Ivy Funds N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-01028

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Ivy Funds

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(Exact name of registrant as specified in charter)

6300 Lamar Avenue, Overland Park, Kansas 66202

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(Address of principal executive offices) (Zip code)

Kristen A. Richards

6300 Lamar Avenue

Overland Park, Kansas 66202

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(Name and address of agent for service)

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

Date of fiscal year end: March 31

Date of reporting period: September 30, 2006

ITEM 1. REPORTS TO STOCKHOLDERS.

Semiannual Report
September 30, 2006

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

3	President's Letter
5	Illustration of Fund Expenses
13	Ivy Balanced Fund
28	Ivy Bond Fund
48	Ivy Cundill Global Value Fund
61	Ivy Dividend Income Fund
74	Ivy European Opportunities Fund
87	Ivy Global Natural Resources Fund
106	Ivy International Fund
121	Ivy International Balanced Fund
137	Ivy International Value Fund
152	Ivy Mortgage Securities Fund
171	Ivy Pacific Opportunities Fund
185	Ivy Real Estate Securities Fund
197	Ivy Small Cap Value Fund
210	Ivy Value Fund
223	Notes to Financial Statements
252	Report of Independent Registered Public Accounting Firm
254	Income Tax Information
255	Renewal of Investment Management Agreements
262	Proxy Voting Information
263	Quarterly Portfolio Schedule Information
264	IRA Disclosure

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

President's Letter
     September 30, 2006

Dear Shareholder:

Enclosed is our report on your Fund's operations for the six months ended September 30, 2006. It has been an especially volatile period. Overall, stock prices rose as energy prices fell and the U.S. housing market deteriorated. The S&P 500 Index advanced 4.14 percent, led by telecommunications and financial stocks. Energy stocks were the weakest performers during the period. International stocks also posted solid gains, as the Morgan Stanley Capital International EAFE Index climbed 4.66 percent.

The Fed pauses. The world does not.

Bond yields climbed and prices declined for much of the past six months as central banks around the world continued to tighten monetary policies. In August, however, the Federal Reserve ended a two-year long streak of boosting short-term U.S. interest rates amid signs that inflation was easing. This helped ignite a modest summer rebound in the U.S. fixed income market. The Citigroup Broad Investment Grade Index returned 3.73 percent for the period. For investors, the difference in income potential between money market securities (those maturing in less than a year) and taxable bonds that mature in 10 to 30 years narrowed. As of September 30, 2006, three-month and six-month U.S. Treasury bills yielded slightly more than 30-year bonds, on average. Such a pattern is generally associated with a slowdown in economic growth. Consumers appear to be growing wary of spending to excess as home "for sale" signs have become about as difficult to remove from lawns as dandelions, and as numerous.

U.S. TREASURY YIELDS (March 31, 2006 compared to September 29, 2006)
	3/31/05	9/29/06	Change
3 MONTH	4.602	4.872	0.2696
6 MONTH	4.804	4.996	0.1913
2 YEAR	4.816	4.683	-0.1332
3 YEAR	4.816	4.614	-0.2019
5 YEAR	4.810	4.578	-0.2327
10 YEAR	4.847	4.628	-0.2196
30 YEAR	4.890	4.762	-0.1278
Source: Bloomberg. Past performance does not guarantee future results. Yields shown fluctuate daily and are not representative of the income potential of a specific mutual fund.

Energy prices hit record, then slide.

The cost of energy has been one of the top economic stories since March. Oil and gasoline prices all reached record highs, only to fall back during the summer as energy stockpiles reached greater-than-expected levels and the U.S. hurricane season was mild. At its peak this past July, oil reached $78.40 a barrel, a nearly eight-fold increase from 1986, and more than double the price just three years ago. Gasoline, peaking at over $3 per gallon in the spring, had fallen to about $2.25 as of this writing.

We believe that, over the longer term, the cost of energy will resume an upward path. There's just too much long-term global demand relative to known reserves, in our opinion, especially in rapidly growing countries such as China and India. Also, our appetite for hydrocarbons in the U.S. remains voracious. Global weather patterns and geopolitics appear to be calmer for the moment, but we feel there's still ample long-term risk to oil and gas supplies from the wrath of both nature and political extremism.

Profit growth appears less robust.

As energy prices have retreated, it appears that one of the chief engines for double-digit corporate profit growth for the S&P 500 may stall in the months ahead. Without the contribution of record oil company earnings, large company profits would have grown 8.2 percent in the past year, versus the reported 13 percent (Source: Bloomberg). We think that falling energy prices have both positive and negative implications for stocks. While it now means lower production and transportation costs for many companies and consumers, helping earnings of firms such as airlines, it is also a headwind for energy firms and utility earnings.

Plan ahead.

None of us can predict with certainty what the price of gas will be down the road, or pinpoint exactly what it will cost to heat and maintain our homes. What we can do, however, is plan as much as we can for the trip ahead - both our economic journey and our ongoing journey toward our financial goals. I firmly believe that with a personal financial plan, you and your financial advisor can build an effective road map to help you more efficiently meet the financial bumps and challenges ahead.

Thank you for your continued confidence in us as long-term stewards of your investments.

Respectfully,

Henry J. Herrmann, CFA

President

The opinions expressed in this letter are those of the President of 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 September 30, 2006.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

Ivy Balanced Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,033.00		1.41	%	$	7.22
Class B		1,000		1,027.90		2.42			12.27
Class C		1,000		1,028.50		2.18			11.06
Class Y		1,000		1,033.70		1.26			6.41
Based on 5% Return (2)
Class A	$	1,000	$	1,017.98		1.41	%	$	7.16
Class B		1,000		1,012.93		2.42			12.18
Class C		1,000		1,014.13		2.18			10.98
Class Y		1,000		1,018.73		1.26			6.36

Ivy Bond Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,036.60		1.22	%	$	6.21
Class B		1,000		1,030.70		2.35			11.98
Class C		1,000		1,032.00		2.10			10.67
Class Y		1,000		1,036.30		1.28			6.52
Based on 5% Return (2)
Class A	$	1,000	$	1,018.94		1.22	%	$	6.16
Class B		1,000		1,013.29		2.35			11.88
Class C		1,000		1,014.56		2.10			10.58
Class Y		1,000		1,018.67		1.28			6.46

Ivy Cundill Global Value Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	998.10		1.57	%	$	7.89
Class B		1,000		994.10		2.47			12.36
Class C		1,000		995.40		2.23			11.17
Class Y		1,000		1,000.00		1.20			6.00
Class I		1,000		1,000.70		1.16			5.80
Advisor Class		1,000		1,001.30		1.06			5.30
Based on 5% Return (2)
Class A	$	1,000	$	1,017.22		1.57	%	$	7.97
Class B		1,000		1,012.69		2.47			12.48
Class C		1,000		1,013.89		2.23			11.28
Class Y		1,000		1,019.05		1.20			6.06
Class I		1,000		1,019.25		1.16			5.86
Advisor Class		1,000		1,019.76		1.06			5.35

Ivy Dividend Income Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,020.60		1.38	%	$	6.97
Class B		1,000		1,016.70		2.29			11.60
Class C		1,000		1,016.60		2.19			11.09
Class Y		1,000		1,021.10		1.31			6.67
Based on 5% Return (2)
Class A	$	1,000	$	1,018.17		1.38	%	$	6.96
Class B		1,000		1,013.59		2.29			11.58
Class C		1,000		1,014.10		2.19			11.08
Class Y		1,000		1,018.51		1.31			6.66

Ivy European Opportunities Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,017.90		1.68	%	$	8.48
Class B		1,000		1,013.90		2.45			12.39
Class C		1,000		1,014.40		2.37			11.99
Class Y		1,000		1,018.80		1.48			7.47
Advisor Class		1,000		1,020.40		1.23			6.26
Based on 5% Return (2)
Class A	$	1,000	$	1,016.67		1.68	%	$	8.47
Class B		1,000		1,012.81		2.45			12.38
Class C		1,000		1,013.20		2.37			11.98
Class Y		1,000		1,017.63		1.48			7.47
Advisor Class		1,000		1,018.92		1.23			6.26

Ivy Global Natural Resources Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	990.40		1.34	%	$	6.67
Class B		1,000		986.40		2.14			10.73
Class C		1,000		986.40		2.07			10.33
Class Y		1,000		991.10		1.19			5.97
Class R		1,000		989.00		1.65			8.25
Advisor Class		1,000		991.60		1.02			5.08
Based on 5% Return (2)
Class A	$	1,000	$	1,018.37		1.34	%	$	6.76
Class B		1,000		1,014.32		2.14			10.88
Class C		1,000		1,014.71		2.07			10.48
Class Y		1,000		1,019.08		1.19			6.06
Class R		1,000		1,016.80		1.65			8.37
Advisor Class		1,000		1,019.94		1.02			5.15

Ivy International Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,012.80		1.52	%	$	7.65
Class B		1,000		1,006.50		2.67			13.44
Class C		1,000		1,006.50		2.64			13.34
Class Y		1,000		1,012.50		1.53			7.75
Class I		1,000		1,014.30		1.22			6.14
Advisor Class		1,000		995.80		4.73			23.65
Based on 5% Return (2)
Class A	$	1,000	$	1,017.47		1.52	%	$	7.67
Class B		1,000		1,011.66		2.67			13.48
Class C		1,000		1,011.81		2.64			13.38
Class Y		1,000		1,017.42		1.53			7.77
Class I		1,000		1,018.96		1.22			6.16
Advisor Class		1,000		1,001.38		4.73			23.72

Ivy International Balanced Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,058.00		1.44	%	$	7.41
Class B		1,000		1,052.00		2.51			12.93
Class C		1,000		1,054.00		2.24			11.50
Class Y		1,000		1,058.30		1.38			7.10
Based on 5% Return (2)
Class A	$	1,000	$	1,017.83		1.44	%	$	7.26
Class B		1,000		1,012.51		2.51			12.68
Class C		1,000		1,013.83		2.24			11.28
Class Y		1,000		1,018.15		1.38			6.96

Ivy International Value Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,026.10		1.60	%	$	8.10
Class B		1,000		1,021.80		2.37			12.03
Class C		1,000		1,021.80		2.38			12.03
Class Y		1,000		1,026.00		1.65			8.41
Advisor Class		1,000		1,026.80		1.38			6.99
Based on 5% Return (2)
Class A	$	1,000	$	1,017.03		1.60	%	$	8.07
Class B		1,000		1,013.17		2.37			11.98
Class C		1,000		1,013.13		2.38			11.98
Class Y		1,000		1,016.79		1.65			8.37
Advisor Class		1,000		1,018.14		1.38			6.96

Ivy Mortgage Securities Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,036.60		1.17	%	$	6.01
Class B		1,000		1,031.20		2.20			11.17
Class C		1,000		1,032.50		1.95			9.96
Class Y		1,000		1,037.30		1.03			5.30
Based on 5% Return (2)
Class A	$	1,000	$	1,019.20		1.17	%	$	5.96
Class B		1,000		1,014.06		2.20			11.08
Class C		1,000		1,015.27		1.95			9.87
Class Y		1,000		1,019.91		1.03			5.25

Ivy Pacific Opportunities Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,023.70		1.86	%	$	9.41
Class B		1,000		1,018.10		2.91			14.73
Class C		1,000		1,019.30		2.61			13.23
Class Y		1,000		1,025.00		1.61			8.20
Advisor Class		1,000		1,026.40		1.26			6.38
Based on 5% Return (2)
Class A	$	1,000	$	1,015.73		1.86	%	$	9.37
Class B		1,000		1,010.49		2.91			14.68
Class C		1,000		1,011.98		2.61			13.18
Class Y		1,000		1,017.01		1.61			8.17
Advisor Class		1,000		1,018.73		1.26			6.36

Ivy Real Estate Securities Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,064.20		1.61	%	$	8.36
Class B		1,000		1,059.10		2.64			13.59
Class C		1,000		1,059.90		2.46			12.77
Class Y		1,000		1,065.40		1.38			7.13
Class R		1,000		1,064.10		1.69			8.77
Based on 5% Return (2)
Class A	$	1,000	$	1,017.00		1.61	%	$	8.17
Class B		1,000		1,011.84		2.64			13.28
Class C		1,000		1,012.72		2.46			12.48
Class Y		1,000		1,018.13		1.38			6.96
Class R		1,000		1,016.58		1.69			8.57

Ivy Small Cap Value Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	979.70		1.79	%	$	8.91
Class B		1,000		974.50		2.89			14.32
Class C		1,000		976.10		2.57			12.75
Class Y		1,000		982.30		1.41			7.04
Based on 5% Return (2)
Class A	$	1,000	$	1,016.09		1.79	%	$	9.07
Class B		1,000		1,010.60		2.89			14.58
Class C		1,000		1,012.20		2.57			12.98
Class Y		1,000		1,018.01		1.41			7.16

Ivy Value Fund Expenses
For the Six Months Ended       September 30, 2006	Beginning Account Value 3-31-06		Ending Account Value 9-30-06		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During Period*
Based on Actual Fund Return (1)
Class A	$	1,000	$	1,041.80		1.51	%	$	7.76
Class B		1,000		1,036.40		2.49			12.73
Class C		1,000		1,036.90		2.40			12.22
Class Y		1,000		1,042.80		1.28			6.54
Based on 5% Return (2)
Class A	$	1,000	$	1,017.50		1.51	%	$	7.67
Class B		1,000		1,012.60		2.49			12.58
Class C		1,000		1,013.06		2.40			12.08
Class Y		1,000		1,018.63		1.28			6.46

*Fund expenses for each share class are equal to the Fund's annualized expense ratio for each share class (provided in the tables), multiplied by the average account value over the period, multiplied by 183 days in the six-month period ended September 30, 2006, and divided by 365.

