Ivy Funds N-14 Registration statement for investment companies business combination

Annual Report
March 31, 2005

Ivy Asset Strategy Fund

Ivy Capital Appreciation 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

CONTENTS

3	President's Letter
5	Illustration of Fund Expenses
11	Ivy Asset Strategy Fund
30	Ivy Capital Appreciation Fund
45	Ivy Core Equity Fund
60	Ivy High Income Fund
86	Ivy International Growth Fund
101	Ivy Large Cap Growth Fund
115	Ivy Limited-Term Bond Fund
132	Ivy Mid Cap Growth Fund
147	Ivy Money Market Fund
162	Ivy Municipal Bond Fund
182	Ivy Science and Technology Fund
196	Ivy Small Cap Growth Fund
211	Notes to Financial Statements
238	Report of Independent Registered Public Accounting Firm
239	Income Tax Information
242	Directors and Officers
247	Annual Privacy Notice
248	Proxy Voting Information
249	Quarterly Portfolio Schedule Information
249	Householding Notice
250	IRA Disclosure

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

President's Letter
     March 31, 2005

Dear Shareholder:

The 12-month period ended March 31, 2005 offered solid results for most investors. Although the final quarter of the period was challenging, with negative returns for both stocks and bonds, the 12-month period as a whole was generally positive for the financial markets and the economy. Stocks ended the 12-month period higher, with the S&P 500 returning 6.69 percent and the Dow Jones Industrial Average returning 3.63 percent. Bonds, in comparison, showed mixed performance and ended the year relatively flat. The Lehman Brothers U.S. Credit Index, which generally represents the performance of the U.S. bond market, had a positive return of 0.84 percent over the last 12 months.

Over the course of the 12-month period, the markets faced numerous challenges. These included continued turmoil in Iraq, the U.S. presidential election, rising energy prices and a decline in the value of the dollar. Corporate earnings remained strong, however, and gross domestic product (GDP) averaged a 4 percent annualized growth rate over 2004, and appears to have grown at about the same rate in the first quarter of 2005.

The strengthening economy caused inflation concerns, which led the Federal Reserve to begin a series of incremental increases in short-term interest rates. The Fed enacted five small rate increases between June and mid-December of 2004, and two more in the first quarter of 2005. During the period, short-term rates rose from the historically low level of 1 percent to 2.75 percent. The Fed has stated that, at this point, it intends to continue considering "measured" rate increases over the next few months.

As we look ahead, we continue to feel that signs point to a favorable environment for stocks and the economy. We believe that the economy could see a real growth rate of around 3 percent for the year, with a nominal growth rate (after inflation) of 6 percent or so. History suggests that corporate profits tend to grow in line with growth in the economy, and stocks generally mirror the growth in profits. With that in mind, we look for a solid year for the equity markets.

Keep in mind, however, that uncertainty is a core feature of the financial markets. That's why we believe that adhering to the fundamental principles of investing is the best way to work toward your long-term financial goals. By investing regularly and diversifying your portfolio among different asset classes and investment styles, we believe that you are more likely to maximize the potential to meet your financial goals.

Your financial advisor can help you with these strategies and work with you to develop and maintain a customized investment plan based on your individual situation. We believe that focusing on that plan, despite the swings of the market, can be your key to a sound financial future.

Thank you for your partnership and your continued commitment to your investment program.

Respectfully,
Henry J. Herrmann, CFA
President

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

Illustration of Fund Expenses

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution and service fees, and other Fund expenses. The following tables are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six-month period ended March 31, 2005.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

Ivy Asset Strategy Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,115		1.47	%	$	7.73
Class B		1,000		1,110		2.31			12.17
Class C		1,000		1,111		2.21			11.64
Class Y		1,000		1,115		1.35			7.13
Based on 5% Return(2)
Class A	$	1,000	$	1,018		1.47	%	$	7.37
Class B		1,000		1,013		2.31			11.62
Class C		1,000		1,014		2.21			11.11
Class Y		1,000		1,018		1.35			6.80

Ivy Capital Appreciation Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,081		1.18	%	$	6.13
Class B		1,000		1,076		2.02			10.45
Class C		1,000		1,074		2.14			11.08
Class Y		1,000		1,081		1.16			6.03
Based on 5% Return(2)
Class A	$	1,000	$	1,019		1.18	%	$	5.95
Class B		1,000		1,015		2.02			10.14
Class C		1,000		1,014		2.14			10.77
Class Y		1,000		1,019		1.16			5.85

Ivy Core Equity Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,088		1.46	%	$	7.58
Class B		1,000		1,084		2.32			12.05
Class C		1,000		1,085		2.20			11.42
Class Y		1,000		1,091		1.24			6.47
Based on 5% Return(2)
Class A	$	1,000	$	1,018		1.46	%	$	7.32
Class B		1,000		1,013		2.32			11.64
Class C		1,000		1,014		2.20			11.03
Class Y		1,000		1,019		1.24			6.25

Ivy High Income Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,021		1.44	%	$	7.27
Class B		1,000		1,017		2.32			11.66
Class C		1,000		1,017		2.17			10.92
Class Y		1,000		1,022		1.27			6.41
Based on 5% Return(2)
Class A	$	1,000	$	1,018		1.44	%	$	7.25
Class B		1,000		1,013		2.32			11.64
Class C		1,000		1,014		2.17			10.91
Class Y		1,000		1,019		1.27			6.40

Ivy International Growth Fund Expenses
For the Six Months nded March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,111		1.86	%	$	9.76
Class B		1,000		1,106		2.88			15.12
Class C		1,000		1,107		2.75			14.42
Class Y		1,000		1,113		1.53			8.04
Based on 5% Return(2)
Class A	$	1,000	$	1,016		1.86	%	$	9.32
Class B		1,000		1,011		2.88			14.44
Class C		1,000		1,011		2.75			13.77
Class Y		1,000		1,017		1.53			7.68

Ivy Large Cap Growth Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,070		1.46	%	$	7.51
Class B		1,000		1,064		2.50			12.87
Class C		1,000		1,066		2.24			11.54
Class Y		1,000		1,071		1.16			6.01
Based on 5% Return(2)
Class A	$	1,000	$	1,018		1.46	%	$	7.32
Class B		1,000		1,012		2.50			12.55
Class C		1,000		1,014		2.24			11.25
Class Y		1,000		1,019		1.16			5.86

Ivy Limited-Term Bond Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	997		1.25	%	$	6.20
Class B		1,000		992		2.18			10.82
Class C		1,000		992		2.14			10.61
Class Y		1,000		997		1.15			5.73
Based on 5% Return(2)
Class A	$	1,000	$	1,019		1.25	%	$	6.27
Class B		1,000		1,014		2.18			10.94
Class C		1,000		1,014		2.14			10.73
Class Y		1,000		1,019		1.15			5.80

Ivy Mid Cap Growth Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,081		1.61	%	$	8.37
Class B		1,000		1,073		2.74			14.17
Class C		1,000		1,077		2.39			12.36
Class Y		1,000		1,083		1.34			6.98
Based on 5% Return(2)
Class A	$	1,000	$	1,017		1.61	%	$	8.11
Class B		1,000		1,011		2.74			13.75
Class C		1,000		1,013		2.39			11.98
Class Y		1,000		1,018		1.34			6.76

Ivy Money Market Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,006		0.78	%	$	3.88
Class B		1,000		1,001		1.57			7.85
Class C		1,000		1,001		1.60			8.00
Based on 5% Return(2)
Class A	$	1,000	$	1,021		0.78	%	$	3.91
Class B		1,000		1,017		1.57			7.91
Class C		1,000		1,017		1.60			8.07

Ivy Municipal Bond Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,002		1.34	%	$	6.68
Class B		1,000		998		2.08			10.37
Class C		1,000		998		2.15			10.69
Class Y		1,000		1,001		1.42			7.09
Based on 5% Return(2)
Class A	$	1,000	$	1,018		1.34	%	$	6.73
Class B		1,000		1,015		2.08			10.46
Class C		1,000		1,014		2.15			10.78
Class Y		1,000		1,018		1.42			7.15

Ivy Science and Technology Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,112		1.64	%	$	8.62
Class B		1,000		1,105		2.79			14.65
Class C		1,000		1,107		2.53			13.29
Class Y		1,000		1,113		1.43			7.54
Based on 5% Return(2)
Class A	$	1,000	$	1,017		1.64	%	$	8.23
Class B		1,000		1,011		2.79			14.00
Class C		1,000		1,012		2.53			12.70
Class Y		1,000		1,018		1.43			7.20

Ivy Small Cap Growth Fund Expenses
For the Six Months Ended March 31, 2005	Beginning Account Value 9-30-04		Ending Account Value 3-31-05		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return(1)
Class A	$	1,000	$	1,146		1.56	%	$	8.37
Class B		1,000		1,141		2.50			13.35
Class C		1,000		1,142		2.24			11.99
Class Y		1,000		1,147		1.35			7.21
Based on 5% Return(2)
Class A	$	1,000	$	1,017		1.56	%	$	7.87
Class B		1,000		1,012		2.50			12.55
Class C		1,000		1,014		2.24			11.27
Class Y		1,000		1,018		1.35			6.78

*Fund expenses for each share class are equal to the Fund's annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by 182 days in the six-month period ended March 31, 2005, and divided by 365.

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

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

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



Managers' Discussion of Ivy Asset Strategy Fund
     March 31, 2005

An interview with Michael L. Avery and Daniel J. Vrabac, portfolio managers of the Ivy Asset Strategy Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund outperformed all of its benchmarks for the fiscal year, with Class C shares of the Fund increasing 11.11 percent. In comparison, the Fund's stock benchmark index, the S&P 500 Index (reflecting the performance of securities that generally represent the stock market), increased 6.69 percent during the fiscal year. The Lipper Flexible Portfolio Funds Universe Average (generally representing the performance of the universe of funds with similar investment objectives), increased 4.95 percent for the fiscal year, the Citigroup Broad Investment Grade Index (reflecting the performance of securities that generally represent the bond market) increased 1.23 percent, and the Citigroup Short-Term Index for 1 Month Certificates of Deposit (reflecting the performance of securities that generally represent one-month certificates of deposit) increased 1.78 percent. Multiple indexes are presented because the Fund invests in stocks, bonds and short-term instruments. Please note that the Fund returns include appli cable fees and expenses, whereas the index returns do not include any such fees.

What helped the Fund outperform its benchmark indexes during the fiscal year?

We believe that our focus on energy, natural resources and Asian holdings generally helped us outperform domestic equities overall, as represented by the benchmark index.

What other market conditions or events influenced the Fund's performance during the fiscal year?

For several quarters now, the Fund has been increasing its focus on Asia, as we believe that Asia will continue to gain in importance as a major growth area in the global economy. China has gradually been opening its economy over the last 25 years, but the pace has accelerated in very recent years. This has led to an increase in Chinese per capita income, which has been followed by an increase in the demand for goods and services. Also impacting this trend for other Asian or Pacific Rim countries has been the decline in the U.S. dollar over the last two years or so, which has helped to boost investment in those regions.

What strategies and techniques did you employ that specifically affected the Fund's performance?

The Fund has maintained a consistent strategy over the past several quarters, based on our following fundamental themes:

• We believe the best asset returns over the next several years will come from outside the U.S.
• We feel that there is a shift in the source of global economic growth occurring. We anticipate that global growth may be driven primarily by Asia in the coming decades, and perhaps by other emerging markets.
• In our view, energy markets will be impacted by rising demand at a time of declining global supply.
• We think that as the U.S. drops deeper as a debtor nation to the rest of the world, the U.S. share of global gross domestic product (GDP) will decline and the dollar will be weak.
• The more than 20-year decline in U.S. interest rates is, in our view, at an end. We believe the tailwind for the market has subsided, and that a headwind is picking up speed.
• We feel that the implication, in general, for the U.S. equity market is not encouraging.

Turning these themes into a portfolio has led to significant investments in energy and natural resource equities, Asian equities, gold bullion and gold equities, and fixed-income instruments that have the potential to provide income while typically shielding the portfolio from price declines in a rising rate environment.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

While we consider the themes outlined above as medium- and long-term, we are under no illusion that this is a one-way street. There has been, and we believe there will continue to be, significant volatility in all of these markets, as well as in the U.S. market. That said, we continue to believe that the focus on the fundamentals we outlined above potentially could serve the investor well in the near-term period.

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

Comparison of Change in Value of
$10,000 Investment

Ivy Asset Strategy Fund, Class C Shares(1)(2)	$	21,614
S&P 500 Index(1)	$	27,067
Citigroup Broad Investment Grade Index(1)	$	19,685
Citigroup Short-Term Index for 1 Month Certificates of Deposit(1)	$	15,055
Lipper Flexible Portfolio Funds Universe Average(1)	$	22,136

IVY ASSET STRATEGY FUND CLASS C SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY ASSET STRATEGY FUND CLASS C SHARES	S&P 500 INDEX	CITIGROUP BROAD INVESTMENT GRADE DEBT INDEX	CITIGROUP SHORT-TERM INDEX FOR 1 MONTH CERTIFICATES OF DEPOSIT	LIPPER FLEXIBLE PORTFOLIO FUNDS UNIVERSE AVERAGE
APRIL	4/20/95	10,000	10,000	10,000	10,000	10,000
MARCH	1996	10,300	12,832	10,936	10,541	11,920
MARCH	1997	10,212	15,366	11,473	11,122	13,257
MARCH	1998	12,758	22,748	12,848	11,760	17,190
MARCH	1999	12,987	26,963	13,682	12,406	18,356
MARCH	2000	18,129	31,862	13,930	13,097	21,201
MARCH	2001	17,365	24,898	15,681	13,949	19,238
MARCH	2002	17,020	24,950	16,519	14,387	19,596
MARCH	2003	16,886	18,773	18,428	14,626	16,712
MARCH	2004	19,454	25,369	19,446	14,792	21,092
MARCH	2005	21,614	27,067	19,685	15,055	22,136

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

(1)Because the Fund commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the indexes (including income) are not available, the investments were effected as of April 30, 1995.

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

Average Annual Total Return(3)
	Class A	Class B	Class C(4)	Class Y
1-year period ended 3-31-05	5.58%	7.02%	11.11%	12.05%
5-year period ended 3-31-05	--	--	3.58%	4.47%
10-year period ended 3-31-05	--	--	--	--
Since inception of Class through 3-31-05(5)	3.27%	3.32%	8.05%	9.23%

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

(4)Performance data from 3-24-00 represents the actual performance of Class C shares. Performance data prior to 3-24-00 represents the performance of the Fund's original Class B shares. The original Class B shares were combined with Class C shares effective 3-24-00, and redesignated as Class C shares. The original Class B's performance has been adjusted to reflect the current contingent deferred sales charge (CDSC) structure applicable to Class C (1.00% maximum and declining to zero at the end of the first year after investment). Accordingly, these returns reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase. New Class B shares, with fees and expenses different from the original Class B shares, were added to the Fund on 6-30-00.

(5)7-10-00 for Class A shares, 7-3-00 for Class B shares, 4-20-95 for Class C shares and 12-29-95 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY ASSET STRATEGY FUND
Portfolio Highlights

On March 31, 2005, Ivy Asset Strategy Fund had net assets totaling $109,081,385 invested in a diversified portfolio of:

73.21%	Common Stocks
10.53%	Cash and Cash Equivalents and Unrealized Loss on Open Forward       Currency Contracts
5.32%	Bullion
4.30%	United States Government and Government Agency Securities
3.80%	Corporate Debt Securities
2.84%	Other Government Securities

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Common Stocks	$	73.21
Cash and Cash Equivalents and Unrealized Loss       on Open Forward Currency Contracts	$	10.53
Bullion	$	5.32
United States Government and Government Agency Securities	$	4.30
Corporate Debt Securities	$	3.80
Other Government Securities	$	2.84

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Raw Materials Stocks	$	17.24
Energy Stocks	$	11.96
Cash and Cash Equivalents and Unrealized       Loss on Open Forward Currency Contracts	$	10.53
Multi-Industry Stocks	$	8.88
Capital Goods Stocks	$	6.52
Technology Stocks	$	5.61
Bullion	$	5.32
Consumer Nondurables Stocks	$	5.31
Shelter Stocks	$	4.67
United States Government and Government Agency Securities	$	4.30
Financial Services Stocks	$	4.09
Miscellaneous Stocks	$	3.94
Corporate Debt Securities	$	3.80
Other Government Securities	$	2.84
Consumer Durables Stocks	$	2.59
Business Equipment and Services Stocks	$	2.40

The Investments of Ivy Asset Strategy Fund
March 31, 2005
BULLION - 5.32%		Troy Ounces		Value
Gold		13,556	$	5,808,243
(Cost: $5,287,146)
COMMON STOCKS		Shares
Aircraft - 1.99%
BAE SYSTEMS plc (A)		107,500		526,849
Boeing Company (The)		13,300		777,518
United Technologies Corporation		8,550		869,193
				2,173,560
Aluminum - 0.83%
Aluminum Corporation of China Limited, H Shares (A)	1,560,600			900,404
Banks - 0.40%
Citigroup Inc.		9,700		435,918
Beverages - 0.73%
Molson Coors Brewing Company, Class B (A)		10,362		797,492
Business Equipment and Services - 2.40%
Headwaters Incorporated*		40,400		1,326,938
Jacobs Engineering Group Inc.*		11,450		594,484
Mitsubishi Corporation (A)		46,400		601,097
Pacific Basin Shipping Limited (A)		211,000		100,772
				2,623,291
Capital Equipment - 2.54%
Caterpillar Inc.		17,650		1,613,916
Chicago Bridge & Iron Company N.V., NY Shares		8,354		367,827
Deere & Company		11,839		794,752
				2,776,495
Chemicals - Petroleum and Inorganic - 0.46%
LG Chem, Ltd. (A)		12,310		497,006
Coal - 1.58%
Foundation Coal Holdings, Inc.		10,000		235,100
Peabody Energy Corporation		32,200		1,492,792
				1,727,892
Communications Equipment - 0.65%
Cisco Systems, Inc.*		39,900		714,809

Computers - Micro - 0.39%
Dell Inc.*		10,950		420,754
Construction Materials - 1.90%
Cemex, S.A. de C.V., ADR		57,080		2,069,150
Electronic Components - 2.00%
Samsung Electronics Co., Ltd. (A)		4,410		2,180,029
Electronic Instruments - 0.58%
Nihon Densan Kabushiki Kaisha (A)		5,100		635,003
Finance Companies - 2.33%
Rio Tinto plc (A)		78,740		2,544,400
Food and Related - 4.15%
Archer Daniels Midland Company		93,100		2,288,398
Bunge Limited		32,600		1,756,488
J.M. Smucker Company (The)		9,600		482,880
				4,527,766
Forest and Paper Products - 2.34%
Aracruz Celulose S.A., ADR		16,700		597,860
International Paper Company		27,400		1,008,046
Weyerhaeuser Company		13,800		945,300
				2,551,206
Gold and Precious Metals - 4.64%
Agnico-Eagle Mines Limited		55,700		810,435
Barrick Gold Corporation		124,900		2,992,604
Yanzhou Coal Mining Company Limited, Class H (A)*		923,600		1,255,229
				5,058,268
Health Care - Drugs - 0.26%
Gilead Sciences, Inc.*		7,850		280,991
Health Care - General - 0.20%
Lumenis Ltd.*		92		215
Schein (Henry), Inc.*		6,200		221,836
				222,051
Household - General Products - 0.43%
Colgate-Palmolive Company		8,950		466,921
Mining - 11.31%
Alumina Limited (A)		174,700		795,198
BHP Billiton Plc (A)		183,300		2,531,361
Cameco Corporation (A)		7,200		318,816
Freeport-McMoRan Copper & Gold Inc., Class B		67,964		2,692,054
Inco Limited*		38,650		1,538,270
Newmont Mining Corporation		72,900		3,080,025
Noranda Inc. (A)		56,600		1,137,333
Phelps Dodge Corporation		2,350		239,065
				12,332,122
Motor Vehicles - 2.59%
Toyota Motor Corporation (A)		75,800		2,820,761
Multiple Industry - 8.88%
Alpha Natural Resources, Inc.*		37,690		1,080,572
Bucyrus International, Inc., Class A		16,000		624,960
Companhia Vale do Rio Doce, ADR		100,900		3,189,449
General Electric Company		58,050		2,093,283
Gerdau Ameristeel Corporation		87,462		529,145
Hutchison Whampoa Limited, Ordinary Shares (A)		191,000		1,622,380
Smiths Group plc (A)		34,000		546,769
				9,686,558
Non-Residential Construction - 2.08%
Fluor Corporation		13,114		726,909
Hyundai Heavy Industries Co., Ltd. (A)		30,750		1,541,285
				2,268,194
Petroleum - International - 6.67%
Anadarko Petroleum Corporation		25,491		1,939,865
BP p.l.c., ADR		20,900		1,304,160
Burlington Resources Inc.		27,766		1,390,244
Exxon Mobil Corporation		44,253		2,637,479
				7,271,748
Petroleum - Services - 3.71%
Baker Hughes Incorporated		20,500		912,045
Schlumberger Limited		27,500		1,938,200
Transocean Inc.*		23,300		1,199,018
				4,049,263
Railroad - 0.68%
Norfolk Southern Corporation		19,900		737,295
Real Estate Investment Trust - 2.33%
Keppel Land Limited (A)		323,000		449,997
Mitsubishi Estate Co., Ltd. (A)		81,000		941,298
Mitsui Fudosan Co., Ltd. (A)		98,000		1,150,737
				2,542,032
Restaurants - 0.59%
Panera Bread Company, Class A*		11,356		641,898
Retail - Food Stores - 1.31%
CVS Corporation		15,250		802,455
Walgreen Co.		14,154		628,721
				1,431,176
Security and Commodity Brokers - 1.36%
Chicago Mercantile Exchange Holdings Inc.		5,193		1,007,598
Franklin Resources, Inc.		7,000		480,550
				1,488,148
Utilities - Electric - 0.46%
Veolia Environment (A)		14,150		502,087
Utilities - Telephone - 0.44%
China Mobile (Hong Kong) Limited (A)		147,000		480,608
TOTAL COMMON STOCKS - 73.21%			$	79,855,296
(Cost: $65,848,013)
CORPORATE DEBT SECURITIES	Principal Amount in Thousands
Capital Equipment - 0.29%
Hyundai Motor Company,
5.3%, 12-19-08 (B)	$	320		320,794
Computers - Peripherals - 0.16%
ASG Consolidated LLC and ASG Finance, Inc.,
0.0%, 11-1-11 (B)(C)		250		175,000
Construction Materials - 0.31%
Interface, Inc.:
7.3%, 4-1-08		160		156,000
9.5%, 2-1-14		170		178,925
				334,925
Finance Companies - 0.58%
ALROSA Finance S.A.,
8.125%, 5-6-08		300		309,600
Toyota Motor Credit Corporation,
4.47%, 1-18-15		325		316,641
				626,241

Mining - 0.49%
Vedanta Resources plc,
6.625%, 2-22-10 (B)		550			531,305
Multiple Industry - 0.42%
National Rural Utilities Cooperative Finance Corporation,
3.0%, 2-15-06			250		248,477
Sino-Forest Corporation,
9.125%, 8-17-11 (B)			200		212,250
					460,727
Security and Commodity Brokers - 0.18%
SLM Corporation,
4.0%, 7-25-14			200		196,104
Utilities - Electric - 0.69%
Dominion Resources, Inc.,
7.625%, 7-15-05			250		253,031
Scana Corporation,
3.24438%, 11-15-06			500		500,354
					753,385
Utilities - Telephone - 0.68%
Open Joint Stock Company ''Vimpel-Communications'',
10.0%, 6-16-09 (B)			700		743,750
TOTAL CORPORATE DEBT SECURITIES - 3.80%				$	4,142,231
(Cost: $4,114,231)
OTHER GOVERNMENT SECURITIES
Japan - 2.20%
Japanese Government 15 Year Floating Rate Bond,
0.64%, 1-20-18 (D)	JPY250,000				2,405,102
South Korea - 0.64%
Korea Development Bank (The),
3.03%, 10-29-06		$	700		693,931
TOTAL OTHER GOVERNMENT SECURITIES - 2.84%				$	3,099,033
(Cost: $3,022,917)

UNITED STATES GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS
Mortgage-Backed Obligations - 1.07%
Federal Home Loan Mortgage Corporation Agency       REMIC/CMO (Interest Only):
5.0%, 2-15-20		725		65,413
5.0%, 7-15-21		369		47,293
5.0%, 6-15-22		858		60,664
5.0%, 7-15-22		3,044		234,354
5.0%, 1-15-23		599		48,339
5.0%, 4-15-23		231		28,217
5.5%, 11-15-23		1,100		153,464
5.0%, 9-15-24		793		91,445
5.5%, 9-15-24		463		49,424
5.5%, 4-15-25		99		15,197
5.0%, 9-15-25		1,010		125,935
5.0%, 8-15-30		547		77,233
Federal National Mortgage Association Agency       REMIC/CMO (Interest Only),
5.5%, 11-25-25		1,112		113,953
Government National Mortgage Association Agency       REMIC/CMO (Interest Only),
5.0%, 7-20-33		220		53,900
				1,164,831
Treasury Obligation - 3.23%
United States Treasury Note,
1.5%, 3-31-06		3,600		3,531,798
TOTAL UNITED STATES GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 4.30%			$	4,696,629
(Cost: $4,736,919)
UNREALIZED GAIN (LOSS) ON OPEN FORWARD CURRENCY CONTRACTS - (0.20%)
Australian Dollar, 5-19-05 (D)	AUD2,300			34,695
Australian Dollar, 5-19-05 (D)		2,300		(256,317	)
			$	(221,622	)

SHORT-TERM SECURITIES
Finance Companies - 4.99%
BP Capital Markets p.l.c.,
2.85%, 4-1-05	$	2,446	$	2,446,000
PACCAR Financial Corp.,
2.77%, 4-11-05		3,000		2,997,692
				5,443,692
Security and Commodity Brokers - 4.32%
Greenwich Capital Holdings Inc. (Royal Bank       of Scotland PLC (The)),
2.86%, 4-1-05		4,712		4,712,000
TOTAL SHORT-TERM SECURITIES - 9.31%			$	10,155,692
(Cost: $10,155,692)
TOTAL INVESTMENT SECURITIES - 98.58%			$	107,535,502
(Cost: $93,164,918)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.42%				1,545,883
NET ASSETS - 100.00%			$	109,081,385

Notes to Schedule of Investments

      *No dividends were paid during the preceding 12 months.

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

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers At March 31, 2005, the total value of these securities amounted to $1,983,099 or 1.82% of net assets.

(C)The security does not bear interest for an initial period of time and subsequently becomes interest bearing.

(D)Principal amounts are denominated in the indicated foreign currency, where applicable (AUD - Australian Dollar, JPY - Japanese Yen).

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

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

Statement of Assets and Liabilities
     IVY ASSET STRATEGY FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (Notes 1 and 3):
Bullion (cost - $5,287)	$	5,808
Securities (cost - $87,878)	101,728
	107,536
Receivables:
Fund shares sold	1,799
Dividends and interest	259
Prepaid and other assets	19
Total assets	109,613
LIABILITIES
Payable to Fund shareholders	428
Due to custodian	32
Accrued shareholder servicing (Note 2)	29
Accrued accounting services fee (Note 2)	5
Accrued management fee (Note 2)	2
Accrued distribution fee (Note 2)	1
Accrued service fee (Note 2)	1
Other	34
Total liabilities	532
Total net assets	$	109,081
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	77
Additional paid-in capital	93,876
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss	(15		)
Accumulated undistributed net realized gain on investment transactions	771
Net unrealized appreciation in value of investments	14,372
Net assets applicable to outstanding units of capital	$	109,081
Net asset value per share (net assets divided by shares outstanding):
Class A	$14.21
Class B	$14.11
Class C	$14.12
Class Y	$14.22
Capital shares outstanding:
Class A	2,745
Class B	816
Class C	3,876
Class Y	269
Capital shares authorized	200,000

See Notes to Financial Statements.

Statement of Operations
     IVY ASSET STRATEGY FUND
     For the Fisecal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $66)	$	1,096
Interest and amortization	534
Total income	1,630
Expenses (Note 2):
Investment management fee	570
Distribution fee:
Class A	12
Class B	65
Class C	358
Shareholder servicing:
Class A	57
Class B	31
Class C	131
Class Y	4
Service fee:
Class A	45
Class B	22
Class C	119
Class Y	6
Accounting services fee	47
Custodian fees	37
Legal fees	23
Audit fees	16
Other	74
Total expenses	1,617
Net investment income	13
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities	1,147
Realized net gain on futures contracts	17
Realized net loss on written options	(191		)
Realized net loss on purchased options	(31		)
Realized net loss on foreign currency transactions	(36		)
Realized net gain on investments	906
Unrealized appreciation in value of securities during the period	8,451
Unrealized depreciation in value of forward currency contracts during the period	(257		)
Unrealized appreciation in value of foreign currency during the period	2
Unrealized appreciation in value of investments during the period	8,196
Net gain on investments	9,102
Net increase in net assets resulting from operations	$	9,115

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)	$	13		$	(70	)
Realized net gain on investments	906			3,660
Unrealized appreciation	8,196			6,241
Net increase in net assets resulting from operations	9,115			9,831
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A	(100		)	(122		)
Class B	(9		)	(11		)
Class C	(60		)	(145		)
Class Y	(11		)	(13		)
Realized gains on investment transactions:
Class A	(207		)	-
Class B	(78		)	-
Class C	(396		)	-
Class Y	(24		)	-
	(885		)	(291		)
Capital share transactions (Note 5)	25,513			1,359
Total increase	33,743			10,899
NET ASSETS
Beginning of period	75,338			64,439
End of period	$	109,081		$	75,338
Undistributed net investment income (loss)	$	(15	)	$	173

(1)See "Financial Highlights" on pages 26 - 29.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-10-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	12.86		$	11.18		$	11.33		$	11.98		$	15.22
Income (loss) from investment operations:
Net investment income	0.06			0.08			0.16			0.25			0.15
Net realized and unrealized gain             (loss) on investments	1.47			1.71			(0.16		)	(0.40		)	(0.60		)
Total from investment operations	1.53			1.79			(0.00		)	(0.15		)	(0.45		)
Less distributions from:
Net investment income	(0.07		)	(0.11		)	(0.15		)	(0.30		)	(0.13		)
Capital gains	(0.11		)	(0.00		)	(0.00		)	(0.20		)	(2.66		)
Total distributions	(0.18		)	(0.11		)	(0.15		)	(0.50		)	(2.79		)
Net asset value, end of period	$	14.21		$	12.86		$	11.18		$	11.33		$	11.98
Total return(2)	12.02		%	16.06		%	0.00		%	-1.25		%	-3.77		%
Net assets, end of period (in millions)	$39			$17			$9			$4			$2
Ratio of expenses to average net assets	1.44		%	1.47		%	1.40		%	1.45		%	1.26		%(3)
Ratio of net investment income       to average net assets	0.56		%	0.53		%	1.23		%	2.28		%	2.26		%(3)
Portfolio turnover rate	98		%	254		%	109		%	143		%	215		%(4)

(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.
(4)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	12.83		$	11.17		$	11.32		$	11.97		$	15.21
Income (loss) from investment operations:
Net investment income (loss)	(0.03		)	(0.03		)	0.05			0.17			0.07
Net realized and unrealized gain             (loss) on investments	1.44			1.71			(0.15		)	(0.41		)	(0.60		)
Total from investment operations	1.41			1.68			(0.10		)	(0.24		)	(0.53		)
Less distributions from:
Net investment income	(0.02		)	(0.02		)	(0.05		)	(0.21		)	(0.05		)
Capital gains	(0.11		)	(0.00		)	(0.00		)	(0.20		)	(2.66		)
Total distributions	(0.13		)	(0.02		)	(0.05		)	(0.41		)	(2.71		)
Net asset value, end of period	$	14.11		$	12.83		$	11.17		$	11.32		$	11.97
Total return	11.02		%	15.07		%	-0.92		%	-2.03		%	-4.35		%
Net assets, end of period (in millions)	$11			$7			$3			$3			$2
Ratio of expenses to average net assets	2.30		%	2.38		%	2.35		%	2.25		%	2.15		%(2)
Ratio of net investment income (loss)       to average net assets	-0.30		%	-0.40		%	0.31		%	1.50		%	1.37		%(2)
Portfolio turnover rate	98		%	254		%	109		%	143		%	215		%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	12.83		$	11.17		$	11.32		$	11.97		$	15.21
Income (loss) from investment operations:
Net investment income (loss)	(0.03		)	(0.03		)	0.05			0.19			0.11
Net realized and unrealized gain             (loss) on investments	1.45			1.73			(0.14		)	(0.43		)	(0.62		)
Total from investment operations	1.42			1.70			(0.09		)	(0.24		)	(0.51		)
Less distributions from:
Net investment income	(0.02		)	(0.04		)	(0.06		)	(0.21		)	(0.07		)
Capital gains	(0.11		)	(0.00		)	(0.00		)	(0.20		)	(2.66		)
Total distributions	(0.13		)	(0.04		)	(0.06		)	(0.41		)	(2.73		)
Net asset value, end of period	$	14.12		$	12.83		$	11.17		$	11.32		$	11.97
Total return	11.11		%	15.21		%	-0.79		%	-1.98		%	-4.22		%
Net assets, end of period (in millions)	$55			$49			$51			$47			$54
Ratio of expenses to average net assets	2.21		%	2.27		%	2.20		%	2.20		%	2.15		%
Ratio of net investment income       (loss) to average net assets	-0.22		%	-0.26		%	0.46		%	1.59		%	0.86		%
Portfolio turnover rate	98		%	254		%	109		%	143		%	215		%

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	12.87		$	11.18		$	11.33		$	11.98		$	15.26
Income (loss) from investment operations:
Net investment income	0.08			0.09			0.11			0.28			0.24
Net realized and unrealized gain             (loss) on investments	1.45			1.71			(0.10		)	(0.42		)	(0.63		)
Total from investment operations	1.53			1.80			0.01			(0.14		)	(0.39		)
Less distributions from:
Net investment income	(0.07		)	(0.11		)	(0.16		)	(0.31		)	(0.23		)
Capital gains	(0.11		)	(0.00		)	(0.00		)	(0.20		)	(2.66		)
Total distributions	(0.18		)	(0.11		)	(0.16		)	(0.51		)	(2.89		)
Net asset value, end of period	$	14.22		$	12.87		$	11.18		$	11.33		$	11.98
Total return	12.05		%	16.19		%	0.08		%	-1.14		%	-3.39		%
Net assets, end of period (in millions)	$4			$2			$1			$1			$1
Ratio of expenses to average net assets	1.35		%	1.39		%	1.32		%	1.33		%	1.32		%
Ratio of net investment income to       average net assets	0.66		%	0.67		%	1.34		%	2.44		%	1.71		%
Portfolio turnover rate	98		%	254		%	109		%	143		%	215		%

See Notes to Financial Statements.

Manager's Discussion of
Ivy Capital Appreciation Fund
     March 31, 2005

An interview with Barry M. Ogden, CFA, CPA, portfolio manager of the Ivy Capital Appreciation Fund

Please note that the Ivy Tax-Managed Equity Fund was renamed the Ivy Capital Appreciation Fund effective March 31, 2005. Its objective and strategy will continue as long-term growth of capital, while minimizing taxable gains and income to shareholders.

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Class A shares of the Fund increased 6.25 percent, before the impact of sales charges, compared with the S&P 500 Index (reflecting the performance of securities that generally represent the stock market), which increased 6.69 percent during the same period, and the Lipper Large-Cap Growth Funds Universe Average (reflecting the universe of funds with similar investment objectives), which increased 1.20 percent during the period. Please note that the Fund's performance numbers do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

What factors affected performance relative to the benchmark index during the fiscal year?

Our largest weighting continued to be within the health care sector, specifically managed care, hospitals, biotechnology, medical technology, orthopedics and generics, which we felt were very good investments for the Fund over the last 12 months. We were underweight large-capitalization pharmaceuticals for most of this period, which we believe also turned out to be the right investment decision. We feel that the health care industry has a very strong, secular investment story, and we continue to try to find new ways to fully exploit the opportunities. Our exposure in health care and our company specific investments helped our performance measurably over the last 12 months. Furthermore, our overweight position in energy, another sector where we believe that long-term supply issues should support higher energy prices, helped our overall performance. We are exposed to the energy sector through a variety of investments in the integrated oils, oil service, drilling equipment and exploration and production sector s. We were underweight in financials, driven in part by our belief that continued Federal Reserve interest rate tightening has the potential to provide challenges to that sector. Lastly, we held comparable benchmark weightings in several other key investment areas, such as technology, consumer staples, basic materials and industrials.

What other market conditions or events influenced the Fund's performance during the fiscal year?

Two significant variables impacting the Fund and the overall economy over the past 12 months were higher energy prices and the Federal Reserve's consistent interest rate hikes. As it relates to higher energy prices, the price of oil increased almost 20 percent over the last 12 months and, as one would expect, it appears that this is beginning to have a slowing impact on the economy and consumer spending. In fact, it seems as if the impact to the economy and the consumer may have accelerated late in March, as several larger retailers noted a slowing in sales trends. In addition, the Federal Reserve has been steadfast in its interest rate hikes since June 2004. Having already raised rates seven times during the fiscal year, the Fed has made it very clear that it intends to raise interest rates further. We believe that the rate hikes, though at a low level, are beginning to take effect and are in fact slowing the economy down. Going forward, we believe the price of oil - and its real and psychological effects on the consumer and the economy - remains the most important variable to watch in the near-term.

What strategies and techniques did you employ that specifically affected the Fund's performance?

We continue to believe that our investment process of focusing on what we feel are high-quality, growth-oriented companies is a key component that differentiates us from our peers, and that this may continue to benefit the Fund across all economic environments. Most of our investments are centered on companies that we feel are rapidly growing their businesses, are very profitable and are able to differentiate themselves from their competitors. Valuation, relative to a company's future growth opportunities and operating free cash flow, continues to play a role in all investment decisions.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive going forward?

The two sectors that we weighted quite heavily during the last 12 months were health care and energy. We continue to be bullish regarding the prospects for both sectors and anticipate them both being an integral part of the Fund's weightings over the foreseeable future.

Overall, we believe that we could potentially be in a sideways market that ends the year roughly flat. Having said that, we feel that there likely will be pockets of opportunity and sectors that dramatically outperform the broader markets over the next 12 months. We ended the fiscal year with a relatively high cash position and intend to look to put some of this back to work over the next few months and on pullbacks. We believe that we could rapidly put much of this cash back to work as the market conditions change (such as a sustained pullback in energy) or if company-specific investment opportunities arise. At this point, we are in no immediate rush to get back to being fully invested, and likely will instead focus on the preservation of capital and investing in what we feel are the right companies in the right sectors. We anticipate no major sector weighting changes at this point, but we might reduce slightly our retail exposure on any strength, as we are fearful of any negative impact on the consumer fr om higher energy prices.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

Comparison of Change in Value of
$10,000 Investment

Ivy Capital Appreciation Fund, Class A Shares(1)	$	7,531
S&P 500 Index	$	8,743
Lipper Large-Cap Growth Funds Universe Average	$	6,180

IVY CAPITAL APPRECIATION FUND CLASS A SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY CAPITAL APPRECIATION FUND CLASS A SHARES	S&P 500 INDEX	LIPPER LARGE-CAP GROWTH FUNDS UNIVERSE AVERAGE
JUNE	6/30/00	9,425	10,000	10,000
MARCH	2001	6,777	8,043	6,742
MARCH	2002	6,060	8,060	6,390
MARCH	2003	5,401	6,064	4,707
MARCH	2004	7,088	8,195	6,107
MARCH	2005	7,531	8,743	6,180

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-05	0.14%	0.96%	4.97%	--
5-year period ended 3-31-05	--	--	--	--
10-year period ended 3-31-05	--	--	--	--
Cumulative return since inception of Class         through 3-31-05(3)	--	--	--	9.00%
Since inception of Class through 3-31-05(3)	-5.79%	-6.12%	-5.65%	--

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

(3)6-30-00 for Class A shares, 7-13-00 for Class B share, 7-6-00 for Class C shares and 9-15-04 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY Capital Appreciation FUND
Portfolio Highlights

On March 31, 2005, Ivy Capital Appreciation Fund had net assets totaling $14,400,551 invested in a diversified portfolio of:

82.52%	Common Stocks
17.48%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Health Care Stocks	$	21.49
Technology Stocks	$	18.46
Cash and Cash Equivalents	$	17.48
Energy Stocks	$	9.03
Multi-Industry Stocks	$	8.88
Retail Stocks	$	8.33
Financial Services Stocks	$	4.80
Consumer Nondurables Stocks	$	3.20
Miscellaneous Stocks	$	2.93
Consumer Services Stocks	$	2.81
Business Equipment and Services Stocks	$	2.59

The Investments of Ivy Capital Appreciation Fund
March 31, 2005
COMMON STOCKS	Shares			Value
Air Transportation - 0.63%
Southwest Airlines Co.		6,400	$	91,136
Aircraft - 2.94%
Boeing Company (The)		2,900		169,534
United Technologies Corporation		2,500		254,150
				423,684
Aluminum - 0.63%
Alcoa Incorporated		3,000		91,170
Apparel - 1.61%
Coach, Inc.*		4,100		232,183
Banks - 0.62%
Citigroup Inc.		2,000		89,880
Broadcasting - 0.95%
Viacom Inc., Class B		2,300		80,109
XM Satellite Radio Holdings Inc., Class A*		1,800		56,844
				136,953
Capital Equipment - 0.70%
Deere & Company		1,500		100,695
Communications Equipment - 1.62%
Cisco Systems, Inc.*		13,000		232,895
Computers - Micro - 3.87%
Apple Computer, Inc.*		6,000		250,500
Dell Inc.*		8,000		307,400
				557,900
Computers - Peripherals - 5.08%
Lexmark International, Inc.*		1,600		127,952
Microsoft Corporation		15,200		367,308
Oracle Corporation*		8,000		99,800
SAP Aktiengesellschaft, ADR		3,400		136,272
				731,332
Defense - 1.49%
General Dynamics Corporation		2,000		214,100
Electronic Components - 2.34%
Analog Devices, Inc.		1,500		54,210
Intel Corporation		7,000		162,610
Texas Instruments Incorporated		4,700		119,803
				336,623
Electronic Instruments - 1.12%
Applied Materials, Inc.*		4,000		65,020
KLA-Tencor Corporation*		2,100		96,610
				161,630
Finance Companies - 0.57%
Fannie Mae		1,500		81,675
Health Care - Drugs - 7.34%
Allergan, Inc.		2,000		138,940
Amgen Inc.*		3,200		186,144
Andrx Corporation*		6,000		136,080
Genentech, Inc.*		1,200		67,932
Gilead Sciences, Inc.*		5,800		207,611
MedImmune, Inc.*		3,500		83,283
Schering-Plough Corporation		4,500		81,675
Teva Pharmaceutical Industries Limited, ADR		5,000		154,925
				1,056,590
Health Care - General - 4.94%
Boston Scientific Corporation*		2,700		79,083
Johnson & Johnson		3,000		201,480
St. Jude Medical, Inc.*		4,000		144,000
Schein (Henry), Inc.*		3,000		107,340
Zimmer Holdings, Inc.*		2,300		178,963
				710,866
Hospital Supply and Management - 9.21%
Aetna Inc.		5,000		374,750
Caremark Rx, Inc.*		4,000		159,120
HCA Inc.		3,100		166,067
PacifiCare Health Systems, Inc.*		2,500		142,300
Triad Hospitals, Inc.*		3,400		170,340
WellPoint, Inc.*		2,500		313,375
				1,325,952
Hotels and Gaming - 0.93%
Hilton Hotels Corporation		6,000		134,100
Insurance - Property and Casualty - 0.63%
Berkshire Hathaway Inc., Class B*		32		91,392
Leisure Time Industry - 0.93%
Royal Caribbean Cruises Ltd.		3,000		134,070
Multiple Industry - 8.88%
China Netcom Group Corporation (Hong Kong) Limited, ADR*		3,000		83,970
DreamWorks Animation SKG, Inc., Class A*		3,600		146,556
General Electric Company		10,500		378,630
Google Inc., Class A*		800		144,388
Huntsman Corporation*		7,000		163,240
Las Vegas Sands, Inc.*		5,000		225,000
Research In Motion Limited*		1,800		137,385
				1,279,169
Petroleum - International - 4.84%
Anadarko Petroleum Corporation		1,900		144,590
Apache Corporation		3,200		195,936
Burlington Resources Inc.		3,200		160,224
Exxon Mobil Corporation		3,300		196,680
				697,430
Petroleum - Services - 4.19%
Nabors Industries Ltd.*		2,000		118,280
Patterson-UTI Energy, Inc.		8,400		210,126
Schlumberger Limited		2,300		162,104
Transocean Inc.*		2,200		113,212
				603,722
Railroad - 0.97%
Union Pacific Corporation		2,000		139,400
Restaurants - 2.06%
Applebee's International, Inc.		6,000		165,210
P.F. Chang's China Bistro, Inc.*		2,200		131,373
				296,583
Retail - Food Stores - 2.73%
CVS Corporation		4,000		210,480
Walgreen Co.		4,100		182,122
				392,602
Retail - General Merchandise - 3.54%
Costco Wholesale Corporation		3,800		168,169
Family Dollar Stores, Inc.		3,000		91,080
Wal-Mart Stores, Inc.		5,000		250,550
				509,799
Security and Commodity Brokers - 2.98%
Goldman Sachs Group, Inc. (The)		2,500		274,975
Merrill Lynch & Co., Inc.		700		39,620
Morgan Stanley		2,000		114,500
				429,095
Timesharing and Software - 2.59%
eBay Inc.*		10,000		372,550
Tobacco - 1.59%
Altria Group, Inc.		3,500		228,865
TOTAL COMMON STOCKS - 82.52%			$	11,884,041
(Cost: $10,051,661)
SHORT-TERM SECURITY - 16.68%	Principal Amount in Thousands
Repurchase Agreement
J.P. Morgan Securities Inc., 2.25% Repurchase Agreement      dated 3-31-05 to be repurchased at $2,402,150 on      4-1-05 (A)	$	2,402	$	2,402,000
(Cost: $2,402,000)
TOTAL INVESTMENT SECURITIES - 99.20%			$	14,286,041
(Cost: $12,453,661)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.80%				114,510
NET ASSETS - 100.00%			$	14,400,551

Notes to Schedule of Investments

      *No dividends were paid during the preceding 12 months.

