485BPOS 1 b_mainpart.htm MAIN PART

File No. 33-45961

File No. 811-6569

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X

Pre-Effective Amendment No. ____

Post-Effective Amendment No. 20

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT

OF 1940 X

Amendment No. 20

IVY FUNDS, INC.

(formerly, W&R FUNDS, INC.)

(Exact Name as Specified in Charter)

6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200

(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code (913) 236-2000

Kristen A. Richards, 6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200

(Name and Address of Agent for Service)

It is proposed that this filing will become effective

		_____	immediately upon filing pursuant to paragraph (b)
		__X__	on July 1, 2003 pursuant to paragraph (b)
		_____	60 days after filing pursuant to paragraph (a)(1)
		_____	on (date) pursuant to paragraph (a)(1)
		_____	75 days after filing pursuant to paragraph (a)(2)
		_____	on (date) pursuant to paragraph (a)(2) of Rule 485
		_____	this post-effective amendment designates a new effective date for a previously filed post-effective amendment

==================================================================

DECLARATION REQUIRED BY RULE 24f-2 (a) (1)

The issuer has registered an indefinite amount of its securities under the Securities Act of 1933 pursuant to Rule 24f-2(a)(1). Notice for the Registrant's fiscal year ended March 31, 2003 was filed on June 24, 2003.

Prospectus

July 1, 2003

Ivy Funds

Ivy Asset Strategy Fund

Ivy Core Equity Fund

Ivy Cundill Global Value Fund

Ivy Dividend Income Fund

Ivy European Opportunities Fund

Ivy Global Natural Resources Fund

Ivy High Income Fund

Ivy International Fund

Ivy International Growth Fund

Ivy International Value Fund

Ivy Large Cap Growth Fund

Ivy Limited-Term Bond Fund

Ivy Mid Cap Growth Fund

Ivy Money Market Fund

Ivy Municipal Bond Fund

Ivy Pacific Opportunities Fund

Ivy Science and Technology Fund

Ivy Small Cap Growth Fund

Ivy Tax-Managed Equity Fund

The Securities and Exchange Commission has not approved
or disapproved the Fund's securities, or determined whether
this Prospectus is accurate or adequate. It is a criminal offense
to state otherwise.

Contents

3 AN OVERVIEW OF THE FUNDS

3 IVY ASSET STRATEGY FUND

7 IVY CORE EQUITY FUND

11 IVY CUNDILL GLOBAL VALUE FUND

16 IVY DIVIDEND INCOME FUND

19 IVY EUROPEAN OPPORTUNITIES FUND

24 IVY GLOBAL NATURAL RESOURCES FUND

29 IVY HIGH INCOME FUND

33 IVY INTERNATIONAL FUND

38 IVY INTERNATIONAL GROWTH FUND

43 IVY INTERNATIONAL VALUE FUND

48 IVY LARGE CAP GROWTH FUND

52 IVY LIMITED-TERM BOND FUND

56 IVY MID CAP GROWTH FUND

60 IVY MONEY MARKET FUND

63 IVY MUNICIPAL BOND FUND

68 IVY PACIFIC OPPORTUNITIES FUND

73 IVY SCIENCE AND TECHNOLOGY FUND

77 IVY SMALL CAP GROWTH FUND

81 IVY TAX-MANAGED EQUITY FUND

85 INVESTMENT PRINCIPLES OF THE FUNDS

85 Investment Goals, Principal Strategies
and Other Investments

95 Risk Considerations of Principal
Strategies and Other Investments

98 YOUR ACCOUNT

98 Choosing a Share Class

104 Ways to Set Up Your Account

105 Buying Shares

107 Selling Shares

112 Distributions and Taxes

115 THE MANAGEMENT OF THE FUNDS

115 Portfolio Management

119 Management Fee

121 FINANCIAL HIGHLIGHTS

AN OVERVIEW OF THE FUND

GOAL

Ivy Asset Strategy Fund

(formerly, W&R Asset Strategy Fund)

seeks high total return over the long term.

Principal Strategies

Ivy Asset Strategy Fund seeks to achieve its goal by allocating its assets among stocks, bonds and short-term instruments.

* The stock class includes equity securities of all types, although Waddell & Reed Ivy Investment Company (WRIICO), the Fund's investment manager, typically emphasizes a blend of value and growth potential in selecting stocks. Value stocks are those that WRIICO believes are currently selling below their true worth. Growth stocks are those whose earnings WRIICO believes are likely to grow faster than the economy. The Fund may invest in the securities of any size company.

* The bond class includes all varieties of fixed-income instruments, such as corporate or U.S. Government debt securities, with remaining maturities of more than three years. This asset class may include a significant amount, up to 35% of the Fund's total assets, of high yield/high risk bonds, or junk bonds, which include bonds rated BB and below by Standard & Poor's (S&P) and Ba and below by Moody's Corporation (Moody's) or unrated bonds deemed by WRIICO to be of comparable quality.

* The short-term class includes all types of short-term instruments with remaining maturities of three years or less, including high-quality money market instruments.

* Within each of these classes, the Fund may invest in both domestic and foreign securities.

The Fund selects a mix which represents the way the Fund's investments will generally be allocated over the long term as indicated below. This mix will vary over shorter time periods as WRIICO changes the Fund's holdings based on its current outlook for the different markets. These changes may be based on such factors as interest rate changes, security valuation levels and a rise in the potential for growth stocks.

14555 Pie Chart

Portfolio Mix

Stocks 70% (can range from 0-100%)
Bonds 25% (can range from 0-100%)
Short-term 5% (can range from 0-100%)

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Asset Strategy Fund. These include:

* WRIICO's skill in allocating the Fund's assets among different types of investments

* the mix of securities in the Fund's portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy

* an increase in interest rates, which may cause the value of the Fund's fixed-income securities, especially bonds with longer maturities, to decline

* prepayment of higher-yielding bonds held by the Fund

* the earnings performance, credit quality and other conditions of the companies whose securities the Fund holds

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

Market risk for small or medium sized companies may be greater than the market risk for large companies. Smaller companies are more likely to have limited financial resources and inexperienced management. Additionally, stock of smaller companies may experience volatile trading and price fluctuations.

Investments by the Fund in high yield/high risk bonds are more susceptible to the risk of non-payment or default, and their prices may be more volatile, than higher-rated bonds.

As well, the Fund may invest a significant portion of its assets in foreign securities. Foreign securities present additional risks such as currency fluctuations and political or economic conditions affecting the foreign countries.

As with any mutual fund, the value of the Fund's shares will change and you could lose money on your investment. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Who May Want to Invest

Asset allocation funds are designed for investors who want to diversify among stocks, bonds and short-term instruments, in one fund. If you are looking for an investment that uses this technique in pursuit of high total return, Ivy Asset Strategy Fund may be appropriate for you. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Asset Strategy Fund

The bar chart and performance table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's performance from year to year and by showing how the Fund's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

The bar chart presents the average annual IVY Asset Strategy total returns for Class C shares and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class C shares because of variations in their respective expense structure.

The bar chart does not reflect any deferred sales charge that you may be required to pay upon redemption of the Fund's Class C shares. If the deferred sales charge were included, the returns would be less than those shown.

The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future.

Note that the performance information in the bar chart and performance table is based on calendar-year periods, while the information shown in the Financial Highlights section of this Prospectus and in the Fund's shareholder reports is based on the Fund's fiscal year.

Because of ongoing market volatility, the Fund's performance may be subject to substantial short-term fluctuation and current performance may be different than the results shown herein. Please check the Ivy web site at www.ivyfunds.com for more current performance information.

In the period shown in the chart, the highest quarterly return was 15.58% (the first quarter of 2000) and the lowest quarterly return was -8.25% (the first quarter of 2001). The Class C return for the year through March 31, 2003 was -1.19%.

¹The returns shown are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of broad-based, securities market indexes that are unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the applicable contingent deferred sales charge (CDSC) for Class B and Class C shares, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

The table also shows average annual returns, for Class C shares, on a before tax and after-tax basis. Return Before Taxes shows the actual change in the value of the Fund shares over the periods shown, but does not reflect the impact of taxes on Fund distributions or the sale of Fund shares. The two after-tax returns take into account taxes that may be associated with owning Fund shares. Return After Taxes on Distributions is a Fund's actual performance, adjusted by the effect of taxes on distributions made by the Fund during the period shown. Return After Taxes on Distributions and the Sale of Fund Shares is further adjusted to reflect the tax impact on any change in the value of Fund shares as if they had been sold on the last day of the period.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts, or to shares held by non-taxable entities.

After-tax returns are shown only for Class C shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class C (began on 04-20-1995)

Before Taxes¹ 2.31% 7.49% 7.20%

After Taxes on Distributions¹ 2.00% 5.32% 5.23%

After Taxes on Distributions and Sale of Fund Shares¹ 1.53% 5.65% 5.39%

Class Y (began on 12-29-1995)

Before Taxes 3.20% 8.43% 8.37%

Class B (began on 07-03-2000)

Before Taxes -1.80% -3.38%

Class A (began on 07-10-2000)

Before Taxes -2.84% -3.97%

Indexes

S&P 500 Index² -22.10% -0.59% 9.02% ³

Citigroup Broad Investment Grade Index² 10.09% 7.53% 8.10% ³

Citigroup Short-Term Index for

1 Month Certificates of Deposit² 1.79% 4.68% 5.04% ³

Lipper Flexible Portfolio Funds Universe Average⁴ -11.74% 0.80% 6.57% ³

¹The returns shown for Class C shares are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999. The prior Class B's performance has been adjusted to reflect the current CDSC structure applicable to Class C. Accordingly, these returns reflect no CDSC since it only applies to Class C shares held for twelve months or less.

²Reflects no deduction for fees, expenses or taxes.

³Index comparison begins on April 30, 1995.

⁴Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Asset Strategy Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 0.70% 0.70% 0.70% 0.70%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.46% 0.64% 0.50% 0.38%

Total Annual Fund Operating Expenses 1.41% 2.34% 2.20% 1.33%

¹The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

²A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $710 $ 996 $1,302 $2,169

Class B Shares $637 $1,030 $1,350 $2,441 ¹

Class C Shares $223 ² $ 688 $1,180 $2,534

Class Y Shares $135 $ 421 $ 729 $1,601

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $710 $ 996 $1,302 $2,169

Class B Shares $237 $ 730 $1,250 $2,441 ¹

Class C Shares $223 $ 688 $1,180 $2,534

Class Y Shares $135 $ 421 $ 729 $1,601

¹Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

² A 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after the purchase date. Solely for purposes of determining the number of months from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month. Therefore, this number does not reflect the effect of the CDSC.

AN OVERVIEW OF THE FUND

GOALS

Ivy Core Equity Fund

(formerly, W&R Core Equity Fund)

seeks to provide capital growth and income.

Principal Strategies

Ivy Core Equity Fund seeks to achieve its goals by investing primarily in common stocks of large U.S. and foreign companies with dominant market positions in their industries. The Fund invests in securities that have the potential for capital appreciation or that WRIICO, the Fund's investment manager, expects to resist market decline. Although the Fund typically invests in large companies, it may invest in securities of any size company.

WRIICO attempts to select securities with growth and income possibilities by looking at many factors including the company's:

* profitability record *leadership position in its industry

* history of improving sales and profits *stock price value

* management *dividend payment history

Generally, in determining whether to sell a security WRIICO uses the same type of analysis that it uses in buying securities in order to determine whether the security has ceased to offer the prospect of significant growth potential and/or the prospect of continued dividend payments. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Core Equity Fund. These include:

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* the earnings performance, credit quality and other conditions of the companies whose securities the Fund holds

* WRIICO's skill in evaluating and selecting securities for the Fund

An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

Who May Want to Invest

Ivy Core Equity Fund is designed for investors who seek capital growth and income. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Core Equity Fund

The bar chart presents the average annual IVY Core Equity total returns for Class C shares and shows how performance has varied from year to year over the past ten calendar years. The returns for the Fund's other classes of shares during these periods were different from those of Class C shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 17.05% (the second quarter of 1997) and the lowest quarterly return was -16.80% (the third quarter of 2002). The Class C return for the year through March 31, 2003 was -5.68%.

¹ The returns shown are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the applicable CDSC for Class B and Class C shares, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

After-tax returns are shown only for Class C shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class C

Before Taxes¹ -23.24% -1.03% 7.30%

After Taxes on Distributions¹ -23.24% -2.60% 6.33%

After Taxes on Distributions and Sale of Fund Shares¹ -14.27% ² -0.04% ² 6.63%

Class Y (began on 12-29-1995)

Before Taxes -22.52% -0.19% 5.76%

Class A (began on 07-03-2000)

Before Taxes -27.08% -18.55%

Class B (began on 07-11-2000)

Before Taxes -26.47% -18.80%

Indexes

S&P 500 Index³ -22.10% -0.59% 9.34%

Lipper Large-Cap Core Funds Universe Average⁴ -23.49% -1.90% 7.55%

² After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

³ Reflects no deduction for fees, expenses or taxes.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Core Equity Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 0.70% 0.70% 0.70% 0.70%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.37% 0.65% 0.48% 0.26%

Total Annual Fund Operating Expenses 1.32% 2.35% 2.18% 1.21%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $702 $ 969 $1,257 $2,074

Class B Shares $638 $1,033 $1,355 $2,426 ¹

Class C Shares $221 ² $ 682 $1,169 $2,513

Class Y Shares $123 $ 384 $ 665 $1,466

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $702 $ 969 $1,257 $2,074

Class B Shares $238 $ 733 $1,255 $2,426 ¹

Class C Shares $221 $ 682 $1,169 $2,513

Class Y Shares $123 $ 384 $ 665 $1,466

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

Ivy Cundill Global Value Fund

seeks long-term capital growth. Any income realized will be incidental.

Principal Strategies

Ivy Cundill Global Value Fund invests primarily in equity securities (including common stock, preferred stock and securities convertible into common stock) throughout the world, including emerging market countries, that the Fund's management team believes are trading below their estimated "intrinsic value."

"Intrinsic value" is the perceived realizable market value, determined through the management team's analysis of the companies' financial statements (and includes factors such as earnings, cash flows, dividends, business prospects, management capabilities and other catalysts for potentially increasing shareholder value).

To control its exposure to certain risks, the Fund may use certain derivative investment techniques (such as foreign currency exchange transactions and forward foreign currency contracts).

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Cundill Global Value Fund. These include:

* Securities selected for the Fund may not perform as well as the securities held by other mutual funds with investment objectives that are similar to those of the Fund. This is called management risk.

* Equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where "management risk" is not a factor. You could lose money if you redeem your Fund shares at a time when the Fund's portfolio is not performing as well as expected.

* Investing in foreign securities involves a number of economic, financial, and political considerations that are not associated with the US markets and that could affect the Fund's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are greater price volatility; comparatively weak supervision and regulations of security exchanges, brokers, and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversion costs; adverse tax consequences; and settlement delays.

* The risks of investing in foreign securities are more acute in countries with developing economies.

* The Fund may not be able to readily dispose of illiquid securities promptly at an acceptable price.

* The Fund may, but is not required to, use a range of derivative investment techniques to hedge various market risks (such as interest rates, currency exchange rates, and broad or specific equity or fixed-income market movements). The use of these derivative investment techniques involves a number of risks, including the possibility of default by the counterparty to the transaction and, to the extent the judgement of the Fund's manager as to the certain market movements is incorrect, the risk of losses that are greater than if the derivative technique(s) had not been used.

Who May Want to Invest

Ivy Cundill Global Value Fund may be appropriate for investors seeking long-term growth potential, but who can accept significant fluctuations in capital value in the short term. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Cundill Global Value Fund

The bar chart presents the average annual IVY Cundill Global total returns for Advisor Class and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Advisor Class because of variations in their respective expense structures.

The bar chart does not reflect any applicable account fees. If account fees were included, the returns would be less than those shown.

In the period shown in the chart, the highest quarterly return was 6.28% (the first quarter of 2002) and the lowest quarterly return was -11.17% (the third quarter of 2002). The Advisor Class return for the year through March 31, 2003 was -3.72%.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

The table also shows average annual returns, for Advisor Class shares, on a before tax and after-tax basis. Return Before Taxes shows the actual change in the value of the Fund shares over the periods shown, but does not reflect the impact of taxes on Fund distributions or the sale of Fund shares. The two after-tax returns take into account taxes that may be associated with owning Fund shares. Return After Taxes on Distributions is a Fund's actual performance, adjusted by the effect of taxes on distributions made by the Fund during the period shown. Return After Taxes on Distributions and Sale of Fund Shares is further adjusted to reflect the tax impact on any change in the value of Fund shares as if they had been sold on the last day of the period.

After-tax returns are shown only for Advisor Class shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years

as of December 31, 2002 1 Year (or Life of Class)

Advisor Class (began on 04-17-00)

Before Taxes -11.86% -3.72%

After Taxes on Distributions -12.18% -4.81%

After Taxes on Distributions and Sale of Fund Shares -7.17% ¹ -3.18% ¹

Class A (began on 09-04-01)

Before Taxes -17.22% -14.66%

Class B (began on 09-26-01)

Before Taxes -16.09% -8.15%

Class C (began on 10-19-01)

Before Taxes -12.88% -7.57%

Indexes

MSCI World Index² -19.89% -17.52% ³

Lipper Global Funds Universe Average⁴ -19.16% -15.90% ³

¹ After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

² Reflects no deduction for fees, expenses or taxes. The Morgan Stanley Capital International World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. As of April 2002 the MSCI World Index consisted of the following 23 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States.

³ Index comparison begins on April 30, 2000.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Cundill Global Value Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Advisor

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ 2.00% None None 2.00%

Annual Fund Operating Expenses⁴

Class A Class B Class C Advisor

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 1.00% 1.00% 1.00% 1.00%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% None

Other Expenses 3.72% 3.72% 3.72% 3.72%

Total Annual Fund Operating Expenses 4.97% 5.72% 5.72% 4.72%

Expenses reimbursed⁵ 2.22% 2.22% 2.22% 2.22%

Net Fund operating expenses 2.75% 3.50% 3.50% 2.50%

¹ The contingent deferred sales charge (CDSC) which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

⁴ The expense information shown has been restated to reflect current fees. Expenses reimbursed are estimated based on Class A.

⁵ WRIICO has contractually agreed to reimburse the Fund's expenses for the fiscal year ending December 31, 2003, and for the following eight years, to the extent necessary to ensure that the Fund's Annual Fund 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).

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $837 $1,379 $1,946 $3,736

Class B Shares $753 $1,374 $1,917 $3,860 ¹

Class C Shares $353 ² $1,074 $1,817 $4,030

Advisors Class Shares $253 $ 779 $1,331 $3,117

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $837 $1,379 $1,946 $3,736

Class B Shares $353 $1,074 $1,817 $3,860 ¹

Class C Shares $353 $1,074 $1,817 $4,030

Advisor Class Shares $253 $ 779 $1,331 $3,117

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOALS

Ivy Dividend Income Fund

seeks to provide income and long-term capital growth.

Principal Strategies

Ivy Dividend Income Fund seeks to achieve its goals by investing primarily in dividend-paying common stocks that WRIICO, the Fund's investment manager, believes also demonstrate favorable prospects for long-term capital growth. Although the Fund invests primarily in large companies, it may invest in companies of any size. The Fund will invest primarily in domestic securities but may also invest up to 25% of its total assets in foreign securities.

WRIICO attempts to select securities by considering a company's ability to sustain, and potentially increase, its dividend payments. It also typically considers other factors, which may include the company's:

* established operating history * management

* competitive dividend yields * leadership position in its industry

* profitability record * stock price value

* history of improving sales and profits

Generally, in determining whether to sell a security, WRIICO considers many factors, including: changes in economic or market factors in general or with respect to a particular industry, changes in the market trends or other factors affecting an individual security, and changes in the relative market performance or appreciation possibilities offered by individual securities. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Dividend Income Fund. These include:

* the mix of securities in the Fund's portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* the earnings performance, credit quality and other conditions of the companies whose securities the Fund holds

* WRIICO's skill in evaluating and selecting securities for the Fund

Market risk for small to medium sized companies may be greater than the market risk for large companies. Smaller companies are more likely to have limited financial resources and inexperienced management. As well, stocks of smaller companies, and growth stocks in general, may experience volatile trading and price fluctuations.

An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Who May Want to Invest

Ivy Dividend Income Fund is designed for investors seeking income and long-term capital growth through a portfolio of primarily dividend-paying common stocks. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Dividend Income Fund has not been in operation for a full calendar year; therefore, it does not have performance information to include in a bar chart or performance table reflecting average annual returns.

FEES AND EXPENSES

Ivy Dividend Income Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 0.70% 0.70% 0.70% 0.70%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses⁴ 0.70% 0.70% 0.70% 0.59%

Total Annual Fund Operating Expenses 1.65% 2.40% 2.40% 1.54%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

⁴ The data for Other Expenses is estimated for the initial fiscal year of the Fund. Actual expenses may be higher or lower.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years

Class A Shares $733 $1,065

Class B Shares $643 $1,048

Class C Shares $243 ¹ $ 748

Class Y Shares $157 $ 486

If shares are not redeemed at end of period: 1 Year 3 Years

Class A Shares $733 $1,065

Class B Shares $243 $ 748

Class C Shares $243 $ 748

Class Y Shares $157 $ 486

¹ A 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after the purchase date. Solely for purposes of determining the number of months from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month. Therefore, this number does not reflect the effect of the CDSC.

AN OVERVIEW OF THE FUND

GOAL

Ivy European Opportunities Fund

seeks long-term capital growth by investing in the securities markets of Europe.

Principal Strategies

Ivy European Opportunities Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the equity securities (including common stock, preferred stock and securities convertible into common stock) of European companies, which may include:

* large European companies, or European companies of any size that provide special investment opportunities (such as privatized companies, those providing exceptional value, or those engaged in initial public offerings);

* small-capitalization companies in the more developed markets of Europe

* companies operating in Europe's emerging markets

The Fund's manager uses a "bottom-up" investment approach, focusing on prospects for long-term earnings growth.

The Fund may also invest in European debt securities, up to 20% of which may be low-rated (commonly referred to as "high yield" or "junk" bonds). These securities typically are rated Ba or below by Moody's or BB or below by S&P (or are judged by the Fund's manager to be of comparable quality).

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy European Opportunities Fund. These include:

* The risks of investing in foreign securities are more acute in countries with developing economies.

* Securities of smaller companies may be subject to more abrupt or erratic market movements than the securities of larger, more established companies, since smaller companies tend to be more thinly traded and because they are subject to greater business risk. Transaction costs of smaller-company stocks may also be higher than those of larger companies.

* Securities issued through an initial public offering (IPO) can experience an immediate drop in value if the demand for the securities does not continue to support the offering price. Information about the issuers of IPO securities is also difficult to acquire since they are new to the market and may not have lengthy operating histories. The Fund may engage in short-term trading in connection with its IPO investments, which could produce higher trading costs and adverse tax consequences. The number of securities issued in an IPO is also limited, so it is likely that IPO securities will represent a smaller component of the Fund's portfolio as the Fund's assets increase (and thus have a more limited effect on the Fund's performance).

* The Fund's debt security investments are susceptible to decline in a rising interest rate environment. The risk is more acute for debt securities with longer maturities.

* The market value of debt securities also tends to vary according to the relative financial condition of the issuer. Certain of the Fund's debt security holdings may be considered below investment grade (commonly referred to as "high yield" or "junk" bonds). Low-rated debt securities are considered speculative and could weaken the Fund's returns if the issuer defaults on its payment obligations.

Who May Want to Invest

Ivy European Opportunities Fund may be appropriate for investors seeking long-term growth potential, but who can accept moderate fluctuations in capital value in the short term. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy European Opportunities Fund

The bar chart presents the average annual IVY European Opps total returns for Class A and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

The bar chart does not reflect any sales charge that you may be required to pay upon purchase of the Fund's Class A shares. If the sales charge were included, the returns would be less than those shown.

In the period shown in the chart, the highest quarterly return was 44.83% (the first quarter of 2000) and the lowest quarterly return was -21.29% (the third quarter of 2002). The Class A return for the year through March 31, 2003 was -12.80%.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

The table also shows average annual returns, for Class A shares, on a before tax and after-tax basis. Return Before Taxes shows the actual change in the value of the Fund shares over the periods shown, but does not reflect the impact of taxes on Fund distributions or the sale of Fund shares. The two after-tax returns take into account taxes that may be associated with owning Fund shares. Return After Taxes on Distributions is a Fund's actual performance, adjusted by the effect of taxes on distributions made by the Fund during the period shown. Return After Taxes on Distributions and Sale of Fund Shares is further adjusted to reflect the tax impact on any change in the value of Fund shares as if they had been sold on the last day of the period.

After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years

as of December 31, 2002 1 Year (or Life of Class)

Class A (began on 05-04-99)

Before Taxes -8.86% 26.80%

After Taxes on Distributions -8.86% 19.44%

After Taxes on Distributions and Sale of Fund Shares -5.44% ¹ 19.66%

Class B (began on 05-24-99)

Before Taxes -8.33% 27.25%

Class C (began on 10-24-99)

Before Taxes -4.49% 5.50%

Advisor Class (began on 05-03-99)

Before Taxes -3.33% 29.21%

Indexes

MSCI Europe^SM Index² -18.38% -9.67% ³

Lipper European Region Funds Universe Average⁴ -16.66% -7.00% ³

¹ After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

² Reflects no deduction for fees, expenses or taxes. The Morgan Stanley Capital International Europe Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance in Europe. As of September 2002 the MSCI Europe Index consisted of the following 16 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

³ Index comparison begins on April 30, 1999.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy European Opportunities Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Advisor

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount

invested or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ 2.00% None None 2.00%

Annual Fund Operating Expenses

Class A Class B Class C Advisor

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 1.00% 1.00% 1.00% 1.00%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% None

Other Expenses 0.90% 0.92% 0.92% 0.81%

Total Annual Fund Operating Expenses 2.15% 2.92% 2.92% 1.81%

²A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $781 $1,209 $1,663 $2,915

Class B Shares $695 $1,204 $1,638 $3,058 ¹

Class C Shares $295 ² $ 904 $1,538 $3,242

Advisor Class Shares $184 $ 569 $ 980 $2,127

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $781 $1,209 $1,663 $2,915

Class B Shares $295 $ 904 $1,538 $3,058 ¹

Class C Shares $295 $ 904 $1,538 $3,242

Advisor Class Shares $184 $ 569 $ 980 $2,127

¹Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

²A 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after the purchase date. Solely for purposes of determining the number of months from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month. Therefore, this number does not reflect the effect of the CDSC.

AN OVERVIEW OF THE FUND

GOAL

Ivy Global Natural Resources Fund

seeks long-term growth. Any income realized will be incidental.

Principal Strategies

Ivy Global Natural Resources Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities (including common stock, preferred stock and securities convertible into common stock) of companies of any size throughout the world that own, explore or develop natural resources and other basic commodities or supply goods and services to such companies.

For these purposes, "natural resources" generally include:

* precious metals (such as gold, silver and platinum);

* ferrous and nonferrous metals (such as iron, aluminum, copper and steel);

* strategic metals (such as uranium and titanium);

* fossil fuels and chemicals;

* forest products and agricultural commodities

* undeveloped real property

The Fund's investment manager uses an equity style that focuses on both growth and value. Companies targeted for investment have strong management and financial positions, adding balance with established low cost, low debt producers and positions that are based on anticipated commodity price trends. The Fund may have some emerging markets exposure in an attempt to achieve higher returns over the long-term.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Global Natural Resources Fund.
These include:

* Investing in foreign securities involves a number of economic, financial, and political considerations that are not associated with the US markets and that could affect the Fund's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are greater price volatility; comparatively weak supervision and regulations of security exchanges, brokers, and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversation costs; adverse tax consequences; and settlement delays.

* The risks of investing in foreign securities are more acute in countries with developing economies.

* Many of the companies in which the Fund may invest have relatively small market capitalizations. Securities of smaller companies may be subject to more abrupt or erratic market movements than the securities of larger, more established companies, since smaller companies tend to be more thinly traded and because they are subject to greater business risk. Transaction costs of smaller-company stocks may also be higher than those of larger companies.

* Since the Fund can invest a significant portion of its assets in securities of companies principally engaged in natural resources activities, the Fund could experience wider fluctuations in value than funds with more diversified portfolios.

Investing in natural resources can be riskier than other types of investment activities because of a range of factors, including price fluctuation caused by real and perceived inflationary trends and political developments; and the cost assumed by natural resource companies in complying with environmental and safety regulations. Investing in physical commodities, such as gold, exposes the Fund to other risk considerations such as potentially severe price fluctuations over short periods of time and storage costs that exceed the custodial and/or brokerage costs associated with the Fund's other portfolio holdings.

Who May Want to Invest

Ivy Global Natural Resources Fund may be appropriate for investors seeking long-term growth potential, but who can accept potentially dramatic fluctuations in capital value in the short term. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Global Natural Resources Fund

The bar chart presents the average annual IVY Global Natural total returns for Class A and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 24.19% (the fourth quarter of 2001) and the lowest quarterly return was -23.28% (the fourth quarter of 1997). The Class A return for the year through March 31, 2003 was -6.00%.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class A (began on 01-01-97)

Before Taxes -1.35% 4.49% 4.90%

After Taxes on Distributions -1.57% 4.21% 3.54%

After Taxes on Distributions and Sale of Fund Shares -0.74% ¹ 3.55% 3.42%

Class B (began on 01-01-97)

Before Taxes -0.49% 4.79% 5.05%

Class C (began on 01-01-97)

Before Taxes 3.46% 4.63% 4.87%

Advisor Class (began on 04-08-99)

Before Taxes 4.46% 15.14%

Indexes

MSCI Commodity Related Index² -5.26% 2.26% 1.50% ³

Lipper Natural Resources Funds Universe Average⁴ -6.26% 2.60% 2.72% ³

¹ After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

² Reflects no deduction for fees, expenses or taxes. The Morgan Stanley Capital International Commodity Related Index is an equal-dollar weighted index of 20 stocks involved in commodity related industries such as energy, non-ferrous metals, agriculture and forest products. The index was developed with a base value of 200 as of March 15, 1996.

³ Index comparison begins on December 31, 1996.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Global Natural Resources Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Advisor

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount

invested or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ 2.00% None None 2.00%

Annual Fund Operating Expenses

Class A Class B Class C Advisor

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 1.00% 1.00% 1.00% 1.00%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% None

Other Expenses 1.13% 1.09% 1.10% 0.98%

Total Annual Fund Operating Expenses 2.38% 3.09% 3.10% 1.98%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³ If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account. Class A and Advisor Class shares redeemed or exchanged within 30 days of purchase are subject to a 2.00% redemption/exchange fee. This fee also applies to Class A shares purchased without a sales charge.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $802 $1,275 $1,772 $3,135

Class B Shares $712 $1,254 $1,720 $3,234 ¹

Class C Shares $313 ² $ 957 $1,625 $3,411

Advisor Class Shares $200 $ 616 $1,057 $2,282

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $802 $1,275 $1,772 $3,135

Class B Shares $312 $ 954 $1,620 $3,234 ¹

Class C Shares $313 $ 957 $1,625 $3,411

Advisor Class Shares $200 $ 616 $1,057 $2,282

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOALS

Ivy High Income Fund

(formerly, W&R High Income Fund)

seeks, as a primary goal, high current income. As a secondary goal, the Fund seeks capital growth when consistent with its primary goal.

Principal Strategies

Ivy High Income Fund seeks to achieve its goals by investing primarily in high-yield, high-risk, fixed-income securities of U.S. and foreign issuers, the risks of which are, in the judgment of WRIICO, the Fund's investment manager, consistent with the Fund's goals. The Fund invests primarily in lower quality bonds, commonly called junk bonds, which include bonds rated BBB and below by S&P and Baa and below by Moody's or, if unrated, deemed by WRIICO to be of comparable quality. The Fund may invest an unlimited amount of its total assets in junk bonds. As well, the Fund may invest in bonds of any maturity and in companies of any size.

The Fund may invest up to 20% of its total assets in common stocks in order to seek capital growth. The Fund emphasizes a blend of value and growth in its selection of common stocks. Value stocks are those which WRIICO believes are currently selling below their true worth, while growth stocks are those whose earnings WRIICO believes are likely to grow faster than the economy.

WRIICO may look at a number of factors in selecting securities for the Fund. These include an issuer's past, current and estimated future:

* financial strength * borrowing requirements

* cash flow * responsiveness to changes in interest rates and business conditions

* management

Generally, in determining whether to sell a debt security, WRIICO uses the same type of analysis that it uses in buying debt securities. For example, WRIICO may sell a holding if the issuer's financial strength declines, or is anticipated to decline, to an unacceptable level, or if management of the company weakens. As well, WRIICO may choose to sell an equity security if the issuer's growth potential has diminished. WRIICO may sell a security if the competitive conditions of a particular industry have increased and it believes the Fund should, therefore, reduce its exposure to such industry. WRIICO may also sell a security if, in its opinion, the price of the security has risen to fully reflect the company's improved creditworthiness and other investments with greater potential exist. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy High Income Fund such as:

* the credit quality, earnings performance and other conditions of the companies whose securities the Fund holds

* the susceptibility of junk bonds to greater risks of non-payment or default, price volatility and lack of liquidity compared to higher-rated bonds

* an increase in interest rates, which may cause the value of bonds held by the Fund, especially bonds with longer maturities, to decline

* the mix of securities in the Fund, particularly the relative weightings in, and exposure to, different sectors and industries

* changes in the maturities of bonds owned by the Fund

* adverse bond and stock market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* the skill of WRIICO in evaluating and managing the interest rate and credit risks of the Fund's portfolio

Market risk for small or medium sized companies may be greater than that for large companies. For example, smaller companies may have limited financial resources, limited product lines or inexperienced management.

Investments in foreign securities also present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

Who May Want to Invest

Ivy High Income Fund is designed for investors who primarily seek a level of current income that is higher than is normally available with securities in the higher rated categories and, secondarily, seek capital growth when consistent with the goal of income. The Fund is not suitable for all investors. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy High Income Fund

The bar chart presents the average annual IVY High Income total returns for Class C shares and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class C shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 6.86% (the fourth quarter of 2001) and the lowest quarterly return was -6.62% (the third quarter of 1998). The Class C return for the year through March 31,2003 was 3.08%.

¹ The returns shown are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

After-tax returns are shown only for Class C shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class C (began on 07-31-1997)

Before Taxes¹ 1.58% 2.35% 3.02%

After Taxes on Distributions¹ -1.66% -0.65% 0.08%

After Taxes on Distributions and Sale of Fund Shares¹ 1.80% ² 1.04% 1.59%

Class Y (began on 12-30-1998)

Before Taxes 2.46% 3.05%

Class A (began on 07-03-2000)

Before Taxes -3.43% 1.15%

Class B (began on 07-18-2000)

Before Taxes -2.26% 1.63%

Indexes

Citigroup High Yield Market Index³ -1.53% 0.64% 1.40% ⁴

Lipper High Current Yield Funds Universe Average⁵ -1.76% -1.41% -0.66% ⁴

² After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

³ Reflects no deduction for fees, expenses or taxes.

⁴ Index comparison begins on July 31, 1997.

⁵ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy High Income Fund

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees⁴ 0.63% 0.63% 0.63% 0.63%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.56% 0.73% 0.66% 0.73%

Total Annual Fund Operating Expenses 1.44% 2.36% 2.29% 1.61%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

⁴ The expenses shown for Management Fees reflect the maximum annual fee payable; however, WRIICO has voluntarily agreed to waive its investment management fee on any day if the Fund's net assets are less than $25 million, subject to WRIICO's right to change or terminate this waiver.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $713 $1,003 $1,314 $2,195

Class B Shares $639 $1,035 $1,358 $2,459 ¹

Class C Shares $232 ² $ 714 $1,223 $2,620

Class Y Shares $163 $ 506 $ 873 $1,906

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $713 $1,003 $1,314 $2,195

Class B Shares $239 $ 735 $1,258 $2,459 ¹

Class C Shares $232 $ 714 $1,223 $2,620

Class Y Shares $163 $ 506 $ 873 $1,906

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOALS

Ivy International Fund

seeks long-term growth. Consideration of current income is secondary to this principal objective.

Principal Strategies

Ivy International Fund invests at least 80% of its net assets in equity securities (including common stock, preferred stock and securities convertible into common stock) principally traded in European, Pacific Basin and Latin American markets.

To enhance potential return, the Fund may invest in countries with new or comparatively undeveloped economies.

WRIICO, the Fund's investment manager, uses an investment approach that focuses on:

* analyzing a company's financial statements;

* taking advantage of overvalued or undervalued markets

* building a portfolio that is diversified by both region and sector

Some of the Fund's investments may produce income (such as dividends), although it is expected that any income realized would be incidental.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy International Fund. These include:

* Equity securities typically represent a proportionate ownership interest in a company. As a result, the value of equity securities rises and falls with a company's success or failure. The market value of equity securities can fluctuate significantly even where "management risk" is not a factor. You could lose money if you redeem your Fund shares at a time when the Fund's portfolio is not performing as well as expected.

Investing in foreign securities involves a number of economic, financial, and political considerations that are not associated with the US markets and that could affect the Fund's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are greater price volatility; comparatively weak supervision and regulations of security exchanges, brokers, and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversation costs; adverse tax consequences; and settlement delays. The risks of investing in foreign securities are more acute in countries with developing economies.

Who May Want to Invest

Ivy International Fund may be appropriate for investors seeking long-term growth potential, but who can accept potentially dramatic fluctuations in capital value in the short term. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy International Fund

The bar chart presents the average annual IVY International Fund total returns for Class A and shows how performance has varied from year to year over the past ten calendar years. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 16.41% (the fourth quarter of 1998) and the lowest quarterly return was -23.02% (the third quarter of 2002). The Class A return for the year through March 31, 2003 was -6.30%.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class A

Before Taxes -25.51% -8.76% 3.80%

After Taxes on Distributions -25.51% -10.38% 2.52%

After Taxes on Distributions and Sale of Fund Shares -15.66% ¹ -5.62% ¹ 3.80%

Class B (began on 10-22-93)

Before Taxes -25.12% -8.67% 0.31%

Class C (began on 04-30-96)

Before Taxes -22.00% -8.54% -3.64%

Advisor Class (began on 08-31-00)

Before Taxes -18.71%

Indexes

MSCI EAFE Index² -15.94% -2.89% 4.00%

Lipper International Funds Universe Average³ -16.67% -2.63% 4.76%

¹After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

² Reflects no deduction for fees, expenses or taxes. The Morgan Stanley Capital International EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US & Canada. As of April 2002 the MSCI EAFE Index consisted of the following 21 developed market country indices: Australia, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

³ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy International Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Advisor

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount

invested or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ 2.00% None None 2.00%

Annual Fund Operating Expenses

Class A Class B Class C Advisor

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 1.00% 1.00% 1.00% 1.00%

Distribution and Service (12b-1) Fees 0.20% ⁴ 1.00% 1.00% None

Other Expenses 0.69% 0.85% 0.83% 0.60%

Total Annual Fund Operating Expenses 1.89% 2.85% 2.83% 1.60%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

²A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

⁴ The annual service fee for Class A shares of the Fund may equal up to 0.25% on net assets attributable to outstanding shares issued on or after January 1, 1992. Since the calculation of the annual service fee does not take into account shares outstanding prior to January 1, 1992, this arrangement results in a rate of service fee that is lower than 0.25% of the net assets attributable to outstanding Class A shares of the Fund.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $756 $1,135 $1,538 $2,659

Class B Shares $688 $1,183 $1,604 $2,944 ¹

Class C Shares $286 ² $ 877 $1,494 $3,157

Advisor Class Shares $162 $ 500 $ 861 $1,878

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $756 $1,135 $1,538 $2,659

Class B Shares $288 $ 883 $1,504 $2,944 ¹

Class C Shares $286 $ 877 $1,494 $3,157

Advisor Class Shares $162 $ 500 $ 861 $1,878

¹Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOALS

Ivy International Growth Fund

(formerly, W&R International Growth Fund)

seeks, as a primary goal, long-term appreciation of capital. As a secondary goal, the Fund seeks current income.

Principal Strategies

Ivy International Growth Fund seeks to achieve its goals by investing primarily in common stocks of foreign companies that WRIICO, the Fund's investment manager, believes have the potential for long-term growth represented by economic expansion within a country or region, as well as the privatization and/or restructuring of particular industries. The Fund emphasizes growth stocks, which are securities of companies whose earnings WRIICO believes are likely to grow faster than the economy. The Fund primarily invests in issuers of developed countries, and the Fund may invest in companies of any size.

WRIICO may look at a number of factors in selecting securities for the Fund's portfolio. These include:

* a company's growth and earnings potential

* management of the company * applicable economic, market and political conditions of the country in which the company is located

* industry position of the company

* strength of the industry

Generally, in determining whether to sell a security, WRIICO uses the same type of analysis that it uses in buying securities of that type. For example, WRIICO may sell a security if it believes the security no longer offers significant growth potential, if it believes the management of the company has weakened, and/or there exists political or economic instability in the issuer's country. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy International Growth Fund. These include:

* changes in foreign exchange rates, which may affect the value of the securities the Fund holds

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* the earnings performance, credit quality and other conditions of the issuers whose securities the Fund holds

* WRIICO's skill in evaluating and selecting securities for the Fund

Investing in foreign securities presents additional risks, such as currency fluctuations and political or economic conditions affecting the foreign country. Accounting and disclosure standards also differ from country to country, which makes obtaining reliable research information more difficult. There is the possibility that, under unusual international monetary or political conditions, the Fund's assets might be more volatile than would be the case with other investment choices.

Market risk for small or medium sized companies may be greater than that for large companies. For example, smaller companies are more likely to have limited financial resources, limited product lines or inexperienced management.

Who May Want to Invest

Ivy International Growth Fund is designed for investors seeking long-term appreciation of capital by investing primarily in securities issued by foreign companies. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy International Growth Fund

The bar chart presents the average annual IVY International Grwth Fnd total returns for Class C shares and shows how performance has varied from year to year over the past ten calendar years. The returns for the Fund's other classes of shares during these periods were different from those of Class C shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 67.07% (the fourth quarter of 1999) and the lowest quarterly return was -18.66% (the third quarter of 2002). The Class C return for the year through March 31, 2003 was -8.64%.

¹ The returns shown are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

After-tax returns are shown only for Class C shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class C

Before Taxes¹ -19.88% 1.82% 5.53%

After Taxes on Distributions¹ -19.88% -0.94% 3.31%

After Taxes on Distributions and Sale of Fund Shares¹ -12.21% ² 2.21% ² 4.68%

Class Y (began on 12-29-1995)

Before Taxes -18.85% 2.89% 7.28%

Class A (began on 07-03-2000)

Before Taxes -23.90% -26.98%

Class B (began on 07-10-2000)

Before Taxes -23.33% -27.07%

Indexes

MSCI EAFE Index³ -15.94% -2.89% -20.51%

Lipper International Funds Universe Average⁴ -16.67% -2.63% 4.76%

¹ The returns shown for Class C shares are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999. The prior Class B's performance has been adjusted to reflect the current CDSC structure applicable to Class C. Accordingly, these returns reflect no CDSC since it only applies to Class C shares held for twelve months or less.

² After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

³ Reflects no deduction for fees, expenses or taxes. The Morgan Stanley Capital International EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US & Canada. As of April 2002 the MSCI EAFE Index consisted of the following 21 developed market country indices: Australia, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy International Growth Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee

(as a percentage of amount

redeemed, if applicable)³ 2.00% None None 2.00%

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 0.85% 0.85% 0.85% 0.85%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 1.01% 1.38% 1.09% 0.55%

Total Annual Fund Operating Expenses 2.11% 3.23% 2.94% 1.65%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³ If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account. Class A and Class Y shares redeemed or exchanged within 30 days of purchase are subject to a 2.00% redemption/exchange fee. This fee also applies to Class A shares purchased without a sales charge.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $777 $1,198 $1,644 $2,876

Class B Shares $726 $1,295 $1,788 $3,270 ¹

Class C Shares $297 ² $ 910 $1,548 $3,261

Class Y Shares $168 $ 520 $ 897 $1,955

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $777 $1,198 $1,644 $2,876

Class B Shares $326 $ 995 $1,688 $3,270 ¹

Class C Shares $297 $ 910 $1,548 $3,261

Class Y Shares $168 $ 520 $ 897 $1,955

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOALS

Ivy International Value Fund

seeks, as a primary goal, long-term capital growth. Consideration of current income is secondary to this principal objective.

Principal Strategies

Ivy International Value Fund invests at least 80% of its net assets in equity securities (including common stock, preferred stock and securities convertible into common stock) principally traded in European, Pacific Basin and Latin American markets.

WRIICO, the Fund's investment manager, uses a disciplined value approach while looking for investment opportunities around the world (including countries with new or comparatively undeveloped economies). Some of the Fund's investments may produce income (such as dividends), although it is expected that any income realized would be incidental.

To control its exposure to certain risks, the Fund might engage in foreign currency exchange transactions and forward foreign currency contracts.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy International Value Fund. These include:

* Securities selected for the Fund may not perform as well as the securities held by other mutual funds with investment objectives that are similar to those of the Fund.

* 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 manager's opinion, undervalued. If the manager's assessment of a company's prospects is wrong, the price of its stock may fall, or may not approach the value the manager has placed on it.

Who May Want to Invest

Ivy International Value Fund may be appropriate for investors seeking long-term growth potential, but who can accept potentially dramatic fluctuations in capital value in the short term. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy International Value Fund

The bar chart presents the average annual IVY International Value Fnd total returns for Class A and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 16.49% (the fourth quarter of 1998) and the lowest quarterly return was -22.75% (the third quarter of 2002). The Class A return for the year through March 31, 2003 was -7.06%.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class A (began on 05-13-97)

Before Taxes -20.77% -3.67% -5.11%

After Taxes on Distributions -20.77% -3.92% -5.32%

After Taxes on Distributions and Sale of Fund Shares -12.75% ¹ -2.92% ¹ -4.01% ¹

Class B (began on 05-13-97)

Before Taxes -21.66% -3.87% -5.38%

Class C (began on 05-13-97)

Before Taxes -18.39% -3.69% -5.22%

Advisor Class (began on 02-23-98)

Before Taxes -17.51% -4.08%

Indexes

MSCI EAFE Index² -15.94% -2.89% -3.20% ³

Lipper International Funds Universe Average⁴ -16.67% -2.63% -2.70% ³

¹ After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

³ Index comparison begins on May 31, 1997.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy International Value Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Advisor

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount

invested or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ 2.00% None None 2.00%

Annual Fund Operating Expenses

Class A Class B Class C Advisor

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 1.00% 1.00% 1.00% 1.00%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% None

Other Expenses 1.07% 1.05% 1.05% 1.05%

Total annual Fund operating expenses 2.32% 3.05% 3.05% 2.05%

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³ If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account. Class A and Advisor Class shares redeemed or exchanged within 30 days of purchase are subject to a 2.00% redemption/exchange fee. This fee also applies to Class A shares purchased without a sales charge.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $797 $1,258 $1,744 $3,078

Class B Shares $708 $1,242 $1,701 $3,192 ¹

Class C Shares $308 ² $ 942 $1,601 $3,365

Advisor Class Shares $207 $ 637 $1,094 $2,357

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $797 $1,258 $1,744 $3,078

Class B Shares $308 $ 942 $1,601 $3,192 ¹

Class C Shares $308 $ 942 $1,601 $3,365

Advisor Class Shares $207 $ 637 $1,094 $2,357

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

Ivy Large Cap Growth Fund

(formerly, W&R Large Cap Growth Fund)

seeks the appreciation of your investment.

Principal Strategies

Ivy Large Cap Growth Fund seeks to achieve its goal by investing primarily in a diversified portfolio of common stocks issued by growth-oriented, large to medium sized U.S. and foreign companies that WRIICO, the Fund's investment manager, believes have appreciation possibilities. Growth stocks are those whose earnings WRIICO believes are likely to grow faster than the economy. Although WRIICO anticipates the majority of the Fund's investments to be in large to medium sized companies, the Fund may invest in companies of any size.

WRIICO attempts to select securities with appreciation possibilities by looking at many factors. These include:

* the company's market position, product line, technological position and prospects for increased earnings

* the management capability of the company being considered

* the short-term and long-term outlook for the industry being analyzed

* changes in economic and political conditions

WRIICO may also analyze the demands of investors for the security relative to its price. Securities may be chosen when WRIICO anticipates a development that might have an effect on the value of a security.

In general, WRIICO may sell a security if it determines that the security no longer presents sufficient appreciation potential; this may be caused by, or be an effect of, changes in the industry of the issuer, loss by the company of its competitive position, and/or poor use of resources. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Large Cap Growth Fund. These include:

* the earnings performance, credit quality and other conditions of the companies whose securities the Fund holds

* the mix of securities in the Fund's portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* the skill of WRIICO in evaluating and selecting securities for the Fund

Market risk for medium sized companies may be greater than the market risk for large companies. Such companies are more likely to have limited financial resources and inexperienced management. As well, stock of these companies may experience volatile trading and price fluctuations.

The Fund may invest a portion of its assets in foreign securities. Foreign securities present additional risks such as currency fluctuations and political or economic conditions affecting the foreign countries.

Who May Want to Invest

Ivy Large Cap Growth Fund is designed for investors seeking long-term investment growth. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Large Cap Growth Fund

The bar chart presents the average annual IVY Large Cap Growth total returns for Class A and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 11.88% (the fourth quarter of 2001) and the lowest quarterly return was -18.97% (the first quarter of 2001). The Class A return for the year through March 31, 2003 was 0.84%.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

The table also shows average annual returns, for Class A shares, on a before tax and after-tax basis. Return Before Taxes shows the actual change in the value of the Fund shares over the periods shown, but does not reflect the impact of taxes on Fund distributions or the sale of Fund shares. The two after-tax returns take into account taxes that may be associated with owning Fund shares. Return After Taxes on Distributions is a Fund's actual performance, adjusted by the effect of taxes on distributions made by the Fund during the period shown. Return After Taxes on Distributions and Sale of Fund Shares is further adjusted to reflect the tax impact on any change in the value of Fund shares as if they had been sold on the last day of the period.

After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years

as of December 31, 2002 1 Year (or Life of Class)

Class A (began on 06-30-2000)

Before Taxes -24.39% -14.10%

After Taxes on Distributions -24.39% -14.24%

After Taxes on Distributions and Sale of Fund Shares -14.98% ¹ -11.01% ¹

Class C (began on 07-03-2000)

Before Taxes -20.54% -12.91%

Class B (began on 07-06-2000)

Before Taxes -24.25% -14.50%

Class Y (began on 07-06-2000)

Before Taxes -19.64% -12.07%

Indexes

S&P 500 Index² -22.10% -17.07% ³

Lipper Large-Cap Growth Funds Universe Average⁴ -28.63% -27.34% ³

¹ After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

² Reflects no deduction for fees, expenses or taxes.

³ Index comparison begins on June 30, 2000.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Large Cap Growth Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees⁴ 0.70% 0.70% 0.70% 0.70%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.71% 1.61% 0.92% 0.51%

Total Annual Fund Operating Expenses 1.66% 3.31% 2.62% 1.46%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

⁴ The expenses shown for Management Fees reflect the maximum annual fee payable; however, WRIICO has voluntarily agreed to waive its investment management fee on any day if the Fund's net assets are less than $25 million, subject to WRIICO's right to change or terminate this waiver.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $734 $1,068 $1,425 $2,427

Class B Shares $734 $1,318 $1,826 $3,221 ¹

Class C Shares $265 ² $ 814 $1,390 $2,954

Class Y Shares $149 $ 462 $ 797 $1,746

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $734 $1,068 $1,425 $2,427

Class B Shares $334 $1,018 $1,726 $3,221 ¹

Class C Shares $265 $ 814 $1,390 $2,954

Class Y Shares $149 $ 462 $ 797 $1,746

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

Ivy Limited-Term Bond Fund

(formerly, W&R Limited-Term Bond Fund)

seeks to provide a high level of current income consistent with preservation
of capital.

Principal Strategies

Ivy Limited-Term Bond Fund seeks to achieve its goal by investing primarily in investment-grade debt securities (including bonds rated BBB and higher by S&P and Baa and higher by Moody's or, if unrated, judged by WRIICO, the Fund's investment manager, to be of comparable quality) of U.S. issuers, including corporate bonds, mortgage-backed securities and U.S. Government securities. The Fund seeks to identify relative value opportunities between these sectors of the fixed-income market. The Fund maintains a dollar-weighted average maturity of not less than two years and not more than five years, and the Fund may invest in companies of any size.

WRIICO may look at a number of factors in selecting securities for the Fund's portfolio. These include:

* the security's current coupon * the creditworthiness of the particular issuer (if not backed by the full faith and credit of the U.S. Treasury)

* the maturity of the security

* the relative value of the security * prepayment risks for mortgage-backed securities and other debt securities with call provisions

Generally, in determining whether to sell a security, WRIICO uses the same type of analysis that it uses in buying securities. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Limited-Term Bond Fund. These include:

* an increase in interest rates, which may cause the value of the Fund's fixed-income securities, especially bonds with longer maturities, to decline

* the credit quality, earnings performance and other conditions of the issuers whose securities the Fund holds

* prepayment of higher-yielding bonds and mortgage-backed securities held by the Fund

* adverse bond and stock market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* WRIICO's skill in evaluating and managing the interest rate and credit risks of the Fund

Who May Want to Invest

Ivy Limited-Term Bond Fund is designed for investors seeking a high level of current income consistent with preservation of capital. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Limited-Term Bond Fund

The bar chart presents the average annual IVY Limited-Term Bond total returns for Class C shares and shows how performance has varied from year to year over the past ten calendar years. The returns for the Fund's other classes of shares during these periods were different from those of Class C shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 4.52% (the second quarter of 1995) and the lowest quarterly return was -1.99% (the first quarter of 1994). The Class C return for the year through March 31, 2003 was 0.82%.

¹ The returns shown are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

The table below compares the Fund's average annual returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (4.25%) and the applicable CDSC for Class B and Class C shares, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

The table also shows average annual returns, for Class C shares, on a before tax and after-tax basis. Return Before Taxes shows the actual change in the value of the Fund shares over the periods shown, but does not reflect the impact of taxes on Fund distributions or the sale of Fund shares. The two after-tax returns take into account taxes that may be associated with owning Fund shares. Return After Taxes on Distributions is a Fund's actual performance, adjusted by the effect of taxes on distributions made by the Fund during the period shown. Return After Taxes on Distributions and Sale of Fund Shares is further adjusted to reflect the tax impact on any change in the value of Fund shares as if they had been sold on the last day of the period.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after tax returns depend on an investor's tax situation and may differ from those shown. After tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts, or to shares held by non-taxable entities.

After-tax returns are shown only for Class C shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class C

Before Taxes¹ 4.05% 4.93% 4.94%

After Taxes on Distributions¹ 2.65% 3.15% 3.20%

After Taxes on Distributions and Sale of Fund Shares¹ 2.80% 3.40% 3.40%

Class Y (began on 12-29-1995)

Before Taxes 4.99% 5.90% 5.68%

Class B (began on 07-03-2000)

Before Taxes 0.05% 5.49%

Class A (began on 08-17-2000)

Before Taxes 0.54% 5.48%

Indexes

Citigroup 1-5 Years

Treasury/Government Sponsored/Corporate Index² 8.08% 7.16% 6.65%

Lipper Short-Intermediate Investment Grade

Debt Funds Universe Average³ 6.63% 6.19% 6.02%

² Reflects no deduction for fees, expenses or taxes.

³ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Limited-Term Bond Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 4.25% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 0.50% 0.50% 0.50% 0.50%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.35% 0.52% 0.47% 0.36%

Total Annual Fund Operating Expenses 1.10% 2.02% 1.97% 1.11%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $532 $760 $1,005 $1,708

Class B Shares $605 $934 $1,188 $2,109 ¹

Class C Shares $200 ² $618 $1,062 $2,296

Class Y Shares $113 $353 $ 612 $1,352

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $532 $760 $1,005 $1,708

Class B Shares $205 $634 $1,088 $2,109 ¹

Class C Shares $200 $618 $1,062 $2,296

Class Y Shares $113 $353 $ 612 $1,352

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

²A 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after the purchase date. Solely for purposes of determining the number of months from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month. Therefore, this number does not reflect the effect of the CDSC.

AN OVERVIEW OF THE FUND

GOAL

Ivy Mid Cap Growth Fund

(formerly, W&R Mid Cap Growth Fund)

seeks the growth of your investment.

Principal Strategies

Ivy Mid Cap Growth Fund seeks to achieve its goal by investing primarily in common stocks of U.S. and foreign companies whose market capitalizations are within the range of capitalizations of companies comprising the Russell Mid-Cap Growth Index (Russell Mid-Cap) and that WRIICO, the Fund's investment manager, believes offer above-average growth potential.

In selecting companies, WRIICO may look at a number of factors, such as:

* new or innovative products or services

* adaptive or creative management

* strong financial and operational capabilities
to sustain growth

* market potential

* profit potential

Generally, in determining whether to sell a stock, WRIICO uses the same type of analysis that it uses when buying stocks. For example, WRIICO may sell a holding if the company no longer meets the desired capitalization range or if the company position weakens in the industry or market. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Mid Cap Growth Fund. These include:

* the earnings performance, credit quality and other conditions of the companies whose securities the Fund holds

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* the mix of securities in the Fund's portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy

* the skill of WRIICO in evaluating and selecting securities for the Fund

Market risk for medium sized companies may be greater than that for large companies. Medium sized companies may have limited financial resources and less experienced management compared to large companies. Stocks of medium sized companies may experience volatile trading and price fluctuations.

Also, the Fund may invest, to a lesser extent, in foreign securities, which present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

Who May Want to Invest

Ivy Mid Cap Growth Fund is designed for investors who are willing to accept greater risks than are present with many other mutual funds. The Fund is not intended for investors who desire assured income and conservation of capital. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Mid Cap Growth Fund

The bar chart presents the average annual IVY Mid Cap Growth total returns for Class A and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 12.41% (the fourth quarter of 2001) and the lowest quarterly return was -16.60% (the third quarter of 2002). The Class A return for the year through March 31, 2003 was -1.04%.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

The table also shows average annual returns, for Class A shares, on a before tax and after-tax basis. Return Before Taxes shows the actual change in the value of the Fund shares over the periods shown, but does not reflect the impact of taxes on Fund distributions or the sale of Fund shares. The two after-tax returns take into account taxes that may be associated with owning Fund shares. Return After Taxes on Distributions is a Fund's actual performance, adjusted by the effect of taxes on distributions made by the Fund during the period shown. Return After Taxes on Distributions and Sale of Fund Shares is further adjusted to reflect the tax impact on any change in the value of Fund shares as if they had been sold on the last day of the period.

After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years

as of December 31, 2002 1 Year (or Life of Class)

Class A (began on 06-30-2000)

Before Taxes -30.11% -15.29%

After Taxes on Distributions -30.11% -15.79%

After Taxes on Distributions and Sale of Fund Shares -18.48% ¹ -11.92% ¹

Class C (began on 07-03-2000)

Before Taxes -26.52% -14.11%

Class B (began on 07-06-2000)

Before Taxes -29.97% -15.58%

Class Y (began on 07-10-2000)

Before Taxes -25.57% -14.01%

Indexes

Russell Mid-Cap Growth Index² -27.40% -26.93% ³

Lipper Mid-Cap Growth Funds Universe Average⁴ -28.33% -25.91% ³

¹ After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

² Reflects no deduction for fees, expenses or taxes.

³ Index comparison begins on June 30, 2000.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Mid Cap Growth Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees⁴ 0.85% 0.85% 0.85% 0.85%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.94% 1.69% 1.15% 0.64%

Total Annual Fund Operating Expenses 2.04% 3.54% 3.00% 1.74%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

⁴ The expenses shown for Management Fees reflect the maximum annual fee payable; however, WRIICO has voluntarily agreed to waive its investment management fee on any day if the Fund's net assets are less than $25 million, subject to WRIICO's right to change or terminate this waiver.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $770 $1,178 $1,610 $2,808

Class B Shares $757 $1,385 $1,936 $3,469 ¹

Class C Shares $303 ² $ 927 $1,577 $3,318

Class Y Shares $177 $ 548 $ 944 $2,052

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $770 $1,178 $1,610 $2,808

Class B Shares $357 $1,085 $1,836 $3,469 ¹

Class C Shares $303 $ 927 $1,577 $3,318

Class Y Shares $177 $ 548 $ 944 $2,052

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

Ivy Money Market Fund

(formerly, W&R Money Market Fund)

seeks maximum current income consistent with stability of principal.

Principal Strategies

Ivy Money Market Fund seeks to achieve its goal by investing in U.S. dollar-denominated, high-quality money market obligations and instruments. High quality indicates that the securities will be rated in one of the two highest categories by the requisite nationally recognized statistical rating organization (NRSRO), as defined in Rule 2a-7 of the Investment Company Act of 1940, as amended, or if unrated, will be of comparable quality as determined by WRIICO, the Fund's investment manager. The Fund seeks, as well, to maintain a net asset value (NAV) of $1.00 per share. The Fund maintains a dollar-weighted average maturity of 90 days or less, and the Fund invests only in securities with a remaining maturity of not more than 397 calendar days.

Principal Risks of Investing in the Fund

Because Ivy Money Market Fund owns different types of money market obligations and instruments, a variety of factors can affect its investment performance, such as:

* an increase in interest rates, which can cause the value of the Fund's holdings, especially securities with longer maturities, to decline

* the credit quality and other conditions of the issuers whose securities the Fund holds

* adverse bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* WRIICO's skill in evaluating and managing the interest rate and credit risks of the Fund

An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

Who May Want to Invest

Ivy Money Market Fund is designed for investors who are risk-averse and seek to preserve principal while earning current income and saving for short-term needs. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Money Market Fund

The bar chart and performance table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's performance and by showing the Fund's average annual total returns for the periods shown.

The bar chart presents the average annual IVY Money Market total return for Class A shares. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

The performance table shows average annual total returns for each class.

The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Fund's past performance does not necessarily indicate how it will perform in the future.

In the period shown in the chart, the highest quarterly return was 1.28% (the first quarter of 2001) and the lowest quarterly return was 0.32% (the second quarter of 2002). The Class A return for the year through March 31, 2003 was 0.24%. As of December 31, 2002, the 7-day yield was equal to 1.12%. Yields are compiled by annualizing the average daily dividend per share during the time period for which the yield is presented.

Average Annual Total Returns
		5 Years
as of December 31, 2002	1 Year	(or Life of Class)
Class A (began on 06-30-2000)	1.40%		3.12%
Class C (began on 07-03-2000)	0.33%		2.05%
Class B (began on 07-12-2000)	0.29%		1.88%

FEES AND EXPENSES

Ivy Money Market Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C

(fees paid directly from your investment) Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None 5% 1%

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)² None None None

Annual Fund Operating Expenses

Class A Class B Class C

(expenses that are deducted from Fund assets) Shares Shares Shares

Management Fees³ 0.40% 0.40% 0.40%

Distribution and Service (12b-1) Fees None 1.00% 1.00%

Other Expenses 0.51% 1.08% 1.04%

Total Annual Fund Operating Expenses 0.91% 2.48% 2.44%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

²If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

³ The expenses shown for Management Fees reflect the maximum annual fee payable; however, WRIICO has voluntarily agreed to waive its investment management fee on any day if the Fund's net assets are less than $25 million, subject to WRIICO's right to change or terminate this waiver.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $ 93 $ 290 $ 504 $1,120

Class B Shares $651 $1,073 $1,421 $2,424 ¹

Class C Shares $247 ² $ 761 $1,301 $2,776

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $ 93 $ 290 $ 504 $1,120

Class B Shares $251 $ 773 $1,321 $2,424 ¹

Class C Shares $247 $ 761 $1,301 $2,776

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

Ivy Municipal Bond Fund

(formerly, W&R Municipal Bond Fund)

seeks to provide income that is not subject to Federal income tax.

Principal Strategies

Ivy Municipal Bond Fund seeks to achieve its goal by investing primarily in tax-exempt municipal bonds, mainly of investment grade and of any maturity. Municipal bonds mean obligations the interest on which is not includable in gross income for Federal income tax purposes. However, a significant portion, up to 40%, of the Fund's dividends paid to shareholders each year may be a tax preference item for purposes of the Federal alternative minimum tax (AMT).

The Fund diversifies its holdings between two main types of municipal bonds:

* general obligation bonds, which are backed by the full faith, credit and taxing power of the governmental authority

* revenue bonds, which are payable only from specific sources, such as the revenue from a particular project, a special tax, lease payments and/or appropriated funds. Revenue bonds include certain private activity bonds (PABs), which finance privately operated facilities. Revenue bonds also include housing bonds that finance pools of single family home mortgages and multi-family project mortgages and student loan bonds that finance pools of student loans

WRIICO primarily utilizes a top-down management style that de-emphasizes aggressive interest rate strategies. WRIICO attempts to enhance fund performance by utilizing opportunities presented by the shape and slope of the yield curve, while keeping the overall fund duration relatively neutral to the fund's stated benchmark. As an overlay to this core strategy, WRIICO attempts to identify and exploit relative value opportunities that exist between sectors, states (including U.S. possessions), security structures and ratings categories. Relative attractiveness to other taxable fixed income asset classes, as well as municipal market supply/demand patterns are monitored closely for opportunities.

Prudent diversification between sectors, states, security structures, position sizes and ratings categories is strongly emphasized, to reduce overall portfolio risk and performance volatility.

WRIICO may look at a number of factors in selecting securities for the Fund's portfolio. These include:

* the security's current coupon

* the maturity of the security

* the relative value of the security

* the creditworthiness of the particular issuer or of the private company involved

* the structure of the security, including whether it has a put or a call feature

Generally, in determining whether to sell a security, WRIICO uses the same type of analysis that is used in buying securities in order to determine whether the security continues to be a desired investment for the Fund. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

Because Ivy Municipal Bond Fund primarily owns different types of securities issued by municipal authorities, a variety of factors can affect its investment performance, such as:

* an increase in interest rates, which may cause the value of a bond held by the Fund, especially bonds with longer maturities and zero coupon bonds, to decline

* prepayment of asset-backed securities or mortgage-backed securities (prepayment risk)

* prepayment of higher-yielding bonds when interest rates decline (optional call risk)

* changes in the maturities of bonds owned by the Fund

* the credit quality of the issuers whose securities the Fund owns or of the private companies involved in PAB-financed projects

* the local economic, political or regulatory environment affecting bonds owned by the Fund, including legislation affecting the tax status of municipal bond interest

* failure of a bond's interest to qualify as tax-exempt

* adverse bond and stock market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* WRIICO's skill in evaluating and managing the interest rate and credit risks of the Fund's portfolio

* changes and shifts in the shape of the yield curve which may result in certain maturities underperforming others

A significant portion of the Fund's dividends attributable to municipal bond interest may be a tax preference item; this would have the effect of reducing the Fund's return to any investor whose AMT liability was increased by the Fund's dividends.