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

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

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

SHAREHOLDER SUMMARY OF IVY BALANCED FUND

Portfolio Highlights

On September 30, 2006, Ivy Balanced Fund had net assets totaling $95,041,699 invested in a diversified portfolio of:

68.91%	Domestic Common Stocks
16.03%	United States Government and Government Agency Obligations
4.78%	Foreign Common Stocks
4.77%	Domestic Corporate Debt Securities
3.87%	Cash and Cash Equivalents
1.04%	Foreign Corporate Debt Securities
0.60%	Other Government Security

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006,
your Fund owned:

United States Government and       Government Agency Obligations	$	16.03
Technology Stocks	$	13.31
Financial Services Stocks	$	13.07
Health Care Stocks	$	10.64
Energy Stocks	$	7.78
Miscellaneous Stocks	$	7.60
Corporate Debt Securities	$	5.81
Consumer Nondurables Stocks	$	5.22
Multi-Industry Stocks	$	4.74
Utilities Stocks	$	4.28
Cash and Cash Equivalents	$	3.87
Business Equipment and Services Stocks	$	3.60
Retail Stocks	$	3.45
Other Government Security	$	0.60

The Investments of Ivy Balanced Fund
September 30, 2006
COMMON STOCKS	Shares			Value
Air Transportation - 0.97%
Southwest Airlines Co.		55,300	$	921,298
Aircraft - 1.38%
Boeing Company (The)		16,600		1,308,910
Banks - 3.60%
Bank of America Corporation		16,600		889,262
Northern Trust Corporation		22,600		1,320,405
Wells Fargo & Company		33,600		1,215,648
				3,425,315
Beverages - 2.65%
Brown-Forman Corporation, Class B		12,400		950,460
PepsiCo, Inc.		24,000		1,566,240
				2,516,700
Business Equipment and Services - 2.58%
NYSE Group, Inc.*		19,800		1,480,050
Pitney Bowes Inc.		21,800		967,266
				2,447,316
Chemicals - Specialty - 1.04%
Air Products and Chemicals, Inc.		14,900		988,913
Communications Equipment - 3.50%
Cisco Systems, Inc.*		59,200		1,360,712
Nokia Corporation, Series A, ADR		56,200		1,106,578
QUALCOMM Incorporated		23,700		861,732
				3,329,022
Computers - Micro - 1.41%
Apple Computer, Inc.*		17,400		1,339,452
Computers - Peripherals - 1.14%
Microsoft Corporation		39,758		1,086,387
Defense - 2.28%
General Dynamics Corporation		30,200		2,164,434
Electrical Equipment - 1.13%
Emerson Electric Co.		12,800		1,073,408
Electronic Components - 2.86%
Advanced Micro Devices, Inc.*		64,100		1,592,885
Microchip Technology Incorporated		34,700		1,124,801
				2,717,686
Electronic Instruments - 0.74%
Lam Research Corporation*		15,500		702,537
Finance Companies - 2.57%
SLM Corporation		46,900		2,437,862
Food and Related - 0.85%
Campbell Soup Company		22,200		810,300
Health Care - Drugs - 4.97%
Allergan, Inc.		13,500		1,520,235
Amgen Inc.*		13,500		965,385
Gilead Sciences, Inc.*		18,900		1,298,525
Novartis AG, ADR		16,100		940,884
				4,725,029
Health Care - General - 4.60%
Biomet, Inc.		27,400		881,869
DENTSPLY International Inc.		35,000		1,054,725
Johnson & Johnson		26,200		1,701,428
Zimmer Holdings, Inc.*		10,900		735,750
				4,373,772
Hospital Supply and Management - 1.07%
Medtronic, Inc.		21,800		1,012,392
Household - General Products - 1.72%
Colgate-Palmolive Company		26,300		1,633,230
Insurance - Life - 1.11%
Aflac Incorporated		23,000		1,052,480
Insurance - Property and Casualty - 1.00%
Berkshire Hathaway Inc., Class B*		300		952,200
Motion Pictures - 1.31%
News Corporation Limited, Class A		63,400		1,245,810
Multiple Industry - 4.74%
Altria Group, Inc.		9,800		750,190
General Electric Company		63,680		2,247,904
Las Vegas Sands, Inc.*		22,100		1,510,535
				4,508,629
Non-Residential Construction - 0.95%
Fluor Corporation		11,700		899,613
Petroleum - International - 4.52%
BP p.l.c., ADR		19,000		1,246,020
ChevronTexaco Corporation		13,500		875,610
Exxon Mobil Corporation		32,400		2,174,040
				4,295,670
Petroleum - Services - 3.26%
Schlumberger Limited		34,200		2,121,426
Smith International, Inc.		25,200		977,760
				3,099,186
Publishing - 1.04%
Meredith Corporation		20,100		991,533
Retail - General Merchandise - 2.62%
Target Corporation		25,600		1,414,400
Wal-Mart Stores, Inc.		21,900		1,080,108
				2,494,508
Retail - Specialty Stores - 0.83%
Best Buy Co., Inc.		14,800		792,688
Security and Commodity Brokers - 4.79%
American Express Company		17,800		998,224
Chicago Mercantile Exchange Holdings Inc.		1,500		717,375
Legg Mason, Inc.		8,100		816,966
Merrill Lynch & Co., Inc.		9,700		758,734
Morgan (J.P.) Chase & Co.		26,800		1,258,528
				4,549,827
Timesharing and Software - 1.02%
Paychex, Inc.		26,400		972,048
Trucking and Shipping - 1.16%
Expeditors International of Washington, Inc.		24,800		1,105,708
Utilities - Electric - 1.66%
Exelon Corporation		26,000		1,574,040
Utilities - Telephone - 2.62%
AT&T Inc.		38,100		1,240,536
UBS AG		21,000		1,245,510
				2,486,046
TOTAL COMMON STOCKS - 73.69%			$	70,033,949
(Cost: $55,377,496)

CORPORATE DEBT SECURITIES	Principal Amount in Thousands
Banks - 0.28%
Wells Fargo Bank, N.A.,
7.55%, 6-21-10	$	250		270,169
Beverages - 0.36%
Diageo Capital plc,
3.5%, 11-19-07		350		343,142
Finance Companies - 2.53%
American International Group,
3.85%, 11-26-07 (A)		500		492,169
Banco Hipotecario Nacional:
7.916%, 7-25-09 (A)		6		162
8.0%, 3-31-11 (A)		269		72,527
First Union-Lehman Brothers-Bank of America       Commercial Mortgage Trust,
6.56%, 11-18-35		413		418,359
General Motors Acceptance Corporation,
6.125%, 8-28-07		300		299,573
Prudential Insurance Company of America,
6.6%, 5-15-08 (A)		750		765,560
Unilever Capital Corporation,
5.9%, 11-15-32		350		352,021
				2,400,371
Food and Related - 1.29%
Archer-Daniels-Midland Company,
7.0%, 2-1-31		700		810,725
Cargill, Inc.,
6.375%, 6-1-12 (A)		400		420,022
				1,230,747
Insurance - Life - 0.51%
StanCorp Financial Group, Inc.,
6.875%, 10-1-12		450		480,459
Real Estate Investment Trust - 0.84%
Vornado Realty L.P.,
5.625%, 6-15-07		800		799,223
TOTAL CORPORATE DEBT SECURITIES - 5.81%			$	5,524,111
(Cost: $5,450,537)

OTHER GOVERNMENT SECURITY - 0.60%
Canada
Hydro-Quebec,
8.0%, 2-1-13	500	$	574,906
(Cost: $574,688)
UNITED STATES GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS
Mortgage-Backed Obligations - 5.55%
Federal National Mortgage Association Fixed Rate       Pass-Through Certificates:
6.23%, 1-1-08	421		421,458
6.0%, 9-1-17	435		441,985
5.0%, 1-1-18	487		479,945
5.5%, 4-1-18	431		432,155
6.5%, 10-1-28	165		170,185
6.5%, 2-1-29	36		36,563
7.0%, 5-1-31	32		33,258
7.5%, 5-1-31	58		60,705
7.0%, 7-1-31	49		50,319
7.0%, 9-1-31	73		75,867
7.0%, 9-1-31	54		55,470
7.0%, 11-1-31	161		166,638
6.5%, 2-1-32	180		184,479
7.0%, 2-1-32	208		214,730
7.0%, 2-1-32	108		111,541
6.5%, 3-1-32	52		53,564
7.0%, 3-1-32	115		119,217
7.0%, 6-1-32	36		37,231
7.0%, 7-1-32	227		235,257
6.5%, 8-1-32	92		94,499
6.0%, 9-1-32	685		689,948
6.5%, 9-1-32	159		163,452
5.5%, 5-1-33	331		326,551
5.5%, 5-1-33	191		188,879
5.5%, 5-1-33	130		128,178
5.5%, 6-1-33	307		303,692
			5,275,766

Treasury Obligations - 10.48%
United States Treasury Bond,
7.5%, 11-15-16	500			612,500
United States Treasury Notes:
3.0%, 2-15-08		900		878,660
4.0%, 3-15-10		800		784,813
4.25%, 10-15-10	2,000			1,975,156
3.875%, 2-15-13	1,250			1,200,635
3.625%, 5-15-13		750		708,633
4.25%, 8-15-13		900		881,016
4.25%, 8-15-15	3,000			2,918,319
				9,959,732
TOTAL UNITED STATES GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 16.03%			$	15,235,498
(Cost: $15,487,794)
SHORT-TERM SECURITIES
Aluminum - 2.11%
Alcoa Incorporated,
5.4%, 10-2-06	2,003			2,002,700
Finance Companies - 1.31%
Preferred Receivables Funding Corp.,
5.26%, 10-19-06	1,250			1,246,712
TOTAL SHORT-TERM SECURITIES - 3.42%			$	3,249,412
(Cost: $3,249,412)
TOTAL INVESTMENT SECURITIES - 99.55%			$	94,617,876
(Cost: $80,139,927)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.45%				423,823
NET ASSETS - 100.00%			$	95,041,699

Notes to Schedule of Investments

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

*No dividends were paid during the preceding 12 months.

(A)Securities 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 September 30, 2006, the total value of these securities amounted to $1,750,440 or 1.84% of net assets.

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

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

Statement of Assets and Liabilities
     IVY BALANCED FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $80,140) (Notes 1 and 3)	$	94,618
Receivables:
Investment securities sold		450
Dividends and interest		281
Fund shares sold		51
Prepaid and other assets		19
Total assets		95,419
LIABILITIES
Payable to Fund shareholders		224
Accrued management fee (Note 2)		54
Accrued service fee (Note 2)		36
Accrued shareholder servicing (Note 2)		23
Due to custodian		7
Accrued accounting services fee (Note 2)		4
Accrued distribution fee (Note 2)		3
Other		26
Total liabilities		377
Total net assets	$	95,042
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	82,232
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		104
Accumulated undistributed net realized loss on                  investment transactions		(1,772	)
Net unrealized appreciation in value of investments		14,478
Net assets applicable to outstanding units of capital	$	95,042
Net asset value per share (net assets divided by shares outstanding):
Class A		$15.64
Class B		$15.60
Class C		$15.61
Class Y		$15.64
Capital shares outstanding:
Class A		3,653
Class B		134
Class C		134
Class Y		2,158

See Notes to Financial Statements.

