net asset value may fall as interest rates rise. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Real Estate Securities Fund, Class A Shares(1)	$	38,491
Dow Jones Wilshire Real Estate Securities Index(2)	$	43,747
Lipper Real Estate Funds Universe Average(2)	$	41,684

		IVY REAL ESTATE SECURITIES FUND,	DOW JONES WILSHIRE REAL ESTATE	LIPPER REAL ESTATE FUNDS
		CLASS A SHARES	SECURITIES INDEX	UNIVERSE AVERAGE
Inception	2/25/99	9,425	10,000	10,000
JULY	1999	9,965	10,582	10,631
JULY	2000	11,448	12,525	12,317
JULY	2001	12,488	14,028	13,663
JULY	2002	14,025	15,283	15,157
JULY	2003	16,781	17,751	17,628
MARCH	2004	21,778	22,712	22,636
MARCH	2005	24,411	25,510	24,957
MARCH	2006	32,595	35,870	34,133
MARCH	2007	38,491	43,747	41,684

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

(2)Because the Fund commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the indexes (including income) are not available, investment in the indexes was effected as of February 28, 1999.

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

Average Annual Total Return(3)
	Class A	Class B	Class C	Class Y	Class R
1-year period ended 3-31-07	11.30%	12.93%	17.17%	18.32%	17.98%
5-year period ended 3-31-07	20.64%	–	–	–	–
10-year period ended 3-31-07	–	–	–	–	–
Since inception of Class (4)      through 3-31-07	18.11%	22.00%	22.84%	24.08%	25.46%

(3)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares and Class R shares are not subject to sales charges.

(4)2-25-99 for Class A shares, 12-8-03 for Class B, Class C and Class Y shares and 12-29-05 for
Class R shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

The Advantus Real Estate Securities Fund merged into the Ivy Real Estate Securities Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Real Estate Securities Fund Class A shares, restated to reflect current sales charges applicable to Ivy Real Estate Securities Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Real Estate Securities Fund. If these expenses were reflected, performance shown would differ.

SHAREHOLDER SUMMARY OF IVY REAL ESTATE SECURITIES FUND

Portfolio Highlights

On March 31, 2007, Ivy Real Estate Securities Fund had net assets totaling $707,775,866 invested in a diversified portfolio of:

94.98%	Domestic Common Stocks
3.66%	Foreign Common Stocks
1.36%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007,
your Fund owned:

Sector Weightings

Shelter Stocks	$	88.30
Business Equipment and Services Stocks	$	4.01
Miscellaneous Stocks	$	3.26
Consumer Services Stocks	$	3.07
Cash and Cash Equivalents	$	1.36

The Investments of Ivy Real Estate Securities Fund
March 31, 2007
COMMON STOCKS		Shares		Value
Business Equipment and Services - 4.01%
Brookfield Properties Corporation		643,000	$	25,912,900
CB Richard Ellis Group, Inc., Class A*		72,400		2,474,632
				28,387,532
Finance Companies - 0.40%
Quadra Realty Trust, Inc.*		218,600		2,850,544
Health Care - General - 0.32%
Brookdale Senior Living, Inc.		50,700		2,264,262
Hotels and Gaming - 3.07%
Hilton Hotels Corporation		252,700		9,087,092
Marriott International, Inc., Class A		58,200		2,849,472
Starwood Hotels & Resorts Worldwide, Inc.		150,700		9,772,895
				21,709,459
Multiple Industry - 2.22%
Digital Realty Trust, Inc.		117,400		4,684,260
Forest City Enterprises, Inc., Class A		159,478		10,554,254
Macquarie Infrastructure Company Trust		11,239		441,693
				15,680,207
Real Estate Investment Trust - 88.30%
AMB Property Corporation		207,500		12,198,925
Acadia Realty Trust		121,800		3,175,326
Alexandria Real Estate Equities, Inc.		81,400		8,170,118
American Campus Communities, Inc.		303,600		9,196,044
American Financial Realty Trust		260,100		2,621,808
Apartment Investment and Management Company, Class A		67,600		3,899,844
Archstone-Smith Trust		494,500		26,841,460
Associated Estates Realty Corporation		137,500		1,937,375
AvalonBay Communities, Inc.		170,100		22,113,000
BioMed Realty Trust, Inc.		455,812		11,987,856
Boston Properties, Inc.		262,800		30,852,720
Brandywine Realty Trust		423,200		14,139,112
Camden Property Trust		210,000		14,765,100
Corporate Office Properties Trust		190,000		8,679,200
DCT Industrial Trust Inc.		540,400		6,392,932
Developers Diversified Realty Corporation		266,600		16,769,140
Equity Inns, Inc.		136,400		2,234,232
Equity Lifestyle Properties, Inc.		100,900		5,449,609
Equity Residential		495,000		23,873,850
Essex Property Trust, Inc.		33,300		4,311,684
Extra Space Storage Inc.		124,000		2,348,560
Federal Realty Investment Trust		78,900		7,149,918
First Potomac Realty Trust		166,900		4,768,333
General Growth Properties, Inc.		321,932		20,787,149
Hersha Hospitality Trust		113,700		1,339,386
Highland Hospitality Corporation		220,900		3,932,020
Home Properties, Inc.		93,900		4,958,859
Hospitality Properties Trust		57,800		2,705,040
Host Hotels & Resorts, Inc.	1,167,747			30,723,424
Innkeepers USA Trust		117,700		1,916,156
Kilroy Realty Corporation		77,300		5,700,875
Kimco Realty Corporation		447,600		21,816,024
Kite Realty Group Trust		264,900		5,284,755
LaSalle Hotel Properties		69,200		3,208,112
Liberty Property Trust		187,200		9,120,384
Macerich Company (The)		134,000		12,376,240
Mack-Cali Realty Corporation		44,200		2,105,246
Maguire Properties, Inc.		280,400		9,971,024
Mid-America Apartment Communities, Inc.		71,000		3,994,460
Newcastle Investment Corp.		124,900		3,463,477
NorthStar Realty Finance Corp.		134,000		2,038,140
PS Business Parks, Inc.		46,800		3,300,336
ProLogis		667,965		43,370,967
Public Storage, Inc.		290,700		27,520,569
RAIT Financial Trust		30,700		857,758
Regency Centers Corporation		142,500		11,905,875
SL Green Realty Corp.		148,900		20,426,102
Simon Property Group, Inc.		473,000		52,621,250
Sunstone Hotel Investors, Inc.		295,400		8,052,604
Tanger Factory Outlet Centers, Inc.		88,000		3,554,320
Taubman Centers, Inc.		155,500		9,017,445
U-Store-It Trust		184,200		3,706,104
UDR, Inc.		174,642		5,347,538
Ventas, Inc.		192,900		8,126,877
Vornado Realty Trust		268,200		32,006,988
Weingarten Realty Investors		123,300		5,864,148
				624,995,798
Utilities - Telephone - 0.32%
Crown Castle International Corp.*		70,300		2,258,739
TOTAL COMMON STOCKS - 98.64%			$	698,146,541
(Cost: $507,590,112)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Aircraft - 0.11%
United Technologies Corporation,
5.25%, 4-4-07	$	750		749,672
Aluminum - 0.79%
Alcoa Incorporated,
5.44%, 4-2-07		5,567		5,566,159
Capital Equipment - 0.42%
Caterpillar Inc.,
5.3%, 4-9-07		3,000		2,996,466
TOTAL SHORT-TERM SECURITIES - 1.32%			$	9,312,297
(Cost: $9,312,297)
TOTAL INVESTMENT SECURITIES - 99.96%			$	707,458,838
(Cost: $516,902,409)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.04%				317,028
NET ASSETS - 100.00%			$	707,775,866

Notes to Schedule of Investments

*No dividends were paid during the preceding 12 months.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY REAL ESTATE SECURITIES FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $516,902) (Notes 1 and 3)	$	707,459
Cash		30
Receivables:
Dividends and interest		2,337
Investment securities sold		1,677
Fund shares sold		1,438
Prepaid and other assets		69
Total assets		713,010
LIABILITIES
Payable for investment securities purchased		3,383
Payable to Fund shareholders		864
Accrued management fee (Note 2)		541
Accrued shareholder servicing (Note 2)		186
Accrued service fee (Note 2)		151
Accrued distribution fee (Note 2)		30
Accrued accounting services fee (Note 2)		15
Other		64
Total liabilities		5,234
Total net assets	$	707,776
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	498,141
Accumulated undistributed income:
Accumulated undistributed net investment income		294
Accumulated undistributed net realized gain on investment transactions		18,785
Net unrealized appreciation in value of investments		190,556
Net assets applicable to outstanding units of capital	$	707,776
Net asset value per share (net assets divided by shares outstanding):
Class A		$26.14
Class B		$25.91
Class C		$26.01
Class Y		$26.15
Class R		$26.14
Capital shares outstanding:
Class A		15,117
Class B		838
Class C		996
Class Y		10,127
Class R		6

See Notes to Financial Statements.

Statement of Operations
      IVY REAL ESTATE SECURITIES FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $67)	$	12,391
Interest and amortization		556
Total income		12,947
Expenses (Note 2):
Investment management fee		5,326
Shareholder servicing:
Class A		1,048
Class B		102
Class C		84
Class Y		355
Class R		–	*
Service fee:
Class A		756
Class B		44
Class C		52
Class Y		591
Class R		–	*
Distribution fee:
Class A		34
Class B		133
Class C		157
Class R		–	*
Accounting services fee		161
Custodian fees		32
Audit fees		24
Legal fees		17
Other		240
Total expenses		9,156
Net investment income		3,791
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		36,618
Unrealized appreciation in value of investments during the period		57,001
Net gain on investments		93,619
Net increase in net assets resulting from operations	$	97,410

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY REAL ESTATE SECURITIES FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	3,791		$	4,120
Realized net gain on investments		36,618			16,076
Unrealized appreciation		57,001			95,208
Net increase in net assets resulting from operations		97,410			115,404
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A		(1,898	)		(1,724	)
Class B		(–	)		(4	)
Class C		(–	)		(16	)
Class Y		(1,896	)		(2,078	)
Class R		(1	)		(–	)*
Realized gains on investment transactions:
Class A		(13,023	)		(7,984	)
Class B		(719	)		(494	)
Class C		(855	)		(541	)
Class Y		(9,462	)		(6,941	)
Class R		(5	)		(–	)
		(27,859	)		(19,782	)
Capital share transactions (Note 5)		134,609			85,348
Total increase		204,160			180,970
NET ASSETS
Beginning of period		503,616			322,646
End of period	$	707,776		$	503,616
Undistributed net investment income	$	294		$	298

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 246 - 250.

See Notes to Financial Statements.

Financial Highlights
      IVY REAL ESTATE SECURITIES FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended July 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	23.11		$	18.13		$	16.99		$	13.42		$	11.93		$	11.67
Income from       investment operations:
Net investment income		0.10			0.15			0.15	(1)		0.62			0.48			0.32
Net realized and unrealized             gain on investments		4.05			5.81			1.93	(1)		3.38			1.72			1.01
Total from investment       operations		4.15			5.96			2.08			4.00			2.20			1.33
Less distributions from:
Net investment income		(0.15	)		(0.18	)		(0.25	)		(0.24	)		(0.48	)		(0.28	)
Capital gains		(0.97	)		(0.80	)		(0.69	)		(0.19	)		(0.23	)		(0.79	)
Total distributions		(1.12	)		(0.98	)		(0.94	)		(0.43	)		(0.71	)		(1.07	)
Net asset value, end of period	$	26.14		$	23.11		$	18.13		$	16.99		$	13.42		$	11.93
Total return(2)		18.09	%		33.53	%		12.09	%		29.78	%		19.65	%		12.31	%
Net assets, end of period       (in millions)	$395			$256			$155			$44			$60			$32
Ratio of expenses to average       net assets including       voluntary expense waiver		1.57	%		1.64	%		1.67	%		1.48	%(3)(4)		1.46	%		1.50	%
Ratio of net investment income to       average net assets including       voluntary expense waiver		0.54	%		0.91	%		0.95	%		4.35	%(3)(4)		2.95	%		2.83	%
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.57	%(5)		1.64	%(5)		1.67	%(5)		1.49	%(3)(4)		1.46	%(5)		1.69	%
Ratio of net investment income to       average net assets excluding       voluntary expense waiver		0.54	%(5)		0.91	%(5)		0.95	%(5)		4.34	%(3)(4)		2.95	%(5)		2.64	%
Portfolio turnover rate		35	%		35	%		48	%		35	%		48	%		101	%

(1)Based on average weekly shares outstanding.

(2)Total return calculated without taking into account the sales load deducted on an initial purchase.

(3)Annualized.

(4)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from August 1, 2003 up to the time of merger. Actual expenses that applied to Class A shareholders were lower than shown above.

(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY REAL ESTATE SECURITIES FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	23.00		$	18.08		$	16.97		$	15.18
Income (loss) from       investment operations:
Net investment income (loss)		(0.09	)		0.01			(0.07	)(2)		0.07
Net realized and unrealized             gain on investments		3.97			5.72			1.95	(2)		2.08
Total from investment operations		3.88			5.73			1.88			2.15
Less distributions from:
Net investment income		(0.00	)		(0.01	)		(0.08	)		(0.17	)
Capital gains		(0.97	)		(0.80	)		(0.69	)		(0.19	)
Total distributions		(0.97	)		(0.81	)		(0.77	)		(0.36	)
Net asset value, end of period	$	25.91		$	23.00		$	18.08		$	16.97
Total return		16.93	%		32.19	%		10.91	%		14.46	%
Net assets, end of period (in millions)	$22			$15			$10			$2
Ratio of expenses to average net assets		2.57	%		2.66	%		2.73	%		3.02	%(3)
Ratio of net investment income       (loss) to average net assets		- -0.42	%		0.01	%		- -0.24	%		- -5.40	%(3)
Portfolio turnover rate		35	%		35	%		48	%		35	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY REAL ESTATE SECURITIES FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	23.04		$	18.10		$	16.99		$	15.18
Income (loss) from       investment operations:
Net investment income (loss)		(0.06	)		0.03			0.12			0.08
Net realized and unrealized             gain on investments		4.00			5.73			1.82			2.09
Total from investment operations		3.94			5.76			1.94			2.17
Less distributions from:
Net investment income		(0.00	)		(0.02	)		(0.14	)		(0.17	)
Capital gains		(0.97	)		(0.80	)		(0.69	)		(0.19	)
Total distributions		(0.97	)		(0.82	)		(0.83	)		(0.36	)
Net asset value, end of period	$	26.01		$	23.04		$	18.10		$	16.99
Total return		17.17	%		32.38	%		11.21	%		14.59	%
Net assets, end of period (in millions)		$26			$17			$10			$2
Ratio of expenses to average net assets		2.39	%		2.46	%		2.49	%		2.82	%(2)
Ratio of net investment income       (loss) to average net assets		- -0.28	%		0.15	%		0.14	%	-4.46		%(2)
Portfolio turnover rate		35	%		35	%		48	%		35	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3) For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY REAL ESTATE SECURITIES FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	23.12		$	18.14		$	16.99		$	15.18
Income from investment operations:
Net investment income		0.23			0.27			0.26	(2)		0.04
Net realized and unrealized             gain on investments		3.97			5.75			1.87	(2)		2.15
Total from investment operations		4.20			6.02			2.13			2.19
Less distributions from:
Net investment income		(0.20	)		(0.24	)		(0.29	)		(0.19	)
Capital gains		(0.97	)		(0.80	)		(0.69	)		(0.19	)
Total distributions		(1.17	)		(1.04	)		(0.98	)		(0.38	)
Net asset value, end of period	$	26.15		$	23.12		$	18.14		$	16.99
Total return		18.32	%		33.86	%		12.40	%		14.78	%
Net assets, end of period (in millions)		$265			$216			$148			$91
Ratio of expenses to average net assets		1.37	%		1.39	%		1.44	%		1.60	%(3)
Ratio of net investment income       to average net assets		0.94	%		1.27	%		1.59	%		0.14	%(3)
Portfolio turnover rate		35	%		35	%		48	%		35	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY REAL ESTATE SECURITIES FUND
      Class R Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended				For the period from 12-29-05(1) to
	3-31-07				3-31-06
Net asset value, beginning of period		$	23.11		$	20.55
Income (loss) from investment operations:
Net investment income (loss)			0.15			(0.20	)
Net realized and unrealized gain on investments			3.98			2.79
Total from investment operations			4.13			2.59
Less distributions from:
Net investment income			(0.13	)		(0.03	)
Capital gains			(0.97	)		(0.00	)
Total distributions			(1.10	)		(0.03	)
Net asset value, end of period		$	26.14		$	23.11
Total return			17.98	%		12.59	%
Net assets, end of period (in thousands)			$158			$113
Ratio of expenses to average net assets			1.68	%		1.73	%(2)
Ratio of net investment income (loss) to average net assets			0.43	%		- -3.64	%(2)
Portfolio turnover rate			35	%		35	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the 12 months ended March 31, 2006.

See Notes to Financial Statements.

Manager's Discussion of Ivy Small Cap Value Fund
      March 31, 2007


The Ivy Small Cap Value Fund is subadvised by BlackRock Capital Management, Inc.*

Below, Wayne J. Archambo, CFA, the Fund's portfolio manager, discusses the Fund's positioning, performance and results for the fiscal year ended March 31, 2007. He has managed the Fund for two years and has 22 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
			LARGE	CAPITALIZATION
			MEDIUM
	X		SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund rose 8.26 percent (Class A shares at net asset value) for the 12 months ended March 31, 2007, underperforming its benchmark index. By comparison, the Russell 2000 Value Index (reflecting the performance of securities that generally represent small company value stocks) increased 10.36 percent during the period. The Lipper Small-Cap Value Funds Universe Average (reflecting the universe of funds with similar investment objectives) increased 7.83 percent during the period.

A volatile year

We faced a challenging year for small-capitalization stocks as increased volatility and a slowing domestic economy led investors to favor larger cap segments of the market. In this environment, value outpaced growth across the market capitalization spectrum. Following a pronounced sell-off in early May, prompted by spiking energy prices and the Federal Reserve's 16th consecutive increase in short-term interest rates, equities rallied. Crude oil prices pulled back toward $60/barrel from their early August highs near $77/barrel. Moving into the first quarter of 2007, equity markets came under pressure following a sharp sell-off overseas. Furthermore, concern surrounding the subprime mortgage market and continued weakness in the housing sector weighed on investors' appetite for risk. However, despite these headwinds, domestic equities ended the quarter in positive territory, contributing to overall gains for the fiscal year.

Within the benchmark Russell 2000 Value Index, utilities, materials and consumer staples were among the strongest performing sectors, while financials and information technology lagged overall index returns. Within the Fund, stock selection gains in consumer discretionary and utilities were largely offset by weakness in financials and energy.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Change in weighting
BJ's Wholesale Club, Inc.	New to Top 10
Orient-Express Hotels Ltd.	New to Top 10
DJO Incorporated	New to Top 10
Brink's Company (The)	Decreased
Silgan Holdings Inc.	New to Top 10
Pilgrim's Pride Corporation	New to Top 10
Hain Celestial Group, Inc. (The)	New to Top 10
Piper Jaffray Companies	Decreased
Texas Industries, Inc.	New to Top 10
Waste Connections, Inc.	New to Top 10

See your advisor or www.ivyfunds.com for more information on the Fund's most recently published Top 10 Holdings.

Despite fears of a slowdown in consumer spending, specialty retailers and hotel and resort holdings were among the key performance drivers in the consumer discretionary sector. Within the Fund, stock selection among specialty retailers added the greatest value, benefiting in part from continued merger-and-acquisition activity within the sector. For example, a private equity group purchased Petco Animal Supplies at a substantial premium. OfficeMax was another contributor to our return. A new management team was able to significantly boost profit margins at the chain of office-supply superstores. Also, hotel and resort holdings added value, led by Orient-Express Hotels Ltd. and Vail Resorts, Inc.

In utilities, solid stock selection, particularly among electric utilities, and an overweight among multi-utilities, contributed to favorable sector comparisons. ITC Holdings Corp. was a standout performer within the sector. Building upon earlier gains, shares of the electricity transmission company spiked higher in mid-January following an announced deal to acquire the transmission assets of Interstate Power & Light Co.