Who May Want to Invest

Ivy Municipal Bond Fund is designed for investors seeking current income that is primarily free from Federal income tax, through a diversified portfolio. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Municipal Bond Fund

The bar chart presents the average annual IVY Municipal Bond total returns for Class C shares and shows how performance has varied from year to year over the past ten calendar years. The returns for the Fund's other classes of shares during these periods were different from those of Class C shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 8.36% (the first quarter of 1995) and the lowest quarterly return was -7.14% (the first quarter of 1994). The Class C return for the year through March 31, 2003 was 1.00%.

¹ The returns shown are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

The table also shows average annual returns, for Class C shares, on a before tax and after-tax basis. Return Before Taxes shows the actual change in the value of the Fund shares over the periods shown, but does not reflect the impact of taxes on Fund distributions or the sale of Fund shares. The two after-tax returns take into account taxes that may be associated with owning Fund shares. Return After Taxes on Distributions is a Fund's actual performance, adjusted by the effect of taxes on distributions made by the Fund during the period shown. Return After Taxes on Distributions and Sale of Fund Shares is further adjusted to reflect the tax impact on any change in the value of Fund shares as if they had been sold on the last day of the period.

After-tax returns are shown only for Class C shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class C

Before Taxes¹ 7.48% 3.62% 5.25%

After Taxes on Distributions¹ 7.46% 3.44% 5.08%

After Taxes on Distributions and Sale of Fund Shares¹ 5.85% 3.57% 4.97%

Class Y (began on 12-30-1998)

Before Taxes 8.26% 4.05%

Class B (began on 08-08-2000)

Before Taxes 3.45% 5.28%

Class A (began on 09-15-2000)

Before Taxes 3.83% 5.50%

Indexes

Lehman Brothers Municipal Bond Index² 9.60% 6.06% 6.71%

Lipper General Municipal Debt Funds Universe Average³ 8.36% 4.62% 5.80%

² Reflects no deduction for fees, expenses or taxes.

³ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Municipal Bond Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment)
Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 4.25% None None None

Maximum Deferred Sales Charge (Load)¹
(as a percentage of lesser of amount invested
or redemption value) None ² 5% 1%
None

Redemption fee/exchange fee (as a percentage
of amount redeemed, if applicable)³ None None
None
None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 0.53% 0.53% 0.53% 0.53%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.37% 0.43% 0.49% 0.60%

Total Annual Fund Operating Expense 1.15% 1.96% 2.02% 1.38%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

²A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $537 $775 $1,031 $1,763

Class B Shares $599 $915 $1,157 $2,074 ¹

Class C Shares $205 ² $634 $1,088 $2,348

Class Y Shares $140 $437 $ 755 $1,657

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $537 $775 $1,031 $1,763

Class B Shares $199 $615 $1,057 $2,074 ¹

Class C Shares $205 $634 $1,088 $2,348

Class Y Shares $140 $437 $ 755 $1,657

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOALS

Ivy Pacific Opportunities Fund

seeks, as a primary goal, long-term capital growth. Consideration of current income is secondary to this principal objective.

Principal Strategies

Ivy Pacific Opportunities Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities (including common stock, preferred stock and securities convertible into common stock) of companies such as those whose securities are traded mainly on markets in the Pacific region, organized under the laws of a Pacific region country or issued by any company with more than half of its business in the Pacific region. Examples of Pacific region countries include China, Hong Kong, Malaysia, Sri Lanka, Australia and India. Although it is permitted to invest in Japan, the Fund does not currently anticipate doing so.

The Fund's manager uses an investment approach that focuses on analyzing a company's financial statements and taking advantage of overvalued or undervalued markets. Some of the Fund's investments may produce income (such as dividends), although it is expected that any income realized would be incidental.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Pacific Opportunities Fund. These include:

* Securities selected for the Fund may not perform as well as the securities held by other mutual funds with investment objectives that are similar to those of the Fund.

* Investing in foreign securities involves a number of economic, financial, and political considerations that are not associated with the US markets and that could affect the Fund's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are greater price volatility; comparatively weak supervision and regulations of security exchanges, brokers, and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversation costs; adverse tax consequences; and settlement delays.

The risks of investing in foreign securities are more acute in countries with developing economies. Since the Fund normally invests a substantial portion of its assets in these countries, it is exposed to the following additional risks: securities that are even less liquid and more volatile than those in more developed foreign countries; unusually long settlement delays; less stable governments that are susceptible to sudden adverse actions (such as nationalization of businesses, restrictions on foreign ownership or prohibitions against reparation of assets); abrupt changes in exchange rate regime or monetary policy; unusually large currency fluctuations and currency conversion costs; and high national debt levels (which may impede an issuer payment of principal and/or interest on external debt).

Investing in the Pacific region involves special risks beyond those described above. For example, certain Pacific region countries may be vulnerable to trade barriers and other protectionist measures that could have an adverse effect on the value of the Fund's portfolio. The limited size of the markets for some Pacific region securities can also make them more susceptible to investor perceptions, which can impact their value and liquidity.

Events in any one country may impact the other countries or the region as a whole. As a result, events in the region will generally have a greater effect on the Fund than if the Fund were more geographically diversified, which may result in greater losses and volatility. Increased social or political unrest in some or all of these countries could cause further economic and market uncertainty.

Who May Want to Invest

Ivy Pacific Opportunities Fund may be appropriate for investors seeking long-term growth potential, but who can accept potentially dramatic fluctuations in capital value in the short term. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Pacific Opportunities Fund

The bar chart presents the average annual IVY Pacific Opportunities total returns for Class A and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 40.73% (the second quarter of 1999) and the lowest quarterly return was -30.21% (the fourth quarter of 1997). The Class A return for the year through March 31, 2003 was -3.69%.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class A (began on 10-22-93)

Before Taxes -16.41% -6.29% -5.41%

After Taxes on Distributions -16.41% -6.54% -5.68%

After Taxes on Distributions and Sale of Fund Shares -10.08% ¹ -4.94% ¹ -4.14% ¹

Class B (began on 10-22-93)

Before Taxes -15.86% -6.23% -5.60%

Class C (began on 04-30-96)

Before Taxes -12.21% -5.96% -6.84%

Advisor Class (began on 02-10-98)

Before Taxes -11.84% -5.41%

Indexes

MSCI Asia Pacific Free (excluding Japan) Index² -5.11% -1.46% -3.03% ³

Lipper Pacific Ex-Japan Funds Universe Average⁴ -7.97% -0.15% -4.91% ³

¹ After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

² Reflects no deduction for fees, expenses or taxes. The Morgan Stanley Capital International Asia Pacific Free (excluding Japan) Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the Far East, excluding Japan. As of April 2002 the MSCI Asia Pacific Free (excluding Japan) Index consisted of the following 9 developed and emerging market country indices: China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore Free, Taiwan and Thailand.

³ Index performance is calculated from October 31, 1993.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Pacific Opportunities Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Advisor

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount

invested or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ 2.00% 2.00% 2.00% 2.00%

Annual Fund Operating Expenses⁴

Class A Class B Class C Advisor

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 1.00% 1.00% 1.00% 1.00%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% None

Other Expenses 2.27% 2.27% 2.27% 2.27%

Total Annual Fund Operating Expenses 3.52% 4.27% 4.27% 3.27%

Expenses reimbursed⁵ 0.77% 0.77% 0.77% 0.77%

Net Fund operating expenses 2.75% 3.50% 3.50% 2.50%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³ If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account. Fund shares redeemed or exchanged within 30 days of purchase are subject to a 2.00% redemption/exchange fee. This fee also applies to Class A shares purchased without a sales charge.

⁴ The expense information shown has been restated to reflect current fees. Expenses reimbursed are estimated based on Class A.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $837 $1,379 $1,946 $3,568

Class B Shares $753 $1,374 $1,917 $3,693 ¹

Class C Shares $353 ² $1,074 $1,817 $3,863

Advisor Class Shares $252 $ 772 $1,319 $2,906

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $837 $1,379 $1,946 $3,568

Class B Shares $353 $1,074 $1,817 $3,693 ¹

Class C Shares $353 $1,074 $1,817 $3,863

Advisor Class Shares $252 $ 772 $1,319 $2,906

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

Ivy Science and Technology Fund

(formerly, W&R Science and Technology Fund)

seeks long-term capital growth.

Principal Strategies

Ivy Science and Technology Fund seeks to achieve its goal of growth by concentrating its investments primarily in the equity securities of U.S. and foreign science and technology companies. Science and technology companies are companies whose products, processes or services, in the opinion of WRIICO, the Fund's investment manager, are being or are expected to be significantly benefited by the use or commercial application of scientific or technological developments or discoveries. As well, the Fund may invest in companies that utilize science and/or technology to improve their existing business even though the business is not within the science and technology industries. The Fund may invest in companies of any size.

WRIICO typically emphasizes growth potential in selecting stocks; that is, WRIICO seeks companies in which earnings are likely to grow faster than the economy. WRIICO may look at a number of factors in selecting securities for the Fund's portfolio. These include the issuer's:

* growth potential * industry position

* earnings potential * applicable economic and market conditions

* management

Generally, in determining whether to sell a security, WRIICO uses the same type of analysis that it uses in buying securities in order to determine whether the security has ceased to offer significant growth potential, has become overvalued and/or whether the company prospects of the issuer have deteriorated. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principl Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Science and Technology Fund. These include:

* the mix of securities in the Fund's portfolio, particularly the relative weightings in, and exposure to, different sectors of the science and technology industries

* the volatility of securities of science and technology companies due, in part, to the competitiveness of the industry

* rapid obsolescence of products or processes of companies in which the Fund invests

* government regulation in the science and technology industry

* the earnings performance, credit quality and other conditions of the companies whose securities the Fund holds

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* WRIICO's skill in evaluating and selecting securities for the Fund

Market risk for small to medium sized companies may be greater than that for large companies. Smaller companies are more likely to have limited financial resources and inexperienced management. As well, stocks of smaller companies may experience volatile trading and price fluctuations.

The Fund may invest, to a lesser extent, in foreign securities. Investments in foreign securities present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

Who May Want to Invest

Ivy Science and Technology Fund is designed for investors who seek long-term capital growth by investing in an actively managed Fund that concentrates in securities of science and technology companies. This Fund is not suitable for all investors. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Science and Technology Fund

IVY Science & Tech

The bar chart presents the average annual total returns for Class C shares and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class C shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 82.61% (the fourth quarter of 1999) and the lowest quarterly return was -23.25% (the second quarter of 2000). The Class C return for the year through March 31, 2003 was -1.70%.

¹ The returns shown are based on the performance of the Fund's prior Class B. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999.

² A substantial portion of the Fund's returns during this period is attributable to investments in initial public offerings (IPOs). No assurance can be given that the Fund will continue to be able to invest in IPOs to the same extent as it has in the past or that future IPOs in which the Fund invests will have as equally beneficial an impact on performance.

Average Annual Total Returns

After-tax returns are shown only for Class C shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class C (began on 07-31-1997)

Before Taxes¹ -26.57% 13.05% 12.42%

After Taxes on Distributions¹ -26.57% 11.73% 11.22%

After Taxes on Distributions and Sale of Fund Shares¹ -16.32% ² 11.82% 11.25%

Class Y (began on 06-09-1998)

Before Taxes -25.67% 10.91%

Class A (began on 07-03-2000)

Before Taxes -30.16% -23.33%

Class B (began on 07-03-2000)

Before Taxes -29.72% -22.98%

Indexes

Goldman Sachs Technology Industry Composite Index³ -40.27% -3.26% -5.08% ⁴

Lipper Science & Technology Funds Universe Average⁵ -43.01% -3.03% -3.87% ⁴

² After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

³ Reflects no deduction for fees, expenses or taxes.

⁴ Index comparison begins on July 31, 1997.

⁵ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Science and Technology Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 0.85% 0.85% 0.85% 0.85%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.70% 1.14% 0.82% 0.34%

Total Annual Fund Operating Expenses 1.80% 2.99% 2.67% 1.44%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $747 $1,109 $1,494 $2,569

Class B Shares $702 $1,224 $1,672 $3,025 ¹

Class C Shares $270 ² $ 829 $1,415 $3,003

Class Y Shares $147 $ 456 $ 787 $1,724

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $747 $1,109 $1,494 $2,569

Class B Shares $302 $ 924 $1,572 $3,025 ¹

Class C Shares $270 $ 829 $1,415 $3,003

Class Y Shares $147 $ 456 $ 787 $1,724

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

Ivy Small Cap Growth Fund

(formerly, W&R Small Cap Growth Fund)

seeks growth of capital.

Principal Strategies

Ivy Small Cap Growth Fund seeks to achieve its goal by investing primarily in common stocks of domestic and foreign companies whose market capitalizations are within the range of capitalizations of companies included in the Lipper, Inc. Small Cap Category (small cap stocks). The Fund emphasizes relatively new or unseasoned companies in their early stages of development or smaller companies positioned in new or emerging industries where there is opportunity for rapid growth.

In selecting companies, WRIICO, the Fund's investment manager, seeks companies whose earnings, it believes, are likely to grow faster than the economy. WRIICO may look at a number of factors regarding a company, such as:

* aggressive or creative management * entry into new or emerging industries

* technological or specialized expertise * growth in earnings/growth in sales

* new or unique products or services

Generally, in determining whether to sell a security, WRIICO uses the same type of analysis that it uses in buying securities. For example, WRIICO may sell a security if it determines that the stock no longer offers significant growth potential, which may be due to a change in the business or management of the company or a change in the industry of the company. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Small Cap Growth Fund. These include:

* the earnings performance, credit quality and other conditions of the companies whose securities the Fund holds

* the mix of securities in the Fund, particularly the relative weightings in, and exposure to, different sectors and industries

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* WRIICO's skill in evaluating and selecting securities for the Fund

The Fund may invest in foreign securities, which present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

Market risk for small to medium sized companies may be greater than that for large companies. Smaller companies are more likely to have limited financial resources and inexperienced management. Stock of smaller companies may also experience volatile trading and price fluctuations.

Due to the nature of the Fund's permitted investments, primarily the small cap stocks of new and/or unseasoned companies, companies in their early stages of development or smaller companies in new or emerging industries, the Fund may be subject to the following additional risks:

* products offered may fail to sell as anticipated

* a period of unprofitability may be experienced before a company develops the expertise and clientele to succeed in an industry

* the company may never achieve profitability

* economic, market and technological factors may cause the new industry itself to lose favor with the public

Who May Want to Invest

Ivy Small Cap Growth Fund is designed for investors willing to accept greater risks than are present with many other mutual funds. It is not intended for those investors who desire assured income and conservation of capital. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Small Cap Growth Fund

IVY Small Cap Growth

The bar chart presents the average annual total returns for Class C shares and shows how performance has varied from year to year over the past ten calendar years. The returns for the Fund's other classes of shares during these periods were different from those of Class C shares because of variations in their respective expense structure.

In the period shown in the chart, the highest quarterly return was 40.97% (the fourth quarter of 1999) and the lowest quarterly return was -23.83% (the third quarter of 2001). The Class C return for the year through March 31, 2003 was 1.77%.

Average Annual Total Returns

After-tax returns are shown only for Class C shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years 10 Years

(or Life (or Life

as of December 31, 2002 1 Year of Class) of Class)

Class C

Before Taxes¹ -25.82% 7.15% 12.47%

After Taxes on Distributions¹ -25.82% 3.33% 9.92%

After Taxes on Distributions and Sale of Fund Shares¹ -15.85% ² 6.42% 10.83%

Class Y (began on 12-29-1995)

Before Taxes -25.17% 8.07% 9.36%

Class A (began on 07-03-2000)

Before Taxes -29.53% -19.62%

Class B (began on 07-06-2000)

Before Taxes -28.97% -18.57%

Indexes

Russell 2000 Growth Index³ -30.22% -6.56% 2.60%

Lipper Small-Cap Growth Funds Universe Average⁴ -29.72% -2.31% 5.54%

¹ The returns shown for Class C shares are based on the performance of the Fund's prior Class B shares. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999. The prior Class B's performance has been adjusted to reflect the current CDSC structure applicable to Class C. Accordingly, these returns reflect no CDSC since it only applies to Class C shares held for twelve months or less.

²After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

³ Reflects no deduction for fees, expenses or taxes.

⁴ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Small Cap Growth Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees 0.85% 0.85% 0.85% 0.85%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 0.44% 0.77% 0.46% 0.24%

Total Annual Fund Operating Expenses 1.54% 2.62% 2.31% 1.34%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $723 $1,033 $1,366 $2,304

Class B Shares $665 $1,114 $1,490 $2,688 ¹

Class C Shares $234 ² $ 721 $1,235 $2,646

Class Y Shares $136 $ 425 $ 734 $1,613

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $723 $1,033 $1,366 $2,304

Class B Shares $265 $ 814 $1,390 $2,688 ¹

Class C Shares $234 $ 721 $1,235 $2,646

Class Y Shares $136 $ 425 $ 734 $1,613

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

Ivy Tax-Managed Equity Fund

(formerly, W&R Tax-Managed Equity Fund)

seeks long-term growth of capital while minimizing taxable gains and income to shareholders.

Principal Strategies

Ivy Tax-Managed Equity Fund seeks to achieve its goal by investing primarily in a diversified portfolio of common stocks of U.S. and foreign companies that WRIICO, the Fund's investment manager, considers to be high in quality and attractive in their long-term investment potential. The Fund seeks stocks that are favorably priced in relation to their fundamental value and will likely grow over time. While the Fund typically invests in the common stocks of large to medium sized U.S. companies, it may invest in companies of any size, any industry or any country in order to achieve its goal.

WRIICO manages the Fund using an investment strategy that is sensitive to the potential impact of Federal income tax on shareholders' investment returns. The Fund's tax-sensitive investment strategy is intended to lead to lower distributions of income and realized capital gains than funds managed without regard to Federal income tax consequences.

In selecting companies, WRIICO typically invests for the long term and selects securities that it believes offer strong opportunities for long-term growth of capital and that are attractively valued. While WRIICO primarily invests in growth stocks, it may also purchase value stocks. Value stocks are those that WRIICO believes are currently selling below their true worth.

When deciding to sell a security, WRIICO considers the negative tax impact of realizing capital gains and, if applicable, the positive tax impact of realizing capital losses. However, WRIICO may sell a security at a realized gain if it determines that the potential tax cost is outweighed by the risk of owning the security, or if more attractive investment opportunities are available. In addition, redemptions by shareholders may force the Fund to sell securities at an inappropriate time, potentially resulting in realized gains.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Ivy Tax-Managed Equity Fund. These include:

* the skill of WRIICO in evaluating and selecting securities for the Fund

* the earnings performance, credit quality and other conditions of the companies whose securities the Fund holds

* the mix of securities in the Fund, particularly the relative weightings in, and exposure to, different sectors and industries that may result in performance less favorable than another investment mix might have produced

* adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Fund's holdings to fall as part of a broad market decline

* the Fund's tax-sensitive investment strategy failing to limit distributions of taxable income and net realized capital gains as contemplated

Market risk for small companies may be greater than that for medium and large companies. Smaller companies are more likely to have limited financial resources and inexperienced management. Stocks of smaller companies, and growth stocks in general, may also experience volatile trading and price fluctuations.

Who May Want to Invest

Ivy Tax-Managed Equity Fund is designed for long-term taxable investors. If you are investing for the short-term (less than one year), you may suffer negative tax consequences. Market conditions may limit the Fund's ability to realize capital losses or to avoid dividend income. While the Fund tries to reduce the extent to which shareholders incur taxes on Fund distributions of income and net realized gains, the Fund does expect to distribute taxable income and/or net capital gains from time to time. Investors may realize capital gains when they sell their shares. You should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Ivy Tax-Managed Equity Fund

IVY Tax-Managed Equity

In the period shown in the chart, the highest quarterly return was 7.04% (the fourth quarter of 2001) and the lowest quarterly return was -17.55% (the first quarter of 2001). The Class A return for the year through March 31, 2003 was 0.88%. The bar chart presents the average annual total returns for Class A and shows how performance has varied from year to year. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structure.

Average Annual Total Returns

The table below compares the Fund's average annual total returns to that of a broad-based securities market index that is unmanaged, and to a Lipper average that is a composite of mutual funds with goals similar to that of the Fund. The Fund's returns include the maximum sales charge for Class A shares (5.75%) and the CDSC for Class B and Class C shares, if applicable, treat dividend and capital gain distributions as reinvested and assume you sold your shares at the end of each period (unless otherwise noted).

After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Average Annual Total Returns

5 Years

as of December 31, 2002 1 Year (or Life of Class)

Class A (began on 06-30-2000)

Before Taxes -19.98% -22.08%

After Taxes on Distributions -19.98% -22.08%

After Taxes on Distributions and Sale of Fund Shares -12.27% ¹ -16.94% ¹

Class C (began on 07-06-2000)

Before Taxes -15.93% -21.16%

Class B (began on 07-13-2000)

Before Taxes -19.17% -22.43%

Class Y²

Indexes

S&P 500 Index³ -22.10% -17.07% ⁴

Lipper Large-Cap Growth Funds Universe Average⁵ -28.63% -27.34% ⁴

¹After tax returns may be better than before tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

² Class Y shares have been offered to the public since June 30, 2000. As of March 31, 2003, there have been no Class Y shares issued. Therefore, there is no Class Y return information to be included in the table.

³ Reflects no deduction for fees, expenses or taxes.

⁴ Index comparison begins on June 30, 2000.

⁵ Lipper Average is net of fees and expenses.

FEES AND EXPENSES

Ivy Tax-Managed Equity Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder Fees

Class A Class B Class C Class Y

(fees paid directly from your investment) Shares Shares Shares Shares

Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of offering price) 5.75% None None None

Maximum Deferred Sales Charge (Load)¹

(as a percentage of lesser of amount invested

or redemption value) None ² 5% 1% None

Redemption fee/exchange fee (as a percentage

of amount redeemed, if applicable)³ None None None None

Annual Fund Operating Expenses

Class A Class B Class C Class Y

(expenses that are deducted from Fund assets) Shares Shares Shares Shares

Management Fees⁴ 0.65% 0.65% 0.65% 0.65%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.25%

Other Expenses 1.26% 1.43% 1.63% 1.28%

Total Annual Fund Operating Expenses 2.16% 3.08% 3.28% 2.18%

¹ The CDSC which is imposed on the lesser of amount invested or redemption value of Class B shares, declines from 5% for redemptions made within the first year of purchase, to 4% for redemptions made within the second year, to 3% for redemptions made within the third and fourth years, to 2% for redemptions made within the fifth year, to 1% for redemptions made within the sixth year and to 0% for redemptions made after the sixth year. For Class C shares, a 1% CDSC applies to the lesser of amount invested or redemption value of Class C shares redeemed within twelve months after purchase. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

² A 1% CDSC may be imposed on purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

³If you choose your redemption proceeds via Federal Funds wire, a $10 wire fee will be charged to your account.

⁴ The expenses shown for Management Fees reflect the maximum annual fee payable; however, WRIICO has voluntarily agreed to waive its investment management fee on any day if the Fund's net assets are less than $25 million, subject to WRIICO's right to change or terminate this waiver.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $781 $1,212 $1,668 $2,925

Class B Shares $711 $1,251 $1,716 $3,175 ¹

Class C Shares $331 ² $1,010 $1,712 $3,576

Class Y Shares $221 $ 682 $1,169 $2,513

If shares are not redeemed at end of period: 1 Year 3 Years 5 Years 10 Years

Class A Shares $781 $1,212 $1,668 $2,925

Class B Shares $311 $ 951 $1,616 $3,175 ¹

Class C Shares $331 $1,010 $1,712 $3,576

Class Y Shares $221 $ 682 $1,169 $2,513

¹ Reflects annual operating expenses of Class A shares after conversion of Class B shares into Class A shares 8 years after the month in which the shares were purchased.

THE INVESTMENT PRINCIPLES OF THE FUNDS

Investment Goals, Principal Strategies and Other Investments

Ivy Asset Strategy Fund: The Fund seeks to achieve its goal of high total return over the long term by allocating its assets among a diversified portfolio of stocks, bonds, and short-term instruments. There is no guarantee, however, that the Fund will achieve its goal.

Allocating assets among different types of investments allows the Fund to take advantage of opportunities wherever they may occur, but also subjects the Fund to the risks of a given investment type. Stock values generally fluctuate in response to the activities of individual companies and general market and economic conditions. The values of bonds and short-term instruments generally fluctuate due to changes in interest rates and due to the credit quality of the issuer.

WRIICO regularly reviews the Fund's allocation of assets and makes changes to favor investments that it believes provide the best opportunity to achieve the Fund's goal. Although WRIICO uses its expertise and resources in choosing investments and in allocating assets, WRIICO's decisions may not always be beneficial to the Fund.

Generally, the mix of assets in the Fund will change from time to time depending on WRIICO's assessment of the market for each asset class. The allowable range and approximate percentage of the mix for each asset class, as a percentage of the Fund's total assets, are listed below. Some types of investments, such as indexed securities, may fall into more than one asset class.

14555 Pie Chart
Portfolio Mix

Stocks 70% (can range from 0-100%)

Bonds 25% (can range from 0-100%)

Short-term 5% (can range from 0-100%)

WRIICO tries to balance the Fund's investment risks against potentially higher total returns by reducing the stock class allocation during stock market down cycles and typically increasing the stock class allocation during periods of strongly positive market performance. Generally, WRIICO makes asset shifts among classes gradually over time. WRIICO considers various factors when it decides to sell a security, such as an individual security's performance and/or if it is an appropriate time to vary the Fund's mix.

As a defensive measure, the Fund may increase its holdings in the bond or short-term asset classes when WRIICO believes that there is a potential bear market, prolonged downturn in stock prices or significant loss in stock value; the Fund may also invest in derivative instruments for both defensive and speculative purposes. WRIICO may, as a temporary defensive measure, invest up to all of the Fund's assets in:

* money market instruments rated A-1 by S&P or Prime 1 by Moody's, or unrated securities judged by WRIICO to be of equivalent quality

* precious metals

Although WRIICO may seek to preserve appreciation in the Fund by taking a defensive position, doing so may prevent the Fund from achieving its investment objective.

Ivy Core Equity Fund: The Fund seeks to achieve its goals of capital growth and income by investing, during normal market conditions, in common stocks of large, high quality U.S., and to a lesser extent foreign, companies that are well-known, have been consistently profitable and have dominant positions in their industries. Under normal market conditions, the Fund will invest at least 80% of its net assets in equity securities, primarily common stocks and securities convertible into common stocks. There is no guarantee, however, that the Fund will achieve its goals.

When WRIICO views stocks with high yields as less attractive than other common stocks, the Fund may hold lower-yielding common stocks because of their prospects for appreciation. When WRIICO believes that a temporary defensive position is desirable, the Fund may invest up to all of its assets in debt securities (typically, investment grade) including commercial paper, short-term U.S. Government securities and/or preferred stocks. However, by taking a temporary defensive position the Fund may not achieve its investment objectives.

Ivy Cundill Global Value Fund: The Fund seeks to achieve its goal of long-term capital growth by investing primarily in the equity securities of companies throughout the world.

The investment approach of Peter Cundill & Associates, Inc. ("Cundill"), the Fund's sub-advisor, is based on a contrarian "value" philosophy. Cundill looks for securities that are trading below their estimated intrinsic value. To determine the intrinsic value of a particular company, Cundill focuses primarily on the company's financial statements. Cundill also considers factors such as earnings, dividends, business prospects, management capabilities and potential catalysts (such as a change in management) to realize shareholder value. A security is purchased when the price reflects a significant discount to Cundill's estimate of the company's intrinsic value. Given the bottom-up or company-specific approach, Cundill does not forecast economies or corporate earnings and does not rely on market timing.

The Fund may from time to time take a defensive position, and invest without limit in U.S. Government securities, investment-grade debt securities, and cash and cash equivalents such as commercial paper, short term notes and other money market securities. However, by taking a temporary defensive position the Fund may not achieve its investment objectives.

Ivy Dividend Income Fund: The Fund seeks to achieve its goals of income and long-term capital growth and income by investing primarily in dividend-paying common stocks that WRIICO believes also demonstrate favorable prospects for long-term capital growth. There is no guarantee, however, that the Fund will achieve its goal.

The Fund will, under normal market conditions, invest at least 80% of its net assets in dividend-paying equity securities, which may include without limitation dividend-paying common stock, preferred stocks or convertible preferred stock. The Fund may also invest up to 25% of its total assets in foreign securities. Common stocks are shares of a corporation or other entity that entitle the holder to a pro rata share of the profits of the corporation, if any, without preference over any other class of securities, including such entity's debt securities, preferred stock and other senior equity securities. Common stock usually carries with it the right to vote and frequently an exclusive right to do so. Preferred stock generally has a preference as to dividends and liquidation over an issuer's common stock but ranks junior to debt securities in an issuer's capital structure. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer's board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions. The ability of common stocks and preferred stocks to generate income is dependent on the earnings and continuing declaration of dividends by the issuers of such securities. A convertible security is a bond, debenture, note, preferred stock, warrant or other security that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities generally have characteristics similar to both debt and equity securities. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Convertible securities ordinarily provide a stream of income with generally higher yields than those of common stock of the same or similar issuers. Convertible securities generally rank senior to common stock in a corporation's capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities generally do not participate directly in any dividend increases or decreases of the underlying securities although the market prices of convertible securities may be affected by any such dividend changes or other changes in the underlying securities.

While the Fund invests primarily in dividend-paying equity securities, it may also invest up to 20% of its net assets in debt securities in seeking to achieve its goal. To the extent the Fund invests in debt securities, the Fund intends to primarily invest in investment-grade debt securities.

At times, when WRIICO believes that a temporary defensive position is desirable, the Fund may invest up to all of its assets in debt securities including short-term cash equivalent securities. By taking a temporary defensive position, the Fund may not achieve its goal.

Ivy European Opportunities Fund: The Fund seeks to achieve its goal of long-term capital growth by investing primarily in the equity securities of companies located or otherwise doing business in European countries and covering a broad range of economic and industry sectors. The Fund may also invest a significant portion of its assets in European debt securities, up to 20% of which is considered below investment grade (commonly referred to as "high yield" or "junk" bonds). The Fund's manager follows a "bottom-up" approach to investing, which focuses on prospects for long-term earnings growth. Company selection is generally based on an analysis of a wide range of financial indicators (such as growth, earnings, cash, book and enterprise value), as well as factors such as market position, competitive advantage and management strength. Country and section allocation decisions are driven by the company selection process.

Ivy Global Natural Resources Fund: The Fund seeks to achieve its goal of long-term growth by investing primarily in the equity securities of companies throughout the world that own, explore or develop natural resources and other basic commodities or that supply goods and services to such companies. The Fund's investment manager targets for investment well managed companies that are expected to increase shareholder value through successful exploration and development of natural resources, balancing the Fund's portfolio with low cost, low debt producers that have outstanding asset bases, and positions that are based on anticipated commodity price trends. Additional emphasis is placed on sectors that are out of favor but appear to offer the most significant recovery potential over a one to three year period. All investment decisions are reviewed systematically and cash reserves may be allowed to build up when valuations seem unattractive. The Fund's investment manager attempts to minimize risk through diversifying the Fund's portfolio by commodity, country, issuer and asset class.

Ivy High Income Fund: The Fund seeks to achieve its goal of a high level of current income and its secondary goal of capital growth by investing primarily in a diversified portfolio of high-yield, high-risk, fixed-income securities, the risks of which are, in the judgment of WRIICO, consistent with the Fund's goals. There is no guarantee, however, that the Fund will achieve its goals.

The Fund primarily owns debt securities; however, it may also own, to a lesser degree, preferred stocks, common stocks and convertible securities. In general, the high income that the Fund seeks is paid by debt securities rated in the lower rating categories of the established rating services or unrated securities that are determined by WRIICO to be of comparable quality; these include bonds rated BBB and lower by S&P, or Baa or lower by Moody's. Lower-quality debt securities, which include junk bonds, are considered to be speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness. The market prices of these securities may fluctuate more than higher-quality securities and may decline significantly in periods of general economic difficulty.

The Fund limits its acquisition of common stocks so that no more than 20% of its total assets will consist of common stocks and no more than 10% of its total assets will consist of non-dividend-paying common stocks.

The Fund may invest an unlimited amount of assets in foreign securities. At this time, however, the Fund does not intend to invest a significant amount of its assets in foreign securities.

When WRIICO believes that a full or partial temporary defensive position is desirable, due to present or anticipated market or economic conditions, WRIICO may take any one or more of the following steps with respect to the Fund's assets:

* shorten the average maturity of the Fund's debt holdings

* hold cash or cash equivalents (short-term investments, such as commercial paper and certificates of deposit)

* emphasize investment-grade debt securities

By taking a temporary defensive position the Fund may not achieve its investment objectives.

Ivy International Fund: The Fund seeks to achieve its principal goal of long-term capital growth by investing primarily in equity securities principally traded in European, Pacific Basin and Latin American markets. The Fund invests in a variety of economic sectors and industry segments to reduce the effects of price volatility in any one area, and usually is invested in at least three different countries. The Fund's investment manager focuses on expanding foreign economies and companies that generally have at least $1 billion in capitalization at the time of investment and a solid history of operations. Individual securities are selected on the basis of various indicators (such as earnings, cash flow, assets and long-term growth potential) and are reviewed for fundamental financial strength.

Ivy International Growth Fund: The Fund seeks to achieve its goal of long-term capital appreciation, with current income as a secondary goal, by investing primarily in a diversified portfolio of common stocks of growth-oriented foreign issuers. Growth securities are those whose earnings, WRIICO believes, are likely to have strong growth over several years. The Fund may also invest, to a lesser extent, in preferred stocks and debt securities. The debt securities may be of any maturity and will typically be investment grade. There is no guarantee, however, that the Fund will achieve its goals.

Under normal conditions, the Fund invests at least 80% of its net assets in foreign securities and at least 65% of its total assets in issuers of at least three foreign countries. The Fund generally limits its holdings so that no more than 75% of its total assets are invested in issuers of a single foreign country.

When WRIICO believes that a temporary defensive position is desirable, it may invest up to all of the Fund's assets in debt securities (including commercial paper and short-term U.S. Government securities) and/or preferred stocks; it may avoid investment in volatile emerging markets and increase investments in more stable, developed countries and industries; it may use forward currency contracts to hedge specific foreign currencies; and it may also invest up to all of the Fund's assets in domestic securities. By taking a temporary defensive position, the Fund may not achieve its investment objectives.

Ivy International Value Fund: The Fund seeks to achieve its primary goal of long-term capital growth by investing in equity securities principally traded in European, Pacific Basin and Latin American markets. The Fund invests in a variety of economic sectors and industry segments to reduce the effects of price volatility in any one area. The Fund's investment manager seeks out rapidly expanding foreign economies and companies that generally have at least $1 billion in capitalization at the time of investment and a solid history of operations. Other factors that the Fund's manager considers in selecting particular countries include long-term economic growth prospects, anticipated inflation levels, and the effect of applicable government policies on local business conditions. The Fund is managed using a value approach, which focuses on financial ratios such as price/earnings, price/book value, price/cash flow, dividend yield and price/replacement cost. Securities purchased are believed to be attractively valued on one or more of these measures relative to a broad universe of comparable securities.

Ivy Large Cap Growth Fund: The Fund seeks to achieve its goal of appreciation of your investment through a diversified holding of securities, primarily those issued by large to medium sized U.S. and foreign companies that WRIICO believes have appreciation possibilities. The Fund will, under normal market conditions, invest at least 80% of its net assets in large cap growth securities. There is no guarantee, however, that the Fund will achieve its goal.

The Fund invests primarily in common stocks but may also own, to a lesser extent, preferred stocks, convertible securities and debt securities, typically of investment grade and of any maturity. As well, the Fund may invest up to 25% of its total assets in foreign securities.

At times, as a temporary defensive measure, the Fund may invest up to all of its assets in either debt securities (which may include money market instruments held as cash reserves), preferred stocks or both. The Fund may also use options and futures contracts for defensive purposes. By taking a temporary defensive position the Fund may not achieve its investment objective.

Ivy Limited-Term Bond Fund: The Fund seeks to achieve its goal of providing a high level of current income consistent with preservation of capital by investing primarily in a diversified portfolio of investment-grade, limited-term debt securities (securities with a dollar-weighted average maturity of two to five years) of U.S. issuers, including U.S. Government securities, which are securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, collateralized mortgage obligations and other asset-backed securities. Under normal market conditions, the Fund will invest at least 80% of its net assets in bonds with limited-term maturities. The Fund may also own, to a lesser extent, common stocks and convertible securities, including convertible preferred stocks in certain circumstances. There is no guarantee, however, that the Fund will achieve its goal.

The maturity of an asset-backed security is the estimated average life of the security based on certain prescribed models or formulas used by WRIICO. The maturity of other types of debt securities is the earlier of the call date or the maturity date, as appropriate.

When WRIICO believes that a temporary defensive position is desirable, it may take certain steps with respect to the Fund's assets, including any one or more of the following:

* shorten the average maturity of the Fund's investments

* hold short-term securities, cash or cash equivalents

* invest up to all of the Fund's assets in U.S. Treasury securities

By taking a temporary defensive position the Fund may not achieve its investment objective.

Ivy Mid Cap Growth Fund: The Fund seeks to achieve its goal of growth of your investment by investing primarily in a diversified portfolio of common stocks of U.S. and foreign companies whose market capitalizations are within the range of capitalizations of companies comprising Russell Mid-Cap and that WRIICO believes offer above-average growth potential. For this purpose, the Fund considers a company's capitalization at the time the Fund acquires the company's securities, and the company need not be listed in Russell Mid-Cap. Companies whose capitalization falls outside the range of Russell Mid-Cap after purchase continue to be considered medium capitalization companies for purpose of the Fund's investment policy. The Fund will, under normal market conditions, invest at least 80% of its net assets in mid cap securities. There is no guarantee, however, that the Fund will achieve its goal.

In addition to common stocks, the Fund may invest in convertible securities, preferred stocks and debt securities of any maturity and mostly of investment grade. The Fund may also invest up to 25% of its total assets in foreign securities.

When WRIICO believes that a temporary defensive position is desirable, the Fund may invest up to all of its assets in debt securities (including commercial paper and short-term securities issued by the U.S. Government or its agencies or instrumentalities), preferred stocks or both. As well, the Fund may choose to invest in companies whose sales and earnings growth are generally stable through a variety of economic conditions. The Fund may also use options and futures contracts for defensive purposes. By taking a defensive position the Fund may not achieve its investment objective.

Ivy Money Market Fund: The Fund seeks to achieve its goal of maximum current income consistent with stability of principal by investing in a diversified portfolio of high-quality money market instruments in accordance with the requirements of Rule 2a-7 (Rule 2a-7) under the Investment Company Act of 1940, as amended (1940 Act). There is no guarantee, however, that the Fund will achieve its goal.

The Fund invests only in the following U.S. dollar-denominated money market obligations and instruments:

* U.S. government obligations (including obligations of U.S. government agencies and instrumentalities)

* bank obligations and instruments secured by bank obligations, such as letters of credit

* commercial paper

* corporate debt obligations, including variable rate master demand notes

* Canadian government obligations

* certain other obligations (including municipal obligations) guaranteed as to principal and interest by a bank in whose obligations the Fund may invest or a by corporation in whose commercial paper the Fund may invest

The Fund only invests in bank obligations if they are obligations of a bank subject to regulation by the U.S. Government (including foreign branches of these banks) or obligations of a foreign bank having total assets of at least $500 million, and instruments secured by any such obligations.

WRIICO may look at a number of factors in selecting securities for the Fund's portfolio. These include:

* the credit quality of the particular issuer or guarantor of the security

* the maturity of the security

* the relative value of the security

Generally, in determining whether to sell a security, WRIICO uses the same analysis that it uses in buying securities to determine if the security no longer offers adequate return or no longer complies with Rule 2a-7. WRIICO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Ivy Municipal Bond Fund: The Fund seeks to achieve its goal to provide income that is not subject to Federal income tax by investing primarily in a diversified portfolio of municipal bonds. There is no guarantee, however, that the Fund will achieve its goal.

As used in this Prospectus, municipal bonds mean obligations the interest on which is not includable in gross income for Federal income tax purposes. The Fund and WRIICO rely on the opinion of bond counsel for the issuer in determining whether the interest on such issuer's obligations is excludable from gross income for Federal income tax purposes. The Fund anticipates that not more than 40% of the dividends it will pay to shareholders, annually, will be treated as a tax preference item for AMT purposes.

Municipal bonds are issued by a wide range of state and local governments, agencies and authorities for various purposes. The two main types of municipal bonds are general obligation bonds and revenue bonds. For general obligation bonds, the issuer has pledged its full faith, credit and taxing power for the payment of principal and interest. Revenue bonds are payable only from specific sources; these may include revenues from a particular project or class of projects, a special tax, lease payments, appropriated funds or other revenue source. PABs are revenue bonds issued by or on behalf of public authorities to obtain funds to finance privately operated facilities. The Fund may invest 25% or more of its total assets in PABs, in securities the payment of principal and interest on which is derived from revenue of similar projects, or in municipal bonds of issuers located in the same geographic area. The Fund will not, however, have more than 25% of its total assets in PABs issued for any one industry or in any one state. Other municipal obligations include lease obligations of municipal authorities or entities and participations in these obligations and housing bonds that finance pools of single family home mortgages and multi-family project mortgages, as well as student loan bonds that finance pools of student loans.

At least 80% of the Fund's net assets will be invested, during normal market conditions, in municipal bonds of investment grade.

The Fund may invest up to 10% of its total assets in taxable debt securities other than municipal bonds. These must be either:

* U.S. Government securities

* obligations of domestic banks and certain savings and loan associations

* commercial paper rated at least A by S&P or Moody's

* any of the foregoing obligations subject to repurchase agreements

Subject to its policies regarding the amount of Fund assets invested in municipal bonds and taxable debt securities and its other investment limitations, the Fund may invest in other types of securities and use certain other instruments in seeking to achieve the Fund's goal.

When WRIICO believes that a temporary defensive position is desirable, it may take certain steps with respect to the Fund's assets, including any one or more of the following:

* shorten the average maturity of the Fund's investments

* hold taxable obligations, subject to the limitations stated above

* emphasize debt securities of a higher quality than those the Fund would ordinarily hold

* hedge exposure to interest rate risk by investing in futures contracts, options on futures contracts and other similar derivative instruments

By taking a temporary defensive position, the Fund may not achieve its investment objective.

Income from taxable obligations, repurchase agreements and derivative instruments will be subject to Federal income tax. At this time, the Fund has limited exposure to futures contracts and similar derivative instruments. The Fund does, and may in the future, hold a portion of its assets in municipal bonds for which the applicable interest rate formula varies inversely with prevailing interest rates or otherwise may expose the bond to greater sensitivity to interest rate changes.

Ivy Pacific Opportunities Fund: The Fund seeks to achieve its goal of long-term capital growth by investing primarily in equity securities of companies traded mainly on markets in the Pacific region, issued by companies organized under the laws of a Pacific region country or issued by any company with more than half of its business in the Pacific region. Examples of Pacific region countries include China, Hong Kong, Malaysia, Sri Lanka, Australia and India. The Fund usually invests in at least three different countries, and does not intend to concentrate its investments in any particular industry. The countries in which the Fund invests are selected on the basis of a mix of factors that include long-term economic growth prospects, anticipated inflation levels, and the effect of applicable government policies on local business conditions. The Fund is managed using an approach which focuses on financial ratios such as price/earnings, price/book value, price/cash flow, dividend yield and price/
replacement cost. Securities purchased are believed to be attractively valued on one or more of these measures relative to a broad universe of comparable securities.

Ivy Science and Technology Fund: The Fund seeks to achieve its goal of long-term capital growth by investing primarily in the equity securities of science and technology companies. Science and technology companies are companies whose products, processes or services, in WRIICO's opinion, are being or are expected to be significantly benefited by the use or commercial application of scientific or technological discoveries. As well, the Fund may invest in companies that utilize science and/or technology to improve their existing business even though the business, itself, is not within the science and technology industries. There is no guarantee, however, that the Fund will achieve its goal. Under normal economic and market conditions, the Fund will invest at least 80% of its net assets in securities of science or technology companies or companies benefited by the application of scientific or technological discoveries.

The Fund may invest in, but is not limited to, areas such as:

* aerospace and defense electronics * electronics and energy

* biotechnology * electronic media

* business machines * genomics

* cable and broadband access * internet and internet-related services

* communications and electronic equipment * medical devices and drugs

* computer software and services * medical and hospital supplies and services

* computer systems * office equipment and supplies

The Fund primarily owns common stocks; however, it may invest, to a lesser extent, in preferred stocks, debt securities and convertible securities. The Fund may invest a limited amount of its assets in foreign securities.

When WRIICO believes that a temporary defensive position is desirable, the Fund may invest up to all of its assets in U.S. Government securities or other debt securities, mostly of investment grade. The Fund may also invest in options and futures contracts for hedging purposes. By taking a temporary defensive position the Fund may not achieve its investment objective.

Ivy Small Cap Growth Fund: The Fund seeks to achieve its goal of growth of capital by investing primarily in small cap common stocks of companies that are relatively new or unseasoned, companies in their early stages of development, or smaller companies positioned in new or emerging industries where there is an opportunity for rapid growth. The Fund may occasionally invest in securities of larger companies that, in WRIICO's opinion, are being fundamentally changed or revitalized, have a position that is considered strong relative to the market as a whole or otherwise offer unusual opportunities for above average growth.

The Fund considers a company's capitalization at the time the Fund acquires the company's common stock. Common stock of a company whose capitalization exceeds the range of the Lipper, Inc. Small Cap Category after purchase will not be sold solely because of its increased capitalization. The Fund will, under normal market conditions, invest at least 80% of its net assets in small cap stocks. There is no guarantee, however, that the Fund will achieve its goal.

In addition to common stocks, the Fund may also invest in securities convertible into common stocks, preferred stocks and debt securities that are mostly of investment grade. The Fund may invest up to 10% of its total assets in foreign securities.

When WRIICO believes that a temporary defensive position is desirable, the Fund may invest up to all of its assets in debt securities (including commercial paper and short-term U.S. Government securities) and/or preferred stocks. The Fund may also invest in more established companies, those with longer operating histories than many small cap companies. By taking a temporary defensive position, the Fund may not achieve its investment objective.

Ivy Tax-Managed Equity Fund: The Fund seeks to achieve its goal of long-term growth of capital while minimizing taxable gains and income to shareholders by investing primarily in a diversified portfolio of common stocks of U.S. and foreign companies that WRIICO considers to be high in quality and attractive in their long-term investment potential. The Fund seeks stocks that are favorably priced in relation to their fundamental value and will, likely, grow over time.

The Fund attempts to achieve high after-tax returns for its shareholders by balancing investment considerations and tax considerations. The Fund seeks to minimize income distributions and distributions of realized net short-term gains (taxed as ordinary income), as well as distributions of realized net long-term gains. The Fund seeks to achieve returns primarily in the form of price appreciation (not subject to current tax until shares are redeemed). There is no guarantee, however, that the Fund will achieve its goal.

WRIICO ordinarily uses one or more of the following strategies in its management of the Fund:

* a long-term, low turnover approach to investing

* an emphasis on lower-yielding securities to require distribution of little, if any, taxable income

* an attempt to avoid net realized short-term gains

* in the sale of portfolio securities, selection of the most tax-favored lots

* selective tax-advantaged hedging techniques as an alternative to taxable sales

The Fund will, under normal market conditions, invest at least 80% of its net assets in equity securities, primarily common stocks and securities convertible into common stocks. The Fund emphasizes growth stocks; however, it may also invest in value stocks. As well, the Fund may invest in preferred stocks and debt securities that are mostly of investment grade. The Fund may also invest up to 25% of its total assets in foreign securities.

When WRIICO believes that a temporary defensive position is desirable, the Fund may invest up to all of its assets in debt securities (including commercial paper and short-term U.S. Government securities) and/or preferred stocks. By taking a temporary defensive position, the Fund may not achieve its investment objective.

Notwithstanding the Fund's use of tax-management investment strategies, the Fund may have taxable income and may realize taxable capital gains from time to time. In addition, investors purchasing Fund shares when the Fund has large undistributed realized capital gains could receive a significant part of the purchase price of their shares back as a taxable capital gain distribution. Over time, securities with unrealized gains may comprise a substantial portion of the Fund's assets. As well, state or Federal tax laws or regulations may be amended at any time and may include adverse changes to applicable tax rates or capital gain holding periods.

All Funds

Each Fund may also invest in and use certain other types of instruments in seeking to achieve its goal(s). For example, each Fund (other than Ivy Money Market Fund) is permitted to invest in options, futures contracts, asset-backed securities and other derivative instruments if it is permitted to invest in the type of asset by which the return on, or value of, the derivative is measured.

You will find more information about each Fund's permitted investments and strategies, as well as the restrictions that apply to them, in its Statement of Additional Information (SAI).

Risk Considerations of Principal Strategies and Other Investments

Risks exist in any investment. Each Fund is subject to market risk, financial risk and, in some cases, prepayment risk.

* Market risk is the possibility of a change in the price of the security. The prices of common stocks and other equity securities generally fluctuate more than those of other investments. A Fund may lose a substantial part, or even all, of its investment in a company's stock. Growth stocks may experience greater price volatility than value stocks. To the extent a Fund invests in fixed income securities, the price of a fixed income security may be affected by changes in interest rates. Bonds with longer maturities are more interest-rate sensitive. For example, if interest rates increase, the value of a bond with a longer maturity is more likely to decrease. Because of market risk, the share price of each Fund (other than Ivy Money Market Fund) will likely change as well.

* Financial risk is based on the financial situation of the issuer of the security. The financial risk of a Fund may depend, for example, on the earnings performance of the issuer of stock held by the Fund. To the extent a Fund invests in debt securities, the financial risk of the Fund may also depend on the credit quality of the securities and the financial condition of the issuer in which it invests.

* Prepayment risk is the possibility that, during periods of falling interest rates, a debt security with a high stated interest rate will be prepaid before its expected maturity date.

Certain types of each Fund's authorized investments and strategies, such as foreign securities, junk bonds, derivative instruments and precious metals involve special risks. Depending on how much a Fund invests or uses these strategies, these special risks may become significant.

Derivative Investment Techniques: The Funds (other than Ivy Money Market Fund) may, but are not required to, use certain derivative investment techniques to hedge various market risks (such as interest rates, currency exchange rates and broad or specific market movements). Among the derivative techniques the Funds might use are options, futures, forward foreign currency contracts and foreign currency exchange transactions.

Using put and call options could cause a Fund to lose money by forcing the sale or purchase of portfolio securities at inopportune times or for prices higher (in the case of put options) or lower (in the case of call options) than current market values, by limiting the amount of appreciation a Fund can realize on its investments, or by causing a Fund to hold a security it might otherwise sell.

Futures transactions (and related options) involve other types of risks. For example, the variable degree of correlation between price movements of futures contracts and price movements in the related portfolio position of the Funds could cause losses on the hedging instrument that are greater than gains in the value of the Funds' position. In addition, futures and options markets may not be liquid in all circumstances and certain over-the-counter options may have no markets. As a result, a Fund might not be able to close out a transaction before expiration without incurring substantial losses (and it is possible that the transaction cannot even be closed). In addition, the daily variation margin requirements for futures contracts would create a greater ongoing potential financial risk than would purchases of options, where the exposure is limited to the cost of the initial premium.

Foreign Currencies: Foreign securities may be denominated in foreign currencies. The value of a Fund's investments, as measured in U.S. dollars, may be affected unfavorably by changes in foreign currency exchange rates and exchange control regulations. Currency conversion can also be costly.

Foreign Currency Exchange Transactions and Forward Foreign Currency Contracts: The Funds (not including Ivy Money Market Fund) may, but are not required to, use foreign currency exchange transactions and forward foreign currency contracts to hedge certain market risks (such as interest rates, currency exchange rates and broad or specific market movement). These investment techniques involve a number of risks, including the possibility of default by the counterparty to the transaction and, to the extent a Fund's judgment as to certain market movements is incorrect, the risk of losses that are greater than if the investment technique had not been used. For example, there may be an imperfect correlation between a Fund's portfolio holdings of securities denominated in a particular currency and the forward contracts entered into by the Fund. An imperfect correlation of this type may prevent the Funds from achieving the intended hedge or expose the Fund to the risk of currency exchange loss. These investment techniques also tend to limit any potential gain that might result from an increase in the value of the hedged position.

Foreign Securities: Investing in foreign securities involves a number of economic, financial and political considerations that are not associated with the U.S. markets and that could affect a Fund's performance unfavorably, depending upon prevailing conditions at any given time. For example, the securities markets of many foreign countries may be smaller, less liquid and subject to greater price volatility than those in the U.S. Foreign investing may also involve brokerage costs and tax considerations that are not usually present in the U.S. markets.

Other factors that can affect the value of a Fund's foreign investments include the comparatively weak supervision and regulation by some foreign governments of securities exchanges, brokers and issuers, and the fact that many foreign companies may not be subject to uniform accounting, auditing and financial reporting standards. It may also be difficult to obtain reliable information about the securities and business operations of certain foreign issuers. Settlement of portfolio transactions may also be delayed due to local restrictions or communication problems, which can cause a Fund to miss attractive investment opportunities or impair its ability to dispose of securities in a timely fashion (resulting in a loss if the value of the securities subsequently declines).

Growth Stock Risk: Growth stocks are stocks of companies believed to have above-average potential for growth in revenue and earnings. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well as value stocks or the stock market in general.

Low-Rated Debt Securities: In general, low-rated debt securities (commonly referred to as "high yield" or "junk" bonds) offer higher yields due to the increased risk that the issuer will be unable to meet its obligations on interest or principal payments at the time called for by the debt instrument. For this reason, these bonds are considered speculative and could significantly weaken a Fund's returns.

Municipal Bonds: For PABs in which Ivy Municipal Bond Fund may invest, credit quality is generally dependent on the credit standing of the company involved. To the extent that this Fund invests in municipal bonds the payment of principal and interest on which is derived from revenue of similar projects, or in municipal bonds of issuers located in the same geographic area, the Fund may be more susceptible to the risks associated with economic, political or regulatory occurrences that might adversely affect particular projects or areas. You will find more information in the SAI about the types of projects underlying the municipal bonds in which Ivy Municipal Bond Fund may invest from time to time and a discussion of the risks associated with such projects.

Precious Metals and Other Physical Commodities: Ivy Global Natural Resources Fund can invest in precious metals and other physical commodities. Commodities trading is generally considered speculative because of the significant potential for investment loss. Among the factors that could affect the value of the Fund's investments in commodities are cyclical economic conditions, sudden political events and adverse international monetary policies. Markets for precious metals and other commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. The Fund may also pay more to store and accurately value its commodity holdings than it does with its other portfolio investments.

Special Emerging Market Concerns: The risks of investing in foreign securities are heightened in countries with new or developing economies. Among these additional risks are the following:

* securities that are even less liquid and more volatile than those in more developed foreign countries;

* less stable governments that are susceptible to sudden adverse actions (such as nationalization of businesses, restrictions on foreign ownership or prohibitions against repatriation of assets);

* increased settlement delays;

* unusually high inflation rates (which in extreme cases can cause the value of a country's assets to erode sharply);

* abrupt changes in exchange rate regime or monetary policy;

* unusually large currency fluctuations and currency conversion costs (see "Foreign Currencies" above)

* high national debt levels (which may impede an issuer's payment of principal and/or interest on external debt)

Value Stock Risk: 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 investment manager's opinion, undervalued. If the investment manager's assessment of a company's prospects is wrong, the price of its stock may fall, or may not approach the value the investment manager has placed on it.

Because each Fund owns different types of investments, its performance will be affected by a variety of factors. The value of a Fund's investments and the income it generates will vary from day to day, generally reflecting changes in interest rates, market conditions, and other company and economic news. Performance will also depend on the investment manager's skill in selecting investments and, with respect to Ivy Asset Strategy Fund, on WRIICO's skill in allocating assets.

Ivy Asset Strategy Fund, Ivy Cundill Global Value Fund and Ivy International Growth Fund may each actively trade securities in seeking to achieve its goals. Doing so may increase transaction costs (which may reduce performance) and increase distributions paid by the Fund, which would increase your taxable income.

YOUR ACCOUNT

Choosing a Share Class

Each class of shares offered in this prospectus has its own sales charge, if any, and expense structure. The decision as to which class of shares of a Fund is best suited to your needs depends on a number of factors that you should discuss with your financial advisor. Some factors to consider are how much you plan to invest and how long you plan to hold your investment. If you are investing a substantial amount and plan to hold your shares for a long time, Class A shares may be the most appropriate for you. If you are investing a lesser amount, you may want to consider Class B shares (if investing for at least seven years) or Class C shares (if investing for less than seven years). Class B and Class C shares are not available for investments of $2 million or more. Class Y shares and Advisor Class shares are designed for institutional investors and others investing through certain intermediaries.

Since your objectives may change over time, you may want to consider another class when you buy additional Fund shares. All of your future investments in a Fund will be made in the class you select when you open your account, unless you inform the Fund otherwise, in writing, when you make a future investment.

General Comparison of Class A, Class B and Class C Shares

Class A Class B Class C

Initial sales charge No initial sales charge No initial sales charge

No deferred sales charge¹ Deferred sales charge on A 1% deferred sales charge on

shares you sell within six shares you sell within twelve

years after purchase months after purchase

Maximum distribution and/or Maximum distribution and Maximum distribution and

service (12b-1) fees of 0.25% service (12b-1) fees of 1.00% service (12b-1) fees of 1.00%

For an investment of $2 million Converts to Class A shares Does not convert to Class A

or more, only Class A shares 8 years after the month in which shares, so annual expenses

are available the shares were purchased, thus do not decrease

reducing future annual expenses

For an investment of $300,000

or more, your financial advisor

typically will recommend

purchase of Class A shares due

to a reduced sales charge and

lower annual expenses

¹ A 1% CDSC may apply to purchases of $2 million or more of Class A shares that are redeemed within twelve months of purchase.

General Comparison of Class A, Class B and Class C Shares -- Ivy Money Market Fund

Class A Class B Class C

No Initial sales charge No initial sales charge No initial sales charge

Funds Plus Service optional Funds Plus Service typically Funds Plus Service typically

required for direct investment required for direct investment

No deferred sales charge Deferred sales charge on A 1% deferred sales charge on

shares you sell within six shares you sell within twelve

years after purchase months after purchase

No distribution and service Maximum distribution and Maximum distribution and

(12b-1) fees service (12b-1) fees of 1.00% service (12b-1) fees of 1.00%

For an investment of $2 million Converts to Class A shares Does not convert to Class A

or more, only Class A shares 8 years after the month in which shares, so annual expenses

are available the shares were purchased, thus do not decrease

reducing future annual expenses

Each Fund has adopted a Distribution and/or Service Plan (Plan) pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (1940 Act) for each of its Class A, Class B,
Class C shares. Under the Class A Plan, a Fund may pay Ivy Funds Distributor, Inc. (IFDI) a fee of up to 0.25%, on an annual basis, of the average daily net assets of the Class A shares. This fee is to reimburse and/or compensate IFDI for, either directly or through third parties, distributing the Fund's Class A shares, providing personal service to Class A shareholders and/or maintaining Class A shareholder accounts. Under the Class B Plan and the Class C Plan, each Fund may pay IFDI, on an annual basis, a service fee of up to 0.25% of the average daily net assets of that class to compensate IFDI for, either directly or through third parties, providing personal service to shareholders of that class and/or maintaining shareholder accounts for that class and a distribution fee of up to 0.75% of the average daily net assets of that class to compensate IFDI for, either directly or through third parties, distributing shares of that class. No payment of the distribution fee will be made, and no deferred sales charge will be paid, to IFDI by any Fund if, and to the extent that, the aggregate distribution fees paid by the Fund and the deferred sales charges received by IFDI with respect to the Fund's Class B or Class C shares would exceed the maximum amount of such charges that IFDI is permitted to receive under the NASD rules as then in effect.

Each of Ivy Asset Strategy Fund, Ivy Core Equity Fund, Ivy Dividend Income Fund, Ivy High Income Fund, Ivy International Growth Fund, Ivy Large Cap Growth Fund, Ivy Limited-Term Bond Fund, Ivy Mid Cap Growth Fund, Ivy Municipal Bond Fund, Ivy Science and Technology Fund, Ivy Small Cap Growth Fund and Ivy Tax-Managed Equity Fund has adopted a Plan for its Class Y shares. Under the Class Y Plan for these Funds, each Fund may pay IFDI a fee of up to 0.25%, on an annual basis, of the average daily net assets of the Fund's Class Y shares to compensate IFDI for, either directly or through third parties, distributing the Class Y shares of that Fund, providing service to Class Y shareholders and/or maintaining Class Y shareholder accounts.

Because the fees of a class are paid out of the assets of that class on an ongoing basis, over time such fees will increase the cost of your investment and may cost you more than paying other types of
sales charges.

Class A shares are subject to an initial sales charge when you buy them (other than Ivy Money Market Fund), based on the amount of your investment, according to the tables below. As noted, Class A shares pay an annual 12b-1 fee of up to 0.25% of average Class A net assets, except Class A shares of Ivy International Fund issued prior to January 1, 1992 are not subject to an ongoing service fee. For this Fund, the annual service fee attributable to the Class A shares of the Fund may equal up to 0.25% of the net assets issued on or after January 1, 1992. The ongoing expenses of this class are lower than those for Class B or Class C shares and typically higher than those for Class Y shares or Advisor Class shares.

All Funds (except Ivy Limited-Term Bond Fund, Ivy Municipal Bond Fund and Ivy Money Market Fund)

Size of Purchase

Sales Charge Reallowance

Sales Charge as Approximate to Dealers as

as Percent of Percent of Percent of

Offering Price Amount Invested Offering Price

under $100,000 5.75% 6.10% 5.00%

$100,000 to less than $200,000 4.75 4.99 4.00

$200,000 to less than $300,000 3.50 3.63 2.80

$300,000 to less than $500,000 2.50 2.56 2.00

$500,000 to less than $1,000,000 1.50 1.52 1.20

$1,000,000 to less than $2,000,000 1.00 1.01 0.75

$2,000,000 and over 0.00¹ 0.00¹ 0.50

Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund

Size of Purchase

Sales Charge Reallowance

Sales Charge as Approximate to Dealers as

as Percent of Percent of Percent of

Offering Price Amount Invested Offering Price

Under $100,000 4.25% 4.44% 3.60%

$100,000 to less than $300,000 3.25 3.36 2.75

$300,000 to less than $500,000 2.50 2.56 2.00

$500,000 to less than $1,000,000 1.50 1.52 1.20

$1,000,000 to less than $2,000,000 1.00 1.01 0.75

$2,000,000 and over 0.00¹ 0.00¹ 0.50

¹ No sales charge is payable at the time of purchase on investments of $2 million or more, although for such investments the Fund may impose a CDSC of 1.00% on certain redemptions made within twelve months of the purchase. The CDSC is assessed on an amount equal to the lesser of the then current market value or the cost of the shares being redeemed. Accordingly, no sales charge is imposed on increases in net asset value above the initial purchase price.

IFDI or its affiliates may pay additional compensation from its own resources to securities dealers based upon the value of shares of a Fund owned by the dealer for its own account or for its customers, including compensation for shares of the Funds purchased by customers of such dealers without payment of a sales charge.

Sales Charge Reductions and Waivers

Lower sales charges are available by:

* Combining additional purchases of Class A shares of any of the funds in the Ivy Family of Funds and Waddell & Reed InvestEd Portfolios, Inc. except Class A shares of Ivy Money Market Fund unless acquired by exchange for Class A shares on which a sales charge was paid (or as a dividend or distribution on such acquired shares), with the net asset value (NAV) of Class A shares already held (Rights of Accumulation)²

* Grouping all purchases of Class A shares of the funds referenced above, except shares of Ivy Money Market Fund, made during a thirteen-month period (Letter of Intent)²

* Grouping purchases by certain related persons²

Additional information and applicable forms are available from your financial advisor.

² Clients of Waddell & Reed, Inc. may also combine purchases of Class A shares of any of the funds in the Waddell & Reed Advisors Family of Funds, except Class A shares of Waddell & Reed Advisors Cash Management, Inc.

Sales Charge Waivers for Certain Investors

Class A shares may be purchased at NAV by:

* Shareholders investing through certain investment advisors and financial planners who charge a management, consulting or other fee for their services

* The Trustees and officers of the Ivy Fund, the Directors and officers of Ivy Funds, Inc. or of any affiliated entity of WRIICO, employees of IFDI and its affiliates, financial advisors of Waddell & Reed and its affiliates and the spouse, children, parents, children's spouses and spouse's parents of each, including purchases into certain retirement plans and certain trusts for these individuals

* New Shareholders, if the purchase is made with the proceeds of the redemption of shares of a mutual fund which is not within the Waddell & Reed Advisors Family of Funds or Ivy Family of Funds and the purchase is made within sixty (60) days of such redemption

* Participants in a 401(k) plan or a 457 plan having 100 or more eligible employees that are participants, and the shares are held in individual plan participant accounts on the Fund's records

* The Merrill Lynch Daily K Plan (the "Plan"), provided the Plan has at least $3 million in assets or over 500 or more eligible employees. Class B shares of the Funds are made available to Plan participants at NAV without a CDSC if the Plan has less than $3 million in assets or fewer than 500 eligible employees. For further information see "Group Systematic Investment Program" in the SAI.

* Friends of the Firm which include certain persons who have an existing relationship with IFDI or any of its affiliates

You will find more information in the Fund's SAI about sales charge reductions and waivers.

Contingent Deferred Sales Charge. A CDSC may be assessed against your redemption amount of Class B, Class C or certain Class A shares and paid to IFDI, as further described below. The purpose of the CDSC is to compensate IFDI for the costs incurred by it in connection with the sale of the Fund's Class B or Class C shares or certain Class A shares. The CDSC will not be imposed on shares representing payment of dividends or other distributions and will be assessed on an amount equal to the lesser of the then current market value or the cost of the shares being redeemed. Accordingly, no CDSC will be imposed on increases in net asset value above the initial purchase price. Solely for purposes of determining the number of months or years from the time of any payment for the purchase of shares, all payments during a month are totaled and deemed to have been made on the first day of the month.

To keep your CDSC as low as possible, each time you place a request to redeem shares, the Fund assumes that a redemption is made first of shares not subject to a CDSC (including shares which represent reinvested dividends and distributions), and then of shares that represent the lowest sales charge.

Unless instructed otherwise, a Fund, when requested to redeem a specific dollar amount, will redeem additional shares of the applicable class that are equal in value to the CDSC. For example, should you request a $1,000 redemption and the applicable CDSC is $27, the Fund will redeem shares having an aggregate NAV of $1,027, absent different instructions. The shares redeemed for payment of the CDSC are not subject to a CDSC.

Class B shares are not subject to an initial sales charge when you buy them. However, you may pay a CDSC if you sell your Class B shares within six years of their purchase, based on the table below. As noted above, Class B shares pay an annual 12b-1 service fee of up to 0.25% of average net assets and a distribution fee of up to 0.75% of average net assets. Over time, these fees will increase the cost of your investment and may cost you more than if you had purchased Class A shares. Class B shares, and any dividends and distributions paid on such shares, automatically convert to Class A shares eight years after the end of the month in which the shares were purchased. Such conversion will be on the basis of the relative net asset values per share, without the imposition of any sales load, fee or other charge. The conversion from Class B shares to Class A shares is not considered a taxable event for Federal income tax purposes.