Statement of Operations
     IVY BALANCED FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	654
Dividends (net of foreign withholding taxes of $1)		493
Total income		1,147
Expenses (Note 2):
Accounting services fee		24
Audit fees		14
Custodian fees		6
Distribution fee:
Class A		3
Class B		8
Class C		8
Class Y		1
Investment management fee		335
Legal fees		–	*
Service fee:
Class A		68
Class B		3
Class C		2
Class Y		43
Shareholder servicing:
Class A		80
Class B		5
Class C		3
Class Y		27
Other		39
Total expenses		669
Net investment income		478
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		1,502
Unrealized appreciation in value of investments during the period		1,038
Net gain on investments		2,540
Net increase in net assets resulting from operations	$	3,018

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
DECREASE IN NET ASSETS
Operations:
Net investment income		$	478		$	1,020
Realized net gain on investments			1,502			3,508
Unrealized appreciation			1,038			4,702
Net increase in net assets resulting                       from operations			3,018			9,230
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A			(295	)		(515	)
Class B			(1	)		(1	)
Class C			(3	)		(1	)
Class Y			(200	)		(423	)
Realized gains on investment transactions:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
			(499	)		(940	)
Capital share transactions (Note 5)			(6,368	)		(9,813	)
Total decrease			(3,849	)		(1,523	)
NET ASSETS
Beginning of period			98,891		100,414
End of period		$	95,042		$	98,891
Undistributed net investment income		$	104		$	125

(1)See "Financial Highlights" on pages 24 - 27.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended September 30,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	15.22		$	14.00		$	13.35		$	12.18		$	10.54		$	11.45		$	19.73
Income (loss) from       investment operations:
Net investment income			0.08			0.15			0.14			0.05			0.16			0.23			0.22
Net realized and             unrealized gain             (loss) on             investments			0.42			1.21			0.65			1.16			1.64			(0.89	)		(6.08	)
Total from investment       operations			0.50			1.36			0.79			1.21			1.80			(0.66	)		(5.86	)
Less distributions from:
Net investment income			(0.08	)		(0.14	)		(0.14	)		(0.04	)		(0.16	)		(0.25	)		(0.20	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(2.22	)
Total distributions			(0.08	)		(0.14	)		(0.14	)		(0.04	)		(0.16	)		(0.25	)		(2.42	)
Net asset value,       end of period		$	15.64		$	15.22		$	14.00		$	13.35		$	12.18		$	10.54		$	11.45
Total return(1)			3.30	%		9.71	%		5.90	%		10.06	%		17.17	%(2)		- -5.91	%	- -32.35		%
Net assets, end of period       (in millions)			$57			$57			$54			$52			$38			$37			$45
Ratio of expenses to       average net assets       including voluntary       expense waiver			1.41	%(3)		1.42	%		1.53	%		1.52	%(3)(4)		1.29	%		1.22	%		1.12	%
Ratio of net investment       income to average       net assets including       voluntary expense       waiver			0.98	%(3)		1.00	%		1.02	%		0.86	%(3)(4)		1.41	%		1.84	%		1.57	%
Ratio of expenses to       average net assets       excluding voluntary       expense waiver			1.41	%(3)(5)		1.42	%(5)		1.53	%(5)		1.57	%(3)(4)		1.62	%		1.52	%		1.40	%
Ratio of net investment       income to average       net assets excluding       voluntary expense       waiver			0.98	%(3)(5)		1.00	%(5)		1.02	%(5)		0.81	%(3)(4)		1.08	%		1.54	%		1.29	%
Portfolio turnover rate			14	%		49	%		37	%		29	%		110	%		129	%		158	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.
(2)Advantus Capital reimbursed the Fund for losses related to certain investment trades. With reimbursed losses, the total return for Class A, for the year ended September 30, 2003, would have been 17.26%.
(3)Annualized.
(4)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from October 1, 2003 up to the time of the merger. Actual expenses that applied to Class A shareholders were lower than shown above.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	15.18		$	13.98		$	13.33		$	12.96
Income (loss) from       investment operations:
Net investment income (loss)			(0.00	)		0.00			0.01			0.01
Net realized and unrealized             gain on investments			0.42			1.21			0.64			0.39
Total from investment operations			0.42			1.21			0.65			0.40
Less distributions from:
Net investment income			(0.00	)*		(0.01	)		(0.00	)*		(0.03	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)*		(0.01	)		(0.00	)*		(0.03	)
Net asset value, end of period		$	15.60		$	15.18		$	13.98		$	13.33
Total return			2.79	%		8.62	%		4.90	%		3.05	%
Net assets, end of period       (in thousands)		$	2,096		$	1,995		$	1,503			$338
Ratio of expenses to       average net assets			2.42	%(2)		2.41	%		2.52	%		2.76	%(2)
Ratio of net investment income       (loss) to average net assets			- -0.03	%(2)		0.01	%		0.06	%		- -0.42	%(2)
Portfolio turnover rate			14	%		49	%		37	%		29	%(3)

*Not shown due to rounding.
(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	15.20		$	13.98		$	13.34		$	12.96
Income from investment operations:
Net investment income			0.01			0.03			0.03			0.02
Net realized and unrealized             gain on investments			0.42			1.20			0.63			0.39
Total from investment operations			0.43			1.23			0.66			0.41
Less distributions from:
Net investment income			(0.02	)		(0.01	)		(0.02	)		(0.03	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.02	)		(0.01	)		(0.02	)		(0.03	)
Net asset value, end of period		$	15.61		$	15.20		$	13.98		$	13.34
Total return			2.85	%		8.80	%		4.98	%		3.13	%
Net assets, end of period       (in thousands)		$2,092			$1,996				$898			$301
Ratio of expenses to       average net assets			2.18	%(2)		2.25	%		2.38	%		2.43	%(2)
Ratio of net investment income       (loss) to average net assets			0.21	%(2)		0.21	%		0.19	%		- -0.12	%(2)
Portfolio turnover rate			14	%		49	%		37	%		29	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	15.22		$	14.00		$	13.35		$	12.96
Income from investment operations:
Net investment income			0.09			0.17			0.17			0.04
Net realized and unrealized             gain on investments			0.42			1.21			0.65			0.40
Total from investment operations			0.51			1.38			0.82			0.44
Less distributions from:
Net investment income			(0.09	)		(0.16	)		(0.17	)		(0.05	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.09	)		(0.16	)		(0.17	)		(0.05	)
Net asset value, end of period		$	15.64		$	15.22		$	14.00		$	13.35
Total return			3.37	%		9.89	%		6.16	%		3.43	%
Net assets, end of period       (in millions)			$34			$38			$44			$53
Ratio of expenses to       average net assets			1.26	%(2)		1.26	%		1.30	%		1.36	%(2)
Ratio of net investment income       to average net assets			1.13	%(2)		1.15	%		1.25	%		0.97	%(2)
Portfolio turnover rate			14	%		49	%		37	%		29	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY BOND FUND

Portfolio Highlights

On September 30, 2006, Ivy Bond Fund had net assets totaling $66,240,265 invested in a diversified portfolio of:

96.08%	Bonds
3.14%	Cash and Cash Equivalents
0.78%	Preferred Stocks

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006,
your Fund owned:

Corporate Bonds	$	60.24
United States Government Agency       Mortgage-Backed Obligations	$	23.61
United States Government Treasury Obligations	$	9.52
Cash and Cash Equivalents       and Taxable Municipal Bond	$	3.28
United States Government Agency Obligations	$	2.57
Preferred Stocks	$	0.78

On September 30, 2006, the breakdown of bonds (by ratings) held by the Fund was as follows:

AAA	49.19	%
AA	5.21	%
A	9.75	%
BBB	24.48	%
BB	3.52	%
B	0.53	%
Non-rated	3.40	%
Cash and Cash Equivalents and Equities	3.92	%

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

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

The Investments of Ivy Bond Fund
September 30, 2006
PREFERRED STOCKS	Shares			Value
Real Estate Investment Trust
PS Business Parks, Inc., 7.0% Cumulative		10,500	$	262,500
Public Storage, Inc., 6.25% Cumulative		10,500		252,525
TOTAL PREFERRED STOCKS - 0.78%			$	515,025
(Cost: $520,050)

CORPORATE DEBT SECURITIES	Principal Amount in Thousands
Aluminum - 0.28%
Steelcase Inc.,
6.5%, 8-15-11	$	185	188,051
Asset-Backed Securities - 6.05%
ABFS Mortgage Loan Trust 2002-  4,
7.423%, 12-15-33		120	120,333
Associates Manufactured Housing Contract       Pass-Through Certificates,
7.725%, 6-15-28		190	193,243
C-Bass 2006-CB2 Trust,
5.86%, 12-25-36		530	535,700
C-Bass 2006-MH1 Trust:
6.24%, 9-25-36 (A)		105	106,440
6.25%, 9-25-36 (A)		170	170,797
Centex Home Equity Loan Trust 2005-C,
5.048%, 6-25-35		370	359,060
Citibank Credit Card Issuance Trust, Class 2005-C1,
5.5%, 3-24-17		200	198,708
CountryPlace Manufactured Housing Contract Trust 2005-1,
5.2%, 12-15-35 (A)		300	286,675
FFCA Secured Lending Corporation,
6.73%, 10-18-25 (A)		13	13,281
Green Tree Financial Corporation:
6.4%, 10-15-18		85	86,801
7.35%, 5-15-27		46	47,426
Home Equity Loan Trust 2003-HS2,
5.09%, 7-25-33		65	63,650