(A)Collateralized by $2,409,170 United States Treasury Note, 4.375% due 5-15-07; market value and accrued interest aggregate $2,448,828.

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

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

Statement of Assets and Liabilities
     IVY CAPITAL APPRECIATION FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (Notes 1 and 3):
Securities (cost - $10,052)	$	11,884
Repurchase agreement (cost - $2,402)		2,402
		14,286
Cash		-	*
Receivables:
Fund shares sold		229
Dividends and interest		8
Prepaid and other assets		11
Total assets		14,534
LIABILITIES
Payable for investment securities purchased		119
Payable to Fund shareholders		4
Accrued shareholder servicing (Note 2)		3
Accrued accounting services fee (Note 2)		1
Other		6
Total liabilities		133
Total net assets	$	14,401
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	18
Additional paid-in capital		15,257
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(1	)
Accumulated undistributed net realized loss                 on investment transactions		(2,705	)
Net unrealized appreciation in value of securities		1,832
Net assets applicable to outstanding units of capital	$	14,401
Net asset value per share (net assets divided by shares outstanding):
Class A		$7.99
Class B		$7.62
Class C		$7.60
Class Y		$7.99
Capital shares outstanding:
Class A		1,359
Class B		140
Class C		312
Class Y		13
Capital shares authorized	350,000

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Operations
     IVY CAPITAL APPRECIATION FUND
     For the Fiscal Year Ended March 31, 2005
  ��  (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends	$	110
Interest and amortization		18
Total income		128
Expenses (Note 2):
Investment management fee		68
Registration fees		38
Distribution fee:
Class A		7
Class B		6
Class C		13
Shareholder servicing:
Class A		13
Class B		2
Class C		6
Class Y		-	*
Audit fees		19
Service fee:
Class A		13
Class B		2
Class C		4
Class Y		-	*
Accounting services fee		8
Custodian fees		6
Legal fees		3
Other		8
Total		216
Less voluntary waiver of investment management fee (Note 2)		(68	)
Total expenses		148
Net investment loss		(20	)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		168
Realized net loss on written options		(1	)
Realized net gain on investments		167
Unrealized appreciation in value of investments during the period		535
Net gain on investments		702
Net increase in net assets resulting from operations	$	682

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE IN NET ASSETS
Operations:
Net investment loss	$	(20	)	$	(76	)
Realized net gain on investments		167			313
Unrealized appreciation		535			1,288
Net increase in net assets resulting from operations		682			1,525
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A	-			-
Class B	-			-
Class C	-			-
Class Y	-			-
Realized gains on investment transactions:
Class A	-			-
Class B	-			-
Class C	-			-
Class Y	-			-
	-			-
Capital share transactions (Note 5)		5,857			1,872
Total increase		6,539			3,397
NET ASSETS
Beginning of period		7,862			4,465
End of period	$	14,401		$	7,862
Undistributed net investment loss	$	(1	)	$	(-	)*

*Not shown due to rounding.
(1)See "Financial Highlights" on pages 41 - 44.

See Notes to Financial Statements.

Financial Highlights
     IVY CAPITAL APPRECIATION FUND⁽¹⁾
     Class A Shares
     For a Share of Capital Stock Outstanding Throughout Each Period:

	For the fiscal year ended March 31,												For the period from 6-30-00(2) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	7.52		$	5.73		$	6.43		$	7.19		$	10.00
Income (loss) from investment operations:
Net investment income (loss)	(0.02		)	(0.06		)	(0.03		)	(0.08		)		0.00
Net realized and unrealized gain             (loss) on investments		0.49			1.85		(0.67		)	(0.68		)		(2.81	)
Total from investment operations		0.47			1.79		(0.70		)	(0.76		)		(2.81	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Net asset value, end of period	$	7.99		$	7.52		$	5.73		$	6.43		$	7.19
Total return(3)		6.25	%	31.24		%	-10.89		%	-10.57		%	-28.10		%
Net assets, end of period (in millions)		$11			$6			$4			$4			$4
Ratio of expenses to average       net assets including voluntary       expense waiver		1.19	%		1.47	%		1.50	%		1.62	%		1.27	%(4)
Ratio of net investment income (loss)       to average net assets including       voluntary expense waiver		0.03	%	-1.05		%	-0.67		%	-0.92		%		-0.09	%(4)
Ratio of expenses to average       net assets excluding voluntary       expense waiver		1.84	%		2.12	%		2.15	%		2.17	%		1.80	%(4)
Ratio of net investment loss to       average net assets excluding       voluntary expense waiver	-0.62		%	-1.70		%	-1.32		%	-1.46		%		-0.62	%(4)
Portfolio turnover rate		62	%		115	%		145	%		96	%		73	%

(1)Capital Appreciation Fund (formerly Tax-Managed Equity Fund) changed its name effective March 31, 2005.
(2)Commencement of operations of the class.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.

See Notes to Financial Statements.

Financial Highlights
     IVY CAPITAL APPRECIATION FUND⁽¹⁾
     Class B Shares
     For a Share of Capital Stock Outstanding Throughout Each Period:

		For the fiscal year ended March 31,												For the period from 7-13-00(2) to
		2005			2004			2003			2002			3-31-01
Net asset value, beginning of period		$	7.26		$	5.58		$	6.31		$	7.12		$	10.06
Income (loss) from investment operations:
Net investment loss		(0.01		)	(0.09		)	(0.11		)	(0.13		)		(0.05	)
Net realized and unrealized gain             (loss) on investments			0.37			1.77		(0.62		)	(0.68		)		(2.89	)
Total from investment operations			0.36			1.68		(0.73		)	(0.81		)		(2.94	)
Less distributions from:
Net investment income		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Total distributions		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Net asset value, end of period		$	7.62		$	7.26		$	5.58		$	6.31		$	7.12
Total return			4.96	%	30.11		%	-11.57		%	-11.38		%	-29.22		%
Net assets, end of period (in thousands)	$1,068				$538			$247			$358				$296
Ratio of expenses to average       net assets including       voluntary expense waiver			2.03	%		2.28	%		2.47	%		2.56	%		2.45	%(3)
Ratio of net investment loss to       average net assets including       voluntary expense waiver		-0.81		%	-1.87		%	-1.63		%	-1.86		%		-1.74	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver			2.68	%		2.93	%		3.12	%		3.42	%		3.48	%(3)
Ratio of net investment loss to       average net assets excluding       voluntary expense waiver		-1.46		%	-2.52		%	-2.28		%	-2.71		%		-2.77	%(3)
Portfolio turnover rate			62	%		115	%		145	%		96	%		73	%

(1)Capital Appreciation Fund (formerly Tax-Managed Equity Fund) changed its name effective March 31, 2005.
(2)Commencement of operations of the class.
(3)Annualized.

See Notes to Financial Statements.

Financial Highlights
     IVY CAPITAL APPRECIATION FUND⁽¹⁾
     Class C Shares
     For a Share of Capital Stock Outstanding Throughout Each Period:

		For the fiscal year ended March 31,												For the period from 7-6-00(2) to
		2005			2004			2003			2002			3-31-01
Net asset value, beginning of period		$	7.24		$	5.57		$	6.32		$	7.13		$	10.01
Income (loss) from investment operations:
Net investment income (loss)			0.03		(0.11		)	(0.12		)	(0.19		)		(0.06	)
Net realized and unrealized gain             (loss) on investments			0.33			1.78		(0.63		)	(0.62		)		(2.82	)
Total from investment operations			0.36			1.67		(0.75		)	(0.81		)		(2.88	)
Less distributions from:
Net investment income		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Total distributions		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Net asset value, end of period		$	7.60		$	7.24		$	5.57		$	6.32		$	7.13
Total return			4.97	%	29.98		%	-11.87		%	-11.36		%	-28.77		%
Net assets, end of period       (in thousands)	$2,373			$1,374				$685			$865				$2
Ratio of expenses to average       net assets including       voluntary expense waiver			2.15	%		2.46	%		2.64	%		2.76	%		2.35	%(3)
Ratio of net investment loss to       average net assets including       voluntary expense waiver		-0.96		%	-2.05		%	-1.81		%	-2.07		%		-1.52	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver			2.80	%		3.11	%		3.29	%		3.69	%		3.34	%(3)
Ratio of net investment loss to       average net assets excluding       voluntary expense waiver		-1.61		%	-2.70		%	-2.46		%	-2.99		%		-2.50	%(3)
Portfolio turnover rate			62	%		115	%		145	%		96	%		73	%

(1)Capital Appreciation Fund (formerly Tax-Managed Equity Fund) changed its name effective March 31, 2005.
(2)Commencement of operations of the class.
(3)Annualized.

See Notes to Financial Statements.

Financial Highlights
     IVY CAPITAL APPRECIATION FUND⁽¹⁾
     Class Y Shares
     For a Share of Capital Stock Outstanding Throughout the Period:

	For the period from 9-15-04(2) to
	3-31-05
Net asset value, beginning of period		$	7.33
Income from investment operations:
Net investment income			0.03
Net realized and unrealized gain on investments			0.63
Total from investment operations			0.66
Less distributions from:
Net investment income		(0.00		)
Capital gains		(0.00		)
Total distributions		(0.00		)
Net asset value, end of period		$	7.99
Total return			9.00	%
Net assets, end of period (in thousands)		$108
Ratio of expenses to average net assets including       voluntary expense waiver			1.11	%(3)
Ratio of net investment income to average net assets       including voluntary expense waiver			0.47	%(3)
Ratio of expenses to average net assets excluding       voluntary expense waiver			1.76	%(3)
Ratio of net investment loss to average net assets       excluding voluntary expense waiver		-0.18		%(3)
Portfolio turnover rate			62	%(4)

(1)Capital Appreciation Fund (formerly Tax-Managed Equity Fund) changed its name effective March 31, 2005.
(2)Commencement of operations of the class.
(3)Annualized.
(4)For the fiscal year ended March 31, 2005.

See Notes to Financial Statements.

Manager's Discussion of Ivy Core Equity Fund
     March 31, 2005

An interview with James D. Wineland, CFA, portfolio manager of the Ivy Core Equity Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund did well, outperforming its benchmark index and Lipper peer group over the fiscal year. Class C shares of the Fund increased 11.00 percent during the period, compared with the S&P 500 Index (reflecting the performance of securities that generally represent the stock market), which increased 6.69 percent for the period, and the Lipper Large-Cap Core Funds Universe Average (generally reflecting the performance of the universe of funds with similar investment objectives), which increased 4.06 percent for the year. Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

What helped the Fund outperform its benchmark index during the fiscal year?

We believe that the Fund benefited primarily from our decision to maintain a heavy emphasis on energy-related and basic industry stocks, which contributed meaningfully to overall return.

What other market conditions or events influenced the Fund's performance during the fiscal year?

The rise in energy prices over the latter part of the fiscal year is a condition that we think is likely to persist. We anticipate that the market will be volatile and that geopolitical events likely will continue to cause commodity prices to both rise and fall. However, for the next several years, we believe energy is likely to be an excellent place for us to invest.

What strategies and techniques did you employ that specifically affected the Fund's performance?

As always, the Fund focused on what we feel are high quality industry leaders with strong financial characteristics, solid management and dominant competitive positions. The portfolio is diversified, but it also provides concentration in the broad investment themes that we believe will continue to offer compelling performance.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

We emphasized energy, aerospace/defense, machinery, chemicals, leisure, and specialty and discount retailers. We generally maintained below benchmark level weightings in the telecommunications, financial services and utility sectors for most of the fiscal year.

As noted above, we feel the energy sector represents a very important long-term investment opportunity. Supply of conventional oil and natural gas appears to be meeting increasingly difficult barriers to growth. Many believe that one possible answer to this big supply/demand problem is to utilize alternative energy sources, such as solar, wind, liquid natural gas or fuel cells. We believe that each of these (and more) may be good alternatives and possibly have investment potential. However, we feel that the mere size of the oil and natural gas markets and the huge reliance of the world's economy on the petroleum infrastructure simply cannot be changed quickly.

We see enormous potential in the health care and travel/vacation/leisure sectors. The demographic forces behind these two large investment themes appear to us to be very powerful. As a result, managed care, drug distribution, medical technology, biotechnology and conventional large-capitalization pharmaceuticals are likely to be well represented in the portfolio. Hotels, gaming, cruise lines and other vacation/recreation stocks are also areas we find very compelling. Our technology investments likely will continue to be centered on what we believe are leading companies involved with the "digital home" and the products, services and components that facilitate the wireless world.

Finally, we intend to continue to invest in basic industry stocks (machinery, chemicals, metals, capital goods) that we think may benefit from expanding global demand for basic infrastructure requirements, such as water systems, electric grid expansion, highways, airports, harbor facilities and refineries.

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

Comparison of Change in Value of
$10,000 Investment

Ivy Core Equity Fund, Class C Shares (1)	$	21,326
S&P 500 Index	$	27,865
Lipper Large-Cap Core Funds Universe Average	$	23,297

IVY CORE EQUITY FUND CLASS C SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY CORE EQUITY FUND CLASS C SHARES	S&P 500 INDEX	LIPPER LARGE-CAP CORE FUNDS UNIVERSE AVERAGE
MARCH	1995	10,000	10,000	10,000
MARCH	1996	12,875	13,210	12,936
MARCH	1997	14,411	15,818	14,966
MARCH	1998	20,113	23,417	21,441
MARCH	1999	21,616	27,757	24,435
MARCH	2000	26,800	32,800	29,340
MARCH	2001	22,406	25,632	23,213
MARCH	2002	21,522	25,686	22,853
MARCH	2003	15,921	19,327	17,029
MARCH	2004	19,213	26,117	22,387
MARCH	2005	21,326	27,865	23,297

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C(3)	Class Y
1-year period ended 3-31-05	5.33%	6.93%	11.00%	12.07%
5-year period ended 3-31-05	--	--	-  4.47%	-3.57%
10-year period ended 3-31-05	--	--	7.87%	--
Since inception of Class through 3-31-05(4)	-5.31%	-5.65%	--	7.26%

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

(3)Performance data from 3-24-00 represents the actual performance of Class C shares. Performance data prior to 3-24-00 represents the performance of the Fund's original Class B shares. The original Class B shares were combined with Class C shares effective 3-24-00, and redesignated as Class C shares. The original Class B's performance has been adjusted to reflect the current contingent deferred sales charge (CDSC) structure applicable to Class C (1.00% maximum and declining to zero at the end of the first year after investment). Accordingly, these returns reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase. New Class B shares, with fees and expenses different from the original Class B shares, were added to the Fund on 6-30-00.

(4)7-3-00 for Class A shares, 7-11-00 for Class B shares and 12-29-95 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY CORE EQUITY FUND
Portfolio Highlights

On March 31, 2005, Ivy Core Equity Fund had net assets totaling $261,992,387 invested in a diversified portfolio of:

99.14%	Common Stocks
0.86%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Energy Stocks	$	18.61
Technology Stocks	$	17.00
Health Care Stocks	$	14.51
Financial Services Stocks	$	9.17
Retail Stocks	$	6.48
Raw Materials Stocks	$	5.80
Capital Goods Stocks	$	5.37
Consumer Services Stocks	$	4.81
Multi Industry Stocks	$	4.77
Utilities Stocks	$	4.29
Consumer Nondurables Stocks	$	3.89
Cash and Cash Equivalents and Miscellaneous Stocks	$	2.92
Transportation Stocks	$	2.38

The Investments of Ivy Core Equity Fund
March 31, 2005
COMMON STOCKS		Shares		Value
Aircraft - 4.26%
Boeing Company (The)		50,700	$	2,963,922
Lockheed Martin Corporation		67,604		4,127,900
United Technologies Corporation		40,100		4,076,566
				11,168,388
Aluminum - 1.04%
Alcoa Incorporated		89,400		2,716,866
Banks - 2.01%
Bank of America Corporation		2		88
Citigroup Inc.		59,101		2,655,999
U.S. Bancorp		90,155		2,598,267
				5,254,354
Beverages - 1.53%
PepsiCo, Inc.		75,366		3,996,659
Broadcasting - 1.47%
Liberty Media Corporation, Class A*		372,208		3,859,797
Business Equipment and Services - 0.48%
First Data Corporation		31,800		1,250,058
Capital Equipment - 4.78%
Caterpillar Inc.		39,923		3,650,559
Deere & Company		92,911		6,237,115
Illinois Tool Works Inc.		29,466		2,638,091
				12,525,765
Chemicals - Petroleum and Inorganic - 4.13%
Air Products and Chemicals, Inc.		121,559		7,693,469
du Pont (E.I.) de Nemours and Company		61,168		3,134,248
				10,827,717
Communications Equipment - 1.58%
Avaya Inc.*		1		12
Cisco Systems, Inc.*		230,900		4,136,574
				4,136,586
Computers - Micro - 2.39%
Apple Computer, Inc.*		32,000		1,336,000
Dell Inc.*		128,388		4,933,309
				6,269,309
Computers - Peripherals - 3.89%
Lexmark International, Inc.*		19,700		1,575,409
Microsoft Corporation		107,060		2,587,105
SAP Aktiengesellschaft, ADR		150,347		6,025,908
				10,188,422
Defense - 1.56%
General Dynamics Corporation		38,200		4,089,310
Electronic Components - 3.32%
Analog Devices, Inc.		42,732		1,544,334
Intel Corporation		150,416		3,494,164
Texas Instruments Incorporated		143,600		3,660,364
				8,698,862
Finance Companies - 1.81%
Rio Tinto plc (A)		19,500		630,122
SLM Corporation		82,700		4,121,768
				4,751,890
Food and Related - 1.53%
Kellogg Company		92,553		4,004,768
Health Care - Drugs - 6.55%
Amgen Inc.*		47,588		2,768,194
Gilead Sciences, Inc.*		80,300		2,874,339
Novartis AG, Registered Shares (A)		82,400		3,846,023
Pfizer Inc.		292,023		7,671,444
				17,160,000
Health Care - General - 2.93%
Boston Scientific Corporation*		43,900		1,285,831
Wyeth		151,597		6,394,361
				7,680,192
Hospital Supply and Management - 5.03%
Aetna Inc.		29,800		2,233,510
Caremark Rx, Inc.*		22,700		903,006
Guidant Corporation		31,900		2,357,410
Medtronic, Inc.		82,701		4,213,616
UnitedHealth Group Incorporated		17,600		1,678,688
WellPoint, Inc.*		14,400		1,805,040
				13,191,270
Hotels and Gaming - 2.51%
Marriott International, Inc., Class A		70,378		4,705,473
Starwood Hotels & Resorts Worldwide, Inc.		22,600		1,356,678
Wynn Resorts, Limited*		7,700		521,406
				6,583,557
Household - General Products - 0.83%
Colgate-Palmolive Company		41,668		2,173,820
Insurance - Property and Casualty - 2.45%
Berkshire Hathaway Inc., Class B*		2,250		6,426,000
Leisure Time Industry - 0.83%
Carnival Corporation		41,900		2,170,839
Mining - 0.63%
Phelps Dodge Corporation		16,200		1,648,026
Multiple Industry - 4.77%
General Electric Company		278,857		10,055,583
Google Inc., Class A*		6,000		1,082,910
Las Vegas Sands, Inc.*		30,000		1,350,000
				12,488,493
Non-Residential Construction - 0.59%
Fluor Corporation		27,700		1,535,411
Petroleum - Canada - 0.33%
Canadian Natural Resources Limited		5,300		301,146
Suncor Energy Inc.		14,000		562,940
				864,086
Petroleum - International - 8.13%
Anadarko Petroleum Corporation		30,561		2,325,692
Burlington Resources Inc.		179,336		8,979,354
Exxon Mobil Corporation		167,479		9,981,748
				21,286,794
Petroleum - Services - 10.15%
Baker Hughes Incorporated		199,631		8,881,583
Nabors Industries Ltd.*		61,331		3,627,115
Schlumberger Limited		86,588		6,102,722
Smith International, Inc.		21,000		1,317,330
Transocean Inc.*		39,300		2,022,378
Weatherford International Ltd.*		80,000		4,635,200
				26,586,328
Retail - Food Stores - 0.85%
Walgreen Co.		50,400		2,238,768
Retail - General Merchandise - 4.52%
Family Dollar Stores, Inc.		61,900		1,879,284
Kohl's Corporation*		57,800		2,984,214
Target Corporation		26,400		1,320,528
Wal-Mart Stores, Inc.		113,000		5,662,430
				11,846,456
Retail - Specialty Stores - 1.11%
Best Buy Co., Inc.		53,816		2,906,602
Security and Commodity Brokers - 2.90%
Goldman Sachs Group, Inc. (The)		52,200		5,741,478
Morgan (J.P.) Chase & Co.		53,800		1,861,480
				7,602,958
Timesharing and Software - 1.58%
eBay Inc.*		92,600		3,449,813
Yahoo! Inc.*		20,700		702,869
				4,152,682
Trucking and Shipping - 2.38%
United Parcel Service, Inc., Class B		85,566		6,224,071
Utilities - Electric - 1.01%
Dominion Resources, Inc.		35,672		2,655,067
Utilities - Telephone - 3.28%
Sprint Corporation		63,200		1,437,800
Vodafone Group Plc, ADR		269,177		7,149,341
				8,587,141
TOTAL COMMON STOCKS - 99.14%			$	259,747,312
(Cost: $196,298,839)
SHORT-TERM SECURITY - 1.11%	Principal Amount in Thousands
Forest and Paper Products
Sonoco Products Co.,
2.88%, 4-1-05	$	2,900	$	2,900,000
(Cost: $2,900,000)
TOTAL INVESTMENT SECURITIES - 100.25%			$	262,647,312
(Cost: $199,198,839)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.25%)				(654,925	)
NET ASSETS - 100.00%			$	261,992,387

Notes to Schedule of Investments

      *No dividends were paid during the preceding 12 months.

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

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

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

Statement of Assets and Liabilities
     IVY CORE EQUITY FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $199,199) (Notes 1 and 3)	$	262,647
Receivables:
Dividends and interest		266
Fund shares sold		223
Prepaid and other assets		22
Total assets		263,158
LIABILITIES
Payable to Fund shareholders		657
Payable for investment securities purchased		265
Accrued shareholder servicing (Note 2)		130
Due to custodian		24
Accrued accounting services fee (Note 2)		8
Accrued management fee (Note 2)		5
Accrued distribution fee (Note 2)		4
Accrued service fee (Note 2)		2
Other		71
Total liabilities		1,166
Total net assets	$	261,992
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	299
Additional paid-in capital		239,166
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(49	)
Accumulated undistributed net realized loss                 on investment transactions		(40,873	)
Net unrealized appreciation in value of investments		63,449
Net assets applicable to outstanding units of capital	$	261,992
Net asset value per share (net assets divided by shares outstanding):
Class A	$9.03
Class B	$8.63
Class C	$8.68
Class Y	$9.38
Capital shares outstanding:
Class A		7,219
Class B		1,374
Class C		21,122
Class Y		168
Capital shares authorized		400,000

See Notes to Financial Statements.

Statement of Operations
     IVY CORE EQUITY FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends (net of foreign withholding taxes of $17)	$	4,169
Interest and amortization		80
Total income		4,249
Expenses (Note 2):
Investment management fee		1,882
Distribution fee:
Class A		16
Class B		91
Class C		1,422
Shareholder servicing:
Class A		267
Class B		62
Class C		716
Class Y		3
Service fee:
Class A		148
Class B		30
Class C		474
Class Y		4
Accounting services fee		95
Legal fees		58
Audit fees		29
Custodian fees		18
Other		175
Total expenses		5,490
Net investment loss		(1,241	)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		27,966
Realized net loss on written options		(106	)
Realized net gain on foreign currency transactions		7
Realized net gain on investments		27,867
Unrealized appreciation in value of investments during the period		1,599
Net gain on investments		29,466
Net increase in net assets resulting from operations	$28,225

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss	$	(1,241	)	$	(887	)
Realized net gain on investments		27,867			15,261
Unrealized appreciation		1,599			33,183
Net increase in net assets resulting from operations		28,225			47,557
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
Realized gains on investment transactions:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
		-			-
Capital share transactions (Note 5)		(55,488	)		21,718
Total increase (decrease)		(27,263	)		69,275
NET ASSETS
Beginning of period		289,255			219,980
End of period	$	261,992		$	289,255
Undistributed net investment loss	$	(49	)	$	(32	)

(1)See "Financial Highlights" on pages 56 - 59.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(2) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	8.08		$	6.63		$	8.89		$	9.51		$	13.89
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.01		(0.08		)	(0.20		)		0.00
Net realized and unrealized gain             (loss) on investments		0.93			1.44		(2.18		)	(0.11		)		(2.00	)
Total from investment operations		0.95			1.45		(2.26		)	(0.31		)		(2.00	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.31		)		(2.38	)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.31		)		(2.38	)
Net asset value, end of period	$	9.03		$	8.08		$	6.63		$	8.89		$	9.51
Total return(3)	11.76		%	21.87		%	-25.42		%	-3.18		%	-16.72		%
Net assets, end of period (in millions)	$65			$75			$13			$9			$4
Ratio of expenses to average net assets		1.50	%		1.46	%		1.31	%		1.26	%		1.18	%(4)
Ratio of net investment income (loss)       to average net assets		0.07	%		0.24	%		0.28	%	-0.11		%		-0.11	%(4)
Portfolio turnover rate		42	%		59	%		39	%		22	%		39	%(5)

(1)Core Equity Fund (formerly Total Return Fund) changed its name effective October 2, 2000.
(2)Commencement of operations of the class.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-11-00(2) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	7.78		$	6.45		$	8.74		$	9.44		$	14.10
Income (loss) from investment operations:
Net investment loss	(0.07		)	(0.05		)	(0.06		)	(0.14		)	(0.05		)
Net realized and unrealized gain             (loss) on investments		0.92			1.38		(2.23		)	(0.25		)	(2.23		)
Total from investment operations		0.85			1.33		(2.29		)	(0.39		)	(2.28		)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.31		)	(2.38		)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.31		)	(2.38		)
Net asset value, end of period	$	8.63		$	7.78		$	6.45		$	8.74		$	9.44
Total return	10.93		%	20.62		%	-26.20		%	-4.06		%	-18.50		%
Net assets, end of period (in millions)	$12			$12			$5			$6			$5
Ratio of expenses to average net assets		2.36	%		2.42	%		2.36	%		2.18	%		2.11	%(3)
Ratio of net investment loss       to average net assets	-0.77		%	-0.66		%	-0.76		%	-1.04		%	-1.02		%(3)
Portfolio turnover rate		42	%		59	%		39	%		22	%		39	%(4)

(1)Core Equity Fund (formerly Total Return Fund) changed its name effective October 2, 2000.
(2)Commencement of operations of the class.
(3)Annualized.
(4)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	7.82		$	6.48		$	8.76		$	9.45		$	13.76
Income (loss) from investment operations:
Net investment loss	(0.06		)	(0.04		)	(0.04		)	(0.08		)		(0.11	)
Net realized and unrealized gain             (loss) on investments		0.92			1.38		(2.24		)	(0.30		)		(1.82	)
Total from investment operations		0.86			1.34		(2.28		)	(0.38		)		(1.93	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.31		)	(2.38		)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.31		)	(2.38		)
Net asset value, end of period	$	8.68		$	7.82		$	6.48		$	8.76		$	9.45
Total return	11.00		%	20.68		%	-26.03		%	-3.94		%	-16.40		%
Net assets, end of period (in millions)	$183			$200			$200			$356			$440
Ratio of expenses to average net assets		2.22	%		2.27	%		2.18	%		2.05	%		1.97	%
Ratio of net investment loss       to average net assets	-0.63		%	-0.45		%	-0.58		%	-0.91		%		-0.93	%
Portfolio turnover rate		42	%		59	%		39	%		22	%		39	%

(1)Core Equity Fund (formerly Total Return Fund) changed its name effective October 2, 2000.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	8.37		$	6.86		$	9.19		$	9.82		$	14.08
Income (loss) from investment operations:
Net investment income (loss)		0.25			0.05			0.04		(0.11		)		(0.04	)
Net realized and unrealized gain             (loss) on investments		0.76			1.46		(2.37		)	(0.21		)		(1.84	)
Total from investment operations		1.01			1.51		(2.33		)	(0.32		)		(1.88	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.31		)	(2.38		)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.31		)	(2.38		)
Net asset value, end of period	$	9.38		$	8.37		$	6.86		$	9.19		$	9.82
Total return	12.07		%	22.01		%	-25.35		%	-3.18		%	-15.62		%
Net assets, end of period (in millions)		$2			$2			$2			$4			$2
Ratio of expenses to average net assets		1.24	%		1.26	%		1.20	%		1.17	%		1.15	%
Ratio of net investment income (loss)       to average net assets		0.34	%		0.61	%		0.40	%	-0.03		%		-0.11	%
Portfolio turnover rate		42	%		59	%		39	%		22	%		39	%

(1)Core Equity Fund (formerly Total Return Fund) changed its name effective October 2, 2000.

See Notes to Financial Statements.

Manager's Discussion of Ivy High Income Fund
     March 31, 2005

An interview with Louise D. Rieke, CFA, CPA, portfolio manager of the Ivy High Income Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund showed a positive return during the fiscal year, but underperformed its benchmark index. Class C shares increased 3.90 percent for the fiscal year, compared with the Citigroup High Yield Market Index (generally reflecting the performance of securities that represent the high yield bond market), which increased 7.21 percent during the period, and the Lipper High Current Yield Funds Universe Average (reflecting the performance of the universe of funds with similar objectives), which increased 6.25 percent during the period. Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

Why did the Fund lag its benchmark index during the fiscal year?

We believe that underperformance was due primarily to the Fund's underweight versus the benchmark in the diversified telecommunications, utilities and gas pipeline sectors. However, we also feel that overweight positions in the chemical, gaming and leisure sectors, along with an underweight in the auto and auto supplier sectors, contributed positively to performance. Sector selection and holdings were the primary contributors to performance over the fiscal year.

What other market conditions or events influenced the Fund's performance during the fiscal year?

The high yield market had a solid, positive total return year, even in the face of the Federal Reserve raising rates from 1 percent on June 30, 2004, to 2.75 percent by March 31, 2005. The benchmark index outperformed the U.S. Treasury market, and the spreads between the high yield and Treasuries narrowed by 100 basis points. In addition, the spreads among the various rating categories had much different changes. The better quality sectors, such as BB and B1-rated securities, underperformed the lower-quality B2, B3 and CCC sectors. We believe that this can be attributed to a perceived lack of credit risk, or lack of defaults, and low inflation. The last three months of the fiscal year, January through March of 2005, were much different than the first nine months. We've recently seen more volatility due to greater concern over the direction of interest rates and inflation.

What strategies and techniques did you employ that specifically affected the Fund's performance?

The quality diversification of the Fund was shifted from the BB and B sectors to more B3 and CCC sectors. A good portion of the shift had taken place at the beginning of the fiscal year, in time to catch this move in spreads. The spreads for the B and CCC sectors then narrowed during the period.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

The Fund is now structured more defensively than it has been in past periods. We have used more short-maturity callable paper, as well as higher-coupon issues. Both of these types of securities are defensive in nature and are less sensitive to U.S. Treasury moves, in our opinion. Going forward, we intend to continue emphasis on these defensive securities, as well as to increase the non-cyclical sectors.

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

Comparison of Change in Value of
$10,000 Investment

Ivy High Income Fund, Class C Shares(1)	$	14,638
Citigroup High Yield Market Index	$	15,369
Lipper High Current Yield Funds Universe Average	$	13,851

IVY HIGH INCOME FUND CLASS C SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY HIGH INCOME FUND CLASS C SHARES	CITIGROUP HIGH YIELD MARKET INDEX	LIPPER HIGH CURRENT YIELD FUNDS UNIVERSE AVERAGE
Inception 7/31/97		10,000	10,000	10,000
MARCH	1998	11,177	10,868	10,837
MARCH	1999	10,986	10,982	10,734
MARCH	2000	11,005	10,720	10,791
MARCH	2001	11,025	11,010	10,618
MARCH	2002	11,860	11,164	10,545
MARCH	2003	12,114	11,713	10,879
MARCH	2004	14,089	14,336	13,036
MARCH	2005	14,638	15,369	13,851

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C(3)	Class Y
1-year period ended 3-31-05	-1.33%	-0.13%	3.90%	4.83%
5-year period ended 3-31-05	--	--	5.87%	6.75%
10-year period ended 3-31-05	--	--	--	--
Since inception of Class through 3-31-05(4)	5.76%	5.86%	5.09%	5.93%

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

(3)Performance data from 3-24-00 represents the actual performance of Class C shares. Performance data prior to 3-24-00 represents the performance of the Fund's original Class B shares. The original Class B shares were combined with Class C shares effective 3-24-00, and redesignated as Class C shares. The original Class B's performance has been adjusted to reflect the current contingent deferred sales charge (CDSC) structure applicable to Class C (1.00% maximum and declining to zero at the end of the first year after investment). Accordingly, these returns reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase. New Class B shares, with fees and expenses different from the original Class B shares, were added to the Fund on 6-30-00.

(4)7-3-00 for Class A shares, 7-18-00 for Class B shares, 7-31-97 for Class C shares and 12-30-98 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY HIGH INCOME FUND
Portfolio Highlights

On March 31, 2005, Ivy High Income Fund had net assets totaling $68,084,842 invested in a diversified portfolio of:

88.96%	Corporate Debt Securities
8.55%	Cash and Cash Equivalents
2.49%	Common and Preferred Stocks, Right and Warrant

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Utilities Bonds	$	11.84
Consumer Services Bonds	$	10.45
Capital Goods Bonds	$	9.71
Consumer Nondurables Bonds	$	9.30
Cash and Cash Equivalents	$	8.55
Energy Bonds	$	7.19
Health Care Bonds	$	5.76
Shelter Bonds	$	5.72
Business Equipment and Services Bonds	$	5.41
Financial Services Bonds	$	5.28
Retail Bonds	$	4.95
Technology Bonds	$	4.75
Raw Materials Bonds	$	4.23
Consumer Durables Bonds	$	2.88
Common and Preferred Stocks, Right and Warrant	$	2.49
Miscellaneous Bonds	$	1.49

On March 31, 2005, the breakdown of bonds (by ratings) held by the Fund was as follows:

A	0.42	%
BBB	1.11	%
BB	8.41	%
B	59.85	%
CCC	18.78	%
Non-rated	0.39	%
Cash and Cash Equivalents and Equities	11.04	%

The Investments of Ivy High Income Fund
March 31, 2005
COMMON STOCKS, RIGHT AND WARRANT	Shares		Value
Aluminum - 0.06%
Century Aluminum Company*	1,300	$	39,293
Chemicals - Petroleum and Inorganic - 0.30%
UAP Holding Corp.*	12,800		205,952
Coal - 0.13%
Foundation Coal Holdings, Inc.	3,800		89,338
Finance Companies - 0.01%
ONO Finance Plc, Rights (A)*	250		5,500
Hospital Supply and Management - 0.12%
Psychiatric Solutions, Inc.*	1,800		82,764
Hotels and Gaming - 0.43%
Orient-Express Hotels Ltd.	11,300		294,930
Multiple Industry - 0.22%
Dollar Financial Corp.*	12,500		149,750
Petroleum - International - 0.45%
Forest Oil Corporation*	7,600		307,800
Utilities - Gas and Pipeline - 0.27%
Williams Companies, Inc. (The)	9,600		180,576
Utilities - Telephone - 0.26%
IWO Holdings, Inc., Warrants (A)*	250		2
SBA Communications Corporation*	7,700		70,301
US Unwired Inc.*	25,280		106,302
			176,605
TOTAL COMMON STOCKS, RIGHT AND WARRANT - 2.25%		$	1,532,508
(Cost: $1,400,380)

PREFERRED STOCKS
Apparel - 0.23%
Anvil Holdings, Inc., 13.0%*		14,774		151,435
Broadcasting - 0.01%
Adelphia Communications Corporation,13.0%*		2,500		8,125
TOTAL PREFERRED STOCKS - 0.24%			$	159,560
(Cost: $520,004)
CORPORATE DEBT SECURITIES	Principal Amount in Thousands
Aircraft - 2.18%
Argo-Tech Corporation,
9.25%, 6-1-11	$	75		80,625
BE Aerospace, Inc.,
8.5%, 10-1-10		200		218,000
Bombardier Recreational Products Inc.,
8.375%, 12-15-13		75		79,500
Esterline Technologies Corporation,
7.75%, 6-15-13		250		260,000
L-3 Communications Corporation,
6.125%, 1-15-14		300		295,500
Orbital Sciences Corporation,
9.0%, 7-15-11		500		548,750
				1,482,375
Aluminum - 0.37%
Century Aluminum Company,
7.5%, 8-15-14		250		252,500
Apparel - 1.26%
Anvil Knitwear, Inc.,
10.875%, 3-15-07		100		84,500
Perry Ellis International, Inc.,
8.875%, 9-15-13		750		772,500
				857,000
Beverages - 0.39%
Constellation Brands, Inc.,
8.125%, 1-15-12		250		267,500