The Fund will redeem your Class B shares at their NAV next calculated after receipt of a written request for redemption in good order, subject to the CDSC identified below.

CDSC on Shares Sold Within Year As % of Amount Subject to Charge

1 5.0%

2 4.0%

3 3.0%

4 3.0%

5 2.0%

6 1.0%

7+ 0.0%

In the table, a year is a 12-month period. In applying the CDSC, all purchases are considered to have been made on the first day of the month in which the purchase was made.

For example, if a shareholder opens an account on July 14, 2003, then redeems all Class B shares on July 12, 2004, the shareholder will pay a CDSC of 4%, the rate applicable to redemptions made within the second year of purchase.

Class C shares are not subject to an initial sales charge when you buy them, but if you sell your Class C shares within twelve months after purchase, you will pay a 1% CDSC, which will be applied to the lesser of amount invested or redemption value of the shares redeemed. For purposes of the CDSC, purchases of Class C shares within a month will be considered as being purchased on the first day of the month. As noted above, Class C shares pay an annual 12b-1 service fee of up to 0.25% of average net assets and an annual distribution fee of up to 0.75% of average net assets. Over time, these fees will increase the cost of your investment and may cost you more than if you had purchased Class A shares. Class C shares do not convert to any other class; therefore, if you anticipate holding the shares for seven years or longer, Class C shares may not be appropriate.

The CDSC will not apply in the following circumstances:

* redemptions of shares requested within one year of the shareholder's death or disability, provided the Fund is notified of the death or disability at the time of the request and furnished proof of such event satisfactory to IFDI

* redemptions of shares made to satisfy required minimum distributions after age 70 1/2 from a qualified retirement plan, a required minimum distribution from an individual retirement account, Keogh plan or custodial account under section 403(b)(7) of the Internal Revenue Code of 1986, as amended (Code), a tax-free return of an excess contribution, or that otherwise results from the death or disability of the employee, as well as in connection with redemptions by any tax-exempt employee benefit plan for which, as a result of a subsequent law or legislation, the continuation of its investment would be improper

* redemptions of shares purchased by current or retired Trustees or Directors of the Funds, Directors of affiliated companies, current or retired officers of the Funds, employees of IFDI and its affiliates, financial advisors of Waddell & Reed and its affiliates, and by the members of the immediate families of such persons

* redemptions of shares made pursuant to a shareholder's participation in any systematic withdrawal service adopted for a Fund (The service and this exclusion from the CDSC do not apply to a one-time withdrawal)

* redemptions the proceeds of which are reinvested within forty-five (45) days in shares of the same class of the Fund as that redeemed

* for Class C shares, redemptions made by shareholders that have purchased shares of the Fund through certain group plans that have selling agreements with IFDI and that are administered by a third party and/or for which brokers not affiliated with IFDI provide administrative or recordkeeping services

* the exercise of certain exchange privileges

* redemptions effected pursuant to the Fund's right to liquidate a shareholder's account if the aggregate NAV of the shares is less than $500, or less than $250 for Ivy Money Market Fund

* redemptions effected by another registered investment company by virtue of a merger or other reorganization with a Fund or redemptions by a former shareholder of such investment company of shares of the Fund acquired pursuant to such reorganization

These exceptions may be modified or eliminated by a Fund at any time without prior notice to shareholders, except with respect to redemptions effected pursuant to the Fund's right to liquidate a shareholder's shares, which requires certain notice.

Class Y shares are not subject to a sales charge. Class Y shares pay an annual 12b-1 distribution and/or service fee of up to 0.25% of average net assets.¹

Class Y shares are only available for purchase by:

* participants of employee benefit plans established under section 403(b) or section 457, or qualified under section 401 of the Code, including 401(k) plans, when the plan has 100 or more eligible employees that are participants and holds the shares in an omnibus account on the Fund's records, and an unaffiliated third party provides administrative, distribution and/or other support services to the plan

* banks, trust institutions, investment fund administrators and other third parties investing for their own accounts or for the accounts of their customers where such investments for customer accounts are held in an omnibus account on the Fund's records, and to which entity an unaffiliated third party provides administrative, distribution and/or other support services

* government entities or authorities and corporations whose investment within the first twelve months after initial investment is $10 million or more and to which entity an unaffiliated third party provides certain administrative, distribution and/or other support services

* certain retirement plans and trusts for employees of Waddell & Reed and its affiliates

Advisor Class shares are not subject to a sales charge or annual 12b-1 fees.¹

Advisor Class shares are offered only to the following investors:

* trustees or other fiduciaries purchasing shares for employee benefit plans that are sponsored by organizations that have at least 1,000 employees

* any account with assets of at least $10,000 if (a) a financial planner, trust company, bank trust department or registered investment adviser has investment discretion, and where the investor pays such person as compensation for his advice and other services an annual fee of at least 0.50% on the assets in the account, or (b) such account is established under a "wrap fee" program and the account holder pays the sponsor of the program an annual fee of at least 0.50% on the assets in the account

* officers and Board members of the Ivy Fund (and their relatives)

* directors or employees of Waddell & Reed Financial, Inc. or its affiliates

* directors, officers, partners, registered representatives, employees and retired employees (and their relatives) of dealers having a sales agreement with IFDI (or trustees or custodians of any qualified retirement plan or IRA established for the benefit of any such person.)

¹Ivy Cundill Global Value Fund, Ivy European Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Fund, Ivy International Value Fund and Ivy Pacific Opportunities Fund do not currently offer Class Y shares. Advisor Class shares are offered only by this group of Funds.

Ways to Set Up Your Account

The different ways to set up (register) your account are listed below.

Individual or Joint Tenants

For your general investment needs

Individual accounts are owned by one person. Joint accounts have two or more owners (tenants).

Business or Organization

For investment needs of corporations, associations, partnerships, institutions or other groups

Retirement and other Tax-Advantaged Savings Plans

To shelter your savings from income taxes

Retirement and other tax-advantaged savings plans allow individuals to shelter investment income and capital gains from current income taxes. In addition, contributions to these accounts (other than Roth IRAs and Coverdell Education Savings Accounts) may be tax-deductible.

* Individual Retirement Accounts (IRAs) allow certain individuals under age 70 1/2, with earned income, to invest up to the Annual Dollar Limit per year. For the 2002 through 2004 calendar years, the Annual Dollar Limit is $3,000. For individuals who have attained age 50 by the last day of the calendar year for which a contribution is made, the Annual Dollar Limit also allows a catch-up contribution. The maximum annual catch-up contribution is $500 for the 2002 through 2005 calendar years. An individual's maximum IRA contribution for a taxable year is reduced by the amount of any contributions that individual makes to a Roth IRA for that year. The maximum annual contribution for an individual and his or her spouse is two times the Annual Dollar Limit or, if less, the couple's combined earned income for the tax year.

* IRA Rollovers retain special tax advantages for certain distributions from employer-sponsored retirement plans.

* Roth IRAs allow certain individuals to make nondeductible contributions up to the Annual Dollar Limit per year (as identified above). The maximum annual contribution for an individual and his or her spouse is two times the Annual Dollar Limit or, if less, the couple's combined earned income for the taxable year. Withdrawals of earnings may be tax-free if the account is at least five years old and certain other requirements are met.

* Coverdell Education Savings Accounts (formerly, Education IRAs) are established for the benefit of a minor, with nondeductible contributions up to $2000 per taxable year, and permit tax-free withdrawals to pay the qualified education expenses of the beneficiary.

* Simplified Employee Pension Plans (SEP-IRAs) provide small business owners or those with self-employed income (and their eligible employees) with many of the same advantages and contribution limits as a profit sharing plan but with fewer administrative requirements.

* Savings Incentive Match Plans for Employees (SIMPLE Plans) can be established by small employers to contribute to, and allow their employees to contribute a portion of their wages on a pre-tax basis to, retirement accounts. This plan-type generally involves fewer administrative requirements than 401(k) or other qualified plans.

* Keogh Plans allow self-employed individuals to make tax-deductible contributions for themselves of up to 100% of their adjusted annual earned income, with a maximum of $40,000.

* Pension and Profit-Sharing Plans, including 401(k) Plans, allow corporations and nongovernmental tax-exempt organizations of all sizes and/or their employees to contribute a percentage of the employees' wages or other amounts on a tax-deferred basis. These accounts need to be established by the administrator or trustee of the plan.

* 403(b) Custodial Accounts are available to employees of public school systems, churches and certain types of charitable organizations.

* 457 Accounts allow employees of state and local governments and certain charitable organizations to contribute a portion of their compensation on a tax-deferred basis.

Gifts or Transfers to a Minor

To invest for a child's education or other future needs

These custodial accounts provide a way to give money to a child and obtain tax benefits. An individual can give up to $11,000 a year per child free of Federal transfer tax consequences. Depending on state laws, you can set up a custodial account under the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA).

Trust

For money being invested by a trust

The trust must be established before an account can be opened, or you may use a trust form made available by IFDI. Contact your financial advisor for the form.

Buying Shares

You may buy shares of each of the Funds through IFDI and through third parties that have entered into selling arrangements with IFDI. To open your account you must complete and sign an application. Your financial advisor can help you with any questions you might have.

By mail: To purchase any class of shares by check, make your check payable to Ivy Funds Distributor, Inc. Mail the check, along with your completed application, to:

Ivy Funds Distributor, Inc.

P. O. Box 29217

Shawnee Mission, Kansas

66201-9217

By wire: To purchase shares of the Fund by wire, you must first obtain an account number by calling 800-777-6472, then mail a completed application to IFDI at the above address, or fax it to 800-532-2749. Instruct your bank to wire the amount you wish to invest, along with the account number and registration, to UMB Bank, n.a., ABA Number 101000695, DDA Number 98-0000-797-8.

The price to buy a share of a Fund, called the offering price, is calculated every business day.

The offering price of a share (the price to buy one share of a particular class) is the next NAV calculated per share of that class plus, for Class A shares, the applicable sales charge.

In the calculation of a Fund's NAV:

* The securities in the Fund's portfolio that are listed or traded on an exchange are valued primarily using market prices.

* Bonds are generally valued according to prices quoted by an independent pricing service.

* Short-term debt securities are valued at amortized cost, which approximates market value.

* Other investment assets for which market prices are unavailable are valued at their fair value by or at the direction of a Fund's Board of Directors or Board of Trustees.

Each Fund is open for business every day the New York Stock Exchange (NYSE) is open. The Funds normally calculate their NAVs as of the close of business of the NYSE, normally 4 p.m. Eastern time, except that an option or futures contract held by a Fund may be priced at the close of the regular session of any other securities exchange on which that instrument is traded.

As noted, some of the Funds may invest in securities listed on foreign exchanges which may trade on Saturdays or on U.S. national business holidays when the NYSE is closed. Consequently, the NAV of Fund shares may be significantly affected on days when a Fund does not price its shares and when you are not able to purchase or redeem a Fund's shares. Similarly, if an event materially affecting the value of foreign investments or foreign currency exchange rates occurs prior to the close of business of the NYSE but after the time their values are otherwise determined, such investments or exchange rates may be valued at their fair value as determined in good faith by or under the direction of each Fund's Board of Trustees or Board of Directors.

When you place an order to buy shares, your order will be processed at the next offering price calculated after your order is received and accepted. Note the following:

* All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. Neither cash nor post-dated checks will be accepted.

* If you buy shares by check, and then sell those shares by any method other than by exchange to another fund in the Ivy Family of Funds, the payment may be delayed for up to ten (10) days from the date of purchase to ensure that your previous investment has cleared.

* If you purchase shares of a Fund from certain broker-dealers, banks or other authorized third parties, the Fund will be deemed to have received your purchase order when that third party (or its designee) has received your order. Your order will receive the offering price next calculated after the order has been received in proper form by the authorized third party (or its designee). You should consult that firm to determine the time by which it must receive your order for you to purchase shares of a Fund at that day's price.

When you sign your account application, you will be asked to certify that your Social Security number or other taxpayer number is correct and whether you are subject to backup withholding for failing to report income to the Internal Revenue Service.

IFDI reserves the right to reject any purchase orders, including purchases by exchange, and it and the Funds reserve the right to discontinue offering Fund shares for purchase.

Minimum Investments

For Class A, Class B and Class C:

To Open an Account $500 (per Fund)

For certain exchanges $100 (per Fund)

For certain retirement accounts and accounts

opened with Automatic Investment Service $50 (per Fund)

For certain retirement accounts and accounts

opened through payroll deductions $25 (per Fund)

To Add to an Account Any amount

For certain exchanges $100 (per Fund)

For Automatic Investment Service $25 (per Fund)

For Class Y:

To Open an Account

For a government entity or authority $10 million

or for a corporation (within first twelve months)

For other eligible investors Any amount

To Add to an Account Any amount

For Advisor Class:

To Open an Account $10,000

To Add to an Account $250

Adding to Your Account

Subject to the minimums described above, you can make additional investments of any amount at
any time.

By mail: Make your check payable to Ivy Funds Distributor, Inc. Mail the check to IFDI, along with the detachable form that accompanies the confirmation of a prior purchase or your year-to-date statement, or a letter stating your account number, the account registration, the Fund and the class of shares that you wish to purchase.

By wire: Instruct your bank to wire the amount you wish to invest, along with the account number and registration, to UMB Bank, n.a., ABA Number 101000695, DDA Number 98-0000-797-8.

By Automatic Investment Method: You can authorize to have funds electronically drawn each month from your bank account through Electronic Funds Transfer ("EFT") and invested as a purchase of shares into your Fund account. Complete the appropriate sections of the Account Application.

If you purchase shares of the Fund from certain broker-dealers, banks or other authorized third parties, additional purchases may be made through those firms.

Selling Shares

You can arrange to take money out of your Fund account at any time by selling (redeeming) some or all of your shares.

The redemption price (price to sell one share of a particular class of the Fund) is the NAV per share of that Fund class, subject to any applicable CDSC.

By mail: Complete an Account Service Request form, available from your financial advisor, or write a letter of instruction with:

* the name on the account registration

* the Fund's name

* the account number

* the dollar amount or number, and the class, of shares to be redeemed

* any other applicable requirements listed in the table on page 109

Deliver the form or your letter to:

Ivy Client Services

c/o Waddell & Reed Services Company

P. O. Box 29217

Shawnee Mission, Kansas

66201-9217

Unless otherwise instructed, a check will be sent to the address on the account. For your protection, the address of record must not have been changed within 30 days prior to your redemption request.

By telephone: If you have elected this method in your application or by subsequent authorization, call 800-777-6472, or fax your request to 800-532-2749, and give your instructions to redeem your shares (redemption must be equal to or greater than $1,000.00) and make payment by wire to your predesignated bank account or by check to you at the address on the account. For your protection, banking wire information must be established on your account for a minimum of 30 days before a wire redemption will be processed. Requests by telephone can only be accepted for amounts up
to $50,000.

By Internet: You need to have selected the Internet option on your Account Application. Once your request for this option has been processed (which may take up to 10 days), you may place your redemption order at www.ivyfunds.com. For your protection, your redemption proceeds will be mailed to your address of record, which may not have been changed within 30 days prior to your redemption request.

To sell Class A shares of Ivy Money Market Fund by check: If you have elected this method in your application or by subsequent authorization, the Fund will provide you with forms or checks drawn on UMB Bank, n.a. You may make these checks payable to the order of an payee in any amount of $250 or more.

When you place an order to sell shares, your shares will be sold at the next NAV calculated, subject to any applicable CDSC, after receipt of a written request for redemption in good order by Ivy Client Services (on behalf of Waddell & Reed Services Company) at the address listed above. Note the following:

* If more than one person owns the shares, each owner must sign the written request.

* If you recently purchased the shares by check, the Fund may delay payment of redemption proceeds. You may arrange for the bank upon which the purchase check was drawn to provide telephone or written assurance, satisfactory to the Fund, that the check has cleared and been honored. If you do not, payment of the redemption proceeds on these shares will be delayed until the earlier of ten (10) days from the date of purchase or the date the Fund can verify that your purchase check has cleared and been honored.

* Redemptions may be suspended or payment dates postponed on days when the NYSE is closed (other than weekends or holidays), when trading on the NYSE is restricted or as permitted by the Securities and Exchange Commission.

* Payment is normally made in cash, although under extraordinary conditions redemptions may be made in portfolio securities when the Fund's Board of Directors determines that conditions exist making cash payments undesirable. A Fund is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder.

* If you purchased shares of a Fund from certain broker-dealers, banks or other authorized third parties, you may sell those shares through those firms, some of which may charge you a fee and may have additional requirements to sell Fund shares. The Fund will be deemed to have received your order to sell shares when that firm (or its designee) has received your order. Your order will receive the NAV of the redeemed Class, subject to any applicable CDSC, next calculated after the order has been received in proper form by the authorized firm (or its designee). You should consult that firm to determine the time by which it must receive your order for you to sell shares at that day's price.

* Dealers that perform account transactions for their clients by participating in NETWORKING through the National Securities Clearing Corporation are responsible for obtaining their clients' permission to perform those transactions, and are responsible to their clients who are shareholders of the Fund if the dealer performs any transaction erroneously or improperly.

Special Requirements for Selling Shares

Account Type Special Requirements

Individual or Joint Tenant The written instructions must be signed by all persons required to

sign for transactions, exactly as their names appear on the account.

Sole Proprietorship The written instructions must be signed by the individual owner

of the business.

UGMA, UTMA The custodian must sign the written instructions indicating capacity

as custodian.

Retirement Account The written instructions must be signed by a properly authorized

person.

Trust The trustee must sign the written instructions indicating capacity

as trustee. If the trustee's name is not in the account registration,

provide a currently certified copy of the trust document.

Business or Organization At least one person authorized by corporate resolution to act on

the account must sign the written instructions.

Conservator, Guardian The written instructions must be signed by the person properly

or Other Fiduciary authorized by court order to act in the particular fiduciary capacity.

A Fund may require a signature guarantee in certain situations such as:

* a redemption request made by a corporation, partnership or fiduciary

* a redemption request made by someone other than the owner of record

* the check is made payable to someone other than the owner of record

This requirement is to protect you and the Funds from fraud. You can obtain a signature guarantee from most banks and securities dealers, but not from a notary public.

Each Fund reserves the right to redeem at NAV all of your Fund shares in your account if the aggregate NAV of those shares is less than $500, or less than $250 for Ivy Money Market Fund. The Fund will give you notice and sixty (60) days to purchase a sufficient number of additional shares to bring the aggregate NAV of your shares in that Fund to $500. These redemptions will not be subject to a CDSC. The Fund will not apply its redemption right to individual retirement plan accounts or to accounts which have an aggregate NAV of less than $500 due to market forces.

You may reinvest, without charge, all or part of the amount of Class A shares of a Fund you redeemed by sending to the Fund the amount you want to reinvest. The reinvested amounts must be received by the Fund within forty-five (45) days after the date of your redemption. You may do this only once with Class A shares of a Fund.

The CDSC will not apply to the proceeds of Class A (as applicable), Class B or Class C shares of a Fund which are redeemed and then reinvested in shares of the same class of the Fund within forty-five (45) days after such redemption. IFDI will, with your reinvestment, restore an amount equal to the CDSC attributable to the amount reinvested by adding the CDSC amount to your reinvestment. For purposes of determining a future CDSC, the reinvestment will be treated as a new investment. You may do this only once as to Class B shares of a Fund and once as to Class C shares of a Fund. This privilege may be eliminated or modified at any time without prior notice to shareholders.

Payments of principal and interest on loans made pursuant to a 401(a) qualified plan (if such loans are permitted by the plan) may be reinvested, without payment of a sales charge, in Class A shares of any of the Funds in which the plan may invest.

Telephone Transactions

The Funds and their agents will not be liable for following instructions communicated by telephone that they reasonably believe to be genuine. Waddell & Reed Services Company (WRSCO), the Funds' transfer agent, will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. If WRSCO fails to do so, WRSCO may be liable for losses due to unauthorized or fraudulent instructions. Current procedures relating to instructions communicated by telephone include tape recording instructions, requiring personal identification and providing written confirmations of transactions effected pursuant to such instructions.

Shareholder Services

We provide a variety of services to help you manage your account.

Personal Service

Your local financial advisor is available to provide personal service. Additionally, a toll-free call, 800-777-6472, connects you to a Client Services Representative or our automated customer telephone service. During normal business hours, our Client Services staff is available to answer your questions or update your account records. At almost any time of the day or night, you may access your account information from a touch-tone phone, or from our web site, www.ivyfunds.com, to:

* obtain information about your accounts

* obtain price information about other funds in the Ivy Family of Funds

* obtain a Fund's current prospectus

* request duplicate statements

* transact certain account activity, including exchange privileges and redemption of shares

Reports

Statements and reports sent to you include the following:

* confirmation statements (after every purchase, other than those purchases made through Automatic Investment Service, and after every exchange, transfer or redemption)

* year-to-date statements (quarterly)

* annual and semiannual reports to shareholders (every six months)

To avoid sending duplicate copies of materials to households and thereby reduce expenses, only one copy of the most recent prospectus, annual and semiannual reports of the Funds may be mailed to Shareholders having the same last name and address in the Fund's records. The consolidation of these mailings, called householding, benefits the Fund through reduced mailing expense. You may call the telephone number listed for Client Services if you need additional copies.

Exchanges

Except as otherwise noted, you may sell your shares and buy shares of the same Class of another Fund in the Ivy Family of Funds without the payment of an additional sales charge if you exchange Class A shares or without payment of a CDSC when you exchange Class B or Class C shares. For Class B and Class C shares, or Class A shares to which the CDSC would otherwise apply, the time period for the CDSC will continue to run. You may sell your Advisor Class or Class Y shares of any of the Funds and buy either Advisor Class or Class Y shares of another Fund or Class A shares of Ivy Money Market Fund.

You may exchange any Class A shares of Ivy Limited-Term Bond and Ivy Municipal Bond Funds that you have held for at least six months and any Class A shares of these Funds acquired as payment of a dividend or distribution for Class A shares of any other Fund in the Ivy Family of Funds. You may exchange Class A shares of Ivy Limited-Term Bond and Ivy Municipal Bond Funds that you have held for less than six months only for Class A shares of Ivy Limited-Term Bond, Ivy Municipal Bond and Ivy Money Market Funds.

You may exchange only into Funds that are legally permitted for sale in your state of residence. Currently, each fund within the Ivy Family of Funds may only be sold within the United States and the Commonwealth of Puerto Rico, except that Ivy Cundill Global Value Fund, Ivy Global Natural Resources Fund, Ivy Pacific Opportunities Fund and the Advisor Class shares of Ivy International Fund are not eligible for sale in the Commonwealth of Puerto Rico. Note that exchanges out of a Fund may have tax consequences for you. Before exchanging into a Fund, read its prospectus.

How to Exchange

By mail: Send your written exchange request to Ivy Client Services at the address on page 108 of
this Prospectus.

By telephone: Call IFDI at 800-777-6472 to authorize an exchange transaction. To process your exchange order by telephone, you must have telephone exchange privileges on your account. IFDI employs reasonable procedures that require personal identification prior to acting on exchange instructions communicated by telephone to confirm that such instructions are genuine. In the absence of such procedures, the Fund or IFDI may be liable for any losses due to unauthorized or fraudulent telephone instructions.

By Internet: You will be allowed to exchange by Internet if (1) you can provide proper identification information; and (2) you have established the Internet trading option.

Important Exchange Information

* You must exchange into the same share class you currently own (except that you may exchange Class Y shares or Advisor Class shares of any of the Funds for Class A shares of Ivy Money Market Fund).

* Exchanges are considered taxable events and may result in a capital gain or a capital loss for tax purposes.

* It is the policy of the Funds to discourage the use of the exchange privilege for the purpose of timing short term market fluctuations. The Funds may therefore limit the frequency of exchanges by a shareholder, charge a redemption fee or cancel a shareholder's exchange privilege if at any time it appears that such market-timing strategies are being used.

Automatic Transactions for Class A, Class B and Class C Shareholders

Regular Investment Plans allow you to transfer money into your Fund account, or between Fund accounts, automatically. While Regular Investment Plans do not guarantee a profit and will not protect you against loss in a declining market, they can be an excellent way to invest for retirement, a home, educational expenses and other long-term financial goals.

Systematic Withdrawal Plan lets you set up ongoing monthly, quarterly, semiannual or annual redemptions from your account.

Certain restrictions and fees imposed by the plan custodian may also apply for retirement accounts. Speak with your financial advisor for more information.

Regular Investment Plans

Automatic Investment Service

To move money from your bank account to an existing Fund account

Minimum Amount Minimum Frequency

$25 (per Fund) Monthly

Funds Plus Service

To move money from Ivy Money Market Fund to a Fund whether in the same or a different account but in the same class

Minimum Amount Minimum Frequency

$100 (per Fund) Monthly

Distributions and Taxes

Distributions

Each Fund distributes substantially all of its net investment income and net capital gains to its shareholders each year.

Usually, a Fund distributes net investment income at the following times: Ivy Core Equity Fund, Ivy Cundill Global Value Fund, Ivy European Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Fund, Ivy International Growth Fund, Ivy International Value Fund, Ivy Large Cap Growth Fund, Ivy Mid Cap Growth Fund, Ivy Pacific Opportunities Fund, Ivy Science and Technology Fund, Ivy Small Cap Growth Fund and Ivy Tax-Managed Equity Fund, annually in December; and Ivy Asset Strategy Fund and Ivy Dividend Income Fund, quarterly in March, June, September and December. Ivy High Income Fund, Ivy Limited-Term Bond Fund, Ivy Money Market Fund and Ivy Municipal Bond Fund declare dividends from net investment income daily and pay them monthly. Net capital gains (and any net gains from foreign currency transactions) ordinarily are distributed by each Fund in December. Ordinarily, dividends are paid on shares starting on the day after they are issued and through the day they are redeemed.

Distribution Options. When you open an account, you may specify on your application how you want to receive your distributions. Each Fund offers two options:

1. Share Payment Option. Your dividends, capital gains and other distributions with respect to a class will be automatically paid in additional shares of the same class of the Fund. If you do not indicate a choice on your application, you will be assigned this option.

2. Cash Option. You will be sent a check for your dividends, capital gains and other distributions if the total distribution is equal to or greater than five dollars. If the distribution is less than five dollars, it will be automatically paid in additional shares of the same class of the Fund.

For retirement accounts, all distributions are automatically paid in additional shares.

Taxes

As with any investment, you should consider how your investment in a Fund will be taxed. If your account is not a retirement account or other tax-advantaged savings plan (or you are not otherwise exempt from income tax), you should be aware of the following tax implications:

Taxes on distributions. You may be subject to tax as a result of income generated at the Fund level, to the extent the Fund makes actual or deemed distributions of such income to you. Dividends from the Fund's investment company taxable income (which includes net short-term capital gains and net gains from certain foreign currency transactions), if any, generally are taxable to you as ordinary income whether received in cash or paid in additional Fund shares, unless such dividends are "qualified dividend income" eligible for the reduced rate of tax on long-term capital gains, as described below. Distributions of the Fund's net capital gains (the excess of net long-term capital gains over net short-term capital loss), when designated as such, are taxable to you as long-term capital gains, whether received in cash or paid in additional Fund shares and regardless of the length of time you have owned your shares. For Federal income tax purposes, long-term capital gains generally are taxed at a maximum rate of 15% for noncorporate shareholders. As a result of changes made by the Jobs and Growth Tax Relief Reconciliation Act of 2003, "qualified dividend income" received by noncorporate shareholders is taxed as net capital gain. The portion of the dividends that the Fund pays which is attributable to qualified dividend income received by the Fund will qualify for such treatment in the hands of noncorporate shareholders of the Fund.

Each Fund notifies you after each calendar year-end as to the amounts of dividends and other distributions paid (or deemed paid) to you for that year.

Distributions by Ivy Municipal Bond Fund that are designated by it as exempt-interest dividends generally may be excluded by you from your gross income. A portion of the exempt-interest dividends paid by Ivy Municipal Bond Fund is expected to be attributable to interest on certain bonds that must be treated, by you, as a tax preference item for purposes of calculating your liability, if any, for the AMT; the Fund anticipates such portion will not be more than 40% of the dividends it will pay, annually, to its shareholders. Ivy Municipal Bond Fund will provide you with information concerning the amount of distributions that is a tax preference item after the end of each calendar year. Shareholders who may be subject to the AMT should consult with their tax advisers concerning investment in the Fund.

Entities or other persons who are substantial users (or persons related to substantial users) of facilities financed by PABs should consult their tax advisers before purchasing Ivy Municipal Bond Fund shares because, for users of certain of these facilities, the interest on those bonds is not exempt from Federal income tax. For these purposes, the term substantial user is defined generally to include a non-exempt person who regularly uses, in trade or business, a part of a facility financed from the proceeds of PABs.

A portion of the dividends paid by a Fund, whether received in cash or paid in additional Fund shares, may be eligible for the dividends received deduction allowed to corporations. The eligible portion may not exceed the aggregate dividends received by a Fund from U.S. corporations. However, dividends received by a corporate shareholder and deducted by it pursuant to the dividends received deduction are subject indirectly to the Federal alternative minimum tax.

None of the dividends paid by Ivy Limited-Term Bond Fund, Ivy Municipal Bond Fund or Ivy Money Market Fund are expected to be eligible for this deduction.

Taxes on transactions. Your redemption of Fund shares will result in a taxable gain or loss to you, depending on whether the redemption proceeds are more or less than what you paid for the redeemed shares (which normally includes any sales charge paid).

An exchange of Fund shares for shares of any other fund in the Ivy Family of Funds generally will have similar tax consequences. However, special rules apply when you dispose of a Fund's Class A shares through a redemption or exchange within ninety (90) days after your purchase and then reacquire Class A shares of that Fund or acquire Class A shares of another fund in the Ivy Family of Funds without paying a sales charge due to the forty-five (45) day reinvestment privilege or exchange privilege. See Your Account -- Selling Shares. In these cases, any gain on the disposition of the original Class A Fund shares will be increased, or loss decreased, by the amount of the sales charge you paid when those shares were acquired, and that amount will increase the adjusted basis of the shares subsequently acquired. In addition, if you purchase shares of a Fund within thirty (30) days before or after redeeming other shares of the Fund (regardless of class) at a loss, part or all of that loss will not be deductible and will increase the basis of the newly purchased shares.

Withholding. Each Fund must withhold a portion of all dividends and capital gains distributions and redemption proceeds payable to individuals and certain other noncorporate shareholders who do not furnish the Fund with a correct taxpayer identification number. Withholding at that rate is also required from dividends and capital gains distributions payable to shareholders who are otherwise subject to backup withholding.

State and local income taxes. The portion of the dividends a Fund pays that is attributable to interest earned on U.S. Government securities generally is not subject to state and local income taxes, although distributions by any Fund to its shareholders of net realized gains on the sale of those securities are fully subject to those taxes. You should consult your tax adviser to determine the taxability in your state and locality of dividends and other distributions by the Funds.

The foregoing is only a summary of some of the important Federal income tax considerations generally affecting each Fund and its shareholders; you will find more information in the SAI. There may be other Federal, state or local tax considerations applicable to a particular investor. You are urged to consult your own tax adviser.

THE MANAGEMENT OF THE FUNDS

Portfolio Management

The Funds, other than Ivy Global Natural Resources Fund, are managed by WRIICO, subject to the authority of the Board of Trustees of Ivy Fund and the Board of Directors of Ivy Funds, Inc. WRIICO provides investment advice to each of the Funds in Ivy Funds, Inc. and supervises each such Fund's investments. WRIICO provides business management services to each of the Funds in Ivy Fund and investment advisory services to all of the Funds in Ivy Fund other than Ivy Global Natural Resources Fund. WRIICO has served as investment manager to Ivy Fund since December 31, 2002,¹ and to Ivy Funds, Inc. since June 30, 2003. WRIICO is located at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217. Prior to June 30, 2003, Waddell & Reed Investment Management Company (WRIMCO) served as the investment manager for each of the Funds in the Ivy Funds, Inc. On June 30, 2003, WRIMCO assigned the Investment Management Agreement with Ivy Funds, Inc. (formerly W&R Funds, Inc.) to WRIICO.

Cundill, an SEC-registered investment adviser located at Suite A1, 1470 East Valley Road, P.O. Box 50133, Montecito, California, 93150-0133, serves as subadvisor to Ivy Cundill Global Value Fund under an agreement with WRIICO. Cundill began operations in 1984, and as of December 31, 2002 (along with its affiliates) had approximately $1.8 billion in assets under management. For its services, Cundill receives a fee from WRIICO that is equal, on an annual basis, to 0.50% of Ivy Cundill Global Value Fund's average net assets.

Under an agreement between WRIICO and Henderson Global Investors (North America) Inc. ("HGINA"), HGINA serves as subadvisor to Ivy European Opportunities Fund. WRIICO pays HGINA for its services a fee payable monthly at an annual rate of 0.45% of the first $100,000,000 of net assets and 0.40% thereafter of the portion of the Fund's average daily net assets managed by HGINA. Henderson Investment Management Ltd. ("Henderson"), 4 Broadgate Avenue, London, England EC2M 2DA, under a subadvisory agreement with HGINA, serves as subadvisor to the Fund. For the period from January 1, 2002 to December 16, 2002 WRIICO paid Henderson for its services a fee that was equal on an annual basis to 0.22% of each Fund's average daily net assets. Henderson is an indirect, wholly owned subsidiary of AMP Limited, an Australian life insurance and financial services company located in New South Wales, Australia.

Mackenzie Financial Corporation ("MFC"), 150 Bloor Street West, Suite 400, Toronto, Ontario, Canada M5S 3B5, serves as the investment adviser to Ivy Global Natural Resources Fund and is responsible for selecting Ivy Global Natural Resources Funds' portfolio investments. MFC has been an investment counsel and mutual fund manager in Toronto for more than 34 years, and as of December 31, 2002 had over $21.8 billion in assets under management. For its services, MFC receives a fee from the Fund that is equal, on an annual basis, to 0.50% of the Fund's average net assets.

Ivy Asset Strategy Fund: Michael L. Avery is primarily responsible for the management of the equity portion of the Ivy Asset Strategy Fund. Mr. Avery has held his Fund responsibilities since January 1997. He is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. From March 1995 to March 1998, Mr. Avery was Vice President of, and Director of Research for, Waddell & Reed Asset Management Company, a former affiliate of WRIMCO. Mr. Avery has served as the portfolio manager for investment companies managed by WRIMCO since February 1994, has served as the Director of Research for WRIMCO and its predecessor since August 1987, and has been an employee of such since June 1981. He holds a BS degree in Business Administration from the University of Missouri, and an MBA with emphasis on finance from Saint Louis University.

Daniel J. Vrabac is primarily responsible for the management of the fixed-income portion of the Asset Strategy Fund. Mr. Vrabac has held his Fund responsibilities since January 1997. He is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. From May 1994 to March 1998, Mr. Vrabac was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company. Mr. Vrabac has been an employee of WRIMCO since May 1994. He earned a BA degree in economics from Duquesne University, and holds an MBA with emphasis in Investments and Finance from Indiana University.

Ivy Core Equity Fund: James D. Wineland is primarily responsible for the management of the Ivy Core Equity Fund. Mr. Wineland has held his Fund responsibilities since July 1997. He is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. From March 1995 to March 1998 Mr. Wineland was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company. Mr. Wineland has served as the portfolio manager for investment companies managed by WRIMCO and its predecessor since January 1988 and has been an employee of such since November 1984. He graduated from the United States Military Academy at West Point, and earned an MBA at the University of Kansas. Mr. Wineland is a Chartered Financial Analyst.

Ivy Dividend Income Fund: David P. Ginther is primarily responsible for the management of the Ivy Dividend Income Fund. He has held his Fund responsibilities since the inception of the Fund. He is Senior Vice President of WRIICO, Vice President of WRIMCO and portfolio manager for another investment company for which WRIMCO serves as investment manager, and has been an employee of WRIMCO since 1995. Mr. Ginther holds a BS degree in accounting from Kansas State University, and has earned the designation of Certified Public Accountant.

Ivy High Income Fund: Louise D. Rieke is primarily responsible for the management of the Ivy High Income Fund. Ms. Rieke has held her Fund responsibilities since July 1997. She is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. From November 1985 to March 1998, Ms. Rieke was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company, a former affiliate of WRIMCO. Ms. Rieke has served as the portfolio manager for investment companies managed by WRIMCO and its predecessor since July 1986 and has been an employee of such since May 1971. She received a BS degree in Accounting from Kansas State University, and holds an MBA from the University of Missouri at Kansas City. Ms. Rieke has earned the designation of Certified Public Accountant, and is a Chartered Financial Analyst.

Ivy Cundill Global Value Fund: The Fund is managed by investment professionals who are supported by a team of research analysts who are responsible for providing information on regional and country-specific economic and political developments and monitoring individual companies.

F. Peter Cundill, founder and majority shareholder has over 32 years of value-investing experience and has managed MFC's Cundill Value Fund since 1975. He is a Chartered Financial Analyst, a Chartered Accountant and holds a Bachelor of Commerce degree from McGill University, Montreal.

Hiok Hhu Ng, Portfolio Manager, assists in the management of the Fund. Mr. Ng holds a degree in finance from the University of British Columbia and is a Chartered Financial Analyst. He has been with Cundill since receiving his degree in 1998.

Ivy European Opportunities Fund: Stephen Peak, Executive Director of Henderson and head of Henderson's European equities team, is primarily responsible for is the management of the Ivy European Opportunities Fund. Formerly a director and portfolio manager with Touche Remnant & Co., Mr. Peak has 28 years of investment experience. He joined Henderson in 1986.

Ivy Global Natural Resources Fund: Frederick Sturm, a Senior Vice President of MFC, is primarily responsible for the management of the Ivy Global Natural Resources Fund. He has managed the Fund since its inception. Mr. Sturm joined MFC in 1983. He is a Chartered Financial Analyst and holds a graduate degree in commerce and finance from the University of Toronto.

Ivy International Fund, Ivy International Growth Fund, Ivy International Value Fund and Ivy Pacific Opportunities Fund: Thomas A. Mengel is primarily responsible for the management of the Ivy International Fund, Ivy International Growth Fund, Ivy International Value Fund and Ivy Pacific Opportunities Fund. Mr. Mengel has held his Fund responsibilities for Ivy International Growth Fund since May 1996, and for each of Ivy International Fund, Ivy International Value Fund and Ivy Pacific Opportunities Fund since December 2002. Mr. Mengel is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. He is a graduate of the University of Berlin with a degree in Business, Finance and Economics.

Ivy Large Cap Growth Fund: Daniel P. Becker is primarily responsible for the management of the Ivy Large Cap Growth Fund. Mr. Becker has held his Fund responsibilities since the inception of the Fund. He is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. From January 1995 to March 1998, Mr. Becker was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company. Mr. Becker has been an employee of WRIMCO and its predecessor since October 1989, initially serving as an investment analyst, and has served as a portfolio manager for WRIMCO since January 1997. He earned a BS degree in Mathematical Economics from the University of Wisconsin, and holds an MS degree with an emphasis in Finance, Investments and Banking from the University of Wisconsin Graduate School of Business. Mr. Becker is a Chartered Financial Analyst.

Ivy Limited-Term Bond Fund: W. Patrick Sterner is primarily responsible for the management of the Ivy Limited-Term Bond Fund. Mr. Sterner has held his Fund responsibilities since September 1992. He is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. From August 1992 to March 1998, Mr. Sterner was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company. He has been an employee of WRIMCO since August 1992. Mr. Sterner earned a degree in Business Administration from the University of Kansas, and is a Chartered Financial Analyst.

Ivy Mid Cap Growth Fund: Kimberly A. Scott is primarily responsible for the management of the Ivy Mid Cap Growth Fund. Ms. Scott has held her Fund responsibilities since February 2001. She is Senior Vice President of WRIICO, Vice President of WRIMCO, Vice President of the Fund and Vice President of another investment company managed by WRIMCO. Ms. Scott served as an investment analyst with WRIMCO from April 1999 to February 2001. From 1994 to 1999, she was an equity analyst for Bartlett & Company. Ms. Scott earned a BS in microbiology from the University of Kansas, and holds an MBA from the University of Cincinnati. She is a Chartered Financial Analyst.

Ivy Money Market Fund: Mira Stevovich is primarily responsible for the management of the Ivy Money Market Fund. Ms. Stevovich has held her Fund responsibilities since the inception of the Fund. She is Senior Vice President of WRIICO, Vice President of WRIMCO, Vice President and Assistant Treasurer of the Fund and Vice President and Assistant Treasurer of other investment companies for which WRIMCO serves as investment manager. Ms. Stevovich has served as the Portfolio Manager for investment companies managed by WRIMCO since May 1998 and has been an employee of WRIMCO and its predecessor since March 1987. Ms. Stevovich earned a BA degree from Colorado Womens College. She holds an MA degree in Soviet and East European Studies and an MBA degree from the University of Kansas. Ms. Stevovich is a Chartered Financial Analyst.

Ivy Municipal Bond Fund: Bryan J. Bailey is primarily responsible for the management of the Ivy Municipal Bond Fund. Mr. Bailey has held his Fund responsibilities since June 2000. He is Senior Vice President of WRIICO, Vice President of WRIMCO, Vice President of the Fund and Vice President of another investment company for which WRIMCO serves as investment manager. Mr. Bailey had served as the Assistant Portfolio Manager for investment companies managed by WRIMCO since January 1999 and has been an employee of WRIMCO since July 1993. Mr. Bailey earned a BS degree in business from Indiana University, and an MBA in financial management/statistics from the University of Chicago Graduate School of Business. He is a Chartered Financial Analyst.

Ivy Science and Technology Fund: Zachary H. Shafran is primarily responsible for the management of the Ivy Science and Technology Fund. Mr. Shafran has held his responsibilities since February 2001. He is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. Mr. Shafran served as an investment analyst with WRIMCO and its predecessor from June 1990 to January 1996 and has served as a portfolio manager since January 1996. Mr. Shafran earned a BSBA degree in Business and an MBA with an emphasis in Finance from the University of Missouri at Kansas City.

Ivy Small Cap Growth Fund: Grant P. Sarris is primarily responsible for the management of the Ivy Small Cap Growth Fund. Mr. Sarris has held his Fund responsibilities since May 1998. He is Senior Vice President of WRIICO and WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. Mr. Sarris had served as an investment analyst with WRIMCO from October 1991 until January 1996 and had served as Assistant Portfolio Manager of Small Cap Growth Fund from January 1996 until May 1998. Mr. Sarris graduated from the University of Wisconsin with a BA degree in Japanese Language and Literature. He earned an MBA with an emphasis in Finance from the University of Minnesota, and is a Chartered Financial Analyst.

Ivy Tax-Managed Equity Fund: Barry M. Ogden is primarily responsible for the management of the Ivy Tax-Managed Equity Fund. Mr. Ogden has held his Fund responsibilities since January 2002. He is Senior Vice President of WRIICO, Vice President of WRIMCO, Vice President of the Fund and Vice President of another investment company for which WRIMCO serves as investment manager. Mr. Ogden has served as Assistant Portfolio Manager for investment companies managed by WRIMCO since January 1999 and has been an employee of WRIMCO since July 1994. He graduated from the University of Kansas with a BS degree in accounting, and has earned the designation of Certified Public Accountant. Mr. Ogden is a Chartered Financial Analyst.

Other members of WRIICO's investment management department provide input on market outlook, economic conditions, investment research and other considerations relating to a Fund's investments.

Management Fee

Like all mutual funds, the Funds pay fees related to their daily operations. Expenses paid out of each Fund's assets are reflected in its share price or dividends; they are neither billed directly to shareholders nor deducted from shareholder accounts.

Each Fund pays a management fee to WRIICO (except that Ivy Global Natural Resources Fund pays a management fee to MFC) for providing investment advice and supervising its investments. Each Fund also pays other expenses, which are explained in the SAI.

The management fee is payable by a Fund at the annual rates of:

* Ivy Money Market Fund: 0.40% of net assets

* Ivy Limited-Term Bond Fund: 0.50% of net assets up to $500 million, 0.45% of net assets over $500 million and up to $1 billion, 0.40% of net assets over $1 billion and up to $1.5 billion, and 0.35% of net assets over $1.5 billion

* Ivy Municipal Bond Fund: 0.525% of net assets up to $500 million, 0.50% of net assets over $500 million and up to $1 billion, 0.45% of net assets over $1 billion and up to $1.5 billion, and 0.40% of net assets over $1.5 billion

* Ivy High Income Fund: 0.625% of net assets up to $500 million, 0.60% of net assets over $500 million and up to $1 billion, 0.55% of net assets over $1 billion and up to $1.5 billion, and 0.50% of net assets over $1.5 billion

* Ivy Tax-Managed Equity Fund: 0.65% of net assets up to $1 billion, 0.60% of net assets over $1 billion and up to $2 billion, 0.55% of net assets over $2 billion and up to $3 billion, and 0.50% of net assets over $3 billion

* Ivy Asset Strategy Fund, Ivy Core Equity Fund, Ivy Dividend Income Fund, Ivy Large Cap Growth Fund: 0.70% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion.

* Ivy International Growth Fund, Ivy Mid Cap Growth Fund, Ivy Science and Technology Fund, Ivy Small Cap Growth Fund: 0.85% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion

* Ivy European Opportunities Fund: 1.00% of net assets up to $250 million; 0.85% of net assets over $250 million and up to $500 million, and 0.75% of net assets over $500 million

* Ivy International Fund: 1.00% of net assets up to $2 billion, 0.90% of net assets over $2 billion and up to $2.5 billion, 0.80% of net assets over $2.5 billion and up to $3 billion, and 0.70% of net assets over $3 billion

* Ivy Cundill Global Value Fund, Ivy Global Natural Resources Fund, Ivy International Value Fund, Ivy Pacific Opportunities Fund: 1.00% of net assets

Management fees for the following Funds as a percent of the Fund's net assets for its fiscal year ended March 31, 2003 were:

Management Fee

Fund Management Fees Paid¹ without Voluntary Waiver¹

Ivy Asset Strategy Fund 0.70% na

Ivy Core Equity Fund 0.70% na

Ivy High Income Fund 0.00% 0.63%

Ivy International Growth Fund 0.85% na

Ivy Large Cap Growth Fund 0.57% 0.70%

Ivy Limited-Term Bond Fund 0.50% na

Ivy Mid Cap Growth Fund 0.00% 0.85%

Ivy Money Market Fund 0.00% 0.40%

Ivy Municipal Bond Fund 0.53% na

Ivy Science and Technology Fund 0.85% na

Ivy Small Cap Growth Fund 0.85% na

Ivy Tax-Managed Equity Fund 0.00% 0.65%

¹WRIICO has voluntarily agreed to waive its management fee for any day that a Fund's net assets are less than $25 million, subject to WRIICO's right to change or modify this waiver.

Management fees for the following Funds as a percent of the Fund's net assets for its fiscal year ended December 31, 2002 were:

Fund Management Fees Paid

Ivy Cundill Global Value Fund 1.00%

Ivy European Opportunities Fund 1.00%

Ivy Global Natural Resources Fund 1.00%

Ivy International Fund 1.00%

Ivy International Value Fund 1.00%

Ivy Pacific Opportunities Fund 1.00%

¹ Until December 31, 2002, Ivy Management, Inc. (IMI) provided business management services to the Ivy Funds and investment advisory services to the Ivy Funds. On December 31,2002, IMI, an indirect wholly owned subsidiary of Waddell & Reed Financial,Inc. (Waddell & Reed) and a wholly owned subsidiary of Ivy Acquisition Corporation (IAC), merged with and into IAC, a wholly owned subsidiary of Waddell & Reed. Upon effectiveness of the merger, IAC changed its name to Waddell and Reed Ivy Investment Company (WRIICO), and WRIICO assumed all of IMI's duties with respect to the Ivy Funds.

FINANCIAL HIGHLIGHTS

The following information is to help you understand the financial performance of each of the classes of each Fund for the fiscal periods shown. Certain information reflects financial results for a single Fund share. Total return shows how much your investment would have increased (or decreased) during each period, assuming reinvestment of all dividends and distributions.

The information for the Funds in the Ivy Funds, Inc. has been audited by Deloitte & Touche LLP, whose independent auditors' report, along with each Fund's financial statements for the fiscal year ended March 31, 2003, is included in the Funds' Annual Report to Shareholders, which is incorporated by reference into its Statement of Additional information. The annual report contains additional performance information and will be made available upon request and without charge.

The Financial Highlights for the fiscal year ended December 31, 2002, for the Funds in Ivy Fund have been audited by Deloitte & Touche LLP, independent auditors, whose report thereon appears in the Ivy Fund's Annual Report to Shareholders, which is incorporated by reference into its Statement of Additional information. The annual report contains additional performance information and will be made available upon request and without charge. The Financial Highlights for the fiscal years ended on or before December 31, 2001 for the Funds in Ivy Fund, have been audited by other independent auditors whose report thereon is incorporated by reference into the Statement of Additional information.

IVY ASSET STRATEGY FUND

(formerly, W&R Asset Strategy Fund)

	Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period

Class A
4-1-02 to 3-31-03	$11.33	$0.16	$(0.16)	$0.00	$(0.15)		$(0.00)	$(0.15)	$11.18
4-1-01 to 3-31-02	11.98	0.25	(0.40)	(0.15)	(0.30)		(0.20)	(0.50)	11.33
7-10-00^a to 3-31-01	15.22	0.15	(0.60)	(0.45)	(0.13)		(2.66)	(2.79)	11.98
Class B
4-1-02 to 3-31-03	$11.32	$0.05	$(0.15)	$(0.10)	$(0.05)		$(0.00)	$(0.05)	$11.17
4-1-01 to 3-31-02	11.97	0.17	(0.41)	(0.24)	(0.21)		(0.20)	(0.41)	11.32
7-3-00^a to 3-31-01	15.21	0.07	(0.60)	(0.53)	(0.05)		(2.66)	(2.71)	11.97
Class C^e
4-1-02 to 3-31-03	$11.32	$0.05	$(0.14)	$(0.09)	$(0.06)		$(0.00)	$(0.06)	$11.17
4-1-01 to 3-31-02	11.97	0.19	(0.43)	(0.24)	(0.21)		(0.20)	(0.41)	11.32
4-1-00 to 3-31-01	15.21	0.11	(0.62)	(0.51)	(0.07)		(2.66)	(2.73)	11.97
4-1-99 to 3-31-00	11.20	0.03	4.33	4.36	(0.05)		(0.30)	(0.35)	15.21
4-1-98 to 3-31-99	11.42	0.15	0.05	0.20	(0.16)		(0.26)	(0.42)	11.20
Class Y
4-1-02 to 3-31-03	$11.33	$0.11	$(0.10)	$0.01	$(0.16)		$(0.00)	$(0.16)	$11.18
4-1-01 to 3-31-02	11.98	0.28	(0.42)	(0.14)	(0.31)		(0.20)	(0.51)	11.33
4-1-00 to 3-31-01	15.26	0.24	(0.63)	(0.39)	(0.23)		(2.66)	(2.89)	11.98
4-1-99 to 3-31-00	11.21	0.15	4.33	4.48	(0.13)		(0.30)	(0.43)	15.26
4-1-98 to 3-31-99	11.43	0.26	0.05	0.31	(0.27)		(0.26)	(0.53)	11.21

^(a) Commencement of operations of the class.

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

^(c)Annualized.

^(d) For the fiscal year ended March 31, 2001.

^(e) The financial data shown for a Class C share are based on the financial data for a share of the fund's prior Class B.
On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced
operations on October 4, 1999.

^(f) Not shown due to rounding.

		Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to to Average Net Assets	Ratio of Net Investment Income (Loss) to Average Net Assets	Portfolio Turnover Rate
Class A
4-1-02 to 3-31-03	0.00%^b	$9	1.40%	1.23%	109.38%
4-1-01 to 3-31-02	-1.25^b	4	1.45	2.28	143.38
7-10-00^a to 3-31-01	-3.77^b	2	1.26^c	2.26^c	214.77^d
Class B
4-1-02 to 3-31-03	-0.92%	$3	2.35%	0.31%	109.38%
4-1-01 to 3-31-02	-2.03	3	2.25	1.50	143.38
7-3-00^ato 3-31-01	-4.35	2	2.15^c	1.37^c	214.77^d
Class C^e
4-1-02 to 3-31-03	-0.79%	$51	2.20%	0.46%	109.38%
4-1-01 to 3-31-02	-1.98	47	2.20	1.59	143.38
4-1-00 to 3-31-01	-4.22	54	2.15	0.86	214.77
4-1-99 to 3-31-00	39.60	52	2.24	0.24	204.12
4-1-98 to 3-31-99	1.79	30	2.32	1.38	168.17
Class Y
4-1-02 to 3-31-03	0.08%	$1	1.32%	1.34%	109.38%
4-1-01 to 3-31-02	-1.14	1	1.33	2.44	143.38
4-1-00 to 3-31-01	-3.39	1	1.32	1.71	214.77
4-1-99 to 3-31-00	40.85	1	1.33	1.14	204.12
4-1-98 to 3-31-99	2.75	--^f	1.45	2.25	168.17

IVY CORE EQUITY FUND

(formerly, W&R Core Equity Fund^a)

	Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$ 8.89	$(0.08)	$(2.18)	$(2.26)	$(0.00)		$(0.00)	$(0.00)	$6.63
4-1-01 to 3-31-02	9.51	(0.20)	(0.11)	(0.31)	(0.00)		(0.31)	(0.31)	8.89
7-3-00^b to 3-31-01	13.89	(0.00)	(2.00)	(2.00)	(0.00)		(2.38)	(2.38)	9.51
Class B
4-1-02 to 3-31-03	$ 8.74	$(0.06)	$(2.23)	$(2.29)	$(0.00)		$(0.00)	$(0.00)	$6.45
4-1-01 to 3-31-02	9.44	(0.14)	(0.25)	(0.39)	(0.00)		(0.31)	(0.31)	8.74
7-11-00^b to 3-31-01	14.10	(0.05)	(2.23)	(2.28)	(0.00)		(2.38)	(2.38)	9.44
Class C^f,g
4-1-02 to 3-31-03	$ 8.76	$(0.04)	$(2.24)	$(2.28)	$(0.00)		$(0.00)	$(0.00)	$ 6.48
4-1-01 to 3-31-02	9.45	(0.08)	(0.30)	(0.38)	(0.00)		(0.31)	(0.31)	8.76
4-1-00 to 3-31-01	13.76	(0.11)	(1.82)	(1.93)	(0.00)		(2.38)	(2.38)	9.45
4-1-99 to 3-31-00	11.52	(0.01)	2.71	2.70	(0.03)		(0.43)	(0.46)	13.76
4-1-98 to 3-31-99	12.24	0.03	0.82	0.85	(0.01)		(1.56)	(1.57)	11.52
Class Y^f
4-1-02 to 3-31-03	$9.19	$0.04	$(2.37)	$(2.33)	$(0.00)		$(0.00)	$(0.00)	$6.86
4-1-01 to 3-31-02	9.82	(0.11)	(0.21)	(0.32)	(0.00)		(0.31)	(0.31)	9.19
4-1-00 to 3-31-01	14.08	(0.04)	(1.84)	(1.88)	(0.00)		(2.38)	(2.38)	9.82
4-1-99 to 3-31-00	11.78	0.06	2.80	2.86	(0.13)		(0.43)	(0.56)	14.08
4-1-98 to 3-31-99	12.46	0.12	0.84	0.96	(0.08)		(1.56)	(1.64)	11.78

^(a) Core Equity Fund (formerly Total Return Fund) changed its name effective October 2, 2000.

^(b) Commencement of operations of the class.

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

^(d) Annualized.

^(e) For the fiscal year ended March 31, 2001.

^(f)Per share amounts have been adjusted retroactively to reflect the 100% stock dividend effected June 26, 1998.

^(g) The financial data shown for a Class C share are based on the financial data for a share of the fund's prior Class B.
On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced
operations on October 4, 1999. Per share amounts have been adjusted retroactively to reflect the 100% stock
dividend effected June 26, 1998.

		Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to to Average Net Assets	Ratio of Net Investment Income (Loss) to Average Net Assets	Portfolio Turnover Rate
Class A
4-1-02 to 3-31-03	-25.42%^c	$13	1.31%	0.28%	39.13%
4-1-01 to 3-31-02	-3.18^c	9	1.26	-0.11	22.36
7-3-00^b to 3-31-01	-16.72^c	4	1.18^d	-0.11^d	39.02^e
Class B
4-1-02 to 3-31-03	-26.20%	$5	2.36%	-0.76%	39.13%
4-1-01 to 3-31-02	-4.06	6	2.18	-1.04	22.36
7-11-00^b to 3-31-01	-18.50	5	2.11^d	-1.02^d	39.02^e
Class C^f,g
4-1-02 to 3-31-03	-26.03%	$200	2.18%	-0.58%	39.13%
4-1-01 to 3-31-02	-3.94	356	2.05	-0.91	22.36
4-1-00 to 3-31-01	-16.40	440	1.97	-0.93	39.02
4-1-99 to 3-31-00	23.98	585	1.98	-0.12	75.64
4-1-98 to 3-31-99	7.47	508	1.93	0.30	54.73
Class Y^f
4-1-02 to 3-31-03	-25.35%	$2	1.20%	0.40%	39.13%
4-1-01 to 3-31-02	-3.18	4	1.17	-0.03	22.36
4-1-00 to 3-31-01	-15.62	2	1.15	-0.11	39.02
4-1-99 to 3-31-00	24.96	2	1.16	0.67	75.64
4-1-98 to 3-31-99	8.37	1	1.15	1.10	54.73

IVY CUNDILL GLOBAL VALUE FUND

		Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
1-1-02 to 12-31-02	$ 9.64	$0.00^b	$(1.17)	$(1.17)	$(0.00)		$(0.08)	$(0.08)	$8.39
9-4-01^a to 12-31-01	10.15	0.01	(0.23)	(0.22)	(0.02)		(0.27)	(0.29)	9.64
Class B
1-1-02 to 12-31-02	$9.61	$(0.05)^b	$(1.16)	$(1.21)	$(0.00)		$(0.08)	$(0.08)	$8.32
9-26-01^a to 12-31-01	9.26	0.01	0.62	0.63	(0.02)		(0.26)	(0.28)	9.61
Class C
1-1-02 to 12-31-02	$9.57	$(0.07)^b	$(1.16)	$(1.23)	$(0.00)		$(0.08)	$(0.08)	$8.26
10-19-01^a to 12-31-01	9.44	0.01	0.40	0.41	(0.02)		(0.26)	(0.28)	9.57
Advisor Class
1-1-02 to 12-31-02	$ 9.55	$0.04^b	$(1.17)	$(1.13)	$(0.00)		$(0.08)	$(0.08)	$8.34
1-1-01 to 12-31-01	10.07	0.03	(0.25)	(0.22)	(0.02)		(0.28)	(0.30)	9.55
4-19-00^a to 12-31-00	10.00	0.05	0.41	0.46	(0.19)		(0.20)	(0.39)	10.07

^(a) Commencement of operations of the class.

^(b) Based on average shares outstanding.

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

^(d) Not shown due to rounding.

^(e) Annualized.

				Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Reimbursement	Ratio of Expenses to Average Net Assets without Reimbursement	Ratio of Net Investment Income (Loss) to Average Net Assets with Reimbursement	Ratio of Net Investment Income (Loss) to to Average Net Assets without Reimbursement	Portfolio Turnover Rate
Class A
1-1-02 to 12-31-02	-12.17%^c	$ 1	2.28%	4.97%	0.02%	-2.67%	122	%
9-4-01^a to 12-31-01	-2.07^c	--^d	4.47^e	31.77^e	0.94^e	-26.36^e	57
Class B
1-1-02 to 12-31-02	-12.62%	$2	2.84%	5.53%	-0.54%	-3.23%	122	%
9-26-01^a to 12-31-01	6.91	1	6.04^e	39.53^e	0.60^e	-32.89^e	57
Class C
1-1-02 to 12-31-02	-12.88%	$--^d	3.10%	5.79%	-0.80%	-3.49%	122	%
10-19-01^a to 12-31-01	4.44	--^d	7.71^e	51.61^e	0.99^e	-42.91^e	57
Advisor Class
1-1-02 to 12-31-02	-11.86%	$2	1.83%	4.52%	0.47%	-2.22%	122	%
1-1-01 to 12-31-01	-2.13	1	1.40	10.30	0.37	-8.53	57
4-19-00^a to 12-31-00	4.66	1	1.95^e	19.15^e	0.70^e	-16.50^e	53

IVY EUROPEAN OPPORTUNITIES FUND

		Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
1-1-02 to 12-31-02	$13.65	$ 0.01^b	$(0.46)^c	$ (0.45)	$(0.00)		$(0.00)	$(0.00)	$13.20
1-1-01 to 12-31-01	17.25	(0.08)	(3.49)^c	(3.57)	(0.00)		(0.03)	(0.03)	13.65
1-1-00 to 12-31-00	17.13	(0.07)	0.82	0.75	(0.00)		(0.63)	(0.63)	17.25
5-4-99^a to 12-31-99	10.01	0.00	16.35	16.35	(0.01)		(9.22)	(9.23)	17.13
Class B
1-1-02 to 12-31-02	$13.54	$(0.10)^b	$ (0.51)	$ (0.61)	$(0.00)		$(0.00)	$(0.00)	$12.93
1-1-01 to 12-31-01	17.26	(0.20)	(3.49)	(3.69)	(0.00)		(0.03)	(0.03)	13.54
1-1-00 to 12-31-00	17.13	(0.18)	0.83	0.65	(0.00)		(0.52)	(0.52)	17.26
5-24-99^a to 12-31-99	10.21	(0.01)	16.15	16.14	(0.00)		(9.22)	(9.22)	17.13
Class C
1-1-02 to 12-31-02	$13.59	$(0.10)^b	$(0.51)	$(0.61)	$(0.00)		$(0.00)	$(0.00)	$12.98
1-1-01 to 12-31-01	17.32	(0.22)	(3.48)	(3.70)	(0.00)		(0.03)	(0.03)	13.59
1-1-00 to 12-31-00	17.13	(0.22)	0.88	0.66	(0.00)		(0.47)	(0.47)	17.32
10-24-99^a to 12-31-99	11.57	(0.01)	6.00	5.99	(0.01)		(0.42)	(0.43)	17.13
Advisor Class
1-1-02 to 12-31-02	$13.80	$0.06^b	$(0.52)	$(0.46)	$(0.00)		$(0.00)	$(0.00)	$13.34
1-1-01 to 12-31-01	17.39	(0.02)	(3.54)	(3.56)	(0.00)		(0.03)	(0.03)	13.80
1-1-00 to 12-31-00	17.23	(0.02)	0.85	0.83	(0.00)		(0.67)	(0.67)	17.39
5-3-99^a to 12-31-99	10.01	0.00	16.46	16.46	(0.02)		(9.22)	(9.24)	17.23

^(a) Commencement of operations of the class.

^(b)Based on average shares outstanding.

^(c) Includes redemption fees added to paid-in capital.

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

^(e) Annualized.

		Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Reimbursement	Ratio of Expenses to Average Net Assets without Reimbursement	Ratio of Net Investment Income (Loss) to Average Net Assets with Reimbursement	Ratio of Net Investment Income (Loss) to to Average Net Assets without Reimbursement	Portfolio Turnover Rate
Class A
1-1-02 to 12-31-02	-3.30%^c,d	$20	2.15%	2.15%	0.06%	0.06%	69	%
1-1-01 to 12-31-01	-20.67^c,d	31	2.15	2.17	-0.44	-0.46	66
1-1-00 to 12-31-00	4.51^d	55	na	1.83	na	-0.36	46
5-4-99^a to 12-31-99	215.58^d	14	2.22^e	6.10^e	-0.15^e	-4.03^e	108
Class B
1-1-02 to 12-31-02	-4.51%	$25	2.92%	2.92%	-0.70%	-0.70%	69	%
1-1-01 to 12-31-01	-21.35	34	2.89	2.91	-1.18	-1.20	66
1-1-00 to 12-31-00	4.12	57	na	2.59	na	-1.12	46
5-24-99^a to 12-31-99	209.41	6	2.96^e	6.84^e	-0.89^e	-5.97^e	108
Class C
1-1-02 to 12-31-02	-4.49%	$19	2.92%	2.92%	-0.70%	-0.70%	69	%
1-1-01 to 12-31-01	-21.32	25	2.91	2.93	-1.20	-1.22	66
1-1-00 to 12-31-00	3.98	50	na	2.58	na	-1.11	46
10-24-99^a to 12-31-99	51.80	8	2.96^e	6.84^e	-0.89^e	-4.77^e	108
Advisor Class
1-1-02 to 12-31-02	-3.33%	$6	1.81%	1.81%	0.40%	0.40%	69	%
1-1-01 to 12-31-01	-20.44	9	1.72	1.74	-0.00	-0.02	66
1-1-00 to 12-31-00	5.01	19	na	1.55	na	-0.09	46
5-3-99^a to 12-31-99	217.16	5	1.93^e	5.81^e	0.14^e	-3.74^e	108

IVY GLOBAL NATURAL RESOURCES FUND

				Selected Per-Share Data
		Increase (Decrease) From Investment Operations				Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains	Total Distributions	Net Asset Value End of Period
Class A
1-1-02 to 12-31-02	$11.05	$(0.11)^a	$ 0.63^b	$ 0.52	$(0.00)	$(0.07)	$(0.07)	$11.50
1-1-01 to 12-31-01	9.74	0.04^a	1.45	1.49	(0.18)	(0.00)	(0.18)	11.05
1-1-00 to 12-31-00	8.91	(0.07)	0.95	0.88	(0.05)	(0.00)	(0.05)	9.74
1-1-99 to 12-31-99	6.32	0.00^a	2.59	2.59	(0.00)	(0.00)	(0.00)	8.91
1-1-98 to 12-31-98	9.01	0.03	(2.68)	(2.65)	(0.04)	(0.00)	(0.04)	6.32
Class B
1-1-02 to 12-31-02	$10.81	$(0.19)^a	$ 0.57	$ 0.38	$(0.00)	$(0.00)	$(0.00)	$11.19
1-1-01 to 12-31-01	9.56	(0.02)^a	1.42	1.40	(0.15)	(0.00)	(0.15)	10.81
1-1-00 to 12-31-00	8.77	(0.09)	0.90	0.81	(0.02)	(0.00)	(0.02)	9.56
1-1-99 to 12-31-99	6.27	(0.04)^a	2.54	2.50	(0.00)	(0.00)	(0.00)	8.77
1-1-98 to 12-31-98	9.00	(0.04)	(2.65)	(2.69)	(0.04)	(0.00)	(0.04)	6.27
Class C
1-1-02 to 12-31-02	$10.61	$(0.18)^a	$ 0.55	$ 0.37	$(0.00)	$(0.01)	$(0.01)	$10.97
1-1-01 to 12-31-01	9.40	(0.02)^a	1.39	1.37	(0.16)	(0.00)	(0.16)	10.61
1-1-00 to 12-31-00	8.63	(0.07)	0.89	0.82	(0.05)	(0.00)	(0.05)	9.40
1-1-99 to 12-31-99	6.21	(0.04)^a	2.46	2.42	(0.00)	(0.00)	(0.00)	8.63
1-1-98 to 12-31-98	9.00	(0.14)	(2.61)	(2.75)	(0.04)	(0.00)	(0.04)	6.21
Advisor Class
1-1-02 to 12-31-02	$11.02	$(0.07)^a	$0.56	$0.49	$(0.00)	$(0.08)	$(0.08)	$11.43
1-1-01 to 12-31-01	9.74	0.09^a	1.43	1.52	(0.24)	(0.00)	(0.24)	11.02
1-1-00 to 12-31-00	8.90	(0.05)	0.95	0.90	(0.06)	(0.00)	(0.06)	9.74
4-8-99^e to 12-31-99	7.00	0.02^a	1.88	1.90	(0.00)	(0.00)	(0.00)	8.90

^(a) Based on average shares outstanding.