Conversely, the Fund underperformed the Russell 2000 Value Index in financials. Within the sector, an overweight in capital market stocks and underweights among thrifts and mortgage finance and commercial banks added value. However, these relative gains were overshadowed by the negative impact of an underweight and stock selection among Real Estate Investment Trusts (REITs) and disappointing performance from holdings in the insurance and commercial banking sub-sectors. We continue to believe REITs, which made up 14 percent of the index, are unattractive from both a valuation and yield standpoint. As such, we are maintaining our underweight position. In addition, disappointing stock selection hampered performance comparisons in energy as the Fund remained market weight. The sector was highly volatile during the period as crude oil prices bounced between $50/barrel and $77/barrel, before closing March above the $65/barrel mark. Notable individual detractors included coal producer Massey Energy and equipment an d service providers Carbo Ceramics and Hercules Offshore, Inc.

Our outlook

Looking ahead, we expect increased volatility in the equity markets as the positive catalysts of ample liquidity, ongoing strength in merger-and-acquisition activity, aggressive stock buybacks and a possible easing in monetary policy fight the headwinds of slowing economic growth, further deterioration in the housing market and contracting corporate profit margins. Accordingly, the Fund is more neutrally positioned from a sector perspective; with a continued focus on holding stocks of what we feel are high-quality, small-cap companies. As we enter the second quarter of 2007, the most notable sector positioning relative to the benchmark Russell 2000 Value Index includes overweights in consumer staples, health care and industrials, and underweights in information technology and financials, primarily driven by our underweight exposure to REITs and banks. We believe the Fund is well positioned to continue to benefit from heightened merger-and-acquisition activity as our investment process generally leads us to o wn what we believe to be attractively valued stocks of solid companies that also have the potential to be compelling private equity and leveraged buyout candidates.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. Investing in small-cap stocks may carry more risk than investing in stocks of larger, more well-established companies. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

*Please note that, effective September 29, 2006, the Fund's subadvisor changed from BlackRock Financial Management, Inc. to BlackRock Capital Management, Inc. due to the contribution by Merrill Lynch & Co., Inc. of its investment management business, Merrill Lynch Investment Managers, to BlackRock, Inc. to form a new asset management company. Between September 29, 2006 and February 2, 2007, BlackRock Capital Management, Inc. served as interim subadvisor.

Comparison of Change in Value of
$10,000 Investment

Ivy Small Cap Value Fund, Class A Shares(1)	$	24,136
Russell 2000 Value Index	$	29,570
Lipper Small-Cap Value Funds Universe Average	$	27,868

		IVY SMALL CAP		LIPPER SMALL-CAP
		VALUE FUND,	RUSSELL 2000	VALUE FUNDS
		CLASS A SHARES	VALUE INDEX	UNIVERSE AVERAGE
JULY	1997	9,425	10,000	10,000
JULY	1998	10,265	10,608	10,331
JULY	1999	9,866	10,590	10,566
JULY	2000	10,235	11,132	10,974
JULY	2001	13,836	13,772	13,882
JULY	2002	12,000	13,017	13,028
JULY	2003	13,790	15,451	15,310
MARCH	2004	17,691	19,726	19,354
MARCH	2005	19,147	21,656	21,501
MARCH	2006	22,294	26,794	25,844
MARCH	2007	24,136	29,570	27,868

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-07	2.04%	3.17%	7.43%	8.70%
5-year period ended 3-31-07	8.06%	–	–	–
10-year period ended 3-31-07	11.12%	–	–	–
Since inception of Class (3) through 3-31-07	–	10.88%	11.95%	13.19%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)12-8-03 for Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

The Advantus Venture Fund merged into the Ivy Small Cap Value Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Venture Fund Class A shares, restated to reflect current sales charges applicable to Ivy Small Cap Value Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Small Cap Value Fund. If these expenses were reflected, performance shown would differ.

SHAREHOLDER SUMMARY OF IVY SMALL CAP VALUE FUND

Portfolio Highlights

On March 31, 2007, Ivy Small Cap Value Fund had net assets totaling $163,063,521 invested in a diversified portfolio of:

87.14%	Domestic Common Stocks
6.45%	Foreign Common Stocks
6.41%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund owned:

Sector Weightings

Financial Services Stocks	$	18.45
Business Equipment and Services Stocks	$	12.73
Consumer Nondurables Stocks	$	8.40
Retail Stocks	$	8.35
Consumer Services Stocks	$	8.29
Technology Stocks	$	6.82
Health Care Stocks	$	6.81
Cash and Cash Equivalents	$	6.41
Capital Goods Stocks	$	6.27
Utilities Stocks	$	4.90
Shelter Stocks	$	4.38
Energy Stocks	$	4.25
Miscellaneous Stocks	$	3.94

The Investments of Ivy Small Cap Value Fund
March 31, 2007
COMMON STOCKS	Shares			Value
Aircraft - 1.32%
K&F Industries Holdings, Inc.*		20,800	$	560,144
Orbital Sciences Corporation*		85,100		1,594,774
				2,154,918
Aluminum - 1.01%
Kaiser Aluminum Corporation*		21,100		1,646,328
Banks - 9.86%
Boston Private Financial Holdings, Inc.		85,500		2,385,450
Cathay General Bancorp		57,300		1,947,341
Columbia Banking System, Inc.		27,500		927,025
First Midwest Bancorp, Inc.		52,400		1,926,748
First Niagara Financial Group, Inc.	155,300			2,158,670
First State Bancorporation		37,300		839,996
KBW, Inc.*		53,300		1,852,708
Umpqua Holdings Corporation		62,574		1,676,670
United Bankshares, Inc.		30,600		1,072,377
Wintrust Financial Corporation		28,800		1,284,624
				16,071,609
Broadcasting - 0.33%
Outdoor Channel Holdings, Inc.*		53,500		545,700
Business Equipment and Services - 12.22%
Administaff, Inc.		23,200		816,640
Brink's Company (The)		63,600		4,035,420
CACI International Inc, Class A*		16,600		777,876
Dollar Thrifty Automotive Group, Inc.*		18,500		944,240
Education Realty Trust, Inc.		82,700		1,222,306
H&E Equipment Services, Inc.*		56,700		1,217,916
Lennox International Inc.		14,916		532,501
PHH Corporation*		75,500		2,307,280
Premiere Global Services, Inc.*		51,595		578,896
Sunterra Corporation*		72,239		1,132,346
TriZetto Group, Inc. (The)*		71,000		1,420,000
Waste Connections, Inc.*		84,450		2,528,433
Watson Wyatt & Company Holdings, Inc., Class A		49,500		2,408,175
				19,922,029
Capital Equipment - 2.52%
Actuant Corporation, Class A		35,000		1,776,600
Astec Industries, Inc.*		37,300		1,500,206
Chart Industries, Inc.*		14,455		262,141
Gardner Denver, Inc.*		16,200		564,570
				4,103,517
Chemicals - Specialty - 0.65%
H.B. Fuller Company		39,000		1,063,530
Communications Equipment - 1.54%
Dycom Industries, Inc.*		72,749		1,895,839
LoJack Corporation*		32,292		612,579
				2,508,418
Computers - Peripherals - 3.51%
Electronics for Imaging, Inc.*		67,100		1,575,173
Imation Corp.		57,200		2,309,736
Lawson Software, Inc.*	152,100			1,229,729
TIBCO Software Inc.*		71,663		610,927
				5,725,565
Construction Materials - 1.57%
Texas Industries, Inc.		33,800		2,552,914
Containers - 2.24%
Silgan Holdings Inc.		71,651		3,659,575
Cosmetics and Toiletries - 0.95%
Nu Skin Enterprises, Inc., Class A		94,263		1,557,225
Electronic Components - 0.45%
RF Micro Devices, Inc.*		39,700		246,934
Varian Semiconductor Equipment Associates, Inc.*		9,200		490,820
				737,754
Finance Companies - 0.89%
Jackson Hewitt Tax Service Inc.		45,100		1,451,318
Food and Related - 5.21%
Hain Celestial Group, Inc. (The)*	102,357			3,076,851
Pilgrim's Pride Corporation		99,500		3,302,405
Ralcorp Holdings, Inc.*		32,988		2,121,128
				8,500,384
Health Care - Drugs - 1.41%
Axcan Pharma Inc.*	139,454			2,303,083
Health Care - General - 2.57%
DJO Incorporated*	110,397			4,184,046
Hospital Supply and Management - 2.83%
Kindred Healthcare, Inc.*		67,700		2,219,206
Magellan Health Services, Inc.*		57,000		2,397,420
				4,616,626
Hotels and Gaming - 5.87%
Morgans Hotel Group Co.*		59,516		1,250,134
Orient-Express Hotels Ltd.		75,700		4,528,374
Pinnacle Entertainment, Inc.*		55,100		1,601,757
Vail Resorts, Inc.*		40,487		2,199,659
				9,579,924
Insurance - Property and Casualty - 3.13%
Aspen Insurance Holdings Limited		53,900		1,412,719
Endurance Specialty Holdings Ltd.		47,561		1,699,830
Platinum Underwriters Holdings, Ltd.		61,891		1,985,463
				5,098,012
Leisure Time Industry - 0.99%
LeapFrog Enterprises, Inc.*		56,238		601,747
RC2 Corporation*		25,000		1,008,000
				1,609,747
Motion Pictures - 1.10%
Regal Entertainment Group		90,000		1,788,300
Motor Vehicle Parts - 0.15%
Accuride Corporation*		17,279		252,273
Non-Residential Construction - 2.18%
Perini Corporation*		31,300		1,153,718
Washington Group International, Inc.*		36,100		2,397,762
				3,551,480
Petroleum - Domestic - 1.52%
Delta Petroleum Corporation*		54,000		1,240,650
Goodrich Petroleum Corporation*		36,876		1,240,140
				2,480,790
Petroleum - Services - 2.73%
Cal Dive International, Inc.*		74,600		910,866
Hercules Offshore, Inc.*		58,983		1,547,714
Oceaneering International, Inc.*		25,100		1,057,212
Universal Compression Holdings, Inc.*		13,800		933,984
				4,449,776
Real Estate Investment Trust - 4.38%
Arbor Realty Trust, Inc.		56,400		1,716,816
BioMed Realty Trust, Inc.		32,848		863,902
Corporate Office Properties Trust		31,200		1,425,216
DCT Industrial Trust Inc.		91,600		1,083,628
Gramercy Capital Corp.		26,219		804,399
Innkeepers USA Trust		76,190		1,240,373
				7,134,334
Restaurants - 0.77%
Landry's Restaurants, Inc.		42,624		1,261,670
Retail - Food Stores - 0.72%
Ruddick Corporation		39,310		1,182,445
Retail - General Merchandise - 3.21%
BJ's Wholesale Club, Inc.*	134,100			4,536,603
Stage Stores, Inc.		30,100		701,631
				5,238,234
Retail - Specialty Stores - 3.65%
Big 5 Sporting Goods Corporation		38,900		1,007,899
Borders Group, Inc.		99,300		2,027,706
Genesco Inc.*		15,000		622,950
Hot Topic, Inc.*		88,867		985,535
Jos. A. Bank Clothiers, Inc.*		20,400		720,732
Talbots, Inc. (The)		24,600		581,052
				5,945,874
Savings and Loans - 1.73%
Sterling Financial Corporation		62,548		1,951,185
WSFS Financial Corporation		13,492		867,468
				2,818,653
Security and Commodity Brokers - 2.84%
GFI Group Inc.*		13,600		923,848
National Financial Partners Corp.		13,803		647,499
Piper Jaffray Companies*		49,328		3,055,376
				4,626,723
Timesharing and Software - 0.51%
TradeStation Group, Inc.*		65,800		827,106
Trucking and Shipping - 2.13%
Kirby Corporation*		56,300		1,969,374
Knight Transportation, Inc.		84,300		1,502,226
				3,471,600
Utilities - Electric - 3.51%
Black Hills Corporation		56,900		2,092,213
ITC Holdings Corp.		33,200		1,437,228
PNM Resources, Inc.		68,100		2,199,630
				5,729,071
Utilities - Gas and Pipeline - 1.39%
South Jersey Industries, Inc.		59,500		2,263,975
TOTAL COMMON STOCKS - 93.59%			$	152,614,526
(Cost: $138,685,741)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Capital Equipment - 2.45%
Caterpillar Inc.,
5.3%, 4-9-07	$	4,000		3,995,289
Forest and Paper Products - 2.00%
Sonoco Products Co.,
5.47%, 4-2-07		3,258		3,257,505
Health Care - Drugs - 1.84%
GlaxoSmithKline Finance plc,
5.3%, 4-10-07		3,000		2,996,025
TOTAL SHORT-TERM SECURITIES - 6.29%			$	10,248,819
(Cost: $10,248,819)
TOTAL INVESTMENT SECURITIES - 99.88%			$	162,863,345
(Cost: $148,934,560)
CASH, NET OF LIABILITIES AND OTHER ASSETS - 0.12%				200,176
NET ASSETS - 100.00%			$	163,063,521

Notes to Schedule of Investments

*No dividends were paid during the preceding 12 months.

See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY SMALL CAP VALUE FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $148,935) (Notes 1 and 3)	$	162,863
Receivables:
Investment securities sold		3,110
Fund shares sold		522
Dividends and interest		308
Prepaid and other assets		43
Total assets		166,846
LIABILITIES
Payable for investment securities purchased		3,239
Payable to Fund shareholders		265
Accrued management fee (Note 2)		114
Accrued shareholder servicing (Note 2)		70
Accrued service fee (Note 2)		35
Accrued distribution fee (Note 2)		13
Due to custodian		13
Accrued accounting services fee (Note 2)		6
Other		27
Total liabilities		3,782
Total net assets	$	163,064
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	143,108
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(14	)
Accumulated undistributed net realized gain on investment transactions		6,041
Net unrealized appreciation in value of investments		13,929
Net assets applicable to outstanding units of capital	$	163,064
Net asset value per share (net assets divided by shares outstanding):
Class A		$16.22
Class B		$15.48
Class C		$15.69
Class Y		$16.42
Capital shares outstanding:
Class A		7,449
Class B		552
Class C		787
Class Y		1,301

See Notes to Financial Statements.

Statement of Operations
      IVY SMALL CAP VALUE FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends	$	1,704
Interest and amortization		310
Total income		2,014
Expenses (Note 2):
Investment management fee		1,150
Shareholder servicing:
Class A		459
Class B		58
Class C		55
Class Y		32
Service fee:
Class A		228
Class B		18
Class C		27
Class Y		52
Distribution fee:
Class A		12
Class B		55
Class C		81
Accounting services fee		66
Audit fees		20
Custodian fees		15
Legal fees		4
Other		110
Total expenses		2,442
Net investment loss		(428	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		13,402
Unrealized depreciation in value of investments during the period		(1,667	)
Net gain on investments		11,735
Net increase in net assets resulting from operations	$	11,307

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY SMALL CAP VALUE FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment loss	$	(428	)	$	(911	)
Realized net gain on investments		13,402			15,553
Unrealized appreciation (depreciation)		(1,667	)		3,388
Net increase in net assets resulting from operations		11,307			18,030
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(–	)		(–	)
Class B		(–	)		(–	)
Class C		(–	)		(–	)
Class Y		(–	)		(–	)
Realized gains on investment transactions:
Class A		(8,051	)		(13,964	)
Class B		(627	)		(1,186	)
Class C		(925	)		(1,589	)
Class Y		(1,624	)		(4,122	)
		(11,227	)		(20,861	)
Capital share transactions (Note 5)		35,884			26,322
Total increase		35,964			23,491
NET ASSETS
Beginning of period		127,100			103,609
End of period	$	163,064		$	127,100
Undistributed net investment loss	$	(14	)	$	(10	)

(1)See "Financial Highlights" on pages 264 - 267.

See Notes to Financial Statements.

Financial Highlights
      IVY SMALL CAP VALUE FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the fiscal period ended			For the fiscal year ended July 31,
	2007			2006			2005			3-31-04			2003			2002
Net asset value,       beginning of period	$	16.24		$	16.88		$	16.68		$	13.02		$	12.25		$	15.05
Income (loss) from       investment operations:
Net investment loss		(0.03	)		(0.11	)		(0.13	)		(0.08	)		(0.09	)		(0.08	)
Net realized and unrealized             gain (loss) on investments		1.35			2.62			1.52			3.76			1.74			(1.84	)
Total from investment       operations		1.32			2.51			1.39			3.68			1.65			(1.92	)
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)*		(0.00	)
Capital gains		(1.34	)		(3.15	)		(1.19	)		(0.02	)		(0.88	)		(0.88	)
Total distributions		(1.34	)		(3.15	)		(1.19	)		(0.02	)		(0.88	)		(0.88	)
Net asset value, end of period	$	16.22		$	16.24		$	16.88		$	16.68		$	13.02		$	12.25
Total return(1)		8.26	%		16.44	%		8.23	%		28.29	%		14.91	%	- -13.27		%
Net assets, end of period       (in millions)	$121			$86			$66			$65			$59			$53
Ratio of expenses to average       net assets including       voluntary expense waiver		1.74	%		1.80	%		1.76	%		1.65	%(2)(3)		1.53	%		1.27	%
Ratio of net investment loss       to average net assets including       voluntary expense waiver		- -0.24	%		- -0.76	%		- -0.79	%		- -0.76	%(2)(3)		- -0.82	%		- -0.57	%
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.74	% (4)		1.80	%(4)		1.76	%(4)		1.65	%(2,3,4)		1.53	%(4)		1.37	%
Ratio of net investment loss       to average net assets excluding       voluntary expense waiver		- -0.24	% (4)		- -0.76	%(4)		- -0.79	%(4)		- -0.76	%(2,3,4)		- -0.82	%(4)		- -0.67	%
Portfolio turnover rate		123	%		157	%		124	%		27	%		54	%		37	%

*Not shown due to rounding.

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.

(2)Annualized.

(3)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from August 1, 2003 up to the time of the merger. Actual expenses that applied to Class A shareholders were lower than shown above.

(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY SMALL CAP VALUE FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	15.72		$	16.59		$	16.61		$	15.27
Income (loss) from       investment operations:
Net investment loss		(0.14	)		(0.25	)		(0.23	)		(0.05	)
Net realized and unrealized             gain on investments		1.24			2.53			1.40			1.41
Total from investment operations		1.10			2.28			1.17			1.36
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(1.34	)		(3.15	)		(1.19	)		(0.02	)
Total distributions		(1.34	)		(3.15	)		(1.19	)		(0.02	)
Net asset value, end of period	$	15.48		$	15.72		$	16.59		$	16.61
Total return		7.11	%		15.28	%		6.92	%		8.93	%
Net assets, end of period (in millions)	$9			$7			$5			$1
Ratio of expenses to average net assets		2.82	%		2.84	%		3.02	%		3.79	%(2)
Ratio of net investment       loss to average net assets		- -1.33	%		- -1.80	%		- -1.88	%		- -2.93	%(2)
Portfolio turnover rate		123	%		157	%		124	%		27	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY SMALL CAP VALUE FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	15.87		$	16.67		$	16.63		$	15.27
Income (loss) from       investment operations:
Net investment loss		(0.12	)		(0.21	)		(0.19	)		(0.05	)
Net realized and unrealized             gain on investments		1.28			2.56			1.42			1.43
Total from investment operations		1.16			2.35			1.23			1.38
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(1.34	)		(3.15	)		(1.19	)		(0.02	)
Total distributions		(1.34	)		(3.15	)		(1.19	)		(0.02	)
Net asset value, end of period	$	15.69		$	15.87		$	16.67		$	16.63
Total return		7.43	%		15.64	%		7.28	%		9.06	%
Net assets, end of period (in millions)	$12			$10			$8			$2
Ratio of expenses to average net assets		2.52	%		2.54	%		2.65	%		2.83	%(2)
Ratio of net investment       loss to average net assets		- -1.04	%		- -1.50	%		- -1.53	%		- -2.00	%(2)
Portfolio turnover rate		123	%		157	%		124	%		27	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY SMALL CAP VALUE FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	16.36		$	16.92		$	16.68		$	15.27
Income (loss) from       investment operations:
Net investment income (loss)		0.03			(0.06	)		(0.10	)		(0.04	)
Net realized and unrealized             gain on investments		1.37			2.65			1.53			1.47
Total from investment operations		1.40			2.59			1.43			1.43
Less distributions from:
Net investment income		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains		(1.34	)		(3.15	)		(1.19	)		(0.02	)
Total distributions		(1.34	)		(3.15	)		(1.19	)		(0.02	)
Net asset value, end of period	$	16.42		$	16.36		$	16.92		$	16.68
Total return		8.70	%		16.88	%		8.48	%		9.38	%
Net assets, end of period (in millions)	$21			$24			$25			$25
Ratio of expenses to average net assets		1.39	%		1.41	%		1.53	%		1.60	%(2)
Ratio of net investment income       (loss) to average net assets		0.08	%		- -0.37	%		- -0.56	%		- -0.82	%(2)
Portfolio turnover rate		123	%		157	%		124	%		27	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Manager's Discussion of Ivy Value Fund
      March 31, 2007


Below, Matthew T. Norris, CFA, portfolio manager of the Ivy Value Fund, discusses positioning, performance and results for the fiscal year ended March 31, 2007. He has managed the Fund since its inception and has 15 years of industry experience.