MMCA Auto Owner:       Trust 2002-2,
4.67%, 3-15-10		126		125,511
Trust 2002-3,
4.6%, 8-17-09		500		499,326
Trust 2002-  4, Class C Asset Backed Notes,
4.56%, 11-16-09		16		16,227
MMCA Automobile Trust 2002-1,
5.37%, 1-15-10		25		24,988
National Collegiate Trust 1997-S2 (The),
7.24%, 9-20-14		213		206,060
Origen Manufactured Housing Contract:
Trust 2004-A,
5.7%, 1-15-35		100		98,697
Trust 2004-B,
5.73%, 11-15-35		50		48,583
Trust 2005-A:
4.49%, 5-15-18		200		196,979
5.86%, 6-15-36		120		116,334
Trust 2005-B,
5.605%, 5-15-22		80		79,665
Vanderbilt Mortgage and Finance, Inc.:
8.75%, 1-7-16		91		91,298
6.38%, 3-7-28		147		146,493
WFS Financial 2005-2 Owner Trust,
4.39%, 11-19-12		175		173,267
				4,005,542
Banks - 0.38%
Wells Fargo Mortgage Backed Securities 2001-14 Trust,
5.6%, 3-15-16		250		252,280
Beverages - 0.95%
SABMiller plc,
6.5%, 7-1-16 (A)		600		626,774
Broadcasting - 1.13%
Cox Communications, Inc.,
7.125%, 10-1-12		450		479,576
Viacom Inc.,
6.875%, 4-30-36 (A)		275		271,862
				751,438
Business Equipment and Services - 1.38%
HSBC Finance Corporation,
5.7%, 6-1-11		400		407,142
International Lease Finance Corporation:
5.875%, 5-1-13		250		256,588
5.625%, 9-20-13		250		251,583
				915,313
Collateralized Mortgage Obligations - 7.18%
Banc of America:
Alternative Loan Trust 2005-10:
5.66792%, 11-25-35		286		281,235
5.66792%, 11-25-35		138		133,415
Alternative Loan Trust 2005-12:
5.80625%, 1-25-36		306		301,391
5.80625%, 1-25-36		222		205,968
Alternative Loan Trust 2006-  4,
6.22471%, 5-25-36		328		327,461
Mortgage Trust 2004-7,
5.75%, 8-25-34		103		102,015
Banco Hipotecario Nacional,
7.916%, 7-25-09 (A)		7		184
BlackRock Capital Finance,
7.75%, 9-25-26 (A)		130		130,368
Charlie Mac Trust 2004-2,
5.0%, 10-25-34		222		211,403
Chase Mortgage Finance Trust, Series 2003-S11,
5.5%, 10-25-33		127		124,301
Credit Suisse First Boston Mortgage Securities Corp.,
6.0%, 11-25-18		56		56,502
Global Mortgage Securitization 2005-A Ltd. and Global       Mortgage Securitization 2005-A LLC:
5.25%, 4-25-32		203		194,691
5.40266%, 4-25-32		301		271,361
Global Mortgage Securitization Ltd. and Global       Mortgage Securitization, LLC:
5.25%, 11-25-32 (A)		314		305,947
5.25%, 11-25-32 (A)		269		264,108
J.P. Morgan Mortgage Trust 2005-S2,
5.66689%, 9-25-35		520		512,755
Lehman XS Trust, Series 2005-8,
5.69%, 12-25-35		585		585,404
MASTR Asset Securitization Trust 2003-10,
5.5%, 11-25-33		195		191,020
Mellon Residential Funding,
6.75%, 6-26-28		64		64,045
RALI Series 2003-QS10 Trust,
5.75%, 5-25-33	247			244,318
Structured Asset Securities Corporation,
5.63%, 5-25-34		250		246,963
				4,754,855
Conduit - 13.51%
Banc of America Commercial Mortgage Inc., Commercial       Mortgage Pass-Through Certificates, Series 2002-2,
6.2%, 7-11-43 (A)		275		285,085
Bear Stearns Commercial Mortgage Securities Inc.,       Series 1999-WF2:
6.0%, 7-15-31 (A)		500		504,666
6.0%, 7-15-31 (A)		100		102,427
Bear Stearns Commercial Mortgage Securities:       Trust 2004-PWR4,
5.468%, 6-11-41	1,500			1,510,998
Trust 2002-TOP6,
6.0%, 10-15-36 (A)		320		317,230
CD 2006-CD2 Mortgage Trust,
5.80516%, 1-15-46 (A)		710		717,884
COMM 2006-CNL2:
5.5699%, 2-5-19 (A)		225		223,098
5.5699%, 2-5-19 (A)		95		95,086
Commercial Mortgage Asset Trust,
6.0%, 11-17-32		225		230,414
DLJ Commercial Mortgage Corp. 1998-CG1,
7.37751%, 6-10-31 (A)		350		384,123
GE Capital Commercial Mortgage Corp. 2002-2,
6.039%, 8-11-36 (A)		565		584,434
GS Mortgage Securities Corporation II, Commercial Mortgage       Pass-Through Certificates, Series 2001-LI B,
6.733%, 2-14-16 (A)		225		237,956
Hilton Hotel Pool Trust:
5.83%, 10-3-15 (A)		790		798,352
7.653%, 10-3-15 (A)		430		453,016
J.P. Morgan Chase Commercial Mortgage Securities       Trust 2006-CIBC14,
5.481%, 12-12-44	$ 305			307,631
Multi Security Asset Trust LP, Commercial Mortgage-Backed       Securities Pass-Through Certificates,       Series 2005-RR4:
1.0668%, 11-28-35 (Interest Only) (A)	6,450			168,970
5.88%, 11-28-35 (A)		155		148,605
5.88%, 11-28-35 (A)		105		102,759
Nomura Asset Securities Corporation, Commercial Mortgage       Pass-Through Certificates, Series1998-D6,
6.0%, 3-15-30 (A)		300		308,805
Paine Webber Mortgage Acceptance Corporation,
7.655%, 1-2-12 (A)		250		251,312
Wachovia Bank Commercial Mortgage Trust (The),
4.942%, 11-15-34 (A)		285		274,220
Wachovia Bank Commercial Mortgage Trust Commercial       Mortgage Pass-Through Certificates Series 2006-C26,
6.011%, 6-15-  45		900		942,813
				8,949,884
Electronic Components - 0.35%
Avnet, Inc.,
6.625%, 9-15-16		225		229,000
Finance Companies - 12.72%
Allied Capital Corporation,
6.625%, 7-15-11		585		596,337
Asset Securitization Corporation:
1.7035%, 10-13-26 (Interest Only) (A)	1,209			51,848
7.65%, 2-14-43		170		185,169
BAC Capital Trust VI,
5.625%, 3-8-35		300		278,945
CSAB Mortgage-Backed Trust 2006-2,
6.08%, 9-25-36		650		648,984
CWHEQ Home Equity Loan Trust, Series 2006-S6,
5.962%, 3-25-34		210		209,998
Caithness Coso Funding Corp.,
5.489%, 6-15-19 (A)		243		242,856
Capital Auto Receivables Asset Trust 2006-1,
7.16%, 1-15-13 (A)		245		247,986
Capital One Financial Corporation,
6.15%, 9-1-16	315			318,737
ERAC USA Finance Company,
5.9%, 11-15-15 (A)		520		524,637
Ford Credit Auto Owner Trust 2006-B,
7.12%, 2-15-13 (A)		140		142,289
Ford Motor Credit Company,
6.36651%, 11-16-06		350		349,779
Fund American Companies, Inc.,
5.875%, 5-15-13		425		420,080
GMACM Home Equity Loan Trust 2006-HE3,
6.088%, 10-25-36		485		488,395
General Motors Acceptance Corporation,
6.40688%, 1-16-07		275		274,779
J.P. Morgan Mortgage Acquisition Trust:
2006-CW2,
6.337%, 8-25-36		590		600,297
2006-WF1,
6.41%, 7-25-36	1,095			1,116,467
JPMorgan Chase Capital XVIII,
6.95%, 8-17-36		425		451,427
Metropolitan Asset Funding, Inc.,
7.525%, 4-20-27 (A)		13		13,144
Morgan Stanley Capital I, Inc., Commercial Mortgage       Pass-Through Certificates, Series 1998-XL2,
6.43663%, 10-3-34		500		509,964
Selkirk Cogen Funding Corporation,
8.65%, 12-26-07		135		138,433
St. George Funding Company LLC,
8.485%, 12-29-49 (A)		200		210,943
Symetra Financial Corporation,
6.125%, 4-1-16 (A)		400		402,713
				8,424,207
Health Care - Drugs - 1.30%
Abbott Laboratories,
5.875%, 5-15-16		400		414,379
AmerisourceBergen Corporation:
5.625%, 9-15-12		150		147,442
5.875%, 9-15-15		125		122,547
Cardinal Health, Inc.,
5.85%, 12-15-17		175		174,698
				859,066
Hospital Supply and Management - 1.50%
Laboratory Corporation of America Holdings:
5.5%, 2-1-13		215		210,713
5.625%, 12-15-15		285		282,857
MedPartners, Inc.,
7.375%, 10-1-06		500		500,000
				993,570
Insurance - Life - 0.72%
StanCorp Financial Group, Inc.,
6.875%, 10-1-12		450		480,459
Insurance - Property and Casualty - 0.78%
Assurant, Inc.,
6.75%, 2-15-34		200		211,108
Commerce Group, Inc. (The),
5.95%, 12-9-13		305		304,725
				515,833
Multiple Industry - 1.56%
CRH America, Inc.,
6.0%, 9-30-16		370		370,519
Tyco International Group S.A.,
7.0%, 6-15-28		235		267,317
Western Union Company (The),
5.93%, 10-1-16 (A)		395		398,251
				1,036,087
Petroleum - Services - 0.55%
Energy Transfer Partners, L.P.,
5.65%, 8-1-12		365		361,704
Real Estate Investment Trust - 4.36%
Brandywine Operating Partnership, L.P.,
5.625%, 12-15-10		420		421,643
Equity One, Inc.,
6.25%, 1-15-17		335		342,696
Healthcare Realty Trust Incorporated,
5.125%, 4-1-14		450		428,720
Nationwide Health Properties, Inc.:
6.5%, 7-15-11		175		178,948
6.0%, 5-20-15		265		262,521
Simon Property Group, L.P.,
5.875%, 3-1-17		645		651,657
Vornado Realty L.P.,
5.625%, 6-15-07		600		599,417
				2,885,602
Security and Commodity Brokers - 2.30%
Janus Capital Group Inc.,
5.875%, 9-15-11		320		321,971
Jefferies Group, Inc.,
6.25%, 1-15-36		225		217,078
Morgan Stanley Dean Witter & Co.,
6.75%, 4-15-11		500		528,618
Nuveen Investments, Inc.,
5.5%, 9-15-15		465		454,402
				1,522,069
Textile - 0.57%
Mohawk Industries, Inc.:
5.75%, 1-15-11		190		189,199
6.125%, 1-15-16		190		188,852
				378,051
Utilities - Electric - 2.27%
MidAmerican Energy Holdings Company,
6.125%, 4-1-36 (A)		475		480,131
National Grid plc.,
6.3%, 8-1-16		285		295,682
Oncor Electric Delivery Company,
7.0%, 9-1-22		450		487,667
Pennsylvania Electric Company,
5.125%, 4-1-14		250		242,027
				1,505,507
Utilities - Gas and Pipeline - 0.40%
Northwest Pipeline Corporation,
7.0%, 6-15-16 (A)		260		265,850
TOTAL CORPORATE DEBT SECURITIES - 60.24%			$	39,901,142
(Cost: $39,868,967)

MUNICIPAL OBLIGATION - TAXABLE - 0.14%
Minnesota
City of Eden Prairie, Minnesota, Taxable Multifamily       Housing Revenue Refunding Bonds (GNMA       Collateralized Mortgage Loan - Parkway       Apartments Project), Series 2000B,
7.35%, 2-20-09	95		95,575
(Cost: $95,000)
UNITED STATES GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS
Agency Obligations - 2.57%
Federal National Mortgage Association:
3.0%, 3-2-07		640	633,963
4.25%, 5-15-09		500	492,017
5.125%, 1-2-14		575	573,405
			1,699,385
Mortgage-Backed Obligations - 23.61%
Federal Home Loan Mortgage Corporation Fixed Rate       Participation Certificates:
3.5%, 2-15-30		125	117,184
6.5%, 9-1-32		239	245,517
6.0%, 11-1-33		488	491,439
5.5%, 5-1-34		200	198,085
5.5%, 5-1-34		147	145,870
5.5%, 6-1-34	1,652		1,632,052
5.0%, 9-1-34		44	42,018
5.5%, 9-1-34		165	162,580
5.5%, 10-1-34		384	379,939
5.5%, 7-1-35		463	457,276
5.5%, 7-1-35		251	247,816
5.5%, 10-1-35		626	617,647
Federal National Mortgage Association Fixed Rate       Pass-Through Certificates:
6.23%, 1-1-08		140	140,486
5.5%, 1-1-17		204	204,114
6.0%, 9-1-17		113	114,916
5.5%, 3-1-18		120	120,334
5.0%, 6-1-18		457	450,191
5.0%, 7-1-18		161	159,163
7.5%, 5-1-31		134	140,038
7.0%, 9-1-31		49	51,033

7.0%, 11-1-31	90			92,577
6.5%, 12-1-31		58		59,674
7.0%, 2-1-32		94		97,605
7.0%, 3-1-32		98		101,270
6.5%, 4-1-32		26		26,602
6.5%, 5-1-32		28		28,618
6.5%, 7-1-32		72		74,176
6.5%, 8-1-32		67		68,872
6.5%, 8-1-32		59		60,534
6.5%, 9-1-32		100		102,846
6.5%, 9-1-32		43		43,951
6.0%, 10-1-32		134		135,472
6.5%, 10-1-32		122		125,324
6.0%, 11-1-32		148		149,406
6.0%, 3-1-33		108		108,623
5.5%, 4-1-33		175		173,533
6.0%, 4-1-33		234		235,171
5.5%, 5-1-33		131		129,270
5.5%, 1-1-34		126		124,579
5.5%, 1-1-34		122		120,582
5.5%, 3-1-34		174		171,745
5.5%, 3-1-34		75		73,892
5.5%, 4-1-34		185		182,605
5.5%, 4-1-34		58		56,939
5.0%, 5-1-34		75		72,625
5.5%, 5-1-34		155		152,646
5.5%, 10-1-34		340		334,900
6.0%, 10-1-34	1,175			1,180,141
5.5%, 11-1-34	1,416			1,398,079
6.0%, 11-1-34		959		964,422
5.5%, 2-1-35		218		215,236
4.5%, 3-1-35		514		480,247
5.0%, 7-1-35		304		291,386
5.0%, 7-1-35		106		102,141
5.0%, 7-1-35		54		51,488
4.5%, 9-1-35		441		412,084
5.5%, 10-1-35	1,048			1,033,883
Government National Mortgage Association Agency       REMIC/CMO (Interest Only),
0.97056%, 6-17-45	5,157			290,842
				15,641,684
Treasury Inflation Protected Obligation - 1.79%
United States Treasury Note,
1.875%, 7-15-13 (B)	1,100			1,187,235
Treasury Obligations - 7.73%
United States Treasury Bond,
5.375%, 2-15-31		390		421,230
United States Treasury Notes:
6.25%, 2-15-07	2,500			2,510,547
3.375%, 10-15-09 (C)	1,400			1,351,218
4.375%, 8-15-12		400		395,828
4.25%, 11-15-14		450		438,855
				5,117,678
TOTAL UNITED STATES GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS- 35.70%			$	23,645,982
(Cost: $23,848,979)
SHORT-TERM SECURITIES
Aluminum - 2.52%
Alcoa Incorporated,
5.4%, 10-2-06	1,669			1,668,750
Finance Companies - 1.95%
Preferred Receivables Funding Corp.,
5.26%, 10-19-06	1,300			1,296,581
TOTAL SHORT-TERM SECURITIES - 4.47%			$	2,965,331
(Cost: $2,965,331)
TOTAL INVESTMENT SECURITIES - 101.33%			$	67,123,055
(Cost: $67,298,327)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.33%)				(882,790	)
NET ASSETS - 100.00%			$	66,240,265

Notes to Schedule of Investments
Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.
(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 September 30, 2006, the total value of these securities amounted to $11,115,112 or 16.78% of net assets.
(B)The interest rate for this security is a stated rate, but the interest payments are determined by multiplying the inflation-adjusted principal by one half of the stated rate for each semiannual interest payment date.
(C)Security serves as collateral for the following open futures contracts at September 30, 2006. (See Note 7 to financial statements):
	Type	Number of Contracts	Expiration Date		Market Value	Underlying Face Amount at Value
	U.S. 2 year Treasury Note	24	12-29-06	$	4,908,000		$	4,896,104
	U.S. 5 year Treasury Note	6	12-29-06		633,094			628,811
	U.S. 10 year Treasury Note	47	12-29-06	(5,078,938		)	(5,032,499		)
				$	462,156		$	492,416
See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
     IVY BOND FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $67,298) (Notes 1 and 3)	$	67,123
Receivables:
Fund shares sold		550
Dividends and interest		542
Variation margin		3
Prepaid and other assets		19
Total assets		68,237
LIABILITIES
Payable for investment securities purchased		1,695
Payable to Fund shareholders		172
Accrued service fee (Note 2)		32
Accrued management fee (Note 2)		28
Dividends payable		21
Accrued shareholder servicing (Note 2)		16
Due to custodian		6
Accrued accounting services fee (Note 2)		4
Accrued distribution fee (Note 2)		2
Other		21
Total liabilities		1,997
Total net assets	$	66,240
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	67,158
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		–
Accumulated undistributed net realized loss on                 investment transactions		(712	)
Net unrealized depreciation in value of investments		(206	)
Net assets applicable to outstanding units of capital	$	66,240
Net asset value per share (net assets divided by shares outstanding):
Class A		$10.42
Class B		$10.42
Class C		$10.42
Class Y		$10.42
Capital shares outstanding:
Class A		5,946
Class B		166
Class C		243
Class Y		3

See Notes to Financial Statements.