^(b) Includes redemption fees added to paid-in capital.

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

^(d) Not shown due to rounding.

^(e) Commencement of operations of the class.

^(f) Annualized.

^(g) For the fiscal year ended December 31, 1999.

				Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Reimbursement	Ratio of Expenses to Average Net Assets without Reimbursement	Ratio of Net Investment Income (Loss) to Average Net Assets with Reimbursement	Ratio of Net Investment Income (Loss) to to Average Net Assets without Reimbursement	Portfolio Turnover Rate
Class A
1-1-02 to 12-31-02	4.66%^b,c	$17	2.22%	2.38%	-0.91%	-1.07%	67	%
1-1-01 to 12-31-01	15.40^c	8	2.25	3.71	0.38	-1.08	169
1-1-00 to 12-31-00	9.86^c	6	2.29	4.54	-0.69	-2.94	134
1-1-99 to 12-31-99	40.98^c	6	2.16	4.53	0.02	-2.35	157
1-1-98 to 12-31-98	-29.35^c	1	2.22	5.75	0.29	-3.24	98
Class B
1-1-02 to 12-31-02	3.52%	$9	2.93%	3.09%	-1.62%	-1.78%	67	%
1-1-01 to 12-31-01	14.73	5	2.87	4.33	-0.24	-1.70	169
1-1-00 to 12-31-00	9.27	3	2.80	5.05	-1.20	-3.45	134
1-1-99 to 12-31-99	39.87	3	2.71	5.08	-0.53	-2.90	157
1-1-98 to 12-31-98	-29.82	1	2.90	6.43	-0.39	-3.92	98
Class C
1-1-02 to 12-31-02	3.46%	$ 5	2.94%	3.10%	-1.64%	-1.80%	67	%
1-1-01 to 12-31-01	14.62	2	2.86	4.32	-0.23	-1.69	169
1-1-00 to 12-31-00	9.49	1	2.70	4.95	-1.10	-3.35	134
1-1-99 to 12-31-99	38.97	--	2.73	5.10	-0.55	-2.92	157
1-1-98 to 12-31-98	-30.49	--^d	3.57	7.10	-1.06	-4.59	98
Advisor Class
1-1-02 to 12-31-02	4.46%	$ 1	1.82%	1.98%	-0.51%	-0.67	67	%
1-1-01 to 12-31-01	15.71	--^d	1.78	3.24	0.85	-0.61	169
1-1-00 to 12-31-00	10.17	--^d	2.02	4.27	-0.42	-2.67	134
4-8-99^e to 12-31-99	27.14	--^d	1.87^f	4.24^f	0.31^f	-2.06^f	157	^g

IVY HIGH INCOME FUND

(formerly, W&R High Income Fund)

				Selected Per-Share Data
		Increase (Decrease) From Investment Operations				Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends Declared From Net Investment Income	Distributions From Realized Gains	Total Distributions	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$8.48	$0.64	$(0.41)	$0.23	$(0.64)	$(0.00)	$(0.64)	$8.07
4-1-01 to 3-31-02	8.54	0.74	(0.06)	0.68	(0.74)	(0.00)	(0.74)	8.48
7-3-00^a to 3-31-01	9.04	0.58	(0.50)	0.08	(0.58)	(0.00)	(0.58)	8.54
Class B
4-1-02 to 3-31-03	$8.48	$0.56	$(0.41)	$0.15	$(0.56)	$(0.00)	$(0.56)	$8.07
4-1-01 to 3-31-02	8.54	0.68	(0.06)	0.62	(0.68)	(0.00)	(0.68)	8.48
7-18-00^a to 3-31-01	9.03	0.48	(0.49)	(0.01)	(0.48)	(0.00)	(0.48)	8.54
Class C^f
4-1-02 to 3-31-03	$ 8.48	$0.57	$(0.41)	$0.16	$(0.57)	$(0.00)	$(0.57)	$8.07
4-1-01 to 3-31-02	8.54	0.68	(0.06)	0.62	(0.68)	(0.00)	(0.68)	8.48
4-1-00 to 3-31-01	9.27	0.73	(0.73)	0.00	(0.73)	(0.00)	(0.73)	8.54
4-1-99 to 3-31-00	9.94	0.69	(0.67)	0.02	(0.69)	(0.00)	(0.69)	9.27
4-1-98 to 3-31-99	10.79	0.63	(0.82)	(0.19)	(0.63)	(0.03)	(0.66)	9.94
Class Y
4-1-02 to 3-31-03	$8.48	$0.64	$(0.41)	$0.23	$(0.64)	$(0.00)	$(0.64)	$8.07
4-1-01 to 3-31-02	8.54	0.75	(0.06)	0.69	(0.75)	(0.00)	(0.75)	8.48
4-1-00 to 3-31-01	9.27	0.78	(0.73)	0.05	(0.78)	(0.00)	(0.78)	8.54
4-1-99 to 3-31-00	9.94	0.77	(0.67)	0.10	(0.77)	(0.00)	(0.77)	9.27
12-30-98^a to 3-31-99	9.97	0.20	0.00	0.20	(0.20)	(0.03)	(0.23)	9.94

^(a)Commencement of operations of the class.

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

^(c) Annualized.

^(d) For the fiscal year ended March 31, 2001.

^(e) Not shown due to rounding.

^(f) The financial data shown for a Class C share are based on the financial data for a share of the fund's prior Class B.
On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced
operations on October 4, 1999.

^(g) For the fiscal year ended March 31, 1999.

				Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Waiver	Ratio of Expenses to Average Net Assets without Waiver	Ratio of Net Investment Income (Loss) to Average Net Assets with Waiver	Ratio of Net Investment Income (Loss) to to Average Net Assets without Waiver	Portfolio Turnover Rate
Class A
4-1-02 to 3-31-03	3.02%^b	$6	0.91%	1.44%	7.83%	7.30%	52.20%
4-1-01 to 3-31-02	8.46^b	2	0.84	1.14	9.00	8.70	82.42
7-3-00^a to 3-31-01	0.90^b	--^e	1.05^c	1.42^c	9.01^c	8.64^c	114.89^d
Class B
4-1-02 to 3-31-03	2.06%	$2	1.84%	2.37%	6.90%	6.37%	52.20%
4-1-01 to 3-31-02	7.64	1	1.74	2.36	8.09	7.47	82.42
7-18-00^a to 3-31-01	0.09	1	1.85^c	2.50^c	8.30^c	7.65^c	114.89^d
Class C^f
4-1-02 to 3-31-03	2.15%	$18	1.74%	2.27%	7.05%	6.52%	52.20%
4-1-01 to 3-31-02	7.58	17	1.82	2.46	8.01	7.36	82.42
4-1-00 to 3-31-01	0.18	19	1.78	2.41	8.38	7.75	114.89
4-1-99 to 3-31-00	0.17	23	2.17	2.26	7.16	7.07	71.31
4-1-98 to 3-31-99	-1.72	25	2.20	--	6.29	--	50.98
Class Y
4-1-02 to 3-31-03	3.03%	$4	1.08%	1.61%	7.22%	6.69%	52.20%
4-1-01 to 3-31-02	8.50	--^e	0.79	1.08	8.99	8.71	82.42
4-1-00 to 3-31-01	0.79	--^e	1.20	1.62	8.95	8.52	114.89
4-1-99 to 3-31-00	0.94	--^e	1.40	1.46	7.85	7.79	71.31
12-30-98^a to 3-31-99	2.45	--^e	0.26^c	--	8.55^c	--	50.98^g

IVY INTERNATIONAL FUND

		Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
1-1-02 to 12-31-02	$20.69	$0.06^a	$ (4.40)^b	$ (4.34)	$(0.00)		$(0.00)	$(0.00)	$16.35
1-1-01 to 12-31-01	26.20	0.05	(5.56)^b	(5.51)	(0.00)		(0.00)	(0.00)	20.69
1-1-00 to 12-31-00	47.09	0.19	(12.44)	(12.25)	(0.04)		(8.60)	(8.64)	26.20
1-1-99 to 12-31-99	41.20	0.30	8.31	8.61	(0.24)		(2.48)	(2.72)	47.09
1-1-98 to 12-31-98	39.03	0.37	2.50	2.87	(0.35)		(0.35)	(0.70)	41.20
Class B
1-1-02 to 12-31-02	$20.03	$(0.12)^a	$ (4.29)	$ (4.41)	$(0.00)		$(0.00)	$(0.00)	$15.62
1-1-01 to 12-31-01	25.64	(0.21)	(5.40)	(5.61)	(0.00)		(0.00)	(0.00)	20.03
1-1-00 to 12-31-00	46.78	(0.17)	(12.33)	(12.50)	(0.04)		(8.60)	(8.64)	25.64
1-1-99 to 12-31-99	40.97	(0.06)	8.27	8.21	(0.00)		(2.40)	(2.40)	46.78
1-1-98 to 12-31-98	38.82	0.00	2.50	2.50	(0.00)		(0.35)	(0.35)	40.97
Class C
1-1-02 to 12-31-02	$19.90	$(0.11)^a	$ (4.27)	$ (4.38)	$(0.00)		$(0.00)	$(0.00)	$15.52
1-1-01 to 12-31-01	25.46	(0.21)	(5.35)	(5.56)	(0.00)		(0.00)	(0.00)	19.90
1-1-00 to 12-31-00	46.57	(0.19)	(12.28)	(12.47)	(0.04)		(8.60)	(8.64)	25.46
1-1-99 to 12-31-99	40.79	(0.05)	8.23	8.18	(0.00)		(2.40)	(2.40)	46.57
1-1-98 to 12-31-98	38.64	0.00	2.50	2.50	(0.00)		(0.35)	(0.35)	40.79
Advisor Class
1-1-02 to 12-31-02	$20.67	$(0.24)^a	$(3.58)	$(3.82)	$(0.00)		$(0.00)	$(0.00)	$16.85
1-1-01 to 12-31-01	26.25	0.01	(5.59)	(5.58)	(0.00)		(0.00)	(0.00)	20.67
8-31-00^d to 12-31-00	40.05	0.02	(5.18)	(5.16)	(0.04)		(8.60)	(8.64)	26.25

^(a)Based on average shares outstanding.

^(b)Includes redemption fees added to paid-in capital.

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

^(d)Commencement of operations of the class.

^(e) Not shown due to rounding.

^(f) Annualized.

^(g) For the fiscal year ended December 31, 2000.

		Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Reimbursement	Ratio of Expenses to Average Net Assets without Reimbursement	Ratio of Net Investment Income (Loss) to Average Net Assets with Reimbursement	Ratio of Net Investment Income (Loss) to to Average Net Assets without Reimbursement	Portfolio Turnover Rate
Class A
1-1-02 to 12-31-02	-20.96%^b,c	$ 127	1.89%	1.89%	na	0.32%	34	%
1-1-01 to 12-31-01	-21.03^b,c	345	1.60	1.66	0.18%	0.12	43
1-1-00 to 12-31-00	-17.26^c	588	na	1.66	na	0.37	91
1-1-99 to 12-31-99	21.05^c	1,574	na	1.66	na	0.63	7
1-1-98 to 12-31-98	7.34^c	1,614	na	1.58	na	0.83	15
Class B
1-1-02 to 12-31-02	-22.00%	$ 68	2.85%	2.85%	na	-0.64%	34	%
1-1-01 to 12-31-01	-21.88	137	2.54	2.60	-0.76%	-0.82	43
1-1-00 to 12-31-00	-17.95	281	na	2.50	na	-0.47	91
1-1-99 to 12-31-99	20.15	541	na	2.42	na	-0.13	7
1-1-98 to 12-31-98	6.43	543	na	2.41	na	-0.01	15
Class C
1-1-02 to 12-31-02	-22.00%	$ 14	2.83%	2.83%	na	-0.62%	34	%
1-1-01 to 12-31-01	-21.84	26	2.54	2.60	-0.76%	-0.82	43
1-1-00 to 12-31-00	-17.97	57	na	2.49	na	-0.46	91
1-1-99 to 12-31-99	20.16	143	na	2.42	na	-0.13	7
1-1-98 to 12-31-98	6.46	154	na	2.40	na	0.01	15
Advisor Class
1-1-02 to 12-31-02	-18.71%	$--^e	3.46%	3.46%	na	-1.24%	34	%
1-1-01 to 12-31-01	-21.26	--^e	1.69	1.75	0.09%	0.03	43
8-31-00^d to 12-31-00	-12.09	--^e	na	2.10^f	na	-0.08^f	91	^g

IVY INTERNATIONAL GROWTH FUND

(formerly, W&R International Growth Fund)

	Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$ 9.82	$(0.03)	$(2.22)	$(2.25)	$(0.00)		$(0.00)	$(0.00)	$ 7.57
4-1-01 to 3-31-02	12.03	(0.17)	(2.01)	(2.18)	(0.00)		(0.03)	(0.03)	9.82
7-3-00^a to 3-31-01	24.33	(0.02)	(6.46)	(6.48)	(0.00)		(5.82)	(5.82)	12.03
Class B
4-1-02 to 3-31-03	$ 9.65	$(0.11)	$(2.19)	$(2.30)	$(0.00)		$(0.00)	$(0.00)	$ 7.35
4-1-01 to 3-31-02	11.94	(0.19)	(2.07)	(2.26)	(0.00)		(0.03)	(0.03)	9.65
7-10-00^a to 3-31-01	24.59	(0.09)	(6.74)	(6.83)	(0.00)		(5.82)	(5.82)	11.94
Class C^e
4-1-02 to 3-31-03	$ 9.69	$(0.08)	$ (2.21)	$ (2.29)	$(0.00)		$(0.00)	$(0.00)	$ 7.40
4-1-01 to 3-31-02	11.96	(0.11)	(2.13)	(2.24)	(0.00)		(0.03)	(0.03)	9.69
4-1-00 to 3-31-01	28.58	(0.17)	(10.63)	(10.80)	(0.00)		(5.82)	(5.82)	11.96
4-1-99 to 3-31-00	15.58	(0.34)	15.14	14.80	(0.00)		(1.80)	(1.80)	28.58
4-1-98 to 3-31-99	15.04	(0.07)	1.55	1.48	(0.00)		(0.94)	(0.94)	15.58
Class Y
4-1-02 to 3-31-03	$10.55	$(0.16)	$ (2.22)	$ (2.38)	$(0.00)		$(0.00)	$(0.00)	$ 8.17
4-1-01 to 3-31-02	12.87	(0.18)	(2.11)	(2.29)	(0.00)		(0.03)	(0.03)	10.55
4-1-00 to 3-31-01	29.86	(0.17)	(11.00)	(11.17)	(0.00)		(5.82)	(5.82)	12.87
4-1-99 to 3-31-00	16.08	(1.41)	16.99	15.58	(0.00)		(1.80)	(1.80)	29.86
4-1-98 to 3-31-99	15.35	0.05	1.62	1.67	(0.00)		(0.94)	(0.94)	16.08

^a)Commencement of operations of the class.

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

^(c) Annualized.

^(d) For the fiscal year ended March 31, 2001.

		Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to to Average Net Assets	Ratio of Net Investment Income (Loss) to Average Net Assets	Portfolio Turnover Rate
Class A
4-1-02 to 3-31-03	-22.91%^b	$5	2.10%	-0.10%	107.62%
4-1-01 to 3-31-02	-18.12^b	7	1.89	-0.49	133.83
7-3-00^a to 3-31-01	-29.73^b	5	1.72^c	-0.31^c	103.03^d
Class B
4-1-02 to 3-31-03	-23.83%	$2	3.24%	-1.22%	107.62%
4-1-01 to 3-31-02	-18.93	2	2.89	-1.42	133.83
7-10-00^a to 3-31-01	-30.89	2	2.61^c	-1.30^c	103.03^d
Class C^e
4-1-02 to 3-31-03	-23.63%	$ 46	2.93%	-0.86%	107.62%
4-1-01 to 3-31-02	-18.73	74	2.62	-1.03	133.83
4-1-00 to 3-31-01	-40.45	123	2.36	-1.03	103.03
4-1-99 to 3-31-00	97.89	233	2.37	-1.48	125.71
4-1-98 to 3-31-99	10.36	100	2.35	-0.53	116.25
Class Y
4-1-02 to 3-31-03	-22.56%	$11	1.63%	0.39%	107.62%
4-1-01 to 3-31-02	-17.79	8	1.52	-0.11	133.83
4-1-00 to 3-31-01	-39.91	7	1.44	-0.02	103.03
4-1-99 to 3-31-00	99.74	5	1.48	-0.80	125.71
4-1-98 to 3-31-99	11.41	1	1.44	0.36	116.25

IVY INTERNATIONAL VALUE FUND

	Selected Per-Share Data
		Increase (Decrease) From Investment Operations				Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
1-1-02 to 12-31-02	$ 9.10	$0.08^a	$(1.53)^b	$(1.45)	$(0.00)		$(0.00)	$(0.00)	$ 7.65
1-1-01 to 12-31-01	11.01	0.07	(1.96)^b	(1.89)	(0.02)		(0.00)	(0.02)	9.10
1-1-00 to 12-31-00	11.99	0.14	(1.01)	(0.87)	(0.04)		(0.07)	(0.11)	11.01
1-1-99 to 12-31-99	9.48	0.09	2.54	2.63	(0.10)		(0.02)	(0.12)	11.99
1-1-98 to 12-31-98	8.98	0.08	0.52	0.60	(0.08)		(0.02)	(0.10)	9.48
Class B
1-1-02 to 12-31-02	$ 8.97	$ 0.01^a	$(1.66)	$(1.65)	$(0.00)		$(0.00)	$(0.00)	$ 7.32
1-1-01 to 12-31-01	10.94	(0.02)	(1.93)	(1.95)	(0.02)		(0.00)	(0.02)	8.97
1-1-00 to 12-31-00	11.91	0.02	(0.96)	(0.94)	(0.01)		(0.02)	(0.03)	10.94
1-1-99 to 12-31-99	9.42	0.01	2.51	2.52	(0.01)		(0.02)	(0.03)	11.91
1-1-98 to 12-31-98	8.93	0.01	0.51	0.52	(0.01)		(0.02)	(0.03)	9.42
Class C
1-1-02 to 12-31-02	$ 8.97	$ 0.01^a	$(1.66)	$(1.65)	$(0.00)		$(0.00)	$(0.00)	$ 7.32
1-1-01 to 12-31-01	10.94	(0.02)	(1.93)	(1.95)	(0.02)		(0.00)	(0.02)	8.97
1-1-00 to 12-31-00	11.92	0.02	(0.97)	(0.95)	(0.01)		(0.02)	(0.03)	10.94
1-1-99 to 12-31-99	9.42	0.02	2.51	2.53	(0.01)		(0.02)	(0.03)	11.92
1-1-98 to 12-31-98	8.93	0.01	0.51	0.52	(0.01)		(0.02)	(0.03)	9.42
Advisor Class
1-1-02 to 12-31-02	$ 9.14	$0.10^a	$(1.70)	$(1.60)	$(0.00)		$(0.00)	$(0.00)	$ 7.54
1-1-01 to 12-31-01	11.03	0.11	(1.98)	(1.87)	(0.02)		(0.00)	(0.02)	9.14
1-1-00 to 12-31-00	11.99	0.50	(1.33)	(0.83)	(0.05)		(0.08)	(0.13)	11.03
1-1-99 to 12-31-99	9.48	0.04	2.64	2.68	(0.10)		(0.07)	(0.17)	11.99
2-23-98^a to 12-31-98	9.63	0.11	(0.13)	(0.02)	(0.11)		(0.02)	(0.13)	9.48

^(a)Based on average shares outstanding.

^(b)Includes redemption fees added to paid-in capital.

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

^(d) Not shown due to rounding.

^(e)Commencement of operations of the class.

^(f) Annualized.

^(g) For the fiscal year ended December 31, 1998

		Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Reimbursement	Ratio of Expenses to Average Net Assets without Reimbursement	Ratio of Net Investment Income (Loss) to Average Net Assets with Reimbursement	Ratio of Net Investment Income (Loss) to to Average Net Assets without Reimbursement	Portfolio Turnover Rate
Class A
1-1-02 to 12-31-02	-15.93%^b,c	$ 8	1.77%	2.32%	0.91%	0.36%		48	%
1-1-01 to 12-31-01	-17.17^b,c	13	1.77	2.15	0.58	0.20		39
1-1-00 to 12-31-00	-7.25^c	24	1.74	1.92	0.96	0.78		36
1-1-99 to 12-31-99	27.79^c	33	1.72	1.87	0.92	0.77		21
1-1-98 to 12-31-98	6.63^c	25	1.74	1.88	0.80	0.66		16
Class B
1-1-02 to 12-31-02	-18.39%	$28	2.50%	3.05%	0.18%	-0.37%		48	%
1-1-01 to 12-31-01	-17.84	46	2.50	2.88	-0.15	-0.53		39
1-1-00 to 12-31-00	-7.94	76	2.51	2.69	0.20	0.02		36
1-1-99 to 12-31-99	26.81	95	2.51	2.66	0.12	-0.03		21
1-1-98 to 12-31-98	5.84	81	2.49	2.63	0.05	-0.09		16
Class C
1-1-02 to 12-31-02	-18.39%	$ 9	2.50%	3.05%	0.18%	-0.37%		48	%
1-1-01 to 12-31-01	-17.84	16	2.51	2.89	-0.16	-0.54		39
1-1-00 to 12-31-00	-7.97	30	2.51	2.69	0.19	0.01		36
1-1-99 to 12-31-99	26.91	44	2.49	2.64	0.14	-0.01		21
1-1-98 to 12-31-98	5.79	40	2.52	2.66	0.03	-0.11		16
Advisor Class
1-1-02 to 12-31-02	-17.51%	$--^d	1.50%	2.05%	1.18%	0.63%		48	%
1-1-01 to 12-31-01	-17.03	--^d	1.47	1.85	0.89	0.51		39
1-1-00 to 12-31-00	-6.90	1	1.35	1.53	1.36	1.18		36
1-1-99 to 12-31-99	28.30	3	1.38	1.53	1.25	1.10		21
2-23-98^e to 12-31-98	-0.15	1	1.32^f	1.45^f	1.23^f	1.10^f		16	^g

IVY LARGE CAP GROWTH FUND

(formerly, W&R Large Cap Growth Fund)

		Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains	Total Distributions	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$ 9.21	$(0.03)	$(1.94)	$(1.97)	$(0.00)	$(0.00)	$(0.00)	$7.24
4-1-01 to 3-31-02	9.48	(0.04)	(0.23)	(0.27)	(0.00)	(0.00)	(0.00)	9.21
6-30-00^a to 3-31-01	10.00	0.05	(0.45)	(0.40)	(0.06)	(0.06)	(0.12)	9.48
Class B
4-1-02 to 3-31-03	$ 9.05	$(0.14)	$(1.92)	$(2.06)	$(0.00)	$(0.00)	$(0.00)	$6.99
4-1-01 to 3-31-02	9.44	(0.16)	(0.23)	(0.39)	(0.00)	(0.00)	(0.00)	9.05
7-6-00^a to 3-31-01	10.02	(0.03)	(0.49)	(0.52)	(0.00)	(0.06)	(0.06)	9.44
Class C
4-1-02 to 3-31-03	$ 9.10	$(0.10)	$(1.92)	$(2.02)	$(0.00)	$(0.00)	$(0.00)	$7.08
4-1-01 to 3-31-02	9.45	(0.12)	(0.23)	(0.35)	(0.00)	(0.00)	(0.00)	9.10
7-3-00^a to 3-31-01	10.00	(0.00)	(0.48)	(0.48)	(0.01)	(0.06)	(0.07)	9.45
Class Y
4-1-02 to 3-31-03	$ 9.22	$(0.30)	$(1.66)	$(1.96)	$(0.00)	$(0.00)	$(0.00)	$7.26
4-1-01 to 3-31-02	9.48	(0.01)	(0.25)	(0.26)	(0.00)	(0.00)	(0.00)	9.22
7-6-00^a to 3-31-01	10.02	0.09	(0.50)	(0.41)	(0.07)	(0.06)	(0.13)	9.48

^(a)Commencement of operations of the class.

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

^(c) Annualized.

^(d) Not shown due to rounding.

				Ratios and Supplemental Data
	For the Period From		Total Return	Net Assets End of Period (in Millions)		Ratio of Expenses to Average Net Assets with Waiver		Ratio of Expenses to Average Net Assets without Waiver		Ratio of Net Investment Income (Loss) to Average Net Assets with Waiver		Ratio of Net Investment Income (Loss) to Average Net Assets without Waiver		Portfolio Turnover Rate
Class A
	4-1-02 to 3-31-03	-21.39%^b			$21		1.28%		1.66%		-0.23%		-0.61%	71.98%
	4-1-01 to 3-31-02	-2.85^b			20		1.58		1.69		-0.38		-0.49	98.59
	6-30-00^a to 3-31-01	-4.27^b			19		1.13^c		1.34^c		0.89^c		0.68^c	75.42
Class B
	4-1-02 to 3-31-03	-22.76%			$2		2.93%		3.31%		-1.87%		-2.25%	71.98%
	4-1-01 to 3-31-02	-4.13			2		2.98		3.19		-1.79		-2.00	98.59
	7-6-00^a to 3-31-01	-5.32			2		2.53^c		3.00^c		-0.60^c		-1.07^c	75.42
Class C
	4-1-02 to 3-31-03	-22.28%			$4		2.26%		2.64%		-1.20%		-1.58%	71.98%
	4-1-01 to 3-31-02	-3.60			7		2.51		2.68		-1.31		-1.48	98.59
	7-3-00^a to 3-31-01	-4.93			7		2.06^c		2.44^c		-0.08^c		-0.46^c	75.42
Class Y
	4-1-02 to 3-31-03	-21.26%			$1		1.05%		1.43%		-0.00%		-0.38%	71.98%
	4-1-01 to 3-31-02	-2.74			1		1.36		1.45		-0.20		-0.29	98.59
	7-6-00^a to 3-31-01	-4.38			--^d		1.13^c		1.34^c		1.11^c		0.90^c	75.42

IVY LIMITED-TERM BOND FUND

(formerly, W&R Limited-Term Bond Fund)

		Selected Per-Share Data
				Increase (Decrease) From Investment Operations						Less Distributions
	For the Period From	Net Asset Value Beginning of Period		Net Investment Income (Loss)		Net Gain (Loss) on Investments (Realized and Unrealized)		Total From Investment Operations		Dividends Declared From Net Investment Income		Distributions From Realized Gains		Total Distributions		Net Asset Value End of Period
Class A
	4-1-02 to 3-31-03		$10.20		$0.36		$0.25		$0.61		$(0.36)		$(0.00)		$(0.36)	$10.45
	4-1-01 to 3-31-02		10.17		0.51		0.03		0.54		(0.51)		(0.00)		(0.51)	10.20
	8-17-00^a to 3-31-01		9.84		0.36		0.33		0.69		(0.36)		(0.00)		(0.36)	10.17
Class B
	4-1-02 to 3-31-03		$10.20		$0.27		$0.25		$0.52		$(0.27)		$(0.00)		$(0.27)	$10.45
	4-1-01 to 3-31-02		10.17		0.42		0.03		0.45		(0.42)		(0.00)		(0.42)	10.20
	7-3-00^a to 3-31-01		9.80		0.36		0.37		0.73		(0.36)		(0.00)		(0.36)	10.17
Class C^g
	4-1-02 to 3-31-03		$10.20		$0.27		$ 0.25		$0.52		$(0.27)		$(0.00)		$(0.27)	$10.45
	4-1-01 to 3-31-02		10.17		0.42		0.03		0.45		(0.42)		(0.00)		(0.42)	10.20
	4-1-00 to 3-31-01		9.76		0.48		0.41		0.89		(0.48)		(0.00)		(0.48)	10.17
	4-1-99 to 3-31-00		10.16		0.47		(0.40)		0.07		(0.47)		(0.00)		(0.47)	9.76
	4-1-98 to 3-31-99		10.14		0.44		0.02		0.46		(0.44)		(0.00)		(0.44)	10.16
Class Y
	4-1-02 to 3-31-03		$10.20		$0.36		$ 0.25		$0.61		$(0.36)		$(0.00)		$(0.36)	$10.45
	4-1-01 to 3-31-02		10.17		0.51		0.03		0.54		(0.51)		(0.00)		(0.51)	10.20
	4-1-00 to 3-31-01		9.76		0.59		0.41		1.00		(0.59)		(0.00)		(0.59)	10.17
	4-1-99 to 3-31-00		10.16		0.57		(0.40)		0.17		(0.57)		(0.00)		(0.57)	9.76
	4-1-98 to 3-31-99		10.14		0.53		0.02		0.55		(0.53)		(0.00)		(0.53)	10.16

^(a)Commencement of operations of the class.

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

^(c)Not shown due to rounding.

^(d)Annualized.

^(e)Because the Fund's net assets exceeded $25 million for the entire period,there is no waiver of expenses.
Therefore, no ratio is provided.

^(f)For the fiscal year ended March 31, 2001.

			Ratios and Supplemental Data
	For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Waiver			Ratio of Net Investment Income (Loss) to Average Net Assets with Waiver	Ratio of Expenses to Average Net Assets without Waiver	Portfolio Turnover Rate		Ratio of Net Investment Income (Loss) to to Average Net Assets without Waiver
Class A
	4-1-02 to 3-31-03	6.15%^b	$40	1.09%		--%^e		3.32%		--%^e	49.41%
	4-1-01 to 3-31-02	5.42^b	6	1.04	1.19			4.76	4.61		32.97
	8-17-00^a to 3-31-01	7.01^b	--^c	0.85^d	1.09^d			5.83^d	5.59^d		16.10^f
	Class B
	4-1-02 to 3-31-03	5.18%	$5	2.01%		--%^e		2.47%		--%^e	49.41%
	4-1-01 to 3-31-02	4.52	1	1.88	2.15			4.02	3.76		32.97
	7-3-00^a to 3-31-01	7.54	--^c	1.81^d	2.33^d			4.91^d	4.39^d		16.10^f
	Class C^g
	4-1-02 to 3-31-03	5.22%	$30	1.98%		--%^e	2.59%			--%^e	49.41%
	4-1-01 to 3-31-02	4.46	20	1.94	2.21			4.04	3.77		32.97
	4-1-00 to 3-31-01	9.48	18	1.82	2.34			4.97	4.44		16.10
	4-1-99 to 3-31-00	0.73	19	1.81	2.19			4.75	4.37		37.02
	4-1-98 to 3-31-99	4.65	21	2.11		--		4.34		--	32.11
	Class Y
	4-1-02 to 3-31-03	6.14%	$2	1.09%		--%^e		3.42%		--%^e	49.41%
	4-1-01 to 3-31-02	5.41	1	1.04	1.18			4.97	4.83		32.97
	4-1-00 to 3-31-01	10.56	2	0.83	1.07			5.95	5.71		16.10
	4-1-99 to 3-31-00	1.69	1	0.69	0.84			6.03	5.88		37.02
	4-1-98 to 3-31-99	5.60	--^c	1.20		--		5.25		--	32.11

IVY MID CAP GROWTH FUND

(formerly, W&R Mid Cap Growth Fund)

		Selected Per-Share Data
				Increase (Decrease) From Investment Operations					Less Distributions
	For the Period From	Net Asset Value Beginning of Period		Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)		Total From Investment Operations		Dividends From Net Investment Income	Distributions From Realized Gains	Total Distributions	Net Asset Value End of Period
Class A
	4-1-02 to 3-31-03	$ 8.91	$(0.05)			$(2.19)		$(2.24)	$(0.00)^d	$(0.00)	$(0.00)	$6.67
	4-1-01 to 3-31-02	9.11	0.02			(0.17)		(0.15)	(0.05)	(0.00)	(0.05)	8.91
	6-30-00^a to 3-31-01	10.00	0.11			(0.65)		(0.54)	(0.06)	(0.29)	(0.35)	9.11
Class B
	4-1-02 to 3-31-03	$ 8.81	$(0.14)			$(2.18)		$(2.32)	$(0.00)	$(0.00)	$(0.00)	$6.49
	4-1-01 to 3-31-02	9.07	(0.09)			(0.17)		(0.26)	(0.00)	(0.00)	(0.00)	8.81
	7-6-00^a to 3-31-01	10.01	0.02			(0.66)		(0.64)	(0.01)	(0.29)	(0.30)	9.07
Class C
	4-1-02 to 3-31-03	$ 8.85	$(0.10)			$(2.19)		$(2.29)	$(0.00)	$(0.00)	$(0.00)	$6.56
	4-1-01 to 3-31-02	9.08	(0.05)			(0.18)		(0.23)	(0.00)	(0.00)	(0.00)	8.85
	7-3-00^a to 3-31-01	10.00	0.04			(0.66)		(0.62)	(0.01)	(0.29)	(0.30)	9.08
Class Y
	4-1-02 to 3-31-03	$ 8.91	$(0.01)			$(2.20)		$(2.21)	$(0.03)	$(0.00)	$(0.03)	$6.67
	4-1-01 to 3-31-02	9.11	0.00			(0.14)		(0.14)	(0.06)	(0.00)	(0.06)	8.91
	7-10-00^a to 3-31-01	10.23	0.11			(0.88)		(0.77)	(0.06)	(0.29)	(0.35)	9.11

^(a)Commencement of operations of the class.

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

^(c)Annualized.

^(d)Not shown due to rounding.

			Ratios and Supplemental Data
	For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Waiver	Ratio of Expenses to Average Net Assets without Waiver	Ratio of Net Investment Income (Loss) to Average Net Assets with Waiver		Ratio of Net Investment Income (Loss) to to Average Net Assets without Waiver	Portfolio Turnover Rate
Class A
	4-1-02 to 3-31-03	-25.13%^b	$14	1.17%	2.02%	-0.49%	-1.34%	35.89%
	4-1-01 to 3-31-02	-1.67^b	15	1.17	1.84	0.34	-0.33	39.05
	6-30-00^a to 3-31-01	-5.88^b	11	1.01^c	1.65^c	1.85^c	1.21^c	110.18
Class B
	4-1-02 to 3-31-03	-26.33%	$2	2.73%	3.58%	-2.05%	-2.90%	35.89%
	4-1-01 to 3-31-02	-2.87	2	2.49	3.90	-0.95	-2.37	39.05
	7-6-00^a to 3-31-01	-6.85	2	2.40^c	3.93^c	0.44^c	-1.09^c	110.18
Class C
	4-1-02 to 3-31-03	-25.88%	$3	2.18%	3.03%	-1.50%	-2.35%	35.89%
	4-1-01 to 3-31-02	-2.53	4	2.10	3.30	-0.55	-1.74	39.05
	7-3-00^a to 3-31-01	-6.58	4	1.99^c	3.26^c	0.84^c	-0.43^c	110.18
Class Y
	4-1-02 to 3-31-03	-24.86%	$--^d	0.86%	1.71%	-0.18%	-1.03%	35.89%
	4-1-01 to 3-31-02	-1.52	--^d	0.83	1.30	0.50	0.03	39.05
	7-10-00^a to 3-31-01	-7.97	--^d	1.03^c	1.68^c	1.77^c	1.11^c	110.18

IVY MONEY MARKET FUND

(formerly, W&R Money Market Fund)

	Selected Per-Share Data
	Increase From Investment Operations		Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Less Dividends Declared	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$1.00	$0.0124	$(0.0124)	$1.00
4-1-01 to 3-31-02	1.00	0.0259	(0.0259)	1.00
6-30-00^a to 3-31-01	1.00	0.0413	(0.0413)	1.00
Class B
4-1-02 to 3-31-03	$1.00	$0.0015	$(0.0015)	$1.00
4-1-01 to 3-31-02	1.00	0.0147	(0.0147)	1.00
7-12-00^a to 3-31-01	1.00	0.0299	(0.0299)	1.00
Class C
4-1-02 to 3-31-03	$1.00	$0.0019	$(0.0019)	$1.00
4-1-01 to 3-31-02	1.00	0.0157	(0.0157)	1.00
7-3-00^a to 3-31-01	1.00	0.0332	(0.0332)	1.00

^(a)Commencement of operations of the class.

^(b)Annualized.

^(c)Not shown due to rounding.

		Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Waiver	Ratio of Expenses to Average Net Assets without Waiver	Ratio of Net Investment Income (Loss) to Average Net Assets with Waiver	Ratio of Net Investment Income (Loss) to to Average Net Assets without Waiver
Class A
4-1-02 to 3-31-03	1.25%	$10	0.52%	0.92%	1.26%	0.86%
4-1-01 to 3-31-02	2.70	5	0.81	1.03	2.60	2.38
6-30-00^a to 3-31-01	4.11	5	0.92^b	1.18^b	5.49^b	5.23^b
Class B
4-1-02 to 3-31-03	0.16%	$1	1.59%	2.06%	0.14%	-0.33%
4-1-01 to 3-31-02	1.55	1	1.88	2.39	1.33	0.82
7-12-00^a to 3-31-01	2.97	--^c	2.29^b	2.94^b	4.05^b	3.41^b
Class C
4-1-02 to 3-31-03	0.20%	$10	1.56%	1.99%	0.18%	-0.25%
4-1-01 to 3-31-02	1.63	7	1.81	2.31	1.58	1.08
7-3-00^a to 3-31-01	3.32	10	1.98^b	2.54^b	4.34^b	3.78^b

IVY MUNICIPAL BOND FUND

(formerly, W&R Municipal Bond Fund)

	Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends Declared From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$10.61	$0.42	$0.49	$0.91	$(0.42)		$(0.00)	$(0.42)	$11.10
4-1-01 to 3-31-02	10.52	0.47	0.09	0.56	(0.47)		(0.00)	(0.47)	10.61
9-15-00^a to 3-31-01	10.33	0.26	0.19	0.45	(0.26)		(0.00)	(0.26)	10.52
Class B
4-1-02 to 3-31-03	$10.61	$0.33	$0.49	$0.82	$(0.33)		$(0.00)	$(0.33)	$11.10
4-1-01 to 3-31-02	10.52	0.32	0.09	0.41	(0.32)		(0.00)	(0.32)	10.61
8-8-00^a to 3-31-01	10.26	0.22	0.26	0.48	(0.22)		(0.00)	(0.22)	10.52
Class C^f
4-1-02 to 3-31-03	$10.61	$0.32	$ 0.49	$0.81	$(0.32)		$(0.00)	$(0.32)	$11.10
4-1-01 to 3-31-02	10.52	0.37	0.09	0.46	(0.37)		(0.00)	(0.37)	10.61
4-1-00 to 3-31-01	10.11	0.40	0.41	0.81	(0.40)		(0.00)	(0.40)	10.52
4-1-99 to 3-31-00	11.24	0.42	(1.11)	(0.69)	(0.42)		(0.02)	(0.44)	10.11
4-1-98 to 3-31-99	11.45	0.42	0.10	0.52	(0.42)		(0.31)	(0.73)	11.24
Class Y
4-1-02 to 3-31-03	$10.61	$0.40	$ 0.49	$0.89	$(0.40)		$(0.00)	$(0.40)	$11.10
4-1-01 to 3-31-02	10.52	0.44	0.09	0.53	(0.44)		(0.00)	(0.44)	10.61
4-1-00 to 3-31-01	10.11	0.47	0.41	0.88	(0.47)		(0.00)	(0.47)	10.52
4-1-99 to 3-31-00	11.24	0.48	(1.11)	(0.63)	(0.48)		(0.02)	(0.50)	10.11
12-30-98^a to 3-31-99	11.58	0.13	(0.03)	0.10	(0.13)		(0.31)	(0.44)	11.24

^(a)Commencement of operations of the class.

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

^(c)Annualized.

^(d)For the fiscal year ended March 31, 2001.

^(e)Not shown due to rounding.

^(g)Recommencement of operations of the class.

^(h)For the fiscal year ended March 31, 1999.

		Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to to Average Net Assets	Ratio of Net Investment Income (Loss) to Average Net Assets	Portfolio Turnover Rate
Class A
4-1-02 to 3-31-03	8.71%^b	$3	1.15%	3.79%	40.03%
4-1-01 to 3-31-02	5.38^b	2	1.17	4.37	36.41
9-15-00^a to 3-31-01	4.32^b	1	1.21^c	4.69^c	34.78^d
Class B
4-1-02 to 3-31-03	7.81%	$1	1.96%	2.98%	40.03%
4-1-01 to 3-31-02	3.97	--^e	2.44	3.09	36.41
8-8-00^a to 3-31-01	4.66	--^e	2.82^c	3.11^c	34.78^d
Class C^f
4-1-02 to 3-31-03	7.75%	$25	2.03%	2.95%	40.03%
4-1-01 to 3-31-02	4.40	24	2.13	3.44	36.41
4-1-00 to 3-31-01	8.22	26	2.13	3.94	34.78
4-1-99 to 3-31-00	-6.21	28	1.98	3.94	16.95
4-1-98 to 3-31-99	4.64	43	1.88	3.68	41.53
Class Y
4-1-02 to 3-31-03	8.52%	$--^e	1.33%	3.64%	40.03%
4-1-01 to 3-31-02	5.10	--^e	1.44	4.09	36.41
4-1-00 to 3-31-01	9.04	--^e	1.47	4.61	34.78
4-1-99 to 3-31-00	-5.69	--^e	1.40	4.52	16.95
12-30-98^g to 3-31-99	0.80	--^e	1.00^c	4.40^c	41.53^h

IVY PACIFIC OPPORTUNITIES FUND

	Selected Per-Share Data
		Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net IInvestment ncome (Loss)	Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
1-1-02 to 12-31-02	$6.72	$ 0.01^a	$(0.77)^b	$(0.76)	$(0.00)		$(0.00)	$(0.00)	$5.96
1-1-01 to 12-31-01	7.42	(0.03)^a	(0.66)^b	(0.69)	(0.01)		(0.00)	(0.01)	6.72
1-1-00 to 12-31-00	9.15	0.07	(1.74)	(1.67)	(0.06)		(0.00)	(0.06)	7.42
1-1-99 to 12-31-99	6.30	0.08	2.86	2.94	(0.08)		(0.01)	(0.09)	9.15
1-1-98 to 12-31-98	8.04	0.13	(1.78)	(1.65)	(0.09)		(0.00)	(0.09)	6.30
Class B
1-1-02 to 12-31-02	$6.56	$(0.04)^a	$(0.77)	$(0.81)	$(0.00)		$(0.00)	$(0.00)	$5.75
1-1-01 to 12-31-01	7.33	(0.08)^a	(0.68)	(0.76)	(0.01)		(0.00)	(0.01)	6.56
1-1-00 to 12-31-00	9.04	0.01	(1.71)	(1.70)	(0.01)		(0.00)	(0.01)	7.33
1-1-99 to 12-31-99	6.24	0.02	2.81	2.83	(0.02)		(0.01)	(0.03)	9.04
1-1-98 to 12-31-98	7.96	0.05	(1.73)	(1.68)	(0.04)		(0.00)	(0.04)	6.24
Class C
1-1-02 to 12-31-02	$6.55	$(0.03)^a	$(0.77)	$(0.80)	$(0.00)		$(0.00)	$(0.00)	$5.75
1-1-01 to 12-31-01	7.31	(0.08)^a	(0.67)	(0.75)	(0.01)		(0.00)	(0.01)	6.55
1-1-00 to 12-31-00	9.07	0.01	(1.71)	(1.70)	(0.06)		(0.00)	(0.06)	7.31
1-1-99 to 12-31-99	6.25	0.02	2.82	2.84	(0.01)		(0.01)	(0.02)	9.07
1-1-98 to 12-31-98	7.94	0.08	(1.75)	(1.67)	(0.02)		(0.00)	(0.02)	6.25
Advisor Class
1-1-02 to 12-31-02	$6.59	$ 0.04^a	$(0.82)	$(0.78)	$(0.00)		$(0.00)	$(0.00)	$5.81
1-1-01 to 12-31-01	7.30	(0.02)^a	(0.68)	(0.70)	(0.01)		(0.00)	(0.01)	6.59
1-1-00 to 12-31-00	9.03	0.12^a	(1.82)	(1.70)	(0.03)		(0.00)	(0.03)	7.30
1-1-99 to 12-31-99	6.27	0.04	2.86	2.90	(0.13)		(0.01)	(0.14)	9.03
2-10-98^e to 12-31-98	7.89	0.08	(1.62)	(1.54)	(0.08)		(0.00)	(0.08)	6.27

^(a)Based on average shares outstanding.

^(b)Includes redemption fees added to paid-in capital.

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

^(d) Not shown due to rounding.

^(e)Commencement of operations of the class.

^(f) Annualized.

^(g) For the fiscal year ended December 31, 1998.

				Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Assets with Reimbursement	Ratio of Expenses to Average Net Assets without Reimbursement	Ratio of Net Investment Income (Loss) to Average Net Assets with Reimbursement	Ratio of Net Investment Income (Loss) to to Average Net Assets without Reimbursement	Portfolio Turnover Rate
Class A
1-1-02 to 12-31-02	-11.31%^b,c	$ 5	2.21%	3.52%	0.20%	-1.11%	16	%
1-1-01 to 12-31-01	-9.29^b,c	6	2.21	3.57	-0.49	-1.85	82
1-1-00 to 12-31-00	-18.25^c	9	2.16	3.10	0.83	-0.11	108
1-1-99 to 12-31-99	46.72^c	13	2.19	2.84	1.01	0.36	23
1-1-98 to 12-31-98	-20.56^c	9	2.30	2.86	1.60	1.04	56
Class B
1-1-02 to 12-31-02	-12.35%	$3	2.96%	4.27	-0.55%	-1.86%	16	%
1-1-01 to 12-31-01	-10.35	4	2.95	4.31	-1.22	-2.58	82
1-1-00 to 12-31-00	-18.80	6	2.92	3.86	0.07	-0.87	108
1-1-99 to 12-31-99	45.33	8	2.97	3.62	0.24	-0.41	23
1-1-98 to 12-31-98	-21.04	6	3.08	3.64	0.82	0.26	56
Class C
1-1-02 to 12-31-02	-12.21%	$1	2.94%	4.25%	-0.53%	-1.84%	16	%
1-1-01 to 12-31-01	-10.25	1	2.90	4.26	-1.18	-2.54	82
1-1-00 to 12-31-00	-18.79	2	3.03	3.97	-0.03	-0.97	108
1-1-99 to 12-31-99	45.41	1	3.03	3.68	0.18	-0.47	23
1-1-98 to 12-31-98	-21.02	1	2.98	3.54	0.92	0.36	56
Advisor Class
1-1-02 to 12-31-02	-11.84%	$--^d	1.74%	3.05	0.67%	-0.64%	16	%
1-1-01 to 12-31-01	-9.58	--^d	2.03	3.39	-0.31	-1.67	82
1-1-00 to 12-31-00	-18.77	--^d	1.77	2.71	1.23	0.29	108
1-1-99 to 12-31-99	46.29	--^d	1.79	2.44	1.42	0.77	23
2-10-98^e to 12-31-98	-19.56	--^d	2.92^f	3.48^f	0.98^f	0.42^f	56	^g

IVY SCIENCE AND TECHNOLOGY FUND

(formerly, W&R Science and Technology Fund)

	Selected Per-Share Data
			Increase (Decrease) From Investment Operations				Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)		Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$18.19	$(0.32)		$(3.70)	$(4.02)	$(0.00)		$(0.00)	$(0.00)	$14.17
4-1-01 to 3-31-02	17.93	(0.45)		0.73	0.28	(0.00)		(0.02)	(0.02)	18.19
7-3-00^a to 3-31-01	34.91	0.02		(9.35)	(9.33)	(0.00)		(7.65)	(7.65)	17.93
Class B
4-1-02 to 3-31-03	$17.88	$(0.34)		$(3.77)	$(4.11)	$(0.00)		$(0.00)	$(0.00)	$13.77
4-1-01 to 3-31-02	17.80	(0.38)		0.48	0.10	(0.00)		(0.02)	(0.02)	17.88
7-3-00^a to 3-31-01	34.91	(0.06)		(9.40)	(9.46)	(0.00)		(7.65)	(7.65)	17.80
Class C^e
4-1-02 to 3-31-03	$17.97	$(0.25)		$ (3.84)	$ (4.09)	$(0.00)		$(0.00)	$(0.00)	$13.88
4-1-01 to 3-31-02	17.83	(0.24)		0.40	0.16	(0.00)		(0.02)	(0.02)	17.97
4-1-00 to 3-31-01	45.03	(0.12)		(19.43)	(19.55)	(0.00)		(7.65)	(7.65)	17.83
4-1-99 to 3-31-00	17.45	(0.95)		28.77	27.82	(0.00)		(0.24)	(0.24)	45.03
4-1-98 to 3-31-99	12.01	(0.09)		5.53	5.44	(0.00)		(0.00)	(0.00)	17.45
Class Y
4-1-02 to 3-31-03	$18.54	$(0.26)		$ (3.77)	$ (4.03)	$(0.00)		$(0.00)	$(0.00)	$14.51
4-1-01 to 3-31-02	18.21	(0.51)		0.86	0.35	(0.00)		(0.02)	(0.02)	18.54
4-1-00 to 3-31-01	45.36	(0.01)		(19.49)	(19.50)	(0.00)		(7.65)	(7.65)	18.21
4-1-99 to 3-31-00	17.65	(6.09)		34.04	27.95	(0.00)		(0.24)	(0.24)	45.36
6-9-98^a to 3-31-99	12.20	0.01		5.44	5.45	(0.00)		(0.00)	(0.00)	17.65

^(a)Commencement of operations of the class.

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

^(c)Annualized.

^(d)For the fiscal year ended March 31, 2001.

^(f)Not shown due to rounding.

^(g)For the fiscal year ended March 31, 1999.

			Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to to Average Net Assets	Ratio of Net Investment Income (Loss) to Average Net Assets	Portfolio Turnover Rate
Class A
4-1-02 to 3-31-03	-22.10%^b	$14	1.79%	-0.92%	74.48%
4-1-01 to 3-31-02	1.56^b	12	1.75	-0.76	90.92
7-3-00^a to 3-31-01	-31.95^b	6	1.70^c	0.26^c	111.25^d
Class B
4-1-02 to 3-31-03	-22.99%	$4	3.00%	-2.12%	74.48%
4-1-01 to 3-31-02	0.56	4	2.75	-1.73	90.92
7-3-00^a to 3-31-01	-32.37	3	2.53^c	-0.55^c	111.25^d
Class C^e
4-1-02 to 3-31-03	-22.76%	$ 70	2.67%	-1.77%	74.48%
4-1-01 to 3-31-02	0.89	112	2.45	-1.40	90.92
4-1-00 to 3-31-01	-47.49	134	2.27	-0.44	111.25
4-1-99 to 3-31-00	159.75	283	2.20	-1.68	44.19
4-1-98 to 3-31-99	45.30	44	2.57	-1.26	51.00
Class Y
4-1-02 to 3-31-03	-21.74%	$3	1.41%	-0.53%	74.48%
4-1-01 to 3-31-02	1.92	3	1.39	-0.43	90.92
4-1-00 to 3-31-01	-47.00	1	1.35	0.47	111.25
4-1-99 to 3-31-00	158.67	2	1.36	-0.96	44.19
6-9-98^a to 3-31-99	44.67	--^f	0.62^c	0.54^c	51.00^g

IVY SMALL CAP GROWTH FUND

(formerly, W&R Small Cap Growth Fund^a)

					Selected Per-Share Data
			Increase (Decrease) From Investment Operations			Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)		Net Gain (Loss) on Investments (Realized and Unrealized)	Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains		Total Distributions	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$10.59	$(0.23)		$(2.11)	$(2.34)	$(0.00)		$(0.00)	$(0.00)	$ 8.25
4-1-01 to 3-31-02	9.43	(0.59)		1.75	1.16	(0.00)		(0.00)	(0.00)	10.59
7-3-00^b to 3-31-01	19.64	(0.02)		(4.74)	(4.76)	(0.00)		(5.45)	(5.45)	9.43
Class B
4-1-02 to 3-31-03	$10.40	$(0.21)		$(2.18)	$(2.39)	$(0.00)		$(0.00)	$(0.00)	$ 8.01
4-1-01 to 3-31-02	9.36	(0.26)		1.30	1.04	(0.00)		(0.00)	(0.00)	10.40
7-6-00^b to 3-31-01	19.26	(0.06)		(4.39)	(4.45)	(0.00)		(5.45)	(5.45)	9.36
Class C^f,g
4-1-02 to 3-31-03	$10.44	$(0.16)		$(2.21)	$(2.37)	$(0.00)		$(0.00)	$(0.00)	$ 8.07
4-1-01 to 3-31-02	9.38	(0.16)		1.22	1.06	(0.00)		(0.00)	(0.00)	10.44
4-1-00 to 3-31-01	21.64	(0.10)		(6.71)	(6.81)	(0.00)		(5.45)	(5.45)	9.38
4-1-99 to 3-31-00	14.74	(0.18)		10.22	10.04	(0.00)		(3.14)	(3.14)	21.64
4-1-98 to 3-31-99	14.29	(0.11)		2.91	2.80	(0.00)		(2.35)	(2.35)	14.74
Class Y^f
4-1-02 to 3-31-03	$11.39	$(0.11)		$(2.39)	$(2.50)	$(0.00)		$(0.00)	$(0.00)	$ 8.89
4-1-01 to 3-31-02	10.14	(0.34)		1.59	1.25	(0.00)		(0.00)	(0.00)	11.39
4-1-00 to 3-31-01	22.65	(0.20)		(6.86)	(7.06)	(0.00)		(5.45)	(5.45)	10.14
4-1-99 to 3-31-00	15.21	(0.15)		10.73	10.58	(0.00)		(3.14)	(3.14)	22.65
4-1-98 to 3-31-99	14.55	0.00		3.01	3.01	(0.00)		(2.35)	(2.35)	15.21

^(a)Small Cap Growth Fund (formerly Growth Fund) changed its name effective June 30, 2000.

^(b) Commencement of operations of the class.

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

^(d)Annualized.

^(e)For the fiscal year ended March 31, 2001.

^(f)Per-share amounts have been adjusted retroactively to reflect the 100% stock dividend effected June 26, 1998.

^(g) The financial data shown for a Class C share are based on the financial data for a share of the fund's prior Class B.
On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced
operations on October 4, 1999. Per-share amounts have been adjusted retroactively to reflect the 100% stock
dividend effected June 26, 1998.

			Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to to Average Net Assets	Ratio of INet Investment ncome (Loss) to Average Net Assets	Portfolio Turnover Rate
Class A
4-1-02 to 3-31-03	-22.10%^c	$20	1.54%	-1.22%	30.63%
4-1-01 to 3-31-02	12.30^c	16	1.39	-0.93	28.77
7-3-00^b to 3-31-01	-28.30^c	4	1.49^d	-0.39^d	47.85^e
Class B
4-1-02 to 3-31-03	-22.98%	$7	2.64%	-2.31%	30.63%
4-1-01 to 3-31-02	11.11	8	2.43	-1.94	28.77
7-6-00^b to 3-31-01	-27.29	5	2.31^d	-1.18^d	47.85^e
Class C^f,g
4-1-02 to 3-31-03	-22.70%	$273	2.31%	-1.98%	30.63%
4-1-01 to 3-31-02	11.30	435	2.20	-1.70	28.77
4-1-00 to 3-31-01	-35.17	459	2.12	-0.81	47.85
4-1-99 to 3-31-00	73.38	801	2.11	-0.90	82.24
4-1-98 to 3-31-99	21.61	425	2.10	-0.90	51.41
Class Y^f
4-1-02 to 3-31-03	-21.95%	$42	1.33%	-1.00%	30.63%
4-1-01 to 3-31-02	12.33	48	1.31	-0.83	28.77
4-1-00 to 3-31-01	-34.67	21	1.30	-0.02	47.85
4-1-99 to 3-31-00	74.71	17	1.30	-0.09	82.24
4-1-98 to 3-31-99	22.73	8	1.18	0.08	51.41

IVY TAX-MANAGED EQUITY FUND

(formerly, W&R Tax-Managed Equity Fund)

					Selected Per-Share Data

			Increase (Decrease) From Investment Operations				Less Distributions
For the Period From	Net Asset Value Beginning of Period	Net Investment Income (Loss)		Net Gain (Loss) on Investments (Realized and Unrealized)		Total From Investment Operations	Dividends From Net Investment Income	Distributions From Realized Gains	Total Distributions	Net Asset Value End of Period
Class A
4-1-02 to 3-31-03	$ 6.43	$(0.03)		$(0.67)		$(0.70)	$(0.00)	$(0.00)	$(0.00)	$5.73
4-1-01 to 3-31-02	7.19	(0.08)		(0.68)		(0.76)	(0.00)	(0.00)	(0.00)	6.43
6-30-00^a to 3-31-01	10.00	(0.00)		(2.81)		(2.81)	(0.00)	(0.00)	(0.00)	7.19
Class B
4-1-02 to 3-31-03	$ 6.31	$(0.11)		$(0.62)		$(0.73)	$(0.00)	$(0.00)	$(0.00)	$5.58
4-1-01 to 3-31-02	7.12	(0.13)		(0.68)		(0.81)	(0.00)	(0.00)	(0.00)	6.31
7-13-00^a to 3-31-01	10.06	(0.05)		(2.89)		(2.94)	(0.00)	(0.00)	(0.00)	7.12
Class C
4-1-02 to 3-31-03	$ 6.32	$(0.12)		$(0.63)		$(0.75)	$(0.00)	$(0.00)	$(0.00)	$5.57
4-1-01 to 3-31-02	7.13	(0.19)		(0.62)		(0.81)	(0.00)	(0.00)	(0.00)	6.32
7-6-00^a to 3-31-01	10.01	(0.06)		(2.82)		(2.88)	(0.00)	(0.00)	(0.00)	7.13

^(a) Commencement of operations of the class.

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

^(c)Annualized.

^(d)Not shown due to rounding.

				Ratios and Supplemental Data
For the Period From	Total Return	Net Assets End of Period (in Millions)	Ratio of Expenses to Average Net Waiver	Ratio of Expenses to Average Net Assets without Waiver	Ratio of Net Investment Income (Loss) to Average Net Assets with Waiver	Ratio of Net Investment Income (Loss) to to Average Net Assets without Waiver	Portfolio Turnover Rate
Class A
4-1-02 to 3-31-03	-10.89%^b	$4	1.50%	2.15%	-0.67%	-1.32%	145.24%
4-1-01 to 3-31-02	-10.57^b	4	1.62	2.17	-0.92	-1.46	95.60
6-30-00^a to 3-31-01	-28.10^b	4	1.27^c	1.80^c	-0.09^c	-0.62^c	73.46
Class B
4-1-02 to 3-31-03	-11.57%	$--^d	2.47%	3.12%	-1.63%	-2.28%	145.24%
4-1-01 to 3-31-02	-11.38	--^d	2.56	3.42	-1.86	-2.71	95.60
7-13-00^a to 3-31-01	-29.22	--^d	2.45^c	3.48^c	-1.74^c	-2.77^c	73.46
Class C
4-1-02 to 3-31-03	-11.87%	$1	2.64%	3.29%	-1.81%	-2.46%	145.24%
4-1-01 to 3-31-02	-11.36	1	2.76	3.69	-2.07	-2.99	95.60
7-6-00^a to 3-31-01	-28.77	--^d	2.35^c	3.34^c	-1.52^c	-2.50^c	73.46

This page for your notes and calculations.

IVY FUNDS

Custodian
UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri 64106

Legal Counsel
Bell, Boyd & Lloyd LLC
Three First National Plaza
70 West Madison Street
Suite 3300
Chicago, Illinois 60602-4207

Independent Auditors
Deloitte & Touche llp
1010 Grand Boulevard
Kansas City, Missouri
64106-2232

Investment Manager
Waddell & Reed Ivy Investment Company
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
913-236-2000
800-777-6472

Distributor
Ivy Funds Distributor, Inc.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
913-236-2000
800-777-6472

Transfer Agent
Waddell & Reed
Services Company
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
913-236-2000
800-777-6472

Accounting Services Agent
Waddell & Reed
Services Company
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
913-236-2000
800-777-6472

IVY FUNDS

You can get more information about each Fund in the --

* Statement of Additional Information (SAI), which contains detailed information about a Fund, particularly the investment policies and practices. You may not be aware of important information about a Fund unless you read both the Prospectus and the SAI. The current SAI is on file with the Securities and Exchange Commission (SEC) and it is incorporated into this Prospectus by reference (that is, the SAI is legally part of the Prospectus).

* Annual and Semiannual Reports to Shareholders, which detail a Fund's actual investments and include financial statements as of the close of the particular annual or semiannual period. The annual report also contains a discussion of the market conditions and investment strategies that significantly affected a Fund's performance during the year covered by the report.

To request a copy of the Funds' current SAI or copies of the most recent Annual and Semiannual reports, without charge, or for other inquiries, contact the Fund or Ivy Funds Disributor, Inc. at the address and telephone number below. Copies of the SAI, Annual and/or Semiannual reports may also be requested via e-mail at request@waddell.com.

Information about the Funds (including the current SAI and most recent Annual and Semiannual Reports) is available from the SEC's web site at http://www.sec.gov and may also be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov or from the SEC's Public Reference Room in Washington, D.C. You can find out about the operation of the Public Reference Room and applicable copying charges by calling 202-942-8090.

The Funds' SEC file numbers are as follows:

Ivy Funds, Inc. 811-6569

Ivy Fund: 811-01028

IVY FUNDS DISTRIBUTOR, INC.

6300 Lamar Avenue

P. O. Box 29217

Shawnee Mission, Kansas 66201-9217

913-236-2000

800-777-5472

WRP3300 (7-03) 526863

IVY FUNDS, INC.

6300 Lamar Avenue

P. O. Box 29217

Shawnee Mission, Kansas 66201-9217

913-236-2000

800-777-6472

July 1, 2003

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information (SAI) is not a prospectus. Investors should read this SAI in conjunction with the prospectus (Prospectus) for Ivy Funds, Inc. (the Funds) dated July 1, 2003, which may be obtained from the Funds or its principal underwriter and distributor, Ivy Funds Distributor, Inc. (IFDI), at the address or telephone number shown above.

The Financial Statements, including notes thereto, are incorporated herein by reference. They are contained in the Funds' Annual Report to Shareholders, dated March 31, 2003, which may also be obtained from the Funds or IFDI at the address or telephone number above.

TABLE OF CONTENTS


	Fund History
	The Fund, Its Investments, Related Risks and Limitations
	Management of the Fund
	Control Persons and Principal Holders of Securities
	Investment Advisory and Other Services
	Brokerage Allocation and Other Practices
	Capital Stock
	Purchase, Redemption and Pricing of Shares
	Taxation of the Fund
	Underwriter
	Performance Information
	Financial Statements
	Appendix A

Ivy Funds, Inc. was organized as a Maryland corporation on January 29, 1992. Prior to June 30, 2003, the corporation was known as W&R Funds, Inc.^SM Prior to June 30, 2000, it was known as Waddell & Reed Funds, Inc.^SM Ivy Funds, Inc. is comprised of twelve series: Ivy Asset Strategy Fund, Ivy Core Equity Fund, Ivy High Income Fund, Ivy International Growth Fund, Ivy Large Cap Growth Fund, Ivy Limited-Term Bond Fund, Ivy Mid Cap Growth Fund, Ivy Money Market Fund, Ivy Municipal Bond Fund, Ivy Science and Technology Fund, Ivy Small Cap Growth Fund and Ivy Tax-Managed Equity Fund. Prior to June 30, 2003, the Funds were known as W&R Asset Strategy Fund, W&R Core Equity Fund, W&R High Income Fund, W&R International Growth Fund, W&R Large Cap Growth Fund, W&R Limited-Term Bond Fund, W&R Mid Cap Growth Fund, W&R Money Market Fund, W&R Municipal Bond Fund, W&R Science and Technology Fund, W&R Small Cap Growth Fund and W&R Tax-Managed Equity Fund, respectively. Prior to October 2, 2000, Core Equity Fund was known as Total Return Fund. Prior to June 30, 2000, Small Cap Growth Fund was known as Growth Fund.

THE FUND, ITS INVESTMENTS, RELATED RISKS AND LIMITATIONS

Ivy Asset Strategy Fund, Ivy Core Equity Fund, Ivy High Income Fund, Ivy International Growth Fund, Ivy Large Cap Growth Fund, Ivy Limited-Term Bond Fund, Ivy Mid Cap Growth Fund, Ivy Money Market Fund, Ivy Municipal Bond Fund, Ivy Science and Technology Fund, Ivy Small Cap Growth Fund and Ivy Tax-Managed Equity Fund is each a mutual fund; an investment that pools shareholders' money and invests it toward a specified goal. Each Fund is a series of Ivy Funds, Inc., an open-ended diversified management investment company.

This SAI supplements the information contained in the Prospectus and contains more detailed information about the investment strategies and policies the Funds' investment manager, Waddell & Reed Ivy Investment Company (WRIICO), may employ and the types of instruments in which a Fund may invest, in pursuit of the Fund's goal(s). A summary of the risks associated with these instrument types and investment practices is included as well.

WRIICO might not buy all of these instruments or use all of these techniques, or use them to the full extent permitted by a Fund's investment policies and restrictions. WRIICO buys an instrument or uses a technique only if it believes that doing so will help a Fund achieve its goal(s). See Investment Restrictions and Limitations for a listing of the fundamental and non-fundamental, or operating, investment restrictions and policies of each Fund.

Ivy Asset Strategy Fund

Ivy Asset Strategy Fund allocates its assets among the following classes, or types, of investments:

The short-term class includes all types of domestic and foreign securities and money market instruments with remaining maturities of three years or less. WRIICO will seek to maximize total return within the short-term asset class by taking advantage of yield differentials between different instruments, issuers, and currencies. Short-term instruments may include corporate debt securities, such as commercial paper and notes; government securities issued by U.S. or foreign governments or their agencies or instrumentalities; bank deposits and other financial institution obligations; repurchase agreements involving any type of security in which the Fund may invest; and other similar short-term instruments. These instruments may be denominated in U.S. dollars or a foreign currency.

The bond class includes all varieties of domestic and foreign fixed-income securities with remaining maturities greater than three years. WRIICO seeks to maximize total return within the bond class by adjusting Ivy Asset Strategy Fund's investments in securities with different credit qualities, maturities, and coupon or dividend rates, and by seeking to take advantage of yield differentials between securities. Securities in this class may include bonds, notes, adjustable-rate preferred stocks, convertible bonds, mortgage-related and asset-backed securities, domestic and foreign government and government agency securities, zero coupon bonds, and other intermediate and long-term securities. As with the short-term class, these securities may be denominated in U.S. dollars or a foreign currency. Ivy Asset Strategy Fund may not invest more than 35% of its total assets in lower quality, high-yielding debt securities.