STYLE
VALUE	BLEND	GROWTH
X			LARGE	CAPITALIZATION
			MEDIUM
			SMALL

This diagram shows the Fund's equity investment style and the size of companies in the Fund, as measured by market capitalization. Shaded areas reflect quarterly data for the past three years. Source: Morningstar

The Fund increased 14.12 percent (Class A shares at net asset value), underperforming its benchmark but outperforming its peer group. By comparison, the Russell 1000 Value Index (reflecting the performance of securities that generally represent the value sector of the stock market) increased 16.87 percent during the period, and the Lipper Large-Cap Value Funds Universe Average (generally reflecting the performance of the universe of funds with similar investment objectives) increased 13.78 percent.

For the fiscal year, higher growth areas generally lagged behind the more traditional value areas. Meanwhile, economic activity was robust for much of 2006, with corporate earnings growth and profit margins near all-time highs. However, that appears to be slowing as we move through calendar year 2007. Housing has slowed and interest rates are up year over year. Also, the inverted bond market yield curve (short-term rates were higher than long-term rates) was a classic indicator of slowing economic performance this past year.

While corporate profit margins are still healthy, the reinvestment opportunities of that cash to generate future growth appear slim, in our opinion. This is reflected in changing corporate behavior, with more companies choosing to pay down debt or buy back stock, as opposed to investing for future growth by building more plants.

Utilities and telecom led, health care detracted

The markets were led by utilities and telecommunications, perhaps because these are less cyclical areas that likely will be affected less by slowing economic conditions. Areas of poor performance this past year included health care, consumer durables and technology. The Fund underperformed its benchmark primarily due to a few poor stock selections in health care at the beginning of the fiscal period. Our relative performance improved as the year wore on.

Our outlook

The Fund has concentrated its holdings into fewer names as conditions have dictated. However, our basic approach has not changed: we continue to search for what we feel are high-quality investment ideas, one by one, with stock prices that look to be cheap relative to a company's prospects. Furthermore, we remain diversified across economic sectors in an effort to maximize our ability to manage risk.

Changes to Top 10 Equity Holdings March 31, 2007 compared to March 31, 2006
Company	Change in weighting
Exxon Mobil Corporation	Unchanged
Bank of America Corporation	Increased
J.P. Morgan Chase & Co.	Increased
Hewlett-Packard Company	Increased
Unum Group	New to Top 10
Altria Group, Inc.	New to Top 10
ChevronTexaco Corporation	Increased
Travelers Companies, Inc. (The)	New to Top 10
Citigroup Inc.	Decreased
FirstEnergy Corp.	New to Top 10

See your advisor or www.ivyfunds.com for more information on the Fund's most currently reported Top 10 Holdings.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment.

Value stocks are stocks of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor and, in the opinion of the Fund's manager, undervalued. The value of a security believed by the Fund's manager to be undervalued may never reach what is believed to be its full value, or such security's value may decrease. These and other risks are more fully described in the Fund's prospectus.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.

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.

Comparison of Change in Value of
$10,000 Investment

Ivy Value Fund, Class A Shares(1)	$	11,875
Russell 1000 Value Index	$	22,187
Lipper Large-Cap Value Funds Universe Average	$	18,335

		IVY VALUE FUND,	RUSSELL 1000	LIPPER LARGE-CAP VALUE FUNDS
		CLASS A SHARES	VALUE INDEX	UNIVERSE AVERAGE
SEPT	1997	9,425	10,000	10,000
SEPT	1998	7,875	10,358	9,713
SEPT	1999	8,661	12,299	11,205
SEPT	2000	8,777	13,383	12,281
SEPT	2001	7,375	12,186	11,379
JULY	2002	6,952	11,303	10,433
JULY	2003	7,455	12,516	11,314
MARCH	2004	8,684	14,809	13,228
MARCH	2005	9,658	16,758	14,454
MARCH	2006	10,406	18,985	16,114
MARCH	2007	11,875	22,187	18,335

Please note that the performance of the Fund's other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.

(1)The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-07	7.56%	8.99%	13.09%	14.28%
5-year period ended 3-31-07	6.07%	–	–	–
10-year period ended 3-31-07	3.70%	–	–	–
Since inception of Class(3) through 3-31-07	–	10.37%	11.20%	12.39%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)12-8-03 for Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

The Advantus Cornerstone Fund merged into the Ivy Value Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Cornerstone Fund Class A shares, restated to reflect current sales charges applicable to Ivy Value Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Value Fund. If these expenses were reflected, performance shown would differ.

SHAREHOLDER SUMMARY OF IVY VALUE FUND

Portfolio Highlights

On March 31, 2007, Ivy Value Fund had net assets totaling $83,744,428 invested in a diversified portfolio of:

92.56%	Domestic Common Stocks
4.33%	Cash and Cash Equivalents
3.11%	Foreign Common Stocks

As a shareholder of the Fund, for every $100 you had invested on March 31, 2007, your Fund owned:

Sector Weightings

Financial Services Stocks	$	32.54
Energy Stocks	$	12.59
Technology Stocks	$	11.33
Health Care Stocks	$	9.96
Utilities Stocks	$	9.84
Miscellaneous Stocks	$	7.69
Cash and Cash Equivalents	$	4.33
Multi-Industry Stocks	$	3.40
Capital Goods Stocks	$	2.89
Consumer Nondurables Stocks	$	2.80
Raw Materials Stocks	$	2.63

The Investments of Ivy Value Fund
March 31, 2007
COMMON STOCKS	Shares			Value
Aircraft - 2.67%
Lockheed Martin Corporation		9,000	$	873,180
Raytheon Company		25,900		1,358,714
				2,231,894
Banks - 9.18%
Bank of America Corporation		72,056		3,676,297
Citigroup Inc.		41,313		2,121,009
Wachovia Corporation		18,750		1,032,188
Wells Fargo & Company		25,000		860,750
				7,690,244
Beverages - 1.50%
Diageo plc, ADR		15,550		1,258,773
Business Equipment and Services - 0.91%
Waste Management, Inc.		22,200		763,902
Capital Equipment - 1.02%
Illinois Tool Works Inc.		16,480		850,368
Chemicals - Petroleum and Inorganic - 1.00%
E.I. du Pont de Nemours and Company		16,850		832,895
Chemicals - Specialty - 1.63%
Air Products and Chemicals, Inc.		7,800		576,342
Mosaic Company*		29,600		789,136
				1,365,478
Communications Equipment - 0.82%
Cisco Systems, Inc.*		13,500		344,183
Nokia Corporation, Series A, ADR		15,000		343,800
				687,983
Computers - Main and Mini - 5.37%
Hewlett-Packard Company		87,700		3,520,278
Xerox Corporation*		57,600		972,864
				4,493,142
Computers - Peripherals - 0.91%
Adobe Systems Incorporated (A)*		18,300		763,018
Defense - 1.16%
General Dynamics Corporation		12,700		970,280
Electronic Components - 0.40%
Motorola, Inc.		19,000		335,730
Finance Companies - 5.04%
Capital One Financial Corporation (A)		19,900		1,501,654
Fannie Mae		24,700		1,348,126
Freddie Mac		23,100		1,374,219
				4,223,999
Food and Related - 1.30%
General Mills, Inc.		18,700		1,088,714
Furniture and Furnishings - 0.70%
Masco Corporation		21,500		589,100
Health Care - Drugs - 3.66%
Endo Pharmaceuticals Holdings Inc.*		12,200		358,619
McKesson Corporation		23,800		1,393,252
Pfizer Inc.		52,000		1,313,520
				3,065,391
Health Care - General - 1.88%
Boston Scientific Corporation (A)*		43,900		638,306
Da Vita Inc. (A)*		17,500		933,100
				1,571,406
Hospital Supply and Management - 4.42%
Aetna Inc.		23,400		1,024,686
Coventry Health Care, Inc. (A)*		26,700		1,496,535
Humana Inc. (A)*		20,400		1,183,608
				3,704,829
Insurance - Life - 3.78%
Unum Group (A)	137,600			3,168,928
Insurance - Property and Casualty - 5.92%
Assurant, Inc.		14,400		772,272
Everest Re Group, Ltd.		10,400		1,000,168
MBIA Inc.		12,200		798,978
Travelers Companies, Inc. (The)		46,052		2,384,112
				4,955,530
Metal Fabrication - 1.87%
Loews Corporation, Carolina Group		20,700		1,565,127
Motion Pictures - 0.46%
News Corporation Limited, Class A		12,000		277,440
Regal Entertainment Group		5,400		107,298
				384,738
Multiple Industry - 3.40%
Altria Group, Inc.		32,400		2,845,044
Petroleum - International - 12.59%
Anadarko Petroleum Corporation		24,300		1,044,414
ChevronTexaco Corporation		37,300		2,758,708
ConocoPhillips		14,600		997,910
Devon Energy Corporation		16,500		1,142,130
Exxon Mobil Corporation		61,006		4,602,903
				10,546,065
Railroad - 1.83%
Union Pacific Corporation		15,100		1,533,405
Real Estate Investment Trust - 1.60%
Duke Realty Corporation		17,400		756,378
Vornado Realty Trust		4,900		584,766
				1,341,144
Restaurants - 1.08%
McDonald's Corporation		20,108		905,865
Retail - General Merchandise - 0.96%
Family Dollar Stores, Inc.		27,200		805,664
Retail - Specialty Stores - 0.15%
Home Depot, Inc. (The)		3,400		124,916
Security and Commodity Brokers - 8.62%
Bear Stearns Companies Inc. (The)		6,400		962,240
CIT Group Inc.		18,500		979,020
J.P. Morgan Chase & Co.		73,902		3,575,379
Morgan Stanley		21,600		1,701,216
				7,217,855
Utilities - Electric - 3.65%
Energy East Corporation		12,100		294,756
Exelon Corporation		7,600		522,196
Mirant Corporation*		25,600		1,035,776
NRG Energy, Inc.*		16,700		1,203,068
				3,055,796
Utilities - Gas and Pipeline - 2.25%
FirstEnergy Corp.		28,400		1,881,216
Utilities - Telephone - 3.94%
AT&T Inc.		47,600		1,876,868
Sprint Nextel Corporation		22,400		424,704
Verizon Communications Inc. (A)		26,300		997,296
				3,298,868
TOTAL COMMON STOCKS - 95.67%			$	80,117,307
(Cost: $62,615,209)

SHORT-TERM SECURITIES - 4.41%	Principal Amount in Thousands
Beverages
Sonoco Products Co.,
5.47%, 4-2-07	$	3,695	$	3,694,439
(Cost: $3,694,439)
TOTAL INVESTMENT SECURITIES - 100.08%			$	83,811,746
(Cost: $66,309,648)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.08%)				(67,318	)
NET ASSETS - 100.00%			$	83,744,428

Notes to Schedule of Investments
Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.
*No dividends were paid during the preceding 12 months.
(A)Securities serve as cover for the following written options outstanding at March 31, 2007. (See Note 6 to financial statements):
	Underlying Security	Contracts Subject to Call	Expiration Month/ Exercise Price	Premium Received			Market Value
	Adobe Systems Incorporated	183	April/42.5		$	14,305	$	12,810
	Boston Scientific Corporation:	159	April/20			7,473		363
		110	May/19			2,915		643
		170	June/16			7,480		7,310
	Da Vita Inc.	143	April/60			8,275		715
	Humana Inc.	98	May/70			7,399		1,225
	Unum Group	113	June/25			3,277		3,390
	Verizon Communications Inc.	1	April/40			45		2
					$	51,169	$	26,458
	Underlying Security	Contracts Subject to Put	Expiration Month/ Exercise Price	Premium Received			Market Value
	Capital One Financial Corporation:	53	April/75		$	10,706	$	9,010
		53	April/70			4,134		1,855
		43	May/75			7,718		10,320
		43	June/75			10,513		13,760
	Coventry Health Care, Inc.	22	April/45			1,056		55
					$	34,127	$	35,000
See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
      IVY VALUE FUND
      March 31, 2007
      (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $66,310) (Notes 1 and 3)	$	83,812
Cash		9
Receivables:
Investment securities sold		571
Fund shares sold		228
Dividends and interest		89
Prepaid and other assets		38
Total assets		84,747
LIABILITIES
Payable for investment securities purchased		682
Payable to Fund shareholders		116
Outstanding written options - at value (premium received - $85) (Note 6)		61
Accrued management fee (Note 2)		48
Accrued service fee (Note 2)		34
Accrued shareholder servicing (Note 2)		31
Accrued distribution fee (Note 2)		7
Accrued accounting services fee (Note 2)		4
Other		20
Total liabilities		1,003
Total net assets	$	83,744
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	64,836
Accumulated undistributed income:
Accumulated undistributed net investment income		44
Accumulated undistributed net realized gain on investment transactions		1,338
Net unrealized appreciation in value of investments		17,526
Net assets applicable to outstanding units of capital	$	83,744
Net asset value per share (net assets divided by shares outstanding):
Class A		$19.04
Class B		$18.83
Class C		$18.90
Class Y		$19.04
Capital shares outstanding:
Class A		3,800
Class B		314
Class C		275
Class Y		15

See Notes to Financial Statements.

Statement of Operations
      IVY VALUE FUND
      For the Fiscal Year Ended March 31, 2007
      (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $1)	$	1,693
Interest and amortization		139
Total income		1,832
Expenses (Note 2):
Investment management fee		570
Shareholder servicing:
Class A		221
Class B		28
Class C		21
Class Y		11
Service fee:
Class A		155
Class B		13
Class C		11
Class Y		19
Distribution fee:
Class A		6
Class B		39
Class C		34
Accounting services fee		46
Audit fees		20
Custodian fees		11
Legal fees		2
Other		81
Total expenses		1,288
Net investment income		544
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		2,539
Realized net gain on written options		231
Realized net gain on investments		2,770
Unrealized appreciation in value of securities during the period		7,582
Unrealized appreciation in value of written options during the period		21
Unrealized appreciation in value of investments during the period		7,603
Net gain on investments		10,373
Net increase in net assets resulting from operations	$	10,917

See Notes to Financial Statements.

Statement of Changes in Net Assets
      IVY VALUE FUND
      (In Thousands)

	For the fiscal year ended March 31,
	2007			2006
INCREASE IN NET ASSETS
Operations:
Net investment income	$	544		$	464
Realized net gain on investments		2,770			4,588
Unrealized appreciation		7,603			708
Net increase in net assets resulting from operations		10,917			5,760
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(470	)		(341	)
Class B		(–	)		(1	)
Class C		(1	)		(2	)
Class Y		(51	)		(160	)
Realized gains on investment transactions:
Class A		(1,502	)		(–	)
Class B		(120	)		(–	)
Class C		(106	)		(–	)
Class Y		(8	)		(–	)
		(2,258	)		(504	)
Capital share transactions (Note 5)		(4,333	)		7,758
Total increase		4,326			13,014
NET ASSETS
Beginning of period		79,418			66,404
End of period	$	83,744		$	79,418
Undistributed net investment income		$44			$22

(1)See "Financial Highlights" on pages 280 - 283.

See Notes to Financial Statements.

Financial Highlights
      IVY VALUE FUND
      Class A Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,								For the fiscal period ended				For the fiscal year ended			For the period from 10-1-01 to			For the fiscal year ended
	2007			2006			2005		3-31-04				7-31-03			7-31-02			9-30-01
Net asset value,       beginning of period	$	17.17		$	16.04		$	14.54		$	12.54		$	11.81		$	12.59		$	15.08
Income (loss) from       investment operations:
Net investment income		0.13			0.10			0.15			0.08			0.12			0.08			0.09
Net realized and             unrealized gain             (loss) on             investments		2.28			1.14			1.48			1.98			0.72			(0.78	)	(2.50		)
Total from investment       operations		2.41			1.24			1.63			2.06			0.84			(0.70	)	(2.41		)
Less distributions from:
Net investment income	(0.13		)	(0.11		)		(0.13	)		(0.06	)		(0.11	)		(0.08	)		(0.08	)
Capital gains	(0.41		)	(0.00		)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions	(0.54		)	(0.11		)		(0.13	)		(0.06	)		(0.11	)		(0.08	)		(0.08	)
Net asset value,       end of period	$	19.04		$	17.17		$	16.04		$	14.54		$	12.54		$	11.81		$	12.59
Total return(1)	14.12		%		7.75	%	11.21		%	16.32		%		7.23	%	- -5.72		%	- -15.97		%
Net assets, end of period       (in millions)	$73			$58			$41			$52			$64			$58			$66
Ratio of expenses to       average net assets       including voluntary       expense waiver		1.49	%		1.53	%		1.47	%		1.45	%(2)(3)		1.29	%		1.24	%(2)		1.24	%
Ratio of net investment       income to average       net assets including       voluntary expense       waiver		0.76	%		0.65	%		0.92	%		0.61	%(2)(3)		1.05	%		0.70	%(2)		0.61	%
Ratio of expenses to       average net assets       excluding voluntary       expense waiver		1.49	%(4)		1.53	%(4)		1.47	%(4)		1.52	%(2)(3)		1.50	%		1.41	%(2)		1.39	%
Ratio of net investment       income to average       net assets excluding       voluntary expense       waiver		0.76	%(4)		0.65	%(4)		0.92	%(4)		0.53	%(2)(3)		0.84	%		0.53	%(2)		0.46	%
Portfolio turnover rate		61	%		63	%		81	%		86	%		123	%		95	%		148	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.

(2)Annualized.

(3)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from August 1, 2003 up to the time of the merger. Actual expenses that applied to Class A shareholders were lower than shown above.

(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

Financial Highlights
      IVY VALUE FUND
      Class B Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	17.04		$	15.97		$	14.50		$	13.63
Income (loss) from       investment operations:
Net investment income (loss)		(0.03	)		(0.04	)		0.03			0.01
Net realized and unrealized             gain on investments		2.23			1.12			1.44			0.90
Total from investment operations		2.20			1.08			1.47			0.91
Less distributions from:
Net investment income		0.00			(0.01	)		(0.00	)		(0.04	)
Capital gains		(0.41	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.41	)		(0.01	)		(0.00	)		(0.04	)
Net asset value, end of period	$	18.83		$	17.04		$	15.97		$	14.50
Total return		12.99	%		6.73	%		10.14	%		6.65	%
Net assets, end of period (in millions)	$6			$5			$2			$1
Ratio of expenses to average net assets		2.46	%		2.50	%		2.53	%		3.12	%(2)
Ratio of net investment income       (loss) to average net assets		- -0.21	%		- -0.33	%		0.07	%		- -1.29	%(2)
Portfolio turnover rate		61	%		63	%		81	%		86	%(3)

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY VALUE FUND
      Class C Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	17.08		$	16.00		$	14.51		$	13.63
Income (loss) from       investment operations:
Net investment income (loss)		(0.01	)		(0.04	)		0.03			0.02
Net realized and unrealized             gain on investments		2.24			1.13			1.46			0.90
Total from investment operations		2.23			1.09			1.49			0.92
Less distributions from:
Net investment income		(0.00	)*		(0.01	)		(0.00	)		(0.04	)
Capital gains		(0.41	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.41	)		(0.01	)		(0.00	)		(0.04	)
Net asset value, end of period	$	18.90		$	17.08		$	16.00		$	14.51
Total return		13.09	%		6.80	%		10.27	%		6.73	%
Net assets, end of period (in millions)	$5			$4			$3			$1
Ratio of expenses to average net assets		2.38	%		2.41	%		2.42	%		2.90	%(2)
Ratio of net investment income       (loss) to average net assets		- -0.12	%		- -0.23	%		0.15	%		- -1.18	%(2)
Portfolio turnover rate		61	%		63	%		81	%		86	%(3)

* Not shown due to rounding.