Broadcasting - 3.00%
CCH II and CCH II Capital,
10.25%, 9-15-10	320			326,400
Charter Communications Operating, LLC and Charter       Communications Operating Capital Corp.,
8.0%, 4-30-12 (A)		300		298,500
Entravision Communications Corporation,
8.125%, 3-15-09		100		104,250
Gray Communications Systems, Inc.,
9.25%, 12-15-11		375		405,000
Insight Communications Company, Inc.,
0.0%, 2-15-11 (B)		250		248,750
NTL Cable PLC,
8.75%, 4-15-14 (A)		125		134,687
Nexstar Broadcasting, Inc.,
7.0%, 1-15-14		175		165,375
Susquehanna Media Co.,
7.375%, 4-15-13		250		257,500
Young Broadcasting Inc.,
8.5%, 12-15-08		100		104,750
				2,045,212
Business Equipment and Services - 5.41%
Alderwoods Group, Inc.,
7.75%, 9-15-12 (A)		625		639,062
Carriage Services, Inc.,
7.875%, 1-15-15 (A)		250		251,250
Iron Mountain Incorporated,
8.625%, 4-1-13		300		303,000
MagnaChip Semiconductor S.A. and MagnaChip       Semiconductor Finance Company:
5.76%, 12-15-11 (A)		550		563,750
8.0%, 12-15-14 (A)		50		51,125
Owens & Minor, Inc.,
8.5%, 7-15-11		250		266,250
Synagro Technologies, Inc.,
9.5%, 4-1-09		500		543,750
UCAR Finance Inc.,
10.25%, 2-15-12		275		294,250
Vertis, Inc.:
9.75%, 4-1-09		25		26,125
10.875%, 6-15-09		500		482,500
13.5%, 12-7-09 (A)		325		264,875
				3,685,937
Capital Equipment - 2.54%
Case New Holland Inc.,
9.25%, 8-1-11 (A)	400			426,000
Dresser-Rand Group Inc.,
7.375%, 11-1-14 (A)		250		250,000
GEO Sub Corp.,
11.0%, 5-15-12		250		256,250
IMCO Recycling Inc.,
10.375%, 10-15-10		75		83,250
Mueller Group, Inc.:
7.4925%, 11-1-11		100		101,500
10.0%, 5-1-12		275		297,000
Simmons Company,
0.0%, 12-15-14 (A)(B)		500		312,500
				1,726,500
Chemicals - Petroleum and Inorganic - 1.75%
PolyOne Corporation,
8.875%, 5-1-12		500		535,000
Resolution Performance Products LLC and       RPP Capital Corporation:
9.5%, 4-15-10		250		266,250
13.5%, 11-15-10		175		189,000
UAP Holding Corp.,
0.0%, 7-15-12 (B)		250		198,750
				1,189,000
Chemicals - Specialty - 2.11%
Compass Minerals International, Inc.,
0.0%, 6-1-13 (B)		1,000		830,000
Ethyl Corporation,
8.875%, 5-1-10		475		508,250
PQ Corporation,
7.5%, 2-15-13 (A)		100		98,500
				1,436,750
Coal - 0.99%
Foundation PA Coal Company,
7.25%, 8-1-14		400		406,000
Southern Star Central Corp.,
8.5%, 8-1-10		250		266,250
				672,250
Communications Equipment - 0.78%
AirGate PCS, Inc.,
6.41%, 10-15-11 (A)	250			255,000
General Cable Corporation,
9.5%, 11-15-10		250		275,000
				530,000
Computers - Peripherals - 1.11%
ASG Consolidated LLC and ASG Finance, Inc.,
0.0%, 11-1-11 (A)(B)		625		437,500
Activant Solutions Inc.:
9.09%, 4-1-10 (A)		50		51,000
10.5%, 6-15-11		250		266,250
				754,750
Construction Materials - 6.41%
AMH Holdings, Inc.,
0.0%, 3-1-14 (B)		350		243,250
Ames True Temper, Inc.,
10.0%, 7-15-12		125		106,250
Associated Materials Incorporated,
9.75%, 4-15-12		505		542,875
Brand Services, Inc.,
12.0%, 10-15-12		100		111,000
Builders FirstSource, Inc.,
7.02438%, 2-15-12 (A)		400		394,000
Interface, Inc.:
10.375%, 2-1-10		250		280,000
9.5%, 2-1-14		250		263,125
Jacuzzi Brands, Inc.,
9.625%, 7-1-10		500		550,000
MAAX Corporation,
9.75%, 6-15-12		500		510,000
Norcraft Holdings, L.P. and Norcraft Capital Corp.,
9.0%, 11-1-11		500		517,500
Nortek, Inc.,
8.5%, 9-1-14		350		337,750
Ply Gem Industries, Inc.,
9.0%, 2-15-12		400		378,000
WII Components, Inc.,
10.0%, 2-15-12		125		128,125
				4,361,875
Containers - 3.65%
Alltrista Corporation,
9.75%, 5-1-12	250			266,250
Constar International Inc.,
6.14938%, 2-15-12 (A)		100		100,000
Crown European Holdings,
9.5%, 3-1-11		500		548,750
Graham Packaging Company, L.P. and GPC Capital Corp. I :
8.5%, 10-15-12 (A)		50		50,000
9.875%, 10-15-14 (A)		100		100,000
MDP Acquisitions plc,
9.625%, 10-1-12		280		301,000
Owens-Brockway Glass Container Inc.,
8.75%, 11-15-12		520		568,100
Pliant Corporation,
0.0%, 6-15-09 (B)		500		450,000
Stone Container Finance Company of Canada II,
7.375%, 7-15-14		100		99,000
				2,483,100
Cosmetics and Toiletries - 0.37%
Chattem, Inc.,
7.0%, 3-1-14		250		251,250
Defense - 0.54%
Armor Holdings, Inc.,
8.25%, 8-15-13		250		269,375
DRS Technologies, Inc.,
6.875%, 11-1-13		100		100,000
				369,375
Electrical Equipment - 0.76%
Coleman Cable Inc.,
9.875%, 10-1-12 (A)		400		408,000
Rexnord Corporation,
10.125%, 12-15-12		100		110,000
				518,000
Electronic Instruments - 0.14%
Fisher Scientific International Inc.,
8.125%, 5-1-12		87		94,395
Finance Companies - 4.27%
Dollar Financial Group, Inc.,
9.75%, 11-15-11	150			159,750
Ferrellgas Partners, L.P. and Ferrellgas Partners       Finance Corp.,
8.75%, 6-15-12		335		348,400
Goodman Global Holdings, Inc.,
7.875%, 12-15-12 (A)		300		274,500
Hanover Equipment Trust 2001B,
8.75%, 9-1-11		150		158,250
IWO Escrow Company:
6.32%, 1-15-12 (A)		50		51,000
0.0%, 1-15-15 (A)(B)		250		160,000
MSW Energy Holdings LLC and MSW Energy       Finance Co., Inc.,
8.5%, 9-1-10		100		105,000
Norcraft Companies, L.P. and Norcraft Finance Corp.,
0.0%, 9-1-12 (B)		500		355,000
Standard Aero Holdings, Inc.,
8.25%, 9-1-14 (A)		250		258,750
Toll Corp.,
8.0%, 5-1-09		500		507,500
Vanguard Health Holding Company II, LLC and       Vanguard Holding Company II, Inc.,
9.0%, 10-1-14		500		526,250
				2,904,400
Food and Related - 3.25%
American Seafoods Group LLC and American       Seafoods, Inc.,
10.125%, 4-15-10		425		459,000
Doane Pet Care Company,
10.75%, 3-1-10		300		318,000
Merisant Company,
10.25%, 7-15-13 (A)		150		129,000
Pierre Merger Corp.,
9.875%, 7-15-12		475		497,563
Pilgrim's Pride Corporation,
9.25%, 11-15-13		150		165,000
Pinnacle Foods Holding Corporation,
8.25%, 12-1-13		750		641,250
				2,209,813
Forest and Paper Products - 4.12%
Buckeye Cellulose Corporation,
9.25%, 9-15-08	116			115,420
Buckeye Technologies Inc.:
8.0%, 10-15-10		500		495,000
8.5%, 10-1-13		250		262,500
Cellu Tissue Holdings, Inc.,
9.75%, 3-15-10		500		515,000
Georgia-Pacific Corporation:
7.375%, 7-15-08		300		314,250
8.875%, 2-1-10		200		223,250
8.0%, 1-15-24		150		167,250
Mercer International Inc.,
9.25%, 2-15-13		500		472,500
Tembec Industries Inc.,
8.625%, 6-30-09		250		241,250
				2,806,420
Health Care - General - 2.39%
Ardent Health Services, Inc.,
10.0%, 8-15-13		250		296,250
Encore Medical IHC, Inc.,
9.75%, 10-1-12 (A)		500		487,500
Eye Care Centers of America, Inc.,
10.75%, 2-15-15 (A)		400		382,000
MQ Associates, Inc.,
0.0%, 8-15-12 (B)		625		356,250
Medical Device Manufacturing, Inc.,
10.0%, 7-15-12		100		107,000
				1,629,000
Homebuilders, Mobile Homes - 0.84%
Meritage Corporation,
7.0%, 5-1-14		200		200,000
Technical Olympic USA, Inc.:
7.5%, 3-15-11		150		144,000
7.5%, 1-15-15 (A)		250		231,250
				575,250
Hospital Supply and Management - 3.37%
EGL Acquisition Corp.,
7.625%, 2-1-15 (A)		200		200,000
Psychiatric Solutions, Inc.,
10.625%, 6-15-13		516		572,760
Rural/Metro Corporation,
0.0%, 3-15-16 (A)(B)		500		246,300
Rural/Metro Operating Company, LLC and       Rural/Metro (Delaware) Inc.,
9.875%, 3-15-15 (A)		125		128,438
Triad Hospitals, Inc.,
7.0%, 11-15-13		250		245,625
US Oncology Holdings, Inc.,
8.62%, 3-15-15 (A)		250		235,625
US Oncology, Inc.,
9.0%, 8-15-12 (A)		500		527,500
United Surgical Partners Holdings, Inc.,
10.0%, 12-15-11		125		137,813
				2,294,061
Hotels and Gaming - 2.29%
Inn of the Mountain Gods Resort and Casino,
12.0%, 11-15-10		435		511,125
John Q Hammons Hotels, L.P. and John Q Hammons       Hotels Finance Corporation III,
8.875%, 5-15-12		300		321,750
MGM MIRAGE,
8.5%, 9-15-10		250		273,750
Pinnacle Entertainment, Inc.,
8.25%, 3-15-12		250		250,000
Premier Entertainment Biloxi LLC and Premier       Finance Biloxi Corp.,
10.75%, 2-1-12		100		102,000
Turning Stone Casino Resort Enterprise,
9.125%, 12-15-10 (A)		100		103,875
				1,562,500
Household - General Products - 0.38%
Sealy Mattress Company,
8.25%, 6-15-14		250		260,625
Leisure Time Industry - 0.40%
Royal Caribbean Cruises Ltd.,
8.0%, 5-15-10		250		274,687
Motion Pictures - 3.46%
Carmike Cinemas, Inc.,
7.5%, 2-15-14		500		490,625
Cinemark, Inc.,
0.0%, 3-15-14 (B)		900		639,000
Cinemark USA, Inc.,
9.0%, 2-1-13		100		108,500
LCE Acquisition Corporation,
9.0%, 8-1-14 (A)		1,125		1,119,375
				2,357,500
Motor Vehicle Parts - 0.65%
Tenneco Automotive Inc.,
10.25%, 7-15-13	400			446,000
Motor Vehicles - 2.23%
AutoNation, Inc.,
9.0%, 8-1-08		250		275,000
Group 1 Automotive, Inc.,
8.25%, 8-15-13		125		126,250
Sonic Automotive, Inc.,
8.625%, 8-15-13		750		746,250
United Auto Group, Inc.,
9.625%, 3-15-12		350		369,250
				1,516,750
Multiple Industry - 0.97%
AMR HoldCo, Inc. and EmCare HoldCo, Inc.,
10.0%, 2-15-15 (A)		50		52,000
Boise Cascade, L.L.C. and Boise Cascade       Finance Corporation,
7.125%, 10-15-14 (A)		150		151,875
CBD Media Holdings LLC and CBD Holdings       Finance, Inc.,
9.25%, 7-15-12		200		204,000
K&F Acquisition, Inc.,
7.75%, 11-15-14 (A)		100		97,000
Tyco International Group S.A.,
3.125%, 1-15-23 Convertible (A)		100		158,250
				663,125
Petroleum - Domestic - 2.59%
Coastal Corporation (The),
9.625%, 5-15-12		665		724,850
Delta Petroleum Corporation,
7.0%, 4-1-15 (A)		50		48,250
EXCO Resources, Inc.,
7.25%, 1-15-11		350		355,250
Encore Acquisition Company,
8.375%, 6-15-12		100		108,000
Frontier Oil Corporation,
6.625%, 10-1-11		50		49,750
KCS Energy, Inc.,
7.125%, 4-1-12		100		101,000
Stone Energy Corporation,
6.75%, 12-15-14		125		121,250
Venoco, Inc.,
8.75%, 12-15-11 (A)	125			128,750
Whiting Petroleum Corporation,
7.25%, 5-1-12		125		126,250
				1,763,350
Petroleum - International - 0.33%
Inergy, L.P. and Inergy Finance Corp.,
6.875%, 12-15-14 (A)		100		96,000
Newfield Exploration Company,
6.625%, 9-1-14		125		126,563
				222,563
Petroleum - Services - 3.28%
Colorado Interstate Gas Company,
10.0%, 6-15-05		500		505,169
Hanover Compressor Company:
0.0%, 3-31-07		375		330,000
8.625%, 12-15-10		650		679,250
9.0%, 6-1-14		100		107,000
Pemex Project Funding Master Trust,
7.375%, 12-15-14		300		321,000
R&B Falcon Corporation,
9.5%, 12-15-08		250		288,562
				2,230,981
Publishing - 1.30%
Advertising Directory Solutions Holdings Inc.,
9.25%, 11-15-12 (A)		125		131,250
Dex Media East LLC and Dex Media East Finance Co.,
12.125%, 11-15-12		97		114,945
Dex Media, Inc.,
8.0%, 11-15-13		250		258,750
Dex Media West LLC and Dex Media West Finance Co.:
8.5%, 8-15-10		100		106,750
9.875%, 8-15-13		244		272,060
				883,755
Railroad - 0.52%
Kansas City Southern Railway Company (The),
7.5%, 6-15-09		350		357,000
Real Estate Investment Trust - 0.76%
Host Marriott, L.P.:
9.25%, 10-1-07	250			267,500
7.125%, 11-1-13		250		248,125
				515,625
Restaurants - 0.47%
Carrols Corporation,
9.0%, 1-15-13 (A)		50		51,500
Landry's Restaurants, Inc.,
7.5%, 12-15-14 (A)		275		266,750
				318,250
Retail - Food Stores - 1.09%
Couche-Tard U.S. L.P. and Couche-Tard Financing Corp.,
7.5%, 12-15-13		150		157,500
Domino's Inc.,
8.25%, 7-1-11		110		114,950
Roundy's, Inc.,
8.875%, 6-15-12		300		321,000
Stater Bros. Holdings Inc.,
6.51%, 6-15-10		150		148,500
				741,950
Retail - Specialty Stores - 3.39%
CSK Auto, Inc.,
7.0%, 1-15-14		500		471,875
FTD, Inc.,
7.75%, 2-15-14		300		307,500
Jo-Ann Stores, Inc.,
7.5%, 3-1-12		500		510,625
Nebraska Book Company, Inc.,
8.625%, 3-15-12		1,050		1,015,875
				2,305,875
Security and Commodity Brokers - 1.01%
Global Cash Access, L.L.C. and Global Cash Access       Finance Corporation,
8.75%, 3-15-12		650		689,000
Utilities - Electric - 0.62%
DPL Inc.,
8.25%, 3-1-07	350			370,909
Texas Genco LLC and Texas Genco Financing Corp.,
6.875%, 12-15-14 (A)		50		50,125
				421,034
Utilities - Gas and Pipeline - 2.06%
ANR Pipeline Company,
8.875%, 3-15-10		100		108,141
AmeriGas Partners, L.P. and AP Eagle Finance Corp.,
8.875%, 5-20-11		100		106,000
Northwest Pipeline Corporation,
8.125%, 3-1-10		450		481,500
Williams Companies, Inc. (The):
8.125%, 3-15-12		250		273,750
7.75%, 6-15-31		400		432,000
				1,401,391
Utilities - Telephone - 9.16%
Alamosa (Delaware), Inc.:
0.0%, 7-31-09 (B)		500		543,750
8.5%, 1-31-12		175		181,344
American Tower Corporation:
9.375%, 2-1-09		168		176,400
7.5%, 5-1-12		250		253,750
American Towers, Inc.,
7.25%, 12-1-11		250		258,125
Centennial Cellular Corp. and Centennial Cellular       Operating Co. LLC,
10.75%, 12-15-08		155		159,650
Centennial Communications Corp., Centennial Cellular       Operating Co. LLC and Centennial Puerto Rico       Operations Corp.,
8.125%, 2-1-14		100		102,500
Crown Castle International Corp.:
9.375%, 8-1-11		314		341,475
7.5%, 12-1-13		250		274,375
MCI, Inc.,
6.908%, 5-1-07	503			511,802
Nextel Communications, Inc.:
5.95%, 3-15-14		300		298,500
7.375%, 8-1-15		500		528,125
Nextel Partners, Inc.,
8.125%, 7-1-11		400		425,000
Qwest Capital Funding, Inc.,
7.75%, 8-15-06		250		252,813
Qwest Services Corporation and Qwest Communications       International Inc.,
13.5%, 12-15-07 (A)		500		556,250
SBA Communications Corporation,
8.5%, 12-1-12 (A)		350		362,250
US Unwired Inc.,
10.0%, 6-15-12		750		830,625
Ubiquitel Operating Company,
9.875%, 3-1-11 (A)		100		110,250
Valor Telecommunications Enterprises, LLC and Valor       Telecommunications Enterprises Finance Corp.,
7.75%, 2-15-15 (A)		75		74,625
				6,241,609
TOTAL CORPORATE DEBT SECURITIES - 88.96%			$	60,570,283
(Cost: $59,151,660)

SHORT-TERM SECURITIES
Retail - Food Stores
Kroger Co. (The):
2.92%, 4-1-05	3,292		3,292,000
2.85%, 4-5-05	800		799,747
TOTAL SHORT-TERM SECURITIES - 6.01%		$	4,091,747
(Cost: $4,091,747)
TOTAL INVESTMENT SECURITIES - 97.46%		$	66,354,098
(Cost: $65,163,791)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.54%			1,730,744
NET ASSETS - 100.00%		$	68,084,842

Notes to Schedule of Investments

      *No dividends were paid during the preceding 12 months.

(A)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2005, the total value of these securities amounted to $11,961,489 or 17.57% of net assets.

(B)The security does not bear interest for an initial period of time and subsequently becomes interest bearing.

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

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

Statement of Assets and Liabilities
     IVY HIGH INCOME FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $65,164) (Notes 1 and 3)	$	66,354
Cash		1
Receivables:
Dividends and interest		1,183
Investment securities sold		675
Fund shares sold		149
Prepaid and other assets		15
Total assets		68,377
LIABILITIES
Payable to Fund shareholders		205
Dividends payable		45
Accrued shareholder servicing (Note 2)		23
Accrued accounting services fee (Note 2)		4
Accrued distribution and service fees (Note 2)		1
Accrued management fee (Note 2)		1
Other		13
Total liabilities		292
Total net assets	$	68,085
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	78
Additional paid-in capital		70,847
Accumulated undistributed income (loss):
Accumulated undistributed net realized loss                 on investment transactions		(4,030	)
Net unrealized appreciation in value of investments		1,190
Net assets applicable to outstanding units of capital	$	68,085
Net asset value per share (net assets divided by shares outstanding):
Class A	$8.69
Class B	$8.69
Class C	$8.69
Class Y	$8.69
Capital shares outstanding:
Class A		3,642
Class B		610
Class C		2,520
Class Y		1,067
Capital shares authorized	200,000

See Notes to Financial Statements.

Statement of Operations
     IVY HIGH INCOME FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	4,754
Dividends		9
Total income		4,763
Expenses (Note 2):
Investment management fee		378
Distribution fee:
Class A		27
Class B		33
Class C		168
Shareholder servicing:
Class A		70
Class B		18
Class C		67
Class Y		15
Service fee:
Class A		33
Class B		11
Class C		56
Class Y		25
Accounting services fee		44
Audit fees		15
Custodian fees		11
Legal fees		11
Other		84
Total expenses		1,066
Net investment income		3,697
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		576
Unrealized depreciation in value of investments during the period	(1,808		)
Net loss on investments	(1,232		)
Net increase in net assets resulting from operations	$	2,465

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE IN NET ASSETS
Operations:
Net investment income	$	3,697		$	2,761
Realized net gain on investments		576			1,460
Unrealized appreciation (depreciation)		(1,808	)		2,221
Net increase in net assets resulting from operations		2,465			6,442
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(1,535	)		(719	)
Class B		(243	)		(145	)
Class C		(1,278	)		(1,244	)
Class Y		(649	)		(645	)
Realized gains on investment transactions:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
		(3,705	)		(2,753	)
Capital share transactions (Note 5)		15,117			20,419
Total increase		13,877			24,108
NET ASSETS
Beginning of period		54,208			30,100
End of period	$	68,085		$	54,208
Undistributed net investment income	$	-		$	8

(1)See "Financial Highlights" on pages 82 - 85.

See Notes to Financial Statements.

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

		For the fiscal year ended March 31,												For the period from 7-3-00(1) to
		2005			2004			2003			2002			3-31-01
Net asset value, beginning of period		$	8.85		$	8.07		$	8.48		$	8.54		$	9.04
Income (loss) from investment operations:
Net investment income			0.57			0.56			0.64			0.74			0.58
Net realized and unrealized             gain (loss) on investments		(0.16		)		0.78		(0.41		)	(0.06		)	(0.50		)
Total from investment operations			0.41			1.34			0.23			0.68			0.08
Less distributions from:
Net investment income		(0.57		)	(0.56		)	(0.64		)	(0.74		)	(0.58		)
Capital gains		(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Total distributions		(0.57		)	(0.56		)	(0.64		)	(0.74		)	(0.58		)
Net asset value, end of period		$	8.69		$	8.85		$	8.07		$	8.48		$	8.54
Total return(2)			4.69	%	17.24		%		3.02	%		8.46	%		0.90
Net assets, end of period (in thousands)	$31,633			$18,036			$6,269			$1,895				$442
Ratio of expenses to average       net assets including       voluntary expense waiver			1.44	%		1.39	%		0.91	%		0.84	%		1.05	%(3)
Ratio of net investment income       to average net assets including       voluntary expense waiver			6.43	%		6.62	%		7.83	%		9.00	%		9.01	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver			-	(4)		-	(4)		1.44	%		1.14	%		1.42	%(3)
Ratio of net investment income       to average net assets excluding       voluntary expense waiver			-	(4)		-	(4)		7.30	%		8.70	%		8.64	%(3)
Portfolio turnover rate			54	%		78	%		52	%		82	%		115	%(5)

(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.
(4)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.
(5)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-18-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	8.85		$	8.07		$	8.48		$	8.54		$	9.03
Income (loss) from investment operations:
Net investment income		0.49			0.50			0.56			0.68			0.48
Net realized and unrealized             gain (loss) on investments	(0.16		)		0.78		(0.41		)	(0.06		)	(0.49		)
Total from investment operations	0.33				1.28			0.15			0.62		(0.01		)
Less distributions from:
Net investment income	(0.49		)	(0.50		)	(0.56		)	(0.68		)	(0.48		)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Total distributions	(0.49		)	(0.50		)	(0.56		)	(0.68		)	(0.48		)
Net asset value, end of period	$	8.69		$	8.85		$	8.07		$	8.48		$	8.54
Total return		3.80	%	16.22		%		2.06	%		7.64	%		0.09	%
Net assets, end of period (in millions)	$5			$4			$2			$1			$1
Ratio of expenses to average       net assets including       voluntary expense waiver		2.31	%		2.28	%		1.84	%		1.74	%		1.85	%(2)
Ratio of net investment income       to average net assets including       voluntary expense waiver		5.56	%		5.78	%		6.90	%		8.09	%		8.30	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		-	(3)		-	(3)		2.37	%		2.36	%		2.50	%(2)
Ratio of net investment income       to average net assets excluding       voluntary expense waiver		-	(3)		-	(3)		6.37	%		7.47	%		7.65	%(2)
Portfolio turnover rate		54	%		78	%		52	%		82	%		115	%(4)

(1)Commencement of operations of the class.
(2)Annualized.
(3)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.
(4)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	8.85		$	8.07		$	8.48		$	8.54		$	9.27
Income (loss) from investment operations:
Net investment income		0.50			0.50			0.57			0.68			0.73
Net realized and unrealized             gain (loss) on investments	(0.16		)		0.78		(0.41		)	(0.06		)	(0.73		)
Total from investment operations		0.34			1.28			0.16			0.62			0.00
Less distributions from:
Net investment income	(0.50		)	(0.50		)	(0.57		)	(0.68		)	(0.73		)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Total distributions	(0.50		)	(0.50		)	(0.57		)	(0.68		)	(0.73		)
Net asset value, end of period	$	8.69		$	8.85		$	8.07		$	8.48		$	8.54
Total return		3.90	%	16.30		%		2.15	%		7.58	%		0.18	%
Net assets, end of period (in millions)	$22			$23			$18			$17			$19
Ratio of expenses to average       net assets including       voluntary expense waiver		2.20	%		2.21	%		1.74	%		1.82	%		1.78	%
Ratio of net investment income to       average net assets including       voluntary expense waiver		5.67	%		5.89	%		7.05	%		8.01	%		8.38	%
Ratio of expenses to average       net assets excluding       voluntary expense waiver		-	(1)		-	(1)		2.27	%		2.46	%		2.41	%
Ratio of net investment income to       average net assets excluding       voluntary expense waiver		-	(1)		-	(1)		6.52	%		7.36	%		7.75	%
Portfolio turnover rate		54	%		78	%		52	%		82	%		115	%

(1)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.

See Notes to Financial Statements.

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

		For the fiscal year ended March 31,
		2005			2004			2003			2002			2001
Net asset value, beginning of period		$	8.85		$	8.07		$	8.48		$	8.54		$	9.27
Income (loss) from investment operations:
Net investment income			0.58			0.58			0.64			0.75			0.78
Net realized and unrealized             gain (loss) on investments		(0.16		)		0.78		(0.41		)	(0.06		)	(0.73		)
Total from investment operations			0.42			1.36			0.23			0.69			0.05
Less distributions from:
Net investment income		(0.58		)	(0.58		)	(0.64		)	(0.75		)	(0.78		)
Capital gains		(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Total distributions		(0.58		)	(0.58		)	(0.64		)	(0.75		)	(0.78		)
Net asset value, end of period		$	8.69		$	8.85		$	8.07		$	8.48		$	8.54
Total return			4.83	%	17.36		%		3.03	%		8.50	%		0.79	%
Net assets, end of period (in thousands)	$9,268			$9,698			$3,643				$64			$12
Ratio of expenses to average       net assets including       voluntary expense waiver			1.30	%		1.30	%		1.08	%		0.79	%		1.20	%
Ratio of net investment income to       average net assets including       voluntary expense waiver			6.57	%		6.82	%		7.22	%		8.99	%		8.95	%
Ratio of expenses to average       net assets excluding       voluntary expense waiver			-	(1)		-	(1)		1.61	%		1.08	%		1.62	%
Ratio of net investment income to       average net assets excluding       voluntary expense waiver			-	(1)		-	(1)		6.69	%		8.71	%		8.52	%
Portfolio turnover rate			54	%		78	%		52	%		82	%		115	%

(1)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.

See Notes to Financial Statements.

Manager's Discussion of
Ivy International Growth Fund
     March 31, 2005

An interview with Thomas A. Mengel, portfolio manager of the Ivy International Growth Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund showed a positive return for the period, but lagged its benchmark index. The Class C shares of the Fund increased 4.72 percent for the year. In comparison, the Morgan Stanley Capital International EAFE Index (generally reflecting the performance of securities that represent the international equity markets) increased 15.05 percent during the year, and the Lipper International Multi-Cap Growth Funds Universe Average (reflecting the performance of the universe of funds with similar objectives) increased 10.05 percent.*

Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

Why did the Fund lag its benchmark index during the fiscal year?

We believe that our stock selection was the biggest factor, as specific holdings negatively impacted performance for the fiscal year. Fund performance was particularly hurt by an overweight position in consumer-discretionary stocks in Europe, where domestic demand has been slow to recover.

What other market conditions or events influenced the Fund's performance during the fiscal year?

Financial markets were faced with sharp increases in energy prices during the year, as well as rising interest rates in the United States and several foreign countries. Deflationary fears faded early in the fiscal year, and were soon replaced by concerns of commodity-induced inflation. During the year, there were also periods of uncertainty over China's ability to manage its industrial growth. Foreign equity markets recovered late in 2004, but trended lower again by March of 2005 as slower economic growth became evident in most industrialized countries.

What strategies and techniques did you employ that specifically affected the Fund's performance?

For most of the fiscal year, the Fund was overweight in consumer-related shares, particularly discretionary spending selections in continental Europe, where domestic demand has been sluggish for several years. Corporate labor reform continues to reduce German business costs while boosting profitability, but workers continue to be impacted by stagnant wages and a weak hiring environment.

By the end of the period, our underweight position in Britain became quite extreme due to falling home prices, a broadly weakening economy and the risk of even higher interest rates.

What industries did you emphasize during the fiscal year, and what looks attractive to you going forward?

While the Fund was overweight in consumer sectors, its exposure to materials and industrials was quite limited early in the period. However, by the end of the fiscal year, our sector weights were trimmed to be much closer to benchmark levels.

We believe global financial markets will continue to be volatile in the coming months in reaction to energy price movements and economic responses. We are pleased to see continuing corporate labor reform in Germany, but will be closely monitoring political concerns that have developed in recent weeks in Britain, Canada and Mexico, including Britain's general election in early May.

We intend to continue to focus on what we feel are healthy companies that we believe can benefit from China's industrial expansion, particularly sector leaders with impressive pricing power. High-beta stocks will likely be avoided, along with regions that we feel are particularly vulnerable to higher interest rates, such as Latin America. In Japan and Asia, we intend to continue to focus on areas of strong domestic demand, which we believe could provide potential insulation from possible near-term external volatility.

*The Fund's Lipper classification was changed from the International Funds Universe to the International Multi-Cap Growth Funds Universe, effective June 30, 2004. The Lipper International Funds Universe Average increased 12.57 percent during the period. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

Comparison of Change in Value of
$10,000 Investment

Ivy International Growth Fund, Class C Shares(1)	$	21,321
Morgan Stanley Capital International EAFE Index	$	16,929
Lipper International Funds Universe Average	$	19,866
Lipper International Multi-Cap Growth Funds Universe Average	$	20,319

IVY INTERNATIONAL GROWTH FUND CLASS C SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY INTERNATIONAL GROWTH FUND CLASS C SHARES	MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX (WITH NET DIVIDENDS)	LIPPER INTERNATIONAL FUNDS UNIVERSE AVERAGE	LIPPER INTERNATIONAL MULTI-CAP GROWTH FUNDS UNIVERSE AVERAGE
MARCH	1995	10,000	10,000	10,000	10,000
MARCH	1996	10,764	11,233	11,759	11,904
MARCH	1997	13,439	11,396	13,041	13,439
MARCH	1998	18,174	13,517	15,753	16,185
MARCH	1999	20,056	14,337	15,784	16,485
MARCH	2000	39,691	17,934	22,136	26,466
MARCH	2001	23,636	13,293	16,169	17,173
MARCH	2002	19,210	12,167	15,125	15,934
MARCH	2003	14,670	9,339	11,465	11,916
MARCH	2004	20,360	14,714	17,648	18,463
MARCH	2005	21,321	16,929	19,866	20,319

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C(3)	Class Y
1-year period ended 3-31-05	-0.42%	0.55%	4.72%	6.09%
5-year period ended 3-31-05	--	--	-11.69%	-10.55%
10-year period ended 3-31-05	--	--	7.87%	--
Since inception of Class through 3-31-05(4)	-9.63%	-9.93%	--	9.13%

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

(3)Performance data from 3-24-00 represents the actual performance of Class C shares. Performance data prior to 3-24-00 represents the performance of the Fund's original Class B shares. The original Class B shares were combined with Class C shares effective 3-24-00, and redesignated as Class C shares. The original Class B's performance has been adjusted to reflect the current contingent deferred sales charge (CDSC) structure applicable to Class C (1.00% maximum and declining to zero at the end of the first year after investment). Accordingly, these returns reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase. New Class B shares, with fees and expenses different from the original Class B shares, were added to the Fund on 6-30-00.

(4)7-3-00 for Class A shares, 7-10-00 for Class B shares and 12-29-95 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY INTERNATIONAL GROWTH FUND
Portfolio Highlights

On March 31, 2005, Ivy International Growth Fund had net assets totaling $66,862,646 invested in a diversified portfolio of:

97.67%	Common Stocks
2.33%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005, your Fund was invested by geographic region and by industry, respectively, as follows:

Europe	$	67.09
Pacific Basin	$	26.07
Cash and Cash Equivalents	$	2.33
Canada	$	2.08
Mexico	$	0.96
United States	$	0.92
Scandinavia	$	0.55
Financial Services Stocks	$	23.22
Utilities Stocks	$	12.47
Capital Goods Stocks	$	11.96
Energy Stocks	$	10.01
Business Equipment and Services Stocks	$	7.61
Health Care Stocks	$	7.21
Consumer Services Stocks	$	6.14
Technology Stocks	$	4.60
Consumer Nondurables Stocks	$	4.35
Retail Stocks	$	3.98
Miscellaneous Stocks	$	3.44
Raw Materials Stocks	$	2.68
Cash and Cash Equivalents	$	2.33

The Investments of Ivy International Growth Fund
March 31, 2005
COMMON STOCKS		Shares		Value
Australia - 4.37%
Australia and New Zealand Banking Group Limited (A)		28,800	$	458,932
Novogen LTD (A)*		474,580		1,778,764
Westpac Banking Corporation (A)		46,600		685,317
				2,923,013
Austria - 2.88%
Bank Austria Creditanstalt (A)		10,000		985,644
Erste Bank der oesterreichischen Sparkassen AG (A)		18,000		941,938
				1,927,582
Belgium - 1.50%
KBC Group NV (A)*		11,900		1,003,924
Canada - 2.08%
EnCana Corporation (A)		12,600		889,749
Shoppers Drug Mart Corporation (A)(B)*		15,100		503,749
				1,393,498
China - 0.81%
China Mobile (Hong Kong) Limited (A)		165,000		539,458
France - 9.05%
France Telecom (A)		24,000		719,001
JCDecaux S.A. (A)*		30,000		819,381
Lafarge (A)		4,600		445,641
Publicis Groupe S.A. (A)		10,900		334,745
Sanofi-Aventis (A)		9,800		826,761
Total S.A. (A)		7,720		1,807,178
VINCI (A)		7,600		1,096,036
				6,048,743
Germany - 11.21%
Allianz Aktiengesellschaft, Registered Shares (A)		11,400		1,448,453
BASF Aktiengesellschaft (A)		10,600		751,281
Continental Aktiengesellschaft (A)		9,600		743,279
E.ON AG (A)		7,900		677,228
Fresenius AG (A)		2,100		243,698
Linde Aktiengesellschaft (A)		15,400		1,057,931
ProSieben- Sat.1 Meida Aktiengesellschaft (A)		40,000		742,346
SAP Aktiengesellschaft (A)		3,900		626,169
Siemens AG (A)		15,300		1,207,817
				7,498,202
Greece - 1.62%
Alpha Bank (A)		5,000		168,986
Alpha Bank (A)(B)		27,000		912,525
				1,081,511
Ireland - 1.77%
Anglo Irish Bank Corporation plc (Ireland) (A)		20,000		500,603
CRH public limited company (A)		26,000		683,492
				1,184,095
Italy - 4.10%
Assicurazioni Generali SpA (A)		14,900		481,163
Banco Popolare di Verona e Novara S.c. a r.l. (A)		30,500		569,203
Eni S.p.A. (A)		51,500		1,337,811
Saipem S.p.A. (A)		27,700		351,338
				2,739,515
Japan - 19.92%
ACOM CO., LTD. (A)		8,100		547,706
Asahi Glass Company, Limited (A)		46,000		484,798
Bank of Yokohama, Ltd. (The) (A)(B)		130,000		792,949
Canon Inc. (A)		20,930		1,122,435
East Japan Railway Company (A)		162		870,285
Hokuto Corporation (A)		20		349
Honda Motor Co., Ltd. (A)		8,800		440,739
Hoya Corporation (A)		6,600		726,357
Kabushiki Kaisha Mitsubishi Tokyo Financial Group (A)		83		719,922
Mitsubishi Corporation (A)		48,000		621,824
Mizuho Financial Group, Inc. (A)		72		340,459
Nihon Densan Kabushiki Kaisha (A)		6,700		834,219
Nikko Cordial Corporation (A)		70,000		349,935
Nomura Holdings, Inc. (A)		27,600		386,122
ORIX Corporation (A)		5,500		701,222
SMC Corporation (A)		3,000		339,396
Sega Sammy Holdings Inc. (A)*		11,000		668,905
Shinsei Bank, Limited (A)		58,000		329,976
Shinsei Bank, Limited (A)(B)		98,000		557,545
Tokyo Electric Power Company, Incorporated (The) (A)		14,300		346,764
Tokyo Gas Co., Ltd. (A)		168,000		676,889
Toyota Motor Corporation (A)		26,600		989,871
TOYOTA TSUSHO CORPORATION (A)		28,000		470,323
				13,318,990
Luxembourg - 0.49%
SES GLOBAL S.A., Fiduciary Deposit Receipt (A)		25,500		330,379
Mexico - 0.96%
Cemex, S.A. de C.V., ADR		17,700		641,625
Norway - 0.55%
Statoil ASA (A)		21,700		369,228
Russia - 1.95%
OAO LUKOIL, ADR		4,500		613,687
Open Joint Stock Company "Vimpel-Communications", ADR*		20,000		688,400
				1,302,087
South Korea - 0.97%
LG Chem, Ltd. (A)		16,000		645,987
Spain - 4.02%
Enagas, S.A. (A)		43,200		658,867
Gestevision Telecinco, S.A. (A)(B)*		50,000		1,163,319
Telefonica, S.A. (A)		49,500		862,802
				2,684,988
Switzerland - 9.54%
Compagnie Financiere Richemont SA (A)		15,500		486,847
Credit Suisse Group, Registered Shares (A)*		26,600		1,142,543
Holcim Ltd, Registered Shares (A)		15,300		941,292
Nestle S.A., Registered Shares (A)		4,400		1,204,433
Novartis AG, Registered Shares (A)		25,000		1,166,876
UBS AG (A)		17,000		1,436,219
				6,378,210
Turkey - 0.31%
Turkiye Garanti Bankasi Anonim Sirketi (A)		55,000		208,593
United Kingdom - 18.65%
BP p.l.c. (A)		161,500		1,672,974
British Sky Broadcasting Group plc (A)		60,810		666,680
Carnival plc (A)		21,900		1,201,931
NEXT plc (A)		29,000		871,929
Reckitt Benckiser plc (A)		38,234		1,214,551
Royal Bank of Scotland Group plc (The) (A)		40,600		1,291,243
Smith & Nephew plc (A)		86,000		808,037
Taylor Nelson Sofres plc (A)		221,160		927,256
tesco plc (A)		216,000		1,291,122
Vodafone Group Plc (A)		653,000		1,732,724
WPP Group plc (A)		69,400		789,690
				12,468,137
United States - 0.92%
Inco Limited*		10,000		398,000
UTStarcom, Inc.*		20,000		218,900
				616,900
TOTAL COMMON STOCKS - 97.67%			$	65,304,665
(Cost: $54,174,842)
SHORT-TERM SECURITY - 1.54%	Principal Amount in Thousands
Security and Commodity Brokers
Greenwich Capital Holdings Inc. (Royal Bank       of Scotland PLC (The)),
2.86%, 4-1-05	$	1,027	$	1,027,000
(Cost: $1,027,000)
TOTAL INVESTMENT SECURITIES - 99.21%			$	66,331,665
(Cost: $55,201,842)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.79%				530,981
NET ASSETS - 100.00%			$	66,862,646

Notes to Schedule of Investments

      *No dividends were paid during the preceding 12 months.

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

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers At March 31, 2005, the total value of these securities amounted to $3,930,087 or 5.88% of net assets.

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

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

Statement of Assets and Liabilities
     IVY INTERNATIONAL GROWTH FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $55,202) (Notes 1 and 3)	$	66,332
Receivables:
Investment securities sold		1,013
Dividends and interest		221
Fund shares sold		31
Prepaid and other assets		15
Total assets		67,612
LIABILITIES
Payable for investment securities purchased		352
Payable to Fund shareholders		291
Accrued shareholder servicing (Note 2)		50
Due to custodian		14
Accrued accounting services fee (Note 2)		4
Accrued management fee (Note 2)		2
Accrued distribution and service fees (Note 2)		1
Other		35
Total liabilities		749
Total net assets	$	66,863
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	62
Additional paid-in capital	102,576
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(347	)
Accumulated undistributed net realized loss                 on investment transactions	(46,532		)
Net unrealized appreciation in value of investments		11,104
Net assets applicable to outstanding units of capital	$	66,863
Net asset value per share (net assets divided by shares outstanding):
Class A	$11.03
Class B	$10.60
Class C	$10.69
Class Y	$12.02
Capital shares outstanding:
Class A		1,179
Class B		404
Class C		4,184
Class Y		404
Capital shares authorized	400,000

See Notes to Financial Statements.

Statement of Operations
     IVY INTERNATIONAL GROWTH FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends (net of foreign withholding taxes of $40)	$	954
Interest and amortization		29
Total income		983
Expenses (Note 2):
Investment management fee		593
Shareholder servicing:
Class A		61
Class B		35
Class C		303
Class Y		10
Distribution fee:
Class A		11
Class B		34
Class C		361
Service fee:
Class A		19
Class B		11
Class C		120
Class Y		13
Accounting services fee		45
Custodian fees		40
Audit fees		23
Legal fees		16
Other		80
Total expenses		1,775
Net investment loss		(792	)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		6,578
Realized net loss on foreign currency transactions		(95	)
Realized net gain on investments		6,483
Unrealized depreciation in value of investments during the period	(2,503		)
Net gain on investments		3,980
Net increase in net assets resulting from operations	$	3,188

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss	$	(792	)	$	(527	)
Realized net gain on investments		6,483			7,464
Unrealized appreciation (depreciation)		(2,503	)		17,303
Net increase in net assets resulting from operations		3,188			24,240
Distributions to shareholders from (Note 1F): (1)            Net investment income:
Class A		(192	)		-
Class B		(24	)		-
Class C		(291	)		-
Class Y		(90	)		-
Realized gains on investment transactions:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
		(597	)		-
Capital share transactions (Note 5)	(11,336		)	(13,138		)
Total increase (decrease)		(8,745	)		11,102
NET ASSETS
Beginning of period		75,608			64,506
End of period	$	66,863		$	75,608
Undistributed net investment income (loss)	$	(347	)	$	132

(1)See "Financial Highlights" on pages 97 - 100.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	10.60		$	7.57		$	9.82		$	12.03		$	24.33
Income (loss) from investment operations:
Net investment loss		(0.05	)		(0.02	)	(0.03		)		(0.17	)		(0.02	)
Net realized and unrealized gain             (loss) on investments		0.65			3.05		(2.22		)		(2.01	)		(6.46	)
Total from investment operations		0.60			3.03		(2.25		)		(2.18	)		(6.48	)
Less distributions from:
Net investment income		(0.17	)		(0.00	)	(0.00		)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)	(0.00		)		(0.03	)		(5.82	)
Total distributions		(0.17	)		(0.00	)	(0.00		)		(0.03	)		(5.82	)
Net asset value, end of period	$	11.03		$	10.60		$	7.57		$	9.82		$	12.03
Total return(2)		5.65	%		40.03	%	-22.91		%	-18.12		%	-29.73		%
Net assets, end of period (in millions)	$13			$12			$5			$7			$5
Ratio of expenses to average net assets		1.90	%		2.01	%		2.10	%		1.89	%		1.72	%(3)
Ratio of net investment       loss to average net assets	-0.51		%	-0.23		%	-0.10		%	-0.49		%	-0.31		%(3)
Portfolio turnover rate		82	%		176	%		108	%		134	%		103	%(4)

(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.
(4)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-10-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	10.19		$	7.35		$	9.65		$	11.94		$	24.59
Income (loss) from investment       operations:
Net investment loss		(0.19	)		(0.12	)	(0.11		)		(0.19	)		(0.09	)
Net realized and unrealized gain             (loss) on investments		0.65			2.96		(2.19		)		(2.07	)		(6.74	)
Total from investment operations		0.46			2.84		(2.30		)		(2.26	)		(6.83	)
Less distributions from:
Net investment income		(0.05	)		(0.00	)	(0.00		)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)	(0.00		)		(0.03	)		(5.82	)
Total distributions		(0.05	)		(0.00	)	(0.00		)		(0.03	)		(5.82	)
Net asset value, end of period	$	10.60		$	10.19		$	7.35		$	9.65		$	11.94
Total return		4.55	%		38.64	%	-23.83		%	-18.93		%	-30.89		%
Net assets, end of period (in millions)	$4			$5			$2			$2			$2
Ratio of expenses to average net assets		2.93	%		3.02	%		3.24	%		2.89	%		2.61	%(2)
Ratio of net investment loss       to average net assets		-1.53	%		-1.46	%	-1.22		%	-1.42		%		-1.30	%(2)
Portfolio turnover rate		82	%		176	%		108	%		134	%		103	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	10.27		$	7.40		$	9.69		$	11.96		$	28.58
Income (loss) from investment operations:
Net investment loss		(0.19	)		(0.10	)	(0.08		)		(0.11	)		(0.17	)
Net realized and unrealized gain             (loss) on investments		0.68			2.97		(2.21		)		(2.13	)	(10.63		)
Total from investment operations		0.49			2.87		(2.29		)		(2.24	)	(10.80		)
Less distributions from:
Net investment income		(0.07	)		(0.00	)	(0.00		)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)	(0.00		)		(0.03	)		(5.82	)
Total distributions		(0.07	)		(0.00	)	(0.00		)		(0.03	)		(5.82	)
Net asset value, end of period	$	10.69		$	10.27		$	7.40		$	9.69		$	11.96
Total return		4.72	%		38.78	%	-23.63		%	-18.73		%	-40.45		%
Net assets, end of period (in millions)	$45			$54			$46			$74			$123
Ratio of expenses to average net assets		2.77	%		2.85	%		2.93	%		2.62	%		2.36	%
Ratio of net investment loss       to average net assets		-1.35	%		-0.96	%	-0.86		%		-1.03	%		-1.03	%
Portfolio turnover rate		82	%		176	%		108	%		134	%		103	%

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	11.53		$	8.17		$	10.55		$	12.87		$	29.86
Income (loss) from investment operations:
Net investment income (loss)		0.11			0.10			(0.16	)		(0.18	)		(0.17	)
Net realized and unrealized gain             (loss) on investments		0.59			3.26			(2.22	)		(2.11	)	(11.00		)
Total from investment operations		0.70			3.36			(2.38	)		(2.29	)	(11.17		)
Less distributions from:
Net investment income		(0.21	)		(0.00	)	(0.00		)		(0.00	)		(0.00	)
Capital gains		(0.00	)		(0.00	)	(0.00		)		(0.03	)		(5.82	)
Total distributions		(0.21	)		(0.00	)	(0.00		)		(0.03	)		(5.82	)
Net asset value, end of period	$	12.02		$	11.53		$	8.17		$	10.55		$	12.87
Total return		6.09	%		41.13	%	-22.56		%	-17.79		%	-39.91		%
Net assets, end of period (in millions)	$5			$5			$11			$8			$7
Ratio of expenses to average net assets		1.57	%		1.62	%		1.63	%		1.52	%		1.44	%
Ratio of net investment income       (loss) to average net assets		-0.19	%		0.63	%		0.39	%		-0.11	%		-0.02	%
Portfolio turnover rate		82	%		176	%		108	%		134	%		103	%

See Notes to Financial Statements.