The stock class includes domestic and foreign equity securities of all types (other than adjustable rate preferred stocks, which are included in the bond class). WRIICO seeks to maximize total return within this asset class by allocating assets to industry sectors expected to benefit from major trends, and to individual stocks that WRIICO believes to have superior growth potential. Securities in the stock class may include common stocks, fixed-rate preferred stocks (including convertible preferred stocks), warrants, rights, depositary receipts, securities of investment companies, and other equity securities issued by companies of any size, located anywhere in the world.

WRIICO seeks to take advantage of yield differentials by considering the purchase or sale of instruments when differentials on spreads between various grades and maturities of such instruments approach extreme levels relative to long-term norms.

In making asset allocation decisions, WRIICO typically evaluates projections of risk, market conditions, economic conditions, volatility, yields, and returns.

The ability of Ivy Asset Strategy Fund to purchase and hold precious metals such as gold, silver and platinum may allow it to benefit from a potential increase in the price of precious metals or stability in the price of such metals at a time when the value of securities may be declining. For example, during periods of declining stock prices, the price of gold may increase or remain stable, while the value of the stock market may be subject to a general decline.

Precious metal prices are affected by various factors, such as economic conditions, political events and monetary policies. As a result, the price of gold, silver or platinum may fluctuate widely. The sole source of return to Ivy Asset Strategy Fund from such investments will be gains realized on sales; a negative return will be realized if the metal is sold at a loss. Investments in precious metals do not provide a yield. Ivy Asset Strategy Fund's direct investment in precious metals is limited by tax considerations. See Taxes.

Ivy High Income Fund

Ivy High Income Fund may invest in certain high-yield, high-risk, non-investment grade debt securities rated BB or below by Standard & Poor's (S&P) or Ba or below by Moody's Corporation (Moody's) or, if unrated, judged by WRIICO to be of equivalent quality (commonly referred to as junk bonds). The market for such securities may differ from that for investment grade debt securities. See the discussion below for information about the risks associated with non-investment grade debt securities. See Appendix A to this SAI for a more complete description of bond ratings.

Ivy Money Market Fund

Ivy Money Market Fund may only invest in the money market obligations and instruments listed below. In addition, as a money market fund, and in order for the Fund to use the amortized cost method of valuing its portfolio securities, the Fund must comply with Rule 2a-7 (Rule 2a-7) under the Investment Company Act of 1940, as amended (1940 Act). Under Rule 2a-7, investments are limited to those that are U.S. dollar denominated and that are rated in one of the two highest rating categories by the requisite nationally recognized statistical rating organization (NRSRO) or are comparable unrated securities. See Appendix A to this SAI for a description of some of these ratings. In addition, Rule 2a-7 limits investments in securities of any one issuer (except U.S. Government securities) to no more than 5% of the Fund's total assets. Investments in securities rated in the second highest rating category by the requisite NRSRO or comparable unrated securities are limited to no more than 5% of the Fund's total assets, with investment in such securities of any one issuer (except U.S. Government securities) being limited to the greater of one percent of the Fund's total assets or $1,000,000. In accordance with Rule 2a-7, the Fund may invest in securities with a remaining maturity of not more than 397 calendar days. See further discussion under Determination of Offering Price.

(1) U.S. Government Securities: See the section entitled U.S. Government Securities.

(2) Bank Obligations and Instruments Secured Thereby: Subject to the limitations described above, time deposits, certificates of deposit, bankers' acceptances and other bank obligations if they are obligations of a bank subject to regulation by the U.S. Government (including obligations issued by foreign branches of these banks) or obligations issued by a foreign bank having total assets equal to at least U.S. $500,000,000, and instruments secured by any such obligation. A bank includes commercial banks and savings and loan associations. Time deposits are monies kept on deposit with U.S. banks or other U.S. financial institutions for a stated period of time at a fixed rate of interest. At present, bank time deposits are not considered by the Board of Directors or WRIICO to be readily marketable. There may be penalties for the early withdrawal of such time deposits, in which case, the yield of these investments will be reduced.

(3) Commercial Paper Obligations Including Variable Rate Master Demand Notes: Commercial paper rated as described above. A variable rate master demand note represents a purchasing/selling arrangement of short-term promissory notes under a letter agreement between a commercial paper issuer and an institutional investor.

(4) Corporate Debt Obligations: Corporate debt obligations if they are rated as described above.

(5) Canadian Government Obligations: Obligations of, or obligations guaranteed by, the Government of Canada, a Province of Canada or any agency, instrumentality or political subdivision of that Government or any Province. The Fund will not invest in Canadian Government obligations if more than 10% of the value of its total assets would then be so invested, subject to the diversification requirements applicable to the Money Market Fund.

(6) Certain Other Obligations: Obligations other than those listed in (1) through (5) (including municipal obligations) only if any such other obligation is guaranteed as to principal and interest by either a bank or a corporation in whose securities the Fund is eligible to invest under Rule 2a-7.

The value of the obligations and instruments in which the Fund invests will fluctuate depending in large part on changes in prevailing interest rates. If these rates go up after the Fund buys an obligation or instrument, its value may go down; if these rates go down, its value may go up. Changes in interest rates will be more quickly reflected in the yield of a portfolio of short-term obligations than in the yield of a portfolio of long-term obligations.

Securities - General

The main types of securities in which the Funds may invest include common stocks, preferred stocks, debt securities and convertible securities. Although common stocks and other equity securities have a history of long-term growth in value, their prices tend to fluctuate in the short term, particularly those of smaller companies. A Fund (other than Ivy Money Market Fund) may invest in preferred stocks rated in any rating category of the established rating services or, if unrated, judged by WRIICO to be of equivalent quality, subject to each Fund's limitations. Debt securities have varying levels of sensitivity to changes in interest rates and varying degrees of quality. As a general matter, however, when interest rates rise, the values of fixed-rate debt securities fall and, conversely, when interest rates fall, the values of fixed-rate debt securities rise. Similarly, long-term bonds are generally more sensitive to interest rate changes than short-term bonds.

The Fund may invest in convertible securities. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or different issuer within a particular period of time at a specified price or formula. Convertible securities generally have higher yields than common stocks of the same or similar issuers, but lower yields than comparable nonconvertible securities, are less subject to fluctuation in value than the underlying stock because they have fixed income characteristics, and provide the potential for capital appreciation if the market price of the underlying common stock increases.

The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on the convertible security's investment value. A convertible security may be subject to redemption at the option of the issuer at a price established in the security's offering document. If a convertible security held by the Fund is called for redemption, the Fund will be required to convert it into the underlying stock, sell it to a third party or permit the issuer to redeem the security. Convertible securities are typically issued by smaller capitalized companies whose stock prices may be volatile. Thus, any of these actions could have an adverse effect on the Fund's ability to achieve its investment objectives.

The Fund may also invest in a type of convertible preferred stock that pays a cumulative, fixed dividend that is senior to, and expected to be in excess of, the dividends paid on the common stock of the issuer. At the mandatory conversion date, the preferred stock is converted into not more than one share of the issuer's common stock at the call price that was established at the time the preferred stock was issued. If the price per share of the related common stock on the mandatory conversion date is less than the call price, the holder of the preferred stock will nonetheless receive only one share of common stock for each share of preferred stock (plus cash in the amount of any accrued but unpaid dividends). At any time prior to the mandatory conversion date, the issuer may redeem the preferred stock upon issuing to the holder a number of shares of common stock equal to the call price of the preferred stock in effect on the date of redemption divided by the market value of the common stock, with such market value typically determined one or two trading days prior to the date notice of redemption is given. The issuer must also pay the holder of the preferred stock cash in an amount equal to any accrued but unpaid dividends on the preferred stock. This convertible preferred stock is subject to the same market risk as the common stock of the issuer, except to the extent that such risk is mitigated by the higher dividend paid on the preferred stock. The opportunity for equity appreciation afforded by an investment in such convertible preferred stock, however, is limited, because in the event the market value of the issuer's common stock increases to or above the call price of the preferred stock, the issuer may (and would be expected to) call the preferred stock for redemption at the call price. This convertible preferred stock is also subject to credit risk with regard to the ability of the issuer to pay the dividend established upon issuance of the preferred stock. Generally, however, the market value of the convertible preferred stock is less volatile than the related common stock of the issuer.

Lower quality debt securities (commonly called junk bonds) are considered to be speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness. The market prices of these securities may fluctuate more than high-quality securities and may decline significantly in periods of general economic difficulty. The market for lower-rated debt securities may be thinner and less active than that for higher-rated debt securities, which can adversely affect the prices at which the former are sold. Adverse publicity and changing investor perceptions may decrease the values and liquidity of lower-rated debt securities, especially in a thinly traded market. Valuation becomes more difficult and judgment plays a greater role in valuing lower-rated debt securities than with respect to securities for which more external sources of quotations and last sale information are available. Since the risk of default is higher for lower-rated debt securities, WRIICO's research and credit analysis are an especially important part of managing securities of this type held by a Fund. WRIICO continuously monitors the issuers of lower-rated debt securities in a Fund's portfolio in an attempt to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments. A Fund may choose, at its expense or in conjunction with others, to pursue litigation or otherwise exercise its rights as a security holder to seek to protect the interests of security holders if it determines this to be in the best interest of the Fund's shareholders.

A Fund (other than Ivy Money Market Fund) may invest in debt securities rated in any rating category of the established rating services, subject to each Fund's limitations, including securities rated in the lowest category (securities rated D by S&P and C by Moody's). Debt securities rated D by S&P or C by Moody's are in payment default or are regarded as having extremely poor prospects of ever attaining any real investment standing. Debt securities rated at least BBB by S&P or Baa by Moody's are considered to be investment grade debt securities; however, securities rated BBB or Baa may have speculative characteristics. In addition, a Fund will treat unrated securities judged by WRIICO to be of equivalent quality to a rated security as having that rating.

While credit ratings are only one factor WRIICO relies on in evaluating high-yield debt securities, certain risks are associated with credit ratings. Credit ratings evaluate the safety of principal and interest payments, not market value risk. Credit ratings for individual securities may change from time to time, and a Fund may retain a portfolio security whose rating has been changed.

Each of the Funds (other than Ivy Money Market Fund and Ivy Municipal Bond Fund) may purchase debt securities whose principal amount at maturity is dependent upon the performance of a specified equity security. The issuer of such debt securities, typically an investment banking firm, is unaffiliated with the issuer of the equity security to whose performance the debt security is linked. Equity-linked debt securities differ from ordinary debt securities in that the principal amount received at maturity is not fixed, but is based on the price of the linked equity security at the time the debt security matures. The performance of equity-linked debt securities depends primarily on the performance of the linked equity security and may also be influenced by interest rate changes. In addition, although the debt securities are typically adjusted for diluting events such as stock splits, stock dividends and certain other events affecting the market value of the linked equity security, the debt securities are not adjusted for subsequent issuances of the linked equity security for cash. Such an issuance could adversely affect the price of the debt security. In addition to the equity risk relating to the linked equity security, such debt securities are also subject to credit risk with regard to the issuer of the debt security. In general, however, such debt securities are less volatile than the equity securities to which they are linked.

Each Fund (other than Ivy Money Market Fund and Ivy Municipal Bond Fund) may invest in convertible securities. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or different issuer within a particular period of time at a specified price or formula. Convertible securities generally have higher yields than common stocks of the same or similar issuers, but lower yields than comparable nonconvertible securities, are less subject to fluctuation in value than the underlying stock because they have fixed income characteristics, and provide the potential for capital appreciation if the market price of the underlying common stock increases.

Each of the Funds (other than Ivy Money Market Fund and Ivy Municipal Bond Fund) may also invest in a type of convertible preferred stock that pays a cumulative, fixed dividend that is senior to, and expected to be in excess of, the dividends paid on the common stock of the issuer. At the mandatory conversion date, the preferred stock is converted into not more than one share of the issuer's common stock at the call price that was established at the time the preferred stock was issued. If the price per share of the related common stock on the mandatory conversion date is less than the call price, the holder of the preferred stock will nonetheless receive only one share of common stock for each share of preferred stock (plus cash in the amount of any accrued but unpaid dividends). At any time prior to the mandatory conversion date, the issuer may redeem the preferred stock upon issuing to the holder a number of shares of common stock equal to the call price of the preferred stock in effect on the date of redemption divided by the market value of the common stock, with such market value typically determined one or two trading days prior to the date notice of redemption is given. The issuer must also pay the holder of the preferred stock cash in an amount equal to any accrued but unpaid dividends on the preferred stock. This convertible preferred stock is subject to the same market risk as the common stock of the issuer, except to the extent that such risk is mitigated by the higher dividend paid on the preferred stock. The opportunity for equity appreciation afforded by an investment in such convertible preferred stock, however, is limited, because in the event the market value of the issuer's common stock increases to or above the call price of the preferred stock, the issuer may (and would be expected to) call the preferred stock for redemption at the call price. This convertible preferred stock is also subject to credit risk with regard to the ability of the issuer to pay the dividend established upon issuance of the preferred stock. Generally, convertible preferred stock is less volatile than the related common stock of the issuer.

Specific Securities and Investment Practices

Bank Deposits

Among the debt securities in which the Funds may invest are deposits in banks (represented by certificates of deposit or other evidence of deposit issued by such banks) of varying maturities. The Federal Deposit Insurance Corporation insures the principal of such deposits, currently to the extent of $100,000 per bank. Bank deposits are not marketable, and a Fund may invest in them only within the limit mentioned under Illiquid Investments unless such obligations are payable at principal amount plus accrued interest on demand or within seven days after demand.

Borrowing

The Funds, other than Ivy Mid Cap Growth Fund, may borrow money, but only from banks and for temporary, emergency or extraordinary purposes. If a Fund does borrow money, its share price may be subject to greater fluctuation until the borrowing is paid off.

From time to time Ivy Mid Cap Growth Fund may increase its ownership of securities by borrowing on an unsecured basis at fixed rates of interest and investing the borrowed funds. Any such borrowing will be made only from banks and only to the extent that the value of the Fund's assets, less its liabilities other than borrowings, is equal to at least 300% of all borrowings including the proposed borrowing. This 300% limit is contained in the 1940 Act. If the value of the Fund's assets so computed should fail to meet the 300% asset coverage requirement, the Fund is required within three days to reduce its bank debt to the extent necessary to meet that requirement and may have to sell a portion of its investments at a time when independent investment judgment would not dictate such sale.

Interest on money borrowed is an expense that Ivy Mid Cap Growth Fund would not otherwise incur, so that it may have little or no net investment income during periods of substantial borrowings. Borrowing for investment increases both investment opportunity and risk. Since substantially all of the Fund's assets may fluctuate in value, but borrowing obligations are fixed, the net asset value per share correspondingly will tend to increase and decrease more when the portfolio assets increase or decrease in value than would otherwise be the case. This factor is known as leverage.

Foreign Securities and Currencies

The Funds (other than Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund) may invest in the securities of foreign issuers, including depositary receipts. In general, depositary receipts are securities convertible into and evidencing ownership of securities of foreign corporate issuers, although depositary receipts may not necessarily be denominated in the same currency as the securities into which they may be converted. American depositary receipts, in registered form, are U. S. dollar-denominated receipts typically issued by a U.S. bank or trust company evidencing ownership of the underlying securities. International depositary receipts and European depositary receipts, in bearer form, are foreign receipts evidencing a similar arrangement and are designed for use by non-U.S. investors and traders in non-U.S. markets. Global depositary receipts are designed to facilitate the trading of securities of foreign issuers by U.S. and non-U.S. investors and traders.

WRIICO believes that there are investment opportunities as well as risks by investing in foreign securities. Individual foreign economies may differ favorably or unfavorably from the U.S. economy or each other in such matters as gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. Individual foreign companies may also differ favorably or unfavorably from domestic companies in the same industry. Foreign currencies may be stronger or weaker than the U.S. dollar or than each other. Thus, the value of securities denominated in or indexed to foreign currencies, and the value of dividends and interest from such securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. WRIICO believes that a Fund's ability to invest its assets abroad might enable it to take advantage of these differences and strengths where they are favorable.

However, foreign securities and foreign currencies involve additional significant risks, apart from the risks inherent in U.S. investments. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices on some foreign markets can be highly volatile. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable information regarding an issuer's financial conditions and operations. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions and custodial costs, are generally higher than for U.S. investments.

Foreign markets may offer less protection to investors than U.S. markets. Foreign issuers, brokers and securities markets may be subject to less government supervision. Foreign securities trading practices, including those involving the release of assets in advance of payment, may involve increased risks in the event of a failed trade or the insolvency of a broker-dealer, and may involve substantial delays. It may also be difficult to enforce legal rights in foreign countries.

Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars, or other government intervention. There may be greater possibility of default by foreign governments or government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic, or social instability, military action or unrest, or adverse diplomatic developments. There is no assurance that WRIICO will be able to anticipate these potential events or counter their effects.

The considerations noted above generally are intensified in developing countries. A developing country is a nation that, in WRIICO's opinion, is likely to experience long-term gross domestic product growth above that expected to occur in the United States, the United Kingdom, France, Germany, Italy, Japan and Canada. Developing countries may have relatively unstable governments, economies based on only a few industries and securities markets that trade a small number of securities.

Certain foreign securities impose restrictions on transfer within the United States or to U.S. persons. Although securities subject to transfer restrictions may be marketable abroad, they may be less liquid than foreign securities of the same class that are not subject to such restrictions.

Each of the Funds (other than Ivy Limited-Term Bond Fund, Ivy Money Market Fund and Ivy Municipal Bond Fund) may purchase and sell foreign currency and invest in foreign currency deposits and may enter into forward currency contracts. The Funds may incur a transaction charge in connection with the exchange of currency. Currency conversion involves dealer spreads and other costs, although commissions are not usually charged. See, Options, Futures and Other Strategies - Forward Currency Contracts.

Investments in obligations of domestic branches of foreign banks will be considered domestic securities if WRIICO has determined that the nature and extent of Federal and state regulation and supervision of the branch in question is substantially equivalent to Federal or state chartered domestic banks doing business in the same jurisdiction.

Illiquid Investments

Illiquid investments are investments that cannot be sold or otherwise disposed of in the ordinary course of business within seven days at approximately the price at which they are valued. Investments currently considered to be illiquid include:

(1) repurchase agreements not terminable within seven days;

(2) restricted securities not determined to be liquid pursuant to guidelines established by the Fund's Board of Directors;

(3) non-government stripped fixed-rate mortgage-backed securities;

(4) bank deposits, unless they are payable at principal amount plus accrued interest on demand or within seven days after demand;

(5) over-the-counter (OTC) options (options not traded on an exchange) and their underlying collateral;

(6) securities for which market quotations are not readily available;

(7) securities involved in swap, cap, floor and collar transactions; and

(8) direct debt instruments.

The assets used as cover for OTC options written by a Fund will be considered illiquid unless the OTC options are sold to qualified dealers who agree that the Fund may repurchase any OTC option it writes at a maximum price to be calculated by a formula set forth in the option agreement. The cover for an OTC option written subject to this procedure would be considered illiquid only to the extent that the maximum repurchase price under the formula exceeds the intrinsic value of the option.

If through a change in values, net assets, or other circumstances, a Fund were in a position where more than 10% or 15%, as applicable, of its net assets were invested in illiquid securities, it would seek to take appropriate steps to protect liquidity.

Indexed Securities

Each Fund may purchase indexed securities subject to its operating policy regarding derivative instruments. Indexed securities are securities the value of which varies in relation to the value of other securities, securities indexes, currencies, precious metals or other commodities, or other financial indicators. Subject to the requirements of Rule 2a-7, Ivy Money Market Fund may purchase securities the value of which varies in relation to the value of financial indicators such as other securities, securities indexes or interest rates, as long as the indexed securities are U.S. dollar-denominated. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific instrument or statistic. The performance of indexed securities depends to a great extent on the performance of the security, currency or other instrument to which they are indexed and may also be influenced by interest rate changes in the United States and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security and their values may decline substantially if the issuer's creditworthiness deteriorates. Indexed securities may be more volatile than the underlying investments. Gold-indexed securities, for example, typically provide for a maturity value that depends on the price of gold, resulting in a security whose price tends to rise and fall together with gold prices. Currency-indexed securities typically are short-term to intermediate-term debt securities whose maturity values or interest rates are determined by reference to the values of one or more specified foreign currencies, and may offer higher yields than U.S. dollar-denominated securities of equivalent issuers. Currency-indexed securities may be positively or negatively indexed; that is, their maturity value may increase when the specified currency value increases, resulting in a security that performs similarly to a foreign-denominated instrument, or their maturity value may decline when foreign currencies increase, resulting in a security whose price characteristics are similar to a put on the underlying currency. Currency-indexed securities may also have prices that depend on the values of a number of different foreign currencies relative to each other.

Recent issuers of indexed securities have included banks, corporations, and certain U.S. Government agencies. WRIICO will use its judgment in determining whether indexed securities should be treated as short-term instruments, bonds, stocks, or as a separate asset class for purposes of Ivy Asset Strategy Fund's investment allocations, depending on the individual characteristics of the securities. Certain indexed securities that are not traded on an established market may be deemed illiquid.

Investment Company Securities

Certain Funds may purchase securities of closed-end investment companies. Ivy Asset Strategy Fund may purchase securities of open-end and closed-end investment companies subject to the restrictions and limitations of the 1940 Act. As a shareholder in an investment company, the Fund would bear its pro rata share of that investment company's expenses, which could result in duplication of certain fees, including management and administrative fees.

Lending Securities

Securities loans may be made on a short-term or long-term basis for the purpose of increasing a Fund's income. If a Fund lends securities, the borrower pays the Fund an amount equal to the dividends or interest on the securities that the Fund would have received if it had not lent the securities. The Fund also receives additional compensation. Under a Fund's current securities lending procedures, the Fund may lend securities only to broker-dealers and financial institutions deemed creditworthy by WRIICO.

Any securities loans that a Fund makes must be collateralized in accordance with applicable regulatory requirements (the Guidelines). At the time of each loan, the Fund must receive collateral equal to no less than 100% of the market value of the securities loaned. Under the present Guidelines, the collateral must consist of cash, U.S. Government securities or bank letters of credit, at least equal in value to the market value of the securities lent on each day that the loan is outstanding. If the market value of the lent securities exceeds the value of the collateral, the borrower must add more collateral so that it at least equals the market value of the securities lent. If the market value of the securities decreases, the borrower is entitled to a return of the excess collateral.

There are two methods of receiving compensation for making loans. The first is to receive a negotiated loan fee from the borrower. This method is available for all three types of collateral. The second method, which is not available when letters of credit are used as collateral, is for a Fund to receive interest on the investment of the cash collateral or to receive interest on the U.S. Government securities used as collateral. Part of the interest received in either case may be shared with the borrower.

The letters of credit that a Fund may accept as collateral are agreements by banks (other than the borrowers of the Fund's securities), entered into at the request of the borrower and for its account and risk, under which the banks are obligated to pay to the Fund, while the letter is in effect, amounts demanded by the Fund if the demand meets the terms of the letter. The Fund's right to make this demand secures the borrower's obligations to it. The terms of any such letters and the creditworthiness of the banks providing them (which might include the Fund's custodian bank) must be satisfactory to WRIICO. The Fund will make loans only under rules of the New York Stock Exchange (NYSE), which presently require the borrower to give the securities back to the Fund within five business days after the Fund gives notice to do so. If the Fund loses its voting rights on securities loaned, it will have the securities returned to it in time to vote them if a material event affecting the investment is to be voted on. The Fund may pay reasonable finder's, administrative and custodian fees in connection with loans of securities.

Some, but not all, of these rules are necessary to meet requirements of certain laws relating to securities loans. These rules will not be changed unless the change is permitted under these requirements. The requirements do not cover the rules which may be changed without shareholder vote as to (1) whom securities may be loaned, (2) the investment of cash collateral, or (3) voting rights.

There may be risks of delay in receiving additional collateral from the borrower if the market value of the securities loaned increases, as well as risks of delay in recovering the securities loaned or even loss of rights in collateral should the borrower fail financially.

Loans and Other Direct Debt Instruments

Direct debt instruments are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates (loans and loan participations), to suppliers of goods or services (trade claims or other receivables), or to other parties. Ivy Asset Strategy Fund may invest in direct debt instruments, subject to its policies regarding the quality of debt securities.

Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. Direct debt instruments may not be rated by any nationally recognized rating service. If Ivy Asset Strategy Fund does not receive scheduled interest or principal payments on such indebtedness, the Fund's share price and yield could be adversely affected. Loans that are fully secured offer the Fund more protections than an unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower's obligation, or that the collateral could be liquidated. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks, and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Direct indebtedness of developing countries also involves a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and principal when due.

Investments in loans through direct assignment of a financial institution's interests with respect to a loan may involve additional risks to Ivy Asset Strategy Fund. For example, if a loan is foreclosed, the Fund could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. Direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary. Direct debt instruments that are not in the form of securities may offer less legal protection to the Fund in the event of fraud or misrepresentation. In the absence of definitive regulatory guidance, the Fund relies on WRIICO's research in an attempt to avoid situations where fraud or misrepresentation could adversely affect the Fund.

A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. Unless, under the terms of the loan or other indebtedness, Ivy Asset Strategy Fund has direct recourse against the borrower, it may have to rely on the agent to apply appropriate credit remedies against a borrower. If assets held by the agent for the benefit of the Fund were determined to be subject to the claims of the agent's general creditors, the Fund might incur certain costs and delays in realizing payment on the loan or loan participation and could suffer a loss of principal or interest.

Investments in direct debt instruments may entail less legal protection for Ivy Asset Strategy Fund. Direct indebtedness purchased by the Fund may include letters of credit, revolving credit facilities, or other standby financing commitments obligating the Fund to pay additional cash on demand. These commitments may have the effect of requiring the Fund to increase its investment in a borrower at a time when it would not otherwise have done so, even if the borrower's condition makes it unlikely that the amount will ever be repaid. The Fund will set aside appropriate liquid assets in a segregated custodial account to cover its potential obligations under standby financing commitments.

For purposes of the limitations on the amount of total assets that Ivy Asset Strategy Fund will invest in any one issuer or in issuers within the same industry, the Fund generally will treat the borrower as the issuer of indebtedness held by the Fund. In the case of loan participations where a bank or other lending institution serves as financial intermediary between the Fund and the borrower, if the participation does not shift to the Fund the direct debtor-creditor relationship with the borrower, Securities and Exchange Commission (SEC) interpretations require the Fund, in appropriate circumstances, to treat both the lending bank or other lending institution and the borrower as issuers for these purposes. Treating a financial intermediary as an issuer of indebtedness may restrict the Fund's ability to invest in indebtedness related to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries.

Money Market Instruments

Money market instruments are high-quality, short-term debt instruments that generally present minimal credit risk. They may include U.S. Government securities, commercial paper and other short-term corporate obligations, certificates of deposit and other financial institution obligations. These instruments may carry fixed or variable interest rates.

Mortgage-Backed and Asset-Backed Securities

Mortgage-Backed Securities. Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property and include single- and multi-class pass-through securities and collateralized mortgage obligations. Multi-class pass-through securities and collateralized mortgage obligations are collectively referred to in this SAI as CMOs. Some CMOs are directly supported by other CMOs, which in turn are supported by mortgage pools. Investors typically receive payments out of the interest and principal on the underlying mortgages. The portions of the payments that investors receive, as well as the priority of their rights to receive payments, are determined by the specific terms of the CMO class.

The U.S. Government mortgage-backed securities in which the Fund may invest include mortgage-backed securities issued or guaranteed as to the payment of principal and interest (but not as to market value) by the Federal National Mortgage Association (Fannie Mae), Government National Mortgage Association (Ginnie Mae), or Federal Home Loan Mortgage Corporation (Freddie Mac). Other mortgage-backed securities are issued by private issuers, generally originators of and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers and special purpose entities. Payments of principal and interest (but not the market value) of such private mortgage-backed securities may be supported by pools of mortgage loans or other mortgage-backed securities that are guaranteed, directly or indirectly, by the U.S. Government or one of its agencies or instrumentalities, or they may be issued without any government guarantee of the underlying mortgage assets but with some form of non-government credit enhancement. These credit enhancements do not protect investors from changes in market value.

The Funds may purchase mortgage-backed securities issued by both government and non-government entities such as banks, mortgage lenders or other financial institutions. Other types of mortgage-backed securities will likely be developed in the future, and the Funds may so invest as long as WRIICO determines that such investments are consistent with the Fund's goals and investment policies.

Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities are created when a U.S. Government agency or a financial institution separates the interest and principal components of a mortgage-backed security and sells them as individual securities. The holder of the principal-only security (PO) receives the principal payments made by the underlying mortgage-backed security, while the holder of the interest-only security (IO) receives interest payments from the same underlying security.

For example, IO classes are entitled to receive all or a portion of the interest, but none (or only a nominal amount) of the principal payments, from the underlying mortgage assets. If the mortgage assets underlying an IO experience greater than anticipated principal prepayments, then the total amount of interest allocable to the IO class, and therefore the yield to investors, generally will be reduced. In some instances, an investor in an IO may fail to recoup all of the investor's initial investment, even if the security is guaranteed by the U.S. Government or considered to be of the highest quality. Conversely, PO classes are entitled to receive all or a portion of the principal payments, but none of the interest, from the underlying mortgage assets. PO classes are purchased at substantial discounts from par, and the yield to investors will be reduced if principal payments are slower than expected. IOs, POs and other CMOs involve special risks, and evaluating them requires special knowledge.

Asset-Backed Securities. Asset-backed securities have structural characteristics similar to mortgage-backed securities, as discussed above. However, the underlying assets are not first lien mortgage loans or interests therein, but include assets such as motor vehicle installment sales contracts, other installment sale contracts, home equity loans, leases of various types of real and personal property and receivables from revolving credit (credit card) agreements. Such assets are securitized through the use of trusts or special purpose corporations. Payments or distributions of principal and interest may be guaranteed up to a certain amount and for a certain time period by a letter of credit or pool insurance policy issued by a financial institution unaffiliated with the issuer, or other credit enhancements may be present. The value of asset-backed securities may also depend on the creditworthiness of the servicing agent for the loan pool, the originator of the loans or the financial institution providing the credit enhancement.

Special Characteristics of Mortgage-Backed and Asset-Backed Securities. The yield characteristics of mortgage-backed and asset-backed securities differ from those of traditional debt securities. Among the major differences are that interest and principal payments are made more frequently, usually monthly, and that principal may be prepaid at any time because the underlying mortgage loans or other obligations generally may be prepaid at any time. Prepayments on a pool of mortgage loans are influenced by a variety of economic, geographic, social and other factors, including changes in mortgagors' housing needs, job transfers, unemployment, mortgagors' net equity in the mortgaged properties and servicing decisions. Generally, however, prepayments on fixed-rate mortgage loans will increase during a period of falling interest rates and decrease during a period of rising interest rates. Similar factors apply to prepayments on asset-backed securities, but the receivables underlying asset-backed securities generally are of a shorter maturity and thus are likely to experience substantial prepayments. Such securities, however, often provide that for a specified time period the issuers will replace receivables in the pool that are repaid with comparable obligations. If the issuer is unable to do so, repayment of principal on the asset-backed securities may commence at an earlier date.

The rate of interest on mortgage-backed securities is lower than the interest rates paid on the mortgages included in the underlying pool due to the annual fees paid to the servicer of the mortgage pool for passing through monthly payments to certificate holders and to any guarantor and due to any yield retained by the issuer. Actual yield to the holder may vary from the coupon rate, even if adjustable, if the mortgage-backed securities are purchased or traded in the secondary market at a premium or discount. In addition, there is normally some delay between the time the issuer receives mortgage payments from the servicer and the time the issuer makes the payments on the mortgage-backed securities, and this delay reduces the effective yield to the holder of such securities.

Yields on pass-through securities are typically quoted by investment dealers and vendors based on the maturity of the underlying instruments and the associated average life assumption. The average life of pass-through pools varies with the maturities of the underlying mortgage loans. A pool's term may be shortened by unscheduled or early payments of principal on the underlying mortgages. Because prepayment rates of individual pools vary widely, it is not possible to predict accurately the average life of a particular pool. In the past, a common industry practice has been to assume that prepayments on pools of fixed-rate 30-year mortgages would result in a 12-year average life for the pool. At present, mortgage pools, particularly those with loans with other maturities or different characteristics, are priced on an assumption of average life determined for each pool. In periods of declining interest rates, the rate of prepayment tends to increase, thereby shortening the actual average life of a pool of mortgage-related securities. Conversely, in periods of rising interest rates, the rate of prepayment tends to decrease, thereby lengthening the actual average life of the pool. Changes in the rate or speed of these payments can cause the value of the mortgage backed securities to fluctuate rapidly. However, these effects may not be present, or may differ in degree, if the mortgage loans in the pools have adjustable interest rates or other special payment terms, such as a prepayment charge. Actual prepayment experience may cause the yield of mortgage-backed securities to differ from the assumed average life yield.

The market for privately issued mortgage-backed and asset-backed securities is smaller and less liquid than the market for U.S. Government mortgage-backed securities. CMO classes may be specifically structured in a manner that provides any of a wide variety of investment characteristics, such as yield, effective maturity and interest rate sensitivity. As market conditions change, however, and especially during periods of rapid or unanticipated changes in market interest rates, the attractiveness of some CMO classes and the ability of the structure to provide the anticipated investment characteristics may be reduced. These changes can result in volatility in the market value and in some instances reduced liquidity, of the CMO class.

Municipal Bonds

Municipal bonds are issued by a wide range of state and local governments, agencies and authorities for various purposes. The two main kinds of municipal bonds are general obligation bonds and revenue bonds. In general obligation bonds, the issuer has pledged its full faith, credit and taxing power for the payment of principal and interest. Revenue bonds are payable only from specific sources; these may include revenues from a particular facility or class of facilities or special tax or other revenue source.

A special class of bonds issued by state and local government authorities and agencies are private activity bonds (PABs). Only those PABs the interest on which is free from Federal income taxation (although the interest may be an item of tax preference for purposes of the Federal alternative minimum tax (AMT)) will be considered municipal bonds for purposes of Ivy Municipal Bond Fund's investment policies. In general, PABs are revenue bonds and are issued by or on behalf of public authorities to obtain funds to finance privately operated facilities. They generally depend for their credit quality on the credit standing of the company involved. Therefore, to the extent the Fund invests a significant amount of its total assets in bonds issued by entities in any one industry, it will be subject to the risks inherent in the industry to which the issuer belongs.

For example, a hospital's gross receipts and net income available to service its debt are influenced by demand for hospital services, the ability of the hospital to provide the services required, management and medical capabilities, economic developments in the service area, efforts by insurers and government agencies to limit rates and expenses, confidence in the hospital, service area economic developments, competition, availability and expense of malpractice insurance, Medicaid and Medicare funding, and possible Federal legislation limiting the rates of increase of hospital charges. Significant events impacting the hospital industry in any one of these areas might adversely affect the industry's ability to service its debt or to pay principal when due.

Life care facilities are an alternative form of long-term housing for the elderly. They are subject to a wide variety of risks. Primarily, the projects must maintain adequate occupancy levels to be able to provide revenues adequate to maintain debt service payments. Moreover, since a portion of housing, medical care and other services may be financed by an initial deposit it is important that the facility maintain adequate financial reserves to secure estimated actuarial liabilities. The ability of management to accurately forecast inflationary cost pressures weighs importantly in the process. The facilities may also be impacted by regulatory cost restrictions applied to health care delivery in general, particularly state regulations or changes in Medicare and Medicaid payments or qualifications, or restrictions imposed by medical insurance companies. They may also face competition from alternative health care or conventional housing facilities in the private or public sector.

Municipal leases and participation interests therein are another specific type of municipal bond. The factors that WRIICO considers in determining whether any rated municipal lease obligations are liquid include the following: (1) the frequency of trades and quotes for the obligations; (2) the number of dealers willing to purchase or sell the security and the number of other potential buyers; (3) the willingness of dealers to undertake to make a market in the securities; (4) the nature of marketplace trades, including the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer; (5) the likelihood that the marketability of the obligation will be maintained through the time the instrument is held; (6) the credit quality of the issuer and the lessee; and (7) the essentiality to the lessee of the property covered by the lease. Unrated municipal lease obligations are considered illiquid. These obligations, which may take the form of a lease, an installment purchase, or a conditional sale contract, are issued by state and local governments and authorities to acquire land and a variety of equipment and facilities. The Funds have not held and do not intend to hold such obligations directly as a lessor of the property but may from time to time purchase a participation interest in a municipal obligation from a bank or other third party. A participation interest gives a Fund a specified, undivided interest in the obligation in proportion to its purchased interest in the total amount of the obligation.

Municipal leases frequently have risks distinct from those associated with general obligation or revenue bonds. State constitutions and statutes set forth requirements that states or municipalities must meet to incur debt, including voter referenda, interest rate limits or public sale requirements. Leases, installment purchases or conditional sale contracts have evolved as means for governmental issuers to acquire property and equipment without being required to meet these constitutional and statutory requirements. Many leases and contracts include non-appropriation clauses providing that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the legislative body on a yearly or other periodic basis. Non-appropriation clauses free the issuer from debt issuance limitations. In determining the liquidity of a municipal lease obligation, WRIICO will differentiate between direct interests in municipal leases and municipal lease-backed securities, the latter of which may take the form of a lease-backed revenue bond, a tax-exempt asset-backed security or any other investment structure using a municipal lease-purchased agreement as its base. While the former may present liquidity issues, the latter are based on a well-established method of securing payment of a municipal lease obligation.

WRIICO and the Funds rely on the opinion of bond counsel for the issuer in determining whether the interest on such issuers obligations is excludable from gross income for Federal income tax purposes. If a court holds that interest on an obligation held by Ivy Municipal Bond Fund is not excludable from gross income for Federal income tax purposes, the Fund will sell the obligation as soon as possible, but it might incur a loss upon such sale.

With respect to ratings of municipal bonds (see, Appendix A), now or in the future, S&P or Moody's may use different rating designations for municipal bonds depending on their maturities on issuance or other characteristics. For example, Moody's currently rates the top four categories of municipal notes (i.e., municipal bonds generally with a maturity at the time of issuance ranging from six months to three years) as MIG 1, MIG 2, MIG 3 and MIG 4. A Fund is not required to dispose of any municipal bond if its rating falls below the rating required for its purchase, nor does such a fall in rating affect the amount of unrated municipal bonds that a Fund may buy.

Options, Futures and Other Strategies

General. WRIICO may use certain options, futures contracts (sometimes referred to as futures), options on futures contracts, forward currency contracts, swaps, caps, floors, collars, indexed securities and other derivative instruments (collectively, Financial Instruments) to attempt to enhance income or yield or to attempt to hedge a Fund's investments. The strategies described below may be used in an attempt to manage the risks of a Fund's investments that can affect fluctuation in its net asset value (NAV).

Generally, a Fund may purchase and sell any type of Financial Instrument. However, as an operating policy, a Fund will only purchase or sell a particular Financial Instrument if the Fund is authorized to invest in the type of asset by which the return on, or value of, the Financial Instrument is primarily measured. If a Fund is authorized to invest in foreign securities, it may purchase and sell foreign currency derivatives.

Hedging strategies can be broadly categorized as short hedges and long hedges. A short hedge is a purchase or sale of a Financial Instrument intended partially or fully to offset potential declines in the value of one or more investments held in a Fund's portfolio. Thus, in a short hedge, the Fund takes a position in a Financial Instrument whose price is expected to move in the opposite direction of the price of the investment being hedged.

Conversely, a long hedge is a purchase or sale of a Financial Instrument intended partially or fully to offset potential increases in the acquisition cost of one or more investments that a Fund intends to acquire. Thus, in a long hedge, the Fund takes a position in a Financial Instrument whose price is expected to move in the same direction as the price of the prospective investment being hedged. A long hedge is sometimes referred to as an anticipatory hedge. In an anticipatory hedge transaction, the Fund does not own a corresponding security and, therefore, the transaction does not relate to a security the Fund owns. Rather, it relates to a security that the Fund intends to acquire. If the Fund does not complete the hedge by purchasing the security it anticipated purchasing, the effect on the Fund's holdings is the same as if the transaction were entered into for speculative purposes.

Financial Instruments on securities generally are used to attempt to hedge against price movements in one or more particular securities positions that a Fund owns or intends to acquire. Financial Instruments on indexes, in contrast, generally are used to attempt to hedge against price movements in market sectors in which a Fund has invested or expects to invest. Financial Instruments on debt securities may be used to hedge either individual securities or broad debt market sectors.

The use of Financial Instruments is subject to applicable regulations of the SEC, the several exchanges upon which they are traded and the Commodity Futures Trading Commission (CFTC). In addition, a Fund's ability to use Financial Instruments is limited by tax considerations. See Taxes.

In addition to the instruments, strategies and risks described below, WRIICO expects to discover additional opportunities in connection with Financial Instruments and other similar or related techniques. These new opportunities may become available as WRIICO develops new techniques, as regulatory authorities broaden the range of permitted transactions and as new Financial Instruments or other techniques are developed. WRIICO may utilize these opportunities to the extent that they are consistent with a Fund's goal(s) and permitted by a Fund's investment limitations and applicable regulatory authorities. A Fund might not use any of these strategies, and there can be no assurance that any strategy used will succeed. The Funds' Prospectus or SAI will be supplemented to the extent that new products or techniques involve materially different risks than those described below or in the Prospectus.

Special Risks. The use of Financial Instruments involves special considerations and risks, certain of which are described below. In general, these techniques may increase the volatility of a Fund and may involve a small investment of cash relative to the magnitude of the risk assumed. Risks pertaining to particular Financial Instruments are described in the sections that follow:

(1) Successful use of most Financial Instruments depends upon WRIICO's ability to predict movements of the overall securities, currency and interest rate markets, which requires different skills than predicting changes in the prices of individual securities. There can be no assurance that any particular strategy will succeed, and use of Financial Instruments could result in a loss, regardless of whether the intent was to reduce risk or increase return.

(2) There might be imperfect correlation, or even no correlation, between price movements of a Financial Instrument and price movements of the investments being hedged. For example, if the value of a Financial Instrument used in a short hedge increased by less than the decline in value of the hedged investment, the hedge would not be fully successful. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as speculation or other pressures on the markets in which Financial Instruments are traded. The effectiveness of hedges using Financial Instruments on indexes will depend on the degree of correlation between price movements in the index and price movements in the securities being hedged.

Because there are a limited number of types of exchange-traded options and futures contracts, it is likely that the standardized contracts available will not match a Fund's current or anticipated investments exactly. A Fund may invest in options and futures contracts based on securities with different issuers, maturities, or other characteristics from the securities in which it typically invests, which involves a risk that the options or futures position will not track the performance of the Fund's other investments.

Options and futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments match a Fund's investments well. Options and futures prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation may also result from differing levels of demand in the options and futures markets and the securities markets, from structural differences in how options and futures and securities are traded, or from imposition of daily price fluctuation limits or trading halts. A Fund may purchase or sell options and futures contracts with a greater or lesser value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in volatility between the contract and the securities, although this may not be successful in all cases. If price changes in a Fund's options or futures positions are poorly correlated with its other investments, the positions may fail to produce anticipated gains or result in losses that are not offset by gains in other investments.

(3) If successful, the above-discussed strategies can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements. However, such strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements. For example, if a Fund entered into a short hedge because WRIICO projected a decline in the price of a security in the Fund's portfolio, and the price of that security increased instead, the gain from that increase might be wholly or partially offset by a decline in the price of the Financial Instrument. Moreover, if the price of the Financial Instrument declined by more than the increase in the price of the security, the Fund could suffer a loss. In either such case, the Fund would have been in a better position had it not attempted to hedge at all.

(4) As described below, a Fund might be required to maintain assets as cover, maintain segregated accounts or make margin payments when it takes positions in Financial Instruments involving obligations to third parties (i.e., Financial Instruments other than purchased options). If the Fund were unable to close out its positions in such Financial Instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. These requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time.

(5) A Fund's ability to close out a position in a Financial Instrument prior to expiration or maturity depends on the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the other party to the transaction (counterparty) to enter into a transaction closing out the position. Therefore, there is no assurance that any position can be closed out at a time and price that is favorable to the Fund.

Cover. Transactions using Financial Instruments, other than purchased options, expose a Fund to an obligation to another party. Each Fund will comply with SEC guidelines regarding cover for these instruments and will, if the guidelines so require, set aside cash or liquid assets in an account with its custodian in the prescribed amount as determined daily. A Fund will not enter into any such transactions unless it owns either (1) an offsetting (covered) position in securities, currencies or other options, futures contracts or forward contracts, or (2) cash and liquid assets with a value, marked-to-market daily, sufficient to cover its potential obligations to the extent not covered as provided in (1) above.

Assets used as cover or held in an account cannot be sold while the position in the corresponding Financial Instrument is open, unless they are replaced with other appropriate assets. As a result, the commitment of a large portion of a Fund's assets to cover or to segregated accounts could impede portfolio management or the Fund's ability to meet redemption requests or other current obligations.

Options. A call option gives the purchaser the right to buy, and obligates the writer to sell, the underlying investment at the agreed-upon price during the option period. A put option gives the purchaser the right to sell, and obligates the writer to buy, the underlying investment at the agreed-upon price during the option period. Purchasers of options pay an amount, known as a premium, to the option writer in exchange for the right under the option contract.

The purchase of call options can serve as a long hedge, and the purchase of put options can serve as a short hedge. Writing put or call options can enable a Fund to enhance income or yield by reason of the premiums paid by the purchasers of such options. However, if the market price of the security underlying a put option declines to less than the exercise price of the option, minus the premium received, the Fund would expect to suffer a loss.

Writing call options can serve as a limited short hedge, because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and the Fund will be obligated to sell the security or currency at less than its market value. If the call option is an OTC option, the securities or other assets used as cover would be considered illiquid to the extent described under Illiquid Investments.

Writing put options can serve as a limited long hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and the Fund will be obligated to purchase the security or currency at more than its market value. If the put option is an OTC option, the securities or other assets used as cover would be considered illiquid to the extent described under Illiquid Investments.

The value of an option position will reflect, among other things, the current market value of the underlying investment, the time remaining until expiration, the relationship of the exercise price to the market price of the underlying investment, the historical price volatility of the underlying investment and general market conditions. Options that expire unexercised have no value.

A Fund may effectively terminate its right or obligation under an option by entering into a closing transaction. For example, the Fund may terminate its obligation under a call or put option that it had written by purchasing an identical call or put option; this is known as a closing purchase transaction. Conversely, the Fund may terminate a position in a put or call option it had purchased by writing an identical put or call option; this is known as a closing sale transaction. Closing transactions permit the Fund to realize profits or limit losses on an option position prior to its exercise or expiration.

A type of put that a Fund may purchase is an optional delivery standby commitment, which is entered into by parties selling debt securities to the Fund. An optional delivery standby commitment gives the Fund the right to sell the security back to the seller on specified terms. This right is provided as an inducement to purchase the security.

Risks of Options on Securities. Options offer large amounts of leverage, which will result in a Fund's NAV being more sensitive to changes in the value of the related instrument. Each Fund may purchase or write both exchange-traded and OTC options. Exchange-traded options in the United States are issued by a clearing organization affiliated with the exchange on which the option is listed that, in effect, guarantees completion of every exchange-traded option transaction. In contrast, OTC options are contracts between a Fund and its counterparty (usually a securities dealer or a bank) with no clearing organization guarantee. Thus, when a Fund purchases an OTC option, it relies on the counterparty from whom it purchased the option to make or take delivery of the underlying investment upon exercise of the option. Failure by the counterparty to do so would result in the loss of any premium paid by the Fund as well as the loss of any expected benefit of the transaction.

A Fund's ability to establish and close out positions in exchange-listed options depends on the existence of a liquid market, and there can be no assurance that such a market will exist at any particular time. Closing transactions can be made for OTC options only by negotiating directly with the counterparty, or by a transaction in the secondary market if any such market exists. There can be no assurance that a Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the counterparty, the Fund might be unable to close out an OTC option position at any time prior to its expiration.

If a Fund were unable to effect a closing transaction for an option it had purchased, it would have to exercise the option to realize any profit. The inability to enter into a closing purchase transaction for a covered call option written by a Fund could cause material losses because the Fund would be unable to sell the investment used as cover for the written option until the option expires or is exercised.

Options on Indexes. Puts and calls on indexes are similar to puts and calls on securities or futures contracts except that all settlements are in cash and gain or loss depends on changes in the index in question rather than on price movements in individual securities or futures contracts. When a Fund writes a call on an index, it receives a premium and agrees that, prior to the expiration date, the purchaser of the call, upon exercise of the call, will receive from the Fund an amount of cash if the closing level of the index upon which the call is based is greater than the exercise price of the call. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call times a specified multiple (multiplier), which determines the total dollar value for each point of such difference. When a Fund buys a call on an index, it pays a premium and has the same rights as to such call as are indicated above. When a Fund buys a put on an index, it pays a premium and has the right, prior to the expiration date, to require the seller of the put, upon the Fund's exercise of the put, to deliver to the Fund an amount of cash if the closing level of the index upon which the put is based is less than the exercise price of the put, which amount of cash is determined by the multiplier, as described above for calls. When a Fund writes a put on an index, it receives a premium and the purchaser of the put has the right, prior to the expiration date, to require the Fund to deliver to it an amount of cash equal to the difference between the closing level of the index and the exercise price times the multiplier if the closing level is less than the exercise price.

Risks of Options on Indexes. The risks of investment in options on indexes may be greater than options on securities. Because index options are settled in cash, when a Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Fund can offset some of the risk of writing a call index option by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will vary from the value of the index.

Even if a Fund could assemble a portfolio that exactly reproduced the composition of the underlying index, it still would not be fully covered from a risk standpoint because of the timing risk inherent in writing index options. When an index option is exercised, the amount of cash that the holder is entitled to receive is determined by the difference between the exercise price and the closing index level on the date when the option is exercised. As with other kinds of options, the Fund as the call writer will not learn that the Fund has been assigned until the next business day at the earliest. The time lag between exercise and notice of assignment poses no risk for the writer of a covered call on a specific underlying security, such as a common stock, because there the writer's obligation is to deliver the underlying security, not to pay its value as of a fixed time in the past. So long as the writer already owns the underlying security, it can satisfy its settlement obligations by simply delivering it, and the risk that its value may have declined since the exercise date is borne by the exercising holder. In contrast, even if the writer of an index call holds securities that exactly match the composition of the underlying index, it will not be able to satisfy its assignment obligations by delivering those securities against payment of the exercise price. Instead, it will be required to pay cash in an amount based on the closing index value on the exercise date. By the time it learns that it has been assigned, the index may have declined, with a corresponding decline in the value of its portfolio. This timing risk is an inherent limitation on the ability of index call writers to cover their risk exposure by holding securities positions.

If a Fund has purchased an index option and exercises it before the closing index value for that day is available, it runs the risk that the level of the underlying index may subsequently change. If such a change causes the exercised option to fall out-of-the-money, the Fund will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer.

OTC Options. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of OTC options (options not traded on an exchange) generally are established through negotiation with the other party to the option contract. While this type of arrangement allows a Fund great flexibility to tailor the option to its needs, OTC options generally involve greater risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded.

Generally, OTC foreign currency options used by a Fund are European-style options. This means that the option is only exercisable immediately prior to its expiration. This is in contrast to American-style options, which are exercisable at any time prior to the expiration date of the option.

Futures Contracts and Options on Futures Contracts. The purchase of futures contracts or call options on futures contracts can serve as a long hedge, and the sale of futures contracts or the purchase of put options on a futures contract can serve as a short hedge. Writing call options on futures contracts can serve as a limited short hedge, using a strategy similar to that used for writing call options on securities or indexes. Similarly, writing put options on futures contracts can serve as a limited long hedge. Futures contracts and options on futures contracts can also be purchased and sold to attempt to enhance income or yield.

In addition, futures contract strategies can be used to manage the average duration of a Fund's fixed-income portfolio. If WRIICO wishes to shorten the average duration of a Fund's fixed-income portfolio, the Fund may sell a debt futures contract or a call option thereon, or purchase a put option on that futures contract. If WRIICO wishes to lengthen the average duration of a Fund's fixed-income portfolio, the Fund may buy a debt futures contract or a call option thereon, or sell a put option thereon.

No price is paid upon entering into a futures contract. Instead, at the inception of a futures contract the Fund is required to deposit initial margin in an amount generally equal to 10% or less of the contract value. Margin must also be deposited when writing a call or put option on a futures contract, in accordance with applicable exchange rules. Unlike margin in securities transactions, initial margin on futures contracts does not represent a borrowing, but rather is in the nature of a performance bond or good-faith deposit that is returned to the Fund at the termination of the transaction if all contractual obligations have been satisfied. Under certain circumstances, such as periods of high volatility, the Fund may be required by an exchange to increase the level of its initial margin payment, and initial margin requirements might be increased generally in the future by regulatory action.

Subsequent variation margin payments are made to and from the futures broker daily as the value of the futures position varies, a process known as marking-to-market. Variation margin does not involve borrowing, but rather represents a daily settlement of the Fund's obligations to or from a futures broker. When a Fund purchases an option on a futures contract, the premium paid plus transaction costs is all that is at risk. In contrast, when a Fund purchases or sells a futures contract or writes a call or put option thereon, it is subject to daily variation margin calls that could be substantial in the event of adverse price movements. If the Fund has insufficient cash to meet daily variation margin requirements, it might need to sell securities at a time when such sales are disadvantageous.

Purchasers and sellers of futures contracts and options on futures contracts can enter into offsetting closing transactions, similar to closing transactions on options, by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Positions in futures contracts and options on futures contracts may be closed only on an exchange or board of trade that provides a secondary market. However, there can be no assurance that a liquid secondary market will exist for a particular contract at a particular time. In such event, it may not be possible to close a futures contract or options position.

Under certain circumstances, futures contracts exchanges may establish daily limits on the amount that the price of a futures contract or an option on a futures contract can vary from the previous day's settlement price; once that limit is reached, no trades may be made that day at a price beyond the limit. Daily price limits do not limit potential losses because prices could move to the daily limit for several consecutive days with little or no trading, thereby preventing liquidation of unfavorable positions.

If a Fund were unable to liquidate a futures contract or an option on a futures position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the futures contract or option or to maintain cash or liquid assets in an account.

Risks of Futures Contracts and Options Thereon. The ordinary spreads between prices in the cash and futures markets (including the options on futures market), due to differences in the natures of those markets, are subject to the following factors which may create distortions. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions, which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may cause temporary price distortions. Due to the possibility of distortion, a correct forecast of general interest rate, currency exchange rate or stock market trends by WRIICO may still not result in a successful transaction. WRIICO may be incorrect in its expectations as to the extent of various interest rate, currency exchange rate or stock market movements or the time span within which the movements take place.

Index Futures. The risk of imperfect correlation between movements in the price of an index futures contract and movements in the price of the securities that are the subject of the hedge increases as the composition of a Fund's portfolio diverges from the securities included in the applicable index. The price of the index futures contract may move more than or less than the price of the securities being hedged. If the price of the index futures contract moves less than the price of the securities that are the subject of the hedge, the hedge will not be fully effective but, if the price of the securities being hedged has moved in an unfavorable direction, the Fund would be in a better position than if it had not hedged at all. If the price of the securities being hedged has moved in a favorable direction, this advantage will be partially offset by the futures contract. If the price of the futures contract moves more than the price of the securities, the Fund will experience either a loss or a gain on the futures contract that will not be completely offset by movements in the price of the securities that are the subject of the hedge. To compensate for the imperfect correlation of movements in the price of the securities being hedged and movements in the price of the index futures contract, a Fund may buy or sell index futures contracts in a greater dollar amount than the dollar amount of the securities being hedged if the historical volatility of the prices of the securities being hedged is more than the historical volatility of the prices of the securities included in the index. It is also possible that, where a Fund has sold index futures contracts to hedge against decline in the market, the market may advance and the value of the securities held in the portfolio may decline. If this occurred, the Fund would lose money on the futures contract and also experience a decline in value of its portfolio securities. However, while this could occur for a very brief period or to a very small degree, over time the value of a diversified portfolio of securities will tend to move in the same direction as the market indexes on which the futures contracts are based.

Where index futures contracts are purchased to hedge against a possible increase in the price of securities before a Fund is able to invest in them in an orderly fashion, it is possible that the market may decline instead. If the Fund then concludes not to invest in them at that time because of concern as to possible further market decline or for other reasons, it will realize a loss on the futures contract that is not offset by a reduction in the price of the securities it had anticipated purchasing.

Foreign Currency Hedging Strategies -- Special Considerations. Each Fund (other than Ivy Limited-Term Bond Fund, Ivy Money Market Fund and Ivy Municipal Bond Fund) may use options and futures contracts on foreign currencies (including the euro), as described above, and forward foreign currency contracts (forward currency contracts), as described below, to attempt to hedge against movements in the values of the foreign currencies in which the Fund's securities are denominated or to attempt to enhance income or yield. Currency hedges can protect against price movements in a security that a Fund owns or intends to acquire that are attributable to changes in the value of the currency in which it is denominated. Such hedges do not, however, protect against price movements in the securities that are attributable to other causes.

A Fund might seek to hedge against changes in the value of a particular currency when no Financial Instruments on that currency are available or such Financial Instruments are more expensive than certain other Financial Instruments. In such cases, the Fund may seek to hedge against price movements in that currency by entering into transactions using Financial Instruments on another currency or a basket of currencies, the values of which WRIICO believes will have a high degree of positive correlation to the value of the currency being hedged. The risk that movements in the price of the Financial Instrument will not correlate perfectly with movements in the price of the currency subject to the hedging transaction is magnified when this strategy is used.

The value of Financial Instruments on foreign currencies depends on the value of the underlying currency relative to the U.S. dollar. Because foreign currency transactions occurring in the interbank market might involve substantially larger amounts than those involved in the use of such Financial Instruments, a Fund could be disadvantaged by having to deal in the odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.

There is no systematic reporting of last sale information for foreign currencies or any regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information generally is representative of very large transactions in the interbank market and thus might not reflect odd-lot transactions where rates might be less favorable. The interbank market in foreign currencies is a global, round-the-clock market. To the extent the U.S. options or futures markets are closed while the markets for the underlying currencies remain open, significant price and rate movements might take place in the underlying markets that cannot be reflected in the markets for the Financial Instruments until they reopen.

Settlement of transactions involving foreign currencies might be required to take place within the country issuing the underlying currency. Thus, a Fund might be required to accept or make delivery of the underlying foreign currency in accordance with any U.S. or foreign regulations regarding the maintenance of foreign banking arrangements by U.S. residents and might be required to pay any fees, taxes and charges associated with such delivery assessed in the issuing country.

Forward Currency Contracts. Each Fund (other than Ivy Limited-Term Bond Fund, Ivy Money Market Fund and Ivy Municipal Bond Fund) may enter into forward currency contracts to purchase or sell foreign currencies for a fixed amount of U.S. dollars or another foreign currency. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (term) from the date of the forward currency contract agreed upon by the parties, at a price set at the time of the forward currency contract. These forward currency contracts are traded directly between currency traders (usually large commercial banks) and their customers.

Such transactions may serve as long hedges; for example, a Fund may purchase a forward currency contract to lock in the U.S. dollar price of a security denominated in a foreign currency that the Fund intends to acquire. Forward currency contract transactions may also serve as short hedges; for example, a Fund may sell a forward currency contract to lock in the U.S. dollar equivalent of the proceeds from the anticipated sale of a security or a dividend or interest payment denominated in a foreign currency.

A Fund may also use forward currency contracts to hedge against a decline in the value of existing investments denominated in foreign currency. For example, if the Fund owned securities denominated in euros, it could enter into a forward currency contract to sell euros in return for U.S. dollars to hedge against possible declines in the euro's value. Such a hedge, sometimes referred to as a position hedge, would tend to offset both positive and negative currency fluctuations, but would not offset changes in security values caused by other factors. The Fund could also hedge the position by selling another currency expected to perform similarly to the euro. This type of hedge, sometimes referred to as a proxy hedge, could offer advantages in terms of cost, yield or efficiency, but generally would not hedge currency exposure as effectively as a simple hedge into U.S. dollars. Proxy hedges may result in losses if the currency used to hedge does not perform similarly to the currency in which the hedged securities are denominated.

A Fund also may use forward currency contracts to attempt to enhance income or yield. The Fund could use forward currency contracts to increase its exposure to foreign currencies that WRIICO believes might rise in value relative to the U.S. dollar, or shift its exposure to foreign currency fluctuations from one country to another. For example, if the Fund owned securities denominated in a foreign currency and WRIICO believed that currency would decline relative to another currency, it might enter into a forward currency contract to sell an appropriate amount of the first foreign currency, with payment to be made in the second foreign currency.

The cost to a Fund of engaging in forward currency contracts varies with factors such as the currency involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. When the Fund enters into a forward currency contract, it relies on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. Failure by the counterparty to do so would result in the loss of any expected benefit of the transaction.

As is the case with futures contracts, purchasers and sellers of forward currency contracts can enter into offsetting closing transactions by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Secondary markets generally do not exist for forward currency contracts, with the result that closing transactions generally can be made for forward currency contracts only by negotiating directly with the counterparty. Thus, there can be no assurance that the Fund will in fact be able to close out a forward currency contract at a favorable price prior to maturity. In addition, in the event of insolvency of the counterparty, the Fund might be unable to close out a forward currency contract at any time prior to maturity. In either event, the Fund would continue to be subject to market risk with respect to the position, and would continue to be required to maintain a position in securities denominated in the foreign currency or to maintain cash or liquid assets in an account.

The precise matching of forward currency contract amounts and the value of the securities involved generally will not be possible because the value of such securities, measured in the foreign currency, will change after the forward currency contract has been established. Thus, a Fund might need to purchase or sell foreign currencies in the spot (cash) market to the extent such foreign currencies are not covered by forward currency contracts. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain.

Normally, consideration of the prospect for currency parities will be incorporated into the longer term investment decisions made with regard to overall diversification strategies. However, WRIICO believes that it is important to have the flexibility to enter into such forward currency contracts when it determines that the best interests of the Fund will be served.

Successful use of forward currency contracts depends on WRIICO's skill in analyzing and predicting currency values. Forward currency contracts may substantially change a Fund's exposure to changes in currency exchange rates and could result in losses to the Fund if currencies do not perform as WRIICO anticipates. There is no assurance that WRIICO's use of forward currency contracts will be advantageous to a Fund or that WRIICO will hedge at an appropriate time.

Combined Positions. A Fund may purchase and write options in combination with each other, or in combination with futures contracts or forward contracts, to adjust the risk and return characteristics of its overall position. For example, the Fund may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.

Turnover. A Fund's options and futures contracts activities may affect its turnover rate and brokerage commission payments. The exercise of calls or puts written by a Fund, and the sale or purchase of futures contracts, may cause it to sell or purchase related investments, thus increasing its turnover rate. Once a Fund has received an exercise notice on an option it has written, it cannot effect a closing transaction in order to terminate its obligation under the option and must deliver or receive the underlying securities at the exercise price. The exercise of puts purchased by a Fund may also cause the sale of related investments, also increasing turnover; although such exercise is within the Fund's control, holding a protective put might cause it to sell the related investments for reasons that would not exist in the absence of the put. A Fund will pay a brokerage commission each time it buys or sells a put or call or purchases or sells a futures contract. Such commissions may be higher than those that would apply to direct purchases or sales.

Swaps, Caps, Floors and Collars. Each Fund may enter into swaps, caps, floors and collars to preserve a return or a spread on a particular investment or portion of its portfolio, to protect against any increase in the price of securities the Fund anticipates purchasing at a later date or to attempt to enhance yield. Swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive cash flows on a notional principal amount, e.g., an exchange of floating rate payments for fixed-rate payments. The purchase of a cap entitles the purchaser, to the extent that a specified index exceeds a predetermined value, to receive payments on a notional principal amount from the party selling the cap. The purchase of a floor entitles the purchaser, to the extent that a specified index falls below a predetermined value, to receive payments on a notional principal amount from the party selling the floor. A collar combines elements of buying a cap and selling a floor.

Swap agreements, including caps, floors and collars, can be individually negotiated and structured to include exposure to a variety of different types of investments or market factors. Depending on their structure, swap agreements may increase or decrease the overall volatility of a Fund's investments and its share price and yield because these agreements may affect the Fund's exposure to long- or short-term interest rates (in the United States or abroad), foreign currency values, mortgage-backed security values, corporate borrowing rates or other factors such as security prices or inflation rates.

Swap agreements will tend to shift a Fund's investment exposure from one type of investment to another. For example, if the Fund agrees to exchange payments in U.S. dollars for payments in foreign currency, the swap agreement would tend to decrease the Fund's exposure to U.S. interest rates and increase its exposure to foreign currency and interest rates. Caps, floors and collars have an effect similar to buying or writing options.

The creditworthiness of firms with which a Fund enters into swaps, caps, floors or collars will be monitored by WRIICO. If a firm's creditworthiness declines, the value of the agreement would be likely to decline, potentially resulting in losses. If a default occurs by the other party to such transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction.

The net amount of the excess, if any, of a Fund's obligations over its entitlements with respect to each swap will be accrued on a daily basis and an amount of cash or liquid assets having an aggregate NAV at least equal to the accrued excess will be maintained in an account with the Fund's custodian that satisfies the requirements of the 1940 Act. Each Fund will also establish and maintain such account with respect to its total obligations under any swaps that are not entered into on a net basis and with respect to any caps or floors that are written by the Fund. WRIICO and the Funds believe that such obligations do not constitute senior securities under the 1940 Act and, accordingly, will not treat them as being subject to a Fund's borrowing restrictions. The position of the SEC is that assets involved in swap transactions are illiquid and are, therefore, subject to the limitations on investing in illiquid securities.

Repurchase Agreements

Each Fund may purchase securities subject to repurchase agreements. The Fund will not enter into a repurchase transaction that will cause more than 10% or 15%, as applicable, of the Fund's net assets to be invested in illiquid investments, which include repurchase agreements not terminable within seven days. See, Illiquid Investments. A repurchase agreement is an instrument under which the Fund purchases a security and the seller (normally a commercial bank or broker-dealer) agrees, at the time of purchase, that it will repurchase the security at a specified time and price. The amount by which the resale price is greater than the purchase price reflects an agreed-upon market interest rate effective for the period of the agreement. The return on the securities subject to the repurchase agreement may be more or less than the return on the repurchase agreement.

The majority of the repurchase agreements in which a Fund will engage are overnight transactions, and the delivery pursuant to the resale typically will occur within one to five days of the purchase. The primary risk is that the Fund may suffer a loss if the seller fails to pay the agreed-upon amount on the delivery date and that amount is greater than the resale price of the underlying securities and other collateral held by the Fund. In the event of bankruptcy or other default by the seller, there may be possible delays and expenses in liquidating the underlying securities or other collateral, decline in their value and loss of interest. The return on such collateral may be more or less than that from the repurchase agreement. A Fund's repurchase agreements will be structured so as to fully collateralize the loans. In other words, the value of the underlying securities, which will be held by the Fund's custodian bank or by a third party that qualifies as a custodian under Section 17(f) of the 1940 Act, is and, during the entire term of the agreement, will remain at least equal to the value of the loan, including the accrued interest earned thereon. Repurchase agreements are entered into only with those entities approved by WRIICO.