(1)Commencement of operations of the class.

(2)Annualized.

(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Financial Highlights
      IVY VALUE FUND
      Class Y Shares
      For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,									For the period from 12-8-03(1) to
	2007			2006			2005			3-31-04
Net asset value, beginning of period	$	17.18		$	16.05		$	14.54		$	13.63
Income from investment operations:
Net investment income		0.22	(2)		0.13			0.17			0.01
Net realized and unrealized             gain on investments		2.22	(2)		1.15			1.49			0.95
Total from investment operations		2.44			1.28			1.66			0.96
Less distributions from:
Net investment income		(0.17	)		(0.15	)		(0.15	)		(0.05	)
Capital gains		(0.41	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.58	)		(0.15	)		(0.15	)		(0.05	)
Net asset value, end of period	$	19.04		$	17.18		$	16.05		$	14.54
Total return		14.28	%		7.99	%		11.44	%		7.05	%
Net assets, end of period (in thousands)		$294	$12,286			$20,286			$22,379
Ratio of expenses to average net assets		1.29	%		1.31	%		1.34	%		1.48	%(3)
Ratio of net investment income       to average net assets		0.96	%		0.89	%		1.09	%		0.35	%(3)
Portfolio turnover rate		61	%		63	%		81	%		86	%(4)

(1)Commencement of operations of the class.

(2)Based on average weekly shares outstanding.

(3)Annualized.

(4)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Notes to Financial Statements
      March 31, 2007


NOTE 1 - Significant Accounting Policies

Ivy Funds (formerly Ivy Fund) (the Trust) is 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 a diversified, open-end management investment company. The Trust issues fourteen series of capital shares; each series represents ownership of a separate mutual fund (Fund). The assets belonging to each Fund are held separately by the custodian. The capital shares of each Fund represent a pro rata beneficial interest in the principal, net income and realized and unrealized capital gains or losses of its respective investments and other assets. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A. Security valuation - Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Securities for which quotations are not readily available or are deemed not to be reliable because of significant events or circumstances identified between the closing of their principal markets and the closing of the New York Stock Exchange are valued at fair value as determined in good faith under p rocedures established by and under the general supervision of the Trust's Board of Trustees. Management's valuation committee makes fair value determinations for the Trust, subject to the supervision of the Board of Trustees. Short-term debt securities, purchased with less than 60 days to maturity, are valued at amortized cost, which approximates market value. Short-term debt securities denominated in foreign currencies are valued at amortized cost in that currency.

B. Security transactions and related investment income - Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes over the remaining lives of the bonds. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, which ar e recorded as soon as the Fund is informed of the ex-dividend date. Interest income is recorded on the accrual basis. See Note 3 - Investment Securities Transactions.

C. Foreign currency translations - All assets and liabilities denominated in foreign currencies are translated into United States dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translation arise from changes in currency exchange rates. The Trust combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.

D. Forward foreign currency exchange contracts - A forward foreign currency exchange contract (Forward Contract) is an obligation to purchase or sell a specific currency at a future date at a fixed price. Forward Contracts are marked-to-market daily at the applicable translation rates and the resulting unrealized gains or losses are reflected in the Trust's financial statements. Gains or losses are realized by the Trust at the time the Forward Contract is extinguished. Contracts may be extinguished either by entry into a closing transaction or by delivery of the currency. Risks may arise from the possibility that the other party will not complete the obligations of the contract and from unanticipated movements in the value of the foreign currency relative to the United States dollar. The Trust uses Forward Contracts to attempt to reduce the overall risk of its investments.

E. Federal income taxes - It is the Trust's policy to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. In addition, the Trust intends to pay distributions as required to avoid imposition of excise tax. Accordingly, provision has not been made for Federal income taxes. See Note 4 - Federal Income Tax Matters.

F. Dividends and distributions - Dividends and distributions to shareholders are recorded by each Fund on the business day following record date. Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as deferral of wash sales and post-October losses, foreign currency transactions, net operating losses and expiring capital loss carryovers. At March 31, 2007, the following amounts were reclassified:

	Accumulated Undistributed Net Realized Gain (Loss)				Accumulated Undistributed Net Investment Income				Additional Paid-in Capital
Ivy Cundill Global Value Fund		$	(77,429	)		$	77,429			$	–
Ivy Dividend Income Fund			(11,297	)			11,297				–
Ivy Global Natural Resources Fund			–			(3,160,500		)			3,160,500
Ivy International Core Equity Fund			–				(119,500	)			119,500
Ivy Pacific Opportunities Fund		(1,080,809		)		1,080,809					–
Ivy Small Cap Value Fund			(438,509	)			423,709				14,800

G. Repurchase agreements - Repurchase agreements are collateralized by the value of the resold securities which, during the entire period of the agreement, remains at least equal to the value of the loan, including accrued interest thereon. The collateral for the repurchase agreement is held by the custodian bank.

H. Recently issued accounting standards - In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity, including mutual funds, in a tax return before being measured and recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Trust will adopt FIN 48 during 2007 and its potential impact on each Fund's financial statements, if any, is currently being assessed by management. In September 2006, FASB issued Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements." SFAS No. 157 defines  fair value for purposes of financial statement presentation, establishes a hierarchy for  measurin g fair value in generally accepted accounting principles and expands  financial statement disclosures about fair value measurements that are relevant  to mutual funds. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007.   The Trust will adopt SFAS No. 157 during  2008 and its potential impact, if any, on each Fund's financial statements is currently being assessed by management.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

NOTE 2 - Investment Management and Payments to Affiliated Persons

Ivy Investment Management Company (IICO), a wholly owned subsidiary of Waddell & Reed Financial, Inc. (WDR), serves as the investment manager for each Fund. IICO provides advice and supervises investments for which services it is paid a fee. The fee is payable by each Fund at the following annual rates:

Fund	Net Asset Breakpoints	Annual Rate
Ivy Balanced Fund	Up to $1 Billion	0.70%
	Over $1 Billion up to $2 Billion	0.65%
	Over $2 Billion up to $3 Billion	0.60%
	Over $3 Billion	0.55%
Ivy Bond Fund	Up to $500 Million	0.525%
	Over $500 Million and up to $1 Billion	0.50%
	Over $1 Billion and up to $1.5 Billion	0.45%
	Over $1.5 Billion	0.40%
Ivy Cundill Global Value Fund	Up to $500 Million	1.00%
	Over $500 Million and up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.76%
Ivy Dividend Income Fund	Up to $1 Billion	0.70%
	Over $1 Billion up to $2 Billion	0.65%
	Over $2 Billion up to $3 Billion	0.60%
	Over $3 Billion	0.55%
Ivy European Opportunities Fund	Up to $250 Million	1.00%
	Over $250 Million up to $500 Million	0.85%
	Over $500 Million	0.75%
Ivy Global Natural Resources Fund	Up to $500 Million	1.00%
	Over $500 Million and up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.76%
Ivy International Balanced Fund	Up to $1 Billion	0.70%
	Over $1 Billion and up to $2 Billion	0.65%
	Over $2 Billion and up to $3 Billion	0.60%
	Over $3 Billion	0.55%
Ivy International Core Equity Fund	Up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.70%
Ivy International Growth Fund	Up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.70%
Ivy Mortgage Securities Fund	Up to $500 Million	0.50%
	Over $500 Million and up to $1 Billion	0.45%
	Over $1 Billion and up to $1.5 Billion	0.40%
	Over $1.5 Billion	0.35%
Ivy Pacific Opportunities Fund	Up to $500 Million	1.00%
	Over $500 Million and up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.76%
Ivy Real Estate Securities Fund	Up to $1 Billion	0.90%
	Over $1 Billion up to $2 Billion	0.87%
	Over $2 Billion up to $3 Billion	0.84%
	Over $3 Billion	0.80%
Ivy Small Cap Value Fund	Up to $1 Billion	0.85%
	Over $1 Billion up to $2 Billion	0.83%
	Over $2 Billion up to $3 Billion	0.80%
	Over $3 Billion	0.76%
Ivy Value Fund	Up to $1 Billion	0.70%
	Over $1 Billion up to $2 Billion	0.65%
	Over $2 Billion up to $3 Billion	0.60%
	Over $3 Billion	0.55%

Prior to March 27, 2006, the fee was payable by Ivy International Growth Fund and Ivy International Core Equity Fund at the following annual rates:

Ivy International Growth Fund	Up to $2 Billion	1.00%
	Over $2 Billion and up to $2.5 Billion	0.90%
	Over $2.5 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.70%
Ivy International Core Equity Fund	Up to $500 Million	1.00%
	Over $500 Million to $1 Billion	0.85%
	Over $1 Billion up to $2 Billion	0.83%
	Over $2 Billion up to $3 Billion	0.80%
	Over $3 Billion	0.76%

These fees are accrued daily and are paid monthly. However, IICO has voluntarily agreed to waive its management fee for Ivy Dividend Income Fund on any day that the Fund's net assets are less than $25 million, subject to IICO's right to change or modify this waiver.

Mackenzie Financial Corporation (MFC) serves as subadvisor to Ivy Global Natural Resources Fund under an agreement with IICO and receives a fee as follows: 0.50% of the Fund's average daily net assets up to $500 million, 0.425% of net assets over $500 million and up to $1 billion, 0.415% of net assets over $1 billion and up to $2 billion, 0.40% of net assets over $2 billion and up to $3 billion, and 0.38% of net assets over $3 billion.

Cundill Investment Research Ltd. served as subadvisor to Ivy Cundill Global Value Fund under an agreement with IICO and received a fee that is shown in the following table:

Fund	Net Asset Breakpoints	Annual Rate
Ivy Cundill Global Value Fund	On the first $500 Million	0.50%
	On the next $500 Million	0.425%
	On the next $1 Billion	0.415%
	On the next $1 Billion	0.40%
	On all assets exceeding $3 Billion	0.38%

Effective September 22, 2006, MFC became the interim subadvisor to Ivy Cundill Global Value Fund. Its fee is the same as that payable to Cundill Investment Research Ltd.

Henderson Global Investors (North America) Inc. (HGINA) serves as subadvisor to Ivy European Opportunities Fund under an agreement with IICO. Henderson Investment Management Ltd., under a subadvisory agreement with HGINA, serves as subadvisor to the Fund. HGINA receives a fee payable monthly at an annual rate of 0.50% of average net assets.

Advantus Capital Management, Inc. serves as subadvisor to Ivy Bond Fund, Ivy Mortgage Securities Fund and Ivy Real Estate Securities Fund under an agreement with IICO and receives a fee equal to, on an annual basis, 0.27%, 0.30% and 0.55% of the respective Fund's average net assets.

BlackRock Financial Management, Inc. served as subadvisor to Ivy Small Cap Value Fund under an agreement with IICO and received a fee equal to, on an annual basis, 0.50% of the Fund's average net assets.

Effective September 27, 2006, BlackRock Capital Management, Inc, became the interim subadvisor to the Fund. Its fee is the same as that payable to the predecessor.

Templeton Investment Counsel, LLC serves as subadvisor to Ivy International Balanced Fund under an agreement with IICO and receives a fee that is shown in the following table:

Fund	Net Asset Breakpoints	Annual Rate
Ivy International Balanced Fund	On the first $100 Million	0.50%
	All net assets exceeding $100 Million	0.40%

Pursuant to a Master Fund Accounting Services Agreement, IICO provides certain accounting and pricing services for each Fund. As of March 18, 2003, IICO assigned its responsibilities under the Accounting Services Agreement to Waddell & Reed Services Company (WRSCO), an indirect subsidiary of WDR. For these services, each Fund pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table:

Accounting Services Fee
	Average Net Asset Level (in millions)					Annual Fee Rate for Each Level
	From	$	0   to	$	10		$	0
	From	$	10   to	$	25		$	11,500
	From	$	25   to	$	50		$	23,100
	From	$	50   to	$	100		$	35,500
	From	$	100   to	$	200		$	48,400
	From	$	200   to	$	350		$	63,200
	From	$	350   to	$	550		$	82,500
	From	$	550   to	$	750		$	96,300
	From	$	750   to	$	1,000		$	121,600
		$	1,000 and Over				$	148,500

In addition, for each class of shares in excess of one, each Fund pays WRSCO a monthly per-class fee equal to 2.5% of the monthly accounting services base fee.

Under the Shareholder Servicing Agreement, with respect to Class A, Class B, Class C, Class II and Advisor Class shares, for each shareholder account that was in existence at any time during the prior month: Ivy Balanced Fund, Ivy Dividend Income Fund, Ivy International Balanced Fund, Ivy Real Estate Securities Fund, Ivy Small Cap Value Fund and Ivy Value Fund pay WRSCO a monthly fee of $1.5792; Ivy Bond Fund and Ivy Mortgage Securities Fund pay WRSCO a monthly fee of $1.6958; and Ivy Cundill Global Value Fund, Ivy European Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Growth Fund, Ivy International Core Equity Fund and Ivy Pacific Opportunities Fund each pay WRSCO a monthly fee of $1.5042. For Class Y shares, each Fund pays WRSCO a monthly fee at an annual rate of 0.15% of the average daily net assets of the class for the preceding month. For Class R shares, each Fund pays WRSCO a monthly fee at an annual rate of 0.20% of the average daily net assets of the class for the preceding month. Effective September 1, 2006, the Shareholder Servicing Agreement with respect to Class A, Class B and Class C shares has been revised so that each Fund pays WRSCO an annual fee (payable monthly) for each account of the Fund that is non-networked and is as shown above; however, WRSCO has agreed to reduce those fees if the number of total shareholders accounts within the Complex (Waddell & Reed Advisors Funds, Waddell & Reed InvestEd Porfolios, Inc., Ivy Funds and Ivy Funds, Inc.) reaches certain levels. For certain networked accounts (that is, those accounts whose Fund shares are purchased through certain intermediaries), WRSCO has agreed to reduce its per account fees charged to the Funds to $0.50 per month per shareholder account. Additional fees may be paid by the Funds to those intermediaries. Each Fund also reimburses WRSCO for certain out-of-pocket costs for all classes. Certain broker-dealers that maintain shareholder accounts with each Fund through an omnibus account provide transfer a gent and other shareholder-related services that would otherwise be provided by WRSCO if the individual accounts that comprise the omnibus account were opened by their beneficial owners directly. WRSCO pays such broker-dealers a per account fee for each open account within the omnibus account, or a fixed rate (e.g., 0.10%) fee, based on the average daily net asset value of the omnibus account (or a combination thereof).

Pursuant to an Administrative Services Agreement, IICO provides certain administrative services to each Fund. The administrative fee for each Fund is a monthly fee at the annual rate of 0.01% of each Fund's average daily net assets.

As principal underwriter for the Trust's shares, Ivy Funds Distributor, Inc. (IFDI) receives sales commissions (which are not an expense of the Trust) for Class A shares. A contingent deferred sales charge (CDSC) may be assessed against a shareholder's redemption amount of Class B, Class C or certain Class A shares and is paid to IFDI. During the fiscal year ended March 31, 2007, IFDI received the following amounts in sales commissions and CDSC:

	Sales Commissions			CDSC
				Class A		Class B		Class C
Ivy Balanced Fund		$	135,533	$	13	$	4,201	$	156
Ivy Bond Fund			194,008		794		4,546		471
Ivy Cundill Global Value Fund			2,163,856		20,310		79,396		40,419
Ivy Dividend Income Fund			431,557		1,881		12,200		1,599
Ivy European Opportunities Fund			1,624,827		45,072		25,584		4,745
Ivy Global Natural Resources Fund			6,577,986		32,834		447,637		201,263
Ivy International Balanced Fund			910,194		11,809		3,774		6,957
Ivy International Core Equity Fund			714,049		2,937		4,828		2,670
Ivy International Growth Fund			173,067		165		7,990		1,414
Ivy Mortgage Securities Fund			991,551		1,123		25,234		6,125
Ivy Pacific Opportunities Fund			2,274,196		68,948		13,800		6,384
Ivy Real Estate Securities Fund			1,977,980		1,963		16,568		2,249
Ivy Small Cap Value Fund			555,127		864		5,151		621
Ivy Value Fund			238,900		598		2,624		205

With respect to Class A, Class B and Class C shares, IFDI pays sales commissions and all expenses in connection with the sale of the Trust's shares, except for registration fees and related expenses. During the fiscal year ended March 31, 2007, IFDI paid the following amounts:

Ivy Balanced Fund	$	135,269
Ivy Bond Fund		197,555
Ivy Cundill Global Value Fund		2,526,523
Ivy Dividend Income Fund		437,392
Ivy European Opportunities Fund		1,734,170
Ivy Global Natural Resources Fund		10,401,236
Ivy International Balanced Fund		1,048,388
Ivy International Core Equity Fund		882,651
Ivy International Growth Fund		227,183
Ivy Mortgage Securities Fund		977,318
Ivy Pacific Opportunities Fund		2,289,335
Ivy Real Estate Securities Fund		1,981,356
Ivy Small Cap Value Fund		555,827
Ivy Value Fund		237,155

Under a Distribution and Service Plan for Class A shares adopted by the Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, each Fund may pay a distribution and/or service fee to IFDI in an amount not to exceed 0.25% of the Fund's average annual net assets attributable to that class. The fee is to be paid to reimburse IFDI for amounts it expends in connection with the distribution of the Class A shares and/or provision of personal services to Fund shareholders and/or maintenance of shareholder accounts.

Under a Distribution and Service Plan for Class B and Class C shares adopted by the Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, each Fund may pay IFDI a service fee in an amount not to exceed 0.25% of the Fund's average annual net assets attributable to that class. The fee is to be paid to reimburse IFDI for amounts it expends in connection with the provision of personal services to Fund shareholders and/or maintenance of shareholder accounts.

Under the Distribution and Service Plan for Class B shares and Class C shares adopted by the Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, each Fund may pay IFDI a distribution fee not to exceed 0.75% of the Fund's average annual net assets attributable to that class to compensate IFDI for its services in connection with the distribution of shares of that class. The Class B Plan and the Class C Plan each permit IFDI to receive compensation, through the distribution fee, for its distribution activities for that class.

Under the Class Y Plan, each Fund may pay IFDI a fee of up to 0.25%, on an annual basis, of the average daily net assets attributable to that class to compensate IFDI for, either directly or through third parties, distributing the Class Y shares of that Fund, providing personal service to Class Y shareholders and/or maintenance of Class Y shareholder accounts.

Under the Class R Plan, each Fund may pay IFDI a fee of up to 0.50%, on an annual basis, of the average daily net assets attributable to that class to compensate IFDI for, either directly or through third parties, distributing the Class R shares of that Fund, providing personal service to Class R shareholders and/or maintenance of Class R shareholder accounts.

For Ivy Cundill Global Value Fund, Ivy Global Natural Resources Fund, Ivy International Core Equity Fund and Ivy Pacific Opportunities Fund, IICO has contractually agreed to reimburse a Fund's expenses, for the calendar year ended December 31, 2006, and for the following five years, to the extent necessary to ensure that the Fund's annual operating expenses, when calculated at the Fund level, do not exceed 2.50% of the Fund's average net assets (excluding 12b-1 fees and certain other expenses). During the fiscal year ended March 31, 2007, IICO reimbursed the Fund's expenses as shown in the following table:

Ivy International Core Equity Fund, Advisor Class $ 13

In addition, IFDI and WRSCO have voluntarily agreed to waive sufficient Fund expenses to ensure that the total annual fund operating expenses do not exceed the following levels for the specified funds/classes:

Fund and Class	Expense Limitation (as a percentage of average net assets of each Class)
Ivy Cundill Global Value Fund, Class A		1.90%
Ivy Cundill Global Value Fund, Class C		2.55%
Ivy Cundill Global Value Fund, Class Y		1.20%
Ivy Global Natural Resources Fund, Class A		1.70%
Ivy Global Natural Resources Fund, Class C		2.40%
Ivy Global Natural Resources Fund, Class Y		1.20%

During the fiscal year ended March 31, 2007, IFDI reimbursed the Fund's service fees as shown:

Ivy Cundill Global Value Fund, Class Y	$	32,943
Ivy Global Natural Resources Fund, Class Y		135,711

During the year ended March 31, 2007, the Funds paid Trustees' regular compensation of $319,841, which is included in other expenses.