Manager's Discussion of
Ivy Large Cap Growth Fund
     March 31, 2005

An interview with Daniel P. Becker, CFA, portfolio manager of the Ivy Large Cap Growth Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Class A shares of the Fund increased 2.91 percent before the impact of sales charges. This compared with the S&P 500 Index (reflecting the performance of securities that generally represent the stock market), which increased 6.69 percent during the period, and the Lipper Large-Cap Growth Funds Universe Average (generally representing the performance of the universe of funds with similar investment objectives), which increased 1.20 percent during the period. Please note that effective May 2005, the Fund's benchmark index changed to the Russell 1000 Growth Index, which increased 1.15 percent during the period. We believe that the Russell 1000 Growth Index provides a more accurate basis for comparing the Fund's performance to the types of securities in which the Fund invests. Both indexes will be presented in this year's and next year's report for comparison purposes. Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

What factors affected performance relative to the benchmark index during the fiscal year?

Our strategy of focusing on what we feel are high-quality growth companies generally does not do well in the early stages of economic expansion, since the market typically favors smaller, faster growing companies during these periods. In our view, much of the market performance of 2003 and 2004 can be attributed to lower-quality, financially weak companies that recovered after several years of difficulty. We believe that many of these companies are still structurally and financially unsound. The Fund seeks to avoid what we feel are structurally disadvantaged companies and will likely continue to do so going forward. On the positive side, the Fund benefited from a large position in a number of strongly performing stocks, as well as below-normal holdings in consumer-staple companies.

What other market conditions or events influenced the Fund's performance during the fiscal year?

The Fund's performance was positively influenced by the rebound in the general economy. As the economy strengthened through the end of calendar year 2004, the revenues and earnings growth of many of the Fund's cyclical stocks were substantially greater than we anticipated earlier in the year. However, the last quarter of the fiscal year was a challenging one for large-cap growth stocks, which underperformed relative to value strategies.

What strategies and techniques did you employ that specifically affected the Fund's performance?

Our strategy, as always, remains steadfast. We focus on what we feel are dominant, well-capitalized companies that we believe can take a structurally advantaged competitive position and potentially produce sustained high levels of profitability and growth. As the economic recovery matures and earnings momentum moderates, we believe quality and sustainability will be valued more highly than they have been in the past. We anticipate that this environment potentially could prove more favorable for our style of investing.

What industries did you emphasize during the fiscal year, and what looks attractive to you going forward?

Despite some uncertainty, we believe that the current economic environment is substantially better than it has been in prior periods. For the first time since the late 1990s, companies appear ready and able to expand their labor force and increase production capacity. In our view, the economy could grow at acceptable rates this coming year, but likely will slow from its fast pace of the recent past. However, the market is a discounting mechanism, and the current turmoil in the stock averages could be discounting a major slowdown in the profit cycle in 2005 and 2006. We are actively monitoring this development for signs of slower-than-anticipated growth, which would have an impact on the prices of all financial assets, in our opinion.

In the near term, we think that interest rates likely will continue to move higher, consistent earnings growth for many companies should be scarcer, and that the valuations of large-company stocks are now attractive. We believe that the portfolio is structured to benefit from growth in capital spending, a rebound in the labor force and strength in what we feel are high quality, structurally advantaged companies. Major industries emphasized include health care devices, student loans, business services and energy capital spending (services).

The Fund's performance noted above is at net asset value (NAV), and does not include the
effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

Comparison of Change in Value of
$10,000 Investment

Ivy Large Cap Growth Fund, Class A Shares(1)	$	9,080
S&P 500 Index	$	8,743
Russell 1000 Growth Index	$	5,648
Lipper Large-Cap Growth Funds Universe Average	$	6,180

IVY LARGE CAP GROWTH FUND CLASS A SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY LARGE CAP GROWTH FUND CLASS A SHARES	S&P 500 INDEX	RUSSELL 1000 GROWTH INDEX	LIPPER LARGE-CAP GROWTH FUNDS UNIVERSE AVERAGE
JUNE	6/30/00	9,425	10,000	10,000	10,000
MARCH	2001	9,023	8,043	5,880	6,742
MARCH	2002	8,766	8,060	5,766	6,390
MARCH	2003	6,891	6,064	4,223	4,707
MARCH	2004	8,823	8,195	5,584	6,107
MARCH	2005	9,080	8,743	5,648	6,180

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-05	-3.01%	-2.19%	2.11%	3.22%
5-year period ended 3-31-05	--	--	--	--
10-year period ended 3-31-05	--	--	--	--
Since inception of Class through 3-31-05(3)	-2.01%	-2.58%	-1.66%	-0.63%

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

(3)6-30-00 for Class A shares, 7-6-00 for Class B shares, 7-3-00 for Class C shares and 7-6-00 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY LARGE CAP GROWTH FUND
Portfolio Highlights

On March 31, 2005, the Ivy Large Cap Growth Fund had net assets totaling $151,783,144 invested in a diversified portfolio of:

95.77%	Common Stocks
4.23%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Health Care Stocks	$	22.09
Financial Services Stocks	$	19.46
Technology Stocks	$	13.52
Multiple Industry Stocks	$	8.52
Business Equipment and Services Stocks	$	7.39
Retail Stocks	$	5.94
Energy Stocks	$	4.96
Consumer Durables Stocks	$	4.65
Cash and Cash Equivalents	$	4.23
Miscellaneous Stocks	$	3.45
Consumer Services Stocks	$	3.33
Consumer Nondurables Stocks	$	2.46

The Investments of Ivy Large Cap Growth Fund
March 31, 2005
COMMON STOCKS		Shares		Value
Apparel - 0.00%
Coach, Inc.*		50	$	2,831
Business Equipment and Services - 2.68%
Robert Half International Inc.		96,110		2,591,126
Staples, Inc.		46,857		1,471,778
				4,062,904
Chemicals - Petroleum and Inorganic - 2.33%
Monsanto Company		54,900		3,541,050
Computers - Micro - 6.26%
Apple Computer, Inc.*		125,700		5,247,975
Dell Inc.*		110,836		4,258,873
				9,506,848
Computers - Peripherals - 5.20%
Microsoft Corporation		207,373		5,011,169
Oracle Corporation*		140,600		1,753,985
SAP Aktiengesellschaft, ADR		28,050		1,124,244
				7,889,398
Consumer Electronics - 1.86%
Harman International Industries, Incorporated		31,867		2,818,955
Cosmetics and Toiletries - 2.46%
Avon Products, Inc.		87,100		3,740,074
Electronic Components - 2.06%
Intel Corporation		30,050		698,061
Linear Technology Corporation		37		1,420
Microchip Technology Incorporated		93,300		2,423,468
Xilinx, Inc.		50		1,461
				3,124,410
Finance Companies - 7.20%
SLM Corporation		219,350		10,932,404
Health Care - Drugs - 6.39%
Alcon, Inc.		60,900		5,437,761
Genentech, Inc.*		29,000		1,641,690
Gilead Sciences, Inc.*		73,200		2,620,194
				9,699,645
Health Care - General - 7.37%
DENTSPLY International Inc.		23,900		1,300,279
Johnson & Johnson		81,900		5,500,404
Zimmer Holdings, Inc.*		56,250		4,376,813
				11,177,496
Hospital Supply and Management - 8.33%
Medtronic, Inc.		83,650		4,261,968
UnitedHealth Group Incorporated		87,900		8,383,902
				12,645,870
Leisure Time Industry - 3.33%
Carnival Corporation		97,544		5,053,755
Motor Vehicles - 2.79%
Harley-Davidson, Inc.		73,347		4,236,523
Multiple Industry - 8.52%
3M Company		23,300		1,996,577
General Electric Company		82,489		2,974,553
Google Inc., Class A*		24,400		4,403,834
Las Vegas Sands, Inc.*		79,100		3,559,500
				12,934,464
Petroleum - Services - 4.96%
Smith International, Inc.*		119,912		7,522,080
Retail - Food Stores - 3.19%
Walgreen Co.		108,814		4,833,518
Retail - General Merchandise - 0.00%
Dollar General Corporation		50		1,095
Retail - Specialty Stores - 2.75%
Home Depot, Inc. (The)		109,300		4,179,632
Security and Commodity Brokers - 12.26%
American Express Company		34,400		1,767,128
Chicago Mercantile Exchange Holdings Inc.		31,743		6,159,094
Goldman Sachs Group, Inc. (The)		43,600		4,795,564
Legg Mason, Inc.		57,875		4,522,353
Moody's Corporation		16,800		1,358,448
				18,602,587
Timesharing and Software - 4.71%
Automatic Data Processing, Inc.		68,100		3,061,095
eBay Inc.*		32,200		1,199,611
Paychex, Inc.		88,000		2,891,680
				7,152,386
Trucking and Shipping - 1.12%
Expeditors International of Washington, Inc.		31,800		1,702,731
TOTAL COMMON STOCKS - 95.77%			$	145,360,656
(Cost: $124,261,586)
SHORT-TERM SECURITIES	Principal Amount in Thousands
Finance Companies - 1.32%
PACCAR Financial Corp.,
2.77%, 4-12-05	$	2,000		1,998,307
Food and Related - 2.29%
McCormick & Co. Inc.,
2.83%, 4-1-05		3,476		3,476,000
TOTAL SHORT-TERM SECURITIES - 3.61%			$	5,474,307
(Cost: $5,474,307)
TOTAL INVESTMENT SECURITIES - 99.38%			$	150,834,963
(Cost: $129,735,893)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.62%				948,181
NET ASSETS - 100.00%			$	151,783,144

Notes to Schedule of Investments

      *No dividends were paid during the preceding 12 months.

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

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

Statement of Assets and Liabilities
     IVY LARGE CAP GROWTH FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $129,736) (Notes 1 and 3)	$	150,835
Receivables:
Fund shares sold		881
Investment securities sold		617
Dividends and interest		77
Prepaid and other assets		19
Total assets		152,429
LIABILITIES
Payable to Fund shareholders		295
Payable for investment securities purchased		233
Accrued shareholder servicing (Note 2)		54
Due to custodian		54
Accrued accounting services fee (Note 2)		6
Accrued management fee (Note 2)		3
Accrued distribution and service fees (Note 2)		1
Total liabilities		646
Total net assets	$	151,783
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	160
Additional paid-in capital		157,391
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(12	)
Accumulated undistributed net realized loss                 on investment transactions		(26,855	)
Net unrealized appreciation in value of investments		21,099
Net assets applicable to outstanding units of capital	$	151,783
Net asset value per share (net assets divided by shares outstanding):
Class A	$9.54
Class B	$8.99
Class C	$9.18
Class Y	$9.62
Capital shares outstanding:
Class A		8,633
Class B		868
Class C		1,300
Class Y		5,160
Capital shares authorized		400,000

See Notes to Financial Statements.

Statement of Operations
     IVY LARGE CAP GROWTH FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends (net of foreign withholding taxes of $9)	$	1,698
Interest and amortization		66
Total income		1,764
Expenses (Note 2):
Investment management fee		1,033
Shareholder servicing:
Class A		305
Class B		43
Class C		48
Class Y		80
Service fee:
Class A		160
Class B		17
Class C		29
Class Y		132
Distribution fee:
Class A		32
Class B		50
Class C		86
Accounting services fee		67
Legal fees		28
Audit fees		23
Custodian fees		13
Other		109
Total		2,255
Less expenses in excess of voluntary limit (Note 2)		(40	)
Total expenses		2,215
Net investment loss		(451	)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		958
Unrealized appreciation in value of investments during the period		3,253
Net gain on investments		4,211
Net increase in net assets resulting from operations	$	3,760

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE IN NET ASSETS
Operations:
Net investment loss	$	(451	)	$	(757	)
Realized net gain (loss) on investments		958			(238	)
Unrealized appreciation		3,253			12,605
Net increase in net assets resulting from operations		3,760			11,610
Distributions to shareholders from (Note 1F): (1)            Net investment income:
Class A		(-	)		(-	)
Class B		(-	)		(-	)
Class C		(-	)		(-	)
Class Y		(-	)		(-	)
Realized gains on investment transactions:
Class A		(-	)		(-	)
Class B		(-	)		(-	)
Class C		(-	)		(-	)
Class Y		(-	)		(-	)
		(-	)		(-	)
Capital share transactions (Note 5)		(3,734	)		112,338
Total increase		26			123,948
NET ASSETS
Beginning of period		151,757			27,809
End of period	$	151,783		$	151,757
Undistributed net investment loss	$	(12	)	$	(5	)

(1)See "Financial Highlights" on pages 111 - 114.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 6-30-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	9.27		$	7.24		$	9.21		$	9.48		$	10.00
Income (loss) from investment operations:
Net investment income (loss)	(0.03		)	(0.04		)	(0.03		)	(0.04		)		0.05
Net realized and unrealized             gain (loss) on investments		0.30			2.07		(1.94		)	(0.23		)		(0.45	)
Total from investment operations		0.27			2.03		(1.97		)	(0.27		)		(0.40	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.06		)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.06		)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.12		)
Net asset value, end of period	$	9.54		$	9.27		$	7.24		$	9.21		$	9.48
Total return(2)		2.91	%	28.04		%	-21.39		%	-2.85		%		-4.27	%
Net assets, end of period (in millions)	$82			$76			$21			$20			$19
Ratio of expenses to average       net assets including       voluntary expense waiver (3)		1.50	%		1.55	%		1.28	%		1.58	%		1.13	%(4)
Ratio of net investment income       (loss) to average net assets       including voluntary       expense waiver (3)	-0.31		%	-0.89		%	-0.23		%	-0.38		%		0.89	%(4)
Ratio of expenses to average       net assets excluding       voluntary expense waiver (3)		1.52	%		-			1.66	%		1.69	%		1.34	%(4)
Ratio of net investment income       (loss) to average net assets       excluding voluntary       expense waiver (3)	-0.33		%		-		-0.61		%	-0.49		%		0.68	%(4)
Portfolio turnover rate		131	%		162	%		72	%		99	%		75	%

(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)See Note 2.
(4)Annualized.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-6-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	8.83		$	6.99		$	9.05		$	9.44		$	10.02
Income (loss) from investment operations:
Net investment loss	(0.05		)	(0.13		)	(0.14		)	(0.16		)		(0.03	)
Net realized and unrealized             gain (loss) on investments		0.21			1.97		(1.92		)	(0.23		)		(0.49	)
Total from investment operations		0.16			1.84		(2.06		)	(0.39		)		(0.52	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.06		)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.06		)
Net asset value, end of period	$	8.99		$	8.83		$	6.99		$	9.05		$	9.44
Total return		1.81	%	26.32		%	-22.76		%	-4.13		%		-5.32	%
Net assets, end of period (in millions)	$8			$5			$2			$2			$2
Ratio of expenses to average       net assets including       voluntary expense waiver(2)		2.53	%		2.85	%		2.93	%		2.98	%		2.53	%(3)
Ratio of net investment loss       to average net assets including       voluntary expense waiver(2)	-1.30		%	-2.16		%	-1.87		%	-1.79		%		-0.60	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver(2)		-			-			3.31	%		3.19	%		3.00	%(3)
Ratio of net investment loss       to average net assets excluding       voluntary expense waiver(2)		-			-		-2.25		%	-2.00		%		-1.07	%(3)
Portfolio turnover rate		131	%		162	%		72	%		99	%		75	%

(1)Commencement of operations of the class.
(2)See Note 2.
(3)Annualized.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	8.99		$	7.08		$	9.10		$	9.45		$	10.00
Income (loss) from investment operations:
Net investment loss	(0.09		)	(0.11		)	(0.10		)	(0.12		)		(0.00	)
Net realized and unrealized             gain (loss) on investments		0.28			2.02		(1.92		)	(0.23		)		(0.48	)
Total from investment operations		0.19			1.91		(2.02		)	(0.35		)		(0.48	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.01	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)	(0.06		)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.07	)
Net asset value, end of period	$	9.18		$	8.99		$	7.08		$	9.10		$	9.45
Total return		2.11	%	26.98		%	-22.28		%	-3.60		%		-4.93	%
Net assets, end of period (in millions)	$12			$11			$4			$7			$7
Ratio of expenses to average       net assets including       voluntary expense waiver(2)		2.25	%		2.44	%		2.26	%		2.51	%		2.06	%(3)
Ratio of net investment loss to       average net assets including       voluntary expense waiver(2)	-1.06		%	-1.75		%	-1.20		%	-1.31		%		-0.08	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver(2)		2.28	%		-			2.64	%		2.68	%		2.44	%(3)
Ratio of net investment loss to       average net assets excluding       voluntary expense waiver(2)	-1.09		%		-		-1.58		%	-1.48		%		-0.46	%(3)
Portfolio turnover rate		131	%		162	%		72	%		99	%		75	%

(1)Commencement of operations of the class.
(2)See Note 2.
(3)Annualized.

See Notes to Financial Statements.

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

		For the fiscal year ended March 31,												For the period from 7-6-00(1) to
		2005			2004			2003			2002			3-31-01
Net asset value, beginning of period		$	9.32		$	7.26		$	9.22		$	9.48		$	10.02
Income (loss) from investment operations:
Net investment income (loss)			0.00		(0.03		)	(0.30		)	(0.01		)		0.09
Net realized and unrealized             gain (loss) on investments			0.30			2.09		(1.66		)	(0.25		)		(0.50	)
Total from investment operations			0.30			2.06		(1.96		)	(0.26		)		(0.41	)
Less distributions from:
Net investment income		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.07	)
Capital gains		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.06	)
Total distributions		(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.13	)
Net asset value, end of period		$	9.62		$	9.32		$	7.26		$	9.22		$	9.48
Total return			3.22	%	28.38		%	-21.26		%	-2.74		%		-4.38	%
Net assets, end of period (in thousands)	$49,661			$59,483				$892			$768			$279
Ratio of expenses to average       net assets including       voluntary expense waiver(2)			1.20	%		1.26	%		1.05	%		1.36	%		1.13	%(3)
Ratio of net investment income       (loss) to average net assets       including voluntary       expense waiver(2)		-0.01		%	-0.64		%		0.00	%	-0.20		%		1.11	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver(2)			1.25	%		-			1.43	%		1.45	%		1.34	%(3)
Ratio of net investment income       (loss) to average net assets       excluding voluntary       expense waiver(2)		-0.06		%		-		-0.38		%	-0.29		%		0.90	%(3)
Portfolio turnover rate			131	%		162	%		72	%		99	%		75	%

(1)Commencement of operations of the class.
(2)See Note 2.
(3)Annualized.

See Notes to Financial Statements.

Manager's Discussion of
Ivy Limited-Term Bond Fund
     March 31, 2005

An interview with W. Patrick Sterner, CFA, portfolio manager of the Ivy Limited-Term Bond Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund underperformed its benchmark during a challenging period, with Class C shares of the Fund declining 1.45 percent over the fiscal year. In comparison, the Citigroup 1-5 Years Treasury/Government Sponsored/Credit Index (reflecting the performance of securities generally representing the limited-term sector of the bond market) declined 0.51 percent for the fiscal year, while the Lipper Short-Intermediate Investment Grade Debt Funds Universe Average (generally reflecting the performance of the universe of funds with similar investment objectives) decreased 0.33 percent. Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

Why did the Fund lag its benchmark index during the fiscal year?

Returns during the fiscal year were negatively impacted by the short maturity of the Fund. The yield curve flattened dramatically during the period, as rates on short and intermediate maturities rose while longer rates actually declined. The yield on the two-year Treasury note increased from 1.57 percent to 3.78 percent, or 221 basis points, over the period, while the 30-year U.S. Treasury declined from 4.78 percent to 4.75 percent. This flattening of the yield curve allowed long-maturity bonds to outperform shorter-term bonds on a total return basis, with long-term U.S. Treasury bonds outperforming intermediate-term U.S. Treasuries. The Fund lacked significant exposure to securities with maturities longer than five years, and therefore didn't capture the additional return provided by these bonds.

However, there were several factors that contributed positively to the Fund's performance over the past year. The most important was an overweighting in both corporate bonds and mortgage-backed securities, which were the best-performing sectors of the fixed income market last year. In addition, we believe that exposure to waste-disposal companies, defense contractors and electric utilities within the corporate sector helped enhance overall return.

What other market conditions or events influenced the Fund's performance during the fiscal year?

A steadily growing economy and improving corporate credit fundamentals were reflected in the market, as spreads on corporate bonds continued to tighten. The tightening was most pronounced in lower-rated securities. Over the last 12 months, Baa-rated bonds outperformed AA-rated bonds. The Fund held over 25 percent in Baa securities, but their short maturity held back relative performance.

What strategies and techniques did you employ that specifically affected the Fund's performance?

Our management style attempts to identify relative value opportunities between sectors of the market. Those sectors include U.S. Treasuries, agencies, corporates and mortgage-backed securities. We expected interest rates to increase gradually over the year, which typically would favor mortgage-backed securities with limited extension risk, and we also felt that intermediate corporate bonds offered good value. As a result, we emphasized those sectors in the Fund, which we feel helped overall performance.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

We anticipate that interest rates likely will move higher over the new fiscal year, as economic growth continues to be solid. We believe the Federal Reserve likely will remain on a course of raising short-term rates at least until they feel a neutral federal funds level is reached. We also believe that corporate credit spreads are still so tight that there is little upside potential in owning corporate bonds, except in selected names.

With this backdrop, we intend to continue to remain short duration while emphasizing mortgage-backed securities with what we believe is limited extension risk.

The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Please note that securities issued by certain U.S. Government-sponsored entities, including the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Banks ("FHLBs") are not funded by Congressional appropriations and the debt and mortgage-backed securities issued by them are neither guaranteed nor insured by the United States Government.

Comparison of Change in Value of
$10,000 Investment

Ivy Limited-Term Bond Fund, Class C Shares(1)	$	15,224
Citigroup 1-5 Years Treasury/Government Sponsored/Credit Index	$	18,028
Lipper Short-Intermediate Investment Grade Debt Funds Universe Average	$	17,279

IVY LIMITED-TERM BOND FUND CLASS C SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY LIMITED-TERM BOND FUND CLASS C SHARES	CITIGROUP 1-5 YEARS TREASURY/GOVT. SPONSORED/ CREDIT INDEX	LIPPER SHORT INTERMEDIATE INVESTMENT GRADE DEBT FUNDS UNIVERSE AVERAGE
MARCH	1995	10,000	10,000	10,000
MARCH	1996	10,741	10,861	10,891
MARCH	1997	11,118	11,422	11,413
MARCH	1998	11,913	12,377	12,415
MARCH	1999	12,467	13,178	13,085
MARCH	2000	12,559	13,572	13,349
MARCH	2001	13,749	15,077	14,755
MARCH	2002	14,362	15,921	15,357
MARCH	2003	15,111	17,413	16,676
MARCH	2004	15,448	18,120	17,337
MARCH	2005	15,224	18,028	17,279

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C(3)	Class Y
1-year period ended 3-31-05	-3.09%	-5.38%	-1.45%	-0.49%
5-year period ended 3-31-05	--	--	3.92%	4.90%
10-year period ended 3-31-05	--	--	4.29%	--
Since inception of Class through 3-31-05(4)	3.96%	3.36%	--	4.69%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 2.50%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly, the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)Performance data from 3-24-00 represents the actual performance of Class C shares. Performance data prior to 3-24-00 represents the performance of the Fund's original Class B shares. The original Class B shares were combined with Class C shares effective 3-24-00, and redesignated as Class C shares. The original Class B's performance has been adjusted to reflect the current contingent deferred sales charge (CDSC) structure applicable to Class C (1.00% maximum and declining to zero at the end of the first year after investment). Accordingly, these returns reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase. New Class B shares, with fees and expenses different from the original Class B shares, were added to the Fund on 6-30-00.

(4)8-17-00 for Class A shares, 7-3-00 for Class B shares and 12-29-95 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY LIMITED-TERM BOND FUND
Portfolio Highlights

On March 31, 2005, Ivy Limited-Term Bond Fund had net assets totaling $63,824,772 invested in a diversified portfolio of:

49.90%	United States Government and Government Agency Securities
48.32%	Corporate Debt Securities
1.78%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Corporate Debt Securities	$	48.32
United States Government Agency Mortgage-Backed Securities	$	24.88
United States Government Treasury Securities	$	18.81
United States Government Agency Securities	$	6.21
Cash and Cash Equivalents	$	1.78

On March 31, 2005, the breakdown of bonds (by ratings) held by the Fund was as follows:

AAA	49.90	%
A	18.85	%
BBB	29.47	%
Cash and Cash Equivalents	1.78	%

The Investments of Ivy Limited-Term Bond Fund
March 31, 2005
CORPORATE DEBT SECURITIES	Principal Amount in Thousands			Value
Aircraft - 2.97%
Raytheon Company,
6.75%, 8-15-07	$	1,800	$	1,893,866
Broadcasting - 1.28%
Clear Channel Communications, Inc.,
4.625%, 1-15-08		829		819,472
Business Equipment and Services - 3.32%
USA Waste Services, Inc.,
7.125%, 10-1-07		2,000		2,121,330
Capital Equipment - 1.27%
John Deere Capital Corporation,
5.125%, 10-19-06		800		812,598
Chemicals - Specialty - 1.97%
Praxair, Inc.,
4.75%, 7-15-07		1,250		1,259,641
Finance Companies - 5.55%
Ford Motor Credit Company,
6.875%, 2-1-06		2,000		2,027,196
General Motors Acceptance Corporation,
6.625%, 10-15-05		1,500		1,511,256
				3,538,452
Food and Related - 1.10%
Kellogg Company,
4.875%, 10-15-05		700		703,521
Multiple Industry - 8.00%
Honeywell International Inc.,
6.875%, 10-3-05		1,100		1,117,065
Household Finance Corporation,
6.5%, 1-24-06		950		970,283
Kansas City Power & Light Company,
7.125%, 12-15-05		950		971,993
National Rural Utilities Cooperative Finance Corporation,
6.0%, 5-15-06		2,000		2,044,636
				5,103,977
Petroleum - International - 3.24%
Anadarko Petroleum Corporation,
5.375%, 3-1-07		2,025		2,069,048
Railroad - 6.43%
Norfolk Southern Corporation,
7.35%, 5-15-07		1,850		1,960,921
Union Pacific Corporation:
7.6%, 5-1-05		1,595		1,599,493
6.7%, 12-1-06		525		545,809
				4,106,223
Security and Commodity Brokers - 0.95%
CIT Group Holdings, Inc. (The),
6.625%, 6-15-05		600		604,099
Utilities - Electric - 8.87%
Dominion Resources, Inc.,
7.625%, 7-15-05		2,200		2,226,668
FPL Group Capital Inc,
6.125%, 5-15-07		2,000		2,074,726
PacifiCorp,
6.75%, 4-1-05		1,000		1,000,000
Wisconsin Energy Corporation,
5.875%, 4-1-06		350		356,562
				5,657,956
Utilities - Telephone - 3.37%
GTE Corporation,
6.36%, 4-15-06		2,100		2,147,405
TOTAL CORPORATE DEBT SECURITIES - 48.32%			$	30,837,588
(Cost: $30,891,406)

UNITED STATES GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS
Agency Obligations - 6.21%
Federal Home Loan Mortgage Corporation,
3.625%, 9-15-08	2,000	1,958,168
Federal National Mortgage Association,
4.25%, 7-15-07	2,000	2,006,666
		3,964,834
Mortgage-Backed Obligations - 24.88%
Federal Home Loan Mortgage Corporation Agency       REMIC/CMO:
4.0%, 12-15-12	898	884,391
3.5%, 12-15-16	1,218	1,176,899
5.5%, 7-15-17 (Interest Only)	1,000	86,434
5.5%, 10-15-23 (Interest Only)	4,865	433,609
5.5%, 4-15-24 (Interest Only)	1,496	164,648
5.0%, 6-15-24 (Interest Only)	2,000	287,010
4.0%, 11-15-32	1,324	1,286,089
Federal Home Loan Mortgage Corporation Fixed Rate       Participation Certificates:
4.5%, 5-1-10	966	962,972
5.5%, 2-1-16	87	89,034
5.5%, 1-1-17	269	274,644
5.5%, 5-1-17	260	265,335
4.5%, 4-1-18	1,468	1,439,927

Federal National Mortgage Association Agency       REMIC/CMO (Interest Only),
5.0%, 3-25-16	1,607		120,788
Federal National Mortgage Association Fixed Rate       Pass-Through Certificates:
8.0%, 2-1-08	2		2,437
6.5%, 12-1-10	36		37,762
6.0%, 1-1-11	43		43,787
6.5%, 2-1-11	65		68,370
7.0%, 5-1-11	30		31,586
7.0%, 7-1-11	27		28,245
7.0%, 9-1-12	25		25,748
6.0%, 11-1-13	72		74,184
7.0%, 9-1-14	45		47,404
7.0%, 10-1-14	54		56,950
6.0%, 6-1-16	46		47,628
6.5%, 6-1-16	106		111,228
5.5%, 2-1-17	820		836,925
5.0%, 11-1-17	934		935,296
5.5%, 1-1-18	956		974,936
7.0%, 4-1-26	29		30,763
Government National Mortgage Association Fixed Rate       Pass-Through Certificates:
6.5%, 1-15-14	86		90,457
6.0%, 5-15-14	232		241,053
5.5%, 1-15-17	425		436,910
6.0%, 1-15-17	300		310,995
5.5%, 7-15-17	823		846,681
5.0%, 12-15-17	1,331		1,347,227
4.0%, 9-15-18	1,653		1,592,487
7.0%, 10-15-28	66		69,385
7.0%, 4-15-29	41		43,758
7.0%, 7-15-29	74		78,015
			15,881,997
Treasury Obligations - 18.81%
United States Treasury Notes:
4.75%, 11-15-08	2,000		2,047,968
3.125%, 4-15-09	2,000		1,928,672
4.0%, 3-15-10	2,000		1,984,376
5.0%, 8-15-11	2,000		2,077,812
4.375%, 8-15-12	2,000		2,004,688
4.25%, 8-15-14	2,000		1,961,250
			12,004,766
TOTAL UNITED STATES GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 49.90%		$	31,851,597
(Cost: $32,147,518)

SHORT-TERM SECURITY - 0.63%
Forest and Paper Products
Sonoco Products Co.,
2.88%, 4-1-05	400		400,000
(Cost: $400,000)
TOTAL INVESTMENT SECURITIES - 98.85%		$	63,089,185
(Cost: $63,438,924)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.15%			735,587
NET ASSETS - 100.00%		$	63,824,772

Notes to Schedule of Investments

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

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

Statement of Assets and Liabilities
     IVY LIMITED-TERM BOND FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $63,439) (Notes 1 and 3)	$	63,089
Receivables:
Interest		877
Fund shares sold		155
Prepaid and other assets		18
Total assets		64,139
LIABILITIES
Payable to Fund shareholders		221
Accrued shareholder servicing (Note 2)		25
Due to custodian		24
Dividends payable		19
Accrued accounting services fee (Note 2)		4
Accrued distribution and service fees (Note 2)		1
Accrued management fee (Note 2)		1
Other		19
Total liabilities		314
Total net assets	$	63,825
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	63
Additional paid-in capital		64,697
Accumulated undistributed loss:
Accumulated undistributed net realized loss                 on investment transactions		(585	)
Net unrealized depreciation in value of investments		(350	)
Net assets applicable to outstanding units of capital	$	63,825
Net asset value per share (net assets divided by shares outstanding):
Class A		$10.14
Class B		$10.14
Class C		$10.14
Class Y		$10.14
Capital shares outstanding:
Class A		3,794
Class B		655
Class C		1,667
Class Y		176
Capital shares authorized	200,000

See Notes to Financial Statements.

Statement of Operations
     IVY LIMITED-TERM BOND FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	2,660
Expenses (Note 2):
Investment management fee		333
Distribution fee:
Class A		27
Class B		48
Class C		146
Shareholder servicing:
Class A		92
Class B		26
Class C		70
Class Y		3
Service fee:
Class A		70
Class B		16
Class C		49
Class Y		5
Accounting services fee		45
Audit fees		17
Legal fees		14
Custodian fees		10
Other		103
Total expenses		1,074
Net investment income		1,586
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (NOTES 1 AND 3)
Realized net loss on investments		(80	)
Unrealized depreciation in value of investments during the period	(2,076		)
Net loss on investments	(2,156		)
Net decrease in net assets resulting from operations	$	(570	)

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
DECREASE IN NET ASSETS
Operations:
Net investment income	$	1,586		$	1,765
Realized net gain (loss) on investments		(80	)		249
Unrealized depreciation		(2,076	)		(87	)
Net increase (decrease) in net assets                       resulting from operations		(570	)		1,927
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(1,057	)		(1,111	)
Class B		(114	)		(110	)
Class C		(359	)		(493	)
Class Y		(56	)		(51	)
Realized gains on investment transactions:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
		(1,586	)		(1,765	)
Capital share transactions (Note 5)		1,791		(13,816		)
Total decrease		(365	)	(13,654		)
NET ASSETS
Beginning of period		64,190			77,844
End of period	$	63,825		$	64,190
Undistributed net investment income	$	-		$	-

(1)See "Financial Highlights" on pages 128 - 131.

See Notes to Financial Statements.

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

		For the fiscal year ended March 31,														For the period from 8-17-00(1) to
		2005				2004				2003			2002			3-31-01
Net asset value, beginning of period		$	10.48			$	10.45			$	10.20		$	10.17		$	9.84
Income (loss) from investment       operations:
Net investment income			0.28				0.29				0.36			0.51			0.36
Net realized and             unrealized gain (loss)             on investments			(0.34	)			0.03				0.25			0.03			0.33
Total from investment operations			(0.06	)			0.32				0.61			0.54			0.69
Less distributions from:
Net investment income			(0.28	)			(0.29	)			(0.36	)		(0.51	)		(0.36	)
Capital gains			(0.00	)			(0.00	)			(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.28	)			(0.29	)			(0.36	)		(0.51	)		(0.36	)
Net asset value, end of period		$	10.14			$	10.48			$	10.45		$	10.20		$	10.17
Total return(2)			-0.60	%			3.13	%			6.15	%		5.42	%		7.01	%
Net assets, end of period       (in thousands)	$38,482				$34,970				$39,765				$6,124				$494
Ratio of expenses to average       net assets including       voluntary expense waiver			1.27	%			1.18	%			1.09	%		1.04	%		0.85	%(3)
Ratio of net investment       income to average net       assets including voluntary       expense waiver			2.71	%			2.79	%			3.32	%		4.76	%		5.83	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver			-	(4)			-	(4)			-	(4)		1.19	%		1.09	%(3)
Ratio of net investment       income to average net       assets excluding voluntary       expense waiver			-	(4)			-	(4)			-	(4)		4.61	%		5.59	%(3)
Portfolio turnover rate			36	%			30	%			49	%		33	%		16	%(5)

(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.
(4)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.
(5)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	10.48		$	10.45		$	10.20		$	10.17		$	9.80
Income (loss) from investment operations:
Net investment income		0.18			0.19			0.27			0.42			0.36
Net realized and             unrealized gain (loss)             on investments		(0.34	)		0.03			0.25			0.03			0.37
Total from investment operations		(0.16	)		0.22			0.52			0.45			0.73
Less distributions from:
Net investment income		(0.18	)		(0.19	)		(0.27	)		(0.42	)		(0.36	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.18	)		(0.19	)		(0.27	)		(0.42	)		(0.36	)
Net asset value, end of period	$	10.14		$	10.48		$	10.45		$	10.20		$	10.17
Total return		-1.51	%		2.18	%		5.18	%		4.52	%		7.54	%
Net assets, end of period       (in thousands)	$	6,649		$	5,812		$	5,471		$	1,419			$425
Ratio of expenses to average       net assets including       voluntary expense waiver		2.20	%		2.11	%		2.01	%		1.88	%		1.81	%(2)
Ratio of net investment       income to average net       assets including voluntary       expense waiver		1.78	%		1.86	%		2.47	%		4.02	%		4.91	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		-	(3)		-	(3)		-	(3)		2.15	%		2.33	%(2)
Ratio of net investment       income to average net       assets excluding voluntary       expense waiver		-	(3)		-	(3)		-	(3)		3.76	%		4.39	%(2)
Portfolio turnover rate		36	%		30	%		49	%		33	%		16	%(4)

(1)Commencement of operations of the class.
(2)Annualized.
(3)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.
(4)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	10.48		$	10.45		$	10.20		$	10.17		$	9.76
Income (loss) from investment operations:
Net investment income		0.19			0.20			0.27			0.42			0.48
Net realized and             unrealized gain (loss)             on investments		(0.34	)		0.03			0.25			0.03			0.41
Total from investment operations		(0.15	)		0.23			0.52			0.45			0.89
Less distributions from:
Net investment income		(0.19	)		(0.20	)		(0.27	)		(0.42	)		(0.48	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.19	)		(0.20	)		(0.27	)		(0.42	)		(0.48	)
Net asset value, end of period	$	10.14		$	10.48		$	10.45		$	10.20		$	10.17
Total return		-1.45	%		2.23	%		5.22	%		4.46	%		9.48	%
Net assets, end of period (in millions)		$17			$22			$30			$20			$18
Ratio of expenses to average       net assets including       voluntary expense waiver		2.14	%		2.05	%		1.98	%		1.94	%		1.82	%
Ratio of net investment income to       average net assets including       voluntary expense waiver		1.84	%		1.92	%		2.59	%		4.04	%		4.97	%
Ratio of expenses to average       net assets excluding       voluntary expense waiver		-	(1)		-	(1)		-	(1)		2.21	%		2.34	%
Ratio of net investment income to       average net assets excluding       voluntary expense waiver		-	(1)		-	(1)		-	(1)		3.77	%		4.44	%
Portfolio turnover rate		36	%		30	%		49	%		33	%		16	%

(1)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	10.48		$	10.45		$	10.20		$	10.17		$	9.76
Income (loss) from investment operations:
Net investment income		0.29			0.29			0.36			0.51			0.59
Net realized and             unrealized gain (loss)             on investments		(0.34	)		0.03			0.25			0.03			0.41
Total from investment operations		(0.05	)		0.32			0.61			0.54			1.00
Less distributions from:
Net investment income		(0.29	)		(0.29	)		(0.36	)		(0.51	)		(0.59	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.29	)		(0.29	)		(0.36	)		(0.51	)		(0.59	)
Net asset value, end of period	$	10.14		$	10.48		$	10.45		$	10.20		$	10.17
Total return		-0.49	%		3.18	%		6.14	%		5.41	%		10.56	%
Net assets, end of period (in millions)		$2			$2			$2			$1			$2
Ratio of expenses to average       net assets including       voluntary expense waiver		1.16	%		1.13	%		1.09	%		1.04	%		0.83	%
Ratio of net investment income to       average net assets including       voluntary expense waiver		2.82	%		2.83	%		3.42	%		4.97	%		5.95	%
Ratio of expenses to average       net assets excluding       voluntary expense waiver		-	(1)		-	(1)		-	(1)		1.18	%		1.07	%
Ratio of net investment income to       average net assets excluding       voluntary expense waiver		-	(1)		-	(1)		-	(1)		4.83	%		5.71	%
Portfolio turnover rate		36	%		30	%		49	%		33	%		16	%

(1)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.

See Notes to Financial Statements.

Manager's Discussion of
Ivy Mid Cap Growth Fund
     March 31, 2005

An interview with Kimberly A. Scott, CFA, portfolio manager of the Ivy Mid Cap Growth Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund's Class A shares increased 9.90 percent for the period, before the impact of sales charges, compared with the Russell Mid-Cap Growth Index (generally reflecting the performance of securities that represent the mid cap sector of the stock market), which increased 8.31 percent during the same period, and the Lipper Mid-Cap Growth Funds Universe Average (reflecting the universe of funds with similar investment objectives), which increased 5.21 percent for the period.

Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

What factors impacted the Fund's performance relative to its benchmark index during the fiscal year?

Positive stock selection across a number of sectors was the primary contributor to performance over the period, in our view. Additionally, several sectors in which we were overweight relative to our benchmark, namely energy and financials, were sectors that outperformed the respective sector in the benchmark, and added nicely to the Fund's total return. One area that detracted from performance was health care, a sector in which we had an overweight position and poorly performing stocks. Our biotechnology stocks were particularly disappointing during the fiscal year.

What other market conditions or events influenced the Fund's performance during the fiscal year?

The performance of mid-cap growth stocks was uninspiring for much of the 12-month period through March of 2005. Stocks struggled against the twin specters of rapidly rising energy prices and higher interest rates, even though earnings trends remained strong. Stocks rallied strongly later in the calendar year, however, helping to generate a solid return for the year, but then quickly lost momentum in early 2005, as concerns over reaccelerating energy prices and rising interest rates came to the fore once again. The energy and utilities sectors did quite well over the fiscal year. More traditionally defensive sectors, such as health care and consumer staples, performed better than the index for the year, while the more cyclical and interest-rate-sensitive sectors, such as technology, consumer discretionary, and financials, underperformed the index.

What strategies and techniques did you employ that specifically affected the Fund's performance?

We believe that stock selection helped Fund performance over the fiscal year. Our focus on premier growth companies with strong, sustainable and highly visible earnings growth opportunities paid off, as it appears that many other investors also came to appreciate these companies. In addition, we were unwilling to react to every negative news item and data point, particularly early in the year. This allowed us to remain invested in a portfolio of stocks in which we had high conviction, and we feel that our patience was rewarded as the markets reacted to good earnings and returns later in the year.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

Areas of emphasis for the Fund during the period, relative to the benchmark index, included health care, consumer staples, energy and financial services. We were disappointed with the performance of our health care names, particularly our stocks in the biotechnology area. However, we intend to continue to emphasize health care, as we like the long-term and consistent growth characteristics of this sector, as well as its selection of higher-quality names. We believe that health care stocks likely will draw greater investor interest this year, as we expect the market to become more defensive. In addition, we expect to see considerable merger and acquisition activity in this sector, as we believe that many large health care companies, especially in the pharmaceutical area, are likely to spend cash holdings to supplement their growth.

We are still slightly overweight in energy, and will likely maintain the overweight given the positive secular supply/demand characteristics of the industry. However, we are concerned that energy prices may have become extended in the near term, and we believe any correction in the price of the commodity may cause a downdraft in the price of the stocks. We would likely use such a move to increase our exposure to the energy sector. We like the consumer staples area for its defensive characteristics and generally healthy dividend yields on many stocks in the sector. We believe there are opportunities throughout consumer staples to invest in companies that are reinvigorating their businesses with smart operating changes.