Restricted Securities

Restricted securities are securities that are subject to legal or contractual restrictions on resale. However, restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933, as amended, or in a registered public offering. Where registration is required, a Fund may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than prevailed when it decided to seek registration of the security.

There are risks associated with investments in restricted securities in that there can be no assurance of a ready market for resale. Also, the contractual restrictions on resale might prevent the Fund from reselling the securities at a time when such sale would be desirable. Restricted securities that are traded in foreign markets are often subject to restrictions that prohibit resale to U.S. persons or entities or permit sales only to foreign broker-dealers who agree to limit their resale to such persons or entities. The buyer of such securities must enter into an agreement that, usually for a limited period of time, it will resell such securities subject to such restrictions. Restricted securities in which the Fund seeks to invest need not be listed or admitted to trading on a foreign or domestic exchange and may be less liquid than listed securities. Certain restricted securities, e.g., Rule 144A securities, may be determined to be liquid in accordance with guidelines adopted by the Board of Directors. See Illiquid Investments.

U.S. Government Securities

Securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities (U.S. Government securities) are high quality debt instruments issued or guaranteed as to principal or interest by the U.S. Treasury or an agency or instrumentality of the U.S. Government. These securities include Treasury Bills (which mature within one year of the date they are issued), Treasury Notes (which have maturities of one to ten years) and Treasury Bonds (which generally have maturities of more than ten years). All such Treasury securities are backed by the full faith and credit of the United States.

U.S. Government agencies and instrumentalities that issue or guarantee securities include, but are not limited to, the Federal Housing Administration, Fannie Mae, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, Ginnie Mae, General Services Administration, Central Bank for Cooperatives, Federal Home Loan Banks, Freddie Mac, Farm Credit Banks, Maritime Administration, the Tennessee Valley Authority, the Resolution Funding Corporation and the Student Loan Marketing Association.

Securities issued or guaranteed by U.S. Government agencies and instrumentalities are not always supported by the full faith and credit of the United States. Some, such as securities issued by the Federal Home Loan Banks, are backed by the right of the agency or instrumentality to borrow from the Treasury. Other securities, such as securities issued by Fannie Mae, are supported only by the credit of the instrumentality and by a pool of mortgage assets. If the securities are not backed by the full faith and credit of the United States, the owner of the securities must look principally to the agency issuing the obligation for repayment and may not be able to assert a claim against the United States in the event that the agency or instrumentality does not meet its commitment.A Fund will invest in securities of agencies and instrumentalities only if WRIICO is satisfied that the credit risk involved is acceptable.

U.S. Government securities may include mortgage-backed securities issued or guaranteed as to the payment of principal and interest by U.S. Government agencies or instrumentalities including, but not limited to, Ginnie Mae, Freddie Mac and Fannie Mae. These mortgage-backed securities include pass-through securities, participation certificates and collateralized mortgage obligations. See, Mortgage-Backed and Asset-Backed Securities. Timely payment of principal and interest on Ginnie Mae pass-throughs is guaranteed by the full faith and credit of the United States. Freddie Mac and Fannie Mae are both instrumentalities of the U.S. Government, but their obligations are not backed by the full faith and credit of the United States. It is possible that the availability and the marketability (i.e., liquidity) of the securities discussed in this section could be adversely affected by actions of the U.S. Government to tighten the availability of its credit.

Variable or Floating Rate Instruments

Variable or floating rate instruments (including notes purchased directly from issuers) bear variable or floating interest rates and may carry rights that permit holders to demand payment of the unpaid principal balance plus accrued interest from the issuers or certain financial intermediaries on dates prior to their stated maturities. Floating rate securities have interest rates that change whenever there is a change in a designated base rate while variable rate instruments provide for a specified periodic adjustment in the interest rate. These formulas are designed to result in a market value for the instrument that approximates its par value.

Warrants and Rights

Warrants are options to purchase equity securities at specified prices for a specific period of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to warrants but normally have a short duration and are distributed directly by the issuer to its shareholders. Rights and warrants have no voting rights, receive no dividends, and have no rights with respect to the assets of the issuer. Warrants and rights are highly volatile and, therefore, more susceptible to sharp decline in value than the underlying security might be. They are also generally less liquid than an investment in the underlying securities.

When-Issued and Delayed-Delivery Transactions

Each Fund may purchase securities in which it may invest on a when-issued or delayed-delivery basis or sell them on a delayed-delivery basis. In either case payment and delivery for the securities take place at a future date. The securities so purchased or sold are subject to market fluctuation; their value may be less or more when delivered than the purchase price paid or received. When purchasing securities on a when issued or delayed-delivery basis, the Fund assumes the rights and risks of ownership, including the risk of price and yield fluctuations. No interest accrues to the Fund until delivery and payment is completed. When the Fund makes a commitment to purchase securities on a when-issued or delayed-delivery basis, it will record the transaction and thereafter reflect the value of securities in determining its NAV per share. When the Fund sells securities on a delayed-delivery basis, the Fund does not participate in further gains or losses with respect to the securities. When the Fund makes a commitment to sell securities on a delayed-delivery basis, it will record the transaction and thereafter value the securities at the sale price in determining the Fund's NAV per share. If the other party to a delayed-delivery transaction fails to deliver or pay for the securities, the Fund could miss a favorable price or yield opportunity, or could suffer a loss.

Ordinarily the Fund purchases securities on a when-issued or delayed-delivery basis with the intention of actually taking delivery of the securities. However, before the securities are delivered to the Fund and before it has paid for them (the settlement date), the Fund could sell the securities if WRIICO decides it is advisable to do so for investment reasons. The Fund will hold aside or segregate cash or other securities, other than those purchased on a when-issued or delayed-delivery basis, at least equal to the amount it will have to pay on the settlement date; these other securities may, however, be sold at or before the settlement date to pay the purchase price of the when-issued or delayed-delivery securities.

Zero Coupon Securities

Zero coupon securities are debt obligations that do not entitle the holder to any periodic payment of interest prior to maturity or do not specify a future date when the securities begin to pay current interest; instead, they are sold at a deep discount from their face value and are redeemed at face value when they mature. Because zero coupon securities do not pay current income, their prices can be very volatile when interest rates change and generally are subject to greater price fluctuations in response to changing interest rates than prices of comparable debt obligations that make current distributions of interest in cash.

A Fund may invest in zero coupon securities that are stripped U.S. Treasury notes and bonds, zero coupon bonds of corporate or municipal issuers and other securities that are issued with original issue discount (OID). The Federal tax law requires that a holder of a security with OID accrue a ratable portion of the OID on the security as income each year, even though the holder may receive no interest payment on the security during the year. Accordingly, although a Fund will receive no payments on its zero coupon securities prior to their maturity or disposition, it will have current income attributable to those securities and includable in the dividends it pays to its shareholders. The Fund will pay those dividends from its cash assets or by liquidation of portfolio securities, if necessary, at a time when it otherwise might not have done so. The Fund may realize capital gains or losses from those sales, which would increase or decrease its taxable income and/or net capital gains.

A broker-dealer creates a derivative zero by separating the interest and principal components of a U.S. Treasury security and selling them as two individual securities. CATS (Certificates of Accrual on Treasury Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury Receipts) are examples of derivative zeros.

The Federal Reserve Bank creates STRIPS (Separate Trading of Registered Interest and Principal of Securities) by separating the interest and principal components of an outstanding U.S. Treasury security and selling them as individual securities. Bonds issued by the Resolution Funding Corporation (REFCORP) and the Financing Corporation (FICO) can also be separated in this fashion. Original issue zeros are zero coupon securities originally issued by the U.S. Government, a government agency, or a corporation in zero coupon form.

Investment Restrictions and Limitations

Certain of the Funds' investment restrictions and other limitations are described in this SAI. The following are each Fund's fundamental investment restrictions set forth in their entirety, which, like each Fund's goal(s), cannot be changed without shareholder approval for the affected Fund. For this purpose, shareholder approval means the approval, at a meeting of Fund shareholders, by the lesser of (1) the holders of 67% or more of a Fund's shares represented at the meeting, if more than 50% of the Fund's outstanding shares are present in person or by proxy or (2) more than 50% of the Fund's outstanding shares. If a percentage restriction is adhered to at the time of an investment or transaction, later changes in the percentage resulting from a change in value of portfolio securities or amount of total assets will not be considered a violation of the restriction.


	(1)	Each Fund (other than Ivy Asset Strategy Fund) may not buy real estate, any nonliquid interests in real estate investment trusts or interests in real estate limited partnerships; however, each of these Funds may buy obligations or instruments that it otherwise may buy even though the issuer invests in real estate or interests in real estate. Ivy Asset Strategy Fund may not invest in real estate limited partnerships or purchase or sell real estate unless acquired as a result of ownership of securities (but this shall not prevent this Fund from purchasing and selling securities issued by companies or other entities or investment vehicles that deal in real estate or interests therein, nor shall this prevent this Fund from purchasing interests in pools of real estate mortgage loans);

	(2)	Each Fund (other than Ivy Asset Strategy Fund) may not acquire shares of an investment company that issues redeemable securities. Each Fund (other than Ivy Limited-Term Bond Fund, Ivy Money Market Fund or Ivy Municipal Bond Fund) may buy shares of an investment company that does not issue redeemable securities if the Fund does so in a regular transaction in the open market and in compliance with the requirements of the 1940 Act. Each of these Funds may purchase such securities if, as a result of such purchase, no more than 10% of its total assets are invested in such securities.

		As operating policies, Ivy High Income Fund and Ivy Science and Technology Fund do not intend to invest more than 5% of their respective total assets in such securities; Ivy Asset Strategy Fund may purchase shares of another investment company subject to the restrictions and limitations of the 1940 Act;

		Notwithstanding the foregoing, each of the Funds (other than Ivy Limited-Term Bond Fund, Ivy Money Market Fund or Ivy Municipal Bond Fund) may also acquire investment company shares as part of a merger, consolidation or other reorganization;

	(3)	The following applies to each of Ivy Core Equity Fund, Ivy Small Cap Growth Fund, Ivy Limited-Term Bond Fund, Ivy Municipal Bond Fund, Ivy International Growth Fund, Ivy Asset Strategy Fund, Ivy Science and Technology Fund, Ivy Mid Cap Growth Fund and Ivy Money Market Fund:

		The Fund may not lend money or other assets, other than through certain limited types of loans; however, each Fund may buy debt securities and other obligations consistent with its goal(s) and its other investment policies and restrictions, may enter into repurchase agreements (see Repurchase Agreements) and, except Ivy Municipal Bond Fund, may lend its portfolio securities to the extent allowed, and in accordance with the requirements, under the 1940 Act and as consistent with its goal(s) and its other investment policies and restrictions;

		The following interpretation applies to, but is not part of, this fundamental restriction: the Fund's investments in master notes and similar instruments will not be considered to be the making of a loan.

		The following applies to Ivy High Income Fund, Large Cap Growth Fund and Ivy Tax-Managed Equity Fund:

		The Fund may not make loans, except that the Fund may purchase or hold debt instruments in accordance with its investment objective and policies, lend Fund securities in accordance with its investment objective and policies and enter into repurchase agreements, to the extent allowed, and in accordance with the requirements, under the 1940 Act. For purposes of this restriction, the participation of the Fund in a credit facility whereby the Fund mayu directly lend and borrow money for temporary purposes, privided that the loans are made in accordance with an order of exemption from the Securities and Exchange Commission and any conditions thereto, will not be considered the making of a loan.

	(4)	No Fund may invest for the purpose of exercising control or management of another issuer;

	(5)	No Fund may sell securities short (unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short) or purchase securities on margin, except that (1) this policy does not prevent a Fund from entering into short positions in foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments, (2) a Fund may obtain such short-term credits as are necessary for the clearance of transactions, and (3) a Fund may make margin payments in connection with futures contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments;

	(6)	No Fund may engage in the underwriting of securities of other issuers, except to the extent that, in connection with the disposition of portfolio securities, the Fund may be deemed an underwriter under Federal securities laws;

	(7)	No Fund may invest in a security if, as a result, it would own more than 10% of the outstanding voting securities of an issuer, or if more than 5% of a Fund's total assets would be invested in securities of that issuer, provided that U.S. Government securities are not subject to this limitation and up to 25% of the total assets of each Fund may be invested without regard to these restrictions;

	(8)	No Fund (other than Ivy Science and Technology Fund) may buy a security, except for U.S. Government securities, if, as a result, 25% or more of the Fund's total assets would then be invested in securities of issuers having their principal business activities in the same industry, except for municipal bonds (other than PABs) for Ivy Municipal Bond Fund and except for bank obligations and instruments for Ivy Money Market Fund;

	(9)	Ivy Money Market Fund and Ivy Municipal Bond Fund may not purchase warrants;

	(10)	Each Fund (other than Ivy Asset Strategy Fund) may not purchase or sell physical commodities; however, this policy does not prevent these Funds (other than Ivy Money Market Fund, Ivy Limited-Term Bond Fund or Ivy Municipal Bond Fund) from purchasing and selling foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments. Ivy Asset Strategy Fund may not purchase or sell physical commodities, except that this Fund may purchase and sell precious metals for temporary, defensive purposes; however, this policy shall not prevent this Fund from purchasing and selling foreign currency, futures contracts, options, forward contracts, swaps, caps, collars, floors and other financial instruments;

	(11)	No Fund may issue senior securities. Each Fund may, however, issue additional series and classes of shares in accordance with the Articles of Incorporation.

		Each Fund (other than Ivy Asset Strategy Fund, Ivy High Income Fund, Large Cap Growth Fund, Ivy Tax-Managed Equity Fund and Ivy Mid Cap Growth Fund) may not borrow money, except that these Funds may borrow money (and pledge assets in connection therewith) from banks for temporary, extraordinary or emergency purposes but only up to 5% of their respective total assets (10% of the total assets of Ivy Money Market Fund).

		Ivy Asset Strategy Fund, Ivy High Income Fund, Large Cap Growth Fund and Ivy Tax-Managed Equity Fund may each borrow money only for temporary, emergency or extraordinary purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets (less liabilities other than borrowings). Any borrowings that come to exceed 33 1/3% of the value of Ivy Asset Strategy Fund's total assets by reason of a decline in net assets will be reduced within three days to the extent necessary to comply with the 33 1/3% limitation. For purposes of this limitation, three days means three days, exclusive of Sundays and holidays.

		Ivy Money Market Fund may not pledge, mortgage, or hypothecate assets as security for indebtedness except to secure permitted borrowings;

	(12)	Each Fund (except Ivy Asset Strategy Fund) may not invest in interests in oil, gas or mineral leases or mineral development programs, including oil and gas limited partnerships;

	(13)	At least 80% of Ivy Municipal Bond Fund's net assets will be invested during normal market conditions in municipal bonds; and

	(14)	No Fund may participate on a joint, or a joint and several basis, in any trading account in securities.

The method of determining who is an issuer for purposes of the 5% limitation in fundamental restriction (7) is non-fundamental. In particular, in applying this limitation:


	(a)	For municipal bonds created by a particular government but backed only by the assets and revenues of a subdivision of that government, such as an agency, instrumentality, authority or other subdivision, the Fund considers such subdivision to be the issuer;

	(b)	For PABs, the nongovernmental user of facilities financed by the user is considered a separate issuer; and

	(c)	Ivy Municipal Bond Fund considers a guarantee of a municipal bond to be a separate security that would be given a value and included in the limitation if the value of all municipal bonds created by the guarantor and owned by the Fund exceeds 10% of the value of the Fund's total assets.

The following investment restrictions are not fundamental and may be changed by the Board of Directors without shareholder approval:


	(1)	During normal market conditions, at least 80% of the net assets of Ivy Small Cap Growth Fund will be invested in small-cap growth stocks; at least 80% of the net assets of Ivy Large Cap Growth Fund will be invested in large-cap growth stocks; at least 80% of the net assets of Ivy Mid Cap Growth Fund will be invested in mid-cap growth stocks; and at least 80% of Ivy Tax-Managed Equity Fund's net assets will be invested in equity securities.

	(2)	During normal market conditions, at least 80% of Ivy International Growth Fund's net assets will be invested in foreign securities and at least 65% of its total assets will be invested in at least three different countries outside the United States. Ivy International Growth Fund may not purchase a foreign security if, as a result of such purchase, more than 75% of its total assets would be invested in issuers of any one foreign country.

	(3)	During normal market conditions, Ivy Science and Technology Fund will invest at least 80% of its net assets in securities of science and technology companies or companies that benefit from the application of science and/or technology innovations.

	(4)	Ivy High Income Fund will not purchase a common stock if, as a result, more than 20% of its total assets would be invested in common stocks. This 20% limit includes common stocks acquired on conversion of convertible securities, on exercise of warrants or call options or in any other voluntary manner. The Fund does not currently intend to invest more than 10% of its total assets in non-dividend-paying common stocks.

	(5)	Ivy Municipal Bond Fund does not intend to invest more than 50% of its total assets in PABs. Up to 10% of Ivy Municipal Bond Fund's total assets may be invested in debt securities other than municipal bonds. The Fund will have less than 25% of its total assets invested in securities of issuers located in any single state.

	(6)	At least 80% of Ivy Limited-Term Bond Fund's net assets will be invested during normal market conditions in bonds.

	(7)	Ivy Money Market Fund may not purchase the securities of any one issuer (other than U.S. Government securities) if, as a result of such purchase, more than 5% of its total assets would be invested in the securities of any one issuer, as determined in accordance with Rule 2a-7; provided, however, the Fund may invest up to 25% of its total assets in first tier securities of a single issuer for a period of up to 3 business days after purchase. The Fund may rely on this exception only as to one issuer at a time. Ivy Money Market Fund may not invest more than 5% of its total assets in securities rated in the second highest rating category by the requisite rating organization(s) or comparable unrated securities, with investments in such securities of any one issuer (except U.S. Government securities) limited to the greater of 1% of the Fund's total assets or $1,000,000, as determined in accordance with Rule 2a-7.

	(8)	Each Fund (other than Ivy Asset Strategy Fund, Ivy High Income Fund and Ivy Money Market Fund) does not currently intend to invest in non-investment grade debt securities and unrated securities judged by WRIICO to be of equivalent quality if, as a result, more than 5% of its total assets, respectively, would consist of such investments. Ivy Asset Strategy Fund may not invest more than 35% of its total assets in non-investment grade debt securities. Ivy High Income Fund may invest all of its assets in non-investment grade debt securities. Ivy Limited-Term Bond Fund does not currently intend to invest more than 50% of its total assets in securities rated in the lowest tier of investment grade debt securities (those rated BBB by S&P or Baa by Moody's). At least 80% of Ivy Municipal Bond Fund's net assets will consist of municipal bonds of investment grade. Ivy Money Market Fund may not invest in non-investment grade debt securities.

	(9)	Subject to the diversification requirements of Rule 2a-7, Ivy Money Market Fund may invest up to 10% of its total assets in Canadian Government obligations. Ivy Money Market Fund may not invest more than 25% of its total assets in a combination of foreign obligations and instruments.

	(10)	Ivy Asset Strategy Fund currently intends to limit its investments in foreign securities, under normal market conditions, to no more than 50% of its total assets. Ivy High Income Fund may invest an unlimited amount of its total assets in foreign securities.

	(11)	Each of Ivy Core Equity Fund and Ivy Small Cap Growth Fund may invest up to 10% of its net assets, and Ivy Science and Technology Fund may invest up to 20% of its net assets, in foreign securities. Each of Ivy Large Cap Growth Fund, Ivy Mid Cap Growth Fund and Ivy Tax-Managed Equity Fund may invest up to 25% of its total assets, respectively, in foreign securities. Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund may not invest in foreign securities.

	(12)	Ivy Asset Strategy Fund, Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund do not currently intend to invest more than 5% of their respective total assets in when-issued and delayed delivery transactions.

	(13)	Each Fund may not purchase a security if, as a result, more than 10% (15% for Ivy Asset Strategy Fund, Ivy Large Cap Growth Fund, Ivy Mid Cap Growth Fund and Ivy Tax-Managed Equity Fund) of its net assets would consist of illiquid investments.

	(14)	Each Fund (other than Ivy Money Market Fund) is permitted to invest in options, futures contracts, asset-backed securities and other derivative instruments only if it is permitted to invest in the type of asset by which the return on, or value of, the derivative is measured.

	(15)	To the extent that a Fund enters into futures contracts, options on futures contracts or options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are in-the-money at the time of purchase) will not exceed 5% of the liquidation value of that Fund's portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Fund has entered into. (In general, a call option on a futures contract is in-the-money if the value of the underlying futures contract exceeds the strike, i.e., exercise, price of the call; a put option on a futures contract is in-the-money if the value of the underlying futures contract is exceeded by the strike price of the put.) This policy does not limit to 5% the percentage of a Fund's total assets that are at risk in futures contracts, options on futures contracts and currency options.

	(16)	Ivy Asset Strategy Fund may borrow money only from a bank. The Fund will not purchase any security while borrowings representing more than 5% of its total assets are outstanding.

	(17)	Ivy Mid Cap Growth Fund may borrow only from banks and only to the extent that the value of its assets, less its liabilities other than borrowings, is equal to at least 300% of all borrowings including the proposed borrowing.

	(18)	Ivy Asset Strategy Fund does not currently intend to invest in money market instruments rated below the highest rating category by S&P or Moody's, or if unrated, judged by WRIICO to be of equivalent quality; provided, however, that the Fund may invest in a money market instrument rated below the highest rating category by S&P or Moody's if such instrument is subject to a letter of credit or similar unconditional credit enhancement that is rated A-1 by S&P or P-1 by Moody's, or if unrated, judged by WRIICO to be of equivalent quality.

	(19)	Ivy Asset Strategy Fund does not currently intend to lend assets other than securities to other parties, except by acquiring loans, loan participations, or other forms of direct debt instruments. (This limitation does not apply to purchases of debt securities and other obligations or to repurchase agreements.)

	(20)	Ivy Asset Strategy Fund does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases.

	(21)	Ivy Money Market Fund will not invest in any security whose interest rate or principal amount to be repaid, or timing of repayments, varies or floats with the value of a foreign currency, the rate of interest payable on foreign currency borrowings, or with any interest rate or currency other than U.S. dollars.

An investment policy or limitation that states a maximum percentage of a Fund's assets that may be so invested or prescribes quality standards is typically applied immediately after, and based on, a Fund's acquisition of an asset. Accordingly, a subsequent change in the asset's value, net assets, or other circumstances will not be considered when determining whether the investment complies with a Fund's investment policies and limitations.

Portfolio Turnover

A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities for a year and dividing it by the monthly average of the market value of such securities during the year, excluding certain short-term securities. A Fund's turnover rate may vary greatly from year to year as well as within a particular year and may be affected by cash requirements for the redemption of its shares.

The portfolio turnover rates for the fiscal years ended March 31, 2003 and 2002 for each of the Funds were as follows:

	2003	2002
Ivy Asset Strategy Fund	109.38%	143.38%
Ivy Core Equity Fund	39.13%	22.36%
Ivy High Income Fund	52.20%	82.42%
Ivy International Growth Fund	107.62%	133.83%
Ivy Large Cap Growth Fund	71.98%	98.59%
Ivy Limited-Term Bond Fund	49.41%	32.97%
Ivy Mid Cap Growth Fund	35.89%	39.05%
Ivy Money Market Fund	NA	NA
Ivy Municipal Bond Fund	40.03%	36.41%
Ivy Science and Technology Fund	74.48%	90.92%
Ivy Small Cap Growth Fund	30.63%	28.77%
Ivy Tax-Managed Equity Fund	145.24%	95.60%

The portfolio turnover rate for the common stock portion of Ivy Asset Strategy Fund's portfolio for the fiscal year ended March 31, 2003 was 106.16%; the rate for the remainder of the portfolio was 110.49%.

The turnover rate Ivy Asset Strategy Fund and Ivy International Growth Fund is a regular component of their investment style. Ivy Tax-Managed Equity Fund experienced a higher turnover rate for the fiscal year ending March 31, 2003 due to a change in the portfolio manager (as of January 2002) and his continued effort to modify the holdings of this Fund to reflect his style of managing the assets.

A high turnover rate will increase transaction costs and commission costs that will be borne by the Funds and could generate taxable income or loss.

MANAGEMENT OF THE FUNDS

Directors and Officers

The Board of Directors (the Board) oversees the operations of the Funds, which number 13 portfolios, and is responsible for the overall management and supervision of its affairs in accordance with the laws of the State of Maryland. The members of the Board are also Trustees for, and similarly oversee the operations of, each of the 8 funds in the Ivy Fund, which, together with the Funds, comprise the Ivy Family of Funds. The Waddell & Reed Fund Complex is comprised of the Ivy Family of Funds and the Advisors Fund Complex, which is comprised of each of the funds in the Waddell & Reed Advisors Funds (21 portfolios), W&R Target Funds, Inc. (12 portfolios) and Waddell & Reed InvestEd Portfolios, Inc. (3 portfolios). Prior to June 3, 2003, the Funds were part of the Advisors Fund Complex, and the Directors who comprised the Board for the Funds were also Members of the Board of Directors for each of the other fund groups in the Advisors Fund Complex. At a Shareholders meeting held June 3, 2003, the Shareholders elected to the Board, as Directors for the Funds, the same individuals who are Trustees for each of the Funds in Ivy Fund. Four of the Directors for the Funds also oversee all of the funds in the Advisors Fund Complex.

The Board appoints officers and delegates to them the management of the day-to-day operations of each of the Funds, based on policies reviewed and approved by the Board and general oversight by the Board.

The address for each Director and Executive Officer in the following tables is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217. Each Director and Officer serves an indefinite term, until he or she dies, resigns or becomes disqualified. The Directors who are not "interested persons" of the Funds within the meaning of Section 2(a)(19) of the 1940 Act ("Disinterested Directors") and their principal occupations during the past five years are:

Name and Age	Position(s) Held with the Funds	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Total Number of Funds Overseen	Other Directorships Held
Jarold W. Boettcher (63)	Director	Director since June 3, 2003	President of Boettcher Enterprises, Inc. (agriculture products and services) since 1979; President of Boettcher Supply, Inc. (electrical and plumbing supplies distributor) since 1979; President of Boettcher Aerial, Inc. (Aerial Ag Applicator) since 1983	21	Director of Guaranty State Bank & Trust Co.; Director of Guaranty, Inc.
James D. Gressett (53)	Director	Director since June 3, 2003	CEO of PacPizza, Inc. (Pizza Hut franchise) since 2000; Secretary of Street Homes, LLP (homebuilding company) since 2001; President of Alien, Inc. (real estate development), 1997 to 2001	21	Director of Collins Financial Services, a debt recovery company
Joseph Harroz, Jr. (36)	Director	5 years	General Counsel, University of Oklahoma, Cameron University and Rogers State University; University-wide Vice President of the University of Oklahoma since 1994; Adjunct Professor of Law, University of Oklahoma College of Law; Managing Member, Harroz Investment, LLC (commercial real estate), since 1998; Managing Member, JHJ Investments, LLC (commercial real estate) since 2002	57	Co-Lead Independent Director of each of the funds in the Advisors Funds Complex (36 portfolios overseen)
Glendon E. Johnson, Jr. (51)	Director	Director since June 3, 2003	Of Counsel, Lee & Smith, PC (law firm) since 1996; Member/Manager, Castle Valley Ranches, LLC (ranching) since 1995	21	None
Eleanor B. Schwartz (66)	Director	8 years	Professor Emeritus, University of Missouri, since 2003; Professor of Business Administration, University of Missouri--Kansas City 1980-2003; Chancellor of University of Missouri--Kansas City, 1991-1999	57	Director of each of the funds in the Advisors Funds Complex (36 portfolios overseen)
Michael G. Smith (59)	Director	Director since June 3, 2003	Retired; formerly, Managing Director--Institutional Sales, Merrill Lynch, 1983-1999	21	Director, Executive Board, Cox Business School, Southern Methodist University (since 1998); Director, Northwestern Mutual Life Series Funds & Mason Street Advisors Funds (since February, 2003) (29 portfolios overseen)
Edward M. Tighe (60)	Director	Director since June 3, 2003	Chairman, CEO and Director of JBE Technology Group, Inc. (telecommunications and computer network consulting); CEO and Director of Asgard Holding, LLC (computer network and security services); President of Global Mutual Fund Services; President and CEO of Global Technology	21	Director of Hansberger Institutional Funds (2 portfolios overseen)

The Directors considered by the Funds and its counsel to be "interested persons" (as defined in the 1940 Act) of the Funds or of their investment manager because of their employment by Waddell & Reed Financial, Inc. (Waddell & Reed) or its subsidiaries are:

Name and Age

Position(s) Held with the Funds

Term of Office and Length of Time Served

Principal
Occupation(s)
During Past 5 Years

Total Number of Funds Overseen

Other
Directorships
Held

Keith A. Tucker
(58)

Director and
Chairman

Director
10 years

Chairman
5 years

Chairman of the Board, Director and CEO of Waddell & Reed; Chairman of the Board of Waddell & Reed, Inc.; Chairman of the Board and Director of Waddell & Reed Investment Management Company (WRIMCO); Chairman of the Board and Director of Waddell & Reed Services Co.; President and CEO of Waddell & Reed Financial Services, Inc.; Chairman of the Board of Waddell & Reed Development, Inc.; Chairman of the Board of Waddell & Reed Distributors, Inc.

Chairman of the Board and Director of the Advisors Funds Complex (36 portfolios overseen)

Henry J. Herrmann
(60)

Director and
President

Director
5 years

President
2 years

Chairman of the Board, CEO and President of WRIICO; President, Chief Investment Officer and Director of Waddell & Reed; President and CEO of WRIMCO; Chief Investment Officer of WRIMCO; Chief Investment Officer of Waddell & Reed Financial Services, Inc.; Executive Vice President of Waddell & Reed Financial Services, Inc.; formerly, Chairman of the Board of Austin, Calvert & Flavin, Inc.

Chairman of the Board and Director, Ivy Services Inc. ("ISI"); Director of WRI; Director of Waddell & Reed Development, Inc.; Director of Waddell & Reed Services Co.; Director of Austin Calvert & Flavin, Inc.; Director and President of the Advisors Funds Complex (36 portfolios overseen)

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, the Fund's officers are:

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH THE TRUST	TERM OF OFFICE: OFFICER SINCE	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Theodore W. Howard Age: 60	Treasurer, Vice President, Principal Accounting Officer and Principal Financial Officer	Treasurer, Vice President, Principal Accounting Officer 11 years Principal Financial Officer 2 years	Senior Vice President of WRSCO; Vice President, Treasurer, Principal Accounting Officer and Principal Financial Officer of the Funds and each of the funds in the Advisors Funds Complex.; Vice President and Treasurer of Ivy Fund; formerly, Vice President of WRSCO
Kristen A. Richards Age: 35	Vice President and Secretary	3 years	Vice President, Associate General Counsel and Chief Compliance Officer of WRIMCO and WRIICO; Vice President, Secretary and Associate General Counsel of each of the funds in the Waddell & Reed Fund Complex; formerly, Assistant Secretary of the Funds and each of the funds in the Waddell & Reed Advisors Funds and W&R Target Funds, Inc.; formerly, Compliance Officer of WRIMCO
Daniel C. Schulte Age: 37	Vice President and Assistant Secretary	3 years	Vice President, Secretary and General Counsel of Waddell & Reed; Senior Vice President, Secretary and General Counsel of Waddell & Reed, WRIMCO and WRSCO; Senior Vice President, Assistant Secretary and General Counsel of WRIICO and ISI; Vice President, General Counsel and Assistant Secretary of each of the funds in the Waddell & Reed Fund Complex; formerly, Assistant Secretary of Waddell & Reed; formerly, an attorney with Klenda, Mitchell, Austerman & Zuercher, L.L.C.

Committees of the Board of Directors

The Board has established the following committees: Audit Committee, Executive Committee, Nominating Committee, Valuation Committee and Investment Review Committee. The respective duties and current memberships are:

Audit Committee. The Audit Committee meets with the Funds' independent auditors, internal auditors and corporate officers to discuss the scope and results of the annual audit of the Fund, to review financial statements, reports, compliance matters, and to discuss such other matters as the Committee deems appropriate or desirable. The Audit Committee acts as a liaison between the Funds' independent auditors and the full Board of Directors. Michael G. Smith, Jarold Boettcher and Glendon E. Johnson, Jr. are the members of the Audit Committee. During the fiscal year ended March 31, 2003, the Audit Committee met four times.

Executive Committee. When the Board is not in session, the Executive Committee has and may exercise any or all of the powers of the Board in the management of the business and affairs of the Funds except the power to increase or decrease the size of, or fill vacancies on, the Board, and except as otherwise provided by law. Keith A. Tucker, Henry J. Herrmann and Edward M. Tighe are the members of the Executive Committee. During the fiscal year ended March 31, 2003, the Executive Committee did not meet.

Nominating Committee. The Nominating Committee evaluates, selects and recommends to the Board candidates for disinterested directors. Joseph Harroz, Jr., Eleanor B. Schwartz and James D. Gressett are the members of the Nominating Committee. During the fiscal year ended March 31, 2003, the Nominating Committee met once.

Valuation Committee. The Valuation Committee reviews and considers valuation recommendations by management for securities for which market quotations are not available, and values such securities and other assets at fair value as determined in good faith under procedures established by the Board. Keith A. Tucker and Henry J. Herrmann are the members of the Valuation Committee. During the fiscal year ended March 31, 2003, the Committee met 14 times.

Investment Review Committee. The Investment Review Committee considers such matters relating to the investment management of the funds in the Fund Complex as the Committee may, from time to time, determine warrant review, such as investment management policies and strategies, investment performance, risk management techniques and securities trading practices, and may make recommendations as to these matters to the Board. During the fiscal year ended March 31, 2003, the committee met once.

OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2002

The following table provides information regarding shares of the Funds owned by each Director, as well as the aggregate dollar range of shares owned, by each Director, within the Waddell & Reed Fund Complex.

DISINTERESTED DIRECTORS

Director	Dollar Range of Fund Shares Owned	Aggregate Dollar Range of Fund Shares Owned in All Funds within the Waddell & Reed Fund Complex
Jarold W. Boettcher¹	$0	$0
James D. Gressett¹	$0	$0
Joseph Harroz, Jr.	$0	over $100,000
Glendon E. Johnson, Jr.¹	$0	$0
Eleanor B. Schwartz	$0	$0
Michael G. Smith¹	$0	$0
Edward M. Tighe¹	$0	$10,001 to $50,000

INTERESTED DIRECTORS

Director	Dollar Range of Fund Shares Owned	Aggregate Dollar Range of Fund Shares Owned in All Funds within the Waddell & Reed Fund Complex
Henry J. Herrmann	$0	over $100,000
Keith A. Tucker	$0	over $100,000

The following Directors have each deferred a portion of their annual compensation. The values of these deferred accounts are:

Director	Dollar Range of Fund Shares Deemed to be Owned	Aggregate Dollar Range of Shares Deemed to be Owned in all Funds within the Fund Complex
James D. Gressett¹	$0	$1 to $10,000
Joseph Harroz, Jr.	$0	$10,001 to $50,000
Eleanor B. Schwartz	$0	$1 to $10,000
Michael G. Smith¹	$0	$1 to $10,000
Edward M. Tighe¹	$0	$1 to $10,000

¹Not a Director on December 31, 2002.

During the fiscal year ended March 31, 2003, the Funds were part of the Advisors Fund Complex,and the Directors then serving received the following fees for service as a director:

COMPENSATION TABLE

Director

Aggregate
Compensation
From
Fund

Total
Compensation
From Fund and
Advisors Fund
Complex¹

--------

------------

Henry J. Herrmann

Keith A. Tucker

James M. Concannon ²

John A. Dillingham ²

David P. Gardner ²

Linda K. Graves ²

Joseph Harroz, Jr.

John F. Hayes²

Robert L. Hechler ²

Glendon E. Johnson ²

William T. Morgan³

Frank J. Ross, Jr. ²

Eleanor B. Schwartz

Frederick Vogel III ²

$ 0

3,738

3,579

1,118

3,738

$ 0

74,000

70,750

22,000

74,000

¹No pension or retirement benefits have been accrued as a part of Fund expenses.

²No longer serving as a Director as of June 3, 2003.

³Mr. Morgan resigned from the Board of Directors for the Waddell & Reed Advisors Funds, W&R Funds, W&R Target Funds, Inc. and Waddell & Reed InvestEd Portfolios, Inc. effective June 1, 2002.

The officers are paid by WRIICO or its affiliates.

The Board has created an honorary position of Director Emeritus, whereby an incumbent Director who has attained the age of 70 may, or if elected on or after May 31, 1993 and has attained the age of 75 must, resign his or her position as Director and, unless he or she elects otherwise, will serve as Director Emeritus provided the Director has served as a Director of the Funds for at least five years which need not have been consecutive. A Director Emeritus receives fees in recognition of his or her past services whether or not services are rendered in his or her capacity as Director Emeritus, but he or she has no authority or responsibility with respect to the management of the Funds. Messrs. Henry L. Bellmon, Jay B. Dillingham, William T. Morgan, Doyle Patterson, Ronald K. Richey and Paul S. Wise retired as Directors of the Funds, and each serves as Director Emeritus.

Code of Ethics

The Funds, WRIICO and IFDI have adopted a Code of Ethics under Rule 17j-1 of the 1940 Act that permits their respective directors, officers and employees to invest in securities, including securities that may be purchased or held by a Fund. The Code of Ethics subjects covered personnel to certain restrictions that include prohibited activities, pre-clearance requirements and reporting obligations.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

The following table sets forth information with respect to the Funds, as of May 31, 2003, regarding beneficial ownership of Fund shares.


Frank H Armstrong (TOD)		Tax-Managed Equity Fund
610 Harry S Truman Dr		Class B	5,816	10.97%
Upper Marlboro MD 20774-2062

William Thomas Ashby &		Municipal Bond Fund
Nelle M Ashby Co-ttees		Class B	2,596	7.02%
The William Thomas Ashby Sr
Revoc Living Trust
105 Stratford
Summerville SC 29485-8636

Marie D Burns Ttee		Tax-Managed Equity Fund
U/A dtd 03-30-1989		Class B	3,106	5.86%
Fred & Marie Dube Trust
FBO Fred Dube
2070 World Parkway Blvd Apt 36
Clearwater FL 33763-3646

Charles Schwab & Co Inc		Core Equity Fund
Special Custody A/C		Class Y	141,676	38.94%
	for the Benefit of
	Customers	Small Cap Growth Fund
ATTN: Mutual Funds		Class Y	313,214	9.47%
101 Montgomery St
San Francisco CA		International Growth Fund
	94104-4122	Class Y	17,126	1.64%

		Science and Technology Fund
		Class Y	34,342	20.09%

		Large Cap Growth Fund
		Class Y	52,382	59.79%

		Mid Cap Growth Fund
		Class Y	41,302	85.49%

Carolyn Cioffi (TOD)		Municipal Bond Fund
1 Rollwood Dr		Class B	1,874	5.07%
Guilford CT 06437-2845

Connecticut Gen		Small Cap Growth Fund
	Life Insurance Co	Class Y	174,621	5.28%
280 Trumbull St
Hartford CT 06103-3509

Marjorie M Cosel Trustee		Municipal Bond Fund
U/A Dtd Mar 11 1987		Class A	27,411	12.53%
Marjorie M Cosel Rev Trust
1675 Comstock Ave
Los Angeles CA 90024-5300

			Shares owned
Name and Address			Beneficially
of Beneficial Owner		Class	or of Record	Percent
-------------------		-----	------------	-------
Cummings Prop Mangment		High Income Fund
	Inc Ttee	Class B	19,775	15.82%
U/A dtd 04-15-1997
FBO Joseph M Sterner
200 W Cummings Park
Woburn MA 01801-6504

Steven G Dangberg &		Municipal Bond Fund
Sharon M Dangberg Jtn Ros		Class B	1,959	5.30%
835 Daniel Drive
Reno NV 89509-2314

Pauline W Dickson (TOD)		Limited-Term Bond Fund
5600 Pioneers Blvd Apt 216		Class B	14,881	6.07%
Lincoln NE 68506-5175

Fiduciary Trust Co		Asset Strategy Fund
	NH Cust	Class B	17,436	7.04%
IRA
FBO Dolores W Dillon
4 Highfield Ln
Wayne PA 19087-2760

Donaldson Lufkin		Limited-Term Bond Fund
	Jenrette	Class A	103,294	8.33%
Securities Corp Inc
P. O. Box 2052		International Growth Fund
Jersey City NJ		Class A	87,799	11.50%
	07303-2052

Robert Egbert &		Municipal Bond Fund
Joan Egbert &		Class A	73,696	33.68%
Co-Ttees U/A Dtd August 21 1991
2902 Sailor Ave
Ventura CA 93001-4156

Fiduciary Trust Co		High Income Fund
	NH Cust	Class B	6,948	5.56%
IRA Rollover
FBO Paul S Fantaski
585 Route 366
Apollo PA 15613-9234

Vincent A Feraudo &		Municipal Bond Fund
Cynthia L Savage Jtn Ros		Class B	544	1.47%
4515 Woodlawn Ave N
Seattle WA 98103-6742		Tax-Managed Equity Fund
		Class B	3,111	5.87%

			Shares owned
Name and Address			Beneficially
of Beneficial Owner		Class	or of Record	Percent
-------------------		-----	------------	-------
Joan G Ford Tr		High Income Fund
U/A Dtd 08-29-1990		Class A	30,755	9.28%
Joan G Ford 1990 Revocable Trust
40 Sunrise Ave
Mill Valley CA 94941-3339

Ronald A & Thomas A		Asset Strategy Fund
	Hawthorne Tr	Class A	49,885	12.31%
Central City Scale Inc
Qualified 401(k) Plan
FBO Ronald A Hawthorne
P O Box 197
Central City NE 68826-0197

Richard L Henderson &		Tax-Managed Equity Fund
Bess A Henderson		Class B	2,753	5.20%
	Jtn Ros (TOD)
721 Bristol Ct
Liberty MO 64068-2900

Joseph D Horvath		Asset Strategy Fund
310 Prince St		Class B	13,022	5.26%
Bordentown NJ 08505-1717

Fiduciary Trust Co		Money Market Fund
	NH Cust	Class B	51,975	9.20%
IRA
FBO Jerome A Infantino Sr
321 Wood Rd
Rochester NY 14626-3238

David Johnson Tr		Core Equity Fund
Church TSA Archdiocese		Class Y	209,817	57.66%
	of OK
FBO Unallocated Assets		Small Cap Growth Fund
Church Sponsored		Class Y	168,825	5.10%
	403(B) Plan
P O Box 32180		Limited-Term Bond Fund
Oklahoma City OK		Class Y	44,064	47.68%
	73123-0380
		International Growth Fund
		Class Y	82,710	7.93%

		Asset Strategy Fund
		Class Y	52,689	91.51%

Dennis Kidwell &		Tax-Managed Equity Fund
	Bennie Kidwell Jtn Ros	Class C	10,226	7.68%
401 S Fann St
Anaheim CA 92804-2619

			Shares owned
Name and Address			Beneficially
of Beneficial Owner		Class	or of Record	Percent
-------------------		-----	------------	-------
Fiduciary Trust Co		Limited-Term Bond Fund
	NH Cust	Class B	13,207	5.38%
IRA Rollover
FBO Judy Knudsen
2260 Cherry St
Lunden WA 98264-9031

Fiduciary Trust Co		Money Market Fund
	NH Cust	Class B	221,086	39.14%
IRA Rollover
FBO Allan T Lane
P O Box 265
Ennis MT 59729-0265

Lyle N Larkin &		Municipal Bond Fund
	Maryann Larkin	Class A	16,084	7.35%
Co-Ttees UA Dtd 09-02-1998
Larkin Family Trust
261 N Thora St
Orange CA 92869-3140

Carol N Lemieux &		Tax-Managed Equity Fund
Gerard R Lemieux Ten Com		Class A	45,872	6.59%
4845 Spurgin Rd
Missoula MT 59804-4552

Fiduciary Trust Co		High Income Fund
	NH Cust	Class B	6,640	5.31%
IRA Rollover
FBO Paula V Martin
3440 SW Macvicar Ave
Topeka KS 66611-1840

Millennium Trust		Small Cap Growth Fund
	Company, LLC	Class Y	301,937	9.13%
Cust Funds 975C
15255 S 94th Ave Ste 300
Orland Park IL 60462-3897

Richard V Morgera MD Tr		Money Market Fund
Family Medicenter Inc		Class B	28,653	5.07%
Profit Sharing Plan
FBO Unallocated Assets
203 Prospect Ave
Middletown RI 02842-5605

Otha B Nance &		Municipal Bond Fund
V Zoann Nance Jtn Ros		Class B	17,145	46.38%
1529 South Kemensky Ave
Chicago IL 60623-1949

			Shares owned
Name and Address			Beneficially
of Beneficial Owner		Class	or of Record	Percent
-------------------		-----	------------	-------
National Financial		Core Equity Fund
	Services Corp	Class Y	1,956	0.54%
FBO Various Customers
ATTN: Mutual Funds Dept		Small Cap Growth Fund
	5th Floor	Class Y	1,338,993	40.49%
200 Liberty St
One World Financial		International Growth Fund
	Center	Class Y	122,195	11.71%
New York NY 10281-1003
		Science and Technology Fund
		Class Y	59,328	34.70%

National Investor		High Income Fund
	Services Corp	Class Y	244	6.35%
for the Exclusive Benefit
of our Customers
55 Water St Fl 32
New York NY 10041-0028

Nationwide Trust		Core Equity Fund
	Company FSB	Class A	83,566	8.06%
C/O IPO Portfolio Accounting
P O Box 182029		Small Cap Growth Fund
Columbus OH 43218-2029		Class A	197,679	11.53%

		Limited-Term Bond Fund
		Class A	50,713	4.09%

		International Growth Fund
		Class A	26,529	3.48%

		Asset Strategy Fund
		Class A	73,449	18.14%

		Science and Technology Fund
		Class A	94,058	14.03%

		High Income Fund
		Class A	18,159	5.48%

Northern Trust Company		International Growth Fund
FBO Schwartz		Class Y	294,618	28.24%
	Charitable Remainder
Unit Trust
P O Box 92956
Chicago IL 60675-2956

Luverne J Olson &		Tax-Managed Equity Fund
Nancy G Olson Jtn Ros		Class B	2,833	5.35%
4024 Third Street NW
Rochester MN 55901-7564
			Shares owned
Name and Address			Beneficially
of Beneficial Owner		Class	or of Record	Percent
-------------------		-----	------------	-------
Lee Dester Pool (TOD)		Municipal Bond Fund
Thomas Pool		Class B	6,571	17.78%
3344 205th St
Olympia Flds IL 60461-1407

Lloyd E Potter &		Tax-Managed Equity Fund
	Nellie M Potter	Class B	4,759	8.98%
Co-Ttees U/A dtd 02-02-2001
Lloyd & Nellie M Potter Trust
1280 Happy Hollow Rd
Napoleon MO 64074-9114

Prudential Securities		International Growth Fund
	Inc	Class Y	278,185	26.66%
Special Custody for the
	Benefit of the Client
ATTN: Mutual Funds
1 New York Plz
New York NY 10292-0001

Quad City Bank &		International Growth Fund
	Trust Co Cust	Class Y	56,766	5.44%
For St Ambrose University
3551 7th St Suite 100
Moline IL 61265-6156

Rosemary Riley (TOD)		Tax-Managed Equity Fund
326 S Davis St		Class B	3,743	7.06%
Ottumwa IA 52501-5007

Fiduciary Trust Co		High Income Fund
	NH Cust	Class B	11,287	9.03%
IRA
FBO Donald P Sanford
P O Box 1570
La Conner WA 98257-1570

Marilyn L Shoemaker		Money Market Fund
5248 Cobblecreek Rd		Class B	84,958	15.04%
Salt Lake City UT 84117-6787

Trust Company of America		Money Market Fund
FBO 65		Class A	6,724,057	50.86%
PO Box 6503
Englewood CO 80155-6503

			Shares owned
Name and Address			Beneficially
of Beneficial Owner		Class	or of Record	Percent
-------------------		-----	------------	-------
UMBSC & Co		Small Cap Growth Fund
FBO Pittsburg State		Class Y	239,742	7.25%
	University
C/O Trust Dept - George Root
P O Box 419692
Kansas City MO 64141-6692

UMBSC & Co		Limited-Term Bond Fund
FBO VFW Veterans		Class Y	45,377	49.10%
	Service Fund
P O Box 419260
Kansas City MO 64141-6260

Fiduciary Trust Co		Money Market Fund
	NH Cust	Class C	526,124	6.75%
IRA Rollover
FBO C A Vallombroso
30 Dorchester Ln
Branford CT 06405-2819

Verb & Co		International Growth Fund
4380 SW Macadam Ave		Class Y	94,310	9.04%
	Ste 450
Portland OR 97201-6407

Waddell & Reed Inc		Large Cap Growth Fund
ATTN: Waddell & Reed		Class A	302,959	14.77%
	Controller
P O Box 29217		Mid Cap Growth Fund
Shawnee Mission KS		Class A	311,637	18.94%
	66201-9217
		Tax-Managed Equity Fund
		Class A	300,000	43.07%

		Money Market Fund
		Class A	3,217,691	24.34%

		Municipal Bond Fund
		Class Y	207	100.00%

		High Income Fund
		Class Y	271	7.04%

			Shares owned
Name and Address			Beneficially
of Beneficial Owner		Class	or of Record	Percent
-------------------		-----	------------	-------
Waddell & Reed		International Growth Fund
	Financial, Inc.	Class Y	62,170	5.96%
401(k) and Thrift Plan
6300 Lamar Avenue		Asset Strategy Fund
Overland Park KS 66201		Class Y	3,878	6.74%

		Science and Technology Fund
		Class Y	76,543	44.77%

		High Income Fund
		Class Y	3,270	85.14%

Woman's Club of Oakmont		Tax-Managed Equity Fund
P O Box 165		Class B	4,167	7.86%
Oakmont PA 15139-0165

As of May 31, 2003, all of the Directors and officers of the Funds, as a group, owned less than 1% of the outstanding shares of the Funds.

INVESTMENT ADVISORY AND OTHER SERVICES

The Management Agreement

On August 31, 1992, Ivy Funds, Inc. (formerly, W&R Funds, Inc.) entered into an Investment Management Agreement (Management Agreement) with Waddell & Reed Investment Management Company (WRIMCO). On June 30, 2003, the Management Agreement was assigned to WRIICO, an affiliate of WRIMCO and a subsidiary of Waddell & Reed Financial, Inc. Such assignment was approved by the Funds' Board of Directors, including a majority of the Disinterested Directors, at a meeting held on May 21, 2003. Under the Management Agreement, WRIICO is employed to supervise the investments of the Funds and provide investment advice to the Funds. The address of these companies is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217. WRIICO also serves as investment manager to each of the funds in Ivy Fund, a Massachusetts Business Trust.

The Management Agreement permits WRIICO, or an affiliate of WRIICO, to enter into a separate agreement for transfer agency services (the Shareholder Servicing Agreement) and a separate agreement for accounting services (the Accounting Services Agreement) with the Funds. The Management Agreement contains detailed provisions as to the matters to be considered by the Board of Directors prior to approving any Shareholder Servicing Agreement or Accounting Services Agreement.

WRIMCO and/or its predecessors have served as investment manager to each of the registered investment companies in the Waddell & Reed Advisors Funds, Ivy Funds, Inc. (until June 30, 2003), W&R Target Funds, Inc. and Waddell & Reed InvestEd Portfolios, Inc. since each company's inception. Waddell & Reed, Inc. serves as principal underwriter for Ivy Funds, Inc. (prior to June 16, 2003), Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc., and acts as principal underwriter and distributor for variable life insurance and variable annuity policies for which W&R Target Funds, Inc. is the underlying investment vehicle. As of June 16, 2003, the Underwriting Agreement between Waddell & Reed, Inc. and Ivy Funds, Inc. (formerly W&R Funds, Inc.) was assigned to IFDI, as a meeting of the Board of Directors held on May 21, 2003. IFDI also serves as the distributor of the Ivy Fund.

The Management Agreement was renewed by the Board of Directors at the meeting held August 21, 2002, and will continue in effect for the period from October 1, 2002, through September 30, 2003, unless sooner terminated. The Management Agreement was assigned to WRIICO by the Board of Directors at a meeting held on May 21, 2003. The Management Agreement provides that it may be renewed year to year, provided that any such renewal has been specifically approved, at least annually, by (i) the Board of Directors, or by a vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Funds, and (ii) the vote of a majority of the Directors who are not deemed to be "interested persons" (as defined in the 1940 Act) of the Funds or WRIICO (the Disinterested Directors). The Management Agreement also provides that either party has the right to terminate it, without penalty, upon 60 days' written notice to the other party, and that the Management Agreement automatically terminates in the event of its assignment (as defined in the 1940 Act).

In connection with their consideration of the Management Agreement as to the Funds, the Disinterested Directors met separately with independent legal counsel. In determining whether to renew the Management Agreement as to the Funds, the Disinterested Directors, as well as the Board of Directors, considered a number of factors, including: the nature and quality of investment management services to be provided to the Funds by WRIMCO, including WRIMCO's investment management expertise and the personnel, resources and experience of WRIMCO; the cost to WRIMCO in providing its services under the Management Agreement and WRIMCO's profitability; whether the Funds and their shareholders will benefit from economies of scale; whether WRIMCO or any of its affiliates will receive ancillary benefits that should be taken into consideration in evaluating the investment management fee payable by the Funds; and the investment management fees paid by comparable investment companies.

Shareholder Services

Under the Shareholder Servicing Agreement entered into between the Funds and Waddell & Reed Services Company (WRSCO), a subsidiary of Waddell & Reed, WRSCO performs shareholder servicing functions, including the maintenance of shareholder accounts, the issuance, transfer and redemption of shares, distribution of dividends and payment of redemptions, the furnishing of related information to the Funds and handling of shareholder inquiries. A new Shareholder Servicing Agreement, or amendments to the existing one, may be approved by the Board of Directors without shareholder approval.

Accounting Services

Under the Accounting Services Agreement entered into between the Funds and WRSCO, WRSCO provides the Funds with bookkeeping and accounting services and assistance, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. A new Accounting Services Agreement, or amendments to an existing one, may be approved by the Board of Directors without shareholder approval.

Payments for Management, Accounting and Shareholder Services

Under the Management Agreement, for WRIICO's management services, the Funds pay WRIICO a fee as described in the Prospectuses. The management fees paid to WRIMCO during the fiscal years ended March 31, 2003, 2002 and 2001 for each of the Funds then in existence were as follows:

	2003	2002	2001
Ivy Asset Strategy Fund	$ 415,430	$ 399,103	$ 401,818
Ivy Core Equity Fund	1,916,603	2,893,713	3,869,543
Ivy High Income Fund	19,492 including the voluntary waiver, 138,958 excluding the voluntary waiver	0 including the voluntary waiver, 123,648 excluding the voluntary waiver	0
Ivy International Growth Fund	646,928	950,632	1,544,356
Ivy Large Cap Growth Fund	79,402 including the voluntary waiver, 172,560 excluding the voluntary waiver	154,239 including the voluntary waiver, 190,189 excluding the voluntary waiver	69,709 including the voluntary waiver, 182,888 excluding the voluntary waiver¹
Ivy Limited-Term Bond Fund	266,026	57,632 including the voluntary waiver, 117,992 excluding the voluntary waiver	0 including the voluntary waiver, 95,901 excluding the voluntary waiver
Ivy Mid Cap Growth Fund	0 including the voluntary waiver, 152,532 excluding the voluntary waiver	0 including the voluntary waiver, 165,431 excluding the voluntary waiver	0 including the voluntary waiver, 78,270 excluding the voluntary waiver¹
Ivy Money Market Fund	0 including the voluntary waiver, 76,352 excluding the voluntary waiver	0 including the voluntary waiver, 56,110 excluding the voluntary waiver	0 including the voluntary waiver, 20,736 excluding the voluntary waiver¹
Ivy Municipal Bond Fund	145,332	141,690	138,980
Ivy Science and Technology Fund	856,293	1,208,793	1,723,401
Ivy Small Cap Growth Fund	3,163,275	4,399,320	5,539,787
Ivy Tax-Managed Equity Fund	0 including the voluntary waiver, 31,791 excluding the voluntary waiver	0 including the voluntary waiver, 36,744 excluding the voluntary waiver	0 including the voluntary waiver, 25,656 excluding the voluntary waiver¹

¹For the period from 6/30/00, the date of the initial public offering, to 3/31/01.

For purposes of calculating the daily fee, the Funds do not include money owed to them by IFDI for shares which it has sold but not yet paid to the Funds. The Funds accrue and pay this fee daily.

Under the Shareholder Servicing Agreement, effective December 1, 2001, with respect to Class A, Class B and Class C shares, each Fund paid WRSCO a monthly fee, payable on the first day of each month, for each account of the Fund which was in existence during any portion of the immediately preceding month, as follows:


	Ivy Asset Strategy Fund	$1.5792
	Ivy High Income Fund	$1.6958
	Ivy Limited-Term Bond Fund	$1.6958
	Ivy Municipal Bond Fund	$1.6958
	Ivy International Growth Fund	$1.5042
	Ivy Large Cap Growth Fund	$1.5042
	Ivy Mid Cap Growth Fund	$1.5042
	Ivy Science and Technology Fund	$1.5042
	Ivy Small Cap Growth Fund	$1.5042
	Ivy Tax-Managed Equity Fund	$1.5042
	Ivy Core Equity Fund	$1.5042

For Ivy Money Market Fund, an amount payable on the first day of each month of $1.75 for each account of the Fund which was in existence during any portion of the immediately preceding month and, in addition, for Class A shares, the Fund also pays WRSCO a monthly fee of $0.75 for each shareholder check it processes.

With respect to Class Y shares, each Fund pays WRSCO an amount payable on the first day of each month equal to 1/12 of .15 of 1% of the average daily net assets of the Class for the preceding month.

Prior to December 1, 2001, with respect to Class A, Class B and Class C shares, each Fund paid WRSCO a monthly fee, payable on the first day of each month, for each account of the Fund which was in existence during any portion of the immediately preceding month, as follows:


	Ivy Asset Strategy Fund	$1.4125
	Ivy High Income Fund	$1.6125
	Ivy Limited-Term Bond Fund	$1.6125
	Ivy Municipal Bond Fund	$1.6125
	Ivy International Growth Fund	$1.3375
	Ivy Large Cap Growth Fund	$1.3375
	Ivy Mid Cap Growth Fund	$1.3375
	Ivy Science and Technology Fund	$1.3375
	Ivy Small Cap Growth Fund	$1.3375
	Ivy Tax-Managed Equity Fund	$1.3375
	Ivy Core Equity Fund	$1.3375

For Ivy Money Market Fund, an amount payable on the first day of each month of $1.75 for each account of the Fund which was in existence during any portion of the immediately preceding month and, in addition, for Class A shares, the Fund also paid WRSCO a monthly fee of $0.75 for each shareholder check it processed.

Each Fund also pays certain out-of-pocket expenses of WRSCO, including: long distance telephone communications costs; microfilm and storage costs for certain documents; forms, printing and mailing costs; charges of any sub-agent used by Agent in performing services under the Shareholder Servicing Agreement; and costs of legal and special services not provided by WRIICO or WRSCO.

Under the Accounting Services Agreement, 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		Annual Fee
	(all dollars in millions)		Rate for Each Fund
	-----------------------------		-----------------------

	From $ 0 to $ 10		$ 0
	From $ 10 to $ 25		$ 11,000
	From $ 25 to $ 50		$ 22,000
	From $ 50 to $ 100		$ 33,000
	From $ 100 to $ 200		$ 44,000
	From $ 200 to $ 350		$ 55,000
	From $ 350 to $ 550		$ 66,000
	From $ 550 to $ 750		$ 77,000
	From $ 750 to $1,000		$ 93,500
	$1,000 and Over		$110,000

Plus, 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 base fee.

Fees paid to WRSCO during the fiscal years ended March 31, 2003, 2002 and 2001 for each of the Funds then in existence were as follows:

	2003	2002	2001
Ivy Asset Strategy Fund	$35,475	$35,475	$33,194
Ivy Core Equity Fund	60,110	70,950	73,510
Ivy High Income Fund	13,796	11,825	11,065
Ivy International Growth Fund	35,475	44,344	47,592
Ivy Large Cap Growth Fund	17,738	20,694	10,840¹
Ivy Limited-Term Bond Fund	31,533	16,752	11,065
Ivy Mid Cap Growth Fund	11,825	11,825	5,913¹
Ivy Money Market Fund	11,550	11,550	1,925¹
Ivy Municipal Bond Fund	23,650	23,650	22,129
Ivy Science and Technology Fund	39,417	47,300	50,548
Ivy Small Cap Growth Fund	64,052	74,892	76,467
Ivy Tax-Managed Equity Fund	0	0	0¹

¹For the period from 6/30/00, the date of the initial public offering, to 3/31/01.

Since each Fund pays a management fee for investment supervision and an accounting services fee for accounting services as discussed above, WRIICO and WRSCO, respectively, pay all of their own expenses, except as otherwise noted in the respective agreements, in providing these services, unless otherwise referenced in the applicable agreement. Amounts paid by a Fund under the Shareholder Servicing Agreement are described above. WRIICO and its affiliates pay the Directors and officers of Ivy Funds who are affiliated with WRIICO and its affiliates. The Funds pay the fees and expenses of the other Directors.

Each Fund pays all of its other expenses. These include, for each Fund, the costs of materials sent to shareholders, audit and outside legal fees, taxes, brokerage commissions, interest, insurance premiums, custodian fees, fees payable by the Funds under Federal or other securities laws and to the Investment Company Institute and nonrecurring and extraordinary expenses, including litigation and indemnification relating to litigation.

Distribution Services

IFDI has served as principal underwriter and distributor to the Funds since June 16, 2003. Prior to June 16, 2003, Waddell & Reed, Inc. served as principal underwriter and distributor to the Funds. On June 16, 2003, Waddell & Reed, Inc. assigned the Principal Underwriting Agreement with Ivy Funds, Inc. (formerly W&R Funds, Inc.) to IFDI; such assignment was approved by the Funds' Board of Directors, including a majority of the Disinterested Directors, at a meeting held on May 21, 2003. Pursuant to the Principal Underwriting Agreement, IFDI offers the Fund's shares through financial advisors of Waddell & Reed, Inc. and Legend Equities Corporation (Legend) and sales managers and through other broker-dealers, banks and other appropriate intermediaries (the sales force). In distributing shares through its sales force, IFDI will pay commissions and incentives to the sales force at or about the time of sale and will incur other expenses including costs for prospectuses, sales literature, advertisements, sales office maintenance, processing of orders and general overhead with respect to its efforts to distribute the Fund's shares.

Under the Distribution and Service Plan (the Plan) for Class A shares adopted by the Funds pursuant to Rule 12b-1 under the 1940 Act, (Rule 12b-1) each Fund (other than Ivy Money Market Fund) may pay IFDI a fee not to exceed 0.25% of the Fund's average annual net assets attributable to Class A shares, paid daily, to compensate IFDI for its costs and expenses in connection with, either directly or through others, the distribution of the Class A shares and/or the provision of personal services to Class A shareholders and/or maintenance of Class A shareholder accounts.

Under the Plans adopted for Class B shares and Class C shares respectively, each Fund may pay IFDI a service fee not to exceed 0.25% of the Fund's average annual net assets attributable to that class, paid daily, to compensate IFDI for its services, either directly or through others, in connection with the provision of personal services to shareholders of that class and/or the maintenance of shareholder accounts of that class and a distribution fee not to exceed 0.75% of the Fund's average annual net assets attributable to that class, paid daily, to compensate IFDI for its services, either directly or through others, in connection with the distribution of shares of that class. Under the Plan adopted for Class Y shares, each Fund pays IFDI daily a distribution and/or service fee not to exceed, on an annual basis, 0.25% of the Fund's average annual net assets attributable to that class, paid daily, to compensate IFDI for its services, either directly or through others, in connection with the distribution of shares of that class.

IFDI offers the Funds' shares through its financial advisors, registered representatives and sales managers and through other broker-dealers, banks and other appropriate intermediaries (the sales force). In distributing shares through its sales force, IFDI will pay commissions and incentives to the sales force at or about the time of sale and will incur other expenses including costs for prospectuses, sales literature, advertisements, sales office maintenance, processing of orders and general overhead with respect to its efforts to distribute the Funds' shares, as applicable. The Plans permit IFDI to receive compensation for the class-related distribution activities through the distribution fee, subject to the limit contained in the Plan. The Plans also contemplate that IFDI may be compensated for its activities in connection with: compensating, training and supporting registered financial advisors, sales managers and/or other appropriate personnel in providing personal services to shareholders of each Fund and/or maintaining shareholder accounts; increasing services provided to shareholders of each Fund by office personnel located at field sales offices; engaging in other activities useful in providing personal service to shareholders of each Fund and/or maintenance of shareholder accounts; and its arrangements with broker-dealers who may regularly sell shares of the Funds, and other third parties, for providing shareholder services and/or maintaining shareholder accounts with respect to Fund shares. Each Plan and the Underwriting Agreement contemplate that IFDI may be compensated for these class-related distribution efforts through the distribution fee.

The sales force and other parties may be paid continuing compensation based on the value of the shares held by shareholders to whom the member of the sales force is assigned to provide personal services, and IFDI or WRSCO, as well as other parties may also provide services to shareholders through telephonic means and written communications. IFDI may pay other broker-dealers a portion of the fees it receives under the respective Plans as well as other compensation in connection with the distribution of Fund shares.