NOTE 3 - Investment Securities Transactions

Investment securities transactions for the fiscal year ended March 31, 2007 are summarized as follows:

	Ivy Balanced Fund		Ivy Bond Fund		Ivy Cundill Global Value Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	20,677,332	$	38,375,465	$	389,397,548
Purchases of U.S. government securities		–		26,458,216		–
Purchases of short-term securities		722,079,454		522,212,446		25,561,175,153
Proceeds from maturities and sales of       investment securities, excluding short-term       and U.S. government securities		31,447,709		21,379,301		325,941,346
Proceeds from maturities and sales of       U.S. government securities		939,085		34,439,340		–
Proceeds from maturities and sales of       short-term securities		721,966,514		518,982,267		25,628,002,000

	Ivy Dividend Income Fund		Ivy European Opportunities Fund		Ivy Global Natural Resources Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	64,681,221	$	269,286,235	$	5,286,444,003
Purchases of U.S. government securities		–		–		–
Purchases of short-term securities		1,197,325,319		2,236,680,268		19,370,597,388
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government securities		23,803,399		163,341,075		4,152,761,229
Proceeds from maturities and sales of       U.S. government securities		–		–		–
Proceeds from maturities and sales of       short-term securities	1,193,115,261			2,237,921,763		19,422,224,391

	Ivy International Balanced Fund		Ivy International Core Equity Fund		Ivy International Growth Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	129,680,417	$	244,408,686	$	216,925,966
Purchases of U.S. government securities		–		–		–
Purchases of short-term       securities		1,453,121,770		917,190,149		1,036,275,848
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government securities		36,771,450		154,950,585		247,538,867
Proceeds from maturities and sales of       U.S. government securities		–		–		–
Proceeds from maturities and sales of       short-term securities		1,424,414,272		916,079,717		1,037,819,371

		Ivy Mortgage Securities Fund		Ivy Pacific Opportunities Fund		Ivy Real Estate Securities Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities		$	93,789,090	$	361,854,776	$	326,826,284
Purchases of U.S. government securities			298,044,332		–		–
Purchases of short-term securities			2,423,406,149		1,652,871,931		1,224,143,921
Purchases of options			–		1,469,113		–
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government securities			38,830,211		220,826,264		204,931,888
Proceeds from maturities and       sales of U.S. government securities			310,210,667		–		–
Proceeds from maturities and       sales of short-term securities			2,432,316,934		1,655,383,996		1,224,385,302
Proceeds from options	–				–		–

	Ivy Small Cap Value Fund		Ivy Value Fund
Purchases of investment securities, excluding short-term       and U.S. government securities	$	180,169,350	$	48,072,608
Purchases of U.S. government securities		–		–
Purchases of short-term securities		944,143,103		603,060,943
Proceeds from maturities and sales of investment securities,       excluding short-term and U.S. government securities		160,796,892		55,866,580
Proceeds from maturities and sales of U.S. government securities		–		–
Proceeds from maturities and sales of short-term securities		940,034,236	601,005,448

For Federal income tax purposes, cost of investments owned at March 31, 2007 and the related unrealized appreciation (depreciation) were as follows:

		Cost	Appreciation		Depreciation			Aggregate Appreciation (Depreciation)
Ivy Balanced Fund	$	77,952,439	$	15,818,099		$	413,313		$	15,404,786
Ivy Bond Fund		72,205,223		481,074			666,727			(185,653	)
Ivy Cundill Global       Value Fund		854,444,028		183,071,532			40,749,980			142,321,552
Ivy Dividend       Income Fund		114,082,968		25,230,821			702,972			24,527,849
Ivy European       Opportunities Fund		402,325,820		121,706,302			4,500,007			117,206,295
Ivy Global Natural       Resources Fund	4,159,071,696			942,786,407			15,265,631			927,520,776
Ivy International       Balanced Fund		237,584,065		39,059,755			1,172,777			37,886,978
Ivy International       Core Equity Fund		191,471,619		24,326,455			2,622,976			21,703,479
Ivy International       Growth Fund		177,015,354		59,450,484			1,435,017			58,015,467
Ivy Mortgage       Securities Fund		336,207,943		1,797,505			5,314,376			(3,516,871	)
Ivy Pacific       Opportunities Fund		354,271,597		91,449,318			11,051,241			80,398,077
Ivy Real Estate       Securities Fund		517,739,500		191,372,931			1,653,593			189,719,338
Ivy Small Cap       Value Fund		149,304,101		16,282,277			2,723,033			13,559,244
Ivy Value Fund		66,807,596		17,879,844			875,694			17,004,150

NOTE 4 - Federal Income Tax Matters

For Federal income tax purposes, the Funds' distributed and undistributed earnings and profit for the fiscal year ended March 31, 2007 and the related Capital Loss Carryover and Post-October activity were as follows:

	Ivy Balanced Fund			Ivy Bond Fund			Ivy Cundill Global Value Fund
Net ordinary income		$	988,959		$	2,847,833		$	25,207,346
Distributed ordinary income			1,085,606			2,841,082			14,086,154
Undistributed ordinary income			38,786			36,210			11,236,019
Realized long-term capital gains			653,025			–			51,372,008
Distributed long-term       capital gains			–			–			35,772,161
Undistributed long-term       capital gains			653,025			–			19,196,641
Capital loss carryover			–			461,131			–
Post-October losses deferred			–			–			287,658

	Ivy Dividend Income Fund			Ivy European Opportunities Fund			Ivy Global Natural Resources Fund
Net ordinary income		$	1,068,470		$	4,879,556		$	142,452,257
Distributed ordinary income			1,079,904			4,118,063			197,937,422
Undistributed ordinary income			28,255			761,493			54,518,171
Realized long-term       capital gains			2,824,612			10,359,289			247,374,843
Distributed long-term       capital gains			1,389,185			–			220,660,776
Undistributed long-term       capital gains			1,435,427			10,359,289			75,872,012
Capital loss carryover			–			–			–
Post-October losses deferred			–			–			573,848

	Ivy International Balanced Fund			Ivy International Core Equity Fund			Ivy International Growth Fund
Net ordinary income		$	6,270,627		$	7,228,646		$	566,909
Distributed ordinary income			5,842,010			837,091			244,825
Undistributed ordinary income			1,949,547			6,391,555			322,084
Realized long-term capital gains			4,862,347			12,068,191			–
Distributed long-term capital gains			5,666,925			6,971,717			–
Undistributed long-term       capital gains			1,924,208			5,096,474			–
Capital loss carryover			–			–			–
Post-October losses deferred			–			44,740			–

	Ivy Mortgage Securities Fund			Ivy Pacific Opportunities Fund			Ivy Real Estate Securities Fund
Net ordinary income		$	14,179,448		$	16,574,426		$	13,944,969
Distributed ordinary income			14,174,142			6,928,367			8,767,618
Undistributed ordinary income			176,961			14,509,064			7,085,430
Realized long-term       capital gains			–			9,390,595			26,471,724
Distributed long-term capital gains			–			6,780,715			19,091,476
Undistributed long-term       capital gains			–			4,211,703			12,870,552
Capital loss carryover			484,106			–			–
Post-October losses deferred			275,654			129,873			–

	Ivy Small Cap Value Fund			Ivy Value Fund
Net ordinary income		$	7,736,967		$	1,503,840
Distributed ordinary income			6,874,058			521,854
Undistributed ordinary income			4,223,778			1,011,126
Realized long-term capital gains			5,487,432			2,139,011
Distributed long-term capital gains			4,367,343			1,735,651
Undistributed long-term capital gains			2,187,065			878,555
Capital loss carryover			–			–
Post-October losses deferred			–			–

Internal Revenue Code regulations permit each Fund to defer into its next fiscal year net capital losses or net long-term capital losses and currency losses incurred between each November 1 and the end of its fiscal year (post-October losses).

Capital Loss Carryovers are available to offset future realized capital gain net income for Federal income tax purposes. The following shows the totals by year in which the capital loss carryovers will expire if not utilized.

	Ivy Bond Fund			Ivy Global Natural Resources Fund			Ivy International Growth Fund
March 31, 2008		$	–		$	–		$	407,464
March 31, 2009			28,681			–			77,610,725
March 31, 2010			–			167,845			146,210,535
March 31, 2011			–			–			47,213,802
March 31, 2015			461,131			–			–
Total carryover		$	489,812		$	167,845		$	271,442,526

	Ivy Mortgage Securities Fund			Ivy Pacific Opportunities Fund
March 31, 2008		$	–		$	157,220
March 31, 2009			–			157,220
March 31, 2010			–			157,220
March 31, 2014			164,447			–
March 31, 2015			484,106			–
Total carryover		$	648,553		$	471,660

Ivy Developing Markets Fund was merged into Ivy Pacific Opportunities Fund as of June 16, 2003. At the time of the merger, Ivy Developing Markets Fund had capital loss carryovers available to offset future gains of the Ivy Pacific Opportunities Fund. These carryovers are limited to $157,220 for each period ending from March 31, 2008 through 2010 plus any unused limitations from prior years.

Ivy International Growth Fund was merged into Ivy International Fund (see Note 11) as of March 27, 2006. At the time of the merger, Ivy International Growth Fund had capital loss carryovers available to offset future gains of the Ivy International Fund. These carryovers are limited to $7,403,026 for the period ending March 31, 2008 and $3,234,412 for each period ending from March 31, 2009 through 2010 plus any unused limitations from prior years and the amount of certain built-in gains realized, if any.

Note 5 - Multiclass Operations

Each Fund within the Trust offers four classes of shares, Class A, Class B, Class C and Class Y, each of which have equal rights as to assets and voting privileges. In addition, Ivy Global Natural Resources Fund and Ivy Real Estate Securities Fund offer Class R shares, which also have equal rights as to assets and voting privileges. Ivy Cundill Global Value Fund, Ivy European Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Core Equity Fund, Ivy International Growth Fund and Ivy Pacific Opportunities Fund also offered Advisor Class shares and Ivy Cundill Global Value Fund and Ivy International Growth Fund also offered Class II shares. Advisor Class and Class II shares are no longer available for investment. A comprehensive discussion of the terms under which shares of each class are offered is contained in the Prospectuses and the Statement of Additional Information for the Trust.

Income, non-class specific expenses, and realized and unrealized gains and losses are allocated daily to each class of shares based on the value of their relative net assets as of the beginning of each day adjusted for the prior day's capital share activity.

Transactions in capital stock for the fiscal year ended March 31, 2007 are summarized below. Amounts are in thousands.

	Ivy Balanced Fund			Ivy Bond Fund
Shares issued from sale of shares:
Class A		763			1,752
Class B		74			96
Class C		117			403
Class Y		605			4
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A		40			123
Class B		–	*		5
Class C		1			8
Class Y		26			–	*
Shares redeemed:
Class A		(891	)		(1,129	)
Class B		(50	)		(67	)
Class C		(62	)		(189	)
Class Y		(1,352	)		(2	)
Increase (decrease) in outstanding capital shares		(729	)		1,004
Value issued from sale of shares:
Class A	$	11,988		$	18,156
Class B		1,146			996
Class C		1,841			4,183
Class Y		9,521			42
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A		636			1,280
Class B		3			50
Class C		8			80
Class Y		411			2
Value redeemed:
Class A	(13,917		)	(11,724		)
Class B	(773		)		(699	)
Class C	(968		)		(1,956	)
Class Y	(21,240		)		(24	)
Increase (decrease) in outstanding capital	$	(11,344	)	$	10,386
*Not shown due to rounding

	Ivy Cundill Global Value Fund				Ivy Dividend Income Fund				Ivy European Opportunities Fund
Shares issued from sale of shares:
Class A			11,695				3,823				4,299
Class B			586				242				270
Class C			3,326				498				431
Class Y			196				137				110
Advisor Class			–				NA				–
Class II			–				NA				NA
Shares issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			2,079				127				88
Class B			161				8				4
Class C			641				17				5
Class Y			39				2				2
Advisor Class			11				NA				–	*
Class II			–	*			NA				NA
Shares redeemed:
Class A			(11,797	)			(1,412	)			(1,798	)
Class B			(831	)			(107	)			(310	)
Class C			(3,225	)			(240	)			(348	)
Class Y			(361	)			(26	)			(50	)
Advisor Class			(20	)			NA				(19	)
Class II			(–	)			NA				NA
Increase in outstanding capital shares			2,500				3,069				2,684
*Not shown due to rounding.
Value issued from sale of shares:
Class A		$	181,422			$	57,590			$	155,748
Class B			8,886				3,622				9,546
Class C			50,324				7,446				15,127
Class Y			3,046				2,107				4,028
Advisor Class			–				NA				–
Class II			–				NA				NA
Value issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			32,120				1,941				3,391
Class B			2,444				126				136
Class C			9,682				259				198
Class Y			602				26				68
Advisor Class			173				NA				12
Class II			1				NA				NA
Value redeemed:
Class A			(182,765	)		(21,237		)		(64,019		)
Class B			(12,526	)			(1,609	)		(10,625		)
Class C			(48,759	)			(3,596	)		(11,838		)
Class Y			(5,541	)			(392	)			(1,746	)
Advisor Class			(321	)			NA				(672	)
Class II			(–	)			NA				NA
Increase in outstanding capital		$	38,788			$	46,283			$	99,354

	Ivy Global Natural Resources Fund				Ivy International Balanced Fund				Ivy International Core Equity Fund
Shares issued from sale of shares:
Class A			44,041				7,862				5,938
Class B			2,245				576				464
Class C			14,135				1,287				1,226
Class Y			6,910				83				199
Class R			128				NA				NA
Advisor Class			–				NA				–
Class II			NA				NA				NA
Shares issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			7,438				566				292
Class B			648				29				21
Class C			2,648				56				56
Class Y			425				3				5
Class R			3				NA				NA
Advisor Class			1				NA				–
Class II			NA				NA				NA
Shares redeemed:
Class A			(23,141	)			(1,840	)			(1,416	)
Class B			(1,584	)			(253	)			(440	)
Class C			(6,347	)			(182	)			(231	)
Class Y			(1,415	)			(31	)			(52	)
Class R			(12	)			NA				NA
Advisor Class			(3	)			NA				(–	)
Class II			NA				NA				NA
Increase in outstanding capital shares			46,120				8,156				6,062
Value issued from sale of shares:
Class A		$	1,355,319			$	127,445			$	97,987
Class B			65,627				9,278				7,113
Class C			404,164				20,788				18,787
Class Y			214,763				1,362				3,361
Class R			3,867				NA				NA
Advisor Class			–				NA				–
Class II			NA				NA				NA
Value issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			228,809				9,230				4,915
Class B			18,786				472				328
Class C			75,247				914				877
Class Y			13,131				53				83
Class R			110				NA				NA
Advisor Class			25				NA				–
Class II			NA				NA				NA
Value redeemed:
Class A		(705,593		)		(29,494		)		(23,415		)
Class B			(45,518	)		(4,181		)			(6,571	)
Class C			(178,056	)			(2,929	)			(3,545	)
Class Y			(43,417	)			(502	)			(847	)
Class R			(369	)			NA				NA
Advisor Class			(90	)			NA				(–	)
Class II			NA				NA				NA
Increase in outstanding capital		$	1,406,805			$	132,436			$	99,073

	Ivy International Growth Fund				Ivy Mortgage Securities Fund				Ivy Pacific Opportunities Fund
Shares issued from sale of shares:
Class A			672				9,873				12,129
Class B			81				358				699
Class C			133				806				1,079
Class Y			44				926				444
Advisor Class			–				NA				–
Class II			–				NA				NA
Shares issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			6				1,061				702
Class B			–				36				43
Class C			–				63				61
Class Y			–	*			36				15
Advisor Class			–				NA				–	*
Class II			–	*			NA				NA
Shares redeemed:
Class A			(1,134	)			(7,938	)			(3,940	)
Class B			(192	)			(327	)			(298	)
Class C			(396	)			(854	)			(371	)
Class Y			(108	)			(425	)			(246	)
Advisor Class			(–	)			NA				(–	)*
Class II			(1	)			NA				NA
Increase (decrease) in outstanding       capital shares			(895	)			3,615				10,317
*Not shown due to rounding.
Value issued from sale of shares:
Class A		$	20,944			$	103,705			$	186,431
Class B			2,325				3,756				9,928
Class C			3,806				8,470				15,685
Class Y			1,416				9,736				6,813
Advisor Class			–				NA				–
Class II			–				NA				NA
Value issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			187				11,153				11,390
Class B			–				375				636
Class C			–				665				927
Class Y			7				380				250
Advisor Class			–				NA				1
Class II			1			NA				NA
Value redeemed:
Class A			(34,986	)			(83,295	)			(59,663	)
Class B			(5,467	)			(3,431	)			(4,184	)
Class C			(11,362	)			(8,958	)			(5,310	)
Class Y			(3,203	)			(4,465	)			(3,734	)
Advisor Class			(–	)			NA				(3	)
Class II			(40	)			NA				NA
Increase (decrease) in outstanding capital		$	(26,372	)		$	38,091			$	159,167

	Ivy Real Estate Securities Fund				Ivy Small Cap Value Fund				Ivy Value Fund
Shares issued from sale of shares:
Class A			6,162				3,124				1,485
Class B			273				170				130
Class C			402				279				118
Class Y			2,397				328				78
Class R			1				NA				NA
Shares issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			564				494				105
Class B			27				38				6
Class C			31				57				6
Class Y			446				100				3
Class R			–	*			NA				NA
Shares redeemed:
Class A			(2,689	)			(1,460	)			(1,195	)
Class B			(108	)			(98	)			(94	)
Class C			(162	)			(172	)			(85	)
Class Y			(2,052	)			(615	)			(780	)
Class R			(–	)*			NA				NA
Increase (decrease) in outstanding       capital shares			5,292				2,245				(223)
*Not shown due to rounding.
Value issued from sale of shares:
Class A		$	153,443			$	50,177			$	26,492
Class B			6,799				2,628				2,306
Class C			9,917				4,335				2,080
Class Y			59,904				5,363				1,375
Class R			26				NA				NA
Value issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			14,369				7,895				1,951
Class B			693				582				119
Class C			802				882				104
Class Y			11,342				1,623				59
Class R			5				NA				NA
Value redeemed:
Class A		(66,195		)		(23,341		)		(21,241		)
Class B			(2,682	)			(1,509	)			(1,660	)
Class C			(3,986	)			(2,691	)			(1,501	)
Class Y		(49,828		)		(10,060		)		(14,417		)
Class R			(–	)*			NA				NA
Increase (decrease) in outstanding capital		$	134,609			$	35,884			$	(4,333)
*Not shown due to rounding.

Transactions in capital stock for the fiscal year ended March 31, 2006 are summarized below. Amounts are in thousands.