Statement of Operations
     IVY BOND FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	1,723
Dividends		17
Total income		1,740
Expenses (Note 2):
Accounting services fee		22
Audit fees		13
Custodian fees		7
Distribution fee:
Class A		2
Class B		6
Class C		9
Investment management fee		161
Legal fees		–	*
Registration fees		23
Service fee:
Class A		70
Class B		2
Class C		3
Class Y		–	*
Shareholder servicing:
Class A		56
Class B		4
Class C		4
Class Y		–	*
Other		12
Total expenses		394
Net investment income		1,346
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net loss on securities		(264	)
Realized net loss on futures		(47	)
Realized net loss on investments		(311	)
Unrealized appreciation in value of securities during the period		1,129
Unrealized depreciation in value of futures during the period		(46	)
Unrealized appreciation in value of investments                 during the period		1,083
Net gain on investments		772
Net increase in net assets resulting from operations	$	2,118

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	1,346		$	2,230
Realized net loss on investments			(311	)		(230	)
Unrealized appreciation (depreciation)			1,083			(1,046	)
Net increase in net assets resulting                       from operations			2,118			954
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(1,277	)		(2,164	)
Class B			(26	)		(33	)
Class C			(42	)		(33	)
Class Y			(1	)		(1	)
Realized gains on investment transactions:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
			(1,346	)		(2,231	)
Capital share transactions (Note 5)			6,738			9,284
Total increase			7,510			8,007
NET ASSETS
Beginning of period			58,730			50,723
End of period		$	66,240		$	58,730
Undistributed net investment income (loss)		$	–		$	(–	)*

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 44 - 47.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended September 30,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	10.28		$	10.52		$	10.83		$	10.73		$	10.57		$	10.30		$	9.60
Income (loss) from       investment operations:
Net investment income			0.22			0.42			0.41			0.23			0.45			0.52			0.58
Net realized and             unrealized gain             (loss) on             investments			0.14			(0.24	)		(0.30	)		0.09			0.15			0.27			0.70
Total from investment       operations			0.36			0.18			0.11			0.32			0.60			0.79			1.28
Less distributions from:
Net investment income			(0.22	)		(0.42	)		(0.42	)		(0.22	)		(0.44	)		(0.52	)		(0.58	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.22	)		(0.42	)		(0.42	)		(0.22	)		(0.44	)		(0.52	)		(0.58	)
Net asset value,       end of period		$	10.42		$	10.28		$	10.52		$	10.83		$	10.73		$	10.57		$	10.30
Total return(1)			3.66	%		1.74	%		1.04	%		3.03	%		5.84	%		7.90	%		13.68	%
Net assets,       end of period       (in millions)			$62			$56			$49			$23			$18			$17			$16
Ratio of expenses       to average net       assets including       reimbursement			1.22	%(2)		1.23	%		1.17	%		1.46	%(2)(3)		1.15	%		1.15	%		1.15	%
Ratio of net investment       income to average       net assets including       reimbursement			4.46	%(2)		4.03	%		3.84	%		4.53	%(2)(3)		4.25	%		5.07	%		5.77	%
Ratio of expenses       to average net       assets excluding       reimbursement			1.22	%(2)(4)		1.23	%(4)		1.43	%		2.36	%(2)(3)		2.01	%		1.92	%		1.99	%
Ratio of net investment       income to average       net assets excluding       reimbursement			4.46	%(2)(4)		4.03	%(4)		3.58	%		3.64	%(2)(3)		3.39	%		4.30	%		4.93	%
Portfolio turnover rate			45	%		126	%		200	%		78	%		119	%		148	%		252	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.
(2)Annualized.
(3)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from October 1, 2003 up to the time of merger. Expenses for Class A shares before and after the merger were limited to 1.15% of average net assets.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	10.28		$	10.52		$	10.83		$	10.64
Income (loss) from       investment operations:
Net investment income			0.17			0.30			0.28			0.11
Net realized and unrealized             gain (loss) on investments			0.14			(0.24	)		(0.31	)		0.19
Total from investment operations			0.31			0.06			(0.03	)		0.30
Less distributions from:
Net investment income			(0.17	)		(0.30	)		(0.28	)		(0.11	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.17	)		(0.30	)		(0.28	)		(0.11	)
Net asset value, end of period		$	10.42		$	10.28		$	10.52		$	10.83
Total return			3.07	%		0.57	%		- -0.23	%		2.77	%
Net assets, end of period       (in thousands)		$1,725			$1,451				$744			$287
Ratio of expenses to average net assets			2.35	%(2)		2.38	%		2.45	%		2.76	%(2)
Ratio of net investment income       to average net assets			3.33	%(2)		2.90	%		2.63	%		3.04	%(2)
Portfolio turnover rate			45	%		126	%		200	%		78	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	10.28		$	10.52		$	10.83		$	10.64
Income (loss) from       investment operations:
Net investment income			0.18			0.31			0.27			0.11
Net realized and unrealized             gain (loss) on investments			0.14			(0.24	)		(0.31	)		0.19
Total from investment operations			0.32			0.07			(0.04	)		0.30
Less distributions from:
Net investment income			(0.18	)		(0.31	)		(0.27	)		(0.11	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.18	)		(0.31	)		(0.27	)		(0.11	)
Net asset value, end of period		$	10.42		$	10.28		$	10.52		$	10.83
Total return			3.20	%		0.66	%		- -0.40	%		2.77	%
Net assets, end of period       (in thousands)		$2,532			$1,737			$547				$115
Ratio of expenses to average net assets			2.10	%(2)		2.28	%		2.59	%		2.61	%(2)
Ratio of net investment income       to average net assets			3.58	%(2)		3.01	%		2.47	%		3.09	%(2)
Portfolio turnover rate			45	%		126	%		200	%		78	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	10.28		$	10.52		$	10.83		$	10.64
Income (loss) from       investment operations:
Net investment income			0.22			0.41			0.39			0.13
Net realized and unrealized       gain (loss) on investments			0.14			(0.24	)		(0.31	)		0.19
Total from investment operations			0.36			0.17			0.08			0.32
Less distributions from:
Net investment income			(0.22	)		(0.41	)		(0.39	)		(0.13	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.22	)		(0.41	)		(0.39	)		(0.13	)
Net asset value, end of period		$	10.42		$	10.28		$	10.52		$	10.83
Total return			3.63	%		1.62	%		0.75	%		3.03	%
Net assets, end of period       (in thousands)			$35			$20			$34			$25
Ratio of expenses to average net assets			1.28	%(2)		1.34	%		1.46	%		1.54	%(2)
Ratio of net investment income       to average net assets			4.41	%(2)		3.91	%		3.65	%		3.99	%(2)
Portfolio turnover rate			45	%		126	%		200	%		78	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY CUNDILL GLOBAL VALUE FUND

Portfolio Highlights

On September 30, 2006, Ivy Cundill Global Value Fund had net assets totaling $945,236,157 invested in a diversified portfolio of:

73.15%	Foreign Common Stocks
19.52%	Cash and Cash Equivalents and Unrealized Gain on       Open Forward Currency Contracts
7.33%	Domestic Common Stocks

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006, your Fund was invested by country and by industry, respectively, as follows:

Japan	$	35.32
Cash and Cash Equivalents and Unrealized Gain       on Open Forward Currency Contracts	$	19.52
South Korea	$	13.24
Canada	$	10.01
United States	$	7.33
Other Pacific Basin	$	5.09
Singapore	$	4.30
Italy	$	3.93
Other Europe	$	1.26

Financial Services Stocks	$	25.45
Cash and Cash Equivalents and Unrealized Gain on       Open Forward Currency Contracts	$	19.52
Consumer Services Stocks	$	15.72
Consumer Nondurables Stocks	$	14.17
Utilities Stocks	$	8.81
Capital Goods Stocks	$	6.16
Technology Stocks	$	2.95
Multi-Industry Stocks	$	2.86
Business Equipment and Services Stocks	$	2.50
Shelter Stocks	$	1.86

The Investments of Ivy Cundill Global Value Fund
September 30, 2006
COMMON STOCKS		Shares		Value
Canada - 10.01%
BCE Inc. (A)		1,815,800	$	49,255,250
Fairfax Financial Holdings Limited (A)		214,300		27,805,797
Legacy Hotels Real Estate Investment Trust (A)		1,289,300		11,084,923
Legacy Hotels Real Estate Investment Trust (A)(B)		753,900		6,481,753
				94,627,723
Germany - 1.26%
Munchener Ruckversicherungs-Gesellschaft       Aktiengesellschaft, Registered Shares (A)		75,184		11,893,336
Hong Kong - 2.86%
First Pacific Company Limited (A)	57,628,000			27,073,284
Italy - 3.93%
Italmobiliare S.p.A., Non-Convertible Savings       Shares (A)		521,786		37,145,187
Japan - 35.32%
ACOM CO., LTD. (A)		850,000		36,266,667
AIFUL Corporation (A)		694,000		26,849,355
Asatsu-DK Inc. (A)		776,800		23,608,144
Coca-Cola West Holdings Company, Limited (A)		1,879,200		37,544,229
Kirin Brewery Company, Limited (A)		2,913,000		38,889,321
Lion Corporation (A)		2,500,000		13,460,317
Mabuchi Motor Co., Ltd. (A)		456,100		27,877,604
NIPPONKOA Insurance Company, Limited (A)		1,900,000		15,151,746
Nikko Cordial Corporation (A)		3,651,500		42,349,672
Nippon Television Network Corporation (A)		180,000		24,594,286
TV Asahi Corporation (A)		6,612		14,049,625
Takefuji Corporation (A)		725,000		33,265,608
				333,906,574
Malaysia - 2.23%
AmcorpGroup Berhad (A)*	57,951,500			21,056,131
Singapore - 4.30%
Singapore Press Holdings Limited (A)	15,738,000			40,626,979
South Korea - 13.24%
Korea Electric Power Corporation (A)		875,324		34,087,915
Korea Investment Holdings Co., Ltd. (A)		1,085,230		46,964,511
Korea Tobacco & Ginseng Corporation (A)*		725,400		44,079,789
				125,132,215
United States - 7.33%
DIRECTV Group, Inc. (The)*		2,200,000		43,296,000
Liberty Global, Inc., Series C*		270,544		6,783,891
Liberty Media Corporation, Liberty Interactive Series A*		941,925		19,210,560
				69,290,451
TOTAL COMMON STOCKS - 80.48%			$	760,751,880
(Cost: $672,524,753)

UNREALIZED GAIN (LOSS) ON OPEN FORWARD CURRENCY CONTRACTS - 0.69%		Face Amount in Thousands
Euro, 1-19-07 (C)	EUR8,914				1,667
Euro, 3-23-07 (C)			25,233		99,924
Japanese Yen, 1-19-07 (C)	JPY16,183,235				6,308,796
Japanese Yen, 3-23-07 (C)			19,311		912,544
Malaysian Ringgit, 1-19-07 (C)	MYR15,941				15,741
Malaysian Ringgit, 3-23-07 (C)			48,930		84,817
Singapore Dollar, 1-19-07 (C)	SGD21,275				16,012
Singapore Dollar, 3-23-07 (C)			34,840		170,967
South Korean Won, 1-19-07 (C)	KRW10,193,580				8,240
South Korean Won, 1-19-07 (C)	36,077,726				(401,839	)
South Korean Won, 3-23-07 (C)	52,495,743				(682,817	)
				$	6,534,052

SHORT-TERM SECURITIES	Principal Amount in Thousands
Repurchase Agreements - 12.09%
J.P. Morgan Securities Inc.,       4.9% Repurchase Agreement dated 9-29-06       to be repurchased at $108,323,214 on 10-2-06,
4.9%, 10-2-06 (D)	$	108,279	108,279,000
J.P. Morgan Securities Inc.,       4.9% Repurchase Agreement dated 9-29-06       to be repurchased at $6,037,464 on 10-2-06,
4.9%, 10-2-06 (E)		6,035	6,035,000
			114,314,000

United States Government Obligations - 6.85%
Treasury Obligations
United States Treasury Bills:
4.96%, 10-19-06	15,000			14,962,800
5.02%, 10-19-06		15,000		14,962,350
5.01%, 11-16-06		25,000		24,839,958
5.05%, 11-24-06		10,000		9,924,250
				64,689,358
TOTAL SHORT-TERM SECURITIES - 18.94%			$	179,003,358
(Cost: $179,003,358)
TOTAL INVESTMENT SECURITIES - 100.11%			$	946,289,290
(Cost: $851,528,111)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.11%)				(1,053,133	)
NET ASSETS - 100.00%			$	945,236,157

Notes to Schedule of Investments

*No dividends were paid during the preceding 12 months.

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

(B)Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2006, the total value of this security amounted to 0.69% of net assets.

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

(D)Collateralized by $111,000,000 United States Treasury Note, 4.25% due 11-15-14; market value and accrued interest aggregate $110,111,620.

(E)Collateralized by $4,959,000 United States Treasury Note, 6.5% due 11-15-26; market value and accrued interest aggregate $6,134,266.

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

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

Statement of Assets and Liabilities
     IVY CUNDILL GLOBAL VALUE FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (Notes 1 and 3):
Securities (cost - $737,214)	$	831,975
Repurchase agreements (cost - $114,314)		114,314
		946,289
Receivables:
Fund shares sold		2,223
Dividends and interest		1,752
Investment securities sold		713
Prepaid and other assets		59
Total assets		951,036
LIABILITIES
Payable for investment securities purchased		2,744
Payable to Fund shareholders		1,011
Accrued management fee (Note 2)		719
Due to custodian		343
Accrued service fee (Note 2)		342
Accrued shareholder servicing (Note 2)		262
Accrued distribution fee (Note 2)		172
Accrued accounting services fee (Note 2)		11
Accrued administrative fee (Note 2)		8
Other		188
Total liabilities		5,800
Total net assets	$	945,236
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	821,819
Accumulated undistributed income:
Accumulated undistributed net investment income		1,361
Accumulated undistributed net realized gain on investment transactions		27,299
Net unrealized appreciation in value of investments		94,757
Net assets applicable to outstanding units of capital	$	945,236
Net asset value per share (net assets divided by shares outstanding):
Class A		$15.50
Class B		$15.14
Class C		$15.09
Class Y		$15.56
Advisor Class		$15.56
Class I		$15.42
Capital shares outstanding:
Class A		41,738
Class B		3,717
Class C		14,892
Class Y		926
Advisor Class		197
Class I		1

See Notes to Financial Statements.