For the fiscal period ended March 31, 2003, the Funds paid (or accrued) the following amounts to Waddell & Reed, Inc. as distribution fees and service fees under the Class A Plan for each of the Funds:

Fund	Distribution Fees	Service Fees
Ivy Asset Strategy Fund	$900	$15,222
Ivy Core Equity Fund	1,400	22,684
Ivy High Income Fund	500	8,707
Ivy International Growth Fund	1,500	14,542
Ivy Large Cap Growth Fund	3,000	39,758
Ivy Limited-Term Bond Fund	2,500	54,332
Ivy Mid Cap Growth Fund	2,600	29,035
Ivy Municipal Bond Fund	400	6,135
Ivy Science and Technology Fund	2,500	26,863
Ivy Small Cap Growth Fund	2,900	38,668
Ivy Tax-Managed Equity Fund	500	9,166

For the fiscal period ended March 31, 2003, the Funds paid (or accrued) the following amounts to Waddell & Reed, Inc. as distribution fees and service fees under the Class B Plan for each of the Funds:

Fund	Distribution Fees	Service Fees
Ivy Asset Strategy Fund	$21,921	$7,307
Ivy Core Equity Fund	37,922	12,641
Ivy High Income Fund	8,829	2,943
Ivy International Growth Fund	14,580	4,860
Ivy Large Cap Growth Fund	14,947	4,982
Ivy Limited-Term Bond Fund	25,493	8,498
Ivy Mid Cap Growth Fund	11,934	3,978
Ivy Money Market Fund	5,048 including the voluntary waiver, 5,593 excluding the voluntary waiver	1,864
Ivy Municipal Bond Fund	3,278	1,093
Ivy Science and Technology Fund	29,214	9,738
Ivy Small Cap Growth Fund	52,759	17,586
Ivy Tax-Managed Equity Fund	2,155	718

For the fiscal year ended March 31, 2003, the Funds paid (or accrued) the following amounts to Waddell & Reed, Inc. as distribution fees and service fees under the Class C Plan for each of the Funds:

Fund	Distribution Fees	Service Fees
Ivy Asset Strategy Fund	$369,488	$123,163
Ivy Core Equity Fund	1,923,701	641,234
Ivy High Income Fund	130,183	43,394
Ivy International Growth Fund	440,418	146,806
Ivy Large Cap Growth Fund	36,514	12,171
Ivy Limited-Term Bond Fund	194,224	64,741
Ivy Mid Cap Growth Fund	25,241	8,414
Ivy Money Market Fund	61,961 including the voluntary waiver, 64,907 excluding the voluntary waiver	21,636
Ivy Municipal Bond Fund	184,949	61,650
Ivy Science and Technology Fund	617,990	205,997
Ivy Small Cap Growth Fund	2,367,681	789,227
Ivy Tax-Managed Equity Fund	5,534	1,845

For the fiscal year ended March 31, 2003, the Funds paid (or accrued) the following amounts to Waddell & Reed, Inc. as distribution fees and service fees under the Class Y Plan for each of the Funds:

Fund	Distribution and Service Fees
Ivy Asset Strategy Fund	$1,872
Ivy Core Equity Fund	6,779
Ivy High Income Fund	957
Ivy International Growth Fund	24,253
Ivy Large Cap Growth Fund	1,745
Ivy Limited-Term Bond Fund	3,295
Ivy Mid Cap Growth Fund	847
Ivy Municipal Bond Fund	8
Ivy Science and Technology Fund	6,912
Ivy Small Cap Growth Fund	82,672
Ivy Tax-Managed Equity Fund	NA

In the current environment of low interest rates, IFDI has voluntarily agreed to reimburse sufficient distribution and service fees to any class of Ivy Money Market Fund in order to insure the yield of that class remains at or above 0.05%.

The only Directors or interested persons, as defined in the 1940 Act, of the Funds who have a direct or indirect financial interest in the operation of a Plan are the officers and Directors who are also officers of either IFDI or its affiliate(s) or who are shareholders of Waddell & Reed Financial, Inc., the indirect parent company of IFDI. Each Plan is anticipated to benefit the applicable Fund and its shareholders affected by the particular Plan through IFDI's activities not only to distribute the affected shares of the Funds but also to provide personal services to shareholders of the affected class and thereby promote the maintenance of their accounts with the Funds. Each Fund anticipates that shareholders of a particular class may benefit to the extent that IFDI's activities are successful in increasing the assets of that Fund class, through increased sales or reduced redemptions, or a combination of these, and reducing a shareholder's share of Fund and class expenses. Increased Fund assets may also provide greater resources with which to pursue the goal(s) of a Fund. Further, continuing sales of shares may also reduce the likelihood that it will be necessary to liquidate portfolio securities, in amounts or at times that may be disadvantageous to a Fund, to meet redemption demands. In addition, each Fund anticipates that the revenues from the Plans will provide IFDI with greater resources to make the financial commitments necessary to continue to improve the quality and level of services to each Fund and its affected shareholders.

To the extent that IFDI incurs expenses for which compensation may be made under the Plans that relate to distribution and service activities also involving another fund in the Ivy Family of Funds, IFDI typically determines the amount attributable to the Fund's expenses under the Plans on the basis of a combination of the respective classes' relative net assets and number of shareholder accounts.

All classes of the Funds are offered through IFDI, Waddell & Reed, Inc., Legend and third-party broker-dealers. IFDI may pay other broker-dealers a portion of the fees it receives under the respective Plans as well as other compensation in connection with the distribution of Fund shares, including the following: 1) for Class A shares purchased at NAV by clients of Legend Equities Corporation (Legend), IFDI (or its affiliate) may pay Waddell & Reed, Inc. and Legend 1.00% of net assets invested; 2) for the purchase of Class B shares, IFDI (or its affiliate) may pay Waddell & Reed, Inc. and Legend 4.00% of net assets invested; 3) for the purchase of Class C shares, IFDI (or its affiliate) may pay Waddell & Reed, Inc. and Legend 1.00% of net assets invested.

Each Plan and the Underwriting Agreement and its assignment to IFDI were approved by the Board of Directors, including the Directors who are not interested persons of the Funds or of IFDI and who have no direct or indirect financial interest in the operations of the Plans or any agreement referred to in the Plans (hereafter the Plan Directors).

Among other things, the Plan for each class provides that (1) IFDI will submit to the Directors at least quarterly, and the Directors will review, reports regarding all amounts expended under the Plan and the purposes for which such expenditures were made, (2) the Plan will continue in effect only so long as it is approved at least annually, and any material amendments thereto are approved by the Directors including the Plan Directors acting in person at a meeting called for that purpose, (3) payments under the Plan shall not be materially increased without the affirmative vote of the holders of a majority of the outstanding shares of that class of each affected Fund, and (4) while the Plan remains in effect, the selection and nomination of the Directors who are Plan Directors shall be committed to the discretion of the Plan Directors.

Custodial and Auditing Services

The custodian for each Fund is UMB Bank, n.a., 928 Grand Boulevard, Kansas City, Missouri. In general, the custodian is responsible for holding each Fund's cash and securities. Deloitte & Touche LLP, 1010 Grand Boulevard, Kansas City, Missouri, the Funds' independent auditors, audits the Funds' financial statements and prepares the Funds' tax returns.

BROKERAGE ALLOCATION AND OTHER PRACTICES

One of the duties undertaken by WRIICO pursuant to the Management Agreement is to arrange for the purchase and sale of securities for the portfolio of each Fund. With respect to Ivy Limited-Term Bond Fund, Ivy Money Market Fund, Ivy Municipal Bond Fund and Ivy High Income Fund, many purchases are made directly from issuers or from underwriters, dealers or banks. Purchases from underwriters include a commission or concession paid by the issuer to the underwriter. Purchases from dealers will include the spread between the bid and the asked prices. Otherwise, transactions in securities other than those for which an exchange is the primary market are generally effected with dealers acting as principals or market makers. Brokerage commissions are paid primarily for effecting transactions in securities traded on an exchange and otherwise only if it appears likely that a better price or execution can be obtained. The individuals who manage the Funds may manage other advisory accounts with similar investment objectives. It can be anticipated that the manager will frequently, yet not always, place concurrent orders for all or most accounts for which the manager has responsibility or WRIICO may otherwise combine orders for a Fund with those of other funds in the Ivy Family of Funds, or other accounts for which it has investment discretion, including accounts affiliated with WRIICO. WRIICO, at its discretion, may aggregate such orders. Under current written procedures, transactions effected pursuant to such combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each fund or advisory account, except where the combined order is not filled completely. In this case, for a transaction not involving an initial public offering (IPO), WRIICO will ordinarily allocate the transaction pro rata based on the orders placed, subject to certain variances provided for in the written procedures. For a partially filled IPO order, subject to certain variances specified in the written procedures, WRIICO generally allocates the shares as follows: the IPO shares are initially allocated pro rata among the included funds and/or advisory accounts grouped according to investment objective, based on relative total assets of each group; and the shares are then allocated within each group pro rata based on relative total assets of the included funds and/or advisory accounts, except that (a) within a group having a small cap-related investment objective, shares are allocated on a rotational basis after taking into account the impact of the anticipated initial gain on the value of the included fund or advisory account and (b) within a group having a mid-cap-related investment objective, shares are allocated based on the portfolio manager's judgment, including but not limited to such factors as the fund's or advisory account's investments strategies and policies, cash availability, any minimum investment policy, liquidity, anticipated term of the investment and current securities positions.

In all cases, WRIICO seeks to implement its allocation procedures to achieve a fair and equitable allocation of securities among its funds and other advisory accounts. Sharing in large transactions could affect the price a Fund pays or receives or the amount it buys or sells. As well, a better negotiated commission may be available through combined orders.

To effect the portfolio transactions of a Fund, WRIICO is authorized to engage broker-dealers (brokers) which, in its best judgment based on relevant factors, will implement the policy of the Fund to seek best execution (prompt and reliable execution at the best price obtainable) for reasonable and competitive commissions. WRIICO need not seek competitive commission bidding but is expected to minimize the commissions paid to the extent consistent with the interests and policies of the Funds. Subject to review by the Board of Directors, such policies include the selection of brokers which provide execution and/or research services and or other services, including pricing or quotation services, directly or through others (research and brokerage services) considered by WRIICO to be useful or desirable for its investment management of the Fund and/or the other funds and accounts for which WRIICO has investment discretion.

Such research and brokerage services are, in general, defined by reference to Section 28(e) of the Securities Exchange Act of 1934 as including (1) advice, either directly or through publications or writings, as to the value of securities, the advisability of investing in, purchasing or selling securities and the availability of securities and purchasers or sellers; (2) furnishing analyses and reports; or (3) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement and custody). Investment discretion is, in general, defined as having authorization to determine what securities shall be purchased or sold for an account or making those decisions even though someone else has responsibility.

The commissions paid to brokers that provide such research and/or brokerage services may be higher than the commission another qualified broker would charge for effecting comparable transactions if a good faith determination is made by WRIICO that the commission is reasonable in relation to the research or brokerage services provided. Subject to the foregoing considerations, WRIICO may also consider sales of Fund shares as a factor in the selection of broker-dealers to execute portfolio transactions. No allocation of brokerage or principal business is made to provide any other benefits to WRIICO.

The investment research provided by a particular broker may be useful only to one or more of the other advisory accounts of WRIICO, and investment research received for the commissions of those other accounts may be useful both to the Funds and one or more of such other accounts. To the extent that electronic or other products provided by such brokers to assist WRIICO in making investment management decisions are used for administration or other non-research purposes, a reasonable allocation of the cost of the product attributable to its non-research use is made by WRIICO.

Such investment research (which may be supplied by a third party at the request of a broker) includes information on particular companies and industries as well as market, economic or institutional activity areas. It serves to broaden the scope and supplement the research activities of WRIICO; serves to make available additional views for consideration and comparisons; and enables WRIICO to obtain market information on the price of securities held in a Fund's portfolio or being considered for purchase.

The Funds may also use brokerage to pay for pricing or quotation services to value securities.

The table below sets forth the brokerage commissions paid by each of the Funds then in existence during the fiscal years ended March 31, 2003, 2002 and 2001. These figures do not include principal transactions or spreads or concessions on principal transactions, i.e., those in which a Fund sells securities to a broker-dealer firm or buys from a broker-dealer firm securities owned by it.

	2003	2002	2001
Ivy Asset Strategy Fund	$124,840	$227,635	$203,332
Ivy Core Equity Fund	422,434	349,642	442,608
Ivy High Income Fund	1,262	743	2,275
Ivy International Growth Fund	397,694	636,691	835,016
Ivy Large Cap Growth Fund	50,870	59,331	31,789
Ivy Limited-Term Bond Fund	---	---	---
Ivy Mid Cap Growth Fund	26,742	24,477	15,528
Ivy Municipal Bond Fund	---	1,277	7,529
Ivy Science and Technology Fund	279,087	279,635	162,423
Ivy Small Cap Growth Fund	386,831	238,679	211,750
Ivy Tax-Managed Equity Fund	13,963	12,989	8,911
	------------	-----------	-----------
Total	$1,703,723	$1,831,099	$1,921,161

The next table shows for each of the Funds the transactions, other than principal transactions, which were directed to broker-dealers who provided research services as well as execution and the brokerage commissions paid during the fiscal year ended March 31, 2003 for each of the Funds. These transactions were allocated to these broker-dealers by the internal allocation procedures described above.

Fund	Amount of Transactions	Brokerage Commissions
Ivy Asset Strategy Fund	$27,210,955	$ 60,427
Ivy Core Equity Fund	211,951,309	343,065
Ivy High Income Fund	267,241	762
Ivy International Growth Fund	6,005,367	11,150
Ivy Large Cap Growth Fund	26,304,292	41,372
Ivy Limited-Term Bond Fund	---	---
Ivy Mid Cap Growth Fund	7,206,935	14,108
Ivy Municipal Bond Fund	---	---
Ivy Science and Technology Fund	76,462,232	166,204
Ivy Small Cap Growth Fund	72,180,432	163,073
Ivy Tax-Managed Equity Fund	3,654,253	5,445
	----------------	---------------
Total	$431,243,016	$805,606

As of March 31, 2003, each of the following Funds held securities issued by their respective regular broker-dealers, as follows: International Growth Fund owned Credit Suisse Group and UBS AG securities in the aggregate amounts of $678,769 and $352,552, respectively. Credit Suisse Group is the parent of Credit Suisse First Boston Corporation (The), a regular broker of the Fund. UBS AG is the parent of UBS Warburg LLC, a regular broker of the Fund. Large Cap Growth Fund owned Bank of America Corporation and Goldman Sachs Group, Inc. securities in the aggregate amounts of $634,980 and $619,528, respectively. Bank of America Corporation is the parent of Banc of America Securities LLC, a regular broker of the Fund. Goldman Sachs Group, Inc. is the parent of Goldman, Sachs & Co., a regular broker of the Fund. Tax-Managed Equity Fund owned Goldman Sachs Group, Inc., Merrill Lynch & Co., Inc. and Morgan Stanley securities in the aggregate amounts of $34,040, $24,780 and $23,010, respectively. Goldman Sachs Group, Inc. is the parent of Goldman, Sachs & Co., a regular broker of the Fund. Merrill Lynch & Co., Inc. is the parent of Merrill Lynch, Pierce, Fenner & Smith Inc., a regular broker of the Fund. Morgan Stanley is the parent of Morgan Stanley & Co. Incorporated, a regular broker of the Fund.

CAPITAL STOCK

The Shares of the Funds

The shares of each of the Funds represents an interest in that Fund's securities and other assets and in its profits or losses. Each fractional share of a class has the same rights, in proportion, as a full share of that class.

Each Fund offers four classes of its shares: Class A, Class B, Class C and Class Y (except Ivy Money Market Fund does not offer Class Y shares). Each class of a Fund represents an interest in the same assets of the Fund and differs as follows: each class of shares has exclusive voting rights pertaining to matters appropriately limited to that class; Class A shares are subject to an initial sales charge and to an ongoing distribution and service fee and certain Class A shares are subject to a CDSC; Class B and Class C shares are subject to a CDSC and to ongoing distribution and service fees; Class B shares convert to Class A shares eight years after the month in which the shares were purchased, and such conversion will be made, without charge or fee, on the basis of the relative NAV of the two classes; and Class Y shares, which are designated for institutional and other eligible investors, have no sales charge and are not subject to a CDSC but are subject to an ongoing distribution and service fee that differs in amount from that of the Class B and Class C shares. Each class may bear differing amounts of certain class-specific expenses; and each class has a separate exchange privilege. The Funds do not anticipate that there will be any conflicts between the interests of holders of the different classes of shares of the same Fund by virtue of those classes. On an ongoing basis, the Board of Directors will consider whether any such conflict exists and, if so, take appropriate action. Each share of a Fund is entitled to equal voting, dividend, liquidation and redemption rights, except that due to the differing expenses borne by the four classes, dividends and liquidation proceeds of Class B and Class C shares are expected to be lower than for Class A shares of the same Fund. Each fractional share of a class has the same rights, in proportion, as a full share of that class. Shares are fully paid and nonassessable when purchased.

The Funds do not hold annual meetings of shareholders; however, certain significant corporate matters, such as the approval of a new investment advisory agreement or a change in a fundamental investment policy, which require shareholder approval will be presented to shareholders at a meeting called by the Board of Directors for such purpose.

Special meetings of shareholders may be called for any purpose upon receipt by a Fund of a request in writing signed by shareholders holding not less than 25% of all shares entitled to vote at such meeting, provided certain conditions stated in the Bylaws are met. There will normally be no meeting of the shareholders for the purpose of electing directors until such time as less than a majority of directors holding office have been elected by shareholders, at time which the directors then in office will call a shareholders' meeting for the election of directors. To the extent that Section 16(c) of the 1940 Act applies to a Fund, the directors are required to call a meeting of shareholders for the purpose of voting upon the question of removal of any director when requested in writing to do so by the shareholders of record of not less than 10% of the Fund's outstanding shares.

Each share of each Fund (regardless of class) is entitled to one vote. On certain matters such as the election of Directors, all shares of the twelve Funds vote together as a single class. On other matters affecting a particular Fund, the shares of that Fund vote together as a separate class, such as with respect to a change in an investment restriction of a particular Fund, except that as to matters for which a separate vote of a class is required by the 1940 Act or which affects the interests of one or more particular classes, the affected shareholders vote as a separate class. In voting on a Management Agreement, approval by the shareholders of a Fund is effective as to that Fund whether or not enough votes are received from the shareholders of the other Funds to approve the Management Agreement for the other Funds.

PURCHASE, REDEMPTION AND PRICING OF SHARES

Purchase of Shares

Minimum Initial and Subsequent Investments

For Class A, Class B and Class C shares, initial investments must be at least $500 (per Fund) with the exceptions described in this paragraph. A $100 minimum initial investment pertains to exchanges of shares from one Fund to another Fund. A $50 minimum initial investment pertains to purchases for certain retirement plan accounts and to accounts for which an investor has arranged, at the time of initial investment, to make subsequent purchases for the account by having regular monthly withdrawals of $25 or more made from a bank account. A minimum initial investment of $25 is applicable to purchases made through payroll deduction or certain retirement plan accounts for or by employees of IFDI, WRIICO, and their affiliates. Except with respect to certain exchanges and automatic withdrawals from a bank account, a shareholder may make subsequent investments of any amount. See, Exchanges for Shares of Other Funds in the Ivy Family of Funds and Waddell & Reed InvestEd Portfolios, Inc.

For Class Y shares, investments by government entities or authorities or by corporations must total at least $10 million within the first twelve months after initial investment. There is no initial investment minimum for other Class Y investors.

Reduced Sales Charges (Applicable to Class A Shares only)

Account Grouping

Large purchases of Class A shares are subject to lower sales charges. The schedule of sales charges appears in the Prospectuses. For the purpose of taking advantage of the lower sales charges available for large purchases, a purchase in any of categories 1 through 7 listed below made by an individual or deemed to be made by an individual may be grouped with purchases in any other of these categories:


1.	Purchases by an individual for his or her own account (includes purchases under the Ivy Funds Revocable Trust Form);

2.	Purchases by that individual's spouse purchasing for his or her own account (includes Ivy Funds Revocable Trust Form of spouse);

3.	Purchases by that individual or his or her spouse in their joint account;

4.	Purchases by that individual or his or her spouse for the account of their child under age 21;

5.	Purchase by any custodian for the child of that individual or spouse in a Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) account;

6.	Purchases by that individual or his or her spouse for his or her individual retirement account (IRA), or salary reduction plan account under Section 457 of the Internal Revenue Code of 1986, as amended (the Code), provided that such purchases are subject to a sales charge (see Net Asset Value Purchases), tax-sheltered annuity account (TSA) or Keogh Plan account, provided that the individual and spouse are the only participants in the Keogh Plan; and

7.	Purchases by a trustee under a trust where that individual or his or her spouse is the settlor (the person who establishes the trust).

	For the foregoing categories, an individual's domestic partner is treated as his or her spouse.

	Examples:

	A.	Grandmother opens a UGMA account for grandson A; Grandmother has an account in her own name; A's father has an account in his own name; the UGMA account may be grouped with A's father's account but may not be grouped with Grandmother's account;

	B.	H establishes a trust naming his children as beneficiaries and appointing himself and his bank as co-trustees; a purchase made in the trust account is eligible for grouping with an IRA account of W, H's wife;

	C.	H's will provides for the establishment of a trust for the benefit of his minor children upon H's death; his bank is named as trustee; upon H's death, an account is established in the name of the bank, as trustee; a purchase in the account may be grouped with an account held by H's wife in her own name.

	D.	X establishes a trust naming herself as trustee and R, her son, as successor trustee and R and S as beneficiaries; upon X's death, the account is transferred to R as trustee; a purchase in the account may not be grouped with R's individual account. If X's spouse, Y, was successor trustee, this purchase could be grouped with Y's individual account.

All purchases of Class A shares made for a participant in a multi-participant Keogh plan may be grouped only with other purchases made under the same plan; a multi-participant Keogh plan is defined as a plan in which there is more than one participant where one or more of the participants is other than the spouse of the owner/employer.

Example A:	H has established a Keogh plan; he and his wife W are the only participants in the plan; they may group their purchases made under the plan with any purchases in categories 1 through 7 above.

Example B:	H has established a Keogh Plan; his wife, W, is a participant and they have hired one or more employees who also become participants in the plan; H and W may not combine any purchases made under the plan with any purchases in categories 1 through 7 above; however, all purchases made under the plan for H, W or any other employee will be combined.

All purchases of Class A shares made under a qualified employee benefit plan of an incorporated business will be grouped. A qualified employee benefit plan is established pursuant to Section 401 of the Code. All qualified employee benefit plans of any one employer or affiliated employers will also be grouped. An affiliate is defined as an employer that directly, or indirectly, controls or is controlled by or is under control with another employer. All qualified employee benefit plans of an employer who is a franchisor and those of its franchisee(s) may also be grouped.

Example:

Corporation X sets up a defined benefit plan; its subsidiary, Corporation Y, sets up a 401(k) plan; all contributions made under both plans will be grouped.

All purchases of Class A shares made under a simplified employee pension plan (SEP), payroll deduction plan or similar arrangement adopted by an employer or affiliated employers (as defined above) may be grouped provided that the employer elects to have all such purchases grouped at the time the plan is set up. If the employer does not make such an election, the purchases made by individual employees under the plan may be grouped with the other accounts of the individual employees described above in Account Grouping.

Account grouping as described above is available under the following circumstances.

One-time Purchases

A one-time purchase of Class A shares in accounts eligible for grouping may be combined for purposes of determining the availability of a reduced sales charge. In order for an eligible purchase to be grouped, the investor must advise IFDI at the time the purchase is made that it is eligible for grouping and identify the accounts with which it may be grouped.

Example:

H and W open an account in the Fund and invest $75,000; at the same time, H's parents open up three UGMA accounts for H and W's three minor children and invest $10,000 in each child's name; the combined purchase of $105,000 of Class A shares is subject to a reduced sales load of 4.75% provided that IFDI is advised that the purchases are entitled to grouping.

Rights of Accumulation

If Class A shares are held in any account and an additional purchase of Class A shares is made in that account or in any account eligible for grouping with that account, the additional purchase is combined with the NAV of the existing account(s) as of the date the new purchase is accepted by IFDI for the purpose of determining the availability of a reduced sales charge.

Example:

H is a current Class A shareholder who invested in one of the Funds three years ago. His account has a NAV of $80,000. His wife, W, now wishes to invest $20,000 in Class A shares of that (or another) Fund. W's purchase will be combined with H's existing account and will be entitled to a reduced sales charge of 4.75%. H's original purchase was subject to a full sales charge and the reduced charge does not apply retroactively to that purchase.

In order to be entitled to Rights of Accumulation, the purchaser must inform IFDI that the purchaser is entitled to a reduced charge and provide IFDI with the name and number of the existing account(s) with which the purchase may be combined.

Letter of Intent

The benefit of a reduced sales charge for larger purchases of Class A shares is also available under a Letter of Intent (LOI). By signing an LOI form, which is available from IFDI, the purchaser indicates an intention to invest in Class A shares, over a 13-month period, a dollar amount which is sufficient to qualify for a reduced sales charge. The 13-month period begins on the date the first purchase made under the LOI is accepted by IFDI. Each purchase made from time to time under the LOI is treated as if the purchaser were buying at one time the total amount which he or she intends to invest. The sales charge applicable to all purchases of Class A shares made under the terms of the LOI will be the sales charge in effect on the beginning date of the 13-month period.

In determining the amount which the purchaser must invest in order to qualify for a reduced sales charge under an LOI, the investor's Rights of Accumulation (see above) will be taken into account; that is, Class A shares already held in the same account in which the purchase is being made or in any account eligible for grouping with that account, as described above, will be included.

Example:

H signs an LOI indicating his intent to invest in his own name a dollar amount sufficient to entitle him to purchase Class A shares at the sales charge applicable to a purchase of $100,000. H has an IRA account and the Class A shares held under the IRA in a Fund have a NAV as of the date the LOI is accepted by IFDI of $15,000; H's wife, W, has an account in her own name invested in another Fund which charges the same sales load as the Fund, with a NAV as of the date of acceptance of the LOI of $10,000; H needs to invest $75,000 in Class A shares over the 13-month period in order to qualify for the reduced sales load applicable to a purchase of $100,000.

A copy of the LOI signed by a purchaser will be returned to the purchaser after it is accepted by IFDI and will set forth the dollar amount of Class A shares which must be purchased within the 13-month period in order to qualify for the reduced sales charge.

The minimum initial investment under an LOI is 5% of the dollar amount which must be invested under the LOI. An amount equal to 5% of the purchase required under the LOI will be held in escrow. If a purchaser does not, during the period covered by the LOI, invest the amount required to qualify for the reduced sales charge under the terms of the LOI, he or she will be responsible for payment of the sales charge applicable to the amount actually invested. The additional sales charge owed on purchases of Class A shares made under an LOI which is not completed will be collected by redeeming part of the shares purchased under the LOI and held in escrow unless the purchaser makes payment of this amount to IFDI within 20 days of IFDI's request for payment.

If the actual amount invested is higher than the amount an investor intends to invest, and is large enough to qualify for a sales charge lower than that available under the LOI, the lower sales charge will apply.

An LOI does not bind the purchaser to buy, or IFDI to sell, the shares covered by the LOI.

With respect to LOIs for $2,000,000 or purchases otherwise qualifying for no sales charge under the terms of the LOI, the initial investment must be at least $200,000.

The value of any shares redeemed during the 13-month period which were acquired under the LOI will be deducted in computing the aggregate purchases under the LOI.

LOIs are not available for purchases made under an SEP where the employer has elected to have all purchases under the SEP grouped.

Other Funds in the Ivy Family of Funds and Waddell & Reed InvestEd Portfolios, Inc.

Reduced sales charges for larger purchases of Class A shares apply to purchases of any of the Class A shares of any of the funds in the Ivy Family of Funds and Waddell & Reed InvestEd Portfolios, Inc. subject to a sales charge. A purchase of Class A shares, or Class A shares held, in any of the funds in the Ivy Family of Funds and/or Waddell & Reed InvestEd Portfolios, Inc. subject to a sales charge will be treated as an investment in the Fund in determining the applicable sales charge. For these purposes, Class A shares of Ivy Money Market Fund that were acquired by exchange of another Ivy Family of Funds or Waddell & Reed InvestEd Portfolios, Inc. Class A shares on which a sales charge was paid, plus the shares paid as dividends on those acquired shares, are also taken into account.

To obtain a reduced sales charge, clients of Waddell & Reed, Inc. and Legend may also combine purchases of Class A shares of any of the funds in the Waddell & Reed Advisors Family of Funds, except Class A shares of Waddell & Reed Advisors Cash Management, Inc.

Net Asset Value Purchases of Class A Shares

Class A shares of a Fund may be purchased at NAV by the Directors and officers of the Fund or of any affiliated entity of IFDI, employees of IFDI or of any of its affiliates, financial advisors of IFDI and its affiliates and the spouse, children, parents, children's spouses and spouse's parents of each such Director, officer, employee and financial advisor. Child includes stepchild; parent includes stepparent. Purchases of Class A shares in an IRA sponsored by IFDI of its affiliates established for any of these eligible purchasers may also be at NAV. Purchases of Class A shares in any tax-qualified retirement plan under which the eligible purchaser is the sole participant may also be made at NAV. Trusts under which the grantor and the trustee or a co-trustee are each an eligible purchaser are also eligible for NAV purchases of Class A shares. Employees include retired employees. A retired employee is an individual separated from service from IFDI, or from an affiliated company with a vested interest in any Employee Benefit plan sponsored by IFDI or any of its affiliated companies. Financial advisors include retired financial advisors. A retired financial advisor is any financial advisor who was, at the time of separation from service from IFDI, a Senior Financial Advisor. A custodian under UGMA or UTMA purchasing for the child or grandchild of any employee or financial advisor may purchase Class A shares at NAV whether or not the custodian himself is an eligible purchaser.

Until December 31, 2003, Class A shares may be purchased at NAV by persons who are clients of Legend if the purchase is made with the proceeds of the redemption of shares of a mutual fund which is not within the Waddell & Reed Advisors Funds or Ivy Funds, Inc. and the purchase is made within 60 days of such redemption.

Shares may be issued at NAV in a merger, acquisition or exchange offer made pursuant to a plan of reorganization to which the Fund is a party.

Purchases of Class A shares by Friends of the Firm which include certain persons who have an existing relationship with IFDI or any of its affiliates may be made at NAV.

Retirement plan accounts held in the Waddell & Reed Advisors Retirement Plan, offered and distributed by Nationwide Investment Services Corporation through Nationwide Trust Company, FSB retirement programs.

Direct Rollovers from the Waddell & Reed Advisors Retirement Plan.

Purchases of Class A shares in a 401(k) plan or a 457 plan having 100 or more eligible employees, and the shares are held in individual plan participant accounts on the Fund's records, may be made at NAV.

Purchases of Class A shares by certain clients investing through a qualified fee-based program offered by a third party that has made arrangements to sell shares of the Funds may be made at NAV.

Reasons for Differences in the Public Offering Price of Class A Shares

As described herein and in the Prospectus, there are a number of instances in which a Fund's Class A shares are sold or issued on a basis other than at the maximum public offering price, that is, the NAV plus the highest sales charge. Some of these instances relate to lower or eliminated sales charges for larger purchases of Class A shares, whether made at one time or over a period of time as under an LOI or Rights of Accumulation. See the table of breakpoints in sales charges in the Prospectus for the Class A shares. The reasons for these quantity discounts are, in general, that (1) they are traditional and have long been permitted in the industry and are therefore necessary to meet competition as to sales of shares of other funds having such discounts, (2) certain quantity discounts are required by rules of the National Association of Securities Dealers, Inc. (as is elimination of sales charges on the reinvestment of dividends and distributions), and (3) they are designed to avoid an unduly large dollar amount of sales charge on substantial purchases in view of reduced selling expenses. Quantity discounts are made available to certain related persons for reasons of family unity and to provide a benefit to tax-exempt plans and organizations.

In general, the reasons for the other instances in which there are reduced or eliminated sales charges for Class A shares are as follows. Exchanges at NAV are permitted because a sales charge has already been paid on the shares exchanged. Sales of Class A shares without a sales charge are permitted to Directors, officers and certain others due to reduced or eliminated selling expenses and since such sales may aid in the development of a sound employee organization, encourage responsibility and interest in a Fund and an identification with its aims and policies. Limited reinvestments of redemptions of Class A shares at no sales charge are permitted to attempt to protect against mistaken or not fully informed redemption decisions. Class A shares may be sold without a sales charge in plans of reorganization due to reduced or eliminated sales expenses and since, in some cases, such shares are exempted by the 1940 Act from the otherwise applicable requirements as to sales charges. Reduced or eliminated sales charges may also be used for certain short-term promotional activities by IFDI. In no case in which there is a reduced or eliminated sales charge are the interests of existing Class A shareholders adversely affected since, in each case, the Fund receives the NAV per share of all shares sold or issued.

Systematic Withdrawal Plan for Class A, Class B and Class C Shareholders

If you qualify, you may arrange to receive through the Systematic Withdrawal Plan (Service) regular monthly, quarterly, semiannual or annual payments by redeeming on an ongoing basis Class A, Class B or Class C shares that you own of any of the funds in the Ivy Family of Funds. It would be a disadvantage to an investor to make additional purchases of Class A shares while the Service is in effect because it would result in duplication of sales charges. Class B and Class C shares, and certain Class A shares to which the CDSC otherwise applies, that are redeemed under the Service are not subject to a CDSC provided the amount withdrawn does not exceed, annually, 12% of the account value. Applicable forms to start the Service are available through Waddell & Reed Services Company.

The maximum amount of the withdrawal for annual withdrawals is 12% of the value of your account at the time the Service is established. As noted above, the withdrawal proceeds are not subject to the CDSC, but only within these percentage limitations. The minimum withdrawal is $50. The Service, and this exclusion from the CDSC, do not apply to a one-time withdrawal.

To qualify for the Service, you must have invested at least $10,000 in Class A, Class B or Class C shares which you still own of any of the funds in the Ivy Family of Funds; or, you must own Class A, Class B or Class C shares having a value of at least $10,000. The value for this purpose is the value at the current offering price.

You can choose to have shares redeemed to receive:

1. a monthly, quarterly, semiannual or annual payment of $50 or more;

2. a monthly payment, which will change each month, equal to one-twelfth of a percentage of the value of the shares in the Account; (you select the percentage); or

3. a monthly or quarterly payment, which will change each month or quarter, by redeeming a number of shares fixed by you (at least five shares).

Shares are redeemed on the 20th day of the month in which the payment is to be made, or on the prior business day if the 20th is not a business day. Payments are made within five days of the redemption.

The dividends and distributions on shares of a class you have made available for the Service are paid in additional shares of that class. All payments under the Service are made by redeeming shares, which may involve a gain or loss for tax purposes. To the extent that payments exceed dividends and distributions, the number of shares you own will decrease. When all of the shares in an account are redeemed, you will not receive any further payments. Thus, the payments are not an annuity, an income or a return on your investment.

You may, at any time, change the manner in which you have chosen to have shares redeemed to any of the other choices originally available to you. You may, at any time, redeem part or all of the shares in your account; if you redeem all of the shares, the Service is terminated. The Fund can also terminate the Service by notifying you in writing.

After the end of each calendar year, information on shares redeemed will be sent to you to assist you in completing your Federal income tax return.

Exchanges for Shares of Other Funds in the Ivy Family of Funds and Waddell & Reed InvestEd Portfolios, Inc.

Class A Share Exchanges

Once a sales charge has been paid on shares of a fund in the Ivy Family of Funds or Waddell & Reed InvestEd Portfolios, Inc., these shares and any shares added to them from dividends or distributions paid in shares may be freely exchanged for corresponding shares of another fund in Ivy Family of Funds or Waddell & Reed InvestEd Portfolios, Inc. and, for clients of Waddell & Reed, Inc. or Legend, another fund in Waddell & Reed Advisors Funds. The shares you exchange must be worth at least $100 or you must already own shares of a fund in Ivy Family of Funds or Waddell & Reed InvestEd Portfolios, Inc. into which you want to exchange.

Except where the special rules described below apply, you may exchange Class A shares you own in a Fund for Class A shares of another fund in the Ivy Family of Funds or Waddell & Reed InvestEd Portfolios and, for clients of Waddell & Reed, Inc. or Legend, for Class A shares of a fund in Waddell & Reed Advisors Funds, without charge if (1) a sales charge was paid on these shares, or (2) the shares were received in exchange for shares for which a sales charge was paid, or (3) the shares were acquired from reinvestment of dividends and distributions paid on such shares. There may have been one or more such exchanges so long as a sales charge was paid on the shares originally purchased. Also, shares acquired without a sales charge because the purchase was $2 million or more will be treated the same as shares on which a sales charge was paid.

Special rules apply to Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund shares. Class A shares of one of these Funds may be exchanged for Class A shares of another fund in the Ivy Family of Funds or Waddell & Reed InvestEd Portfolios, Inc. (or, for customers of Waddell & Reed, Inc. or Legend, for Class A shares of a fund within Waddell & Reed Advisors Funds) only if (1) you received the shares to be exchanged as a result of one or more exchanges of shares on which a maximum sales charge was originally paid (currently, 5.75%), or (2) the shares to be exchanged have been held for at least six months from the date of the original purchase. However, you may exchange, and these restrictions do not apply to exchanges of, Class A shares of Ivy Limited-Term Bond, Ivy Municipal Bond Fund or Ivy Money Market Fund (and, for clients of Waddell & Reed, Inc. or Legend, Class A shares of Waddell & Reed Advisors Municipal Bond Fund, Inc., Waddell & Reed Advisors Municipal High Income Fund, Inc., Waddell & Reed Advisors Fixed Income Funds, Inc. or Waddell & Reed Advisors Cash Management, Inc.).

Subject to the above rules regarding sales charges, you may have a specific dollar amount of Class A shares of Ivy Money Market Fund automatically exchanged each month into Class A shares of any other fund in Ivy Family of Funds, provided you already own Class A shares of the fund. The shares of Ivy Money Market Fund which you designate for automatic exchange must be worth at least $100, which may be allocated among the Class A shares of different Funds so long as each fund receives a value of at least $25. Minimum initial investment and minimum balance requirements apply to such automatic exchange service.

Class B Share Exchanges

You may exchange Class B shares of one Fund for Class B shares of another Fund in the Ivy Family of Funds or Waddell & Reed InvestEd Portfolios, Inc., and, for clients of Waddell & Reed, Inc. or Legend, for Class B shares of a fund in Waddell & Reed Advisors Funds without charge.

The redemption of a Fund's Class B shares as part of an exchange is not subject to the deferred sales charge. For purposes of computing the deferred sales charge, if any, applicable to the redemption of the shares acquired in the exchange, those acquired shares are treated as having been purchased when the original redeemed shares were purchased.

You may have a specific dollar amount of Class B shares of Ivy Money Market Fund automatically exchanged each month into Class B shares of any other fund in the Ivy Family of Funds, provided you already own Class B shares of the fund. The shares of Ivy Money Market Fund which you designate for automatic exchange must be worth at least $100, which may be allocated among different Funds so long as each Fund receives a value of at least $25. Minimum initial investment and minimum balance requirements apply to such automatic exchange service.

Class C Share Exchanges

You may exchange Class C shares of one Fund for Class C shares of another Fund or Waddell & Reed InvestEd Portfolios, Inc., and for customers of Waddell & Reed, Inc. or Legend, for Class C shares of a fund in the Waddell & Reed Advisors Funds without charge.

The redemption of a Fund's Class C shares as part of an exchange is not subject to the deferred sales charge. For purposes of computing the deferred sales charge, if any, applicable to the redemption of the shares acquired in the exchange, those acquired shares are treated as having been purchased when the original redeemed shares were purchased.

You may have a specific dollar amount of Class C shares of Ivy Money Market Fund automatically exchanged each month into Class C shares of any other fund in the Ivy Family of Funds, provided you already own Class C shares of the fund. The shares of Ivy Money Market Fund which you designate for automatic exchange must be worth at least $100, which may be allocated among different Funds so long as each Fund receives a value of at least $25. Minimum initial investment and minimum balance requirements apply to such automatic exchange service.

Class Y Share Exchanges

Class Y shares of a Fund may be exchanged for Class Y shares of any other Fund or for Class A shares of Ivy Money Market Fund, and, for clients of Waddell & Reed, Inc. or Legend, for Class Y shares of a fund within Waddell & Reed Advisors Funds.

General Exchange Information

You may exchange only into Funds that are legally permitted for sale in your state of residence. Currently, each Fund within Ivy Family of Funds, Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc. may be sold only within the United States and the Commonwealth of Puerto Rico, except that Ivy Cundill Global Value Fund, Ivy Global Natural Resources Fund, Ivy Pacific Opportunities Fund and the Advisor Class shares of Ivy International Fund are not eligible for sale in the Commonwealth of Puerto Rico.

Ivy International Growth Fund will deduct a redemption fee of 2.00% from any redemption or exchange proceeds if you sell or exchange your Class A or Class Y shares after holding them less than 30 days. These fees are paid to the Fund, and are designed to offset the brokerage commissions, market impact, and other costs associated with fluctuations in fund asset levels and cash flow caused by short term shareholder trading. If you bought your shares on different days, the "first-in, first-out" (FIFO) method is used to determine the holding period. Under this method, the shares you held longest will be redeemed first for purposes of determining whether the redemption fee applies. The redemption fee does not apply to shares that were acquired through reinvestment of distributions and generally is waived for shares purchased through certain retirement and educational plans, and programs and through certain fee-based asset allocation programs. In addition, the fee waiver does not apply to any IRA or SEP-IRA accounts. Ivy International Growth Fund reserves the right to modify the terms of or terminate the redemption/exchange fee at any time.

The exchange will be made at the NAVs next determined after receipt of your written request in good order by the Funds. When you exchange shares, the total shares you receive will have the same aggregate NAV as the total shares you exchange.

These exchange rights may be eliminated or modified at any time by the Funds, upon notice in certain circumstances. The Funds will typically limit activity deemed to be market timing by restricting the amount of exchanges permitted by a shareholder.

Retirement Plans and Other Tax-Advantaged Savings Accounts

Your account may be set up as a funding vehicle for a retirement plan or other tax-advantaged savings account. For individual taxpayers meeting certain requirements, IFDI offers model or prototype documents for the following retirement plans and other accounts. All of these accounts involve investment in shares of one or more of the Funds (other than Ivy Municipal Bond Fund or Ivy Tax-Managed Equity Fund) and, for Clients of Waddell & Reed, Inc. or Legend, shares of certain other funds in Waddell & Reed Advisors Funds. The dollar limits specified below are for 2003 for Federal income tax purposes and may change for subsequent years.

Individual Retirement Accounts (IRAs). Investors having eligible earned income may set up a plan that is commonly called an IRA. Under a traditional IRA, an investor can contribute each year up to 100% of his or her earned income, up to the Annual Dollar Limit per year (provided the investor has not reached age 70 1/2). For the 2002 through 2004 calendar years, the Annual Dollar Limit is $3,000. For individuals who have attained age 50 by the last day of the calendar year for which the contribution is made, the Annual Dollar Limit also allows a catch-up contribution. The maximum annual catch-up contribution is $500 for the 2002 through 2005 calendar years. For a married couple, the maximum annual contribution is two times the Annual Dollar Limit (the Annual Dollar Limit for each spouse) or, if less, the couple's combined earned income for the taxable year, even if one spouse had no earned income. Generally, the contributions are deductible unless: 1) the investor (or, if married, either spouse) is an active participant in an employer-sponsored retirement plan; and 2) their adjusted gross income exceeds certain levels. A married investor who is not an active participant, who files jointly with his or her spouse and whose combined adjusted gross income does not exceed $150,000 is not affected by his or her spouse's active participant status.

An investor may also use a traditional IRA to receive a rollover contribution that is either (a) a direct rollover distribution from an employer's plan or (b) a rollover of an eligible distribution paid to the investor from an employer's plan or another IRA. To the extent a rollover contribution is made to a traditional IRA, the distribution will not be subject to Federal income tax until distributed from the IRA. A direct rollover generally applies to any distribution from an employer's plan (including a custodial account under Section 403(b)(7) of the Code or a government plan under Section 457 of the Code, but not an IRA) other than certain periodic payments, required minimum distributions and other specified distributions. In a direct rollover, the eligible rollover distribution is paid directly to the IRA, not to the investor. If, instead, an investor receives payment of an eligible rollover distribution, all or a portion of that distribution generally may be rolled over to an IRA within 60 days after receipt of the distribution. Because mandatory Federal income tax withholding applies to any eligible rollover distribution that is not paid in a direct rollover, investors should consult their tax advisers or pension consultants as to the applicable tax rules. If you already have an IRA, you may have the assets in that IRA transferred directly to an IRA offered by IFDI.

Roth IRAs. Investors having eligible earned income and whose adjusted gross income (or combined adjusted gross income, if married) does not exceed certain levels, may establish and contribute up to the Annual Dollar Limit per tax year to a Roth IRA (or to any combination of Roth and traditional IRAs). For a married couple, the annual maximum is two times the Annual Dollar Limit (the Annual Dollar Limit for each spouse) or, if less, the couple's combined earned income for the taxable year, even if one spouse had no earned income.

In addition, for an investor whose adjusted gross income does not exceed $100,000 (and who is not a married person filing a separate return), certain distributions from traditional IRAs may be rolled over to a Roth IRA and any of the investor's traditional IRAs may be converted into a Roth IRA; these rollover distributions and conversions are, however, subject to Federal income tax.

Contributions to a Roth IRA are not deductible; however, earnings accumulate tax-free in the Roth IRA, and withdrawals of earnings are not subject to Federal income tax if the account has been held for at least five years and the account holder has reached age 59 1/2 (or certain other conditions apply).

Coverdell Education Savings Accounts (formerly, Education IRAs). Although not technically for retirement savings, Coverdell Education Savings Accounts provide a vehicle for saving for a child's education. A Coverdell Education Savings Account may be established for the benefit of any minor, and any person whose adjusted gross income does not exceed certain levels may contribute up to $2000 to a Coverdell Education Savings Account (or to each of multiple Coverdell Education Savings Accounts), provided that no more than $2000 may be contributed for any year to Coverdell Education Savings Accounts for the same beneficiary. Contributions are not deductible and may not be made after the beneficiary reaches age 18 (except that this age limit does not apply to a beneficiary with "special needs," as defined in the Code). Earnings accumulate tax-free, and withdrawals are not subject to tax if used to pay the qualified education expenses of the beneficiary (or certain members of his or her family).

Simplified Employee Pension (SEP) plans. Employers can make contributions to SEP-IRAs established for employees. Generally an employer may contribute up to 25% of compensation, subject to certain maximums, per year for each employee.

Savings Incentive Match Plans for Employees (SIMPLE Plans). An employer with 100 or fewer eligible employees that does not sponsor another active retirement plan may sponsor a SIMPLE plan to contribute to its employees' retirement accounts. A SIMPLE plan can be in the form of either an IRA or a 401(k) plan. In general, an employer can choose to match employee contributions dollar-for-dollar (up to 3% of an employee's compensation) or may contribute to all eligible employees 2% of their compensation, whether or not they defer salary to their retirement plans. SIMPLE plans involve fewer administrative requirements, generally, than traditional 401(k) or other qualified plans.

Keogh Plans. Keogh plans, which are available to self-employed individuals, are defined contribution plans that may be either a money purchase plan or a profit-sharing plan. As a general rule, an investor under a defined contribution Keogh plan can contribute, for 2002, up to 25% of his or her annual earned income, with a maximum of $40,000.

457 Plans. If an investor is an employee of a state or local government or of certain types of charitable organizations, he or she may be able to enter into a deferred compensation arrangement in accordance with Section 457 of the Code.

TSAs - Custodial Accounts and Title I Plans. If an investor is an employee of a public school system, a church or certain types of charitable organizations, he or she may be able to enter into a deferred compensation arrangement through a custodial account under Section 403(b)(7) of the Code. Some organizations have adopted Title I plans, which are funded by employer contributions in addition to employee deferrals.

Pension and Profit-Sharing Plans, including 401(k) Plans. With a 401(k) plan, employees can make tax-deferred contributions to a plan to which the employer may also contribute, usually on a matching basis. An employee may defer each year the lesser of 100% of income or $11,000 of compensation for 2002, which may be increased each year based on cost-of-living adjustments.

More detailed information about these arrangements and applicable forms are available from IFDI. These tax-advantaged savings plans and other accounts may be treated differently under state tax law and may involve complex tax questions as to premature distributions and other matters. Investors should consult their tax adviser or pension consultant.

Redemptions

The Prospectus gives information as to redemption procedures. Redemption payments are made within seven (7) days from receipt of a request in good order, unless delayed because of emergency conditions as determined by the SEC, when the NYSE is closed other than for weekends or holidays, or when trading on the NYSE is restricted. Payment is made in cash, although under extraordinary conditions redemptions may be made in portfolio securities. Payment for redemptions of shares of the Funds may be made in portfolio securities when the Board of Directors determines that conditions exist making cash payments undesirable. Redemptions made in securities will be made only in readily marketable securities. Securities used for payment of redemptions are valued at the price used in figuring NAV. There would be brokerage costs to the redeeming shareholder in selling such securities. Each Fund, however, has elected to be governed by Rule 18f-1 under the 1940 Act, pursuant to which it is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder.

Reinvestment Privilege

The Funds offer a one-time reinvestment privilege that allows you to reinvest without charge all or part of any amount of Class A shares you redeem from the Fund by sending to the Fund the amount you wish to reinvest. The amount you return will be reinvested in Class A shares at the NAV next calculated after the Fund receives the returned amount. Your written request to reinvest and the amount to be reinvested must be received within forty-five (45) days after your redemption request was received, and the Fund must be offering Class A shares at the time your reinvestment request is received. You can do this only once as to Class A shares of a Fund. You do not lose this privilege by redeeming shares to invest the proceeds at NAV in a Keogh plan or an IRA.

There is also a reinvestment privilege for Class B and Class C shares and, where applicable, certain Class A shares under which you may reinvest in the Fund all or part of any amount of the shares you redeemed and have the corresponding amount of the CDSC, if any, which you paid restored to your account by adding the amount of that charge to the amount you are reinvesting in shares of the same class. If Fund shares of that class are then being offered, you can put all or part of your redemption payment back into such shares at the NAV next calculated at the time your request is received. Your written request to do this must be received within forty-five (45) days after your redemption request was received. You can do this only once as to Class B and Class C shares of the Fund. For purposes of determining future CDSC, the reinvestment will be treated as a new investment. You do not lose this privilege by redeeming shares to invest the proceeds at NAV in a Keogh plan or an IRA.

Mandatory Redemption of Certain Small Accounts

Each of the Funds has the right to require the redemption of shares held under any account or any plan if the aggregate NAV of such shares (taken at cost or value as the Board of Directors may determine) is less than $500 or, for Ivy Money Market Fund, less than $250. The Board has no intent to require redemptions in the foreseeable future. If it should elect to require redemptions, shareholders who are affected will receive prior written notice and will be permitted 60 days to bring their accounts up to the minimum before this redemption is processed. Ivy Money Market Fund may charge a fee of $1.75 per month on all accounts with a NAV of less than $250, except for retirement plan accounts.

Determination of Offering Price

The NAV of each class of the shares of a Fund is the value of the assets of that class, less the class's liabilities, divided by the total number of outstanding shares of that class.

Class A shares of the Funds are sold at their next determined NAV plus the sales charge described in the Prospectuses. The sales charge is paid to IFDI. The price makeup as of March 31, 2003, which is the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, was as follows:

Ivy Asset Strategy Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$11.18
Add: selling commission (5.75% of offering
	price)	0.68
	------
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$11.86
	======

Ivy Core Equity Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$6.63
Add: selling commission (5.75% of offering
	price)	0.40
	------
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$7.03
	======

Ivy High Income Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$8.07
Add: selling commission (5.75% of offering
	price)	0.49
	-----
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$8.56
	=====

Ivy International Growth Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$7.57
Add: selling commission (5.75% of offering
	price)	0.46
	------
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$8.03
	======

Ivy Large Cap Growth Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$7.24
Add: selling commission (5.75% of offering
	price)	0.44
	------
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$7.68
	======

Ivy Limited-Term Bond Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$10.45
Add: selling commission (4.25% of offering
	price)	0.46
	------
Maximum offering price per Class A share
	(Class A NAV divided by 95.75%)	$10.91
	======

Ivy Mid Cap Growth Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$6.67
Add: selling commission (5.75% of offering
	price)	0.41
	-----
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$7.08
	=====

Ivy Municipal Bond Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$11.10
Add: selling commission (4.25% of offering
	price)	0.49
	------
Maximum offering price per Class A share
	(Class A NAV divided by 95.75%)	$11.59
	======

Ivy Science and Technology Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$14.17
Add: selling commission (5.75% of offering
	price)	0.86
	------
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$15.03
	======

Ivy Small Cap Growth Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$8.25
Add: selling commission (5.75% of offering
	price)	0.50
	------
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$8.75
	======

Ivy Tax-Managed Equity Fund

NAV per Class A share (Class A
	net assets divided by Class A shares
	outstanding)	$5.73
Add: selling commission (5.75% of offering
	price)	0.35
	-----
Maximum offering price per Class A share
	(Class A NAV divided by 94.25%)	$6.08
	=====

The offering price of a Class A share is its NAV next calculated following acceptance of a purchase request, in good order, plus the sales charge, as applicable. The offering price of a Class B share, Class C share, Class Y share or certain Class A shares is the applicable Class NAV next calculated following acceptance of a purchase request, in good order. The number of shares you receive for your purchase depends on the next offering price after IFDI, or an authorized third party, properly receives and accepts your order. You will be sent a confirmation after your purchase (except for automatic transactions) which will indicate how many shares you have purchased.

IFDI need not accept any purchase order, and it or the Funds may determine to discontinue offering Fund shares for purchase.

The NAV and offering price per share are computed once on each day that the NYSE is open for trading as of the later of the close of the regular session of the NYSE or the close of the regular session of any other securities or commodities exchange on which an option or futures contract held by a Fund is traded. The NYSE annually announces the days on which it will not be open for trading. The most recent announcement indicates that the NYSE will not be open on the following days: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. However, it is possible that the NYSE may close on other days. The NAV will likely change every business day, since typically the value of the assets and the number of shares outstanding change every business day. Ivy Money Market Fund is designed so that the value of each share of each class of the Fund (the NAV per share) will remain fixed at $1.00 per share except under extraordinary circumstances.

The securities in the portfolio of each Fund, except as otherwise noted, that are listed or traded on a stock exchange, are valued on the basis of the last sale on that day or, lacking any sales, at a price that is the mean between the closing bid and asked prices. Other securities that 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. Bonds, other than convertible bonds, are valued using a third-party pricing system. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Short-term debt securities are valued at amortized cost, which approximates market value. When market quotations are not readily available, securities and other assets are valued at fair value as determined in good faith under procedures established by, and under the general supervision and responsibility of, the Board of Directors.

Options and futures contracts purchased and held by a Fund are valued at the last sales price thereof on the securities or commodities exchanges on which they are traded, or, if there are no transactions, at the mean between bid and asked prices. Ordinarily, the close of the regular session for options trading on national securities exchanges is 4:10 p.m. Eastern time and the close for the regular session for commodities exchanges is 4:15 p.m. Eastern time. Futures contracts will be valued with reference to established futures exchanges. The value of a futures contract purchased by a Fund will be either the closing price of that contract or the bid price. Conversely, the value of a futures contract sold by a Fund will be either the closing purchase price or the asked price.

When a Fund writes a put or call, an amount equal to the premium received is included in the Statement of Assets and Liabilities as an asset, and an equivalent deferred credit is included in the liability section. The deferred credit is marked-to-market (that is, treated as sold for its fair market value) to reflect the current market value of the put or call. If a call a Fund wrote is exercised, the proceeds received on the sale of the related investment are increased by the amount of the premium the Fund received. If a Fund exercised a call it purchased, the amount paid to purchase the related investment is increased by the amount of the premium paid. If a put written by a Fund is exercised, the amount that the Fund pays to purchase the related investment is decreased by the amount of the premium it received. If a Fund exercises a put it purchased, the amount the Fund receives from the sale of the related investment is reduced by the amount of the premium it paid. If a put or call written by a Fund expires, it has a gain in the amount of the premium; if a Fund enters into a closing purchase transaction, it will have a gain or loss depending on whether the premium was more or less than the cost of the closing transaction.

Foreign currency exchange rates are generally determined prior to the close of trading of the regular session of the NYSE. Occasionally events affecting the value of foreign investments and such exchange rates occur between the time at which they are determined and the close of the regular session of trading on the NYSE, which events will not be reflected in a computation of a Fund's NAV on that day. If events materially affecting the value of such investments or currency exchange rates occur during such time period, the investments will be valued at their fair value as determined in good faith by or under the direction of the Board of Directors. The foreign currency exchange transactions of a Fund conducted on a spot (i.e., cash) basis are valued at the spot rate for purchasing or selling currency prevailing on the foreign exchange market. This rate under normal market conditions differs from the prevailing exchange rate in an amount generally less than one-tenth of one percent due to the costs of converting from one currency to another.

Optional delivery standby commitments are valued at fair value under the general supervision and responsibility of the Funds' Board of Directors. They are accounted for in the same manner as exchange-listed puts.

Ivy Money Market Fund operates under Rule 2a-7 which permits it to value its portfolio on the basis of amortized cost. The amortized cost method of valuation is accomplished by valuing a security at its cost and thereafter assuming a constant amortization rate to maturity of any discount or premium, and does not reflect the impact of fluctuating interest rates on the market value of the security. This method does not take into account unrealized gains or losses.

While the amortized cost method provides some degree of certainty in valuation, there may be periods during which value, as determined by amortized cost, is higher or lower than the price the Fund would receive if it sold the instrument. During periods of declining interest rates, the daily yield on the Fund's shares may tend to be higher than a like computation made by a fund with identical investments utilizing a method of valuation based upon market prices and estimates of market prices for all of its portfolio instruments and changing its dividends based on these changing prices. Thus, if the use of amortized cost by the Fund resulted in a lower aggregate portfolio value on a particular day, a prospective investor in the Fund's shares would be able to obtain a somewhat higher yield than would result from investment in such a fund, and existing investors in the Fund's shares would receive less investment income. The converse would apply in a period of rising interest rates.

Under Rule 2a-7, the Board of Directors must establish procedures designed to stabilize, to the extent reasonably possible, the Fund's price per share as computed for the purpose of sales and redemptions at $1.00. Such procedures must include review of the Fund's portfolio holdings by the Board at such intervals as it may deem appropriate and at such intervals as are reasonable in light of current market conditions to determine whether the Fund's NAV calculated by using available market quotations deviates from the per share value based on amortized cost.

For the purpose of determining whether there is any deviation between the value of the Fund's portfolio based on amortized cost and that determined on the basis of available market quotations, if there are readily available market quotations, investments are valued at the mean between the bid and asked prices. If such market quotations are not available, the investments will be valued at their fair value as determined in good faith under procedures established by and under the general supervision and responsibility of the Board of Directors, including being valued at prices based on market quotations for investments of similar type, yield and duration.

Under Rule 2a-7, if the extent of any deviation between the NAV per share based upon available market quotations and the NAV per share based on amortized cost exceeds one-half of 1%, the Board must promptly consider what action, if any, will be initiated. When the Board believes that the extent of any deviation may result in material dilution or other unfair results to investors or existing shareholders, it is required to take such action as it deems appropriate to eliminate or reduce to the extent reasonably practicable such dilution or unfair results. Such actions could include the sale of portfolio securities prior to maturity to realize capital gains or losses or to shorten average portfolio maturity, withholding dividends or payment of distributions from capital gains, redemptions of shares in kind, or establishing a NAV per share using available market quotations.

The procedures which the Board of Directors has adopted include changes in the dividends payable by the Fund under specified conditions, as further described under Taxes and Payments to Shareholders. The purpose of this portion of the procedures is to provide for the automatic taking of one of the actions which the Board of Directors might take should it otherwise be required to consider taking appropriate action.

TAXATION OF THE FUND

General

Each Fund has qualified since its inception for treatment as a regulated investment company (RIC) under the Code, so that it is relieved of Federal income tax on that part of its investment company taxable income (consisting generally of taxable net investment income, net short-term capital gains and, for certain Funds, net gains from certain foreign currency transactions, determined without regard to any deduction for dividends paid) that it distributes to its shareholders. To continue to qualify for treatment as a RIC, a Fund must distribute to its shareholders for each taxable year at least 90% of the sum of its investment company taxable income plus, in the case of Ivy Municipal Bond Fund, its net interest income excludable from gross income under Section 103(a) of the Code and must meet several additional requirements. With respect to each Fund, these requirements include the following: (1) the Fund must derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities or foreign currencies or other income (including gains from options, futures contracts or forward currency contracts) derived with respect to its business of investing in securities or those currencies; (2) at the close of each quarter of the Fund's taxable year, at least 50% of the value of its total assets must be represented by cash and cash items, U.S. Government securities, securities of other RICs and other securities that are limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of the Fund's total assets and that does not represent more than 10% of the issuer's outstanding voting securities; and (3) at the close of each quarter of the Fund's taxable year, not more than 25% of the value of its total assets may be invested in securities (other than U.S. Government securities or the securities of other RICs) of any one issuer.

Investments in precious metals would have adverse tax consequences for Ivy Asset Strategy Fund and its shareholders if it either (1) derived more than 10% of its gross income in any taxable year from the disposition of precious metals and from other income that does not qualify under the Income Requirement or (2) held precious metals in such quantities that the Fund failed to satisfy the 50% Diversification Requirement for any quarter. Ivy Asset Strategy Fund intends to continue to manage its portfolio so as to avoid failing to satisfy those requirements for these reasons.

If a Fund failed to qualify for treatment as a RIC for any taxable year, (1) it would be taxed as an ordinary corporation on the full amount of its taxable income for that year (even if it distributed that income to its shareholders) and (2) the shareholders would treat all distributions out of its earnings and profits, including distributions of net capital gains and, for Ivy Municipal Bond Fund, distributions that otherwise would be exempt-interest dividends described below, as dividends (that is, ordinary income). In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying for RIC treatment.

Dividends and distributions declared by a Fund in December of any year and payable to its shareholders of record on a date in that month are deemed to have been paid by the Fund and received by the shareholders in December even if the Fund pays them during the following January. Accordingly, those dividends and distributions will be taxed to the shareholders for the year in which that December falls.

If Fund shares are sold at a loss after being held for six months or less, the loss will be treated as a long-term, instead of short-term, capital loss to the extent of any distributions received on those shares. Investors also should be aware that if they purchase shares shortly before the record date for a dividend or distribution, they will receive some portion of the purchase price back as a taxable dividend or distribution.

Each Fund will be subject to a nondeductible 4% excise tax (Excise Tax) to the extent it fails to distribute, by the end of any calendar year, substantially all of its ordinary income for that year and capital gains net income for the one-year period ending on October 31 of that year, plus certain other amounts. For these purposes, a Fund may defer into the next calendar year net capital loss incurred between November 1 and the end of the current calendar year. It is the policy of each Fund to pay sufficient dividends and distributions each year to avoid imposition of the Excise Tax.

Income from Foreign Securities

Dividends and interest received, and gains realized, by a Fund on foreign securities may be subject to income, withholding or other taxes imposed by foreign countries and U.S. possessions (foreign taxes) that would reduce the yield and/or total return on its securities. Tax conventions between certain countries and the United States may reduce or eliminate foreign taxes, however, and many foreign countries do not impose taxes on capital gains in respect of investments by foreign investors.

If more than 50% of the value of Ivy International Growth Fund's total assets at the close of its taxable year consists of securities of foreign corporations, that Fund will be eligible to, and may, file an election with the Internal Revenue Service that will enable its shareholders, in effect, to receive the benefit of the foreign tax credit with respect to any foreign taxes paid by it. Pursuant to any such election, Ivy International Growth Fund would treat those taxes as dividends paid to its shareholders and each shareholder would be required to (1) include in gross income, and treat as paid by the shareholder, the shareholder's proportionate share of those taxes, (2) treat the shareholder's share of those taxes and of any dividend paid by that Fund that represents income from foreign or U.S. possessions sources as the shareholder's own income from those sources and (3) either deduct the taxes deemed paid by the shareholder in computing the shareholder's taxable income or, alternatively, use the foregoing information in calculating the foreign tax credit against the shareholder's Federal income tax. Ivy International Growth Fund will report to its shareholders shortly after each taxable year their respective shares of that Fund's income from sources within foreign countries and U.S. possessions and foreign taxes it paid, if it makes this election. Individuals who have no more than $300 ($600 for married persons filing jointly) of creditable foreign taxes included on Forms 1099 and all of whose foreign-source income is qualified passive income may elect each year to be exempt from the extremely complicated foreign tax credit limitation, in which event they would be able to claim a foreign tax credit without having to file the detailed Form 1116 that otherwise is required.

Each of Ivy Asset Strategy Fund, Ivy Core Equity Fund, Ivy High Income Fund, Ivy International Growth Fund, Ivy Large Cap Growth Fund, Ivy Mid Cap Growth Fund, Ivy Science and Technology Fund, Ivy Small Cap Growth Fund, and Ivy Tax-Managed Equity Fund may invest in the stock of passive foreign investment companies (PFICs). A PFIC is any foreign corporation (with certain exceptions) that, in general, meets either of the following tests: (1) at least 75% of its gross income is passive or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. Under certain circumstances, a Fund will be subject to Federal income tax on a portion of any excess distribution received on the stock of a PFIC or of any gain on disposition of the stock (collectively PFIC income), plus interest thereon, even if the Fund distributes the PFIC income as a taxable dividend to its shareholders. The balance of the PFIC income will be included in the Fund's investment company taxable income and, accordingly, will not be taxable to it to the extent it distributes that income to its shareholders.

If a Fund invests in a PFIC and elects to treat the PFIC as a qualified electing fund (QEF), then in lieu of the foregoing tax and interest obligation, the Fund will be required to include in income each year its pro rata share of the QEF's annual ordinary earnings and net capital gain -- which probably would have to be distributed by the Fund to satisfy the Distribution Requirement and avoid imposition of the Excise Tax -- even if those earnings and gain were not distributed to the Fund by the QEF. In most instances it will be very difficult, if not impossible, to make this election because of certain requirements thereof.

A Fund may elect to mark to market its stock in any PFIC. Marking-to-market, in this context, means including in ordinary income each taxable year the excess, if any, of the fair market value of a PFIC's stock over a Fund's adjusted basis therein as of the end of that year. Pursuant to the election, a Fund also may deduct (as an ordinary, not capital, loss) the excess, if any, of its adjusted basis in PFIC stock over the fair market value thereof as of the taxable year-end, but only to the extent of any net mark-to-market gains with respect to that stock included by the Fund for prior taxable years under the election (and under regulations proposed in 1992 that provided a similar election with respect to the stock of certain PFICs). A Fund's adjusted basis in each PFIC's stock with respect to which it makes this election will be adjusted to reflect the amounts of income included and deductions taken under the election.

Foreign Currency Gains and Losses

Under Section 988 of the Code, gains or losses (1) from the disposition of foreign currencies, including forward currency contracts, (2) except in certain circumstances, from options and forward contracts on foreign currencies (and on financial instruments involving foreign currencies) and from notional principal contracts (e.g., swaps, caps, floors, and collars) involving payments denominated in foreign currencies, (3)on the disposition of each debt security denominated in a foreign currency that are attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security and the date of its disposition and (4) that are attributable to fluctuations in exchange rates that occur between the time a Fund accrues interest, dividends or other receivables, or expenses or other liabilities, denominated in a foreign currency and the time the Fund actually collects the receivables or pays the liabilities, generally are treated as ordinary income or loss. These gains or losses may increase or decrease the amount of a Fund's investment company taxable income to be distributed to its shareholders as ordinary income, rather than affecting the amount of its net capital gain.

Income from Financial Instruments and Foreign Currencies

The use of hedging and option income strategies, such as writing (selling) and purchasing options and futures contracts and entering into forward currency contracts, involves complex rules that will determine for income tax purposes the amount, character and timing of recognition of the gains and losses a Fund realizes in connection therewith. Gains from the disposition of foreign currencies (except certain gains that may be excluded by future regulations), and gains from options, futures contracts and forward currency contracts a Fund derives with respect to its business of investing in securities, will be treated as qualifying income under the Income Requirement.

Any income a Fund earns from writing options is treated as short-term capital gains. If the Fund enters into a closing purchase transaction, it will have a short-term capital gain or loss based on the difference between the premium it receives for the option it wrote and the premium it pays for the option it buys. If an option written by the Fund lapses without being exercised, the premium it receives also will be a short-term capital gain. If such an option is exercised and the Fund thus sells the securities subject to the option, the premium the Fund receives will be added to the exercise price to determine the gain or loss on the sale.