	Ivy Balanced Fund				Ivy Bond Fund
Shares issued from sale of shares:
Class A			699				1,197
Class B			61				104
Class C			93				154
Class Y			268				2
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			33				84
Class B			–	*			3
Class C			–	*			3
Class Y			29				–	*
Shares redeemed:
Class A			(836	)			(586	)
Class B			(37	)			(36	)
Class C			(26	)			(40	)
Class Y			(960	)			(4	)
Increase (decrease) in outstanding capital shares			(676	)			881
Value issued from sale of shares:
Class A		$	10,172			$	12,586
Class B			873				1,089
Class C			1,351				1,620
Class Y			3,925				24
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			493				885
Class B			1				30
Class C			1				33
Class Y			423				1
Value redeemed:
Class A		(12,215		)		(6,143		)
Class B			(531	)			(378	)
Class C			(386	)			(424	)
Class Y		(13,920		)			(39	)
Increase (decrease) in outstanding capital		$	(9,813	)		$	9,284
*Not shown due to rounding

	Ivy Cundill Global Value Fund				Ivy Dividend Income Fund				Ivy European Opportunities Fund
Shares issued from sale of shares:
Class A			20,739				2,368				3,307
Class B			1,345				173				262
Class C			7,470				352				406
Class Y			775				25				67
Advisor Class			–	*			NA				–
Class II			–				NA				NA
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			1,449				34				45
Class B			113				1				–
Class C			419				3				–
Class Y			45				1				1
Advisor Class			9				NA				1
Class II			–	*			NA				NA
Shares redeemed:
Class A			(5,174	)			(796	)			(2,346	)
Class B			(451	)			(142	)			(388	)
Class C			(1,104	)			(214	)			(481	)
Class Y			(483	)			(60	)			(86	)
Advisor Class			(20	)			NA				(75	)
Class II			(4	)			NA				NA
Increase in outstanding capital shares			25,128				1,745				713
*Not shown due to rounding.
Value issued from sale of shares:
Class A		$	301,972			$	31,516			$	96,107
Class B			19,035				2,256				7,330
Class C			106,253				4,637				11,400
Class Y			11,417				348				1,934
Advisor Class			2				NA				–
Class II			–				NA				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			21,288				459				1,325
Class B			1,631				20				–
Class C			6,019				37				–
Class Y			655				12				27
Advisor Class			134				NA				30
Class II			1				NA				NA
Value redeemed:
Class A			(75,706	)		(10,687		)		(68,210		)
Class B			(6,439	)			(1,916	)		(10,777		)
Class C			(15,720	)			(2,854	)		(13,590		)
Class Y			(7,160	)			(845	)			(2,464	)
Advisor Class			(292	)			NA				(2,190	)
Class II			(50	)			NA				NA
Increase in outstanding capital		$	363,040			$	22,983			$	20,922

	Ivy Global Natural Resources Fund				Ivy International Fund (See Note 11)				Ivy International Balanced Fund
Shares issued from sale of shares:
Class A			44,945				824				4,510
Class B			3,329				45				205
Class C			14,993				32				458
Class Y			3,174				8				37
Class R			4				NA				NA
Advisor Class			–				–				NA
Class II			NA				–				NA
Shares issued in connection with merger of       Ivy International Growth Fund:
Class A			NA				622				NA
Class B			NA				159				NA
Class C			NA				1,691				NA
Class Y			NA				198				NA
Shares issued from reinvestment of       dividends and/or capital gains distribution:
Class A			3,194				29				377
Class B			359				–				17
Class C			1,265				–				29
Class Y			120				–	*			2
Class R			–				NA				NA
Advisor Class			1				–				NA
Class II			NA				–	*			NA
Shares redeemed:
Class A			(9,897	)			(1,603	)			(4,132	)
Class B			(958	)			(540	)			(63	)
Class C			(2,318	)			(101	)			(136	)
Class Y			(395	)			(10	)			(23	)
Class R			(–	)			NA				NA
Advisor Class			(9	)			(–	)			NA
Class II			NA				(5	)			NA
Increase in outstanding capital shares			57,807				1,349				1,281
*Not shown due to rounding.
Value issued from sale of shares:
Class A		$	1,165,684			$	20,366			$	66,425
Class B			80,686				1,077				3,002
Class C			361,451				786				6,699
Class Y			83,597				197				545
Class R			100				NA				NA
Advisor Class			–				–				NA
Class II			NA				–				NA
Value issued in connection with merger of       Ivy International Growth Fund:
Class A			NA				18,225				NA
Class B			NA				4,308				NA
Class C			NA				45,833				NA
Class Y			NA				5,818				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			83,464				770				5,444
Class B			8,924				–				236
Class C			30,828				–				417
Class Y			3,158				3				31
Class R			–				NA				NA
Advisor Class			13				–				NA
Class II			NA				2				NA
Value redeemed:
Class A		(252,205		)		(40,726		)		(60,740		)
Class B			(22,930	)		(11,967		)			(934	)
Class C			(55,523	)			(2,389	)			(1,987	)
Class Y			(10,323	)			(274	)			(334	)
Class R			(–	)			NA				NA
Advisor Class			(219	)			(–	)			NA
Class II			NA				(121	)			NA
Increase in outstanding capital		$	1,476,705			$	41,908			$	18,804

	Ivy International Value Fund (See Note 11)				Ivy Mortgage Securities Fund				Ivy Pacific Opportunities Fund
Shares issued from sale of shares:
Class A			3,440				11,305				8,544
Class B			321				527				437
Class C			515				1,124				795
Class Y			59				416				229
Advisor Class			–				NA				–
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				813				109
Class B			–				27				6
Class C			–				51				8
Class Y			–				27				3
Advisor Class			–				NA				–	*
Shares redeemed:
Class A			(610	)			(6,495	)			(1,357	)
Class B			(1,113	)			(182	)			(262	)
Class C			(146	)			(537	)			(164	)
Class Y			(20	)			(247	)			(72	)
Advisor Class			(3	)			NA				(1	)
Increase in outstanding capital shares			2,443				6,829				8,275
Value issued from sale of shares:
Class A		$	46,962			$	120,577			$	107,057
Class B			4,021				5,628				5,106
Class C			6,847				12,002				9,476
Class Y			800				4,437				2,865
Advisor Class			–				NA				–
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				8,651				1,371
Class B			–				287				67
Class C			–				542				97
Class Y			–				283				33
Advisor Class			–				NA				–	*
Value redeemed:
Class A			(8,349	)		(69,143		)			(16,746	)
Class B		(13,321		)			(1,932	)			(2,947	)
Class C			(1,794	)			(5,707	)			(1,903	)
Class Y			(276	)			(2,626	)			(879	)
Advisor Class			(32	)			NA				(8	)
Increase in outstanding capital		$	34,858			$	72,999			$	103,589
*Not shown due to rounding.

	Ivy Real Estate Securities Fund				Ivy Small Cap Value Fund				Ivy Value Fund
Shares issued from sale of shares:
Class A			4,941				1,808				1,674
Class B			233				145				161
Class C			299				186				110
Class Y			2,267				268				90
Class R			5				NA				NA
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			456				918				20
Class B			24				75				–	*
Class C			26				107				–	*
Class Y			436				273				10
Class R			–	*			NA				NA
Shares redeemed:
Class A			(2,833	)			(1,356	)			(828	)
Class B			(161	)			(97	)			(48	)
Class C			(169	)			(135	)			(48	)
Class Y			(1,526	)			(495	)			(654	)
Class R			(–	)			NA				NA
Increase in outstanding capital shares			3,998				1,697				487
Value issued from sale of shares:
Class A		$	102,220			$	30,229			$	27,487
Class B			4,734				2,371				2,626
Class C			6,148				3,069				1,795
Class Y			47,284				4,497				1,477
Class R			100				NA				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			9,405				13,765				334
Class B			484				1,091				1
Class C			540				1,564				2
Class Y			9,017				4,120				160
Class R			–	*			NA				NA
Value redeemed:
Class A			(56,847	)		(22,367		)		(13,682		)
Class B			(3,275	)			(1,545	)			(784	)
Class C			(3,453	)			(2,217	)			(792	)
Class Y			(31,009	)		(8,255		)		(10,866		)
Class R			(–	)*			NA				NA
Increase in outstanding capital		$	85,348			$	26,322			$	7,758
*Not shown due to rounding.

NOTE 6 - Options

Options purchased by a Fund are accounted for in the same manner as marketable portfolio securities. The cost of portfolio securities acquired through the exercise of call options is increased by the premium paid to purchase the call. The proceeds from securities sold through the exercise of put options are decreased by the premium paid to purchase the put.

When a Fund writes (sells) an option, an amount equal to the premium received by the Fund is recorded as a liability. The amount of the liability is subsequently adjusted to reflect the current market value of the option written. The current market value of an option is the last sales price on the principal exchange on which the option is traded or, in the absence of transactions, the mean between the bid and asked prices or at a value supplied by a broker-dealer. When an option expires on its stipulated expiration date or a Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the call option was sold) and the liability related to such option is extinguished. When a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. For each Fund, when a written put is exercised, the cost basis of the sec urities purchased by the Fund is reduced by the amount of the premium received.

For Ivy Value Fund, transactions in written call options were as follows:

	Number of Contracts			Premiums Received
Outstanding at March 31, 2006		420			$	24,522
Options written		4,102				201,315
Options terminated in closing purchase transactions		(331	)		(27,620		)
Options exercised		(650	)		(32,775		)
Options expired		(2,564	)		(114,273		)
Outstanding at March 31, 2007		977			$	51,169

For Ivy Value Fund, transactions in written put options were as follows:

	Number of Contracts			Premiums Received
Outstanding at March 31, 2006		367			$	29,642
Options written		2,685				190,538
Options terminated in closing purchase transactions		(–	)			(–	)
Options exercised		(430	)		(36,280		)
Options expired		(2,408	)		(149,773		)
Outstanding at March 31, 2007		214			$	34,127

NOTE 7 - Futures

The Trust may engage in buying and selling futures contracts. Upon entering into a futures contract, the Trust is required to deposit, in a segregated account, an amount of cash or United States Treasury Bills equal to a varying specified percentage of the contract amount. This amount is known as the initial margin. Subsequent payments (variation margins) are made or received by the Trust each day, dependent on the daily fluctuations in the value of the underlying debt security or index. These changes in the variation margins are recorded by the Trust as unrealized gains or losses. Upon the closing of the contracts, the cumulative net change in the variation margin is recorded as realized gain or loss. The Trust uses futures to attempt to reduce the overall risk of its investments.

NOTE 8 - Swaps

Each Fund may invest in swap agreements, which are agreements to exchange the return generated by one instrument for the return generated by another instrument. The Fund may enter into credit default, total return, variance and other swap agreements to: 1) preserve a return or a spread on a particular investment or portion of its portfolio; 2) to protect against any increase in the price of securities the Fund anticipates purchasing at a later date; or 3) to attempt to enhance yield.

Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying security in the event of a defined credit event, such as payment default or bankruptcy. Under a credit default swap one party acts as a guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if the defined credit event occurs. Each Fund may enter into credit default swaps in which either it or its counterparty act as the guarantor.

Total return swaps involve a commitment to pay periodic interest payments in exchange for a market-linked return based on a security or a basket of securities representing a variety of securities or a particular index. To the extent the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.

Variance swaps involve a contract in which two parties agree to exchange cash flows based on the measured variance of a specified underlying security or index during a certain time period. On the trade date, the two parties agree on the strike price of the contract (the reference level against which cash flows are exchanged), as well as the number of units in the transaction and the length of the contract. Like an option contract, the value of a variance swap is influenced by both realized and implied volatility, as well as the passage of time. Each Fund may enter into variance swaps to manage volatility risk.

The creditworthiness of firms with which a Fund enters into a swap agreement is monitored by IICO. If a firm's creditworthiness declines, the value of the agreement would likely decline, potentially resulting in losses. If a default occurs by the counterparty to such a transaction, the Fund will have contractual remedies pursuant to the agreement related to the transaction.

Swaps are marked-to-market daily based on valuations provided by a pricing vendor of a broker-dealer. Changes in value are recorded as unrealized appreciation (depreciation) in the Statement of Operations. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with the custodian or counterparty. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities. These upfront payments, as well as any periodic payments, are recorded as realized gain or loss in the Statement of Operations. Gains or losses may be realized upon termination of the swap agreement.

Entering into swap agreements involves certain risks. Among these are possible failure of the counterparty to fulfill its obligations, possible lack of liquidity, and unfavorable changes in interest rates or underlying investments.

NOTE 9 - Acquisition of Ivy International Growth Fund

On March 27, 2006, Ivy International Fund acquired all the net assets of Ivy International Growth Fund pursuant to a plan of reorganization approved by the shareholders of Ivy International Growth Fund on March 17, 2006. The acquisition was accomplished by a tax-free exchange of 2,671,036 shares of Ivy International Fund (valued at $74,183,759) for the 5,422,375 shares of Ivy International Growth Fund outstanding on March 27, 2006. Ivy International Growth Fund had net assets of $74,183,759, including $17,373,263 of net unrealized appreciation in value of investments and $37,072,675 of accumulated net realized losses on investments, which were combined with those of Ivy International Fund. The aggregate net assets of Ivy International Fund and Ivy International Growth Fund immediately before the acquisition were $155,403,615 and $74,183,759, respectively. The aggregate net assets of Ivy International Fund and Ivy International Growth Fund immediately following the acquisition were $229,587,374 and $0, respec tively.

NOTE 10 - Liquidation of Ivy Cash Reserves Fund

On September 29, 2006, Ivy Cash Reserves Fund was liquidated.

NOTE 11 - Name Changes

On December 6, 2006, Ivy International Fund and Ivy International Value Fund changed their names to Ivy International Growth Fund and Ivy International Core Equity Fund, respectively.

Report of Independent Registered Public Accounting Firm

The Board of Trustees and Shareholders of Ivy Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Balanced Fund, Bond Fund, Cundill Global Value Fund, Dividend Income Fund, European Opportunities Fund, Global Natural Resources Fund, International Balanced Fund, International Core Equity Fund (formerly International Value Fund), International Growth Fund (formerly International Fund), Mortgage Securities Fund, Pacific Opportunities Fund, Real Estate Securities Fund, Small Cap Value Fund and Value Fund (collectively the "Funds") comprising Ivy Funds, as of March 31, 2007, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two fiscal years in the period then ended, and the financial highlights for the periods presented (except as noted below). These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the Real Estate Securities Fund, Small Cap Value Fund and Value Fund for each of the periods ended July 31, 2003 and prior were audited by other auditors whose report, dated September 5, 2003, expressed an unqualified opinion on those financial highlights. The financial highlights of the Balanced Fund, Bond Fund, International Balanced Fund and Mortgage Securities Fund for each of the periods ended September 30, 2003 and prior were audited by other auditors whose report, dated November 7, 2003, expressed an unqualified opinion on those financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall f inancial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2007, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective funds of Ivy Funds, as of March 31, 2007, the results of their operations for the year then ended, the changes in their net assets for each of the two fiscal years in the period then ended, and the financial highlights for the periods presented (except as noted above in reference to the reports of other auditors), in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Kansas City, Missouri
May 17, 2007

Income Tax Information

Dividends are declared and recorded by Ivy Cash Reserves Fund on each day the New York Stock Exchange is open for business. Dividends are paid monthly usually on the 27th of the month or on the preceding business day if the 27th is a weekend or holiday. Dividends paid during the period beginning April 1, 2006 through the date of liquidation of September 29, 2006 are not qualified dividend income for individuals and are not eligible for the dividends received deduction for corporations.

The tax status of dividends paid will be reported to you on Form 1099-DIV after the close of the applicable calendar year.

Income Tax Information

The amounts of the dividends and long-term capital gains below, multiplied by the number of shares owned by you in the Funds shown on the record dates, will give you the total amounts to be reported in your Federal income tax return for the years in which they were received or reinvested.