Statement of Operations
     IVY CUNDILL GLOBAL VALUE FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $904)	$	7,067
Interest and amortization		4,770
Total income		11,837
Expenses (Note 2):
Accounting services fee		68
Administrative fee		47
Audit fees		11
Custodian fees		112
Distribution fee:
Class A		55
Class B		211
Class C		827
Class Y		1
Investment management fee		4,346
Legal fees		11
Service fee:
Class A		743
Class B		70
Class C		276
Class Y		18
Shareholder servicing:
Class A		887
Class B		117
Class C		212
Class Y		13
Advisor Class		1
Class I		–	*
Other		258
Total		8,284
Less expenses in excess of voluntary limit (Note 2)		(18	)
Total expenses		8,266
��       Net investment income		3,571
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		26,269
Realized net gain on forward currency contracts		2,510
Realized net loss on foreign currency transactions		(437	)
Realized net gain on investments		28,342
Unrealized depreciation in value of securities during the period	(37,050		)
Unrealized appreciation in value of forward currency
contracts during the period		2,095
Unrealized depreciation in value of investments during the period	(34,955		)
Net loss on investments		(6,613	)
Net decrease in net assets resulting from operations	$	(3,042	)

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	3,571		$	6,038
Realized net gain on investments			28,342			27,211
Unrealized appreciation (depreciation)			(34,955	)		80,530
Net increase (decrease) in net assets                       resulting from operations			(3,042	)		113,779
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(–	)		(5,373	)
Class B			(–	)		(65	)
Class C			(–	)		(616	)
Class Y			(–	)		(252	)
Advisor Class			(–	)		(39	)
Class I			(–	)		(–	)*
Realized gains on investment transactions:
Class A			(–	)		(16,729	)
Class B			(–	)		(1,681	)
Class C			(–	)		(5,678	)
Class Y			(–	)		(569	)
Advisor Class			(–	)		(99	)
Class I			(–	)		(1	)
			(–	)		(31,102	)
Capital share transactions (Note 5)			35,073			363,040
Total increase			32,031			445,717
NET ASSETS
Beginning of period			913,205			467,488
End of period		$	945,236		$	913,205
Undistributed net investment income (loss)		$	1,361		$	(1,773	)

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 55 - 60.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended				For the fiscal year ended December 31,					For the period from 9-4-01(1) to
	9-30-06				2006			2005			3-31-04				2003			2002		12-31-01
Net asset value,       beginning of period		$	15.52		$	13.79		$	12.57			$	11.41		$	8.39		$	9.64		$	10.15
Income (loss) from       investment operations:
Net investment             income (loss)			0.08			0.17			0.04				0.01			0.01		(0.00		)(2)		0.01
Net realized and             unrealized gain (loss)             on investments			(0.10	)		2.21			1.25				1.15			3.05		(1.17		)		(0.23	)
Total from investment       operations			(0.02	)		2.38			1.29				1.16			3.06		(1.17		)		(0.22	)
Less distributions from:
Net investment income			(0.00	)		(0.16	)		(0.07	)			(0.00	)		(0.04	)	(0.00		)		(0.02	)
Capital gains			(0.00	)		(0.49	)		(0.00	)			(0.00	)		(0.00	)	(0.08		)		(0.27	)
Total distributions			(0.00	)		(0.65	)		(0.07	)			(0.00	)		(0.04	)	(0.08		)		(0.29	)
Net asset value,       end of period		$	15.50		$	15.52		$	13.79			$	12.57		$	11.41		$	8.39		$	9.64
Total return(3)		- -0.19		%	17.49		%	10.29		%		10.17		%	36.43		%	- -12.17		%	- -2.07		%
Net assets, end of period       (in thousands)	$646,730			$624,894			$320,750			$58,678				$29,530			$1,403				$213
Ratio of expenses to average       net assets including       reimbursement			1.57	%(4)		1.62	%		1.74	%			1.70	%(4)		2.05	%		2.28	%		4.47	%(4)
Ratio of net investment       income (loss) to average       net assets including       reimbursement			0.97	%(4)		1.09	%		0.08	%			- -0.09	%(4)		0.18	%		0.02	%		0.94	%(4)
Ratio of expenses to average       net assets excluding       reimbursement			1.57	%(4)(5)		1.62	%(5)		1.74	%(5)			1.84	%(4)		2.21	%		4.97	%		31.77	%(4)
Ratio of net investment       income (loss) to average       net assets excluding       reimbursement			0.97	%(4)(5)		1.09	%(5)		0.08	%(5)			- -0.23	%(4)		0.02	%	- -2.67		%	- -26.36		%(4)
Portfolio turnover rate			13	%		4	%		5	%			1	%		24	%		122	%		57	%(6)

(1)Commencement of operations of the class.
(2)Based on average shares outstanding.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)There was no waiver of expenses during the period.
(6)For the 12 months ended December 31, 2001.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended				For the fiscal year ended December 31,					For the period from 9-26-01(1) to
	9-30-06				2006			2005			3-31-04				2003			2002		12-31-01
Net asset value,       beginning of period		$	15.23		$	13.54		$	12.38			$	11.26		$	8.32		$	9.61		$	9.26
Income (loss) from       investment operations:
Net investment             income (loss)			0.01			0.06			(0.01	)			(0.02	)		(0.06	)	(0.05		)(2)		0.01
Net realized and             unrealized gain (loss)             on investments			(0.10	)		2.14			1.17				1.14			3.00		(1.16		)		0.62
Total from investment       operations			(0.09	)		2.20			1.16				1.12			2.94		(1.21		)		0.63
Less distributions from:
Net investment income			(0.00	)		(0.02	)		(0.00	)			(0.00	)		(0.00	)	(0.00		)	(0.02		)
Capital gains			(0.00	)		(0.49	)		(0.00	)			(0.00	)		(0.00	)	(0.08		)	(0.26		)
Total distributions			(0.00	)		(0.51	)		(0.00	)			(0.00	)		(0.00	)	(0.08		)	(0.28		)
Net asset value,       end of period		$	15.14		$	15.23		$	13.54			$	12.38		$	11.26		$	8.32		$	9.61
Total return			- -0.59	%		16.43	%		9.37	%			9.95	%		35.34	%	- -12.62		%		6.91	%
Net assets, end of period       (in millions)		$56			$57			$37				$12			$7			$2			$1
Ratio of expenses to average       net assets including       reimbursement			2.47	%(3)		2.51	%		2.62	%			2.52	%(3)		3.20	%		2.84	%		6.04	%(3)
Ratio of net investment       income (loss) to average       net assets including       reimbursement			0.08	%(3)		0.21	%		- -0.86	%			- -1.31	%(3)		- -1.13	%	- -0.54		%		0.60	%(3)
Ratio of expenses to average       net assets excluding       reimbursement			2.47	%(3)(4)		2.51	%(4)		2.62	%(4)			2.67	%(3)		3.36	%		5.53	%	39.53		%(3)
Ratio of net investment       income (loss) to average       net assets excluding       reimbursement			0.08	%(3)(4)		0.21	%(4)		- -0.86	%(4)			- -1.46	%(3)		- -1.29	%	- -3.23		%	- -32.89		%(3)
Portfolio turnover rate			13	%		4	%		5	%			1	%		24	%		122	%		57	%(5)

(1)Commencement of operations of the class.
(2)Based on average shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.
(5)For the 12 months ended December 31, 2001.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,					For the period from 10-19-01(1) to
	9-30-06				2006			2005		3-31-04				2003			2002		12-31-01
Net asset value,       beginning of period		$	15.16		$	13.48		$	12.30		$	11.19		$	8.26		$	9.57		$	9.44
Income (loss) from       investment operations:
Net investment             income (loss)			0.02			0.08			(0.02	)		(0.01	)		(0.03	)	(0.07		)(2)		0.01
Net realized and             unrealized gain (loss)             on investments			(0.09	)		2.14			1.20			1.12			2.96		(1.16		)		0.40
Total from investment       operations			(0.07	)		2.22			1.18			1.11			2.93		(1.23		)		0.41
Less distributions from:
Net investment income			(0.00	)		(0.05	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.02		)
Capital gains			(0.00	)		(0.49	)		(0.00	)		(0.00	)		(0.00	)	(0.08		)	(0.26		)
Total distributions			(0.00	)		(0.54	)		(0.00	)		(0.00	)		(0.00	)	(0.08		)	(0.28		)
Net asset value,       end of period		$	15.09		$	15.16		$	13.48		$	12.30		$	11.19		$	8.26		$	9.57
Total return			- -0.46	%		16.70	%		9.59	%		9.92	%		35.47	%	- -12.88		%		4.44	%
Net assets, end of period       (in thousands)	$224,724			$211,242			$96,375			$23,840			$11,235				$446			$30
Ratio of expenses to average       net assets including       reimbursement			2.23	%(3)		2.28	%		2.42	%		2.35	%(3)		2.93	%		3.10	%		7.71	%(3)
Ratio of net investment       income (loss) to average       net assets including       reimbursement			0.30	%(3)		0.43	%		- -0.62	%		- -1.09	%(3)		- -0.83	%	- -0.80		%		0.99	%(3)
Ratio of expenses to average       net assets excluding       reimbursement			2.23	%(3)(4)		2.28	%(4)		2.42	%(4)		2.50	%(3)		3.10	%		5.79	%	51.61		%(3)
Ratio of net investment       income (loss) to average       net assets excluding       reimbursement			0.30	%(3)(4)		0.43	%(4)		- -0.62	%(4)		- -1.23	%(3)		- -1.00	%	- -3.49		%	-42.91		%(3)
Portfolio turnover rate			13	%		4	%		5	%		1	%		24	%		122	%		57	%(5)

(1)Commencement of operations of the class.
(2)Based on average shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.
(5)For the 12 months ended December 31, 2001.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended			For the period from 7-24-03(1) to
	9-30-06				2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period		$	15.56		$	13.82		$	12.58		$	11.40		$	9.84
Income (loss) from       investment operations:
Net investment income (loss)			0.10			0.19			0.07			(0.01	)		0.02
Net realized and unrealized gain             (loss) on investments			(0.10	)		2.26			1.29			1.19			1.58
Total from investment operations			0.00			2.45			1.36			1.18			1.60
Less distributions from:
Net investment income			(0.00	)		(0.22	)		(0.12	)		(0.00	)		(0.04	)
Capital gains			(0.00	)		(0.49	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.71	)		(0.12	)		(0.00	)		(0.04	)
Net asset value, end of period		$	15.56		$	15.56		$	13.82		$	12.58		$	11.40
Total return			0.00	%		17.99	%		10.90	%		10.35	%		16.28	%
Net assets, end of period       (in millions)		$15			$17			$10			$2			$1
Ratio of expenses to average net       assets including reimbursement			1.20	%(2)		1.19	%		1.20	%		1.20	%(2)		1.76	%(2)
Ratio of net investment income       (loss) to average net assets       including reimbursement			1.35	%(2)		1.46	%		0.52	%		- -0.32	%(2)		0.55	%(2)
Ratio of expenses to average net       assets excluding reimbursement			1.43	%(2)		1.46	%		1.56	%		1.80	%(2)		2.09	%(2)
Ratio of net investment income       (loss) to average net assets       excluding reimbursement			1.12	%(2)		1.19	%		0.16	%		- -0.92	%(2)		0.22	%(2)
Portfolio turnover rate			13	%		4	%		5	%		1	%		24	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended					For the fiscal year ended December 31,
	9-30-06				2006			2005			3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	15.54		$	13.77		$	12.54			$	11.37		$	8.34		$	9.55		$	10.07
Income (loss) from       investment operations:
Net investment             income (loss)			0.11			0.22			0.04				(0.01	)		(0.01	)		0.04	(2)		0.03
Net realized and             unrealized gain (loss)             on investments			(0.09	)		2.23			1.32				1.18			3.10		(1.17		)		(0.25	)
Total from investment       operations			0.02			2.45			1.36				1.17			3.09		(1.13		)		(0.22	)
Less distributions from:
Net investment income			(0.00	)		(0.19	)		(0.13	)			(0.00	)		(0.06	)	(0.00		)		(0.02	)
Capital gains			(0.00	)		(0.49	)		(0.00	)			(0.00	)		(0.00	)	(0.08		)		(0.28	)
Total distributions			(0.00	)		(0.68	)		(0.13	)			(0.00	)		(0.06	)	(0.08		)		(0.30	)
Net asset value,       end of period		$	15.56		$	15.54		$	13.77			$	12.54		$	11.37		$	8.34		$	9.55
Total return			0.13	%	18.09		%	10.86		%		10.29		%	37.11		%	- -11.86		%	- -2.13		%
Net assets, end of period       (in millions)		$3			$3			$3				$3			$3			$2			$1
Ratio of expenses to average       net assets including       reimbursement			1.06	%(3)		1.12	%		1.23	%			1.26	%(3)		2.12	%		1.83	%		1.40	%
Ratio of net investment       income (loss) to average       net assets including       reimbursement			1.49	%(3)		1.57	%		0.41	%			- -0.17	%(3)		- -0.07	%		0.47	%		0.37	%
Ratio of expenses to average       net assets excluding       reimbursement			1.06	%(3)(4)		1.12	%(4)		1.23	%(4)			1.41	%(3)		2.28	%		4.52	%		10.30	%
Ratio of net investment       income (loss) to average       net assets excluding       reimbursement			1.49	%(3)(4)		1.57	%(4)		0.41	%(4)			- -0.32	%(3)	- -0.23		%	- -2.22		%	- -8.53		%
Portfolio turnover rate			13	%		4	%		5	%			1	%		24	%		122	%		57	%