We continue to like select areas of the technology sector, such as storage networking, but are unlikely to overweight this group given the high valuations and increasingly commodity-like nature of the business. We have been overweight in financial services, but will likely become more selective and less exposed there in the future. We are also less enthusiastic about consumer-discretionary investments, as we believe consumers are facing many challenges, namely higher interest rates, higher energy prices and consistently increasing health care expenses. Generally, we believe that investors will prefer higher-quality companies that have the potential to produce consistent revenue and earnings growth, as we believe the economic cycle is certainly mature.

The Fund's performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted. The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

Comparison of Change in Value of
$10,000 Investment

Ivy Mid Cap Growth Fund, Class A Shares(1)	$	9,782
Russell Mid-Cap Growth Index	$	7,391
Lipper Mid-Cap Growth Funds Universe Average	$	7,648

IVY MID CAP GROWTH FUND CLASS A SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY MID CAP GROWTH FUND CLASS A SHARES	RUSSELL MID-CAP GROWTH INDEX	LIPPER MID-CAP GROWTH FUNDS UNIVERSE AVERAGE
JUNE	6/30/00	9,425	10,000	10,000
MARCH	2001	8,871	5,899	6,971
MARCH	2002	8,723	6,170	6,958
MARCH	2003	6,531	4,560	5,072
MARCH	2004	8,901	6,824	7,269
MARCH	2005	9,782	7,391	7,648

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C	Class Y
1-year period ended 3-31-05	3.58%	4.57%	9.14%	10.45%
5-year period ended 3-31-05	--	--	--	--
10-year period ended 3-31-05	--	--	--	--
Since inception of Class through 3-31-05(3)	-0.46%	-0.93%	-0.11%	0.52%

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

(3)6-30-00 for Class A shares, 7-6-00 for Class B shares, 7-3-00 for Class C shares and 7-10-00 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY MID CAP GROWTH FUND
Portfolio Highlights

On March 31, 2005, the Ivy Mid Cap Growth Fund had net assets totaling $91,947,473 invested in a diversified portfolio of:

96.41%	Common Stocks
3.59%	Cash and Cash Equivalents and Options

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Health Care Stocks	$	21.25
Technology Stocks	$	17.67
Business Equipment and Services Stocks	$	16.24
Financial Services Stocks	$	9.80
Consumer Nondurables Stocks	$	7.29
Consumer Services Stocks	$	6.98
Capital Goods Stocks	$	6.07
Miscellaneous Stocks	$	5.78
Energy Stocks	$	5.33
Cash and Cash Equivalents and Options	$	3.59

The Investments of Ivy Mid Cap Growth Fund
March 31, 2005
COMMON STOCKS	Shares		Value
Aircraft - 1.53%
L-3 Communications Holdings, Inc.	19,800	$	1,406,196
Banks - 5.04%
Northern Trust Corporation	39,300		1,709,747
Southwest Bancorporation of Texas, Inc.	31,000		566,680
Synovus Financial Corp.	84,600		2,356,956
			4,633,383
Beverages - 2.89%
Brown-Forman Corporation, Class B	24,600		1,346,850
Coca-Cola Enterprises Inc.	63,750		1,308,150
			2,655,000
Broadcasting - 1.08%
Cox Radio, Inc., Class A*	59,200		995,152
Business Equipment and Services - 5.77%
Cintas Corporation	32,500		1,343,712
Lamar Advertising Company*	57,350		2,310,345
Stericycle, Inc.*	37,300		1,648,474
			5,302,531
Capital Equipment - 2.08%
IDEX Corporation	47,475		1,915,616
Communications Equipment - 1.05%
Juniper Networks, Inc.*	43,800		966,447
Computers - Micro - 4.38%
Apple Computer, Inc. (A)*	86,400		3,607,200
Sun Microsystems, Inc.*	104,100		420,044
			4,027,244
Computers - Peripherals - 2.53%
EMC Corporation*	96,700		1,191,344
Mercury Interactive Corporation*	23,950		1,133,913
			2,325,257
Cosmetics and Toiletries - 2.63%
Estee Lauder Companies Inc. (The), Class A	53,750		2,417,675
Electrical Equipment - 1.55%
Molex Incorporated	8,900		234,826
Molex Incorporated, Class A	50,450		1,189,359
			1,424,185
Electronic Components - 6.64%
Analog Devices, Inc.	24,900		899,886
Broadcom Corporation, Class A*	38,350		1,150,308
Microchip Technology Incorporated	55,650		1,445,509
Network Appliance, Inc.*	86,150		2,382,909
Semtech Corporation*	12,700		226,695
			6,105,307
Electronic Instruments - 1.54%
Lam Research Corporation*	49,150		1,418,715
Food and Related - 1.77%
Hershey Foods Corporation	26,950		1,629,397
Health Care - Drugs - 7.76%
Allergan, Inc.	30,900		2,146,623
Cephalon, Inc.*	24,000		1,123,800
Eyetech Pharmaceuticals, Inc.*	15,100		415,174
Forest Laboratories, Inc.*	10,950		404,602
Gilead Sciences, Inc.*	41,200		1,474,754
ICOS Corporation*	37,300		835,333
Neurocrine Biosciences, Inc.*	19,300		733,786
			7,134,072
Health Care - General - 6.05%
Biomet, Inc.	51,925		1,886,695
Gen-Probe Incorporated*	12,000		536,400
Kyphon Inc.*	38,250		961,031
Schein (Henry), Inc.*	61,050		2,184,369
			5,568,495
Hospital Supply and Management - 7.44%
Bard (C. R.), Inc.	48,700		3,315,496
Health Management Associates, Inc., Class A	53,950		1,412,411
Laboratory Corporation of America Holdings*	43,800		2,111,160
			6,839,067
Hotels and Gaming - 2.16%
Orient-Express Hotels Ltd.	12,200		318,420
Starwood Hotels & Resorts Worldwide, Inc.	27,750		1,665,833
			1,984,253
Metal Fabrication - 2.44%
Fastenal Company	40,550		2,242,415
Motor Vehicles - 1.10%
Harley-Davidson, Inc.	17,500		1,010,800
Multiple Industry - 1.29%
AXIS Capital Holdings Limited	44,000		1,189,760
Petroleum - Domestic - 1.11%
XTO Energy Inc. (A)	31,066		1,020,207
Petroleum - International - 3.70%
Burlington Resources Inc. (A)	45,750		2,290,702
Noble Energy, Inc. (A)	16,300		1,108,726
			3,399,428
Petroleum - Services - 0.52%
Smith International, Inc. (A)*	7,650		479,885
Publishing - 3.74%
Getty Images, Inc.*	35,150		2,499,517
Meredith Corporation	20,050		937,337
			3,436,854
Retail - Food Stores - 0.54%
Longs Drug Stores Corporation	14,450		494,479
Retail - General Merchandise - 1.28%
Nordstrom, Inc.	21,200		1,174,056
Security and Commodity Brokers - 4.76%
Ameritrade Holding Corporation*	123,350		1,260,637
Chicago Mercantile Exchange Holdings Inc.	10,600		2,056,718
Prudential Financial, Inc.	18,448		1,058,915
			4,376,270
Timesharing and Software - 10.47%
Alliance Data Systems Corporation*	66,050		2,668,420
eBay Inc.*	74,100		2,760,595
Global Payments Inc.	16,500		1,064,085
Paychex, Inc.	61,000		2,004,460
Total System Services, Inc.	45,150		1,128,299
			9,625,859
Trucking and Shipping - 1.57%
C.H. Robinson Worldwide, Inc.	28,050		1,444,435
TOTAL COMMON STOCKS - 96.41%		$	88,642,440
(Cost: $66,781,103)

PUT OPTIONS - 0.00%	Number of Contracts
Burlington Resources Inc., April 43,       Expires 4-16-05		457		1,325
Noble Energy, Inc., April 58.5,       Expires 4-16-05		163		18
Smith International, Inc., April 57.5,       Expires 4-16-05		76		1,145
XTO Energy Inc., April 27.375,       Expires 4-16-05		232		441
(Cost: $82,360)			$	2,929
SHORT-TERM SERCURITY - 3.53%	Principal Amount in Thousands
Food and Related
McCormick & Co. Inc.,
2.83%, 4-1-05	$	3,250		3,250,000
(Cost: $3,250,000)
TOTAL INVESTMENT SECURITIES - 99.94%			$	91,895,369
(Cost: $70,113,463)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.06%				52,104
NET ASSETS - 100.00%			$	91,947,473

Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
(A)Securities serves as cover for the following written call options outstanding as of March 31, 2005. (See Note 6 to financial statements):
	Underlying Security	Contracts Subject to Call	Expiration Month/ Exercise Price	Premium Received			Market Value
	Apple Computer, Inc.	220	April/45		$	17,594	$	16,500
	Apple Computer, Inc.	220	April/47.5			11,979		6,600
	Burlington Resources Inc.	457	April/51.5			18,280		34,184
	Noble Energy, Inc.	163	April/69			5,216		15,390
	Smith International, Inc.	76	April/68			4,902		449
	XTO Energy Inc.	232	April/33.375			8,468		22,438
					$	66,439	$	95,561
See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
     IVY MID CAP GROWTH FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $70,113) (Notes 1 and 3)	$	91,895
Receivables:
Fund shares sold		229
Dividends and interest		56
Prepaid and other assets		34
Total assets		92,214
LIABILITIES
Payable to Fund shareholders		98
Outstanding written options at market (premium received - $66) (Note 6)		96
Accrued shareholder servicing (Note 2)		43
Due to custodian		23
Accrued accounting services fee (Note 2)		4
Accrued management fee (Note 2)		2
Accrued distribution and service fees (Note 2)		1
Total liabilities		267
Total net assets	$	91,947
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	93
Additional paid-in capital	116,778
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(7	)
Accumulated undistributed net realized loss on investment transactions	(46,670		)
Net unrealized appreciation in value of securities		21,753
Net assets applicable to outstanding units of capital	$	91,947
Net asset value per share (net assets divided by shares outstanding):
Class A	$9.99
Class B	$9.50
Class C	$9.67
Class Y	$10.04
Capital shares outstanding:
Class A		6,794
Class B		1,117
Class C		1,191
Class Y		195
Capital shares authorized	350,000

See Notes to Financial Statements.

Statement of Operations
     IVY MID CAP GROWTH FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends	$	508
Interest and amortization		74
Total income		582
Expenses (Note 2):
Investment management fee		707
Shareholder servicing:
Class A		231
Class B		79
Class C		43
Class Y		3
Distribution fee:
Class A		30
Class B		82
Class C		80
Service fee:
Class A		120
Class B		27
Class C		27
Class Y		4
Accounting services fee		46
Audit fees		21
Legal fees		18
Custodian fees		11
Other		85
Total		1,614
Less expenses in excess of voluntary limit (Note 2)		(43	)
Total expenses		1,571
Net investment loss		(989	)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		2,285
Realized net gain on purchased options		218
Realized net loss on written options		(301	)
Realized net gain on investments		2,202
Unrealized appreciation in value of securities during the period		6,593
Unrealized depreciation in value of purchased options during the period		(79	)
Unrealized depreciation in value of written options during the period		(42	)
Unrealized appreciation in value of investments during the period		6,472
Net gain on investments		8,674
Net increase in net assets resulting from operations	$	7,685

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE IN NET ASSETS
Operations:
Net investment loss	$	(989	)	$	(820	)
Realized net gain (loss) on investments		2,202			(874	)
Unrealized appreciation		6,472			14,284
Net increase in net assets resulting from operations		7,685			12,590
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
Realized gains on investment transactions:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
		-			-
Capital share transactions (Note 5)		11,632			41,350
Total increase		19,317			53,940
NET ASSETS
Beginning of period		72,630			18,690
End of period	$	91,947		$	72,630
Undistributed net investment loss	$	(7	)	$	(2	)

(1)See "Financial Highlights" on pages 143 - 146.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 6-30-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	9.09		$	6.67		$	8.91		$	9.11		$	10.00
Income (loss) from investment operations:
Net investment income (loss)	(0.09		)	(0.08		)	(0.05		)		0.02			0.11
Net realized and unrealized             gain (loss) on investments		0.99			2.50		(2.19		)	(0.17		)		(0.65	)
Total from investment operations		0.90			2.42		(2.24		)	(0.15		)		(0.54	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)*	(0.05		)		(0.06	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.29	)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.05		)		(0.35	)
Net asset value, end of period	$	9.99		$	9.09		$	6.67		$	8.91		$	9.11
Total return(2)		9.90	%	36.28		%	-25.13		%	-1.67		%		-5.88	%
Net assets, end of period (in millions)	$68			$50			$14			$15			$11
Ratio of expenses to average       net assets including       voluntary expense waiver		1.65	%		1.84	%		1.17	%		1.17	%		1.01	%(3)
Ratio of net investment income (loss)       to average net assets including       voluntary expense waiver	-0.95		%	-1.20		%	-0.49		%		0.34	%		1.85	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.70	%		1.89	%		2.02	%		1.84	%		1.65	%(3)
Ratio of net investment income (loss)       to average net assets excluding       voluntary expense waiver	-1.00		%	-1.25		%	-1.34		%	-0.33		%		1.21	%(3)
Portfolio turnover rate		25	%		24	%		36	%		39	%		110	%

*Not shown due to rounding.
(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-6-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	8.75		$	6.49		$	8.81		$	9.07		$	10.01
Income (loss) from investment operations:
Net investment income (loss)	(0.23		)	(0.17		)	(0.14		)	(0.09		)		0.02
Net realized and unrealized gain             (loss) on investments		0.98			2.43		(2.18		)	(0.17		)		(0.66	)
Total from investment operations		0.75			2.26		(2.32		)	(0.26		)		(0.64	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.01	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.29	)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.30	)
Net asset value, end of period	$	9.50		$	8.75		$	6.49		$	8.81		$	9.07
Total return		8.57	%	34.82		%	-26.33		%	-2.87		%		-6.85	%
Net assets, end of period (in millions)	$11			$12			$2			$2			$2
Ratio of expenses to average       net assets including       voluntary expense waiver		2.81	%		3.04	%		2.73	%		2.49	%		2.40	%(2)
Ratio of net investment income (loss)       to average net assets including       voluntary expense waiver	-2.12		%	-2.37		%	-2.05		%	-0.95		%		0.44	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		-			3.09	%		3.58	%		3.90	%		3.93	%(2)
Ratio of net investment loss to average       net assets excluding voluntary       expense waiver		-		-2.43		%	-2.90		%	-2.37		%		-1.09	%(2)
Portfolio turnover rate		25	%		24	%		36	%		39	%		110	%

(1)Commencement of operations of the class.
(2)Annualized.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	8.86		$	6.56		$	8.85		$	9.08		$	10.00
Income (loss) from investment operations:
Net investment income (loss)	(0.15		)	(0.13		)	(0.10		)	(0.05		)		0.04
Net realized and unrealized gain             (loss) on investments		0.96			2.43		(2.19		)	(0.18		)		(0.66	)
Total from investment operations		0.81			2.30		(2.29		)	(0.23		)		(0.62	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.01	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.29	)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.30	)
Net asset value, end of period	$	9.67		$	8.86		$	6.56		$	8.85		$	9.08
Total return		9.14	%	35.06		%	-25.88		%	-2.53		%		-6.58	%
Net assets, end of period (in millions)	$11			$10			$3			$4			$4
Ratio of expenses to average       net assets including       voluntary expense waiver		2.35	%		2.59	%		2.18	%		2.10	%		1.99	%(2)
Ratio of net investment income (loss)       to average net assets including       voluntary expense waiver	-1.66		%	-1.98		%	-1.50		%	-0.55		%		0.84	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		2.46	%		2.64	%		3.03	%		3.30	%		3.26	%(2)
Ratio of net investment loss       to average net assets excluding       voluntary expense waiver	-1.77		%	-2.03		%	-2.35		%	-1.74		%		-0.43	%(2)
Portfolio turnover rate		25	%		24	%		36	%		39	%		110	%

(1)Commencement of operations of the class.
(2)Annualized.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-10-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	9.09		$	6.67		$	8.91		$	9.11		$	10.23
Income (loss) from investment operations:
Net investment income (loss)		(0.06	)	(0.05		)	(0.01		)		0.00			0.11
Net realized and unrealized gain             (loss) on investments		1.01			2.47		(2.20		)	(0.14		)		(0.88	)
Total from investment operations		0.95			2.42		(2.21		)	(0.14		)		(0.77	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.03		)	(0.06		)		(0.06	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.29	)
Total distributions	(0.00		)	(0.00		)	(0.03		)	(0.06		)		(0.35	)
Net asset value, end of period	$	10.04		$	9.09		$	6.67		$	8.91		$	9.11
Total return		10.45	%	36.28		%	-24.86		%	-1.52		%		-7.97	%
Net assets, end of period (in thousands)	$1,961			$1,363			$329			$438			$184
Ratio of expenses to average       net assets including       voluntary expense waiver		1.25	%		1.72	%		0.86	%		0.83	%		1.03	%(2)
Ratio of net investment income (loss)       to average net assets including       voluntary expense waiver		-0.55	%	-0.91		%	-0.18		%		0.50	%		1.77	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.48	%		1.77	%		1.71	%		1.30	%		1.68	%(2)
Ratio of net investment income (loss)       to average net assets excluding       voluntary expense waiver		-0.78	%	-0.96		%	-1.03		%		0.03	%		1.11	%(2)
Portfolio turnover rate		25	%		24	%		36	%		39	%		110	%

(1)Commencement of operations of the class.
(2)Annualized.

See Notes to Financial Statements.

Manager's Discussion of Ivy Money Market Fund
     March 31, 2005

An interview with Mira Stevovich, CFA, portfolio manager of the Ivy Money Market Fund

The following discussion and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund was competitive with peer group money market funds over the fiscal year. The yield on the Fund has increased gradually due to increases in the federal funds rate, which has translated into higher-yielding market rates of interest. The Fund's fiscal year started with the federal funds rate at a historically low 1 percent. As the economy improved, the Federal Reserve began to remove excess liquidity from the financial system in a slow and measured way. In June of 2004, the Federal Reserve voted to increase the federal funds rate one quarter-point, and continued to do so at each of its subsequent meetings. At the end of the fiscal year, the federal funds rate was 2.75 percent.

What factors affected performance during the fiscal year?

The increase in short-term interest rates positively affected the overall performance of the Fund. After a long period of low short-term interest rates, along with market sentiment that anticipated this environment to remain the same for a prolonged period of time, things began to change in the spring of 2004. The market began to incorporate higher future rates of interest into market rates, which provided the opportunity to invest in securities with higher yields.

Credit quality continued to play a role in the management and performance of the Fund. We remain vigilant in our review of companies and securities in which we invest. We continue to select investments that we believe to be of the highest credit quality, based on our strict credit risk constraints.

What market conditions or events influenced the Fund's performance during the fiscal year?

A decline in the supply of short-term securities was a factor in the Fund's return during the past year. Early in the fiscal year, companies that had contracted their businesses during the economic downturn, as well as those that had financed their businesses in the long-term bond market, continued borrowing less in the short-term market. However, as the economy expanded, companies began to increase their short-term financing, which increased the supply of securities in the short-term market.

However, counteracting this increased supply was the increasing number of investors that remained in the short-term market, anticipating each interest rate increase by the Federal Reserve. This slightly depressed the yields on securities with very short maturities. Also, uncertainty about the ultimate magnitude and timing of increases by the Federal Reserve made it difficult for the longer end of the money market yield curve to fully capture the anticipated future increases in short-term rates. Therefore, higher yields were available in one-year maturities; however, they did not fully reflect the anticipated increases in short-term rates. That also kept investors at the shorter end of the short-term market, which further depressed yields.

What strategies and techniques did you employ that specifically affected the Fund's performance?

As always, we carefully select securities that we feel are of the highest credit quality. This approach ultimately affects the Fund's yield, because high quality securities are issued at premium rates of interest (lower-yielding securities).

To attempt to compensate for this, we have tried to purchase longer-dated (higher-yielding) high-quality securities. We also have looked to certain sectors, such as taxable municipal securities, which have been offered at attractive rates of interest. In our view, floating rate taxable municipal and corporate securities have been an excellent investment vehicle during this increasing interest rate environment. The more frequent the rate change of the floating rate security, the quicker the interest rate increases are typically captured in the portfolio.

What industries did you emphasize during the fiscal year, and what looks attractive to you going forward?

We have emphasized investments of the highest credit quality during the fiscal year, and we intend to continue to do so going forward. We have also increased our exposure to floating rate securities in an attempt to take advantage of increasing rates of interest, and we intend to remain invested in them going forward. We have also added investments in asset-backed commercial paper from time-to-time, as they provide higher yields while also providing high credit quality.

Going forward, we plan to choose securities from all industries and sectors, including U.S. Treasury and government agency securities, when we feel that they look attractive on a relative basis.

The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager's views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Please remember that an investment in the Fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other governmental 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.

SHAREHOLDER SUMMARY OF IVY MONEY MARKET FUND
Portfolio Highlights

On March 31, 2005, Ivy Money Market Fund had net assets totaling $45,600,867.

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Corporate Obligations - Notes	$	38.80
Taxable Municipal Obligations	$	24.87
Corporate Obligations - Commercial Paper	$	21.99
United States Government Agency Obligations and       Cash and Cash Equivalents	$	9.73
Corporate Obligations - Certificates of Deposit	$	4.61

The Investments of Ivy Money Market Fund
March 31, 2005
CORPORATE OBLIGATIONS	Principal Amount in Thousands			Value
Certificates of Deposit - 4.61%
Banks
Citibank, N.A.:
2.8%, 5-20-05	$	1,900	$	1,900,000
3.02%, 6-29-05		200		200,000
				2,100,000
Commercial Paper
Finance Companies - 3.28%
Ciesco, LLC,
2.79%, 4-14-05		1,500		1,498,489
Food and Related - 3.59%
Golden Peanut Co.,
2.9%, 5-27-05		250		248,872
McCormick & Co. Inc.:
2.8%, 5-3-05		500		498,755
2.95%, 8-16-05		900		889,896
				1,637,523
Household - General Products - 5.28%
Fortune Brands Inc.,
2.9%, 5-25-05		2,000		1,991,300
Procter & Gamble Company (The),
2.68%, 5-2-05		420		419,031
				2,410,331
Motor Vehicles - 1.31%
Harley-Davidson Funding Corp.,
2.9%, 5-25-05		600		597,390
Multiple Industry - 2.72%
General Electric Capital Corporation:
2.8%, 4-1-05		250		250,000
3.04%, 8-8-05		1,000		989,107
				1,239,107
Security and Commodity Brokers - 4.93%
Greenwich Capital Holdings Inc. (Royal Bank            of Scotland PLC (The)),
2.86%, 4-1-05		1,306		1,306,000
UBS Finance Delaware LLC:
2.83%, 5-18-05		570		567,894
2.85%, 6-2-05		375		373,159
				2,247,053
Utilities - Telephone - 0.88%
SBC Communications Inc.,
2.7%, 4-5-05		400		399,880
Total Commercial Paper - 21.99%				10,029,773
Notes
Banks - 7.69%
Bank of America Corporation,
2.99%, 5-13-05		1,000		1,000,259
U.S. Bancorp,
4.75%, 6-30-05		800		804,742
Wells Fargo & Company:
2.76625%, 4-4-05		500		500,000
2.78%, 4-15-05		1,200		1,200,000
				3,505,001
Business Equipment and Services - 1.78%
Playworld Systems Incorporated, Taxable Variable            Rate Demand/Fixed Rate Revenue Bonds,            Series A of 1998 (Wachovia Bank, N.A.),
2.93%, 4-6-05		810		810,000
Computers - Main and Mini - 2.19%
International Business Machines Corporation,
2.72458%, 4-8-05		1,000		1,000,000
Electrical Equipment - 0.45%
Emerson Electric Co.,
7.875%, 6-1-05		205		206,931
Finance Companies - 2.78%
P&W Holdings, LLC, Taxable Variable Rate Demand            Bonds, Series 2005 (Wachovia Bank, N.A.),
2.86%, 4-7-05		395		395,000
Park Street Properties I, LLC, Taxable Variable            Rate Demand Notes, Series 2004 (University            of Wisconsin - Madison Projects), (U.S. Bank,            National Association),
2.81%, 4-7-05		875		875,000
				1,270,000
Food and Related - 2.07%
Unilever Capital Corporation,
6.875%, 11-1-05		925		945,533
Health Care - General - 2.16%
ACTS Retirement - Life Communities, Inc.,            Variable Rate Demand Bonds, Series 2003A            (Bank of America, N.A.),
2.8%, 4-7-05		985		985,000
Hospital Supply and Management - 0.85%
Autumn House at Powder Mill, Inc.,            Taxable Variable Rate Demand Bonds,            Series of 2003 (Suntrust Bank),
2.85%, 4-7-05		150		150,000
Meriter Management Services, Inc.,            Taxable Variable Rate Demand Notes,            Series 1996 (U.S. Bank Milwaukee, N.A.),
2.82%, 4-6-05		235		235,000
				385,000
Household - General Products - 2.74%
Procter & Gamble Company (The),
2.93%, 6-9-05		1,250		1,250,000
Insurance - Property and Casualty - 2.19%
MBIA Global Funding, LLC            (MBIA Insurance Corporation),
2.81%, 4-29-05		1,000		1,000,000
Multiple Industry - 5.87%
Heller Financial, Inc.,
6.375%, 3-15-06		900		925,338
The Salvation Army, Taxable Multi-Modal Revenue            Bonds, Series 2005A (The Bank of New York),
2.84%, 4-7-05		1,750		1,750,000
				2,675,338
Publishing - 1.76%
Gannett Co., Inc.,
4.95%, 4-1-05		800		800,000
Restaurants - 1.22%
McDonald's Corporation,
4.488%, 3-7-06 (A)		550		554,781
Retail - General Merchandise - 0.48%
Service Oil, Inc., Taxable Variable Rate Demand            Bonds (Service Oil, Inc.), Series 2002            (U.S. Bank, National Association),
2.9%, 4-1-05		220		220,000
Trucking and Shipping - 1.16%
Volpe Family Partnership, L.P., Taxable Variable            Rate Demand Revenue Bonds, Series of 2001            (Wachovia Bank, N.A.),
2.91%, 4-7-05		530		530,000
Utilities - Telephone - 3.41%
BellSouth Corporation,
4.119%, 4-26-05 (A)		1,100		1,101,859
SBC Communications Inc.,
4.206%, 6-5-05 (A)		450		451,561
				1,553,420
Total Notes - 38.80%				17,691,004
TOTAL CORPORATE OBLIGATIONS - 65.40%			$	29,820,777
(Cost: $29,820,777)
MUNICIPAL OBLIGATIONS
California - 8.13%
California Pollution Control Financing Authority,       Environmental Improvement Revenue Bonds       (Air Products and Chemicals, Inc./Wilmington Facility),       Taxable Series 1997A,
2.85%, 5-9-05		2,130		2,130,000
County of Sacramento, Taxable Pension Funding Bonds,       Series 1995B (Bayerische Landesbank Girozentrale,       New York Branch),
2.84%, 4-6-05		1,575		1,575,000
				3,705,000

Florida - 1.10%
University of South Florida Research Foundation,       Incorporated, Variable Rate Demand Revenue Bonds       (Multi-Tenant Office Building Project), Taxable       Series 2004C (Bank of America, N.A.),
2.82%, 4-6-05		500		500,000
Maryland - 1.06%
Mayor and City Council of Baltimore (City of Baltimore,       Maryland), General Obligation Bonds, Consolidated       Public Improvement Bonds, Series 2003D       (Variable Rate Demand/Taxable),       (Financial Security Assurance Inc.),
2.85%, 4-7-05		485		485,000
New York - 4.00%
Nassau County Industrial Development Agency,       Taxable Variable Rate Demand Revenue Bonds       (57 Seaview Realty Associates, LLC 2004 Project),       (Wachovia Bank, N.A.),
2.86%, 4-7-05		1,500		1,500,000
The City of New York, General Obligation Bonds,       Fiscal 1995 Series B, Taxable Adjustable Rate Bonds       (Bayerische Landesbank Girozentrale, New York Branch),
2.62%, 4-  4-05		325		325,000
				1,825,000
Texas - 4.65%
Gulf Coast Waste Disposal Authority, Pollution Control       Revenue Bonds (Amoco Oil Company Project),       Taxable Series 1995,
2.74%, 4-7-05		2,121		2,121,000
Washington - 3.21%
Washington State Housing Finance Commission:       Taxable Variable Rate Demand Multifamily Revenue Bonds:
Brittany Park Project, Series 1996B (U.S. Bank       of Washington, National Association),
2.92%, 4-7-05		595		595,000
Columbia Heights Retirement Project, Series 2004B       (Wells Fargo Bank, N.A.),
2.9%, 4-1-05		380		380,000
Mill Pointe Apartments Project, Series 1999B       (U. S. Bank, National Assocation),
2.9%, 4-7-05		225		225,000
Taxable Variable Rate Demand Nonprofit Revenue Bonds       (Virginia Mason Research Center Project), Series 1997B       (U.S. Bank, National Association),
2.9%, 4-1-05	265			265,000
				1,465,000
Wisconsin - 2.72%
Town of Wood River, Wisconsin, Taxable Variable Rate       Demand Industrial Development Revenue Bonds       (Burnett Dairy Cooperative Project), Series 2001B       (U. S. Bank, National Association),
2.9%, 4-1-05		1,240		1,240,000
TOTAL MUNICIPAL OBLIGATIONS - 24.87%			$	11,341,000
(Cost: $11,341,000)
UNITED STATES GOVERNMENT AGENCY OBLIGATIONS
Federal Home Loan Bank:
1.3%, 4-27-05		1,500		1,500,000
1.35%, 4-29-05		800		800,000
1.555%, 5-3-05		750		750,000
Overseas Private Investment Corporation:
2.85%, 4-6-05		1,144		1,144,000
2.85%, 4-6-05		407		406,977
TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS - 10.09%			$	4,600,977
(Cost: $4,600,977)
TOTAL INVESTMENT SECURITIES - 100.36%			$	45,762,754
(Cost: $45,762,754)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.36%)				(161,887	)
NET ASSETS - 100.00%			$	45,600,867

Notes to Schedule of Investments

(A)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2005, the total value of these securities amounted to $2,108,201 or 4.62% of net assets.

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

Statement of Assets and Liabilities
     IVY MONEY MARKET FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $45,763) (Note 1)	$	45,763
Cash		20
Receivables:
Interest		205
Fund shares sold		17
Prepaid and other assets		19
Total assets		46,024
LIABILITIES
Payable to Fund shareholders		386
Accrued shareholder servicing (Note 2)		25
Dividends payable		9
Accrued accounting services fee (Note 2)		2
Accrued management fee (Note 2)		1
Total liabilities		423
Total net assets	$	45,601
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	456
Additional paid-in capital		45,145
Net assets applicable to outstanding units of capital	$	45,601
Net asset value per share (net assets divided by shares outstanding):
Class A	$1.00
Class B	$1.00
Class C	$1.00
Capital shares outstanding:
Class A		39,324
Class B		1,396
Class C		4,881
Capital shares authorized	300,000

See Notes to Financial Statements.

Statement of Operations
     IVY MONEY MARKET FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	819
Expenses (Note 2):
Shareholder servicing:
Class A		191
Class B		4
Class C		12
Investment management fee		192
Registration fees		54
Distribution fee:
Class B		12
Class C		36
Accounting services fee		32
Audit fees		17
Service fee:
Class B		4
Class C		12
Legal fees		15
Custodian fees		9
Other		37
Total		627
Less expenses in excess of voluntary waiver of (Note 2):
Class A shareholder servicing	(127		)
Class B service and distribution fees		(6	)
Class C service and distribution fees		(20	)
Total expenses		474
Net investment income		345
Net increase in net assets resulting from operations	$	345

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income	$	345		$	116
Net increase in net assets resulting from operations		345			116
Distributions to shareholders from                   net investment income (Note 1F): (1)
Class A		(337	)		(114	)
Class B		(2	)		(-	)*
Class C		(6	)		(2	)
		(345	)		(116	)
Capital share transactions (Note 5)		(6,679	)		30,964
Total increase (decrease)		(6,679	)		30,964
NET ASSETS
Beginning of period		52,280			21,316
End of period	$	45,601		$	52,280
Undistributed net investment income	$	-		$	-

*Not shown due to rounding.
(1)See "Financial Highlights" on pages 159 - 161.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,										For the period from 6-30-00(1) to
	2005		2004		2003			2002			3-31-01
Net asset value, beginning of period	$	1.00	$	1.00	$	1.00		$	1.00		$	1.00
Net investment income		0.0083		0.0061		0.0124			0.0259			0.0413
Less dividends declared	(	0.0083)	(	0.0061)	(	0.0124)		(	0.0259)		(	0.0413)
Net asset value, end of period	$	1.00	$	1.00	$	1.00		$	1.00		$	1.00
Total return		0.82%		0.62%		1.25	%		2.70	%		4.11	%
Net assets, end of period       (in millions)		$39		$45		$10			$5			$5
Ratio of expenses to average       net assets including voluntary       expense waiver		0.89%		0.67%		0.52	%		0.81	%		0.92	%(2)
Ratio of net investment       income to average net       assets including voluntary       expense waiver		0.81%		0.48%		1.26	%		2.60	%		5.49	%(2)
Ratio of expenses to average       net assets excluding voluntary       expense waiver		1.20%		0.87%		0.92	%		1.03	%		1.18	%(2)
Ratio of net investment       income to average net       assets excluding voluntary       expense waiver		0.50%		0.28%		0.86	%		2.38	%		5.23	%(2)

(1)Commencement of operations of the class.
(2)Annualized.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,											For the period from 7-12-00(1) to
	2005			2004			2003			2002		3-31-01
Net asset value, beginning of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Net investment income		0.0014			0.0002			0.0015			0.0147			0.0299
Less dividends declared	(	0.0014)		(	0.0002)		(	0.0015)		(	0.0147)		(	0.0299)
Net asset value, end of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total return		0.14	%		0.02	%		0.16	%		1.55	%		2.97	%
Net assets, end of period (in thousands)	$	1,396		$	1,225		$	1,188		$	578		$	431
Ratio of expenses to average       net assets including       voluntary expense waiver		1.57	%		1.14	%		1.59	%		1.88	%		2.29	%(2)
Ratio of net investment income to       average net assets including       voluntary expense waiver		0.12	%		0.02	%		0.14	%		1.33	%		4.05	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.95	%		1.34	%		2.06	%		2.39	%		2.94	%(2)
Ratio of net investment income       (loss) to average net assets       excluding voluntary       expense waiver	-0.26		%	-0.18		%	-0.33		%		0.82	%		3.41	%(2)

(1)Commencement of operations of the class.
(2)Annualized.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,											For the period from 7-3-00(1) to
	2005			2004			2003			2002		3-31-01
Net asset value, beginning of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Net investment income		0.0013			0.0002			0.0019			0.0157			0.0332
Less dividends declared	(	0.0013)		(	0.0002)		(	0.0019)		(	0.0157)		(	0.0332)
Net asset value, end of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total return		0.12	%		0.02	%		0.20	%		1.63	%		3.32	%
Net assets, end of period (in millions)		$5			$6			$10			$7			$10
Ratio of expenses to average       net assets including       voluntary expense waiver		1.58	%		1.16	%		1.56	%		1.81	%		1.98	%(2)
Ratio of net investment income to       average net assets including       voluntary expense waiver		0.12	%		0.03	%		0.18	%		1.58	%		4.34	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.99	%		1.35	%		1.99	%		2.31	%		2.54	%(2)
Ratio of net investment income       (loss) to average net assets       excluding voluntary       expense waiver	-0.29		%	-0.17		%	-0.25		%	1.08		%		3.78	%(2)

(1)Commencement of operations of the class.
(2)Annualized.

See Notes to Financial Statements.

Manager's Discussion of Ivy Municipal Bond Fund
     March 31, 2005

An interview with Bryan J. Bailey, CFA, portfolio manager of the Ivy Municipal Bond Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund showed disappointing performance during the fiscal year and underperformed its benchmark index. The Fund's Class C shares increased 1.04 percent for the fiscal year, compared with the Lehman Brothers Municipal Bond Index (reflecting the performance of securities that generally represent the municipal bond market), which increased 2.67 percent for the period, and the Lipper General Municipal Debt Funds Universe Average (reflecting the performance of funds with similar investment objectives), which increased 2 percent for the period.

Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

Why did the Fund lag its benchmark index during the fiscal year?

The same issues that negatively impacted Fund performance in the prior fiscal year continued to plague the Fund in this most recent fiscal year. Two primary factors contributed to underperformance over the period. First, the Fund both began and ended the fiscal year with lower exposure to long-dated (20-year or more) bonds than the benchmark. The long-end of the yield curve provided the best performance results during the fiscal year, by a wide margin. Aggressive discount structures performed particularly well. With nominal interest rates hovering near historical lows, the Federal Reserve began to aggressively remove monetary accommodation from the system. Couple this with emerging signs of accelerating inflation, and we felt it prudent to underweight bonds with the highest level of interest-rate sensitivity. We were wrong. In February, the Federal Reserve chairman called the tame behavior of long-term interest rates a "conundrum," as it is unprecedented for long rates not to rise during periods o f monetary tightening. We entered the fiscal year with the 20-year to 30-year interest rate slope steep by historical standards. However, we did not believe that we would be nimble enough to exploit this opportunity if indeed interest rates began to rise, as we expected. We continue to dislike the risk/reward tradeoff presented by the long end of the market, and believe it is prudent to stick with the current maturity distribution of the portfolio.

The second notable factor that negatively impacted performance was an underweight position in non-investment-grade and lower-quality corporate-backed bonds. We started the fiscal year with quality spreads trading tight, in our opinion, but by fiscal year-end the spreads remained similar, and were even tighter in some instances. Once again, we enter the new fiscal year believing that we are not being adequately compensated for increasing exposure to lower-rated credits.

On the positive side, we feel that Fund performance was enhanced by the fact that some of our holdings were pre-refunded, as well as by the fact that we had an overweight position in bonds subject to the alternative minimum tax (AMT). We feel that our overweight position in the underperforming housing-revenue bond sector was a drag on performance, but we intend to maintain this position because we like the sector's higher yield, higher credit quality characteristics plus the defensive attributes.

What other market conditions or events influenced the Fund's performance during the fiscal year?

We have been, and believe that we will continue to be, in an environment characterized by high levels of volatility. We are in a period in which the markets appear to be trading on technical influences rather than on fundamentals. The presence of many large, nontraditional fixed-income investors is making any predictions on interest rates very difficult, if not impossible. It appears that arbitrageurs, foreign central bank currency manipulation activities, mortgage portfolio rebalancing, and flight-to-quality trades on geopolitical/terrorism fears have become the primary drivers of the fixed-income markets. Unfortunately, many of these activities are very difficult to predict, and the size of the trades are typically massive. This is today's reality, and it is something that we intend to continue to attempt to manage by not straying too far from the duration (interest rate sensitivity) of our stated benchmark. We believe this is prudent in the current environment.

What strategies and techniques did you employ that specifically affected the Fund's performance?

Maintaining the quality of the Fund, improving its diversification between sectors and states, and maintaining marketable position sizes has dramatically reduced the volatility of the Fund, in our opinion. Our management style is essentially a skeptical top-down style with an emphasis on identifying relative value opportunities between sectors, states and different security structures. Simultaneously, we attempt to exploit opportunities presented by the shape of the yield curve and by cross-market technical issues. The Fund is typically fully invested. We believe that a diligent approach to ongoing credit analysis and subsequent surveillance after purchase has helped the Fund to avoid credit problems that can surface with some holdings.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

As we entered the fiscal year, we felt that the market presented few, if any, attractive relative value opportunities. As mentioned above, quality spreads were tight by historical standards, and we did not find the risk/reward tradeoff attractive for moving down the credit curve. Unfortunately, lower-quality bond spreads remained tight over the course of the fiscal year and many of the best-performing sectors were also the most risky. We built an overweight position in housing bonds relative to the benchmark because of the sector's positive performance characteristics in rising interest-rate environments. However, we were not rewarded for our actions. While short and intermediate interest rates did rise, long rates actually declined, thus negating the typical performance characteristics of housing bonds in an increasing interest rate environment.

We still see very few, if any, relative value opportunities in our market. Nominal interest rates are still low, credit spreads are still tight, the Federal Reserve continues to remove accommodation from the system, signs of accelerating inflation are emerging, and the yield curve is flatter than it was one year ago. We intend to exercise restraint in "yield chasing," as we feel that tight credit spreads do not adequately compensate one for moving too far down the credit curve. While acknowledging that we have been through a painful period, we feel that our patience will eventually be rewarded.

Going forward, we intend to keep the credit quality of the Fund in the AA category, while actively seeking relative value opportunities between sectors, states and security structures. Positioning and asset distribution across the yield curve likely will continue to be a vital part of our investment strategy, as well as monitoring cross-market technical factors. We anticipate maintaining the Fund's neutral-to-defensive exposure to interest rate risk, and we believe that the Fund is well positioned entering the new fiscal year. Generally, we look to continue investing in short, intermediate and longer-term (when appropriate) investment grade (primarily) municipal bonds, with an emphasis on quality and capital preservation, with minimal yield sacrifice.

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

Comparison of Change in Value of
$10,000 Investment

Ivy Municipal Bond Fund, Class C Shares(1)	$	15,825
Lehman Brothers Municipal Bond Index	$	18,472
Lipper General Municipal Debt Funds Universe Average	$	16,754

IVY MUNICIPAL BOND FUND CLASS C SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY MUNICIPAL BOND FUND CLASS C SHARES	LEHMAN BROS MUNICIPAL BOND INDEX	LIPPER GENERAL MUNICIPAL DEBT FUNDS UNIVERSE AVERAGE
MARCH	1995	10,000	10,000	10,000
MARCH	1996	10,748	10,838	10,724
MARCH	1997	11,320	11,431	11,234
MARCH	1998	12,553	12,656	12,438
MARCH	1999	13,135	13,441	13,048
MARCH	2000	12,317	13,430	12,734
MARCH	2001	13,330	14,898	13,995
MARCH	2002	13,916	15,466	14,380
MARCH	2003	14,995	16,996	15,567
MARCH	2004	15,662	17,992	16,425
MARCH	2005	15,825	18,472	16,754

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C(3)	Class Y
1-year period ended 3-31-05	-2.44%	-2.85%	1.04%	1.75%
5-year period ended 3-31-05	-	-	5.14%	5.88%
10-year period ended 3-31-05	-	-	4.70%	-
Since inception of Class through 3-31-05(4)	4.63%	4.36%	-	3.87%

(2)Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund's most recent month-end performance. Class A shares carry a maximum front-end sales load of 4.25%. Class B and Class C shares carry maximum contingent deferred sales charges (CDSC) of 5% and 1%, respectively. (Accordingly the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class Y shares are not subject to sales charges.

(3)Performance data from 3-24-00 represents the actual performance of Class C shares. Performance data prior to 3-24-00 represents the performance of the Fund's original Class B shares. The original Class B shares were combined with Class C shares effective 3-24-00, and redesignated as Class C shares. The original Class B's performance has been adjusted to reflect the current contingent deferred sales charge (CDSC) structure applicable to Class C (1.00% maximum and declining to zero at the end of the first year after investment). Accordingly, these returns reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase. New Class B shares, with fees and expenses different from the original Class B shares, were added to the Fund on 6-30-00.

(4)9-15-00 for Class A shares, 8-8-00 for Class B shares and 12-30-98 for Class Y shares (the date on which shares were first acquired and continuously held by shareholders).