			PER-SHARE AMOUNTS REPORTABLE AS:
			For Individuals								For Corporations
Record Date		Total	Quali-fying		Non- Quali-fying		Long-Term Capital Gain		1250 Gain		Quali-fying		Non- Quali- fying		Long-Term Capital Gain		1250 Gain
Ivy Balanced Fund Class A
6-14-06	$	0.0400	$	0.0400	$	–	$	–	$	–	$	0.0395	$	0.0005	$	–	$	–
9-13-06		0.0400		0.0400		–		–		–		0.0388		0.0012		–		–
12-13-06		0.0600		0.0600		–		–		–		0.0582		0.0018		–		–
3-16-07		0.0400		0.0400		–		–		–		0.0356		0.0044		–		–
Total	$	0.1800	$	0.1800	$	–	$	–	$	–	$	0.1721	$	0.0079	$	–	$	–
Class B
6-14-06	$	0.0020	$	0.0020	$	–	$	–	$	–	$	0.0020	$	–	$	–	$	–
9-13-06		0.0020		0.0020		–		–		–		0.0019		0.0001		–		–
12-13-06		0.0200		0.0200		–		–		–		0.0194		0.0006		–		–
3-16-07		0.0010		0.0010		–		–		–		0.0009		0.0001		–		–
Total	$	0.0250	$	0.0250	$	–	$	–	$	–	$	0.0242	$	0.0008	$	–	$	–
Class C
6-14-06	$	0.0110	$	0.0110	$	–	$	–	$	–	$	0.0108	$	0.0002	$	–	$	–
9-13-06		0.0110		0.0110		–		–		–		0.0107		0.0003		–		–
12-13-06		0.0290		0.0290		–		–		–		0.0281		0.0009		–		–
3-16-07		0.0120		0.0120		–		–		–		0.0107		0.0013		–		–
Total	$	0.0630	$	0.0630	$	–	$	–	$	–	$	0.0603	$	0.0027	$	–	$	–
Class Y
6-14-06	$	0.0440	$	0.0440	$	–	$	–	$	–	$	0.0434	$	0.0006	$	–	$	–
9-13-06		0.0460		0.0460		–		–		–		0.0446		0.0014		–		–
12-13-06		0.0660		0.0660		–		–		–		0.0640		0.0020		–		–
3-16-07		0.0450		0.0450		–		–		–		0.0401		0.0049		–		–
Total	$	0.2010	$	0.2010	$	–	$	–	$	–	$	0.1921	$	0.0089	$	–	$	–
Ivy Cundill Global Value Fund Class A
12-13-06	$	0.8676*	$	0.2186	$	0.0551	$	0.5939	$	–	$	0.0045	$	0.2692	$	0.5939	$	–
Class B
12-13-06	$	0.7576*	$	0.1307	$	0.0330	$	0.5939	$	–	$	0.0027	$	0.1610	$	0.5939	$	–
Class C
12-13-06	$	0.7726*	$	0.1427	$	0.0360	$	0.5939	$	–	$	0.0029	$	0.1758	$	0.5939	$	–
Class Y
12-13-06	$	0.9156*	$	0.2569	$	0.0648	$	0.5939	$	–	$	0.0053	$	0.3164	$	0.5939	$	–
Advisor Class
12-13-06	$	0.9496*	$	0.2841	$	0.0716	$	0.5939	$	–	$	0.0059	$	0.3498	$	0.5939	$	–
Class II
12-13-06	$	0.9416*	$	0.2777	$	0.0700	$	0.5939	$	–	$	0.0058	$	0.3419	$	0.5939	$	–
Ivy Dividend Income Fund Class A
6-14-06	$	0.0400	$	0.0400	$	–	$	–	$	–	$	0.0400	$	–	$	–	$	–
9-13-06		0.0450		0.0450		–		–		–		0.0450		–		–		–
12-13-06		0.2464		0.0600		–		0.1864		–		0.0600		–		0.1864		–
3-16-07		0.0310		0.0310		–		–		–		0.0310		–		–		–
Total	$	0.3624	$	0.1760	$	–	$	0.1864	$	–	$	0.1760	$	–	$	0.1864	$	–
Class B
6-14-06	$	0.0070	$	0.0070	$	–	$	–	$	–	$	0.0070	$	–	$	–	$	–
9-13-06		0.0120		0.0120		–		–		–		0.0120		–		–		–
12-13-06		0.2104		0.0240		–		0.1864		–		0.0240		–		0.1864		–
3-16-07		–		–		–		–		–		–		–		–		–
Total	$	0.2294	$	0.0430	$	–	$	0.1864	$	–	$	0.0430	$	–	$	0.1864	$	–
Class C
6-14-06	$	0.0110	$	0.0110	$	–	$	–	$	–	$	0.0110	$	–	$	–	$	–
9-13-06		0.0160		0.0160		–		–		–		0.0160		–		–		–
12-13-06		0.2154		0.0290		–		0.1864		–		0.0290		–		0.1864		–
3-16-07		0.0010		0.0010		–		–		–		0.0010		–		–		–
Total	$	0.2434	$	0.0570	$	–	$	0.1864	$	–	$	0.0570	$	–	$	0.1864	$	–
Class Y
6-14-06	$	0.0440	$	0.0440	$	–	$	–	$	–	$	0.0440	$	–	$	–	$	–
9-13-06		0.0490		0.0490		–		–		–		0.0490		–		–		–
12-13-06		0.2484		0.0620		–		0.1864		–		0.0620		–		0.1864		–
3-16-07		0.0320		0.0320		–		–		–		0.0320		–		–		–
Total	$	0.3734	$	0.1870	$	–	$	0.1864	$	–	$	0.1870	$	–	$	0.1864	$	–
Ivy European Opportunities Fund Class A
12-13-06	$	0.4581*	$	0.4581	$	–	$	–	$	–	$	–	$	0.4581	$	–	$	–
Class B
12-13-06	$	0.1701*	$	0.1701	$	–	$	–	$	–	$	–	$	0.1701	$	–	$	–
Class C
12-13-06	$	0.2031*	$	0.2031	$	–	$	–	$	–	$	–	$	0.2031	$	–	$	–
Class Y
12-13-06	$	0.5171*	$	0.5171	$	–	$	–	$	–	$	–	$	0.5171	$	–	$	–
Advisor Class
12-13-06	$	0.6221*	$	0.6221	$	–	$	–	$	–	$	–	$	0.6221	$	–	$	–
Ivy Global Natural Resources Fund Class A
12-13-06	$	3.0436*	$	0.4251	$	1.0341	$	1.5844	$	–	$	0.1174	$	1.3418	$	1.5844	$	–
Class B
12-13-06	$	2.8836*	$	0.3785	$	0.9207	$	1.5844	$	–	$	0.1045	$	1.1947	$	1.5844	$	–
Class C
12-13-06	$	2.8836*	$	0.3785	$	0.9207	$	1.5844	$	–	$	0.1045	$	1.1947	$	1.5844	$	–
Class Y
12-13-06	$	3.0836*	$	0.4368	$	1.0624	$	1.5844	$	–	$	0.1206	$	1.3786	$	1.5844	$	–
Class R
12-13-06	$	2.9836*	$	0.4076	$	0.9916	$	1.5844	$	–	$	0.1125	$	1.2867	$	1.5844	$	–
Advisor Class
12-13-06	$	3.1036*	$	0.4426	$	1.0766	$	1.5844	$	–	$	0.1222	$	1.3970	$	1.5844	$	–
Ivy International Balanced Fund Class A
6-14-06	$	0.1566*	$	0.0675	$	0.0891	$	–	$	–	$	–	$	0.1566	$	–	$	–
9-13-06		0.0656*		0.0283		0.0373		–		–		–		0.0656		–		–
12-13-06		0.6705*		0.1019		0.1346		0.4340		–		–		0.2365		0.4340		–
3-16-07		0.0701*		0.0301		0.0400		–		–		–		0.0701		–		–
Total	$	0.9628*	$	0.2278	$	0.3010	$	0.4340	$	–	$	–	$	0.5288	$	0.4340	$	–
Class B
6-14-06	$	0.1166*	$	0.0503	$	0.0663	$	–	$	–	$	–	$	0.1166	$	–	$	–
9-13-06		0.0256*		0.0110		0.0146		–		–		–		0.0256		–		–
12-13-06		0.6275*		0.0834		0.1101		0.4340		–		–		0.1935		0.4340		–
3-16-07		0.0351*		0.0151		0.0200		–		–		–		0.0351		–		–
Total	$	0.8048*	$	0.1598	$	0.2110	$	0.4340	$	–	$	–	$	0.3708	$	0.4340	$	–
Class C
6-14-06	$	0.1266*	$	0.0546	$	0.0720	$	–	$	–	$	–	$	0.1266	$	–	$	–
9-13-06		0.0356*		0.0153		0.0203		–		–		–		0.0356		–		–
12-13-06		0.6395*		0.0886		0.1169		0.4340		–		–		0.2055		0.4340		–
3-16-07		0.0411*		0.0177		0.0234		–		–		–		0.0411		–		–
Total	$	0.8428*	$	0.1762	$	0.2326	$	0.4340	$	–	$	–	$	0.4088	$	0.4340	$	–
Class Y
6-14-06	$	0.1586*	$	0.0684	$	0.0902	$	–	$	–	$	–	$	0.1586	$	–	$	–
9-13-06		0.0676*		0.0291		0.0385		–		–		–		0.0676		–		–
12-13-06		0.6715*		0.1024		0.1351		0.4340		–		–		0.2375		0.4340		–
3-16-07		0.0741*		0.0319		0.0422		–		–		–		0.0741		–		–
Total	$	0.9718*	$	0.2318	$	0.3060	$	0.4340	$	–	$	–	$	0.5378	$	0.4340	$	–
Ivy International Core Equity Fund Class A
12-13-06	$	0.7905	$	0.0878	$	–	$	0.7027	$	–	$	–	$	0.0878	$	0.7027	$	–
Class B
12-13-06	$	0.7305	$	0.0278	$	–	$	0.7027	$	–	$	–	$	0.0278	$	0.7027	$	–
Class C
12-13-06	$	0.7305	$	0.0278	$	–	$	0.7027	$	–	$	–	$	0.0278	$	0.7027	$	–
Class Y
12-13-06	$	0.7985	$	0.0958	$	–	$	0.7027	$	–	$	–	$	0.0958	$	0.7027	$	–
Advisor Class
12-13-06	$	0.8055	$	0.1028	$	–	$	0.7027	$	–	$	–	$	0.1028	$	0.7027	$	–
Ivy International Growth Fund Class A
12-13-06	$	0.0852*	$	0.0852	$	–	$	–	$	–	$	0.0051	$	0.0801	$	–	$	–
Class B
12-13-06	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–
Class C
12-13-06	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–
Class Y
12-13-06	$	0.0922*	$	0.0922	$	–	$	–	$	–	$	0.0055	$	0.0867	$	–	$	–
Advisor Class
12-13-06	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–
Class II
12-13-06	$	0.1812*	$	0.1812	$	–	$	–	$	–	$	0.0108	$	0.1704	$	–	$	–
Ivy Pacific Opportunities Fund Class A
12-13-06	$	0.6363*	$	0.0601	$	0.2695	$	0.3067	$	–	$	–	$	0.3296	$	0.3067	$	–
Class B
12-13-06	$	0.6263*	$	0.0583	$	0.2613	$	0.3067	$	–	$	–	$	0.3196	$	0.3067	$	–
Class C
12-13-06	$	0.6263*	$	0.0583	$	0.2613	$	0.3067	$	–	$	–	$	0.3196	$	0.3067	$	–
Class Y
12-13-06	$	0.6733*	$	0.0669	$	0.2997	$	0.3067	$	–	$	–	$	0.3666	$	0.3067	$	–
Advisor Class
12-13-06	$	0.7223*	$	0.0758	$	0.3398	$	0.3067	$	–	$	–	$	0.4156	$	0.3067	$	–
Ivy Real Estate Securities Fund Class A
6-14-06	$	0.0400	$	0.0007	$	0.0393	$	–	$	–	$	0.0007	$	0.0393	$	–	$	–
9-13-06		0.0400		0.0007		0.0393		–		–		0.0007		0.0393		–		–
12-13-06		1.0219		0.0043		0.2497		0.7152		0.0527		0.0043		0.2497		0.7152		0.0527
3-16-07		0.0150		–		0.0150		–		–		–		0.0150		–		–
Total	$	1.1169	$	0.0057	$	0.3433	$	0.7152	$	0.0527	$	0.0057	$	0.3433	$	0.7152	$	0.0527
Class B
6-14-06	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–
9-13-06		–		–		–		–		–		–		–		–		–
12-13-06		0.9679		0.0034		0.1966		0.7152		0.0527		0.0034		0.1966		0.7152		0.0527
3-16-07		–		–		–		–		–		–		–		–		–
Total	$	0.9679	$	0.0034	$	0.1966	$	0.7152	$	0.0527	$	0.0034	$	0.1966	$	0.7152	$	0.0527
Class C
6-14-06	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–
9-13-06		–		–		–		–		–		–		–		–		–
12-13-06		0.9679		0.0034		0.1966		0.7152		0.0527		0.0034		0.1966		0.7152		0.0527
3-16-07		–		–		–		–		–		–		–		–		–
Total	$	0.9679	$	0.0034	$	0.1966	$	0.7152	$	0.0527	$	0.0034	$	0.1966	$	0.7152	$	0.0527
Class Y
6-14-06	$	0.0540	$	0.0009	$	0.0531	$	–	$	–	$	0.0009	$	0.0531	$	–	$	–
9-13-06		0.0530		0.0009		0.0521		–		–		0.0009		0.0521		–		–
12-13-06		1.0349		0.0045		0.2625		0.7152		0.0527		0.0045		0.2625		0.7152		0.0527
3-16-07		0.0250		–		0.0250		–		–		–		0.0250		–		–
Total	$	1.1669	$	0.0063	$	0.3927	$	0.7152	$	0.0527	$	0.0063	$	0.3927	$	0.7152	$	0.0527
Class R
6-14-06	$	0.0340	$	0.0006	$	0.0334	$	–	$	–	$	0.0006	$	0.0334	$	–	$	–
9-13-06		0.0350		0.0006		0.0344		–		–		0.0006		0.0344		–		–
12-13-06		1.0179		0.0042		0.2458		0.7152		0.0527		0.0042		0.2458		0.7152		0.0527
3-16-07		0.0070		–		0.0070		–		–		–		0.0070		–		–
Total	$	1.0939	$	0.0054	$	0.3206	$	0.7152	$	0.0527	$	0.0054	$	0.3206	$	0.7152	$	0.0527
Ivy Small Cap Value Fund Class A, B, C and Y
6-14-06	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–
9-13-06		–		–		–		–		–		–		–		–		–
12-13-06		1.3420		0.1691		0.6509		0.5220		–		0.1701		0.6499		0.5220		–
3-16-07		–		–		–		–		–		–		–		–		–
Total	$	1.3420	$	0.1691	$	0.6509	$	0.5220	$	–	$	0.1701	$	0.6499	$	0.5220	$	–
Ivy Value Fund Class A
6-14-06	$	0.0250	$	0.0250	$	–	$	–	$	–	$	0.0250	$	–	$	–	$	–
9-13-06		0.0300		0.0300		–		–		–		0.0300		–		–		–
12-13-06		0.4515		0.0450		–		0.4065		–		0.0450		–		0.4065		–
3-16-07		0.0300		0.0300		–		–		–		0.0300		–		–		–
Total	$	0.5365	$	0.1300	$	–	$	0.4065	$	–	$	0.1300	$	–	$	0.4065	$	–
Class B
6-14-06	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–
9-13-06		–		–		–		–		–		–		–		–		–
12-13-06		0.4065		–		–		0.4065		–		0.4065		–		0.4065		–
3-16-07		–		–		–		–		–		–		–		–		–
Total	$	0.4065	$	–	$	–	$	0.4065	$	–	$	0.4065	$	–	$	0.4065	$	–
Class C
6-14-06	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–	$	–
9-13-06		–		–		–		–		–		–		–		–		–
12-13-06		0.4085		0.0020		–		0.4065		–		0.0020		–		0.4065		–
3-16-07		–		–		–		–		–		–		–		–		–
Total	$	0.4085	$	0.0020	$	–	$	0.4065	$	–	$	0.0020	$	–	$	0.4065	$	–
Class Y
6-14-06	$	0.0320	$	0.0320	$	–	$	–	$	–	$	0.0320	$	–	$	–	$	–
9-13-06		0.0400		0.0400		–		–		–		0.0400		–		–		–
12-13-06		0.4615		0.0550		–		0.4065		–		0.0550		–		0.4065		–
3-16-07		0.0400		0.0400		–		–		–		0.0400		–		–		–
Total	$	0.5735	$	0.1670	$	–	$	0.4065	$	–	$	0.1670	$	–	$	0.4065	$	–

*Includes gross up of pass-through foreign tax credit.

Dividends are declared and recorded by each of the following Funds on each day the New York Stock Exchange is open for business. Dividends are paid monthly usually on the 27th of the month or on the preceding business day if the 27th is a weekend or holiday.

The table below shows the taxability of dividends and long-term capital gains paid during the fiscal year ended March 31, 2007:

		PER-SHARE AMOUNTS REPORTABLE AS:
		For Individuals		For Corporations
Record Date	Total	Non- Qualifying	Long-Term Capital Gain	Qualifying	Non- Qualifying	Long-Term Capital Gain
Ivy Bond Fund
April 2006 through       March 2007	100.0000%	100.0000%	-%	-%	100.0000%	-%
Ivy Mortgage Securities Fund
April 2006 through       March 2007	100.0000%	100.0000%	-%	-%	100.0000%	-%

CORPORATION DEDUCTIONS - Under Federal tax law, the amounts reportable as Qualifying Dividends are eligible for the dividends received deduction in the year received as provided by Section 243 of the Internal Revenue Code.

Internal Revenue Code regulations permit each qualifying Fund to elect to pass through a foreign tax credit to shareholders with respect to foreign taxes paid by the Fund. Ivy Cundill Global Value Fund, Ivy European Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Balanced Fund, Ivy International Core Equity Fund, Ivy International Growth Fund and Ivy Pacific Opportunities Fund elected to pass through to their shareholders $1,351,869, $985,154, $3,623,791, $327,457, $310,763, $402,834 and $722,668, respectively, of creditable foreign taxes paid on income derived from sources within any foreign country or possession of the United States in the amounts of $14,467,469, $10,508,372, $39,471,284, $5,089,160, $3,294,286, $4,671,362 and $5,429,688, respectively.

The tax status of dividends paid and the pass-through of foreign taxes paid will be reported to you on Form 1099-DIV after the close of the applicable calendar year.

The Board of Trustees of Ivy Funds

The Waddell & Reed Fund Complex (Fund Complex) is comprised of the Ivy Family of Funds and the Advisors Fund Complex. The Ivy Family of Funds is comprised of the funds in Ivy Funds (16 portfolios) and Ivy Funds, Inc. (12 portfolios). The Advisors Fund Complex is comprised of each of the funds in the Waddell & Reed Advisors Funds (22 portfolios), Waddell & Reed InvestEd Portfolios, Inc. (three portfolios) and W&R Target Funds, Inc. (21 portfolios).

Each of the individuals listed below serves as a trustee or director for each of the funds within the Ivy Family of Funds. Eleanor B. Schwartz, Joseph Harroz, Jr. and Henry J. Herrmann also serve as directors of each of the funds in the Advisors Fund Complex. Each Trustee serves an indefinite term, until he or she dies, resigns, is removed or becomes disqualified.

A Trustee is considered by Ivy Funds and its counsel to be an "interested person" of the Funds or of their investment manager by virtue of his or her employment by Waddell & Reed Financial, Inc. (WDR) or its wholly-owned subsidiaries. The other Trustees (more than a majority of the total number) are independent; that is, they are not employees or officers of, and have no financial interest in, WDR or any of its wholly-owned subsidiaries, including Ivy Funds Distributor, Inc. (IFDI), Ivy Investment Management Company (IICO) (formerly, Waddell & Reed Ivy Investment Company), and Waddell & Reed Services Company (WRSCO).

Additional Information about Trustees

The Statement of Additional Information (SAI) for Ivy Funds includes additional information about Fund Trustees. The SAI is available without charge, upon request, by calling 1.800.777.6472. It is also available on the Ivy Funds website, www.ivyfunds.com.

Independent Trustees

Name, address, age	Position held with Fund and length of service	Principal occupation during the past five years	Other directorships
Jarold W. Boettcher 6300 Lamar Avenue Overland Park, KS 66202 Age: 67	Trustee since 2002	President of Boettcher Enterprises, Inc. (agriculture products and services) (1979 to present); President of Boettcher Supply, Inc. (electrical and plumbing supplies distributor) (1979 to present); President of Boettcher Aerial, Inc. (Aerial Ag Applicator) (1983 to present)	Director of Guaranty State Bank & Trust Co.; Director of Guaranty, Inc.; Trustee, Kansas Public Employees Retirement System
James D. Gressett 6300 Lamar Avenue Overland Park, KS 66202 Age: 57	Trustee since 2002	Secretary of Streetman Homes, LLP (homebuilding company) (2001 to present); Chief Executive Officer (CEO) of PacPizza LLC (Pizza Hut franchise) (2000 to 2004)	Director of Collins Financial Services, a debt recovery company
Joseph Harroz, Jr. 6300 Lamar Avenue Overland Park, KS 66202 Age: 40	Independent Chair since 2006 Trustee since 2002	Vice President and General Counsel of the Board of Regents, University of Oklahoma (1996 to present); Adjunct Professor, University of Oklahoma Law School (1997 to present); Managing Member, Harroz Investments, LLC, commercial enterprise investments (1998 to present)	Director of Valliance Bank NA; Director of Advisors Fund Complex (46 portfolios overseen); Director, Melbourne Family Support Organization; Director, Norman Economic Development Coalition
Glendon E. Johnson, Jr. 6300 Lamar Avenue Overland Park, KS 66202 Age: 55	Trustee since 2002	Of Counsel, Lee & Smith, PC (law firm) (1996 to present); Member/Manager, Castle Valley Ranches, LLC (ranching) (1995 to present)	None
Eleanor B. Schwartz 6300 Lamar Avenue Overland Park, KS 66202 Age: 70	Trustee since 2002	Professor Emeritus, University of Missouri at Kansas City (2003 to present); Professor of Business Administration, University of Missouri at Kansas City (1980 to 2003)	Director of Advisors Fund Complex (46 portfolios overseen)
Michael G. Smith 920 York Road Suite 350 Hinsdale IL 60521 Age: 63	Trustee since 2002	Retired	Director of Executive Board, Cox Business School, Southern Methodist University; Director of Northwestern Mutual Life Series Funds & Mason Street Advisors Funds (18 portfolios overseen)
Edward M. Tighe 6300 Lamar Avenue Overland Park, KS 66202 Age: 64	Trustee since 1999	Retired; CEO and Director of Asgard Holding, LLC (computer network and security services) (2002 to 2004); CEO and Director of JBE Technology Group, Inc. (telecommunications services) (2001 to 2003)	Director of Hansberger International Funds (5 portfolios overseen)

Interested Trustee

Name, address, age	Position held with Fund and length of service	Principal occupation during the past five years	Other directorships
Henry J. Herrmann 6300 Lamar Avenue Overland Park, KS 66202 Age: 64	Trustee since 2002 President since 2002	CEO of WDR (2005 to present); President, CEO and Chairman of IICO (2002 to present); President, CEO and Chairman of Waddell & Reed Investment Management Company (WRIMCO) (1993 to present); President and Chief Investment Officer (CIO) of WDR (1998 to 2005); Chief Investment Officer of WRIMCO (1991 to 2005) and IICO (2002 to 2005); President of each of the funds in the Fund Complex (2001 to present)	Director of WDR, IICO, WRSCO, Waddell & Reed, Inc. and WRIMCO; Director of each of the funds in the Advisors Fund Complex (46 portfolios overseen); Director, Austin, Calvert & Flavin, Inc., an affiliate of WRIMCO; Director, Ivy Services Inc. (ISI), an affiliate of IICO

Officers

The Board has appointed officers who are responsible for the day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. In addition to Mr. Herrmann, who is President, Ivy Fund's officers are:

Name, address, age	Position held with Fund and length of service	Principal occupation during the past five years	Directorships held
Joseph W. Kauten 6300 Lamar Avenue Overland Park, KS 66202 Age: 38	Vice President since 2006 Treasurer since 2006 Principal Accounting Officer since 2006	Vice President, Treasurer and Principal Accounting Officer of each of the funds in the Fund Complex (2006 to present); Assistant Treasurer of each of the funds in the Fund Complex (2003 to 2006); Senior Manager, Deloitte & Touche LLP (2001 to 2003)	None
Mara D. Herrington 6300 Lamar Avenue Overland Park, KS 66202 Age: 43	Vice President since 2006 Secretary since 2006	Vice President and Secretary of each of the funds in the Fund Complex (2006 to present); Vice President of WRIMCO and IICO (2006 to present); Vice President and Associate General Counsel, Deutsche Investment Management Americas, Inc. (1994 to 2005)	None
Kristen A. Richards 6300 Lamar Avenue Overland Park, KS 66202 Age: 39	Vice President since 2002 Assistant Secretary since 2006 Associate General Counsel since 2002	Vice President, Associate General Counsel and Chief Compliance Officer of WRIMCO (2000 to present) and IICO (2002 to present); Vice President and Associate General Counsel of each of the funds in the Fund Complex (2000 to present); Assistant Secretary of each of the funds in the Fund Complex (since 2006); Secretary of each of the funds in the Fund Complex (2000 to 2006)	None
Daniel C. Schulte 6300 Lamar Avenue Overland Park, KS 66202 Age: 41	Vice President since 2002 General Counsel since 2002 Assistant Secretary since 2002	Senior Vice President and General Counsel of WDR, Waddell & Reed, WRIMCO and WRSCO (2000 to present); Senior Vice President and General Counsel of IICO (2002 to present); Vice President, General Counsel and Assistant Secretary of each of the funds in the Fund Complex (2000 to present)	None
Scott J. Schneider 6300 Lamar Avenue Overland Park, KS 66202 Age: 39	Chief Compliance Officer since 2004	Chief Compliance Officer for each of the Funds in the Fund Complex (2004 to present); Senior Attorney and Compliance Officer for each of the Funds in the Fund Complex (2000 to 2004)	None
Theodore W. Howard 6300 Lamar Avenue Overland Park, KS 66202 Age: 64	Vice President since 2002 Principal Financial Officer since 2002	Senior Vice President of WRSCO (2001 to present); Vice President of each of the Funds in the Fund Complex (1987 to present); Principal Financial Officer of each of the Funds in the Fund Complex (2002 to present); Treasurer and Principal Accounting Officer of each of the Funds in the Fund Complex (1976 to 2006)	None

Shareholder Meeting Results:

On December 7, 2006, a special shareholder meeting (the "Meeting") for Ivy Cundill Global Value Fund (Fund), a series of Ivy Funds, was held at the offices of Waddell & Reed Financial, Inc., 6300 Lamar Avenue, Overland Park, Kansas, 66202. The meeting was held for the following purpose (and with the following results):

Proposal 1: To approve a sub-advisory agreement between Ivy Investment Management Company and Mackenzie Financial Corporation with respect to the Fund.