(1)See Note 5 to financial statements.
(2)Based on average shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended				For the period from 11-5-02(2) to
	9-30-06				2006			2005		3-31-04				12-31-03				12-31-02
Net asset value,       beginning of period		$	15.41		$	13.70		$	12.49		$	11.33			$	8.31		$	8.85
Income (loss) from       investment operations:
Net investment             income (loss)			0.11			0.25	(3)		0.02			(0.01	)			0.00			0.26
Net realized and             unrealized gain (loss)             on investments			(0.10	)		2.16	(3)		1.30			1.17				3.08		(0.72		)
Total from investment       operations			0.01			2.41			1.32			1.16				3.08		(0.46		)
Less distributions from:
Net investment income			(0.00	)		(0.21	)		(0.11	)		(0.00	)			(0.06	)	(0.00		)
Capital gains			(0.00	)		(0.49	)		(0.00	)		(0.00	)			(0.00	)	(0.08		)
Total distributions			(0.00	)		(0.70	)		(0.11	)		(0.00	)			(0.06	)	(0.08		)
Net asset value,       end of period		$	15.42		$	15.41		$	13.70		$	12.49			$	11.33		$	8.31
Total return			0.07	%		17.88	%		10.62	%		10.24	%			37.12	%	- -5.23		%
Net assets, end of period       (in thousands)		$24			$24			$70			$63				$57			$42
Ratio of expenses to average       net assets including       reimbursement			1.16	%(4)		1.28	%		1.49	%		1.39	%(4)			2.03	%	11.51		%(4)
Ratio of net investment       income (loss) to average       net assets including       reimbursement			1.38	%(4)		1.20	%		0.16	%		- -0.29	%(4)			0.03	%	2.96		%(4)
Ratio of expenses to average       net assets excluding       reimbursement			1.16	%(4)(5)		1.28	%(5)		1.49	%(5)		1.53	%(4)			2.20	%	28.44		%(4)
Ratio of net investment       income (loss) to average       net assets excluding       reimbursement			1.38	%(4)(5)		1.20	%(5)		0.16	%(5)		- -0.44	%(4)		- -0.13		%	- -13.97		%(4)
Portfolio turnover rate			13	%		4	%		5	%		1	%			24	%		122	%(6)

(1)See Note 5 to financial statements.
(2)Commencement of operations of the class.
(3)Based on average weekly shares outstanding.
(4)Annualized.
(5)There was no waiver of expenses during the period.
(6)For the 12 months ended December 31, 2002.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY DIVIDEND INCOME FUND

Portfolio Highlights

On September 30, 2006, Ivy Dividend Income Fund had net assets totaling $101,976,360 invested in a diversified portfolio of:

76.42%	Domestic Common Stocks
16.70%	Cash and Cash Equivalents
6.88%	Foreign Common Stocks

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006,
your Fund owned:

Energy Stocks	$	17.11
Financial Services Stocks	$	17.10
Cash and Cash Equivalents	$	16.70
Consumer Nondurables Stocks	$	7.67
Utilities Stocks	$	7.26
Capital Goods Stocks	$	6.95
Multi-Industry Stocks	$	5.84
Technology Stocks	$	5.03
Raw Materials Stocks	$	3.47
Health Care Stocks	$	3.11
Consumer Services Stocks	$	2.93
Shelter Stocks	$	2.81
Transportation Stocks	$	2.67
Miscellaneous Stocks	$	1.35

The Investments of Ivy Dividend Income Fund
September 30, 2006
COMMON STOCKS	Shares			Value
Aircraft - 2.20%
Boeing Company (The)		18,250	$	1,439,012
Goodrich Corporation		19,900		806,348
				2,245,360
Banks - 3.15%
Bank of America Corporation		37,550		2,011,553
Mellon Financial Corporation		13,750		537,625
Wells Fargo & Company		18,200		658,476
				3,207,654
Beverages - 2.24%
Diageo plc, ADR		21,500		1,527,360
PepsiCo, Inc.		11,600		757,016
				2,284,376
Business Equipment and Services - 0.78%
Genuine Parts Company		18,500		797,905
Capital Equipment - 3.17%
Caterpillar Inc.		16,550		1,088,990
Deere & Company		25,500		2,139,705
				3,228,695
Chemicals - Petroleum and Inorganic - 0.71%
du Pont (E.I.) de Nemours and Company		17,000		728,280
Chemicals - Specialty - 1.70%
Air Products and Chemicals, Inc.		26,200		1,738,894
Computers - Peripherals - 1.90%
SAP Aktiengesellschaft, ADR		39,100		1,935,450
Electrical Equipment - 0.49%
Emerson Electric Co.		5,950		498,967
Electronic Components - 0.93%
Microchip Technology Incorporated		29,400		953,001
Finance Companies - 3.20%
SLM Corporation		62,805		3,264,604
Food and Related - 0.82%
Campbell Soup Company		23,000		839,500
Health Care - Drugs - 1.15%
Pfizer Inc.		41,450		1,175,522
Health Care - General - 1.13%
Johnson & Johnson		17,800		1,155,932
Hospital Supply and Management - 0.83%
Medtronic, Inc.		18,150		842,886
Hotels and Gaming - 2.93%
Harrah's Entertainment, Inc.		16,000		1,062,880
Starwood Hotels & Resorts Worldwide, Inc.		33,600		1,921,584
				2,984,464
Household - General Products - 3.27%
Colgate-Palmolive Company		32,950		2,046,195
Procter & Gamble Company (The)		20,850		1,292,283
				3,338,478
Insurance - Life - 0.49%
Aflac Incorporated		11,000		503,360
Insurance - Property and Casualty - 3.45%
ACE Limited		9,300		508,989
Allstate Corporation (The)		21,300		1,336,149
Everest Re Group, Ltd.		5,300		516,909
St. Paul Companies, Inc. (The)		24,650		1,155,839
				3,517,886
Metal Fabrication - 1.14%
Loews Corporation, Carolina Group		21,000		1,163,190
Mining - 1.06%
Freeport-McMoRan Copper & Gold Inc., Class B		20,300		1,081,178
Multiple Industry - 5.84%
3M Company		11,350		844,667
Altria Group, Inc.		32,250		2,468,737
General Electric Company		74,750		2,638,675
				5,952,079
Non-Residential Construction - 2.15%
Fluor Corporation		28,550		2,195,210
Petroleum - International - 6.81%
Anadarko Petroleum Corporation		36,400		1,595,412
BP p.l.c., ADR		11,250		737,775
ConocoPhillips		17,519		1,042,906
Exxon Mobil Corporation		46,050		3,089,955
Marathon Oil Corporation		6,200		476,780
				6,942,828
Petroleum - Services - 10.30%
BJ Services Company		31,950		962,653
Baker Hughes Incorporated		33,950		2,315,390
Grant Prideco, Inc.*		19,200		730,176
National Oilwell Varco, Inc.*		18,500		1,083,175
Schlumberger Limited		46,800		2,903,004
Transocean Inc.*		14,400		1,054,512
Valero GP Holdings, LLC*		32,200		624,680
Weatherford International Ltd.*		19,850		828,142
				10,501,732
Railroad - 1.05%
Union Pacific Corporation		12,150		1,069,200
Real Estate Investment Trust - 2.81%
Host Hotels & Resorts, Inc.		20,571		471,693
ProLogis		18,550		1,058,463
Simon Property Group, Inc.		14,750		1,336,645
				2,866,801
Retail - General Merchandise - 0.57%
Federated Department Stores, Inc.		13,462		581,693
Security and Commodity Brokers - 6.81%
AllianceBernstein Holding L.P.		33,750		2,328,412
Chicago Mercantile Exchange Holdings Inc.		4,950		2,367,338
Legg Mason, Inc.		4,350		438,741
Morgan (J.P.) Chase & Co.		38,452		1,805,706
				6,940,197
Tobacco - 1.34%
Reynolds American Inc.		22,100		1,369,537
Trucking and Shipping - 1.62%
United Parcel Service, Inc., Class B		22,900		1,647,426
Utilities - Electric - 1.77%
Dominion Resources, Inc.		12,250		937,002
NRG Energy, Inc.*		19,100		865,230
				1,802,232
Utilities - Gas and Pipeline - 2.44%
Enbridge Inc.		29,750		960,330
Kinder Morgan, Inc.		14,550		1,525,568
				2,485,898
Utilities - Telephone - 3.05%
BellSouth Corporation		22,500		961,875
Iowa Telecommunications Services, Inc.		54,750		1,083,503
Windstream Corporation		80,550		1,062,455
				3,107,833
TOTAL COMMON STOCKS - 83.30%			$	84,948,248
(Cost: $68,460,198)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Commercial Paper
Aluminum - 3.41%
Alcoa Incorporated,
5.4%, 10-2-06	$	3,476	3,475,479
Banks - 1.96%
Wells Fargo Bank, N.A.,
5.27%, 10-18-06		2,000	2,000,000
Finance Companies - 4.31%
Preferred Receivables Funding Corp.,
5.26%, 10-19-06		1,500	1,496,055
Three Pillars Funding LLC,
5.37%, 10-2-06		2,897	2,896,568
			4,392,623
Multiple Industry - 2.93%
General Electric Capital Corporation,
5.23%, 10-27-06		3,000	2,988,668

Publishing - 2.94%
Gannett Co., Inc.,
5.26%, 10-3-06	3,000		2,999,123
Total Commercial Paper - 15.55%			15,855,893
Municipal Obligation - 0.98%
California
County of Sacramento, Taxable Pension Funding Bonds,            Series 1995B (Bayerische Landesbank Girozentrale,            New York Branch),
5.39%, 10-  4-06	1,000		1,000,000
TOTAL SHORT-TERM SECURITIES - 16.53%		$	16,855,893
(Cost: $16,855,893)
TOTAL INVESTMENT SECURITIES - 99.83%		$	101,804,141
(Cost: $85,316,091)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.17%			172,219
NET ASSETS - 100.00%		$	101,976,360

Notes to Schedule of Investments

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

*No dividends were paid during the preceding 12 months.

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

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

Statement of Assets and Liabilities
     IVY DIVIDEND INCOME FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $85,316) (Notes 1 and 3)	$	101,804
Cash		1
Receivables:
Fund shares sold		267
Dividends and interest		202
Prepaid and other assets		29
Total assets		102,303
LIABILITIES
Payable to Fund shareholders		178
Accrued management fee (Note 2)		57
Accrued shareholder servicing (Note 2)		30
Accrued service fee (Note 2)		28
Accrued distribution fee (Note 2)		14
Accrued accounting services fee (Note 2)		4
Other		16
Total liabilities		327
Total net assets	$	101,976
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	84,048
Accumulated undistributed income:
Accumulated undistributed net investment income		115
Accumulated undistributed net realized gain on                 investment transactions		1,325
Net unrealized appreciation in value of investments		16,488
Net assets applicable to outstanding units of capital	$	101,976
Net asset value per share (net assets divided by shares outstanding):
Class A		$14.62
Class B		$14.55
Class C		$14.55
Class Y		$14.62
Capital shares outstanding:
Class A		5,263
Class B		562
Class C		1,086
Class Y		72

See Notes to Financial Statements.