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

SHAREHOLDER SUMMARY OF IVY MUNICIPAL BOND FUND
Portfolio Highlights

On March 31, 2005, Ivy Municipal Bond Fund had net assets totaling $24,292,801 invested in a diversified portfolio.

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Education Revenue Bonds	$	13.96
City and County General Obligation Bonds	$	13.62
Housing Revenue Bonds	$	8.36
Prerefunded ETM Bonds	$	7.60
Special Tax Bonds	$	7.41
Airport Revenue Bonds	$	7.08
Hospital Revenue Bonds	$	7.07
Sales Revenue Bonds	$	5.57
Public Power Revenue Bonds	$	5.40
Other Municipal Bonds	$	5.25
School General Obligation Bonds	$	5.14
Lease/Certificate of Participation Bonds	$	4.69
Transportation Revenue Bonds	$	4.45
Water and Sewer Revenue Bonds	$	3.06
Cash and Cash Equivalents	$	1.34

On March 31, 2005, the breakdown of municipal bonds (by ratings) held by the Fund, including cash and cash equivalents, was as follows:

AAA	57.14	%
AA	14.73	%
A	8.08	%
BBB	13.21	%
Non-rated	5.50	%
Cash and Cash Equivalents	1.34	%

Ratings reflected in the wheel are taken from the following sources in order of preference: Standard & Poor's and Moody's.

2005 TAX YEAR TAXABLE EQUIVALENT YIELDS(1)
If your Taxable Income is:								Your Marginal Tax	Equivalent Tax Free Yields
	Joint Return				Single Return			Bracket Is	3%	4%	5%	6%
$	0	-	14,600	$	0	-	7,300	10%	3.33%	4.44%	5.56%	6.67%
$	14,601	-	59,400	$	7,301	-	29,700	15%	3.53%	4.71%	5.88%	7.06%
$	59,401	-	119,950	$	29,701	-	71,950	25%	4.00%	5.33%	6.67%	8.00%
$	119,951	-	182,800	$	71,951	-	150,150	28%	4.17%	5.56%	6.94%	8.33%
$	182,801	-	326,450	$	150,151	-	326,450	33%	4.48%	5.97%	7.46%	8.96%
$	326,451 and above			$	326,451 and above			35%	4.62%	6.15%	7.69%	9.23%

(1)Table is for illustration only and does not represent the actual performance of Ivy Municipal Bond Fund.

The Investments of Ivy Municipal Bond Fund
March 31, 2005
MUNICIPAL BONDS	Principal Amount in Thousands			Value
Arizona - 2.33%
The Industrial Development Authority of the City of Phoenix,       Arizona, Single Family Mortgage Revenue Bonds,       Series 2002-1A,
6.2%, 3-1-34	$	290	$	313,040
City of Bullhead City, Arizona, Bullhead Parkway       Improvement District, Improvement Bonds,
6.1%, 1-1-13		250		252,955
				565,995
California - 6.42%
San Mateo County Community College District       (County of San Mateo, California), 2002 General       Obligation Bonds (Election of 2001),       Series A (Current Interest Bonds),
5.375%, 9-1-15		500		553,120
Trustees of the California State University Systemwide       Revenue Bonds, Series 2002A,
5.5%, 11-1-15		250		276,517
Moreno Valley Unified School District, General       Obligation Bonds, 2004 Election, Series A       (Riverside County, California),
5.25%, 8-1-22		240		258,300
State of California, Various Purpose General       Obligation Bonds,
5.0%, 2-1-22		245		253,822
Riverside Community College District, Riverside County,       California, Election of 2004, General Obligation Bonds,       Series 2004A,
5.5%, 8-1-29		200		218,260
				1,560,019
Colorado - 4.23%
City of Aspen, Colorado, Sales Tax Revenue Bonds,       Series 1999,
5.25%, 11-1-15		500		526,505
El Paso County School District No. 12 - Cheyenne       Mountain, El Paso County, Colorado, General       Obligation Refunding Bonds, Series 2002,
0.0%, 9-15-12		685		501,235
				1,027,740
Florida - 3.40%
School District of Hillsborough County, Florida,       Sales Tax Revenue Bonds, Series 2002,
5.375%, 10-1-13		500		554,000
City of Jacksonville, Florida, Better Jacksonville       Sales Tax Revenue Bonds, Series 2003,
5.25%, 10-1-19		250		271,743
				825,743
Georgia - 0.94%
Hospital Authority of Cobb County (Georgia),       Revenue Anticipation Refunding and       Improvement Certificates, Series 2003,
5.25%, 4-1-20		210		228,900
Illinois - 8.17%
Village of Bedford Park, Cook County, Illinois,       Water Revenue Bonds, Series 2000A,
6.0%, 12-15-12		955		1,069,963
Bloomington-Normal Airport Authority of McLean       County, Illinois, Central Illinois Regional Airport,       Passenger Facility Charge Revenue Bonds, Series 2001,
6.05%, 12-15-19		645		645,632
City of Chicago, General Obligation Bonds,       Project and Refunding, Series 2004A,
5.25%, 1-1-21		250		268,640
				1,984,235
Indiana - 8.19%
New Albany-Floyd County School Building Corporation,       First Mortgage Bonds, Series 2002 (Floyd County, Indiana),
5.75%, 7-15-17		675		748,454
Ball State University Board of Trustees, Ball State       University Student Fee Bonds, Series K,
5.75%, 7-1-18		500		552,760
East Chicago Elementary School Building Corporation       (Lake County, Indiana), First Mortgage Bonds,       Series 1993A,
5.5%, 1-15-16		355		360,268
Dyer (Indiana) Redevelopment Authority, Economic       Development Lease Rental Bonds, Series 1999,
6.5%, 1-15-24		300		326,664
				1,988,146
Kansas - 5.06%
Sedgwick County, Kansas and Shawnee County, Kansas,       Single Family Mortgage Revenue Bonds       (Mortgage-Backed Securities Program):       2002 Series A-5,
5.55%, 12-1-33		500		530,630
2003 Series A-2,
5.65%, 6-1-35		360		383,512
2001 Series A-1 (AMT),
6.3%, 12-1-32		300		315,480
				1,229,622
Louisiana - 3.34%
State of Louisiana, Gasoline and Fuels Tax Revenue       Bonds, 2002 Series A,
5.25%, 6-1-13		500		545,350
Louisiana Local Government Environmental       Facilities and Community Development       Authority, Mortgage Revenue Bonds, Series 2004A       (GNMA Collateralized - Cypress Apartments Project),
5.5%, 4-20-38		250		264,905
				810,255
Maryland - 2.22%
Maryland Transportation Authority, Airport       Parking Revenue Bonds, Series 2002B,       Baltimore/Washington International Airport       Projects (Qualified Airport Bonds - AMT),
5.375%, 3-1-15		500		539,570
Massachusetts - 0.91%
Massachusetts Bay Transportation Authority,       Assessment Bonds, 2004 Series A,
5.25%, 7-1-20		200		221,256
Michigan - 1.85%
City of Detroit, Michigan, General Obligation Bonds       (Unlimited Tax), Series 2004-A(1),
5.25%, 4-1-23		420		448,841
Minnesota - 5.17%
City of Perham, Minnesota, General Obligation       Disposal System Revenue Bonds, Series 2001,
6.0%, 5-1-22		500		529,910
City of Victoria, Minnesota, Private School Facility       Revenue Bonds (Holy Family Catholic High School       Project), Series 1999A,
5.6%, 9-1-19		400		401,832
City of Minneapolis, Minnesota, General Obligation       Convention Center Bonds, Series 2002,
5.0%, 12-1-10		300		324,495
				1,256,237
Missouri - 5.43%
The City of St. Louis, Missouri, Airport Revenue Bonds,       Series 2001A (Airport Development Program),
5.0%, 7-1-11		500		535,315
City of Kearney, Missouri, General Obligation Bonds,       Series 2001,
5.5%, 3-1-16		350		380,041
The Industrial Development Authority of the City       of Kansas City, Missouri, Revenue Bonds, Series 2004       (Plaza Library Project),
5.9%, 3-1-24		200		202,056
City of Belton, Missouri, Tax Increment Revenue       Bonds (Belton Town Centre Project), Series 2004,
6.25%, 3-1-24		200		201,614
				1,319,026
Nebraska - 1.82%
Nebraska Higher Education Loan Program, Inc.,       Senior Subordinate Bonds, 1993-2, Series A-5A,
6.2%, 6-1-13		425		441,800
New Jersey - 2.86%
Casino Reinvestment Development Authority,       Hotel Room Fee Revenue Bonds, Series 2004,
5.25%, 1-1-23		250		272,418
New Jersey Economic Development Authority,       School Facilities Construction Bonds, 2004 Series I,
5.25%, 9-1-24		250		265,618
Tobacco Settlement Financing Corporation, Tobacco       Settlement Asset-Backed Bonds, Series 2002,
5.5%, 6-1-11		150		157,237
				695,273
New York - 13.22%
The City of New York, General Obligation Bonds:       Fiscal 2003 Series A Current Interest Bonds,
5.5%, 8-1-10		500		543,090
Fiscal 2004 Series E,
5.25%, 8-1-09		250		267,912
Dormitory Authority of the State of New York:       Third General Resolution Revenue Bonds       (State University Educational Facilities Issue),       Series 2002B,
5.25%, 11-15-23		500		539,290
Mental Health Services Facilities Improvement       Revenue Bonds, Series 2005D-1,
5.0%, 8-15-11		230		247,609
The Port Authority of New York and New Jersey,       Consolidated Bonds, One Hundred Twenty-Seventh Series,
5.5%, 12-15-14		500		544,000
New York State Thruway Authority, State Personal Income       Tax Revenue Bonds (Transportation), Series 2002A,
5.25%, 3-15-10		500		537,520
New York City, Municipal Water Finance Authority,       Water and Sewer System Revenue Bonds,       Fiscal 2003, Series D,
5.0%, 6-15-09		500		532,815
				3,212,236
Oklahoma - 1.61%
Tulsa Public Facilities Authority (Oklahoma),       Assembly Center Lease Payment Revenue Bonds,       Refunding Series 1985,
6.6%, 7-1-14		335		391,407
Pennsylvania - 3.65%
The School District of Philadelphia, Pennsylvania,       General Obligation Bonds, Series A of 2002,       Prerefunded 2-1-12,
5.5%, 2-1-18		500		555,710
Schuylkill County Industrial Development Authority,       Variable Rate Demand Revenue Bonds       (Pine Grove Landfill, Inc. Project), 1995 Series,
5.1%, 10-1-19		320		331,427
				887,137
Rhode Island - 3.04%
Rhode Island Health and Educational Building Corporation,       Hospital Financing Revenue Bonds, St. Joseph Health       Services of Rhode Island Issue, Series 1999,
5.4%, 10-1-09		725		739,152
South Carolina - 2.22%
South Carolina Public Service Authority, Santee Cooper,       Revenue Obligations, 2002 Refunding Series D,
5.0%, 1-1-10		500		537,890
Texas - 4.97%
Lufkin Health Facilities Development Corporation,       Health System Revenue and Refunding Bonds       (Memorial Health System of East Texas), Series 1995,
6.875%, 2-15-26		480		502,618
Pflugerville Independent School District       (Travis County, Texas), Unlimited Tax School       Building Bonds, Series 2001,
5.5%, 8-15-19		250		271,595
Texas Department of Housing and Community Affairs,       Single Family Mortgage Revenue Bonds,       1997 Series D (AMT) TEAMS Structure,
5.7%, 9-1-29		220		222,209
City of Houston, Texas, Combined Utility System,       First Lien Fixed Rate Revenue Refunding Bonds,       Series 2004A,
5.25%, 5-15-25		200		210,948
				1,207,370
Virginia - 2.25%
City of Chesapeake, Virginia, General Obligation Public       Improvement and Refunding Bonds, Series of 2001,
5.5%, 12-1-17		500		546,775
Washington - 3.18%
Energy Northwest:       Project No. 1 Refunding Electric Revenue Bonds,       Series 2002-A,
5.75%, 7-1-16		500		556,485
Columbia Generating Station Electric Revenue       Refunding Bonds, Series 2004-A,
5.25%, 7-1-10		200		216,510
				772,995
Wyoming - 2.18%
Wyoming Student Loan Corporation, Student Loan       Revenue Refunding Bonds, Series 1999A (Non-AMT),
6.2%, 6-1-24		500		529,980
TOTAL MUNICIPAL BONDS - 98.66%			$	23,967,600
(Cost: $23,206,672)
SHORT-TERM SECURITY - 0.96%
Forest and Paper Products
Sonoco Products Co.,
2.88%, 4-1-05		232	$	232,000
(Cost: $232,000)
TOTAL INVESTMENT SECURITIES - 99.62%			$	24,199,600
(Cost: $23,438,672)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.38%				93,201
NET ASSETS - 100.00%			$	24,292,801

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

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

Statement of Assets and Liabilities
     IVY MUNICIPAL BOND FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $23,439) (Notes 1 and 3)	$	24,200
Cash		1
Receivables:
Interest		328
Fund shares sold		8
Prepaid and other assets		13
Total assets		24,550
LIABILITIES
Payable to Fund shareholders		224
Dividends payable		9
Accrued shareholder servicing (Note 2)		6
Accrued accounting services fee (Note 2)		1
Accrued distribution and service fees (Note 2)		1
Other		16
Total liabilities		257
Total net assets	$	24,293
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	22
Additional paid-in capital		24,084
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		10
Accumulated undistributed net realized loss                 on investment transactions		(584	)
Net unrealized appreciation in value of investments		761
Net assets applicable to outstanding units of capital	$	24,293
Net asset value per share (net assets divided by shares outstanding):
Class A	$11.13
Class B	$11.13
Class C	$11.13
Class Y	$11.13
Capital shares outstanding:
Class A		496
Class B		92
Class C		1,591
Class Y		4
Capital shares authorized	200,000

Statement of Operations
     IVY MUNICIPAL BOND FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	1,133
Expenses (Note 2):
Distribution fee:
Class A		6
Class B		7
Class C		143
Investment management fee		131
Service fee:
Class A		6
Class B		2
Class C		48
Class Y		-	*
Shareholder servicing:
Class A		6
Class B		2
Class C		40
Class Y		-	*
Registration fees		43
Accounting services fee		21
Audit fees		16
Legal fees		6
Custodian fees		5
Other		26
Total		508
Less voluntary waiver of investment management fee (Note 2)		(66	)
Total expenses		442
Net investment income		691
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		55
Unrealized depreciation in value of investments during the period	(459		)
Net loss on investments	(404		)
Net increase in net assets resulting from operations	$	287

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
DECREASE IN NET ASSETS
Operations:
Net investment income	$	691		$	702
Realized net gain on investments		55			268
Unrealized appreciation (depreciation)		(459	)		208
Net increase in net assets resulting from operations		287			1,178
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		(168	)		(123	)
Class B		(26	)		(19	)
Class C		(506	)		(554	)
Class Y		(1	)		(-	)*
Realized gains on investment transactions:
Class A		(-	)		(-	)
Class B		(-	)		(-	)
Class C		(-	)		(-	)
Class Y		(-	)		(-	)
		(701	)		(696	)
Capital share transactions (Note 5)		(623	)		(2,997	)
Total decrease		(1,037	)		(2,515	)
NET ASSETS
Beginning of period		25,330			27,845
End of period	$	24,293		$	25,330
Undistributed net investment income	$	10		$	20

*Not shown due to rounding.
(1)See "Financial Highlights" on pages 178 - 181.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,											For the period from 9-15-00(1) to
	2005			2004			2003			2002		3-31-01
Net asset value, beginning of period	$	11.31		$	11.10		$	10.61		$	10.52		$	10.33
Income (loss) from investment operations:
Net investment income		0.38			0.37			0.42			0.47			0.26
Net realized and unrealized gain             (loss) on investments		(0.17	)		0.21			0.49			0.09			0.19
Total from investment operations		0.21			0.58			0.91			0.56			0.45
Less distributions from:
Net investment income		(0.39	)		(0.37	)		(0.42	)		(0.47	)		(0.26	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.39	)		(0.37	)		(0.42	)		(0.47	)		(0.26	)
Net asset value, end of period	$	11.13		$	11.31		$	11.10		$	10.61		$	10.52
Total return(2)		1.89	%		5.36	%		8.71	%		5.38	%		4.32	%
Net assets, end of period (in millions)	$5			$4			$3			$2				$1
Ratio of expenses to average       net assets including       voluntary expense waiver		1.13	%		1.25	%		1.15	%		1.17	%		1.21	%(3)
Ratio of net investment income to       average net assets including       voluntary expense waiver		3.42	%		3.35	%		3.79	%		4.37	%		4.69	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.39	%		-			-			-			-
Ratio of net investment income to       average net assets excluding       voluntary expense waiver		3.16	%		-			-			-			-
Portfolio turnover rate		17	%		11	%		40	%		36	%		35	%(4)

(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.
(4)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,											For the period from 8-8-00(1) to
	2005			2004			2003			2002		3-31-01
Net asset value, beginning of period	$	11.31		$	11.10		$	10.61		$	10.52		$	10.26
Income (loss) from investment operations:
Net investment income		0.30			0.28			0.33			0.32			0.22
Net realized and unrealized gain             (loss) on investments		(0.18	)		0.21			0.49			0.09			0.26
Total from investment operations		0.12			0.49			0.82			0.41			0.48
Less distributions from:
Net investment income		(0.30	)		(0.28	)		(0.33	)		(0.32	)		(0.22	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.30	)		(0.28	)		(0.33	)		(0.32	)		(0.22	)
Net asset value, end of period	$	11.13		$	11.31		$	11.10		$	10.61		$	10.52
Total return		1.09	%		4.50	%		7.81	%		3.97	%		4.66	%
Net assets, end of period (in thousands)	$1,025			$863			$532			$120			$37
Ratio of expenses to average       net assets including       voluntary expense waiver		1.90	%		2.06	%		1.96	%		2.44	%		2.82	%(2)
Ratio of net investment income to       average net assets including       voluntary expense waiver		2.65	%		2.54	%		2.98	%		3.09	%		3.11	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver		2.16	%		-			-			-			-
Ratio of net investment income to       average net assets excluding       voluntary expense waiver		2.39	%		-			-			-			-
Portfolio turnover rate		17	%		11	%		40	%		36	%		35	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	11.31		$	11.10		$	10.61		$	10.52		$	10.11
Income (loss) from investment operations:
Net investment income		0.29			0.28			0.32			0.37			0.40
Net realized and unrealized gain             (loss) on investments		(0.17	)		0.21			0.49			0.09			0.41
Total from investment operations		0.12			0.49			0.81			0.46			0.81
Less distributions from:
Net investment income		(0.30	)		(0.28	)		(0.32	)		(0.37	)		(0.40	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.30	)		(0.28	)		(0.32	)		(0.37	)		(0.40	)
Net asset value, end of period	$	11.13		$	11.31		$	11.10		$	10.61		$	10.52
Total return		1.04	%		4.45	%		7.75	%		4.40	%		8.22	%
Net assets, end of period (in millions)	$18			$20			$25			$24			$26
Ratio of expenses to average       net assets including       voluntary expense waiver		1.93	%		2.10	%		2.03	%		2.13	%		2.13	%
Ratio of net investment income to       average net assets including       voluntary expense waiver		2.62	%		2.50	%		2.95	%		3.44	%		3.94	%
Ratio of expenses to average       net assets excluding       voluntary expense waiver		2.19	%		-			-			-			-
Ratio of net investment income to       average net assets excluding       voluntary expense waiver		2.36	%		-			-			-			-
Portfolio turnover rate		17	%		11	%		40	%		36	%		35	%

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	11.31		$	11.10		$	10.61		$	10.52		$	10.11
Income (loss) from investment operations:
Net investment income		0.37			0.35			0.40			0.44			0.47
Net realized and unrealized gain             (loss) on investments		(0.18	)		0.21			0.49			0.09			0.41
Total from investment operations		0.19			0.56			0.89			0.53			0.88
Less distributions from:
Net investment income		(0.37	)		(0.35	)		(0.40	)		(0.44	)		(0.47	)
Capital gains		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions		(0.37	)		(0.35	)		(0.40	)		(0.44	)		(0.47	)
Net asset value, end of period	$	11.13		$	11.31		$	11.10		$	10.61		$	10.52
Total return		1.75	%		5.13	%		8.52	%		5.10	%		9.04	%
Net assets, end of period (in thousands)	$44			$5			$4			$2			$2
Ratio of expenses to average       net assets assets including       voluntary expense waiver		1.22	%		1.44	%		1.33	%		1.44	%		1.47	%
Ratio of net investment income to       average net assets including       voluntary expense waiver		3.13	%		3.14	%		3.64	%		4.09	%		4.61	%
Ratio of expenses to average       net assets excluding       voluntary expense waiver		1.48	%		-			-			-			-
Ratio of net investment income to       average net assets excluding       voluntary expense waiver		2.87	%		-			-			-			-
Portfolio turnover rate		17	%		11	%		40	%		36	%		35	%

See Notes to Financial Statements.

Manager's Discussion of
Ivy Science and Technology Fund
     March 31, 2005

An interview with Zachary H. Shafran, portfolio manager of the Ivy Science and Technology Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund generated strong returns during the fiscal year, significantly outperforming its benchmark index. The Class C shares of the Fund increased 8.17 percent for the fiscal year, compared with the Goldman Sachs Technology Industry Composite Index (reflecting the performance of securities that generally represent the technology sector of the stock market), which decreased 5.03 percent for the year, and the Lipper Science & Technology Funds Universe Average (generally reflecting the performance of the universe of funds with similar investment objectives), which decreased 6.58 percent for the year.

Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

What helped the Fund outperform its benchmark index during the fiscal year?

Sector outperformance and underperformance was notable this year due to the wide variance in performance within particular sectors. Simply put, we feel that stock selection, both making the right investment decisions as well as avoiding the wrong ones, was central to the Fund's positive performance during the fiscal year.

What other market conditions or events influenced the Fund's return during the fiscal year?

There were a number of issues and events that impacted the market beyond the science and technology sectors. These included uncertainty surrounding the U.S. presidential election in late 2004 and the consequent implications for health care reform; progress of the war on terrorism, particularly the war in Iraq; and the impact of rising interest rates. Another factor was the rise of commodity prices, particularly oil, and its effect on economic activities such as consumer spending patterns. The competitive economic threat from other nations, most notably China, and the impact on corporate revenue growth and profitability also affected the markets.

What strategies and techniques did you employ that specifically affected the Fund's performance?

We believe that continued emphasis on stock selection using our bottom-up fundamental approach was of particular benefit this past year. This approach involves identifying companies that we believe are well positioned to continue generating sustainable growth in revenue and profits. We effectively let the portfolio build itself as the year progressed.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

Unlike in past years, we generally did not make conscious decisions to be meaningfully overweight or underweight a particular sector. Some of the areas we did emphasize were those that we felt would benefit from wireless and mobility products and services, such as Internet access, e-mail, satellite radio, downloadable music, and GPS (global positioning systems). With health care inflation remaining a major issue, we increased our investment in the managed-care sector, an area that we believe will play a key role in health care reform and cost containment. We also made investments in companies providing transaction processing for debit cards, gift cards, loyalty cards, and EBPP (electronic bill payment and presentment). These are all areas that we believe likely will continue to benefit from the use of technology to lower cost, provide greater ease of use, and offer more targeted marketing and advertising capabilities.

Health care reform and its implications likely will continue to be a major focal point for us in the coming fiscal year. Companies that manage health care and those that help create products that lead to the more cost-effective delivery of health care and to healthier lives will, for us, be key. In our view, beneficiaries could potentially include pharmaceuticals, biotechnology, genomics and medical technology. In technology, we intend to continue to emphasize those areas we emphasized over the last fiscal year.

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

Comparison of Change in Value of
$10,000 Investment

Ivy Science and Technology Fund, Class C Shares(1)	$	27,436
Goldman Sachs Technology Industry Composite Index	$	10,923
Lipper Science & Technology Funds Universe Average	$	12,641

IVY SCIENCE & TECHNOLOGY FUND CLASS C SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY SCIENCE & TECHNOLOGY FUND CLASS C SHARES	GOLDMAN SACHS TECHNOLOGY INDEX	LIPPER SCIENCE & TECHNOLOGY FUNDS UNIVERSE AVERAGE
JULY	7/31/97	10,000	10,000	10,000
MARCH	1998	12,010	10,550	10,902
MARCH	1999	17,450	16,690	16,729
MARCH	2000	45,325	32,935	39,007
MARCH	2001	23,802	12,805	15,320
MARCH	2002	24,015	11,704	13,705
MARCH	2003	18,549	7,502	8,508
MARCH	2004	25,364	11,502	13,531
MARCH	2005	27,436	10,923	12,641

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

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

Average Annual Total Return(2)
	Class A	Class B	Class(3)	Class Y
1-year period ended 3-31-05	2.88%	3.83%	8.17%	9.42%
5-year period ended 3-31-05	-	-	-9.55%	-8.54%
10-year period ended 3-31-05	-	-	-	-
Since inception of Class through 3-31-05 (4)	-5.51%	-5.67%	14.06%	13.67%

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

(3)Performance data from 3-24-00 represents the actual performance of Class C shares. Performance data prior to 3-24-00 represents the performance of the Fund's original Class B shares. The original Class B shares were combined with Class C shares effective 3-24-00, and redesignated as Class C shares. The original Class B's performance has been adjusted to reflect the current contingent deferred sales charge (CDSC) structure applicable to Class C (1.00% maximum and declining to zero at the end of the first year after investment). Accordingly, these returns reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase. New Class B shares, with fees and expenses different from the original Class B shares, were added to the Fund on 6-30-00.

(4)7-3-00 for Class A shares and Class B shares, 7-31-97 for Class C shares and 6-9-98 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY SCIENCE AND TECHNOLOGY FUND
Portfolio Highlights

On March 31, 2005, Ivy Science and Technology Fund had net assets totaling $187,860,744 invested in a diversified portfolio of:

97.00%	Common Stocks
3.00%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Technology Stocks	$	35.58
Health Care Stocks	$	31.57
Business Equipment and Services Stocks	$	14.76
Multi-Industry Stocks	$	9.55
Cash and Cash Equivalents	$	3.00
Consumer Services Stocks	$	2.96
Financial Services Stocks	$	2.58

The Investments of Ivy Science and Technology Fund
March 31, 2005
COMMON STOCKS	Shares		Value
Broadcasting - 2.96%
DIRECTV Group, Inc. (The)*	126,000	$	1,816,920
XM Satellite Radio Holdings Inc., Class A*	118,500		3,742,230
			5,559,150
Business Equipment and Services - 11.23%
CheckFree Corporation*	164,800		6,716,424
Euronet Worldwide, Inc.*	161,700		4,617,344
First Data Corporation	173,600		6,824,216
Headwaters Incorporated*	89,400		2,936,343
			21,094,327
Computers - Micro - 4.02%
Apple Computer, Inc.*	112,000		4,676,000
Dell Inc.*	75,000		2,881,875
			7,557,875
Computers - Peripherals - 13.88%
Amdocs Limited*	132,190		3,754,196
BEA Systems, Inc.*	215,200		1,714,068
Check Point Software Technologies Ltd.*	229,700		4,990,233
Microsoft Corporation	177,700		4,294,120
Oracle Corporation*	282,900		3,529,177
Red Hat, Inc.*	261,500		2,851,658
Symbol Technologies, Inc.	340,815		4,938,409
			26,071,861
Electronic Components - 16.51%
Advanced Micro Devices, Inc.*	114,100		1,839,292
Amphenol Corporation, Class A*	72,500		2,685,400
Analog Devices, Inc.	55,500		2,005,770
Broadcom Corporation, Class A*	60,400		1,811,698
Cherokee International Corporation*	79,400		554,609
Cypress Semiconductor Corporation*	181,500		2,286,900
Intel Corporation	78,100		1,814,263
MEMC Electronic Materials, Inc.*	166,100		2,234,045
MediaTek Incorporation (A)	235,498		1,673,670
Microchip Technology Incorporated	162,600		4,223,535
Samsung Electronics Co., Ltd. (A)	14,800		7,316,199
Xilinx, Inc.	88,000		2,571,800
			31,017,181
Electronic Instruments - 1.17%
ASML Holding N.V.*	55,200		925,980
Mattson Technology, Inc.*	160,000		1,266,400
			2,192,380
Health Care - Drugs - 7.09%
Amgen Inc.*	52,400		3,048,108
Genzyme Corporation*	100,900		5,777,029
IVAX Corporation*	227,762		4,502,855
			13,327,992
Health Care - General - 3.84%
Advanced Medical Optics, Inc.*	109,600		3,968,616
Boston Scientific Corporation*	110,700		3,242,403
			7,211,019
Hospital Supply and Management - 20.64%
Cerner Corporation*	180,500		9,494,300
HCA Inc.	106,900		5,726,633
PacifiCare Health Systems, Inc.*	32,100		1,827,132
Tenet Healthcare Corporation*	187,000		2,156,110
Triad Hospitals, Inc.*	46,400		2,324,640
UnitedHealth Group Incorporated	68,200		6,504,916
VCA Antech, Inc.*	40,900		827,203
WellCare Health Plans, Inc.*	188,100		5,729,526
WellPoint, Inc.*	33,300		4,174,155
			38,764,615
Multiple Industry - 9.55%
Critical Therapeutics, Inc.*	14,700		94,153
Cytokinetics, Incorporated*	32,100		210,255
Dolby Laboratories, Inc., Class A*	104,400		2,453,400
DreamWorks Animation SKG, Inc., Class A*	95,400		3,883,734
Google Inc., Class A*	27,900		5,035,531
Research In Motion Limited*	69,550		5,308,404
Telvent GIT, S.A.*	96,700		960,715
			17,946,192
Security and Commodity Brokers - 2.58%
Chicago Mercantile Exchange Holdings Inc.	25,000		4,850,750
Timesharing and Software - 3.53%
Alliance Data Systems Corporation*	163,900		6,621,560
TOTAL COMMON STOCKS - 97.00%		$	182,214,902
(Cost: $156,717,861)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Aluminum - 1.44%
Alcoa Incorporated,
2.82%, 4-4-05	$	2,706		2,705,364
Forest and Paper Products - 1.21%
Sonoco Products Co.,
2.88%, 4-1-05		2,280		2,280,000
TOTAL SHORT-TERM SECURITIES - 2.65%			$	4,985,364
(Cost: $4,985,364)
TOTAL INVESTMENT SECURITIES - 99.65%			$	187,200,266
(Cost: $161,703,225)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.35%				660,478
NET ASSETS - 100.00%			$	187,860,744

Notes to Schedule of Investments

      *No dividends were paid during the preceding 12 months.

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

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

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

Statement of Assets and Liabilities
     IVY SCIENCE AND TECHNOLOGY FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $161,703) (Notes 1 and 3)	$	187,200
Receivables:
Investment securities sold		1,706
Fund shares sold		517
Dividends and interest		18
Prepaid and other assets		18
Total assets		189,459
LIABILITIES
Payable for investment securities purchased		934
Payable to Fund shareholders		477
Accrued shareholder servicing (Note 2)		95
Due to custodian		24
Accrued accounting services fee (Note 2)		6
Accrued management fee (Note 2)		4
Accrued distribution fee (Note 2)		2
Accrued service fee (Note 2)		1
Other		55
Total liabilities		1,598
Total net assets	$	187,861
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	90
Additional paid-in capital		191,656
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(22	)
Accumulated undistributed net realized loss                 on investment transactions		(29,360	)
Net unrealized appreciation in value of investments		25,497
Net assets applicable to outstanding units of capital	$	187,861
Net asset value per share (net assets divided by shares outstanding):
Class A		$21.34
Class B		$20.24
Class C		$20.53
Class Y		$21.96
Capital shares outstanding:
Class A		2,561
Class B		605
Class C		4,288
Class Y		1,500
Capital shares authorized		400,000

See Notes to Financial Statements.

Statement of Operations
     IVY SCIENCE AND TECHNOLOGY FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends (net of foreign withholding taxes of $17)	$	801
Interest and amortization		158
Total income		959
Expenses (Note 2):
Investment management fee		1,379
Distribution fee:
Class A		32
Class B		85
Class C		653
Shareholder servicing:
Class A		179
Class B		91
Class C		448
Class Y		29
Service fee:
Class A		84
Class B		28
Class C		218
Class Y		45
Custodian fees		107
Accounting services fee		68
Legal fees		28
Audit fees		17
Other		123
Total expenses		3,614
Net investment loss		(2,655	)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		14,723
Realized net loss on foreign currency transactions		(5	)
Realized net gain on investments		14,718
Unrealized appreciation in value of investments during the period		1,708
Net gain on investments		16,426
Net increase in net assets resulting from operations	$	13,771

See Notes to Financial Statements.

Statement of Changes in Net Assets
     IVY SCIENCE AND TECHNOLOGY FUND
     (In Thousands)
     

	For the fiscal year ended March 31,
	2005			2004
INCREASE IN NET ASSETS
Operations:
Net investment loss	$	(2,655	)	$	(2,412	)
Realized net gain (loss) on investments		14,718			(2,583	)
Unrealized appreciation		1,708			41,698
Net increase in net assets resulting from operations		13,771			36,703
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
Realized gains on investment transactions:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
		-			-
Capital share transactions (Note 5)		28,842			16,811
Total increase		42,613			53,514
NET ASSETS
Beginning of period		145,248			91,734
End of period	$	187,861		$	145,248
Undistributed net investment loss	$	(22	)	$	(10	)

(1)See "Financial Highlights" on pages 192 - 195.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	19.55		$	14.17		$	18.19		$	17.93		$	34.91
Income (loss) from investment operations:
Net investment income (loss)		(0.28	)		(0.19	)		(0.32	)		(0.45	)		0.02
Net realized and unrealized gain             (loss) on investments		2.07			5.57			(3.70	)		0.73			(9.35	)
Total from investment operations		1.79			5.38			(4.02	)		0.28			(9.33	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)		(0.02	)		(7.65	)
Total distributions	(0.00		)	(0.00		)	(0.00		)		(0.02	)		(7.65	)
Net asset value, end of period	$	21.34		$	19.55		$	14.17		$	18.19		$	17.93
Total return(2)		9.16	%		37.97	%	-22.10		%		1.56	%	-31.95		%
Net assets, end of period (in millions)		$55			$36			$14			$12			$6
Ratio of expenses to average net assets		1.70	%		1.80	%		1.79	%		1.75	%		1.70	%(3)
Ratio of net investment income       (loss) to average net assets		-1.09	%		-1.35	%		-0.92	%		-0.76	%		0.26	%(3)
Portfolio turnover rate		106	%		114	%		74	%		91	%		111	%(4)

(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.
(4)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	18.77		$	13.77		$	17.88		$	17.80		$	34.91
Income (loss) from investment operations:
Net investment loss		(0.42	)		(0.39	)		(0.34	)		(0.38	)		(0.06	)
Net realized and unrealized gain             (loss) on investments		1.89			5.39			(3.77	)		0.48			(9.40	)
Total from investment operations		1.47			5.00			(4.11	)		0.10			(9.46	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)		(0.02	)		(7.65	)
Total distributions	(0.00		)	(0.00		)	(0.00		)		(0.02	)		(7.65	)
Net asset value, end of period	$	20.24		$	18.77		$	13.77		$	17.88		$	17.80
Total return		7.83	%		36.31	%	-22.99		%		0.56	%	-32.37		%
Net assets, end of period (in millions)		$12			$11			$4			$4			$3
Ratio of expenses to average net assets		2.90	%		3.06	%		3.00	%		2.75	%		2.53	%(2)
Ratio of net investment loss       to average net assets		-2.31	%		-2.60	%		-2.12	%		-1.73	%		-0.55	%(2)
Portfolio turnover rate		106	%		114	%		74	%		91	%		111	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	18.98		$	13.88		$	17.97		$	17.83		$	45.03
Income (loss) from investment operations:
Net investment loss		(0.42	)		(0.38	)		(0.25	)		(0.24	)		(0.12	)
Net realized and unrealized gain             (loss) on investments		1.97			5.48			(3.84	)		0.40		(19.43		)
Total from investment operations		1.55			5.10			(4.09	)		0.16		(19.55		)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)		(0.02	)		(7.65	)
Total distributions	(0.00		)	(0.00		)	(0.00		)		(0.02	)		(7.65	)
Net asset value, end of period	$	20.53		$	18.98		$	13.88		$	17.97		$	17.83
Total return		8.17	%		36.74	%	-22.76		%		0.89	%	-47.49		%
Net assets, end of period (in millions)		$88			$89			$70			$112			$134
Ratio of expenses to average net assets		2.58	%		2.66	%		2.67	%		2.45	%		2.27	%
Ratio of net investment loss       to average net assets		-2.00	%		-2.15	%		-1.77	%		-1.40	%		-0.44	%
Portfolio turnover rate		106	%		114	%		74	%		91	%		111	%

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	20.07		$	14.51		$	18.54		$	18.21		$	45.36
Income (loss) from investment operations:
Net investment loss		(0.18	)(1)		(0.15	)		(0.26	)		(0.51	)		(0.01	)
Net realized and unrealized gain             (loss) on investments		2.07			5.71			(3.77	)		0.86		(19.49		)
Total from investment operations		1.89			5.56			(4.03	)		0.35		(19.50		)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)		(0.02	)		(7.65	)
Total distributions	(0.00		)	(0.00		)	(0.00		)		(0.02	)		(7.65	)
Net asset value, end of period	$	21.96		$	20.07		$	14.51		$	18.54		$	18.21
Total return		9.42	%		38.32	%	-21.74		%		1.92	%	-47.00		%
Net assets, end of period (in millions)		$33			$9			$3			$3			$1
Ratio of expenses to average net assets		1.45	%		1.45	%		1.41	%		1.39	%		1.35	%
Ratio of net investment income       (loss) to average net assets		-0.87	%		-1.03	%		-0.53	%		-0.43	%		0.47	%
Portfolio turnover rate		106	%		114	%		74	%		91	%		111	%

(1)Based on average weekly shares outstanding.

See Notes to Financial Statements.

Manager's Discussion of Ivy
Small Cap Growth Fund
     March 31, 2005

An interview with Gilbert C. Scott, CFA, portfolio manager of the Ivy Small Cap Growth Fund

The following discussion, graphs and tables provide you with information regarding the Fund's performance for the fiscal year ended March 31, 2005.

How did the Fund perform during the last fiscal year?

The Fund produced a strong return for the fiscal year, outperforming both its benchmark index and Lipper peer group. The Class C shares of the Fund increased 7.71 percent over the period, compared with the Russell 2000 Growth Index (reflecting the performance of securities that generally represent the small companies sector of the stock market), which increased 0.86 percent for the fiscal year, and the Lipper Small-Cap Growth Funds Universe Average (generally reflecting the performance of the universe of funds with similar investment objectives), which increased 0.93 percent for the same period.

Please note that the Fund returns include applicable fees and expenses, whereas the index returns do not include any such fees.

What helped the Fund outperform its benchmark index during the fiscal year?

A small overweight in energy was beneficial, as the energy sector brought strong returns over the last 12 months. Over the period, energy was up almost 58 percent, with the next best sector being auto and transportation, which was up only 15 percent. We believe that strong stock selection in the technology sector also served to bolster performance. In contrast, stock selection in the consumer staples and producer durable sectors acted as drags on performance.

What other market conditions or events influenced the Fund's performance during the fiscal year?

The benchmark index only realized one positive quarter over the fiscal year, and its negligible overall return for the period was in sharp contrast to the prior year, in which it returned 63 percent. (That was the strongest 12-month performance for the benchmark since 1983.) Included in the benchmark's current fiscal year return of less than 1 percent was an almost 30 percent advance from August to December of 2004. These quarterly returns illustrate the level of volatility within the small-capitalization asset class. In addition, higher-quality stocks outperformed lower-quality stocks over the fiscal year, which was a big change from the prior year.

The market had a lot to digest in the latter half of the fiscal year, including the very strong advance in late 2004, increasing energy and commodity prices, rising interest rates, and perhaps most important, concerns about increasing inflation. We believe that all of these issues served as gating factors for the market. One of the main inflation measures, the core Consumer Price Index, moved up to 2.2 percent at the end of February 2005, which was up from 1.2 percent in the prior February. Core producer prices rose even faster, from 0.9 percent in February of 2004 to 2.8 percent in February of 2005, which suggests to us that companies will either attempt to pass on the higher prices to consumers or suffer margin declines.

What strategies and techniques did you employ that affected performance during the fiscal year?

The Fund maintained a fairly neutral sector position throughout the fiscal year. As mentioned above, we believe that our small overweight in energy aided returns. One of our core strategies is to seek to maintain a higher quality company bias versus the benchmark. We believe that, over time, higher quality companies will produce superior results to lower quality companies. That was certainly evident this past year.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

Industries within the energy sector were emphasized over the fiscal year, and the Fund was rewarded for this move. We still view the energy sector as an attractive investment area, but would not be surprised to see the sector consolidate some gains, since it has generally outperformed all other areas in recent quarters. In our view, technology and biotechnology could be areas that may show interesting investment appeal, since they have been such poor performers over the last 12 months.

Inflation, interest rates, and oil have come to the forefront of concerns for the market as we look toward the new fiscal year. We believe corporate profit growth likely will be positive, but may decelerate from 2004 levels. Taking into consideration the increase in costs that many businesses likely face, we intend to pay particular attention to a company's ability to pass on the additional costs or lower other costs in an effort to protect margins.

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

Comparison of Change in Value of
$10,000 Investment

Ivy Small Cap Growth Fund, Class C Shares(1)	$	32,233
Russell 2000 Growth Index	$	17,562
Lipper Small-Cap Growth Funds Universe Average	$	27,989

IVY SMALL CAP GROWTH FUND CLASS C SHARES ANNUAL REPORT INDEX COMPARISONS YEAR ENDED MARCH 31, 2005
		IVY SMALL CAP GROWTH FUND CLASS C SHARES	RUSSELL 2000 GROWTH INDEX	LIPPER SMALL-CAP GROWTH FUNDS UNIVERSE AVERAGE
MARCH	1995	10,000	10,000	10,000
MARCH	1996	12,657	13,119	13,696
MARCH	1997	11,268	12,354	13,742
MARCH	1998	18,634	17,444	20,239
MARCH	1999	22,661	15,511	18,934
MARCH	2000	39,290	24,662	36,150
MARCH	2001	25,471	14,861	23,659
MARCH	2002	28,350	15,607	25,472
MARCH	2003	21,914	10,672	17,772
MARCH	2004	29,925	17,412	27,730
MARCH	2005	32,233	17,562	27,989

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

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

Average Annual Total Return(2)
	Class A	Class B	Class C(3)	Class Y
1-year period ended 3-31-05	2.22%	3.52%	7.71%	8.73%
5-year period ended 3-31-05	--	--	-3.88%	-3.00%
10-year period ended 3-31-05	--	--	12.42%	--
Since inception of Class through 3-31-05(4)	-2.59%	-2.22%	--	12.04%

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

(3)Performance data from 3-24-00 represents the actual performance of Class C shares. Performance data prior to 3-24-00 represents the performance of the Fund's original Class B shares. The original Class B shares were combined with Class C shares effective 3-24-00, and redesignated as Class C shares. The original Class B's performance has been adjusted to reflect the current contingent deferred sales charge (CDSC) structure applicable to Class C (1.00% maximum and declining to zero at the end of the first year after investment). Accordingly, these returns reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase. New Class B shares, with fees and expenses different from the original Class B shares, were added to the Fund on 6-30-00.