Certain futures contracts, forward currency contracts and listed non-equity options (that is, certain listed options, such as those on a broad-based securities index) in which the Funds may invest will be Section 1256 contracts. Section 1256 contracts a Fund holds at the end of its taxable year, other than contracts subject to a mixed straddle election the Fund made, are marked-to-market (that is, treated as sold at that time for their fair market value) for Federal income tax purposes, with the result that unrealized gains or losses are treated as though they were realized. Sixty percent of any net gains or losses recognized on these deemed sales, and 60% of any net realized gains or losses from any actual sales of Section 1256 contracts, are treated as long-term capital gains or losses, and the balance is treated as short-term capital gains or losses. Section 1256 contracts also may be marked-to-market for purposes of the Excise Tax. A Fund may need to distribute any mark-to-market gains to its shareholders to satisfy the Distribution Requirement and/or avoid imposition of the Excise Tax, even though it may not have closed the transactions and received cash to pay the distributions.

Code Section 1092 (dealing with straddles) also may affect the taxation of options, futures contracts and forward currency contracts in which the Funds may invest. That section defines a straddle as offsetting positions with respect to actively traded personal property; for these purposes, options, futures contracts and forward currency contracts are positions in personal property. Section 1092 generally provides that any loss from the disposition of a position in a straddle may be deducted only to the extent the loss exceeds the unrealized gain on the offsetting position(s) of the straddle. In addition, these rules may postpone the recognition of loss that would otherwise be recognized under the mark-to-market rules discussed above. The regulations under Section 1092 also provide certain wash sale rules, which apply to transactions where a position is sold at a loss and a new offsetting position is acquired within a prescribed period, and short sale rules applicable to straddles. If a Fund makes certain elections, the amount, character and timing of the recognition of its gains and losses from the affected straddle positions will be determined under rules that vary according to the elections made. Because only a few of the regulations implementing the straddle rules have been promulgated, the tax consequences of straddle transactions to the Funds are not entirely clear.

If a Fund has an appreciated financial position -- generally, an interest (including an interest through an option, futures or forward currency contract or short sale) with respect to any stock, debt instrument (other than straight debt) or partnership interest the fair market value of which exceeds its adjusted basis -- and enters into a constructive sale of the position, the Fund will be treated as having made an actual sale thereof, with the result that it will recognize gain at that time. A constructive sale generally consists of a short sale, an offsetting notional principal contract or a futures or forward currency contract a Fund or a related person enters into with respect to the same or substantially identical property. In addition, if the appreciated financial position is itself a short sale or such a contract, acquisition of the underlying property or substantially identical property will be deemed a constructive sale. The foregoing will not apply, however, to any transaction of a Fund during any taxable year that otherwise would be treated as a constructive sale if the transaction is closed within 30 days after the end of that year and the Fund holds the appreciated financial position unhedged for 60 days after that closing (i.e., at no time during that 60-day period is the Fund's risk of loss regarding that position reduced by reason of certain specified transactions with respect to substantially identical or related property, such as having an option to sell, being contractually obligated to sell, making a short sale or granting an option to buy substantially identical stock or securities).

Corporate Zero Coupon and Payment-in-Kind Securities

Certain Funds may acquire zero coupon or other corporate securities issued at a discount. As a holder of those securities, a Fund must include in its income the portion of the discount that accrues on them during the taxable year, even if the Fund receives no corresponding payment on the securities during the year. Similarly, a Fund must include in its gross income securities it receives as payment-in-kind securities. Because a Fund annually must distribute substantially all of its investment company taxable income, including any accreted discount and other non-cash income, to satisfy the Distribution Requirement and avoid imposition of the Excise Tax, it may be required in a particular year to distribute as a dividend an amount that is greater than the total amount of cash it actually receives. Those distributions will be made from the Fund's cash assets or from the proceeds of sales of portfolio securities, if necessary. The Fund may realize capital gains or losses from those sales, which would increase or decrease its investment company taxable income and/or net capital gains.

Ivy Municipal Bond Fund

Dividends paid by Ivy Municipal Bond Fund will qualify as exempt-interest dividends, and thus will be excludable from its shareholders' gross income, if the Fund satisfies the additional requirement that, at the close of each quarter of its taxable year, at least 50% of the value of its total assets consists of securities the interest on which is excludable from gross income under section 103(a); the Fund intends to continue to satisfy this requirement. The aggregate dividends excludable from all shareholders' gross income may not exceed the Fund's net tax-exempt income. Ivy Municipal Bond Fund uses the average annual method to determine the exempt income portion of each distribution, and the percentage of income designated as tax-exempt for any particular distribution may be substantially different from the percentage of its income that was tax-exempt during the period covered by the distribution. The treatment of dividends from the Fund under state and local income tax laws may differ from the treatment thereof under the Code.

If the Fund's shares are sold at a loss after being held for six months or less, the loss will be disallowed to the extent of any exempt-interest dividends received on those shares. Tax-exempt interest attributable to certain PABs (including a proportionate part of the exempt-interest dividends paid by the Fund attributable thereto) is a tax preference item for purposes of the AMT. Exempt-interest dividends received by a corporate shareholder also may be indirectly subject to the AMT without regard to whether the Fund's tax-exempt interest was attributable to PABs.

Up to 85% of social security and railroad retirement benefits may be included in taxable income for recipients whose adjusted gross income (including tax-exempt income such as the Fund's exempt-interest dividends) plus 50% of their benefits exceeds certain base amounts. Exempt-interest dividends from the Fund still are tax-exempt to the extent described above; they are only included in the calculation of whether a recipient's income exceeds the established amounts.

If the Fund invests in any instruments that generate taxable income, under the circumstances described in its Prospectus, distributions of the income earned thereon will be taxable to the Fund's shareholders as ordinary income to the extent of its earnings and profits. Moreover, if the Fund realizes capital gains as a result of market transactions, any distribution of those gains will be taxable to its shareholders. There also may be collateral Federal income tax consequences regarding the receipt of exempt-interest dividends by shareholders such as S corporations, financial institutions, and property and casualty insurance companies. A shareholder falling into any such category should consult its tax adviser concerning its investment in shares of the Fund.

UNDERWRITER

IFDI acts as principal underwriter and distributor of the Funds' shares pursuant to an underwriting agreement (the Underwriting Agreement). The Underwriting Agreement requires IFDI to use its best efforts to sell the shares of the Funds but is not exclusive, and permits and recognizes that IFDI also distributes shares of other investment companies and other securities. Shares are sold on a continuous basis. IFDI is not required to sell any particular number of shares, and sells shares only for purchase orders received. Under this agreement, IFDI pays the costs of sales literature, including the costs of shareholder reports used as sales literature. IFDI has served as principal underwriter and distributor to Ivy Funds, Inc. since June 16, 2003. Prior to June 16, 2003, Waddell & Reed, Inc. served as principal underwriter and distributor to Ivy Funds, Inc. On June 16, 2003, Waddell & Reed, Inc. assigned the Principal Underwriting Agreement with Ivy Funds, Inc. (formerly W&R Funds, Inc.) to IFDI, and such was approved by the Board of Directors on May 21, 2003.

The aggregate dollar amounts of underwriting commissions for each Fund for Class A shares for the fiscal years ended March 31, 2003, 2002 and 2001 were as follows:

	2003	2002	2001
Ivy Asset Strategy Fund	$ 44,257	49,220	55,325
Ivy Core Equity Fund	57,848	99,876	96,329
Ivy High Income Fund	68,060	26,214	10,912
Ivy International Growth Fund	25,086	43,432	90,757
Ivy Large Cap Growth Fund	69,362	93,171	240,775
Ivy Limited-Term Bond Fund	304,314	76,997	3,780
Ivy Mid Cap Growth Fund	69,276	94,488	162,467
Ivy Money Market Fund	---	---	---
Ivy Municipal Bond Fund	4,102	9,628	4,133
Ivy Science and Technology Fund	58,512	92,478	137,599
Ivy Small Cap Growth Fund	135,333	151,481	127,764
Ivy Tax-Managed Equity Fund	11,805	13,670	46,961

The aggregate dollar amounts of underwriting commissions for the Funds for Class B shares for the fiscal years ended March 31, 2003, 2002 and 2001 were as follows:

	2003	2002	2001
Ivy Asset Strategy Fund	$7,456	9,074	693
Ivy Core Equity Fund	11,967	6,559	3,712
Ivy High Income Fund	1,763	2,063	46
Ivy International Growth Fund	3,373	5,074	19
Ivy Large Cap Growth Fund	5,076	13,047	425
Ivy Limited-Term Bond Fund	9,546	878	---
Ivy Mid Cap Growth Fund	5,227	9,288	352
Ivy Money Market Fund	5,068	3,530	---
Ivy Municipal Bond Fund	60	0	---
Ivy Science and Technology Fund	6,600	8,035	1,046
Ivy Small Cap Growth Fund	14,141	9,820	629
Ivy Tax-Managed Equity Fund	816	1,081	---

The aggregate dollar amounts of underwriting commissions for the Funds for Class C shares for the fiscal years ended March 31, 2003, 2002 and 2001 were as follows:

	2003	2002	2001
Ivy Asset Strategy Fund	$ 1,583	2,201	2,300
Ivy Core Equity Fund	5,298	9,889	16,363
Ivy High Income Fund	607	585	235
Ivy International Growth Fund	956	1,901	15,985
Ivy Large Cap Growth Fund	646	1,293	1,334
Ivy Limited-Term Bond Fund	1,971	706	343
Ivy Mid Cap Growth Fund	895	1,264	1,009
Ivy Money Market Fund	1,302	4,554	2,709
Ivy Municipal Bond Fund	1,459	1,013	562
Ivy Science and Technology Fund	3,203	4,189	37,148
Ivy Small Cap Growth Fund	6,708	8,311	27,077
Ivy Tax-Managed Equity Fund	26	241	404

The amounts retained for each Fund for the fiscal years ended March 31, 2003, 2002 and 2001 were as follows:

	2003	2002	2001
Ivy Asset Strategy Fund	$---	---	---
Ivy Core Equity Fund	---	---	---
Ivy High Income Fund	8,301	3,759	---
Ivy International Growth Fund	---	---	---
Ivy Large Cap Growth Fund	21,342	29,821	31,259
Ivy Limited-Term Bond Fund	68,871	15,907	---
Ivy Mid Cap Growth Fund	25,221	28,804	18,016
Ivy Money Market Fund	545	---	2,709
Ivy Municipal Bond Fund	---	---	---
Ivy Science and Technology Fund	---	---	---
Ivy Small Cap Growth Fund	---	---	---
Ivy Tax-Managed Equity Fund	4,319	4,963	11,478

PERFORMANCE INFORMATION

IFDI or the Funds may, from time to time, publish for one or more of the Funds total return information, yield information and/or performance rankings in advertisements and sales materials.

Average Annual Total Returns (Before Taxes)

Each Fund, when advertising average annual total return before taxes for a class of its shares, computes such return by determining the average annual compounded rate of return during specified periods that equates the initial amount invested to the ending redeemable value of such investment according to the following formula:

n
P(1 + T)	=	ERV

Where: P	=	a hypothetical initial payment of $1,000
T	=	average annual total return
n	=	period covered by computation expressed in years
ERV	=	ending redeemable value of a hypothetical $1,000 payment made at the beginning of the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year periods (or fractional portion).

The calculation for average annual total returns before taxes is made assuming that (1) the maximum sales load (or other charges deducted from payments) is deducted from the initial $1,000 investment; and (2) all distributions by the Fund are reinvested at the price stated in the prospectus on the reinvestment dates during the period.

The ending redeemable value (variable "ERV" in the formula) is determined by assuming complete redemption of the hypothetical investment and the deduction of all non-recurring charges and the applicable sales charge at the end of the measuring period.

The average annual total return quotations for the Class A shares of each Fund with the maximum sales load deducted as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Asset Strategy Fund	-5.76%	-3.97%	7-10-00
Ivy Core Equity Fund	-29.71%	-18.70%	7-3-00
Ivy High Income Fund	-2.90%	2.24%	7-3-00
Ivy International Growth Fund	-27.35%	-27.24%	7-3-00
Ivy Large Cap Growth Fund	-25.91%	-12.66%	6-30-00
Ivy Limited-Term Bond Fund	1.64%	5.36%	8-17-00
Ivy Mid Cap Growth Fund	-29.43%	-14.35%	6-30-00
Ivy Municipal Bond Fund	4.09%	5.44%	9-15-00
Ivy Science and Technology Fund	-26.58%	-21.91%	7-3-00
Ivy Small Cap Growth Fund	-26.58%	-17.44%	7-3-00
Ivy Tax-Managed Equity Fund	-16.01%	-20.07%	6-30-00

The average annual total return quotations for the Class A shares of each Fund without sales load deducted as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Asset Strategy Fund	0.00%	-1.85%	7-10-00
Ivy Core Equity Fund	-25.42%	-16.93%	7-3-00
Ivy High Income Fund	3.02%	4.47%	7-3-00
Ivy International Growth Fund	-22.91%	-25.65%	7-3-00
Ivy Large Cap Growth Fund	-21.39%	-10.76%	6-30-00
Ivy Limited-Term Bond Fund	6.15%	7.12%	8-17-00
Ivy Mid Cap Growth Fund	-25.13%	-12.48%	6-30-00
Ivy Municipal Bond Fund	8.71%	7.26%	9-15-00
Ivy Science and Technology Fund	-22.10%	-20.21%	7-3-00
Ivy Small Cap Growth Fund	-22.10%	-15.64%	7-3-00
Ivy Tax-Managed Equity Fund	-10.89%	-18.33%	6-30-00

The average annual total return quotations for the Class B shares of each Fund with the maximum deferred sales charge deducted as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Asset Strategy Fund	-4.87%	-3.52%	7-3-00
Ivy Core Equity Fund	-29.15%	-19.02%	7-11-00
Ivy High Income Fund	-1.74%	2.63%	7-18-00
Ivy International Growth Fund	-26.88%	-27.42%	7-10-00
Ivy Large Cap Growth Fund	-25.85%	-13.15%	7-6-00
Ivy Limited-Term Bond Fund	1.18%	5.30%	7-3-00
Ivy Mid Cap Growth Fund	-29.28%	-14.72%	7-6-00
Ivy Municipal Bond Fund	3.81%	5.19%	8-8-00
Ivy Science and Technology Fund	-26.07-3.44%	-21.66%	7-3-00
Ivy Small Cap Growth Fund	-26.06%	-16.55%	7-6-00
Ivy Tax-Managed Equity Fund	-15.11%	-20.41%	7-13-00

The average annual total return quotations for the Class B shares of each Fund without the maximum deferred sales charge deducted as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Asset Strategy Fund	-0.92%	-2.67%	7-3-00
Ivy Core Equity Fund	-26.20%	-18.30%	7-11-00
Ivy High Income Fund	2.06%	3.58%	7-18-00
Ivy International Growth Fund	-23.83%	-26.85%	7-10-00
Ivy Large Cap Growth Fund	-12.18%	-22.76%	7-6-00
Ivy Limited-Term Bond Fund	5.18%	6.30%	7-3-00
Ivy Mid Cap Growth Fund	-26.33%	-13.79%	7-6-00
Ivy Municipal Bond Fund	7.81%	6.22%	8-8-00
Ivy Science and Technology Fund	-22.99%	-21.01%	7-3-00
Ivy Small Cap Growth Fund	-15.93%	-22.98%	7-6-00
Ivy Tax-Managed Equity Fund	-11.57%	-19.51%	7-13-00

The average annual total return quotations for the Class C shares of each fund as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Five-Year Period from 4-1-98 to 3-31-03	Ten-Year Period from 4-1-93 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Asset Strategy Fund	-0.79%	5.77%	NA	6.81%	4-20-95¹
Ivy Core Equity Fund	-26.03%	-4.57%	6.23%	NA	9-21-92¹
Ivy High Income Fund	2.15%	1.62	NA	3.44%	7-31-97¹
Ivy International Growth Fund	-23.63%	-4.19%	4.33%	NA	9-21-92¹
Ivy Large Cap Growth Fund	-22.28%	NA	NA	-11.64%	7-3-00
Ivy Limited-Term Bond Fund	5.22%	4.87%	4.64%	NA%	9-21-92¹
Ivy Mid Cap Growth Fund	-25.88%	NA	NA	-13.36%	7-3-00
Ivy Municipal Bond Fund	7.75%	3.62%	4.86%	NA%	9-21-92¹
Ivy Science and Technology Fund	-22.76%	9.08	NA	11.52%	7-31-97¹
Ivy Small Cap Growth Fund	-22.70%	3.30%	12.71%	NA%	9-21-92¹
Ivy Tax-Managed Equity Fund	-11.87%	NA	NA	-19.30%	7-6-00

The returns shown are based on the performance of the Fund's prior Class B. On March 24, 2000, that Class B was combined with and redesignated as Class C, which had commenced operations on October 4, 1999. The prior Class B performance has been adjusted to reflect the current CDSC structure applicable to Class C. Accordingly, these returns reflect no CDSC since it only applies to Class C shares held for twelve months or less.

¹Date of initial public offering of prior Class B shares.

Ivy International Growth Fund, formerly W&R International Growth Fund (formerly Global Income Fund) changed its name and investment objective effective April 20, 1995. Prior to this change, this Fund's policies related to providing a high level of current income rather than long-term appreciation.

The average annual total return quotations for Class Y shares as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Five-Year Period from 4-1-98 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Asset Strategy Fund	0.08%	6.70%	7.93%	12-29-95
Ivy Core Equity Fund	-25.35%	-3.75%	4.74%	12-29-95
Ivy High Income Fund	3.03%	NA	3.66%	12-30-98
Ivy International Growth Fund	-22.56%	-3.17%	5.75%	12-29-95
Ivy Large Cap Growth Fund	-21.26%	NA	-10.77%	7-6-00
Ivy Limited-Term Bond Fund	6.14%	5.84%	5.63%	12-29-95
Ivy Mid Cap Growth Fund	-24.86%	NA	-13.16%	7-10-00
Ivy Municipal Bond Fund	8.52%	NA	4.09%	12-30-98¹
Ivy Science and Technology Fund	-21.74%	NA	10.01%	6-9-98
Ivy Small Cap Growth Fund	-21.95%	4.20%	9.34%	12-29-95
Ivy Tax-Managed Equity Fund	NA	NA	NA	NA

¹All outstanding shares were redeemed on 6-23-97. Operations of the class recommenced on 12-30-98.

Average Annual Total Returns (After Taxes on Distributions)

Each Fund, when advertising average annual total return after taxes on distributions for a class of its shares, computes such return by determining the average annual compounded rate of return during specified periods that equates the initial amount invested to the ending value of such investment according to the following formula:

n
P(1 + T)	=	ATVD

Where: P	=	a hypothetical initial payment of $1,000
T	=	average annual total return (after taxes on distributions)
n	=	period covered by computation expressed in years
ATVD	=	ending value of a hypothetical $1,000 payment made at the beginning of the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year periods (or fractional portion), after taxes on fund distributions but not after taxes on redemption.

The calculation for average annual total returns after taxes on distributions is made assuming that (1) the maximum sales load (or other charges deducted from payments) is deducted from the initial $1,000 investment; and (2) all distributions by the Fund, less taxes due on such distributions, are reinvested at the price stated in the prospectus on the reinvestment dates during the period.

The ending value (variable "ATVD" in the formula) is determined by assuming complete redemption of the hypothetical investment after deduction of all non-recurring charges and the applicable sales charge at the end of the measuring period. The Fund assumes that the redemption has no tax consequences.

The Fund calculates the taxes due on any distributions by applying the applicable tax rates to each component of the distributions (i.e., ordinary income, short-term capital gain, long-term capital gain). The taxable amount and tax character of each distribution will be as specified by the Fund on the dividend declaration date, unless adjusted to reflect subsequent recharacterizations of distributions. Distributions are adjusted to reflect the Federal tax impact of the distribution on an individual taxpayer on the reinvestment date. The effect of applicable tax credits, such as the foreign tax credit, are taken into account in accordance with Federal tax law. The Fund calculates taxes due on any distributions using the highest individual marginal Federal income tax rates in effect on the reinvestment date. Note that the required tax rates may vary over the measurement period. The Fund has disregarded any potential tax liabilities other than Federal tax liabilities (e.g., state and local taxes); the effect of phaseouts of certain exemptions, deductions, and credits at various income levels; and the impact of the Federal alternative minimum tax.

The quotations for average annual total return after taxes on distributions for the Class A shares of the following Funds with the maximum sales load deducted as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Large Cap Growth Fund	-25.91%	-12.78%	6-30-00
Ivy Mid Cap Growth Fund	-29.44%	-14.81%	6-30-00
Ivy Tax-Managed Equity Fund	-16.01%	-20.07%	6-30-00

The quotations for average annual total return after taxes on distributions for the Class C shares of the following Funds as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Five-Year Period from 4-1-98 to 3-31-03	Ten-Year Period from 4-1-93 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Asset Strategy Fund	-1.00%	3.66%	NA	4.90%	4-20-95¹
Ivy Core Equity Fund	-26.03%	-6.07%	5.28%	NA%	9-21-92¹
Ivy High Income Fund	-0.92%	-1.35%	NA	0.52%	7-31-97¹
Ivy International Growth Fund	-23.63%	-6.80%	2.17%	NA%	9-21-92¹
Ivy Limited-Term Bond Fund	3.96%	3.14%	2.92%	NA%	9-21-92¹
Ivy Municipal Bond Fund	7.74%	3.44%	4.69%	NA%	9-21-92¹
Ivy Science and Technology Fund	-22.76%	7.81%	NA	10.37%	7-31-97
Ivy Small Cap Growth Fund	-22.70%	-0.38%	10.16%	NA%	9-21-92¹

¹Date of initial public offering of prior Class B shares.

Average Annual Total Returns (After Taxes on Distributions and Redemption of Shares)

Each Fund, when advertising average annual total return after taxes on distributions and redemption for a class of its shares, computes such return by determining the average annual compounded rate of return during specified periods that equates the initial amount invested to the ending value of such investment according to the following formula:

n
P(1 + T)	=	ATVDR

Where: P	=	a hypothetical initial payment of $1,000
T	=	average annual total return (after taxes on distributions and redemption)
n	=	period covered by computation expressed in years
ATVDR	=	ending value of a hypothetical $1,000 payment made at the beginning of the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year periods (or fractional portion), after taxes on fund distributions and redemption.

The calculation for average annual total returns after taxes on distributions and redemption is made assuming that (1) the maximum sales load (or other charges deducted from payments) is deducted from the initial $1,000 investment; and (2) all distributions by the Fund, less taxes due on such distributions, are reinvested at the price stated in the prospectus on the reinvestment dates during the period.

The Fund calculates the taxes due on any distributions as described above under Average Annual Total Returns (After Taxes on Distributions).

The ending value (variable "ATVDR" in the formula) is determined by assuming complete redemption of the hypothetical investment after deduction of all non-recurring charges and the applicable sales charge at the end of the measuring period. The Fund calculates the capital gain or loss upon redemption by subtracting the tax basis from the redemption proceeds (after deducting any non-recurring charges). The Fund separately tracks the basis of shares acquired through the $1,000 initial hypothetical investment and each subsequent purchase through reinvested distributions. In determining the basis for a reinvested distribution, the Fund includes the distribution net of taxes assumed paid from the distribution. Tax basis is adjusted for any distributions representing returns of capital and any other tax basis adjustments that would apply to an individual taxpayer, as permitted by applicable Federal tax law.

The amount and character (e.g., short-term or long-term) of capital gain or loss upon redemption is separately determined for shares acquired through the hypothetical $1,000 initial investment and each subsequent purchase through reinvested distributions. The Fund does not assume that shares acquired through reinvestment of distributions have the same holding period as the initial $1,000 investment. The tax character is determined by the length of the measurement period in the case of the initial $1,000 investment and the length of the period between reinvestment and the end of the measurement period in the case of reinvested distributions.

The Fund calculates capital gain taxes (or the benefit resulting from tax losses) using the highest Federal individual capital gains tax rate for gains of the appropriate character in effect on the redemption date and in accordance with Federal tax law applicable on the redemption date. The Fund assumes that a shareholder has sufficient capital gains of the same character from other investments to offset any capital losses from the redemption so that the taxpayer may deduct the capital losses in full.

The quotations for average annual total return after taxes on distributions and redemption of shares for the Class A shares of the following Funds with the maximum sales load deducted as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Large Cap Growth Fund	-16.84%	-9.87%	6-30-00
Ivy Mid Cap Growth Fund	-19.13%	-11.15%	6-30-00
Ivy Tax-Managed Equity Fund	-10.41%	-15.36%	6-30-00

The quotations for average annual total return after taxes on distributions and redemption of shares for the Class C shares of the following Funds as of March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for the periods shown were as follows:

	One-Year Period from 4-1-02 to 3-31-03	Five-Year Period from 4-1-98 to 3-31-03	Ten-Year Period from 4-1-93 to 3-31-03	Period from Class Inception to 3-31-03	Date of Class Inception
Ivy Asset Strategy Fund	-0.46%	4.24%	NA	5.09%	4-20-95¹
Ivy Core Equity Fund	-16.92%	-2.74%	5.76%	5.76%	9-21-92¹
Ivy High Income Fund	1.78%	0.40%	NA	1.88%	7-31-97¹
Ivy International Growth Fund	-15.36%	-2.39%	3.83%	NA%	9-21-92¹
Ivy Limited-Term Bond Fund	3.52%	3.36%	3.15%	NA%	9-21-92¹
Ivy Municipal Bond Fund	6.11%	3.55%	4.62%	NA%	9-21-92¹
Ivy Science and Technology Fund	-14.80%	8.41%	NA	10.47%	7-31-97
Ivy Small Cap Growth Fund	-14.76%	3.13%	11.02%	NA%	9-21-92¹

¹Date of initial public offering of prior Class B shares.

Non-standardized performance information may also be presented that may not reflect the initial front-end sales charge or the deferred sales charge.

A Fund may also quote unaveraged or cumulative total return for a class which reflects the change in value of an investment in that class over a stated period of time. Cumulative total returns will be calculated according to the formula indicated above but without averaging the rate for the number of years in the period.

Yield

Yield refers to the income generated by an investment in a Fund over a given period of time. A yield quoted for a class of a Fund is computed by dividing the net investment income per share of that class earned during the period for which the yield is shown by the maximum offering price per share of that class on the last day of that period according to the following formula:

6
Yield	=	2 ((((a - b)/cd)+1) -1)

Where with respect to a particular class of the Fund:
a	=	dividends and interest earned during the period.
b	=	expenses accrued for the period (net of reimbursements).
c	=	the average daily number of shares of the class outstanding during the period that were entitled to receive dividends.
d	=	the maximum offering price per share of the class on the last day of the period.

The yields computed according to the formula for the 30-day period ended on March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for Class A shares of each of Ivy High Income Fund, Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund are:

Ivy High Income Fund	5.89%
Ivy Limited-Term Bond Fund	1.96%
Ivy Municipal Bond Fund	3.07%

The yields computed according to the formula for the 30-day period ended on March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for Class B shares of each of Ivy High Income Fund, Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund are:

Ivy High Income Fund	5.28%
Ivy Limited-Term Bond Fund	1.17%
Ivy Municipal Bond Fund	2.40%

The yields computed according to the formula for the 30-day period ended on March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for Class C shares of each of Ivy High Income Fund, Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund are:

Ivy High Income Fund	5.42%
Ivy Limited-Term Bond Fund	1.28%
Ivy Municipal Bond Fund	2.38%

The yield computed according to the formula for the 30-day period ended on March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, for Class Y shares of each of Ivy High Income Fund, Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund are:

Ivy High Income Fund	6.50%
Ivy Limited-Term Bond Fund	2.11%
Ivy Municipal Bond Fund	3.01%

Ivy Municipal Bond Fund may also advertise or include in sales materials its tax equivalent yield, which is calculated by applying the stated income tax rate to only the net investment income exempt from taxation according to a standard formula which provides for computation of tax equivalent yield by dividing that portion of the Fund's yield which is tax-exempt by one minus a stated income tax rate and adding the product to that portion, if any, of the yield of the Fund that is not tax-exempt.

The tax equivalent yield for shares of Ivy Municipal Bond Fund computed according to the formula for the 30-day period ended on March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, is:

Class	10%	15%	25%	28%	33%	35%
A shares	Not available	Not available	Not available	Not available	Not available	Not available
B shares	Not available	Not available	Not available	Not available	Not available	Not available
C shares	Not available	Not available	Not available	Not available	Not available	Not available
Y shares	Not available	Not available	Not available	Not available	Not available	Not available

The following information relates to Ivy Money Market Fund. There are two methods by which yield is calculated for a specified time period for a class of shares of the Fund. The first method, which results in an amount referred to as the "current yield," assumes an account containing exactly one share of the applicable class at the beginning of the period. The NAV of this share will be $1.00, except under extraordinary circumstances. The net change in the value of the account during the period is then determined by subtracting this beginning value from the value of the account at the end of the period which will include all dividends accrued for a share of such class; however, capital changes are excluded from the calculation, i.e., realized gains and losses from the sale of securities and unrealized appreciation and depreciation. However, so that the change will not reflect the capital changes to be excluded, the dividends used in the yield computation may not be the same as the dividends actually declared, as certain realized gains and losses and, under unusual circumstances, unrealized gains and losses (see Purchase, Redemption and Pricing of Shares), will be taken into account in the calculation of dividends actually declared. Instead, the dividends used in the yield calculation will be those which would have been declared if the capital changes had not affected the dividends.

This net change in the account value is then divided by the value of the account at the beginning of the period (i.e., normally $1.00 as discussed above) and the resulting figure (referred to as the base period return) is then annualized by multiplying it by 365 and dividing it by the number of days in the period with the resulting current yield figure carried to at least the nearest hundredth of one percent.

The second method results in a figure referred to as the "effective yield." This represents an annualization of the current yield with dividends reinvested daily. Effective yield is calculated by compounding the base period return by adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the result and rounding the result to the nearest hundredth of one percent according to the following formula:

365/7

EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)] - 1

The yield for Ivy Money Market Fund's Class A shares, Class B shares and Class C shares as calculated above for the seven days ended March 31, 2003, the date of the most recent balance sheet included in the Funds' Annual Report to Shareholders, which is incorporated into this SAI by reference, was 0.95%, 0.05% and 0.05%, respectively. The effective yield calculated for the same period was 0.95%, 0.05% and 0.05%, respectively.

Changes in yields primarily reflect different interest rates received by a Fund as its portfolio securities change. Yield is also affected by portfolio quality, portfolio maturity, type of securities held and operating expenses.

Performance Rankings and Other Information

IFDI or the Funds may also publish, for one or more of the twelve Funds, in advertisements or sales material performance rankings as published by recognized independent mutual fund statistical services such as Lipper Analytical Services, Inc., or by publications of general interest such as The Wall Street Journal, Business Week, Barron's, Fortune, Morningstar, etc. Each class of a Fund may also compare its performance to that of other selected mutual funds or selected recognized market indicators such as the Standard & Poor's 500 Composite Stock Price Index and the Dow Jones Industrial Average. Performance information may be quoted numerically or presented in a table, graph or other illustration. In connection with a ranking, a Fund may provide additional information, such as the particular category to which it related, the number of funds in the category, the criteria upon which the ranking is based, and the effect of sales charges, fee waivers and/or expense reimbursements.

Performance information for a Fund may be accompanied by information about market conditions and other factors that affected the Fund's performance for the period(s) shown.

All performance information that a Fund advertises or includes in sales material is historical in nature and is not intended to represent or guarantee future results. The value of a Fund's shares when redeemed may be more or less than their original cost.

FINANCIAL STATEMENTS

The Financial Statements, including notes thereto, for the fiscal year ended March 31, 2003 are incorporated herein by reference. They are contained in the Funds' Annual Report to Shareholders, dated March 31, 2003, which is available upon request.

APPENDIX A

The following are descriptions of some of the ratings of securities which the Fund may use. The Fund may also use ratings provided by other nationally recognized statistical rating organizations in determining the securities eligible for investment.

DESCRIPTION OF BOND RATINGS

Standard & Poor's, a division of The McGraw-Hill Companies, Inc. A Standard & Poor's (S&P) corporate bond rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment of creditworthiness may take into consideration obligors such as guarantors, insurers or lessees.

The debt rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment as to market price or suitability for a particular investor.

The ratings are based on current information furnished to S&P by the issuer or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended or withdrawn as a result of changes in, or unavailability of, such information, or based on other circumstances.

The ratings are based, in varying degrees, on the following considerations:

1. Likelihood of default -- capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation;

2. Nature of and provisions of the obligation;

3. Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.

AA -- Debt rated AA also qualifies as high quality debt. Capacity to pay interest and repay principal is very strong, and debt rated AA differs from AAA issues only in a small degree.

A -- Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.

BBB -- Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.

BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. BB indicates the lowest degree of speculation and C the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major exposures to adverse conditions.

BB -- Debt rated BB has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The BB rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BBB- rating.

B -- Debt rated B has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The B rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BB or BB- rating.

CCC -- Debt rated CCC has a currently indefinable vulnerability to default, and is dependent upon favorable business, financial and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The CCC rating category is also used for debt subordinated to senior debt that is assigned an actual or implied B or B- rating.

CC -- The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C -- The rating C is typically applied to debt subordinated to senior debt which is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI -- The rating CI is reserved for income bonds on which no interest is being paid.

D -- Debt rated D is in payment default. It is used when interest payments or principal payments are not made on a due date even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace periods. The D rating will also be used upon a filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-) -- To provide more detailed indications of credit quality, the ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

NR -- Indicates that no public rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.

Debt Obligations of issuers outside the United States and its territories are rated on the same basis as domestic corporate and municipal issues. The ratings measure the creditworthiness of the obligor but do not take into account currency exchange and related uncertainties.

Bond Investment Quality Standards: Under present commercial bank regulations issued by the Comptroller of the Currency, bonds rated in the top four categories (AAA, AA, A, BBB, commonly known as investment grade ratings) are generally regarded as eligible for bank investment. In addition, the laws of various states governing legal investments may impose certain rating or other standards for obligations eligible for investment by savings banks, trust companies, insurance companies and fiduciaries generally.

Moody's Corporation. A brief description of the applicable Moody's Corporation (Moody's) rating symbols and their meanings follows:

Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as gilt edge. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuations of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Some bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

NOTE: Bonds within the above categories which possess the strongest investment attributes are designated by the symbol 1 following the rating.

Ba -- Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Description of Preferred Stock Ratings

Standard & Poor's, a division of The McGraw-Hill Companies, Inc. An S&P preferred stock rating is an assessment of the capacity and willingness of an issuer to pay preferred stock dividends and any applicable sinking fund obligations. A preferred stock rating differs from a bond rating inasmuch as it is assigned to an equity issue, which issue is intrinsically different from, and subordinated to, a debt issue. Therefore, to reflect this difference, the preferred stock rating symbol will normally not be higher than the debt rating symbol assigned to, or that would be assigned to, the senior debt of the same issuer.

The preferred stock ratings are based on the following considerations:

1. Likelihood of payment - capacity and willingness of the issuer to meet the timely payment of preferred stock dividends and any applicable sinking fund requirements in accordance with the terms of the obligation;

2. Nature of, and provisions of, the issue;

3. Relative position of the issue in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

AAA -- This is the highest rating that may be assigned by Standard & Poor's to a preferred stock issue and indicates an extremely strong capacity to pay the preferred stock obligations.

AA -- A preferred stock issue rated AA also qualifies as a high-quality fixed income security. The capacity to pay preferred stock obligations is very strong, although not as overwhelming as for issues rated AAA.

A -- An issue rated A is backed by a sound capacity to pay the preferred stock obligations, although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.

BBB -- An issue rated BBB is regarded as backed by an adequate capacity to pay the preferred stock obligations. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to make payments for a preferred stock in this category than for issues in the 'A' category.

BB, B, CCC -- Preferred stock rated BB, B, and CCC are regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay preferred stock obligations. BB indicates the lowest degree of speculation and CCC the highest degree of speculation. While such issues will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.

CC -- The rating CC is reserved for a preferred stock issue in arrears on dividends or sinking fund payments but that is currently paying.

C -- A preferred stock rated C is a non-paying issue.

D -- A preferred stock rated D is a non-paying issue with the issuer in default on debt instruments.

NR -- This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.

Plus (+) or minus (-) -- To provide more detailed indications of preferred stock quality, the rating from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

A preferred stock rating is not a recommendation to purchase, sell, or hold a security inasmuch as it does not comment as to market price or suitability for a particular investor. The ratings are based on current information furnished to S&P by the issuer or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended, or withdrawn as a result of changes in, or unavailability of, such information, or based on other circumstances.

Moody's Investors Service, Inc. Because of the fundamental differences between preferred stocks and bonds, a variation of Moody's familiar bond rating symbols is used in the quality ranking of preferred stock. The symbols are designed to avoid comparison with bond quality in absolute terms. It should always be borne in mind that preferred stock occupies a junior position to bonds within a particular capital structure and that these securities are rated within the universe of preferred stocks.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating classification; the modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.

Preferred stock rating symbols and their definitions are as follows:

aaa -- An issue which is rated aaa is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.

aa -- An issue which is rated aa is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance the earnings and asset protection will remain relatively well-maintained in the foreseeable future.

a -- An issue which is rated a is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the aaa and aa classification, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels.

baa -- An issue which is rated baa is considered to be a medium-grade preferred stock, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.

ba -- An issue which is rated ba is considered to have speculative elements and its future cannot be considered well assured. Earnings and asset protection may be very moderate and not well safeguarded during adverse periods. Uncertainty of position characterizes preferred stocks in this class.

b -- An issue which is rated b generally lacks the characteristics of a desirable investment. Assurance of dividend payments and maintenance of other terms of the issue over any long period of time may be small.

caa -- An issue which is rated caa is likely to be in arrears on dividend payments. This rating designation does not purport to indicate the future status of payments.

ca -- An issue which is rated ca is speculative in a high degree and is likely to be in arrears on dividends with little likelihood of eventual payments.

c -- This is the lowest rated class of preferred or preference stock. Issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

DESCRIPTION OF NOTE RATINGS

Standard and Poor's, a division of The McGraw-Hill Companies, Inc. An S&P note rating reflects the liquidity factors and market access risks unique to notes. Notes maturing in 3 years or less will likely receive a note rating. Notes maturing beyond 3 years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment.

--Amortization schedule (the larger the final maturity relative to other maturities, the more likely the issue is to be treated as a note).

--Source of Payment (the more the issue depends on the market for its refinancing, the more likely it is to be treated as a note).

The note rating symbols and definitions are as follows:

SP-1 Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation.

SP-2 Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.

SP-3 Speculative capacity to pay principal and interest.

Moody's Investors Service, Inc. Moody's Short-Term Loan Ratings -- Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade (MIG). This distinction is in recognition of the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower are uppermost in importance in short-term borrowing, while various factors of major importance in bond risk are of lesser importance over the short run. Rating symbols and their meanings follow:

MIG 1 -- This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.

MIG 2 -- This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.

MIG 3 -- This designation denotes favorable quality. All security elements are accounted for but this is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.

MIG 4 -- This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Standard & Poor's, a division of The McGraw-Hill Companies, Inc. An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt considered short-term in the relevant market. Ratings are graded into several categories, ranging from A-1 for the highest quality obligations to D for the lowest. Issuers rated A are further referred to by use of numbers 1, 2 and 3 to indicate the relative degree of safety. Issues assigned an A rating (the highest rating) are regarded as having the greatest capacity for timely payment. An A-1 designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. An A-2 rating indicates that capacity for timely payment is satisfactory; however, the relative degree of safety is not as high as for issues designated A-1. Issues rated A-3 have adequate capacity for timely payment; however, they are more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. Issues rated B are regarded as having only speculative capacity for timely payment. A C rating is assigned to short-term debt obligations with a doubtful capacity for payment. Debt rated D is in payment default, which occurs when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period.

Moody's Corporation commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months. Moody's employs the designations of Prime 1, Prime 2 and Prime 3, all judged to be investment grade, to indicate the relative repayment capacity of rated issuers. Issuers rated Prime 1 have a superior capacity for repayment of short-term promissory obligations and repayment capacity will normally be evidenced by (1) lending market positions in well established industries; (2) high rates of return on Funds employed; (3) conservative capitalization structures with moderate reliance on debt and ample asset protection; (4) broad margins in earnings coverage of fixed financial charges and high internal cash generation; and (5) well established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated Prime 2 also have a strong capacity for repayment of short-term promissory obligations as will normally be evidenced by many of the characteristics described above for Prime 1 issuers, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation; capitalization characteristics, while still appropriate, may be more affected by external conditions; and ample alternate liquidity is maintained. Issuers rated Prime 3 have an acceptable capacity for repayment of short-term promissory obligations, as will normally be evidenced by many of the characteristics above for Prime 1 issuers, but to a lesser degree. The effect of industry characteristics and market composition may be more pronounced; variability in earnings and profitability may result in changes in the level of debt protection measurements and requirement for relatively high financial leverage; and adequate alternate liquidity is maintained.

Fitch Ratings-National Short-term Credit Ratings

F1-Indicates the strongest capacity for timely payment of financial commitments relative to other issuers or issues in the same country. Under Fitch Ratings' national rating scale, this rating is assigned to the best credit risk relative to all others in the same country and is normally assigned to all financial commitments issued or guaranteed by the government. Where the credit risk is particularly strong, a + is added to the assigned rating.

F2-Indicates a satisfactory capacity for timely payment of financial commitments relative other issuers in the same country. However, the margin of safety is not as great as in the case of the higher ratings.

F3-Indicates an adequate capacity for timely payment of financial commitments relative to other issuers or issues in the same country. However, such capacity is more susceptible to near-term adverse changes than for financial commitments in higher rated categories.

B-Indicates an uncertain capacity for timely payment of financial commitments relative to other issuers or issues in the same country. Such capacity is highly susceptible to near-term adverse changes in financial and economic conditions.

C-Indicates a highly uncertain capacity for timely payment of financial commitments relative to other issues in the same country. Capacity or meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.

D-Indicates actual or imminent payment default.

Notes to Short-term national rating:

+ or - may be appended to a national rating to denote relative status within a major rating category. Such suffixes are not added to Short-term national ratings other than F1.

Ratings Watch: Ratings are placed on Rating Watch to notify investors that there is a reasonable probability of a rating change and the likely direction of such change. These are designated as Positive, indicating a potential upgrade, Negative, for a potential downgrade, or Evolving, if ratings may be raised, lowered or maintained. Rating Watch is typically resolved over a relatively short period.

		REGISTRATION STATEMENT

		PART C

		OTHER INFORMATION


23.	Exhibits: W&R Funds, Inc.

	(a)	Articles of Incorporation, as amended, filed by EDGAR on May 16, 1997 as EX-99.B1-charter to Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A*

		Articles Supplementary, filed by EDGAR on May 16, 1997 as EX-99.B1-wrartsup to Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A*

		Articles Supplementary (combination of Class B into Class C), filed by EDGAR on April 17, 2000 as EX-99.B(a)wrartsup to Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A*

		Articles Supplementary, filed by EDGAR on June 30, 2000 as EX-99.B(a)wrartsup to Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A*

		Articles of Amendment, effective October 2, 2000, filed by EDGAR on June 26, 2001 as EX-99.B(a)wrartamend1 to Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A*

		Articles of Amendment, filed March 1, 2001, filed by EDGAR on June 26, 2001 as EX-99.B(a)wrartamend2 to Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A*

		Articles of Amendment to add the Capital ProtectionPlus Series, filed February 5, 2003, attached hereto as EX-99.B(a)artamend1

		Articles of Amendment to change the name of the Corporation, effective June 30, 2003, attached hereto as EX-99.B(a)artamend2

	(b)	Bylaws, as amended, filed by EDGAR on June 27, 1996 as EX-99.B2-wrbylaw to Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A*

		Amendment to Bylaws filed by EDGAR on April 30, 1999 as EX-99.B(b)-wrbylaw2 to Post-Effective Amendment No. 11 to the Registration Statement on Form N-1A*

		Amendment to Bylaws, dated May 17, 2000, filed by EDGAR on June 26, 2001 as EX-99.B(b)wrbylawamend to Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A*

	(c)	Article Fifth of the Articles of Incorporation and Articles II and VIII of the Bylaws each define the rights of shareholders.

	(d)	Investment Management Agreement with amended fee schedule to reflect the addition of Science and Technology Fund and High Income Fund, filed by EDGAR on May 16, 1997 as EX-99.B5-wrima to Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A*

		Fee Schedule (Exhibit A) to the Investment Management Agreement, as amended, filed by EDGAR on April 17, 2000 as EX-99.B(d)wrimafee to Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A*

		Investment Management Agreement for Capital ProtectionPlus Fund, filed by EDGAR on January 29, 2003 as EX-99.B(d)cpima to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

		Subadvisory Contract between Waddell & Reed Investment Management Company and Gartmore Morley Capital Management, Inc. on behalf of Capital ProtectionPlus Fund, filed by EDGAR on January 29, 2003 as EX-99.B(d)wrfsubadv to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

		Assignment of Investment Management Agreement by Waddell & Reed Investment Management Company to Waddell & Reed Ivy Investment Company, effective June 30, 2003, attached hereto as EX-99.B(e)imaassign

	(e)	Underwriting Agreement filed by EDGAR on June 27, 1995 as EX-99.B6-wrua to Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A*

		Amendment to Underwriting Agreement, dated July 24, 2002, filed by EDGAR on January 29, 2003 as EX-99.B(e)wrfuadel to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

		Assignment of Underwriting Agreement by Waddell & Reed, Inc. to Ivy Funds Distributor, Inc., effective June 16, 2003, attached hereto as EX-99.B(e)puaassign

	(f)	Not applicable

	(g)	Custodian Agreement, as amended, filed by EDGAR on April 17, 2000 as EX-99.B(g)wrca to Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A*.

		Amendment to Custodian Agreement, dated July 1, 2001, filed by EDGAR on January 29, 2003 as EX-99.B(g)wrfcaamend to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*. The Custodian Agreement for W&R Funds, Inc. Asset Strategy Fund is being filed as a representative copy. The Amendments to the Custodian Agreements for all funds in W&R Funds, Inc. are identical.

		Delegation Agreement, dated July 1, 2001, filed by EDGAR on January 29, 2003 as EX-99.B(g)wrfcadel to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*. The Delegation Agreement for W&R Funds, Inc. Asset Strategy Fund is being filed as a representative copy. The Delegation Agreements for all funds in W&R Funds, Inc. are identical.

		Custodian Agreement for Capital ProtectionPlus Fund, filed by EDGAR on January 29, 2003 as EX-99.B(g)cpca to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

		Delegation Agreement for Capital ProtectionPlus Fund, filed by EDGAR on January 29, 2003 as EX-99.B(g)cpcadel to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

	(h)	Shareholder Servicing Agreement, as amended August 22, 2001, filed by EDGAR on July 29, 2002 as EX-99.B(h)wrfssa to Post-Effective Amendment No. 18 to the Registration Statement on Form N-1A*

		Amendment to the Shareholder Servicing Agreement, dated July 24, 2002, filed by EDGAR on January 29, 2003 as EX-99.B(h)wrfssadel to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

		Exhibit B to the Shareholder Servicing Agreement, as amended February 19,2003, filed by EDGAR on January 29, 2003 as EX-99.B(h)wrfssaexb to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

		Exhibit C to the Shareholder Servicing Agreement, effective August 31, 2002, filed by EDGAR on January 29, 2003 as EX-99.B(h)wrfssaexc to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

		Accounting Services Agreement filed by EDGAR on October 3, 1995, as EX-99.B9-wrasa to Post-Effective Amendment No. 6 to the Registration Statement on Form N-1A*

		Amendment to Accounting Services Agreement, effective September 1, 2000, filed by EDGAR on June 26, 2001 as EX-99.B(h)wrasaamend to Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A*

	(i)	Opinion and Consent of Counsel, attached hereto as EX-99.B(i)wrlegopn

	(j)	Consent of Deloitte & Touche LLP, Independent Accountants, attached hereto as EX-99.B(j)wrconsnt

	(k)	Not applicable

	(l)	Agreement with initial shareholder, Waddell & Reed, Inc. filed by EDGAR on June 2, 1992 as Exhibit (b)(13) to Pre-Effective Amendment No. 1 to the initial Registration Statement on Form N-1A*.

		Agreement with Initial Shareholder of Waddell & Reed Funds, Inc. Asset Strategy Fund, filed by EDGAR on June 27, 1995 as EX-99.B13-wragree to Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A*

	(m)	Distribution and Service Plan for Class Y shares, filed by EDGAR on October 3, 1995 as EX-99.B15-wrdspcy to Post-Effective Amendment No. 6 to the Registration Statement on Form N-1A*

		Distribution and Service Plan for Class C shares, filed by EDGAR on July 2, 1999 as EX-99.B(m)wrdspc to Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A*

		Distribution and Service Plan for Class A shares, revised May 16, 2001, filed by EDGAR on June 26, 2001 as EX-99.B(m)wrdspca to Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A*

		Distribution and Service Plan for Class B shares, filed by EDGAR on June 30, 2000 as EX-99.B(m)wrdspcB to Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A*

	(n)	Not applicable

	(o)	Multiple Class Plan, as effective February 19, 2003, filed by EDGAR on January 29, 2003 as EX-99.B(o)wrfmcp to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

	(p)	Code of Ethics, as amended November 13, 2002, filed by EDGAR on January 29, 2003 as Ex-99.B(p)wrfcode to Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A*

24.	Persons Controlled by or under common control with Registrant
	-------------------------------------------------------------

	None

25.	Indemnification
	---------------

	Reference is made to Article 10.2 of the Articles of Incorporation of Registrant, filed by EDGAR on May 16, 1997 as EX-99.B1-charter to Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A; Article IX of the Bylaws, as amended May 17, 2000, filed by EDGAR on June 26, 2001 as EX-99.B2-wrbylawamend to Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A; and Article V of the Underwriting Agreement filed by EDGAR on June 27, 1995 as EX-99.B6-wrua to the Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A*, each of which provides indemnification. Also refer to Section 2-418 of the Maryland General Corporation Law regarding indemnification of directors, officers, employees and agents.

	Registrant undertakes to carry out all indemnification provisions of its Articles of Incorporation, Bylaws, and the above-described contracts in accordance with the Investment Company Act Release No. 11330 (September 4, 1980) and successor releases.

	Insofar as indemnification for liability arising under the 1933 Act, as amended, may be provided to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer of controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

26.	Business and Other Connections of Investment Manager
	----------------------------------------------------

	Waddell & Reed Investment Management Company (WRIMCO) is the investment manager of the Registrant. Under the terms of an Investment Management Agreement between WRIMCO and the Registrant, WRIMCO is to provide investment management services to the Registrant. WRIMCO is a corporation which is not engaged in any business other than the provision of investment management services to those registered investment companies described in Part A and Part B of this Post-Effective Amendment and to other investment advisory clients.

	Each director and executive officer of WRIMCO has had as his sole business, profession, vocation or employment during the past two years only his duties as an executive officer and/or employee of WRIMCO or its predecessors, except as to persons who are directors and/or officers of the Registrant and have served in the capacities shown in the Statement of Additional Information (SAI) of the Registrant. The address of the officers is 6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200.

	As to each director and officer of WRIMCO, reference is made to Part A and Part B of the Prospectus and SAI of this Registrant.

27.	Principal Underwriter and Distributor
	-------------------------------------

	(a)	Waddell & Reed, Inc. is the principal underwriter and distributor of the Registrant's shares. It is also the principal underwriter to the following investment companies:

		Waddell & Reed Advisors Asset Strategy Fund, Inc.
		Waddell & Reed Advisors Cash Management, Inc.
		Waddell & Reed Advisors Continental Income Fund, Inc.
		Waddell & Reed Advisors Fixed Income Funds, Inc.
		Waddell & Reed Advisors Funds, Inc.
		Waddell & Reed Advisors Global Bond Fund, Inc.
		Waddell & Reed Advisors High Income Fund, Inc.
		Waddell & Reed Advisors International Growth Fund, Inc.
		Waddell & Reed Advisors Municipal Bond Fund, Inc.
		Waddell & Reed Advisors Municipal High Income Fund, Inc.
		Waddell & Reed Advisors New Concepts Fund, Inc.
		Waddell & Reed Advisors Retirement Shares, Inc.
		Waddell & Reed Advisors Small Cap Fund, Inc.
		Waddell & Reed Advisors Tax-Managed Equity Fund, Inc.
		Waddell & Reed Advisors Value Fund, Inc.
		Waddell & Reed Advisors Vanguard Fund, Inc.
		Waddell & Reed Advisors Select Life
		Waddell & Reed Advisors Survivorship Life
		Waddell & Reed Advisors Select Annuity
		Waddell & Reed Advisors Select Plus Annuity
		Waddell & Reed InvestEd Portfolios, Inc.

	(b)	The information contained in the underwriter's application on Form BD, as filed on June 24, 2003 SEC No. 8-27030 under the Securities Exchange Act of 1934, is herein incorporated by reference.

	(c)	No compensation was paid by the Registrant to any principal underwriter who is not an affiliated person of the Registrant or an affiliated person of such affiliated person.

28.	Location of Accounts and Records
	--------------------------------

	The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and rules promulgated thereunder are under the possession of Mr. Theodore W. Howard and Ms. Kristen A. Richards, as officers of the Registrant, each of whose business address is Post Office Box 29217, Shawnee Mission, Kansas 66201-9217.

29.	Management Services
	-------------------

	There are no service contracts other than as discussed in Part A and B of this Post-Effective Amendment and listed in response to Items 23.(h) and 23.(m) hereof.

30.	Undertakings
	--------------

	Not applicable

---------------------------------
*Incorporated herein by reference

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, That the undersigned, IVY FUNDS, INC. (hereinafter called the Corporation), and certain directors and officers for the Corporation, do hereby constitute and appoint KEITH A. TUCKER, DANIEL C. SCHULTE and KRISTEN A. RICHARDS, and each of them individually, their true and lawful attorneys and agents to take any and all action and execute any and all instruments which said attorneys and agents may deem necessary or advisable to enable each Corporation to comply with the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, and any rules, regulations, orders or other requirements of the United States Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, including specifically, but without limitation of the foregoing, power and authority to sign the names of each of such directors and officers in his/her behalf as such director or officer as indicated below opposite his/her signature hereto, to any Registration Statement and to any amendment or supplement to the Registration Statement filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, and to any instruments or documents filed or to be filed as a part of or in connection with such Registration Statement or amendment or supplement thereto; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents shall do or cause to be done by virtue hereof.

Date: June 30, 2003	/s/Henry J. Herrmann
	------------------------------------
	Henry J. Herrmann, President

/s/Keith A. Tucker	Chairman of the Board	June 30, 2003
------------------------		-------------------
Keith A. Tucker


/s/Henry J. Herrmann	President and Director	June 30, 2003
---------------------------		--------------------
Henry J. Herrmann


/s/Theodore W. Howard	Vice President, Treasurer,	June 30, 2003
------------------------------	Principal Financial Officer	--------------------
Theodore W. Howard	and Principal Accounting Officer


/s/Jarold W. Boettcher	Director	June 30, 2003
----------------------------		----------------------
Jarold W. Boettcher


/s/James D. Gressett	Director	June 30, 2003
--------------------------		---------------------
James D. Gressett


/s/Joseph Harroz, Jr.	Director	June 30, 2003
--------------------------		--------------------
Joseph Harroz, Jr.


/s/Glendon E. Johnson, Jr.	Director	June 30, 2003
----------------------------------		----------------------
Glendon E. Johnson, Jr.


/s/Eleanor B. Schwartz	Director	June 30, 2003
------------------------------		-------------------
Eleanor B. Schwartz


/s/Michael G. Smith	Director	June 30, 2003
--------------------------		---------------------
Michael G. Smith


/s/Edward M. Tighe	Director	June 30, 2003
--------------------------		---------------------
Edward M. Tighe



Attest:

/s/Kristen A. Richards
--------------------------------
Kristen A. Richards
Secretary

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment pursuant to Rule 485(b) of the Securities Act of 1933 and has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Overland Park, and State of Kansas, on the 1st day of July, 2003.

IVY FUNDS, INC.

(Registrant)

By /s/ Henry J. Herrmann

-------------------------------------

Henry J. Herrmann, President

Pursuant to the requirements of the Securities Act of 1933, and/or the Investment Company Act of 1940, this Post-Effective Amendment has been signed below by the following persons in the capacities and on the date indicated.

Signatures	Title
--------------	------

/s/Keith A. Tucker*	Chairman of the Board	July 1, 2003
-------------------------		---------------------
Keith A. Tucker


/s/Henry J. Herrmann*	President and Director	July 1, 2003
--------------------------		---------------------
Henry J. Herrmann


/s/Theodore W. Howard	Vice President, Treasurer,	July 1, 2003
-----------------------------	Principal Financial Officer and	---------------------
Theodore W. Howard	Principal Accounting Officer


/s/Jarold W. Boettcher*	Director	July 1, 2003
----------------------------		----------------------
Jarold W. Boettcher


/s/James D. Gressett*	Director	July 1, 2003
--------------------------		---------------------
James D. Gressett


/s/Joseph Harroz, Jr.*	Director	July 1, 2003
--------------------------		--------------------
Joseph Harroz, Jr.


/s/Glendon E. Johnson, Jr.*	Director	July 1, 2003
----------------------------------		----------------------
Glendon E. Johnson, Jr.


/s/Eleanor B. Schwartz*	Director	July 1, 2003
------------------------------		-------------------
Eleanor B. Schwartz


/s/Michael G. Smith*	Director	July 1, 2003
--------------------------		---------------------
Michael G. Smith


/s/Edward M. Tighe*	Director	July 1, 2003
--------------------------		---------------------
Edward M. Tighe


*By:/s/Kristen A. Richards
------------------------
Kristen A. Richards
Attorney-in-Fact


ATTEST:/s/Daniel C. Schulte
---------------------------
Daniel C. Schulte
Assistant Secretary

	Average Annual Total Returns
						5 Years	10 Years
						(or Life	(or Life
	as of December 31, 2002				1 Year	of Class)	of Class)
Class C (began on 04-20-1995)
		Before Taxes¹		2.31%		7.49%		7.20%
		After Taxes on Distributions¹		2.00%		5.32%		5.23%
		After Taxes on Distributions and Sale of Fund Shares¹		1.53%		5.65%		5.39%
Class Y (began on 12-29-1995)
		Before Taxes		3.20%		8.43%		8.37%
Class B (began on 07-03-2000)
		Before Taxes		-1.80%		-3.38%
Class A (began on 07-10-2000)
		Before Taxes		-2.84%		-3.97%
Indexes
		S&P 500 Index²		-22.10%		-0.59%		9.02%	³
		Citigroup Broad Investment Grade Index²		10.09%		7.53%		8.10%	³
		Citigroup Short-Term Index for
			1 Month Certificates of Deposit²	1.79%		4.68%		5.04%	³
		Lipper Flexible Portfolio Funds Universe Average⁴		-11.74%		0.80%		6.57%	³

Shareholder Fees
	Class A		Class B		Class C		Class Y
(fees paid directly from your investment)	Shares		Shares		Shares		Shares
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price)	5.75%			None		None		None
Maximum Deferred Sales Charge (Load)¹
(as a percentage of lesser of amount invested
or redemption value)	None	²		5%		1%		None
Redemption fee/exchange fee (as a percentage
of amount redeemed, if applicable)³	None			None		None		None

Annual Fund Operating Expenses
	Class A	Class B	Class C	Class Y
(expenses that are deducted from Fund assets)	Shares	Shares	Shares	Shares
Management Fees	0.70%	0.70%	0.70%	0.70%
Distribution and Service (12b-1) Fees	0.25%	1.00%	1.00%	0.25%
Other Expenses	0.46%	0.64%	0.50%	0.38%
Total Annual Fund Operating Expenses	1.41%	2.34%	2.20%	1.33%

	Example
This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. The example assumes that (a) you invest $10,000 in the particular class of shares for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
	If shares are redeemed at end of period:	1 Year		3 Years	5 Years	10 Years
	Class A Shares	$710		$ 996	$1,302	$2,169
	Class B Shares	$637		$1,030	$1,350	$2,441	¹
	Class C Shares	$223	²	$ 688	$1,180	$2,534
	Class Y Shares	$135		$ 421	$ 729	$1,601
	If shares are not redeemed at end of period:	1 Year		3 Years	5 Years	10 Years
	Class A Shares	$710		$ 996	$1,302	$2,169
	Class B Shares	$237		$ 730	$1,250	$2,441	¹
	Class C Shares	$223		$ 688	$1,180	$2,534
	Class Y Shares	$135		$ 421	$ 729	$1,601

*	profitability record	*leadership position in its industry
*	history of improving sales and profits		*stock price value
*	management	*dividend payment history

Annual Fund Operating Expenses⁴
	Class A	Class B	Class C	Advisor
(expenses that are deducted from Fund assets)	Shares	Shares	Shares	Shares
Management Fees	1.00%	1.00%	1.00%	1.00%
Distribution and Service (12b-1) Fees	0.25%	1.00%	1.00%	None
Other Expenses	3.72%	3.72%	3.72%	3.72%
Total Annual Fund Operating Expenses	4.97%	5.72%	5.72%	4.72%
Expenses reimbursed⁵	2.22%	2.22%	2.22%	2.22%
Net Fund operating expenses	2.75%	3.50%	3.50%	2.50%

*	established operating history	* management
*	competitive dividend yields	* leadership position in its industry
*	profitability record	* stock price value
*	history of improving sales and profits

*	financial strength	* borrowing requirements
*	cash flow	* responsiveness to changes in interest rates and business conditions
*	management

* a company's growth and earnings potential
* management of the company	* applicable economic, market and political conditions of the country in which the company is located
* industry position of the company
* strength of the industry

* growth potential	* industry position
* earnings potential	* applicable economic and market conditions
* management

* aggressive or creative management	* entry into new or emerging industries
* technological or specialized expertise	* growth in earnings/growth in sales
* new or unique products or services

	Portfolio Mix
	Stocks 70% (can range from 0-100%)
	Bonds 25% (can range from 0-100%)
	Short-term 5% (can range from 0-100%)

* aerospace and defense electronics	* electronics and energy
* biotechnology	* electronic media
* business machines	* genomics
* cable and broadband access	* internet and internet-related services
* communications and electronic equipment	* medical devices and drugs
* computer software and services	* medical and hospital supplies and services
* computer systems	* office equipment and supplies

General Comparison of Class A, Class B and Class C Shares
Class A	Class B	Class C
Initial sales charge	No initial sales charge	No initial sales charge
No deferred sales charge¹	Deferred sales charge on	A 1% deferred sales charge on
	shares you sell within six	shares you sell within twelve
	years after purchase	months after purchase
Maximum distribution and/or	Maximum distribution and	Maximum distribution and
service (12b-1) fees of 0.25%	service (12b-1) fees of 1.00%	service (12b-1) fees of 1.00%
For an investment of $2 million	Converts to Class A shares	Does not convert to Class A
or more, only Class A shares	8 years after the month in which	shares, so annual expenses
are available	the shares were purchased, thus	do not decrease
	reducing future annual expenses
	For an investment of $300,000
	or more, your financial advisor
	typically will recommend
	purchase of Class A shares due
	to a reduced sales charge and
	lower annual expenses

Size of Purchase
		Sales Charge	Reallowance
	Sales Charge	as Approximate	to Dealers as
	as Percent of	Percent of	Percent of
	Offering Price	Amount Invested	Offering Price
under $100,000	5.75%	6.10%	5.00%
$100,000 to less than $200,000	4.75	4.99	4.00
$200,000 to less than $300,000	3.50	3.63	2.80
$300,000 to less than $500,000	2.50	2.56	2.00
$500,000 to less than $1,000,000	1.50	1.52	1.20
$1,000,000 to less than $2,000,000	1.00	1.01	0.75
$2,000,000 and over	0.00¹	0.00¹	0.50

CDSC on Shares Sold Within Year		As % of Amount Subject to Charge
	1	5.0%
	2	4.0%
	3	3.0%
	4	3.0%
	5	2.0%
	6	1.0%
	7+	0.0%

Minimum Investments
	For Class A, Class B and Class C:
	To Open an Account	$500 (per Fund)
	For certain exchanges	$100 (per Fund)
	For certain retirement accounts and accounts
	opened with Automatic Investment Service	$50 (per Fund)
	For certain retirement accounts and accounts
	opened through payroll deductions	$25 (per Fund)
	To Add to an Account	Any amount
	For certain exchanges	$100 (per Fund)
	For Automatic Investment Service	$25 (per Fund)
For Class Y:
To Open an Account
	For a government entity or authority	$10 million
	or for a corporation	(within first twelve months)
	For other eligible investors	Any amount
	To Add to an Account	Any amount
	For Advisor Class:
	To Open an Account	$10,000
	To Add to an Account	$250

Special Requirements for Selling Shares
Account Type	Special Requirements
Individual or Joint Tenant	The written instructions must be signed by all persons required to
	sign for transactions, exactly as their names appear on the account.
Sole Proprietorship	The written instructions must be signed by the individual owner
	of the business.
UGMA, UTMA	The custodian must sign the written instructions indicating capacity
	as custodian.
Retirement Account	The written instructions must be signed by a properly authorized
	person.
Trust	The trustee must sign the written instructions indicating capacity
	as trustee. If the trustee's name is not in the account registration,
	provide a currently certified copy of the trust document.
Business or Organization	At least one person authorized by corporate resolution to act on
	the account must sign the written instructions.
Conservator, Guardian	The written instructions must be signed by the person properly
or Other Fiduciary	authorized by court order to act in the particular fiduciary capacity.

	Regular Investment Plans
Automatic Investment Service
To move money from your bank account to an existing Fund account
		Minimum Amount	Minimum Frequency
		$25 (per Fund)	Monthly
Funds Plus Service
To move money from Ivy Money Market Fund to a Fund whether in the same or a different account but in the same class
		Minimum Amount	Minimum Frequency
		$100 (per Fund)	Monthly

		Management Fee
Fund	Management Fees Paid¹	without Voluntary Waiver¹
Ivy Asset Strategy Fund	0.70%	na
Ivy Core Equity Fund	0.70%	na
Ivy High Income Fund	0.00%	0.63%
Ivy International Growth Fund	0.85%	na
Ivy Large Cap Growth Fund	0.57%	0.70%
Ivy Limited-Term Bond Fund	0.50%	na
Ivy Mid Cap Growth Fund	0.00%	0.85%
Ivy Money Market Fund	0.00%	0.40%
Ivy Municipal Bond Fund	0.53%	na
Ivy Science and Technology Fund	0.85%	na
Ivy Small Cap Growth Fund	0.85%	na
Ivy Tax-Managed Equity Fund	0.00%	0.65%

Fund	Management Fees Paid
Ivy Cundill Global Value Fund	1.00%
Ivy European Opportunities Fund	1.00%
Ivy Global Natural Resources Fund	1.00%
Ivy International Fund	1.00%
Ivy International Value Fund	1.00%
Ivy Pacific Opportunities Fund	1.00%