For	Against	Abstain	Broker Non-vote
25,585,363.62	694,254.99	1,442,856.67	4,989,572.00

On February 2, 2007, a special shareholder meeting (the "Meeting") for Ivy Small Cap Value Fund (Fund), a series of Ivy Funds, was held at the offices of Waddell & Reed Financial, Inc., 6300 Lamar Avenue, Overland Park, Kansas, 66202. The meeting was held for the following purpose (and with the following results):

Proposal 1: To approve a sub-advisory agreement between Ivy Investment Management Company and BlackRock Capital Management, Inc. with respect to the Fund.

For	Against	Abstain
3,963,844.17	123,811.93	251,510.73

Proposal 2: To authorize a "manager of managers" structure for the Fund whereby Ivy Investment Management Company will be able to make changes to the Fund's sub-advisors and materially amend investment sub-advisory agreements related to the Fund without obtaining shareholder approval.

For	Against	Abstain
3,843,371.70	238,904.60	256,890.52

Ivy Funds Annual Privacy Notice

The following privacy notice is issued by Ivy Funds (the Funds), Ivy Investment Management Company ("IICO") and Ivy Funds Distributor, Inc. (IFDI).

Information Collected

We collect nonpublic personal information about you from your account application and other forms that you may deliver to us, and from your transactions with us and our affiliates. This is information that regulators consider necessary for the proper servicing of your account. In order to effect your transactions and service your account properly, we may disclose all of the information that we collect, as described above, to firms that assist us in servicing your account, such as our transfer agent.

Confidentiality of Information Collected

All records containing your nonpublic personal information are kept at our various service providers. These entities include IICO, IFDI and our transfer agent and administrative services provider. We require these affiliates, and any non-affiliated service providers, to protect the confidentiality of your information and to use the information only for the purposes for which disclosure to them is made. The Funds, IICO, IFDI and other service providers restrict access to nonpublic personal information about you to those employees who need to know that information to provide products and services to you and maintain physical, electronic, and procedural safeguards that comply with federal standards to maintain the security of your nonpublic personal information.

Disclosure of Information in Limited Circumstances

We do not disclose nonpublic personal information about present or former customers to non-affiliated third parties, except as permitted or required by law. In connection with servicing your account, your nonpublic personal information may be shared among the entities named in this notice, their affiliates, and non-affiliates, including a transfer agent or other service companies. We will adhere to the policies and practices above for both current and former customers.

Proxy Voting Information

Proxy Voting Guidelines

A description of the policies and procedures Ivy Funds uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 800.777.6472 and (ii) on the Securities and Exchange Commission's (SEC) website at www.sec.gov.

Proxy Voting Records

Information regarding how Ivy Funds voted proxies relating to portfolio securities during the most recent 12 month period ending June 30 is available on Form N-PX through the Ivy Funds' website at www.ivyfunds.com and on the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule Information

A complete schedule of portfolio holdings for the first and third quarters of each fiscal year is filed with the Securities and Exchange Commission (SEC) on the Fund's Form N-Q. This form may be obtained in the following ways:

• On the SEC's website at www.sec.gov.
• For review and copy at the SEC's Public Reference Room in Washington, DC. Information on the operations of the Public Reference Room may be obtained by calling 1.800.SEC.0330.
• On the Ivy Funds' website at www.ivyfunds.com.

Householding Notice

If you currently receive one copy of the shareholder reports and prospectus for your household (even if more than one person in your household owns shares of the Fund) and you would prefer to receive separate shareholder reports and prospectuses for each account holder living at your address, you can do either of the following:

Fax your request to 800.532.2749.

Write to us at the address listed on the back cover.

Please list each account for which you would like to receive separate shareholder reports and prospectus mailings. We will resume sending separate documents within 30 days of receiving your request.

To All Traditional IRA Planholders:

As required by law, we are hereby providing notice to you that income tax may be withheld automatically from any distribution or withdrawal from a traditional IRA. A Fund is generally required to withhold taxes unless you make a written election not to have taxes withheld. The election may be made on the distribution/withdrawal form provided by Waddell & Reed, Inc. which can be obtained from your Waddell & Reed representative or by submitting Internal Revenue Service Form W-4P. Once made, an election can be revoked by providing written notice to Waddell & Reed, Inc. If you elect not to have tax withheld you may be required to make payments of estimated tax. Penalties may be imposed by the IRS if withholding and estimated tax payments are not adequate.

THE IVY FUNDS FAMILY

Global/International Funds      

Cundill Global Value Fund

European Opportunities Fund

International Balanced Fund

International Core Equity Fund

International Growth Fund

Pacific Opportunities Fund

Domestic Equity Funds      

Capital Appreciation Fund

Core Equity Fund

Dividend Income Fund

Large Cap Growth Fund

Mid Cap Growth Fund

Small Cap Growth Fund

Small Cap Value Fund

Value Fund

Fixed Income Funds      

Bond Fund

High Income Fund

Limited-Term Bond Fund

Mortgage Securities Fund

Municipal Bond Fund

Money Market Funds      

Money Market Fund

Specialty Funds      

Asset Strategy Fund

Balanced Fund

Energy Fund

Global Natural Resources Fund

Real Estate Securities Fund

Science and Technology Fund

1.800.777.6472
Visit us online at www.ivyfunds.com

The Ivy Funds are managed by Ivy Investment Management Company and distributed by its subsidiary, Ivy Funds Distributor, Inc.

Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. For a prospectus containing this and other information for the Ivy Funds, call your financial advisor or visit us online at www.ivyfunds.com. Please read the prospectus carefully before investing.

WRR3300A (3-07)

ITEM 2. CODE OF ETHICS
(a)	As of March 31, 2007, the Registrant has adopted a code of ethics (the "Code"), as defined in Item 2 of Form N-CSR, that applies to the Principal Executive Office and Principal Financial Officer or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. A copy of this code of ethics is filed as an exhibit to this Form N-CSR.
(b)	There have been no amendments, during the period covered by this report, to a provision of the Code that applies to the registrant's Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the Code.
(c)	During the period covered by this report, the registrant did not grant any waivers, including an implicit waiver, from a provision of the Code that applies to the registrant's Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, or persons performing similar functions, regardless of whether those individuals were employed by the registrant or a third party, that related to one or more of the items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Registrant has determined that each of Jarold W. Boettcher, Glendon E. Johnson, Jr. and Edward M. Tighe is an audit committee financial expert, as defined in Item 3 of Form N-CSR, serving on its audit committee. Each of Mr. Boettcher, Mr. Johnson and Mr. Tighe is independent for purposes of Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a)	Audit Fees
	The aggregate fees billed for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for each of the last two fiscal years are as follows:
	2006	$327,900
	2007	321,100
(b)	Audit-Related Fees
	The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's annual financial statements and are not reported under paragraph (a) of this Item are as follows:
	2006	$3,320
	2007	3,580
	These fees are related to the review of Form N-1A.
(c)	Tax Fees
	The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning are as follows:
	2006	$42,180
	2007	39,900
	These fees are related to the review of the registrant's tax returns.
(d)	All Other Fees
	The aggregate fees billed for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this item are as follows:
	2006	$4,740
	2007	7,690
	These fees are related to the review of internal control.
(e)(1)	Registrant's audit committee considers with the principal accountants all audit services to be provided by the principal accountants and pre-approves all such audit services.
	The audit committee shall pre-approve all non-audit services to be provided by the principal accountants to the registrant; provided that the pre-approval requirement does not apply to non-audit services that (i) were not identified as such at the time of the pre-approval and (ii) do not aggregate more than 5% of total fees paid to the principal accountants by the registrant during the fiscal year in which the services are provided, if the audit committee approves the provision of such non-audit services prior to the completion of the audit.
	The audit committee shall pre-approve all non-audit services to be provided by the principal accountants to the investment adviser (not including any subadvisor whose role is primarily portfolio management and is subcontracted and overseen by the investment advisor) or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant if the engagement relates directly to the operations or financial reporting of the registrant; provided that the pre-approval requirement does not apply to non-audit services that (i) were not identified as such at the time of the pre-approval and (ii) do not aggregate more than 5% of total fees paid to the principal accountants by the registrant for all services and by the registrant's investment adviser for non-audit services if the engagement relates directly to the operations or financial reporting of the registrant during the fiscal year in which those services are provided, if the audit committee app roves the provision of such non-audit services prior to the completion of the audit.
(e)(2)	None of the services described in each of paragraphs (b) through (d) of this Item were approved by the audit committee pursuant to the waiver provisions of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f)	Not applicable
(g)	$50,240 and $51,170 are the aggregate non-audit fees billed in each of the last two fiscal years for services rendered by the principal accountant to the registrant. $171,850 and $119,600 are the aggregate non-audit fees billed in each of the last two fiscal years for services rendered by the principal accountant to the investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant.
(h)	Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Item 1 Shareholder Report.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant's board of directors.
ITEM 11. CONTROLS AND PROCEDURES.
(a)	The Registrant's Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective and adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits is accumulated and communicated to the Registrant's management, including the Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
(b)	There were no significant changes in the registrant's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1)	The Code described in Item 2 of this Form N-CSR.
	Attached hereto as Exhibit 99.CODE.
(a)(2)	A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)).
	Attached hereto as Exhibit 99.CERT.
(b)	A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)).
	Attached hereto as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Ivy Funds
(Registrant)

By     /s/Kristen A. Richards
         Kristen A. Richards, Vice President and Assistant Secretary

Date: July 26, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By     /s/Henry J. Herrmann
         Henry J. Herrmann, President and Principal Executive Officer

Date: July 26, 2007

By      /s/Joseph W. Kauten
         Joseph W. Kauten, Vice President and Principal Financial Officer

Date: July 26, 2007

EX-99.CODE

EXHIBIT 99.CODE

IVY FUNDS, INC.

IVY FUNDS

(each a "Fund" and, together, the "Funds")

CODE OF ETHICS

pursuant to

Section 406 of the Sarbanes-Oxley Act of 2002

      The Board of Directors of Ivy Funds, Inc. and the Board of Trustees of Ivy Funds , each of which is an open-end management investment company registered as such under the provisions of the Investment Company Act of 1940, as amended (the "1940 Act"), have adopted this Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms of the Securities and Exchange Commission ("Commission") thereunder.

1. Persons to Whom this Code of Ethics Applies

      This Code of Ethics is applicable to each person who occupies the position of principal executive officer, principal financial officer, controller or principal accounting officer of a Fund ("Covered Officers").

2. Relationship to Codes of Ethics Under Rule 17j-1

      Each of the Funds is subject to, and has adopted a code of ethics pursuant to, Rule 17j-1 under the 1940 Act (the "17j-1 codes"), applicable to directors, trustees, officers and employees of a Fund, the Fund's investment adviser and, in the case of Series Trust and Investors Series Trust, those Funds' principal underwriter.

      The 17j-1 codes impose reporting and disclosure requirements on covered persons relating to their personal investment transactions in securities, as well as substantively regulate such transactions, as the Board of Directors or Board of Trustees have determined to be reasonably necessary in order to prevent fraud, deceit or manipulative practices by such persons in connection with the purchase or sale, directly or indirectly, by the person of a security held or to be acquired by a Fund.

      The requirements of this Code of Ethics are in addition to, not in substitution for, the provisions of the 17j-1 codes that are applicable to Covered Officers to whom this Code of Ethics applies.

3. Substantive Requirements

a. Honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

      It shall be the responsibility of each Covered Officer to comply with the reporting, disclosure and pre-approval requirements of the 17j-1 codes of the Funds as are applicable to personal securities investments of such Covered Officer. No personal securities investment transaction by a Covered Officer that complies with the procedural, reporting, disclosure and other provisions of such 17j-1 codes as may be applicable to such transaction, shall be deemed to be a violation or constitute a waiver of any requirement of this Code of Ethics.

      No Covered Officer shall derive any personal¹ financial or other benefit of a substantial nature as a result of his or her position as the principal executive officer, principal financial officer, controller or principal accounting officer, as the case may be, through or from a Fund, or through or from any person or entity doing business or seeking to do business with a Fund, including, without limitation, gifts or gratuities (other than customary business gifts, meals or business entertainment that are not extravagant), preferred investment opportunities, or cash payments of any amount.

¹ For the purpose of this Code of Ethics, a "personal" benefit includes a benefit offered to or received by: a Covered Officer; a partnership in which the Covered Officer is a partner; a trust of which the Covered Officer is the grantor or beneficiary; a member of such Covered Officer's "immediate family," which includes the Covered Officer's spouse, a child residing in the Covered Officer's household (including a step or adoptive child), and any dependent of the Covered Officer as defined in section 152 of the Internal Revenue Code; a partnership in which any member of the Covered Officer's immediate family is a partner; or a trust for the benefit of any member of the Covered Officer's immediate family.

      The employment of a member of the immediate family of a Covered Officer by an entity doing business, or seeking to do business, with a Fund shall not be deemed a violation of this Code of Ethics if the Covered Officer shall have disclosed such employment to the Board of Directors or Board of Trustees of such Fund.

      Any Covered Officer who shall, in his or her capacity as principal executive officer, principal financial officer, controller or principal accounting officer, receive or be offered any personal financial or other benefit that is or may be proscribed by this Code of Ethics promptly shall report same to the Funds' Chief Legal Officer.² The Chief Legal Officer shall be, and hereby is, authorized to determine whether the receipt of such financial or other benefit is or would be proscribed by this Code of Ethics. If the Chief Legal Officer shall determine the receipt of any such personal financial or other benefit is or would be proscribed by this Code of Ethics, then the Chief Legal Officer may direct that such benefit refused or, if already received, that such benefit anonymously be donated to a charitable organization. Upon such donation, no violation of this Code of Ethics shall be deemed to have occurred by reason of the Covered Officer having received such personal financial or other benefit. The Chief Legal Officer's determination that the offer to or receipt by a Covered Officer of a benefit is not a violation of this Code of Ethics shall not be deemed a waiver of any provision of this Code of Ethics.

² References herein to the Chief Legal Officer of the Funds shall include a designee of the Chief Legal Officer.

      The Chief Legal Officer shall maintain a record of reports, if any, by Covered Officers of the receipt or offer of personal financial or other benefits, and the Chief Legal Officer's determinations and directions with respect to such reports.

b. Full, fair, accurate, timely and understandable disclosure in reports and documents the Funds file with, or submit to, the Commission and in other public communications made by the Funds.

      Each Covered Officer is responsible for the full, fair, accurate, timely and understandable disclosure in reports and documents the Funds file with, or submit to, the Commission and in other public communications made by a Fund, insofar as such disclosure or communication relates to matters within the scope of such Covered Officer's responsibilities of office. Without limiting the generality of the foregoing, no Covered Officer willfully shall cause or permit any such disclosure or communication regarding a matter within the scope of his or her responsibility to: misstate a material fact; or omit to state a material fact necessary to make any statement made in any such disclosure or communication, in light of the circumstances in which such statement is made, not misleading.

c. Compliance with applicable governmental laws, rules and regulations.

      A Covered Officer promptly shall report to the Chief Legal Officer of the Funds any non-compliance or apparent non-compliance by a Fund with applicable governmental laws, rules and regulations including, without limitation, federal securities laws, regarding any matter that is within the scope of office of such Covered Officer, and shall take such action, if any, as may be directed by the Chief Legal Officer with respect to the investigation or cure of such non-compliance or apparent non-compliance.

      The responsibility of a Covered Officer pursuant to this Code of Ethics with respect to non-compliance or apparent non-compliance by a Fund with applicable governmental laws, rules or regulations shall be fully discharged upon such report to the Chief Legal Officer, unless such Covered Officer shall refuse or willfully fail to act as shall have been directed by the Chief Legal Officer in response to such report. The fact that a violation of applicable governmental laws, rules or regulations has, or may have, occurred shall not itself be deemed violation of this Code of Ethics. A determination by the Chief Legal Officer that a violation of applicable governmental laws, rules or regulations has, or has not, occurred shall not be deemed a waiver of any provision of this Code of Ethics.

d. Prompt internal reporting of violations of this Code of Ethics.

      It is the responsibility of each Covered Person promptly to report to the Chief Legal Officer of the Funds any violation or apparent violation of this Code of Ethics by any Covered Person. The Chief Legal Officer shall maintain a record of the reports, if any, of violations or apparent violations of this Code of Ethics by any Covered Person.

      The Chief Legal Officer shall determine, in response to any such report, whether or not a violation of this Code of Ethics has occurred and, in the event the Chief Legal Officer shall determine that a violation has occurred, shall report such violation to the Board of Directors or Board of Trustees of the Fund(s) to which such violation relates.

e. Accountability for adherence to this Code of Ethics.

      Compliance with the requirements of this Code of Ethics is a condition of office of each Covered Officer. In the event of violation of the requirements of this Code of Ethics by a Covered Officer, the Board of Directors or Board of Trustees of a Fund affected by such violation may take such action as it deems appropriate, including but not limited to removal from office with such Fund of the Covered Officer.

      Each Covered Officer shall acknowledge in writing his or her receipt of a copy of this Code of Ethics, and his or her agreement that adherence to this Code of Ethics is a condition of office.



Adopted: September 9, 2003.

EX-99.CERT

         EXHIBIT 99.CERT

CERTIFICATION

I, Henry J. Herrmann, certify that:

1.         I have reviewed this report on Form N-CSR of Ivy Funds;

2.         Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.         Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.         The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

         a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that the material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

         b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

         c)         Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

         d)         Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.         The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions):

         a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

         b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 26, 2007	/s/Henry J. Herrmann
	-------------------------------------------------------------
	Henry J. Herrmann, Principal Executive Officer

CERTIFICATION

I, Joseph W. Kauten, certify that:

1.         I have reviewed this report on Form N-CSR of Ivy Funds;

2.         Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.         Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.         The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

         a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that the material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

         b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

         c)         Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

         d)         Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.         The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions):

         a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

         b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 26, 2007	/s/Joseph W. Kauten
	-------------------------------------------------------------
	Joseph W. Kauten, Principal Financial Officer

EX-99.906CERT

         EXHIBIT 99.906 CERT

CERTIFICATION UNDER SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

Henry J. Herrmann, Principal Executive Officer, and Joseph W. Kauten, Principal Financial Officer of Ivy Funds (the "Registrant"), each certify to the best of his knowledge that:

         1.         The Registrant's periodic report on Form N-CSR for the period covered by the report (the "Form N-CSR") fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

         2.         The information contained in the Form N-CSR fairly represents, in all material respects, the financial condition and results of operation of the Registrant.

This certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Registrant and will be retained and furnished to the U.S. Securities and Exchange Commission or its staff upon request.

By      /s/Henry J. Herrmann
          Henry J. Herrmann, Principal Executive Officer

Date: July 26, 2007

By     /s/Joseph W. Kauten
         Joseph W. Kauten, Principal Financial Officer

Date: July 26, 2007