(4)7-3-00 for Class A shares, 7-6-00 for Class B shares and 12-29-95 for Class Y shares (the date on which shares were first acquired by shareholders).

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

SHAREHOLDER SUMMARY OF IVY SMALL CAP GROWTH FUND
Portfolio Highlights

On March 31, 2005, Ivy Small Cap Growth Fund had net assets totaling $509,605,041 invested in a diversified portfolio of:

94.93%	Common Stocks and Warrant
5.07%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on March 31, 2005,
your Fund owned:

Health Care Stocks	$	19.14
Capital Goods Stocks	$	16.20
Technology Stocks	$	16.18
Business Equipment and Services Stocks	$	16.08
Consumer Nondurables Stocks	$	6.87
Energy Stocks	$	6.16
Cash and Cash Equivalents	$	5.07
Retail Stocks	$	4.66
Consumer Services Stocks	$	3.75
Miscellaneous Stocks	$	3.17
Financial Services Stocks	$	2.72

The Investments of Ivy Small Cap Growth Fund
March 31, 2005
COMMON STOCKS AND WARRANT			Shares		Value
Apparel - 3.65%
Oxford Industries, Inc.			271,600	$	9,937,844
Quiksilver, Inc.*			298,400		8,662,552
					18,600,396
Banks - 1.35%
City National Corporation			98,350		6,866,797
Business Equipment and Services - 9.51%
CheckFree Corporation*			335,444		13,671,020
Headwaters Incorporated*			213,250		7,004,196
Jacobs Engineering Group Inc.*			129,900		6,744,408
Macrovision Corporation*			284,950		6,461,241
Resources Connection, Inc.*			478,202		10,020,723
Strayer Education, Inc.			40,300		4,569,214
					48,470,802
Capital Equipment - 9.67%
ADC Telecommunications, Inc.*	1,576,950				3,130,246
ADTRAN, Inc.			309,650		5,463,774
Chicago Bridge & Iron Company N.V., NY Shares			212,750		9,367,383
Cooper Cameron Corporation*			109,500		6,264,495
Inter-Tel, Incorporated			91,700		2,244,358
Minerals Technologies Inc.			139,150		9,153,287
Nordson Corporation			184,273		6,779,404
Plantronics, Inc.			180,000		6,854,400
					49,257,347
Computers - Peripherals - 16.18%
Allscripts Healthcare Solutions, Inc.*			227,600		3,248,990
Avid Technology, Inc.*			129,700		7,021,309
Cognex Corporation			308,950		7,688,221
Epicor Software Corporation*			269,800		3,530,333
Kronos Incorporated*			214,250		10,933,178
MICROS Systems, Inc.*			237,050		8,691,438
Macromedia, Inc.*			280,000		9,368,800
McAfee, Inc.*			154,000		3,474,240
National Instruments Corporation			261,550		7,051,388
Nautilus Group, Inc. (The)			472,000		11,214,720
Red Hat, Inc.*			428,800		4,676,064
Take-Two Interactive Software, Inc.*			142,100		5,553,979
					82,452,660
Cosmetics and Toiletries - 1.38%
Nu Skin Enterprises, Inc., Class A			311,800		7,018,618
Electrical Equipment - 6.53%
APW Ltd., Warrants (A)*			19		0
FLIR Systems, Inc.*			342,200		10,361,816
FormFactor, Inc.*			306,400		6,935,364
Microsemi Corporation*			154,700		2,516,196
Semtech Corporation*			244,400		4,362,540
WMS Industries Inc.*			322,400		9,078,784
					33,254,700
Finance Companies - 1.37%
Financial Federal Corporation			197,250		6,976,732
Food and Related - 1.84%
J.M. Smucker Company (The)			185,950		9,353,285
Health Care - Drugs - 13.06%
Advanced Neuromodulation Systems, Inc.*			236,000		6,274,060
American Medical Systems Holdings, Inc.*			248,100		4,253,674
Amylin Pharmaceuticals, Inc.*			97,750		1,711,114
Angiotech Pharmaceuticals, Inc.*			292,850		4,499,640
Digene Corporation*			260,400		5,396,790
Encysive Pharmaceuticals Inc.*			177,900		1,817,248
Hologic, Inc.*			192,000		6,120,000
Martek Biosciences Corporation*			186,622		10,873,531
ResMed Inc.*			198,850		11,215,140
Schein (Henry), Inc.*			252,100		9,020,138
Wright Medical Group, Inc.*			224,700		5,369,207
					66,550,542
Hospital Supply and Management - 6.08%
Advisory Board Company (The)*			171,135		7,473,465
Cerner Corporation*			301,000		15,832,600
VCA Antech, Inc.*			380,550		7,696,624
					31,002,689
Leisure Time Industry - 1.29%
THQ Inc.*			235,350		6,599,214
Motor Vehicle Parts - 0.99%
Gentex Corporation			158,400		5,050,584
Multiple Industry - 0.54%
FoxHollow Technologies, Inc.*			97,500		2,740,237
Petroleum - Domestic - 6.16%
Newfield Exploration Company*			175,800		13,054,908
Patterson-UTI Energy, Inc.			441,950		11,055,379
Western Gas Resources, Inc.			212,000		7,303,400
					31,413,687
Publishing - 2.46%
Getty Images, Inc.*			176,444		12,546,933
Railroad - 1.64%
Kansas City Southern*			435,100		8,380,026
Restaurants - 0.25%
Red Robin Gourmet Burgers, Inc.*			25,100		1,277,967
Retail - Specialty Stores - 4.41%
Guitar Center, Inc.*			92,900		5,094,171
O'Reilly Automotive, Inc.*			208,450		10,332,867
Tractor Supply Company*			161,800		7,039,918
					22,466,956
Timesharing and Software - 6.57%
Digitas Inc.*			756,100		7,640,390
FactSet Research Systems, Inc.			368,825		12,174,913
MicroStrategy Incorporated, Class A*			129,968		7,052,714
Zebra Technologies Corporation*			139,600		6,627,510
					33,495,527
TOTAL COMMON STOCKS AND WARRANT - 94.93%				$	483,775,699
(Cost: $380,210,651)
SHORT-TERM SECURITIES		Principal Amount in Thousands
Commercial Paper
Capital Equipment - 1.38%
John Deere Capital Corporation,
2.84%, 4-21-05		$	4,000		3,993,689
John Deere Finance S.A. (John Deere Capital Corporation),
2.76%, 4-7-05			3,000		2,998,620
					6,992,309

Finance Companies - 2.34%
Ciesco, LLC,
2.76%, 4-  4-05	4,000			3,999,080
PACCAR Financial Corp.,
2.77%, 4-12-05		3,000		2,997,461
USAA Capital Corp.,
2.76%, 4-12-05		5,000		4,995,783
				11,992,324
Health Care - General - 0.98%
Baxter International Inc.,
2.85%, 4-6-05		5,000		4,998,021
Security and Commodity Brokers - 0.60%
Greenwich Capital Holdings Inc. (Royal Bank            of Scotland PLC (The)),
2.86%, 4-1-05		3,052		3,052,000
Total Commercial Paper - 5.30%				27,034,654
Municipal Obligations - 0.67%
California
California Pollution Control Financing Authority,            Environmental Improvement Revenue Bonds            (Air Products and Chemicals, Inc./Wilmington Facility),            Taxable Series 1997A,
2.85%, 5-9-05		3,400		3,400,000
TOTAL SHORT-TERM SECURITIES - 5.97%			$	30,434,654
(Cost: $30,434,654)
TOTAL INVESTMENT SECURITIES - 100.90%			$	514,210,353
(Cost: $410,645,305)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.90%)				(4,605,312	)
NET ASSETS - 100.00%			$	509,605,041

Notes to Schedule of Investments

      *No dividends were paid during the preceding 12 months.

(A) Security valued in good faith by the Valuation Committee of the Board of Directors.

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

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

Statement of Assets and Liabilities
     IVY SMALL CAP GROWTH FUND
     March 31, 2005
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $410,645) (Notes 1 and 3)	$	514,210
Cash		291
Receivables:
Investment securities sold		752
Fund shares sold		742
Dividends and interest		130
Prepaid and other assets		36
Total assets		516,161
LIABILITIES
Payable for investment securities purchased		4,666
Payable to Fund shareholders		1,573
Accrued shareholder servicing (Note 2)		170
Accrued accounting services fee (Note 2)		12
Accrued management fee (Note 2)		12
Accrued distribution fee (Note 2)		7
Accrued service fee (Note 2)		3
Other		113
Total liabilities		6,556
Total net assets	$	509,605
NET ASSETS
$0.01 par value capital stock:
Capital stock	$	417
Additional paid-in capital		453,284
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(71	)
Accumulated undistributed net realized loss on investment transactions		(47,590	)
Net unrealized appreciation in value of investments		103,565
Net assets applicable to outstanding units of capital	$	509,605
Net asset value per share (net assets divided by shares outstanding):
Class A		$12.32
Class B		$11.73
Class C		$11.87
Class Y		$13.33
Capital shares outstanding:
Class A		5,804
Class B		1,250
Class C		25,980
Class Y		8,628
Capital shares authorized		400,000

See Notes to Financial Statements.

Statement of Operations
     IVY SMALL CAP GROWTH FUND
     For the Fiscal Year Ended March 31, 2005
     (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends (net of foreign withholding taxes of $5)	$	1,440
Interest and amortization		672
Total income		2,112
Expenses (Note 2):
Investment management fee		4,384
Distribution fee:
Class A		33
Class B		101
Class C		2,353
Shareholder servicing:
Class A		244
Class B		73
Class C		930
Class Y		173
Service fee:
Class A		157
Class B		34
Class C		784
Class Y		282
Accounting services fee		142
Legal fees		106
Custodian fees		34
Audit fees		26
Other		276
Total expenses		10,132
Net investment loss		(8,020	)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		57,022
Realized net loss on purchased options		(305	)
Realized net gain on investments		56,717
Unrealized depreciation in value of investments during the period	(12,102		)
Net gain on investments		44,615
Net increase in net assets resulting from operations	$	36,595

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss	$	(8,020	)	$	(8,396	)
Realized net gain on investments		56,717			14,860
Unrealized appreciation (depreciation)		(12,102	)		130,559
Net increase in net assets resulting from operations		36,595			137,023
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
Realized gains on investment transactions:
Class A		-			-
Class B		-			-
Class C		-			-
Class Y		-			-
		-			-
Capital share transactions (Note 5)		(89,990	)		83,571
Total increase (decrease)		(53,395	)		220,594
NET ASSETS
Beginning of period		563,000			342,406
End of period	$	509,605		$	563,000
Undistributed net investment loss	$	(71	)	$	(42	)

(1)See "Financial Highlights" on pages 207 - 210.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-3-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	11.36		$	8.25		$	10.59		$	9.43		$	19.64
Income (loss) from investment operations:
Net investment loss		(0.08	)		(0.08	)		(0.23	)		(0.59	)		(0.02	)
Net realized and unrealized gain             (loss) on investments		1.04			3.19			(2.11	)		1.75			(4.74	)
Total from investment operations		0.96			3.11			(2.34	)		1.16			(4.76	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(5.45	)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(5.45	)
Net asset value, end of period	$	12.32		$	11.36		$	8.25		$	10.59		$	9.43
Total return(2)		8.45	%	37.70		%	-22.10		%	12.30		%	-28.30		%
Net assets, end of period (in millions)		$72			$92			$20			$16			$4
Ratio of expenses to average net assets		1.54	%		1.48	%		1.54	%		1.39	%		1.49	%(3)
Ratio of net investment loss to       average net assets		-1.14	%		-1.21	%		-1.22	%		-0.93	%		-0.39	%(3)
Portfolio turnover rate		83	%		91	%		31	%		29	%		48	%(4)

(1)Commencement of operations of the class.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.
(4)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,												For the period from 7-6-00(1) to
	2005			2004			2003			2002			3-31-01
Net asset value, beginning of period	$	10.91		$	8.01		$	10.40		$	9.36		$	19.26
Income (loss) from investment operations:
Net investment loss		(0.23	)		(0.20	)		(0.21	)		(0.26	)		(0.06	)
Net realized and unrealized gain             (loss) on investments		1.05			3.10			(2.18	)		1.30			(4.39	)
Total from investment operations		0.82			2.90			(2.39	)		1.04			(4.45	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(5.45	)
Total distributions	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(5.45	)
Net asset value, end of period	$	11.73		$	10.91		$	8.01		$	10.40		$	9.36
Total return		7.52	%		36.21	%	-22.98		%		11.11	%	-27.29		%
Net assets, end of period (in millions)		$15			$13			$7			$8			$5
Ratio of expenses to average net assets		2.52	%		2.57	%		2.64	%		2.43	%		2.31	%(2)
Ratio of net investment loss       to average net assets		-2.11	%		-2.29	%		-2.31	%		-1.94	%		-1.18	%(2)
Portfolio turnover rate		83	%		91	%		31	%		29	%		48	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the fiscal year ended March 31, 2001.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	11.02		$	8.07		$	10.44		$	9.38		$	21.64
Income (loss) from investment operations:
Net investment loss		(0.24	)		(0.21	)		(0.16	)		(0.16	)		(0.10	)
Net realized and unrealized gain             (loss) on investments		1.09			3.16			(2.21	)		1.22			(6.71	)
Total from investment operations		0.85			2.95			(2.37	)		1.06			(6.81	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)		(0.00	)		(5.45	)
Total distributions	(0.00		)	(0.00		)	(0.00		)		(0.00	)		(5.45	)
Net asset value, end of period	$	11.87		$	11.02		$	8.07		$	10.44		$	9.38
Total return		7.71	%		36.56	%	-22.70		%		11.30	%	-35.17		%
Net assets, end of period (in millions)		$308			$334			$273			$435			$459
Ratio of expenses to average net assets		2.26	%		2.31	%		2.31	%		2.20	%		2.12	%
Ratio of net investment loss       to average net assets		-1.85	%		-2.03	%		-1.98	%		-1.70	%		-0.81	%
Portfolio turnover rate		83	%		91	%		31	%		29	%		48	%

(1)Small Cap Growth Fund (formerly Growth Fund) changed its name effective June 30, 2000.

See Notes to Financial Statements.

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

	For the fiscal year ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of period	$	12.26		$	8.89		$	11.39		$	10.14		$	22.65
Income (loss) from investment operations:
Net investment loss		(0.09	)		(0.10	)		(0.11	)		(0.34	)		(0.20	)
Net realized and unrealized gain             (loss) on investments		1.16			3.47			(2.39	)		1.59			(6.86	)
Total from investment operations		1.07			3.37			(2.50	)		1.25			(7.06	)
Less distributions from:
Net investment income	(0.00		)	(0.00		)	(0.00		)	(0.00		)		(0.00	)
Capital gains	(0.00		)	(0.00		)	(0.00		)		(0.00	)		(5.45	)
Total distributions	(0.00		)	(0.00		)	(0.00		)		(0.00	)		(5.45	)
Net asset value, end of period	$	13.33		$	12.26		$	8.89		$	11.39		$	10.14
Total return		8.73	%		37.91	%	-21.95		%		12.33	%	-34.67		%
Net assets, end of period (in millions)		$115			$124			$42			$48			$21
Ratio of expenses to average net assets		1.36	%		1.35	%		1.33	%		1.31	%		1.30	%
Ratio of net investment loss       to average net assets		-0.95	%		-1.09	%		-1.00	%		-0.83	%		-0.02	%
Portfolio turnover rate		83	%		91	%		31	%		29	%		48	%

(1)Small Cap Growth Fund (formerly Growth Fund) changed its name effective June 30, 2000.

See Notes to Financial Statements.

Notes to Financial Statements
     March 31, 2005
Note 1 - Significant Accounting Policies

Ivy Funds, Inc. (formerly W&R Funds, Inc.) (the "Corporation") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Corporation issues twelve series of capital shares; each series represents ownership of a separate mutual fund. The assets belonging to each Fund are held separately by the custodian. The capital shares of each Fund represent a pro rata beneficial interest in the principal, net income and realized and unrealized capital gains or losses of its respective investments and other assets. The following is a summary of significant accounting policies consistently followed by the Corporation in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A. Security valuation - Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Gold bullion is valued at the last settlement price for current delivery as calculated by the Commodity Exchange, Inc. as of the close of that exchange. Restricted securities and securities for which quotations are not readily available or are deemed not to be reliable because of significant events or circumst ances identified between the closing of their principal markets and the closing of the New York Stock Exchange are valued as determined in good faith under procedures established by and under the general supervision of the Corporation's Board of Directors. Short-term debt securities are valued at amortized cost, which approximates market value. Short-term debt securities denominated in foreign currencies are valued at amortized cost in that currency.

B. Security transactions and related investment income - Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes over the remaining lives of the bonds. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the Fund is informed of the ex-dividend date. Interest income is recorded on the accrual basis. See Note 3 - Investment Securities Transactions.

C. Foreign currency translations - All assets and liabilities denominated in foreign currencies are translated into United States dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translation arise from changes in currency exchange rates. The Corporation combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.

D. Forward foreign currency exchange contracts - A forward foreign currency exchange contract (Forward Contract) is an obligation to purchase or sell a specific currency at a future date at a fixed price. Forward Contracts are "marked-to-market" daily at the applicable translation rates and the resulting unrealized gains or losses are reflected in the Corporation's financial statements. Gains or losses are realized by the Corporation at the time the Forward Contract is extinguished. Contracts may be extinguished either by entry into a closing transaction or by delivery of the currency. Risks may arise from the possibility that the other party will not complete the obligations of the contract and from unanticipated movements in the value of the foreign currency relative to the United States dollar. The Corporation uses Forward Contracts to attempt to reduce the overall risk of its investments.

E. Federal income taxes - It is the Corporation's policy to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. In addition, the Corporation intends to pay distributions as required to avoid imposition of excise tax. Accordingly, provision has not been made for Federal income taxes. See Note 4 - Federal Income Tax Matters.

F. Dividends and distributions - Dividends and distributions to shareholders are recorded by each Fund on the business day following the applicable record date. Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as deferral of wash sales and post-October losses, foreign currency transactions, net operating losses and expiring capital loss carryovers. At March 31, 2005, the following amounts were reclassified:

	Accumulated Undistributed Net Investment Income			Accumulated Undistributed Net Realized Gains on Investment Transactions				Additional Paid-in Capital
Ivy Asset Strategy Fund		$	15,254		$	(15,254	)	$	--
Ivy Capital Appreciation Fund			19,385			--			(19,385	)
Ivy Core Equity Fund			1,216,563			--		(1,216,563		)
Ivy International Growth Fund			1,004,749		(195,333		)		(809,416	)
Ivy Large Cap Growth Fund			443,910			--			(443,910	)
Ivy Mid Cap Growth Fund			984,177			--		(984,177		)
Ivy Science and Technology Fund			2,648,167			--		(2,648,167		)
Ivy Small Cap Growth Fund			7,991,368			--		(7,991,368		)

G. Repurchase agreements - Repurchase agreements are collateralized by the value of the resold securities which, during the entire period of the agreement, remains at least equal to the value of the loan, including accrued interest thereon. The collateral for the repurchase agreement is held by the custodian bank.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

Note 2 - Investment Management and Payments to Affiliated Persons

Ivy Investment Management Company ("IICO"), a wholly owned subsidiary of Waddell & Reed Financial, Inc. ("WDR"), serves as the Corporation's investment manager. Prior to March 8, 2005, IICO was known as Waddell & Reed Ivy Investment Company. IICO provides advice and supervises investments for which services it is paid a fee. Prior to June 30, 2003, Waddell & Reed Investment Management Company (WRIMCO), a wholly owned subsidiary of Waddell & Reed, Inc. (W&R), served as the investment manager. On June 30, 2003, WRIMCO assigned the investment management agreement between it and the Corporation to Waddell & Reed Ivy Investment Company ("WRIICO"), an affiliated entity. The fee is payable by each Fund at the following annual rates:

Fund	Net Assets Breakpoints	Annual Rate
Ivy Asset Strategy Fund	Up to $1 Billion	.700%
	Over $1 Billion up to $2 Billion	.650%
	Over $2 Billion up to $3 Billion	.600%
	Over $3 Billion	.550%
Ivy Capital Appreciation Fund	Up to $1 Billion	.650%
	Over $1 Billion up to $2 Billion	.600%
	Over $2 Billion up to $3 Billion	.550%
	Over $3 Billion	.500%
Ivy Core Equity Fund	Up to $1 Billion	.700%
	Over $1 Billion up to $2 Billion	.650%
	Over $2 Billion up to $3 Billion	.600%
	Over $3 Billion	.550%
Ivy High Income Fund	Up to $500 Million	.625%
	Over $500 Million up to $1 Billion	.600%
	Over $1 Billion up to $1.5 Billion	.550%
	Over $1.5 Billion	.500%
Ivy International Growth Fund	Up to $1 Billion	.850%
	Over $1 Billion up to $2 Billion	.830%
	Over $2 Billion up to $3 Billion	.800%
	Over $3 Billion	.760%
Ivy Large Cap Growth Fund	Up to $1 Billion	.700%
	Over $1 Billion up to $2 Billion	.650%
	Over $2 Billion up to $3 Billion	.600%
	Over $3 Billion	.550%
Ivy Limited-Term Bond Fund	Up to $500 Million	.500%
	Over $500 Million up to $1 Billion	.450%
	Over $1 Billion up to $1.5 Billion	.400%
	Over $1.5 Billion	.350%
Ivy Mid Cap Growth Fund	Up to $1 Billion	.850%
	Over $1 Billion up to $2 Billion	.830%
	Over $2 Billion up to $3 Billion	.800%
	Over $3 Billion	.760%
Ivy Money Market Fund	All levels	.400%
Ivy Municipal Bond Fund	Up to $500 Million	.525%
	Over $500 Million up to $1 Billion	.500%
	Over $1 Billion up to $1.5 Billion	.450%
	Over $1.5 Billion	.400%
Ivy Science and Technology Fund	Up to $1 Billion	.850%
	Over $1 Billion up to $2 Billion	.830%
	Over $2 Billion up to $3 Billion	.800%
	Over $3 Billion	.760%
Ivy Small Cap Growth Fund	Up to $1 Billion	.850%
	Over $1 Billion up to $2 Billion	.830%
	Over $2 Billion up to $3 Billion	.800%
	Over $3 Billion	.760%

The fee is accrued and paid daily. However, IICO has voluntarily agreed to waive a Fund's management fee on any day that the Fund's net assets are less than $25 million, subject to IICO's right to change or modify this waiver. During the period ended March 31, 2005, IICO voluntarily waived its fee (in thousands) as shown in the following table:

Ivy Capital Appreciation Fund	$	68
Ivy Municipal Bond Fund		66

The Corporation has an Accounting Services Agreement with Waddell & Reed Services Company ("WRSCO"), an indirect subsidiary of WDR. Under the agreement, WRSCO acts as the agent in providing bookkeeping and accounting services and assistance to the Corporation, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. For these services, each of the Funds paid WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table.

Accounting Services Fee
	Average Net Asset Level (in millions)					Annual Fee Rate for Each Level
	From	$	0 to	$	10		$	0
	From	$	10 to	$	25		$	11,500
	From	$	25 to	$	50		$	23,100
	From	$	50 to	$	100		$	35,500
	From	$	100 to	$	200		$	48,400
	From	$	200 to	$	350		$	63,200
	From	$	350 to	$	550		$	82,500
	From	$	550 to	$	750		$	96,300
	From	$	750 to	$	1,000		$	121,600
		$	1,000 and Over				$	148,500

In addition, for each class of shares in excess of one, each Fund pays WRSCO a monthly per-class fee equal to 2.5% of the monthly accounting services base fee.

Each Fund also pays monthly a fee at the annual rate of 0.01% or one basis point for the first $1 billion of net assets with no fee charged for net assets in excess of $1 billion. This fee may be voluntarily waived until Fund net assets are at least $10 million.

Under the Shareholder Servicing Agreement between the Corporation and WRSCO, with respect to Class A, Class B and Class C shares, for each shareholder account that was in existence at any time during the prior month: Ivy Asset Strategy Fund pays a monthly fee of $1.5792; Ivy High Income Fund, Ivy Limited-Term Bond Fund and Ivy Municipal Bond Fund each pay a monthly fee of $1.6958; and Ivy Capital Appreciation Fund, Ivy Core Equity Fund, Ivy International Growth Fund, Ivy Large Cap Growth Fund, Ivy Mid Cap Growth Fund, Ivy Science and Technology Fund and Ivy Small Cap Growth Fund each pay a monthly fee of $1.5042. Ivy Money Market Fund pays a monthly fee of $1.75 for each shareholder account that was in existence at any time during the prior month plus, for Class A shareholder accounts, $0.75 for each shareholder check processed in the prior month. Ivy Limited-Term Bond Fund Class A, which also has check writing privileges, pays $0.75 for each shareholder check processed in the prior month. For Class Y share s, each Fund pays a monthly fee equal to one-twelfth of 0.15 of 1% of the average daily net assets of the class for the preceding month. Each Fund also reimburses WRSCO for certain out-of-pocket costs for all classes.

Prior to June 16, 2003, Waddell & Reed, Inc. ("W&R") served as underwriter for the Corporation's shares. On June 16, 2003, W&R assigned the underwriting agreement to Ivy Funds Distributor, Inc. ("IFDI"), a wholly-owned subsidiary of IICO. As principal underwriter for the Corporation's shares, IFDI receives sales commissions (which are not an expense of the Corporation) for Class A shares. A contingent deferred sales charge ("CDSC") may be assessed against a shareholder's redemption amount of Class B, Class C or certain Class A shares and is paid to IFDI. During the period ended March 31, 2005, IFDI received the following amounts in sales commissions and CDSC:

	Sales Commissions			CDSC
				Class A		Class B		Class C
Ivy Asset Strategy Fund		$	290,297	$	--	$	15,519	$	3,888
Ivy Capital Appreciation Fund			54,891		37		2,376		412
Ivy Core Equity Fund			115,420		--		20,635		6,752
Ivy High Income Fund			283,684		--		7,873		4,873
Ivy International Growth Fund			46,307		--		9,947		1,265
Ivy Large Cap Growth Fund			496,015		--		16,504		1,458
Ivy Limited-Term Bond Fund			153,779		562		18,242		2,354
Ivy Mid Cap Growth Fund			271,912		--		15,418		898
Ivy Money Market Fund			--		--		34,035		1,499
Ivy Municipal Bond Fund			22,132		--		3,357		283
Ivy Science and Technology Fund			250,710		--		19,915		4,173
Ivy Small Cap Growth Fund			299,823		--		17,201		8,714

With respect to Class A, Class B and Class C shares, IFDI pays sales commissions and all expenses in connection with the sale of the Corporation's shares, except for registration fees and related expenses. During the fiscal year ended March 31, 2005, the following amounts were paid:

Ivy Asset Strategy Fund	$	432,273
Ivy Capital Appreciation Fund		81,621
Ivy Core Equity Fund		203,902
Ivy High Income Fund		360,450
Ivy International Growth Fund		76,566
Ivy Large Cap Growth Fund		620,553
Ivy Limited-Term Bond Fund		200,296
Ivy Mid Cap Growth Fund		329,437
Ivy Money Market Fund		--
Ivy Municipal Bond Fund		43,078
Ivy Science and Technology Fund		390,927
Ivy Small Cap Growth Fund		456,640

Under a Distribution and Service Plan for Class A shares adopted by the Corporation pursuant to Rule 12b-1 under the Investment Company Act of 1940, each Fund may pay a distribution and/or service fee to IFDI in an amount not to exceed 0.25% of the Fund's average annual net assets. The fee is to be paid to compensate IFDI for amounts it expends in connection with the distribution of the Class A shares and/or provision of personal services to Fund shareholders and/or maintenance of shareholder accounts.

Under the Distribution and Service Plan adopted by the Corporation for Class B shares and Class C shares, respectively, each Fund may pay IFDI a service fee not to exceed 0.25% and a distribution fee not to exceed 0.75% of a Fund's average annual net assets attributable to that class to compensate IFDI for its services in connection with the distribution of shares of that class and/or the service and/or maintenance of shareholder accounts of that class. The Class B Plan and the Class C Plan each permit IFDI to receive compensation, through the distribution fee and service fee, respectively, for its distribution activities for that class, which are similar to the distribution activities described with respect to the Class A Plan, and for its activities in providing personal services to shareholders of that class and/or maintaining shareholder accounts of that class, which are similar to the corresponding activities for which it is entitled to compensation under the Class A Plan. Under the Class Y Plan, each Fund may pay IFDI a fee of up to 0.25%, on an annual basis, of the average daily net assets 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 personal service to Class Y shareholders and/or maintaining Class Y shareholder accounts.

In the current environment of low interest rates, IFDI and WRSCO have voluntarily agreed to reimburse sufficient expenses to any class of Ivy Money Market Fund in order to insure the yield of that class remains at or above 0.01%. As of March 31, 2005, the amount of fees (in thousands) reimbursed to Ivy Money Market Fund, by class, are as follows:

Class A	$	127
Class B		6
Class C		20

In addition, IFDI and WRSCO have voluntarily agreed to waive sufficient Fund expenses to ensure that the total annual fund operating expenses do not exceed the following levels for the specified funds/classes:

Fund and Class	Expense Limitation (as a percentage of average net assets of each Class)
Ivy Large Cap Growth Fund, Class A		1.50%
Ivy Large Cap Growth Fund, Class C		2.25%
Ivy Large Cap Growth Fund, Class Y		1.20%
Ivy Mid Cap Growth Fund, Class A		1.65%
Ivy Mid Cap Growth Fund, Class C		2.35%
Ivy Mid Cap Growth Fund, Class Y		1.25%

As of March 31, 2005, the amount of fees (in thousands) reimbursed under these agreements are as follows:

Ivy Large Cap Growth Fund
Class A	$	11
Class C		4
Class Y		25
Ivy Mid Cap Growth Fund
Class A	$	27
Class C		12
Class Y		4

The Corporation paid Directors' fees of $157,006, which are included in other expenses.

Note 3 - Investment Securities Transactions

Investment securities transactions for the fiscal year ended March 31, 2005 are summarized as follows:

	Ivy Asset Strategy Fund		Ivy Capital Appreciation Fund		Ivy Core Equity Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	90,535,915	$	9,432,937	$	112,657,666
Purchases of bullion		1,402,976		--		--
Purchases of U.S. government securities		885,328		--		--
Purchases of short-term securities		682,283,890		273,627,876		712,970,374
Purchases of options		261,420		--		--
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government       securities		66,763,311		5,857,955		169,253,658
Proceeds from sales of bullion		3,625,215		--		--
Proceeds from maturities and sales of       U.S. government securities		2,172,753		--		--
Proceeds from maturities and sales of       short-term securities		676,561,462		271,360,937		711,800,035
Proceeds from options		307,643		--		--

	Ivy High Income Fund		Ivy International Growth Fund		Ivy Large Cap Growth Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	41,163,104	$	55,765,960	$	189,898,622
Purchases of U.S. government securities		--		--		--
Purchases of short-term securities		463,025,476		385,553,379		566,573,524
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government       securities		30,793,597		68,456,802		188,433,395
Proceeds from maturities and sales of       U.S. government securities		--		--		--
Proceeds from maturities and       sales of short-term securities		459,168,404		384,551,778		567,117,582

	Ivy Limited Term Bond Fund		Ivy Mid Cap Growth Fund		Ivy Municipal Bond Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	6,322,113	$	30,994,166	$	4,086,721
Purchases of U.S. government securities		20,877,280		--		--
Purchases of short-term securities		369,414,004		693,534,473		64,264,224
Purchases of options		--		473,817		--
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government securities		11,902,081		19,480,501		4,555,792
Proceeds from maturities and sales of       U.S. government securities		10,957,145		--		--
Proceeds from maturities and sales of       short-term securities		370,924,321		694,748,926		64,197,984
Proceeds from options		--		609,744		--

	Ivy Science and Technology Fund		Ivy Small Cap Growth Fund
Purchases of investment securities, excluding       short-term and U.S. government securities	$	188,219,031	$	399,953,268
Purchases of U.S. government securities		--		--
Purchases of short-term securities		860,316,080		2,040,434,964
Purchases of options		--		305,230
Proceeds from maturities and sales of investment       securities, excluding short-term and       U.S. government securities		163,269,777		485,811,465
Proceeds from maturities and sales of       U.S. government securities		--		--
Proceeds from maturities and sales of       short-term securities		861,740,963		2,051,098,398
Proceeds from options		--		--

For Federal income tax purposes, cost of investments owned at March 31, 2005 and the related unrealized appreciation (depreciation) were as follows:

	Cost		Appreciation		Depreciation		Aggregate Appreciation (Depreciation)
Ivy Asset Strategy Fund	$	93,063,394	$	15,061,397	$	589,289	$	14,472,108
Ivy Capital Appreciation       Fund		12,470,441		2,028,932		213,332		1,815,600
Ivy Core Equity Fund		199,419,263		66,972,394		3,744,345		63,228,049
Ivy High Income Fund		65,163,791		2,343,998		1,153,691		1,190,307
Ivy International Growth Fund		55,570,136		11,706,980		945,451		10,761,529
Ivy Large Cap Growth       Fund		129,885,688		22,629,075		1,679,800		20,949,275
Ivy Limited-Term Bond       Fund		63,438,924		233,522		583,261		(349,739	)
Ivy Mid Cap Growth Fund		70,575,294		23,957,242		2,637,167		21,320,075
Ivy Money Market Fund		45,762,754		--		--		--
Ivy Municipal Bond Fund		23,482,903		764,866		48,169		716,697
Ivy Science and Technology       Fund		162,115,822		30,047,225		4,962,781		25,084,444
Ivy Small Cap Growth       Fund		411,430,483		117,732,440		14,952,570		102,779,870

Note 4 - Federal Income Tax Matters

For Federal income tax purposes, the Fund's distributed and undistributed earnings and profit for the fiscal year ended March 31, 2005 and the related Capital Loss Carryover and Post-October activity were as follows:

	Ivy Asset Strategy Fund		Ivy Capital Appreciation Fund		Ivy Core Equity Fund
Net ordinary income	$	99,965	$	--	$	--
Distributed ordinary income		180,383		--		--
Undistributed ordinary income		97,945		--		--
Realized long-term capital gains		599,143		--		--
Distributed long-term capital gains		705,308		--		--
Undistributed long-term capital gains		599,143		--		--
Capital loss carryover		--		--		--
Post-October losses deferred		2,421		62,442		1,599

	Ivy High Income Fund		Ivy International Growth Fund		Ivy Large Cap Growth Fund
Net ordinary income	$	3,700,170	$	--	$	--
Distributed ordinary income		3,687,419		596,184		--
Undistributed ordinary income		66,540		--		--
Realized long-term capital gains		--		--		--
Distributed long-term capital gains		--		--		--
Undistributed long-term capital gains		--		--		--
Capital loss carryover		--		--		--
Post-October losses deferred		--		14,783		--

	Ivy Limited- Term Bond Fund		Ivy Mid Cap Growth Fund		Ivy Money Market Fund
Net ordinary income	$	1,589,308	$	--	$	347,083
Distributed ordinary income		1,579,176		--		336,430
Undistributed ordinary income		28,965		--		13,878
Realized long-term capital gains		--		--		--
Distributed long-term capital gains		--		--		--
Undistributed long-term capital gains		--		--		--
Capital loss carryover		--		--		--
Post-October losses deferred		91,289		--		--

	Ivy Municipal Bond Fund			Ivy Science and Technology Fund		Ivy Small Cap Growth Fund
Net ordinary income		$	702,840	$	--	$	--
Distributed ordinary income			697,508		--		--
Undistributed ordinary income			13,316		--		--
Realized long-term capital gains			--		--		--
Distributed long-term capital gains			--		--		--
Undistributed long-term capital gains			--		--		--
Capital loss carryover			--		--		--
Post-October losses deferred			--		1,859		--

Internal Revenue Code regulations permit each Fund to defer into its next fiscal year net capital losses or net long-term capital losses incurred between each November 1 and the end of its fiscal year ("post-October losses").

Capital loss carryovers are available to offset future realized capital gain net income for Federal income tax purposes. The following shows the totals by year in which the capital loss carryovers will expire if not utilized.

	Ivy Capital Appreciation Fund		Ivy Core Equity Fund		Ivy High Income Fund		Ivy International Growth Fund
March 31, 2009	$	--	$	4,268,163	$	1,574,985	$	1,629,853
March 31, 2010		1,620,668		5,388,835		1,271,702		24,986,955
March 31, 2011		1,005,096		30,995,562		1,182,962		19,867,500
Total carryover	$	2,625,764	$	40,652,560	$	4,029,649	$	46,484,308

	Ivy Large Cap Growth Fund			Ivy Limited-Term Bond Fund			Ivy Mid Cap Growth Fund			Ivy Municipal Bond Fund
March 31, 2008		$	620,955		$	--		$	--		$	--
March 31, 2009			11,368,220			36,676			22,505,437			223,145
March 31, 2010			9,290,552			--			17,363,901			230,753
March 31, 2011			4,727,341			456,813			5,387,010			75,199
March 31, 2012			697,963			--			949,121			--
Total carryover		$	26,705,031		$	493,489		$	46,205,469		$	529,097

	Ivy Science and Technology Fund		Ivy Small Cap Growth Fund
March 31, 2008	$	541,589	$	4,767,939
March 31, 2009		1,113,450		3,509,351
March 31, 2010		10,616,042		8,387,927
March 31, 2011		16,278,545		25,225,254
March 31, 2012		398,136		4,914,132
Total carryover	$	28,947,762	$	46,804,603

Ivy U.S. Blue Chip Fund was merged into Ivy Core Equity Fund as of June 16, 2003 (see Note 8) and Advantus Index 500 Fund was merged into Ivy Core Equity Fund as of December 8, 2003 (see Note 9). At the time of the mergers, Ivy U.S. Blue Chip Fund and Advantus Index 500 Fund had capital loss carryovers available to offset future gains of the Ivy Core Equity Fund. Ivy US Blue Chip Fund's carryovers are limited to $1,479,061 for each period ending from March 31, 2006 through 2011 plus any unused limitations from prior years.

Ivy Global Fund and Ivy International Small Companies Fund were merged into Ivy International Growth Fund as of June 16, 2003 (see Note 8). At the time of the merger, Ivy Global Fund and Ivy International Small Companies Fund had capital loss carryovers available to offset future gains of the Ivy International Growth Fund. These carryovers are limited to $181,724 and $225,739, respectively, for each period ending from March 31, 2006 through 2011 plus any unused limitations from prior years.

Advantus Horizon Fund was merged into Ivy Large Cap Growth Fund as of December 8, 2003 (see Note 9). At the time of the merger, Advantus Horizon Fund had capital loss carryovers available to offset future gains of the Ivy Large Cap Growth Fund. These carryovers are limited to $6,142,321 for the period ending March 31, 2006 and $1,383,732 for each period ending from March 31, 2007 through 2010 plus any unused limitations from prior years and the amount of certain built-in gains realized, if any.

Ivy US Emerging Growth Fund was merged into Ivy Mid Cap Growth fund as of June 16, 2003 (see Note 8). At the time of the merger, Ivy Mid Cap Growth Fund had capital loss carryovers available to offset future gains. These carryovers are limited to $3,301,377 for the period ending March 31, 2006 and $1,182,294 for each period from March 31, 2007 through 2011 and $197,085 for the period ending March 31, 2012 plus any unused limitations from prior years.

Ivy Global Science & Technology Fund was merged into Ivy Science and Technology Fund as of June 16, 2003 (see Note 8). At the time of the merger, Ivy Global Science & Technology Fund had capital loss carryovers available to offset future gains of the Ivy Science and Technology Fund. These carryovers are limited to $413,760 for each period ending from March 31, 2006 through 2011 plus any unused limitations from prior years.

Advantus Enterprise Fund was merged into Ivy Small Cap Growth Fund as of December 8, 2003 (see Note 9). At the time of the merger, Advantus Enterprise Fund had capital loss carryovers available to offset future gains of the Ivy Small Cap Growth Fund. These carryovers are limited to $2,069,323 for each period ending from March 31, 2006 through 2010 and $564,364 for the period ending March 31, 2011 plus any unused limitations from prior years.

Note 5 - Multiclass Operations

Each Fund within the Corporation currently offers four classes of shares, Class A, Class B, Class C and Class Y (other than Money Market Fund which offers only Class A shares), each of which have equal rights as to assets and voting privileges. Ivy Money Market Fund Class B and Class C shares are no longer available for investment. A comprehensive discussion of the terms under which shares of each class are offered is contained in the Prospectus and the Statement of Additional Information for the Corporation.

Income, non-class specific expenses, and realized and unrealized gains and losses are allocated daily to each class of shares based on the value of their relative net assets as of the beginning of each day adjusted for the prior day's capital share activity.

Transactions in capital stock for the fiscal year ended March 31, 2005 are summarized below. Amounts are in thousands.

	Ivy Asset Strategy Fund			Ivy Capital Appreciation Fund				Ivy Core Equity Fund
Shares issued from sale of shares:
Class A		1,843				728			1,173
Class B		364				91			324
Class C		885				196			1,221
Class Y		158				17			24
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A		22				--			--
Class B		6				--			--
Class C		34				--			--
Class Y		2				--			--
Shares redeemed:
Class A		(489	)			(161	)		(3,223	)
Class B		(107	)			(25	)		(511	)
Class C		(833	)			(74	)		(5,690	)
Class Y		(46	)			(3	)		(102	)
Increase (decrease) in outstanding capital shares		1,839				769			(6,784	)
Value issued from sale of shares:
Class A	$	25,040			$	5,606		$	10,008
Class B		4,796				662			2,628
Class C		11,912				1451			10,009
Class Y		2,099				125			205
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A		293				--			--
Class B		82				--			--
Class C		449				--			--
Class Y		33				--			--
Value redeemed:
Class A	(6,407		)			(1,241	)	(26,867		)
Class B		(1,391	)			(180	)		(4,154	)
Class C	(10,775		)			(539	)	(46,423		)
Class Y		(618	)			(27	)		(894	)
Increase (decrease) in outstanding capital	$	25,513			$	5,857		$	(55,488	)

	Ivy High Income Fund			Ivy International Growth Fund				Ivy Large Cap Growth Fund
Shares issued from sale of shares:
Class A		2,247				353			5,034
Class B		303				70			573
Class C		533				286			532
Class Y		139				207			585
Shares issued from reinvestment of dividends:
Class A		139				17			--
Class B		22				2			--
Class C		137				26			--
Class Y		73				7			--
Shares redeemed:
Class A		(781	)			(331	)		(4,551	)
Class B		(120	)			(141	)		(316	)
Class C		(736	)			(1,339	)		(490	)
Class Y		(241	)			(261	)		(1,805	)
Increase (decrease) in outstanding capital shares		1,715				(1,104	)		(438	)
Value issued from sale of shares:
Class A	$	19,814			$	3,785		$	46,868
Class B		2,674				712			4,987
Class C		4,694				2,917			4,740
Class Y		1,219				2,401			5,432
Value issued from reinvestment of dividends:
Class A		1,224				183			--
Class B		193				21			--
Class C		1,205				286			--
Class Y		648				87			--
Value redeemed:
Class A		(6,867	)		(3,536		)	(41,787		)
Class B		(1,056	)			(1,436	)		(2,732	)
Class C		(6,480	)			(13,716	)		(4,309	)
Class Y		(2,151	)			(3,040	)	(16,933		)
Increase (decrease) in outstanding capital	$	15,117			$	(11,336	)	$	(3,734	)

	Ivy Limited- Term Bond Fund			Ivy Mid Cap Growth Fund			Ivy Money Market Fund
Shares issued from sale of shares:
Class A		3,145			2,730			46,298
Class B		304			286			5,580
Class C		385			340			10,835
Class Y		100			80			NA
Shares issued from reinvestment of dividends:
Class A		96			--			324
Class B		10			--			1
Class C		33			--			5
Class Y		5			--			NA
Shares redeemed:
Class A		(2,785	)	(1,403		)	(52,704		)
Class B		(213	)		(496	)		(5,410	)
Class C		(811	)		(276	)	(11,608		)
Class Y		(103	)		(35	)		NA
Increase (decrease) in outstanding capital shares		166			1,226			(6,679	)
Value issued from sale of shares:
Class A	$	32,300		$	26,012		$	46,298
Class B		3,127			2,618			5,580
Class C		3,953			3,176			10,835
Class Y		1,032			776			NA
Value issued from reinvestment of dividends:
Class A		990			--			324
Class B		100			--			1
Class C		339			--			5
Class Y		52			--			NA
Value redeemed:
Class A	(28,528		)	(13,542		)	(52,704		)
Class B		(2,189	)		(4,511	)		(5,410	)
Class C		(8,325	)		(2,564	)	(11,608		)
Class Y		(1,060	)		(333	)		NA
Increase (decrease) in outstanding capital	$	1,791		$	11,632		$	(6,679	)

	Ivy Municipal Bond Fund			Ivy Science and Technology Fund				Ivy Small Cap Growth Fund
Shares issued from sale of shares:
Class A		191				1,571			2,763
Class B		35				196			331
Class C		179				557			1,511
Class Y		4				1,321			2,386
Shares issued from reinvestment of dividends:
Class A		12				--			--
Class B		2				--			--
Class C		40				--			--
Class Y		--	*			--			--
Shares redeemed:
Class A		(104	)			(856	)		(5,108	)
Class B		(21	)			(154	)		(242	)
Class C		(394	)			(987	)		(5,823	)
Class Y		(--	)*			(273	)		(3,879	)
Increase (decrease) in outstanding capital shares		(56)				1,375			(8,061	)
Value issued from sale of shares:
Class A	$	2,136			$	31,721		$	31,601
Class B		396				3,732			3,657
Class C		2,012				10,871			16,856
Class Y		43				27,807			30,101
Value issued from reinvestment of dividends:
Class A		135				--			--
Class B		16				--			--
Class C		447				--			--
Class Y		1				--			--
Value redeemed:
Class A		(1,156	)		(17,589		)		(56,508	)
Class B		(234	)			(2,920	)		(2,657	)
Class C		(4,415	)		(19,034		)		(64,820	)
Class Y		(4	)			(5,746	)		(48,220	)
Increase (decrease) in outstanding capital	$	(623	)		$	28,842		$	(89,990	)

*Not shown due to rounding.

Transactions in capital stock for the fiscal year ended March 31, 2004 are summarized below. Amounts are in thousands.

	Ivy Asset Strategy Fund			Ivy Capital Appreciation Fund				Ivy Core Equity Fund
Shares issued from sale of shares:
Class A		1,053				322			5,603
Class B		390				39			1,371
Class C		619				89			2,100
Class Y		136				--			189
Shares issued in connection with mergers of       Ivy US Blue Chip Fund and       Advantus Index 500 Fund:
Class A		NA				NA			7,526
Class B		NA				NA			1,048
Class C		NA				NA			63
Class Y		NA				NA			69
Shares issued from reinvestment of dividends:
Class A		10				--			--
Class B		1				--			--
Class C		12				--			--
Class Y		1				--			--
Shares redeemed:
Class A		(537	)			(147	)		(5,808	)
Class B		(141	)			(9	)		(1,567	)
Class C		(1,359	)			(22	)		(7,452	)
Class Y		(86	)			(-	)		(369	)
Increase in outstanding capital shares		99				272			2,773
Value issued from sale of shares:
Class A	$	12,565			$	2,202		$	36,676
Class B		4,632				270			8,830
Class C		7,365				606			22,358
Class Y		1,644				--			1,361
Value issued in connection with mergers of       Ivy US Blue Chip Fund and       Advantus Index 500 Fund:
Class A		NA				NA			57,881
Class B		NA				NA			7,641
Class C		NA				NA			463
Class Y		NA				NA			533
Value issued from reinvestment of dividends:
Class A		118				--			--
Class B		11				--			--
Class C		145				--			--
Class Y		13				--			--
Value redeemed:
Class A		(6,418	)		(994		)	(44,359		)
Class B		(1,674	)		(62		)	(11,548		)
Class C	(16,033		)		(150		)	(55,231		)
Class Y		(1,009	)			(-	)		(2,887	)
Increase in outstanding capital	$	1,359			$	1,872		$	21,718

	Ivy High Income Fund			Ivy International Growth Fund				Ivy Large Cap Growth Fund
Shares issued from sale of shares:
Class A		1,618				4,008			3,672
Class B		258				361			433
Class C		966				578			895
Class Y		1,152				10,647			7,115
Shares issued in connection with merger of       Advantus Horizon Fund:
Class A		NA				NA			3,201
Shares issued in connection with mergers of       Ivy International Small Companies Fund and       Ivy Global Fund:
Class A		NA				648			NA
Class B		NA				272			NA
Class C		NA				109			NA
Class Y		NA				30			NA
Shares issued from reinvestment of dividends:
Class A		71				--			--
Class B		14				--			--
Class C		139				--			--
Class Y		75				--			--
Shares redeemed:
Class A		(428	)			(4,232	)		(1,581	)
Class B		(80	)			(411	)		(91	)
Class C		(807	)			(1,695	)		(251	)
Class Y		(583	)		(11,599		)		(858	)
Increase (decrease) in outstanding capital shares		2,395				(1,284	)		12,535
Value issued from sale of shares:
Class A	$	13,999			$	33,106		$	33,918
Class B		2,234				3,526			3,634
Class C		8,268				12,513			7,655
Class Y		9,619				89,992			62,609
Value issued in connection with merger of       Advantus Horizon Fund:
Class A		NA				NA			29,203
Value issued in connection with merger of       Ivy International Small Companies Fund and       Ivy Global Fund:
Class A		NA				5,646			NA
Class B		NA				2,298			NA
Class C		NA				928			NA
Class Y		NA				284			NA
Value issued from reinvestment of dividends:
Class A		612				--			--
Class B		117				--			--
Class C		1,194				--			--
Class Y		642				--			--
Value redeemed:
Class A	(3,657		)		(36,188		)		(13,747	)
Class B		(691	)			(3,580	)		(777	)
Class C	(6,938		)		(14,976		)		(2,196	)
Class Y		(4,980	)		(106,687		)		(7,961	)
Increase (decrease) in outstanding capital	$	20,419			$	(13,138	)	$	112,338

	Ivy Limited- Term Bond Fund			Ivy Mid Cap Growth Fund			Ivy Money Market Fund
Shares issued from sale of shares:
Class A		2,509			4,450			29,888
Class B		357			1,514			4,918
Class C		600			912			10,784
Class Y		355			358			NA
Shares issued in connection with merger of       Advantus Money Market Fund:
Class A		NA			NA			32,239
Shares issued in connection with merger of       Ivy US Emerging Growth Fund:
Class A		NA			2,114			NA
Class B		NA			1,208			NA
Class C		NA			160			NA
Class Y		NA			39			NA
Shares issued from reinvestment of dividends:
Class A		103			--			111
Class B		10			--			-	*
Class C		46			--			2
Class Y		5			--			NA
Shares redeemed:
Class A		(3,081	)	(3,153		)	(27,380		)
Class B		(336	)		(1,628	)		(4,881	)
Class C		(1,500	)	(424		)	(14,717		)
Class Y		(392	)		(297	)		NA
Increase (decrease) in outstanding capital shares		(1,324	)		5,253			30,964
*Not shown due to rounding.
Value issued from sale of shares:
Class A	$	26,204		$	36,931		$	29,888
Class B		3,725			11,807			4,918
Class C		6,261			6,784			10,784
Class Y		3,720			2,216			NA
Value issued in connection with merger of       Advantus Money Market Fund:
Class A		NA			NA			32,239
Value issued in connection with merger of       Ivy US Emerging Growth Fund:
Class A		NA			16,592			NA
Class B		NA			9,204			NA
Class C		NA			1,230			NA
Class Y		NA			308			NA
Value issued from reinvestment of dividends:
Class A		1,079			--			111
Class B		106			--			-	*
Class C		476			--			2
Class Y		50			--			NA
Value redeemed:
Class A	(32,153		)	(25,327		)	(27,380		)
Class B	(3,509		)	(12,667		)		(4,881	)
Class C	(15,667		)	(3,390		)	(14,717		)
Class Y		(4,108	)		(2,338	)		NA
Increase (decrease) in outstanding capital	$	(13,816	)	$	41,350		$	30,964

*Not shown due to rounding.

	Ivy Municipal Bond Fund			Ivy Science and Technology Fund				Ivy Small Cap Growth Fund
Shares issued from sale of shares:
Class A		390				1,269			4,917
Class B		44				392			475
Class C		85				676			2,790
Class Y		--	*			552			11,693
Shares issued in connection with merger of       Advantus Enterprise Fund:
Class A		NA				NA			4,061
Shares issued in connection with merger of       Ivy Global Science and Technology Fund:
Class A		NA				287			NA
Class B		NA				245			NA
Class C		NA				56			NA
Class Y		NA				7			NA
Shares issued from reinvestment of dividends:
Class A		9				--			--
Class B		1				--			--
Class C		45				--			--
Class Y		--	*			--			--
Shares redeemed:
Class A		(241	)			(720	)		(3,270	)
Class B		(17	)			(361	)		(184	)
Class C		(585	)			(1,077	)		(6,332	)
Class Y		(--	)			(328	)		(6,339	)
Increase (decrease) in outstanding capital shares		(269	)			998			7,811
*Not shown due to rounding.
Value issued from sale of shares:
Class A	$	4,386			$	15,942		$	47,321
Class B		495				5,032			4,653
Class C		957				22,515			32,820
Class Y		1				5,915			125,087
Value issued in connection with merger of       Advantus Enterprise Fund:
Class A		NA				NA			43,667
Value issued in connection with merger of       Ivy Global Science and Technology Fund:
Class A		NA				4,548			NA
Class B		NA				3,771			NA
Class C		NA				860			NA
Class Y		NA				119			NA
Value issued from reinvestment of dividends:
Class A		96				--			--
Class B		11				--			--
Class C		509				--			--
Class Y		--	*			--			--
Value redeemed:
Class A	(2,706		)		(12,236		)	(32,941		)
Class B		(190	)			(5,784	)		(1,860	)
Class C	(6,556		)		(17,948		)	(62,826		)
Class Y		(-	)			(5,923	)	(72,350		)
Increase (decrease) in outstanding capital	$	(2,997	)		$	16,811		$	83,571

*Not shown due to rounding.

Note 6 - Options

Options purchased by a Fund are accounted for in the same manner as marketable portfolio securities. The cost of portfolio securities acquired through the exercise of call options is increased by the premium paid to purchase the call. The proceeds from securities sold through the exercise of put options are decreased by the premium paid to purchase the put.

When the Fund writes (sells) an option, an amount equal to the premium received by the Fund is recorded as a liability. The amount of the liability is subsequently adjusted to reflect the current market value of the option written. The current market value of an option is the last sales price on the principal exchange on which the option is traded or, in the absence of transactions, the mean between the bid and asked prices or at a value supplied by a broker-dealer. When an option expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the call option was sold) and the liability related to such option is extinguished. When a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. For each Fund, when a written put is exercised, the cost basis of th e securities purchased by the Fund is reduced by the amount of the premium received.

For Ivy Asset Strategy Fund, transactions in call options written were as follows:

	Number of Contracts			Premiums Received
Outstanding at March 31, 2004		--		$	--
Options written		3,813			571,610
Options terminated in closing purchase transactions	(3,577		)	(549,107		)
Options exercised		(180	)		(18,303	)
Options expired		(56	)		(4,200	)
Outstanding at March 31, 2005		--		$	--

For Ivy Capital Appreciation Fund, transactions in call options written were as follows:

	Number of Contracts			Premiums Received
Outstanding at March 31, 2004		7		$	854
Options written		--			--
Options terminated in closing purchase transactions	(7		)	(854		)
Options exercised		--			--
Options expired		--			--
Outstanding at March 31, 2005		--		$	--

For Ivy Core Equity Fund, transactions in call options written were as follows:

	Number of Contracts			Premiums Received
Outstanding at March 31, 2004		--		$	--
Options written		800			63,904
Options terminated in closing purchase transactions	(420		)		(34,341	)
Options exercised		--			--
Options expired		(380	)		(29,563	)
Outstanding at March 31, 2005		--		$	--

For Ivy Mid Cap Growth Fund, transactions in call options written were as follows:

	Number of Contracts			Premiums Received
Outstanding at March 31, 2004		107		$	19,288
Options written		5,617			412,929
Options terminated in closing purchase transactions	(3,285		)	(290,644		)
Options exercised		(21	)		(3,300	)
Options expired		(1,050	)		(71,834	)
Outstanding at March 31, 2005		1,368		$	66,439

Note 7 - Futures

The Corporation may engage in buying and selling futures contracts. Upon entering into a futures contract, the Corporation is required to deposit, in a segregated account, an amount of cash or United States Treasury Bills equal to a varying specified percentage of the contract amount. This amount is known as the initial margin. Subsequent payments ("variation margins") are made or received by the Corporation each day, dependent on the daily fluctuations in the value of the underlying debt security or index. These changes in the variation margins are recorded by the Corporation as unrealized gains or losses. Upon the closing of the contracts, the cumulative net change in the variation margin is recorded as realized gain or loss. The Corporation uses futures to attempt to reduce the overall risk of its investments.

Note 8 - Acquisitions of Ivy Global Fund, Ivy Global Science and Technology Fund, Ivy International Small Companies Fund, Ivy US Blue Chip Fund and Ivy US Emerging Growth Fund

On June 16, 2003, Ivy Core Equity Fund acquired all the net assets of Ivy US Blue Chip Fund pursuant to a plan of reorganization approved by the shareholders of Ivy US Blue Chip Fund on June 10, 2003. The acquisition was accomplished by a tax-free exchange of 4,455,649 shares of Ivy Core Equity Fund (valued at $33,237,149) for the 4,314,763 shares of Ivy US Blue Chip Fund outstanding on June 16, 2003. Ivy US Blue Chip Fund had net assets of $33,237,149, including $3,400,840 of net unrealized appreciation in value of investments and $17,432,572 of accumulated net realized losses on investments, which were combined with those of Ivy Core Equity Fund. The aggregate net assets of Ivy Core Equity Fund and Ivy US Blue Chip Fund immediately before the acquisition were $243,451,378 and $33,237,149, respectively. The aggregate net assets of Ivy Core Equity Fund and Ivy US Blue Chip Fund immediately following the acquisition were $276,688,527 and $0, respectively.

On June 16, 2003, Ivy International Growth Fund acquired all the net assets of Ivy Global Fund pursuant to a plan of reorganization approved by the shareholders of Ivy Global Fund on June 10, 2003. The acquisition was accomplished by a tax-free exchange of 471,708 shares of Ivy International Growth Fund (valued at $4,084,583) for the 555,824 shares of Ivy Global Fund outstanding on June 16, 2003. Ivy Global Fund had net assets of $4,084,583, including $187,112 of net unrealized appreciation in value of investments and $3,440,525 of accumulated net realized losses on investments, which were combined with those of Ivy International Growth Fund. The aggregate net assets of Ivy International Growth Fund and Ivy Global Fund immediately before the acquisition were $75,960,531 and $4,084,583, respectively. The aggregate net assets of Ivy International Growth Fund and Ivy Global Fund immediately following the acquisition were $80,045,114 and $0, respectively.

On June 16, 2003, Ivy International Growth Fund acquired all the net assets of Ivy International Small Companies Fund pursuant to a plan of reorganization approved by the shareholders of Ivy International Small Companies Fund on June 12, 2003. The acquisition was accomplished by a tax-free exchange of 586,893 shares of Ivy International Growth Fund (valued at $5,072,637) for the 746,180 shares of Ivy International Small Companies Fund outstanding on June 16, 2003. Ivy International Small Companies Fund had net assets of $5,072,637, including $410,933 of net unrealized appreciation in value of investments and $11,716,558 of accumulated net realized losses on investments, which were combined with those of Ivy International Growth Fund. The aggregate net assets of Ivy International Growth Fund and Ivy International Small Companies Fund immediately before the acquisition were $75,960,531 and $5,072,637, respectively. The aggregate net assets of Ivy International Growth Fund and Ivy International Small Companies Fund immediately following the acquisition were $81,033,168 and $0, respectively.

On June 16, 2003, Ivy Science and Technology Fund acquired all the net assets of Ivy Global Science and Technology Fund pursuant to a plan of reorganization approved by the shareholders of Ivy Global Science and Technology Fund on June 10, 2003. The acquisition was accomplished by a tax-free exchange of 594,910 shares of Ivy Science and Technology Fund (valued at $9,297,885) for the 1,192,759 shares of Ivy Global Science and Technology Fund outstanding on June 16, 2003. Ivy Global Science and Technology Fund had net assets of $9,297,885, including $1,112,396 of net unrealized appreciation in value of investments and $48,964,829 of accumulated net realized losses on investments, which were combined with those of Ivy Science and Technology Fund. The aggregate net assets of Ivy Science and Technology Fund and Ivy Global Science and Technology Fund immediately before the acquisition were $102,611,502 and $9,297,885, respectively. The aggregate net assets of Ivy Science and Technology Fund and Ivy Global Science and Technology Fund immediately following the acquisition were $111,909,387 and $0, respectively.

On June 16, 2003, Ivy Mid Cap Growth Fund acquired all the net assets of Ivy US Emerging Growth Fund pursuant to a plan of reorganization approved by the shareholders of Ivy US Emerging Growth Fund on June 10, 2003. The acquisition was accomplished by a tax-free exchange of 3,520,272 shares of Ivy Mid Cap Growth Fund (valued at $27,334,380) for the 1,980,747 shares of Ivy US Emerging Growth Fund outstanding on June 16, 2003. Ivy US Emerging Growth Fund had net assets of $27,334,380, including $3,678,066 of net unrealized appreciation in value of investments and $41,518,711 of accumulated net realized losses on investments, which were combined with those of Ivy Mid Cap Growth Fund. The aggregate net assets of Ivy Mid Cap Growth Fund and Ivy US Emerging Growth Fund immediately before the acquisition were $26,567,950 and $27,334,380, respectively. The aggregate net assets of Ivy Mid Cap Growth Fund and Ivy US Emerging Growth Fund immediately following the acquisition were $53,902,330 and $0, respectively.

Note 9 - Acquisitions of Advantus Enterprise Fund, Advantus Horizon Fund, Advantus Index 500 Fund and Advantus Money Market Fund

On December 8, 2003, Ivy Core Equity Fund acquired all the net assets of Advantus Index 500 Fund pursuant to a plan of reorganization approved by the shareholders of Advantus Index 500 Fund on November 26, 2003. The acquisition was accomplished by a tax-free exchange of 4,249,982 shares of Ivy Core Equity Fund (valued at $33,280,493) for the 2,400,840 shares of Advantus Index 500 Fund outstanding on December 8, 2003. Advantus Index 500 Fund had net assets of $33,277,474, including $5,911,503 of net unrealized appreciation in value of investments and $6,876,798 of accumulated net realized losses on investments, which were combined with those of Ivy Core Equity Fund. The aggregate net assets of Ivy Core Equity Fund and Advantus Index 500 Fund immediately before the acquisition were $266,407,080 and $33,277,474, respectively. The aggregate net assets of Ivy Core Equity Fund and Advantus Index 500 Fund immediately following the acquisition were $299,687,573 and $0, respectively. Advantus Index 500 Fund Class A, B and C shares merged into Ivy Core Equity Fund Class A.

On December 8, 2003, Ivy Large Cap Growth Fund acquired all the net assets of Advantus Horizon Fund pursuant to a plan of reorganization approved by the shareholders of Advantus Horizon Fund on November 26, 2003. The acquisition was accomplished by a tax-free exchange of 3,201,030 shares of Ivy Large Cap Growth Fund (valued at $29,203,164) for the 2,185,881 shares of Advantus Horizon Fund outstanding on December 8, 2003. Advantus Horizon Fund had net assets of $29,192,654, including $6,087,063 of net unrealized appreciation in value of investments and $15,819,183 of accumulated net realized losses on investments, which were combined with those of Ivy Large Cap Growth Fund. The aggregate net assets of Ivy Large Cap Growth Fund and Advantus Horizon Fund immediately before the acquisition were $111,801,149 and $29,192,654, respectively. The aggregate net assets of Ivy Large Cap Growth Fund and Advantus Horizon Fund immediately following the acquisition were $141,004,313 and $0, respectively. Advantus Horizon F und Class A, B and C shares merged into Ivy Large Cap Growth Fund Class A.

On December 8, 2003, Ivy Money Market Fund acquired all the net assets of Advantus Money Market Fund pursuant to a plan of reorganization approved by the shareholders of Advantus Money Market Fund on November 26, 2003. The acquisition was accomplished by a tax-free exchange of 32,238,877 shares of Ivy Money Market Fund (valued at $32,238,877) for the 32,238,877 shares of Advantus Money Market Fund outstanding on December 8, 2003. Advantus Money Market Fund had net assets of $32,238,877, including $0 of net unrealized appreciation in value of investments and $0 of accumulated net realized losses on investments, which were combined with those of Ivy Money Market Fund. The aggregate net assets of Ivy Money Market Fund and Advantus Money Market Fund immediately before the acquisition were $21,990,069 and $32,238,877, respectively. The aggregate net assets of Ivy Money Market Fund and Advantus Money Market Fund immediately following the acquisition were $54,228,946 and $0, respectively. Advantus Money Market Cla ss A, B and C shares merged into Ivy Money Market Class A.

On December 8, 2003, Ivy Small Cap Growth Fund acquired all the net assets of Advantus Enterprise Fund pursuant to a plan of reorganization approved by the shareholders of Advantus Enterprise Fund on November 26, 2003. The acquisition was accomplished by a tax-free exchange of 4,061,128 shares of Ivy Small Cap Growth Fund (valued at $43,666,738) for the 4,672,306 shares of Advantus Enterprise Fund outstanding on December 8, 2003. Advantus Enterprise Fund had net assets of $43,656,594, including $6,463,903 of net unrealized appreciation in value of investments and $18,900,444 of accumulated net realized losses on investments, which were combined with those of Ivy Small Cap Growth Fund. The aggregate net assets of Ivy Small Cap Growth Fund and Advantus Enterprise Fund immediately before the acquisition were $524,433,879 and $43,656,594, respectively. The aggregate net assets of Ivy Small Cap Growth Fund and Advantus Enterprise Fund immediately following the acquisition were $568,100,617 and $0, respectively. Advantus Enterprise Fund Class A, B and C shares merged into Ivy Small Cap Growth Fund Class A.

Note 10 - Name Change

On March 31, 2005, Ivy Tax-Managed Equity Fund changed its name to Ivy Capital Appreciation Fund.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders,
Ivy Funds, Inc.:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Asset Strategy Fund, Capital Appreciation Fund (formerly Tax-Managed Equity Fund), Core Equity Fund, High Income Fund, International Growth Fund, Large Cap Growth Fund, Limited-Term Bond Fund, Mid Cap Growth Fund, Money Market Fund, Municipal Bond Fund, Science and Technology Fund and Small Cap Growth Fund (collectively the "Funds") comprising Ivy Funds, Inc. (formerly W&R Funds, Inc.) as of March 31, 2005, and the related statements of operations for the fiscal year then ended, the statements of changes in net assets for each of the two fiscal years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising Ivy Funds, Inc., as of March 31, 2005, the results of their operations for the fiscal year then ended, the changes in their net assets for each of the two fiscal years in the period then ended, and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Kansas City, Missouri
May 17, 2005

Income Tax Information

The amounts of the dividends and long-term capital gains below, multiplied by the number of shares owned by you in the Funds shown on the record dates, will give you the total amounts to be reported in your Federal income tax return for the years in which they were received or reinvested.

			PER-SHARE AMOUNTS REPORTABLE AS:
			For Individuals						For Corporations
Record Date	Total		Qualifying		Non- Qualifying		Long-Term Capital Gain		Qualifying		Non- Qualifying		Long-Term Capital Gain
Ivy Asset Strategy Fund Class A
6-16-04	$	0.0670	$	0.0670	$	--	$	--	$	--	$	0.0670	$	--
9-15-04		--		--		--		--		--		--		--
12-15-04		0.1114		--		--		0.1114		--		--		0.1114
3-9-05		--		--		--		--		--		--		--
Total	$	0.1784	$	0.0670	$	--	$	0.1114	$	--	$	0.0670	$	0.1114
Ivy Asset Strategy Fund Class B
6-16-04	$	0.0150	$	0.0150	$	--	$	--	$	--	$	0.0150	$	--
9-15-04		--		--		--		--		--		--		--
12-15-04		0.1114		--		--		0.1114		--		--		0.1114
3-9-05		--		--		--		--		--		--		--
Total	$	0.1264	$	0.0150	$	--	$	0.1114	$	--	$	0.0150	$	0.1114
Ivy Asset Strategy Fund Class C
6-16-04	$	0.0160	$	0.0160	$	--	$	--	$	--	$	0.0160	$	--
9-15-04		--		--		--		--		--		--		--
12-15-04		0.1114		--		--		0.1114		--		--		0.1114
3-9-05		--		--		--		--		--		--		--
Total	$	0.1274	$	0.0160	$	--	$	0.1114	$	--	$	0.0160	$	0.1114
Ivy Asset Strategy Fund Class Y
6-16-04	$	0.0710	$	0.0710	$	--	$	--	$	--	$	0.0710	$	--
9-15-04		--		--		--		--		--		--		--
12-15-04		0.1114		--		--		0.1114		--		--		0.1114
3-9-05		--		--		--		--		--		--		--
Total	$	0.1824	$	0.0710	$	--	$	0.1114	$	--	$	0.0710	$	0.1114
Ivy International Growth Fund Class A
12-15-04	$	0.1704	$	0.1704	$	--	$	--	$	0.00046	$	0.16994	$	--
Ivy International Growth Fund Class B
12-15-04	$	0.0544	$	0.0544	$	--	$	--	$	0.00015	$	0.05425	$	--
Ivy International Growth Fund Class C
12-15-04	$	0.0654	$	0.0654	$	--	$	--	$	0.00017	$	0.06523	$	--
Ivy International Growth Fund Class Y
12-15-04	$	0.2134	$	0.2134	$	--	$	--	$	0.00057	$	0.21283	$	--

Dividends are declared and recorded by each of the following Funds on each day the New York Stock Exchange is open for business. Dividends are paid monthly usually on the 27th of the month or on the preceding business day if the 27th is a weekend or holiday.

Exempt Interest Dividends - The exempt interest portion of dividends paid represents the distribution of state and municipal bond interest and is exempt from Federal income taxation.

The table below shows the taxability of dividends and long-term capital gains paid during the fiscal year ended March 31, 2005:

		PER-SHARE AMOUNTS REPORTABLE AS:
		For Individuals			For Corporations
Record Date	Total	Qualifying	Non- Qualifying	Long-Term Capital Gain	Qualifying	Non- Qualifying	Long-Term Capital Gain
High Income Fund Class A, Class B, Class C and Class Y
April 2004 through December 2004	100.0000%	0.32310%	99.67690%	--%	0.32540%	99.67460%	--%
January 2005 through March 2005	100.0000%	0.04920%	99.95080%	--%	0.04920%	99.95080%	--%
Limited-Term Bond Fund Class A, Class B, Class C and Class Y
April 2004 through March 2005	100.0000%	--%	100.00000%	--%	--%	100.00000%	--%
Money Market Fund Class A, Class B and Class C
April 2004 through March 2005	100.0000%	--%	100.00000%	--%	--%	100.00000%	--%

Municipal Bond Fund Class A, Class B, Class C and Class Y
		For Individuals				For Corporations
Record Date	Total	Qualifying	Non- Qualifying	Long-Term Capital Gain	Exempt Interest	Non- Qualifying	Long-Term Capital Gain	Exempt Interest
April 2004 through December 2004	100.0000%	--%	0.43637%	--%	99.56363%	0.43637%	--%	99.56363%
January 2005 through March 2005	100.0000%	--%	0.20838%	--%	99.79162%	0.20838%	--%	99.79162%

CORPORATION DEDUCTIONS - Under Federal tax law, the amounts reportable as Qualifying Dividends are eligible for the dividends received deduction in the year received as provided by Section 243 of the Internal Revenue Code.

The tax status of dividends paid will be reported to you on Form 1099-DIV after the close of the applicable calendar year.

Income from Municipal Bond Fund may be subject to the alternative minimum tax. Shareholders are advised to consult with their tax advisors concerning the tax treatment of dividends and distributions from all the Funds.

The Board of Directors of Ivy Funds, Inc.

The Waddell & Reed Fund Complex (Fund Complex) is comprised of the Ivy Family of Funds and the Advisors Fund Complex. The Ivy Family of Funds is comprised of the funds in Ivy Funds, Inc. (13 portfolios) and Ivy Funds (15 portfolios). The Advisors Fund Complex is comprised of each of the funds in the Waddell & Reed Advisors Funds (21 portfolios), Waddell & Reed InvestEd Portfolios, Inc. (three portfolios) and W&R Target Funds, Inc. (18 portfolios).

Each of the individuals listed below serves as a director or trustee for each of the funds within the Ivy Family of Funds. Eleanor B. Schwartz, Joseph Harroz, Jr., Henry J. Herrmann and Keith A. Tucker also serve as directors of each of the funds in the Advisors Fund Complex. Each Director serves an indefinite term, until he or she dies, resigns, is removed or becomes disqualified.

Two of the Directors are considered by Ivy Funds, Inc. and its counsel to be "interested persons" of the Funds or of their investment manager because of their employment by Waddell & Reed Financial, Inc. (WDR) or its wholly-owned subsidiaries. The other Directors (more than a majority of the total number) are independent; that is, they are not employees or officers of, and have no financial interest in, WDR or any of its wholly-owned subsidiaries, including Ivy Funds Distributor, Inc. (IFDI), Ivy Investment Management Company (IICO) (formerly, Waddell & Reed Ivy Investment Company), and Waddell & Reed Services Company (WRSCO).

Additional Information about Directors

The Statement of Additional Information (SAI) for Ivy Funds, Inc. includes additional information about the Corporation's Directors. The SAI is available without charge, upon request, by calling 1.800.777.6472. It is also available on the Ivy Funds website, www.ivyfunds.com.

Independent Directors

Jarold W. Boettcher (64)

6300 Lamar Avenue, Overland Park, KS 66202

Position held with Corporation: Director

Number of portfolios overseen by Director: 28

Director since: 2003

Director of Funds in the Fund Complex since: 2002

Principal Occupations During Past 5 Years: President of Boettcher Enterprises, Inc. (agriculture products and services) (1979 to present); President of Boettcher Supply, Inc. (electrical and plumbing supplies distributor) (1979 to present); President of Boettcher Aerial, Inc. (Aerial Ag Applicator) (1983 to present)

Other Directorships held by Director: Director of Guaranty State Bank & Trust Co.; Director of Guaranty, Inc.; Trustee of Ivy Funds

James D. Gressett (54)

6300 Lamar Avenue, Overland Park, KS 66202

Position held with Corporation: Director

Number of portfolios overseen by Director: 28

Director since: 2003 Director of Funds in the Fund Complex since: 2002

Principal Occupations During Past 5 Years: Secretary of Streetman Homes Ltd, LLP (homebuilding company) (2001 to present); Chief Executive Officer (CEO) of PacPizza LLC (Pizza Hut franchise) (2000 to 2004); President of Alien, Inc. (real estate development) (1997 to 2001) Other Directorships held by Director: Director of Collins Financial Services, a debt recovery company; Trustee of Ivy Funds

Joseph Harroz, Jr. (38)

6300 Lamar Avenue, Overland Park, KS 66202

Position held with Corporation: Director

Number of portfolios overseen by Director: 70

Director since: 1998 Director of Funds in the Fund Complex since: 1998

Principal Occupations During Past 5 Years: Vice President and General Counsel of the Board of Regents, University of Oklahoma (1996 to present); Adjunct Professor, University of Oklahoma Law School (1997 to present); Managing Member, Harroz Investments, LLC, commercial enterprise investments (1998 to present) Other Directorships held by Director: Trustee of Ivy Funds and Director of each fund in the Advisors Fund Complex

Glendon E. Johnson, Jr. (53)

6300 Lamar Avenue, Overland Park, KS 66202

Position held with Corporation: Director

Number of portfolios overseen by Director: 28

Director since: 2003 Director of Funds in the Fund Complex since: 2002

Principal Occupation During Past 5 Years: Of Counsel, Lee & Smith, PC (law firm) (1996 to present); Member/Manager, Castle Valley Ranches, LLC (ranching) (1995 to present) Other Directorships held by Director: Trustee of Ivy Funds

Eleanor B. Schwartz (68)

6300 Lamar Avenue, Overland Park, KS 66202

Position held with Corporation: Director

Number of portfolios overseen by Director: 70

Director since: 1995 Director of Funds in the Fund Complex since: 1995

Principal Occupations During Past 5 Years: Professor Emeritus, University of Missouri at Kansas City (2003 to present) Professor of Business Administration (1980 to 2003) and Chancellor (1991 to 1999), University of Missouri at Kansas City Other Directorships held by Director: Trustee of Ivy Funds and Director of each fund in the Advisors Fund Complex

Michael G. Smith (60)

6300 Lamar Avenue, Overland Park, KS 66202

Position held with Corporation: Director

Number of portfolios overseen by Director: 28

Director since: 2003 Director of Funds in the Fund Complex since: 2002

Principal Occupation During Past 5 Years: Retired Other Directorships held by Director: Director, Executive Board, Cox Business School, Southern Methodist University; Director of Northwestern Mutual Life Series Funds & Mason Street Advisors Funds (29 portfolios overseen); Trustee of Ivy Funds

Edward M. Tighe (62)

6300 Lamar Avenue, Overland Park, KS 66202

Position held with Corporation: Director

Number of portfolios overseen by Director: 28

Director since: 2003 Director of Funds in the Fund Complex since: 2002

Principal Occupation During Past 5 Years: Retired; CEO and Director of Asgard Holding, LLC (computer network and security services) (2002 to 2004); CEO and Director of JBE Technology Group, Inc. (telecommunications services) (2001 to 2003); CEO and Director of Global Mutual Fund Services (1993 to 2000); CEO and Director of Global Technology Management, Inc. (software and consulting) (1992 to 2000) Other Directorships held by Director: Director of Hansberger Institutional Funds (2 portfolios overseen); Trustee of Ivy Funds

Interested Directors

Henry J. Herrmann (62)

6300 Lamar Avenue, Overland Park, KS 66202

Positions held with Corporation: Director and President

Number of portfolios overseen by Director: 70

Director since: 1998; President since: 2001 Director of Funds in the Fund Complex since: 1998

Principal Occupation(s) During Past 5 Years: President and Chief Investment Officer (CIO) of WDR (1998 to present); President and CEO of IICO (2002 to present); CIO of IICO (2003 to present); President and CEO of Waddell & Reed Investment Management Company (WRIMCO), an affiliate of IICO, (1993 to present); CIO of WRIMCO (1991 to present); President of each of the Funds in the Fund Complex (2001 to present) Other Directorships held by Director: Chairman of the Board (COB) and Director of IICO; COB and Director of Ivy Services, Inc., an affiliate of IICO; Director of WDR, W&R and WRIMCO; Director, Austin, Calvert & Flavin, an affiliate of WRIMCO; Trustee of Ivy Funds and Director of each fund in the Advisors Fund Complex

Keith A. Tucker (60)

6300 Lamar Avenue, Overland Park, KS 66202

Positions held with Corporation: COB and Director

Number of portfolios overseen by Director: 70

Director since: 1993; COB since: 1998 Director of Funds in the Fund Complex since: 1993

Principal Occupation(s) During Past 5 Years: CEO of WDR (1998 to present) Other Directorships held by Director: COB and Director of WDR, WRIMCO and WRSCO; Director of W&R; COB of W&R (1993 to 2005); COB and Trustee of Ivy Funds and Director of each fund in the Advisors Fund Complex

Officers

Theodore W. Howard (62)

6300 Lamar Avenue, Overland Park, KS 66202

Positions held with Corporation: Principal Accounting Officer, Treasurer and Vice President since 1992; Principal Financial Officer since 2002

Positions held with Funds in the Fund Complex: Principal Accounting Officer and Treasurer since 1976; Vice President since 1987; Principal Financial Officer since 2002

Principal Occupation(s) During Past 5 Years: Senior Vice President of WRSCO (2001 to present); Treasurer and Principal Accounting Officer of each of the Funds in the Fund Complex (1976 to present); Vice President of each of the Funds in the Fund Complex (1987 to present); Principal Financial Officer of each of the Funds in the Fund Complex (2002 to present); Vice President of WRSCO (1988 to 2001)

Directorships held: None

Kristen A. Richards (37)

6300 Lamar Avenue, Overland Park, KS 66202

Positions held with Corporation: Vice President, Secretary and Associate General Counsel since 2000

Positions held with Funds in the Fund Complex: Vice President, Secretary and Associate General Counsel since 2000

Principal Occupation(s) During Past 5 Years: Vice President, Associate General Counsel and Chief Compliance Officer of WRIMCO (2000 to present); Vice President, Associate General Counsel and Chief Compliance Officer of IICO (2002 to present); Vice President, Secretary and Associate General Counsel of each of the Funds in the Fund Complex (2000 to present); Assistant Secretary of each of the funds in the Fund Complex (1998 to 2000)

Directorships held: None

Daniel C. Schulte (39)

6300 Lamar Avenue, Overland Park, KS 66202

Positions held with Corporation: Vice President, Assistant Secretary and General Counsel since 2000

Positions held with Funds in the Fund Complex: Vice President, Assistant Secretary and General Counsel since 2000

Principal Occupation(s) During Past 5 Years: Vice President and General Counsel of WDR (2000 to present); Senior Vice President, Secretary and General Counsel of W&R, WRIMCO and WRSCO (2000 to present); Senior Vice President, General Counsel and Assistant Secretary of Ivy Services, Inc. (2002 to present); Vice President, General Counsel and Assistant Secretary of IICO (2002 to present); Vice President and Assistant Secretary of each of the Funds in the Fund Complex (2000 to present); Secretary of WDR (2000 to 2003); Assistant Secretary of WDR (1998 to 2000)

Directorships held: None

Scott J. Schneider (37)

6300 Lamar Avenue, Overland Park, KS 66202

Position held with Corporation: Chief Compliance Officer since 2004

Position held with Funds in the Fund Complex: Chief Compliance Officer since 2004

Principal Occupation(s) During Past 5 Years: Chief Compliance Officer for each of the Funds in the Fund Complex (2004 to present); Senior Attorney and Compliance Officer for each of the Funds in the Fund Complex (2000 to 2004)

Directorships Held: None

Ivy Funds, Inc. Privacy Notice

The following privacy notice is issued by Ivy Funds, Inc. (the "Funds"), Ivy Investment Management Company ("IICO") and Ivy Funds Distributor, Inc. ("IFDI").

Information Collected

We collect nonpublic personal information about you from your account application and other forms that you may deliver to us, and from your transactions with us and our affiliates. This is information that regulators consider necessary for the proper servicing of your account. In order to effect your transactions and service your account properly, we may disclose all of the information that we collect, as described above, to firms that assist us in servicing your account, such as our transfer agent.

Confidentiality of Information Collected

All records containing your nonpublic personal information are kept at our various service providers. These entities include IICO, IFDI and our transfer agent and administrative services provider. We require these affiliates, and any non-affiliated service providers, to protect the confidentiality of your information and to use the information only for the purposes for which disclosure to them is made. The Funds, IICO, IFDI and other service providers restrict access to nonpublic personal information about you to those employees who need to know that information to provide products and services to you and maintain physical, electronic, and procedural safeguards that comply with federal standards to maintain the security of your nonpublic personal information.

Disclosure of Information in Limited Circumstances

We do not disclose nonpublic personal information about present or former customers to non-affiliated third parties, except as permitted or required by law. In connection with servicing your account, your nonpublic personal information may be shared among the entities named in this notice, their affiliates, and non-affiliates, including a transfer agent or other service companies. We will adhere to the policies and practices above for both current and former customers.

Proxy Voting Information


Proxy Voting Guidelines

A description of the policies and procedures Ivy Funds, Inc. uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 1.800.777.6472 and (ii) on the Securities and Exchange Commission's ("SEC") website at http://www.sec.gov.

Proxy Voting Records

Information regarding how the Corporation voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on Form N-PX through the Corporation's website at http://www.ivyfunds.com and on the SEC's website at http://www.sec.gov.

Quarterly Portfolio Schedule Information

A complete schedule of portfolio holdings for the first and third quarters of each fiscal year is filed with the Securities and Exchange Commission ("SEC") on the Corporation's Form N-Q, 60 days after the end of the quarter. This form may be obtained in the following ways:

• On the SEC's website at http://www.sec.gov.
• For review and copy at the SEC's Public Reference Room in Washington, DC. Information on the operations of the Public Reference Room may be obtained by callling 1.800.SEC.0330.
• On the Corporation's website at http://www.ivyfunds.com.

Householding Notice

If you currently receive one copy of the shareholder reports and prospectus for your household (even if more than one person in your household owns shares of a Fund) and you would prefer to receive separate shareholder reports and prospectuses for each account holder living at your address, you can do either of the following:

Fax your request to 800.532.2749.

Write to us at the address listed on the back cover.

Please list each account for which you would like to receive separate shareholder reports and prospectus mailings. We will resume sending separate documents within 30 days of receiving your request.

To all Traditional IRA Planholders:

As required by law, we are hereby providing notice to you that income tax may be withheld automatically from any distribution or withdrawal from a traditional IRA. The fund is generally required to withhold taxes unless you make a written election not to have taxes withheld. The election may be made on the distribution/withdrawal form provided by Waddell & Reed, Inc. which can be obtained from your Waddell & Reed representative or by submitting Internal Revenue Service Form W-4P. Once made, an election can be revoked by providing written notice to Waddell & Reed, Inc. If you elect not to have tax withheld you may be required to make payments of estimated tax. Penalties may be imposed by the IRS if withholding and estimated tax payments are not adequate.

THE IVY FUNDS FAMILY

Global/International Funds

Cundill Global Value Fund

European Opportunities Fund

International Fund

International Balanced Fund

International Growth Fund

International Value Fund

Pacific Opportunities Fund

Domestic Equity Funds

Capital Appreciation Fund (formerly, Tax-Managed Equity Fund)

Core Equity Fund

Dividend Income Fund

Large Cap Growth Fund

Mid Cap Growth Fund

Small Cap Growth Fund

Small Cap Value Fund

Value Fund

Fixed Income Funds

Bond Fund

High Income Fund

Limited-Term Bond Fund

Mortgage Securities Fund

Municipal Bond Fund

Money Market Funds

Cash Reserves Fund

Money Market Fund

Specialty Funds

Asset Strategy Fund

Balanced Fund

Global Natural Resources Fund

Real Estate Securities Fund

Science and Technology Fund

1.800.777.6472
Visit us online at www.ivyfunds.com

The Ivy Funds are managed by Ivy Investment Management Company and distributed by its subsidiary, Ivy Funds Distributor, Inc.

Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. For a prospectus containing this and other information for the Ivy Funds, call your financial advisor or visit us online at www.ivyfunds.com. Please read the prospectus carefully before investing.

WRR3000A (3-05)