Statement of Operations
     IVY DIVIDEND INCOME FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $4)	$	966
Interest and amortization		298
Total income		1,264
Expenses (Note 2):
Accounting services fee		24
Audit fees		10
Custodian fees		3
Distribution fee:
Class A		3
Class B		29
Class C		55
Investment management fee		322
Legal fees		–	*
Service fee:
Class A		83
Class B		10
Class C		18
Class Y		1
Shareholder servicing:
Class A		89
Class B		16
Class C		23
Class Y		1
Other		40
Total expenses		727
Net investment income		537
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		1,183
Realized net gain on swaps		326
Realized net gain on investments		1,509
Unrealized depreciation in value of investments during the period		(292	)
Net gain on investments		1,217
Net increase in net assets resulting from operations	$	1,754

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	537		$	440
Realized net gain (loss) on investments			1,509			(174	)
Unrealized appreciation (depreciation)			(292	)		11,630
Net increase in net assets resulting                       from operations			1,754			11,896
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(415	)		(397	)
Class B			(10	)		(6	)
Class C			(28	)		(13	)
Class Y			(6	)		(10	)
Realized gains on investment transactions:
Class A			(–	)		(98	)
Class B			(–	)		(14	)
Class C			(–	)		(25	)
Class Y			(–	)		(2	)
			(459	)		(565	)
Capital share transactions (Note 5)			17,427			22,983
Total increase			18,722			34,314
NET ASSETS
Beginning of period			83,254			48,940
End of period		$	101,976		$	83,254
Undistributed net investment income		$	115		$	37

(1)See "Financial Highlights" on pages 70 - 73.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended				For the period from 6-30-03(1) to
	9-30-06				2006			2005			3-31-04				12-31-03
Net asset value,       beginning of period		$	14.41		$	12.13		$	11.07			$	11.03			$	10.00
Income from investment operations:
Net investment income			0.10			0.12	(2)		0.09				0.01				0.04
Net realized and unrealized             gain on investments			0.20			2.30	(2)		1.10				0.04				1.03
Total from investment operations			0.30			2.42			1.19				0.05				1.07
Less distributions from:
Net investment income			(0.09	)		(0.11	)		(0.09	)			(0.01	)			(0.04	)
Capital gains			(0.00	)		(0.03	)		(0.04	)			(0.00	)			(0.00	)
Total distributions			(0.09	)		(0.14	)		(0.13	)			(0.01	)			(0.04	)
Net asset value, end of period		$	14.62		$	14.41		$	12.13			$	11.07			$	11.03
Total return(3)			2.06	%		19.99	%		10.78	%			0.41	%			10.70	%
Net assets, end of period       (in millions)			$77			$61			$32				$17				$16
Ratio of expenses to average       net assets including       voluntary expense waiver			1.38	%(4)		1.45	%		1.59	%			2.00	%(4)			1.11	%(4)
Ratio of net investment income to       average net assets including       voluntary expense waiver			1.36	%(4)		0.92	%		0.94	%			0.20	%(4)			1.34	%(4)
Ratio of expenses to average       net assets excluding       voluntary expense waiver			1.38	%(4)(5)		1.45	%(5)		1.59	%(5)			2.40	%(4)			1.81	%(4)
Ratio of net investment income (loss)       to average net assets excluding       voluntary expense waiver			1.36	%(4)(5)		0.92	%(5)		0.94	%(5)			- -0.20	%(4)			0.64	%(4)
Portfolio turnover rate			9	%		15	%		32	%			12	%			16	%

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended			For the period from 6-30-03(1) to
	9-30-06				2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period		$	14.34		$	12.09		$	11.05		$	11.03		$	10.00
Income (loss) from       investment operations:
Net investment income (loss)			0.03			0.01			0.02			(0.02	)		0.01
Net realized and unrealized             gain on investments			0.20			2.28			1.06			0.04			1.03
Total from investment operations			0.23			2.29			1.08			0.02			1.04
Less distributions from:
Net investment income			(0.02	)		(0.01	)		(0.00	)		(0.00	)		(0.01	)
Capital gains			(0.00	)		(0.03	)		(0.04	)		(0.00	)		(0.00	)
Total distributions			(0.02	)		(0.04	)		(0.04	)		(0.00	)		(0.01	)
Net asset value, end of period		$	14.55		$	14.34		$	12.09		$	11.05		$	11.03
Total return			1.67	%		18.94	%		9.76	%		0.18	%		10.36	%
Net assets, end of period       (in millions)			$8			$7			$6			$2			$2
Ratio of expenses to average       net assets including       voluntary expense waiver			2.29	%(2)		2.32	%		2.44	%		2.99	%(2)		2.03	%(2)
Ratio of net investment       income (loss) to average       net assets including       voluntary expense waiver			0.46	%(2)		0.03	%		0.11	%		- -0.81	%(2)		0.36	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver			2.29	%(2)(3)		2.32	%(3)		2.44	%(3)		3.39	%(2)		2.73	%(2)
Ratio of net investment       income (loss) to average       net assets excluding       voluntary expense waiver			0.46	%(2)(3)		0.03	%(3)		0.11	%(3)		- -1.21	%(2)		- -0.34	%(2)
Portfolio turnover rate			9	%		15	%		32	%		12	%		16	%

(1)Commencement of operations of the class.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended			For the period from 6-30-03(1) to
	9-30-06				2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period		$	14.34		$	12.09		$	11.05		$	11.03		$	10.00
Income (loss) from       investment operations:
Net investment income (loss)			0.04			0.01			0.01			(0.02	)		0.01
Net realized and unrealized             gain on investments			0.20			2.28			1.07			0.04			1.03
Total from investment operations			0.24			2.29			1.08			0.02			1.04
Less distributions from:
Net investment income			(0.03	)		(0.01	)		(0.00	)		(0.00	)		(0.01	)
Capital gains			(0.00	)		(0.03	)		(0.04	)		(0.00	)		(0.00	)
Total distributions			(0.03	)		(0.04	)		(0.04	)		(0.00	)		(0.01	)
Net asset value, end of period		$	14.55		$	14.34		$	12.09		$	11.05		$	11.03
Total return			1.66	%		18.95	%		9.76	%		0.18	%		10.38	%
Net assets, end of period       (in millions)			$16			$14			$10			$6			$5
Ratio of expenses to average       net assets including       voluntary expense waiver			2.19	%(2)		2.27	%		2.42	%		2.88	%(2)		1.98	%(2)
Ratio of net investment       income (loss) to average       net assets including       voluntary expense waiver			0.57	%(2)		0.08	%		0.10	%		- -0.68	%(2)		0.45	%(2)
Ratio of expenses to average       net assets excluding       voluntary expense waiver			2.19	%(2)(3)		2.27	%(3)		2.42	%(3)		3.28	%(2)		2.68	%(2)
Ratio of net investment       income (loss) to average       net assets excluding       voluntary expense waiver			0.57	%(2)(3)		0.08	%(3)		0.10	%(3)		- -1.08	%(2)		- -0.25	%(2)
Portfolio turnover rate			9	%		15	%		32	%		12	%		16	%

(1)Commencement of operations of the class.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended			For the period from 6-30-03(1) to
	9-30-06				2006			2005			3-31-04			12-31-03
Net asset value,       beginning of period		$	14.41		$	12.13		$	11.07		$	11.03		$	10.00
Income from investment operations:
Net investment income			0.09	(2)		0.15	(2)		0.11			0.01			0.05
Net realized and unrealized             gain on investments			0.21	(2)		2.29	(2)		1.10			0.04			1.03
Total from investment operations			0.30			2.44			1.21			0.05			1.08
Less distributions from:
Net investment income			(0.09	)		(0.13	)		(0.11	)		(0.01	)		(0.05	)
Capital gains			(0.00	)		(0.03	)		(0.04	)		(0.00	)		(0.00	)
Total distributions			(0.09	)		(0.16	)		(0.15	)		(0.01	)		(0.05	)
Net asset value, end of period		$	14.62		$	14.41		$	12.13		$	11.07		$	11.03
Total return			2.11	%		20.14	%		10.94	%		0.42	%		10.78	%
Net assets, end of period       (in millions)			$1			$1			$1			$1			$1
Ratio of expenses to average       net assets including       voluntary expense waiver			1.31	%(3)		1.34	%		1.44	%		1.91	%(3)		1.25	%(3)
Ratio of net investment       income to average net       assets including voluntary       expense waiver			1.36	%(3)		1.03	%		1.09	%		0.28	%(3)		1.08	%(3)
Ratio of expenses to average       net assets excluding       voluntary expense waiver			1.31	%(3)(4)		1.34	%(4)		1.44	%(4)		2.31	%(3)		1.95	%(3)
Ratio of net investment       income (loss) to average       net assets excluding       voluntary expense waiver			1.36	%(3)(4)		1.03	%(4)		1.09	%(4)		- -0.12	%(3)		0.38	%(3)
Portfolio turnover rate			9	%		15	%		32	%		12	%		16	%

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY EUROPEAN OPPORTUNITIES FUND

Portfolio Highlights

On September 30, 2006, Ivy European Opportunities Fund had net assets totaling $370,869,093 invested in a diversified portfolio of:

95.58%	Foreign Common Stocks
4.42%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006, your Fund was invested by country and by industry, respectively, as follows:

United Kingdom	$	26.36
Germany	$	14.99
Spain	$	9.08
Italy	$	8.73
Greece	$	7.80
France	$	5.94
Other Europe	$	5.67
Austria	$	5.53
Norway	$	5.03
Cash and Cash Equivalents	$	4.42
Other	$	3.51
Netherlands	$	2.94

Financial Services Stocks	$	29.04
Capital Goods Stocks	$	12.46
Utilities Stocks	$	10.22
Consumer Nondurables Stocks	$	9.94
Energy Stocks	$	9.23
Miscellaneous Stocks	$	6.91
Retail Stocks	$	6.70
Cash and Cash Equivalents	$	4.42
Multi-Industry Stocks	$	3.24
Transportation Stocks	$	2.92
Consumer Durables Stocks	$	2.61
Consumer Services Stocks	$	2.31

The Investments of Ivy European Opportunities Fund
September 30, 2006
COMMON STOCKS		Shares		Value
Argentina - 1.18%
NDS Group plc, ADR*		100,000	$	4,397,000
Austria - 5.53%
AGRANA Beteiligungs-AG (A)		36,000		3,638,757
OMV Aktiengesellschaft (A)		180,000		9,326,283
Telekom Austria Aktiengesellschaft (A)		138,000		3,482,330
Wienerberger AG (A)		86,000		4,061,120
				20,508,490
Bermuda - 2.33%
SeaDrill Limited (A)*		659,611		8,651,166
France - 5.94%
Amboise Investissement (A)*		76,021		1,041,106
Compagnie Generale des Etablissements Michelin, Class B (A)		53,000		3,884,556
France Telecom (A)		360,000		8,262,639
Sanofi-Aventis (A)		52,534		4,676,439
Technip-Coflexip (A)		73,000		4,148,895
				22,013,635
Germany - 14.99%
Commerzbank Aktiengesellschaft (A)		314,903		10,669,670
Deutsche Post AG (A)		320,000		8,391,474
Hypo Real Estate Holding AG (A)		159,825		9,967,149
KARSTADT QUELLE Aktiengesellschaft (A)*		177,313		4,233,783
Pfleiderer Ag, Registered Shares (A)		425,982		10,273,998
SAP Aktiengesellschaft (A)		18,654		3,701,894
SGL Carbon AG (A)*		108,370		2,088,769
Siemens AG (A)		72,000		6,282,345
				55,609,082
Greece - 7.80%
Alpha Bank (A)		249,113		6,646,299
Coca-Cola Hellenic Bottling Company S.A. (A)		223,867		7,715,734
National Bank of Greece S.A. (A)		222,519		9,576,717
Titan Cement Company S.A. (A)		105,000		4,976,985
				28,915,735
Ireland - 1.76%
CRH public limited company (A)		193,000		6,531,961
Italy - 8.73%
AZIMUT HOLDING S.P.A. (A)		567,000		6,470,879
ENEL S.p.A. (A)	1,166,792			10,645,399
Eni S.p.A. (A)		125,000		3,704,303
Geox S.p.A. (A)(B)		200,000		2,490,458
Sanpaolo Imi SpA (A)		189,500		4,000,932
UniCredito Italiano S.p.A. (A)		610,000		5,062,642
				32,374,613
Luxembourg - 1.38%
SES GLOBAL S.A., Fiduciary Deposit Receipts (A)		340,922		5,114,197
Netherlands - 2.94%
Aalberts Industries N.V. (A)		74,000		5,484,714
Trader Media East Limited, GDR*		301,000		2,347,800
Univar N.V. (A)		72,894		3,054,928
				10,887,442
Norway - 5.03%
Bergesen Worldwide Offshore Limited (A)*		679,878		2,448,002
Prosafe ASA (A)		54,771		3,356,786
Sinvest ASA (A)*		214,000		3,754,328
Statoil ASA (A)		385,000		9,099,110
				18,658,226
Spain - 9.08%
Altadis, S.A. (A)		193,581		9,190,440
Banco Bilbao Vizcaya Argentaria, S.A. (A)		323,800		7,493,374
Banco Santander Central Hispano, S.A. (A)		476,647		7,537,044
Enagas, S.A. (A)		89,843		2,177,121
Telefonica, S.A. (A)		420,000		7,280,405
				33,678,384
Sweden - 1.13%
Investor AB, B Shares (A)		201,317		4,189,440
Switzerland - 1.40%
Lonza Group Ltd, Registered Shares (A)		75,000		5,194,130
United Kingdom - 26.36%
Admiral Group Plc (A)		295,574		4,587,819
Aurora Russia Limited (A)*		970,000		1,580,071
Enterprise Inns plc (A)		160,000		3,160,516
Evolution Group Plc (The) (A)	2,592,416			6,771,182
Halfords Group Plc (A)		921,998		5,791,727
IP Group plc (A)*	1,619,705			4,306,355
ITV plc (A)	1,896,320			3,435,169
Imperial Tobacco Group PLC (A)		230,000		7,665,375
Interserve Plc (A)		194,500		1,311,015
Investec plc (A)		540,000		5,303,039
Man Group plc (A)		642,000		5,385,160
Old Mutual plc (A)	1,850,000			5,801,925
Omega International Group PLC (A)		270,000		1,592,428
Persimmon plc (A)		100,000		2,505,196
Premier Brands Foods plc (A)		918,000		4,567,741
Punch Taverns plc (A)		318,368		5,779,134
Regal Petroleum plc (A)*		667,000		1,929,478
Regal Petroleum plc (A)(B)*	1,050,000			3,037,409
Royal Bank of Scotland Group plc (The) (A)		159,950		5,507,462
tesco plc (A)		800,000		5,392,350
Travis Perkins plc (A)		194,276		6,314,725
Vodafone Group Plc (A)	2,633,967			6,028,993
				97,754,269
TOTAL COMMON STOCKS - 95.58%			$	354,477,770
(Cost: $285,917,958)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Commercial Paper - 1.80%
Banks
Rabobank USA Financial Corp. (Rabobank Nederland),
5.35%, 10-2-06	$	9,256		9,254,625
Other Government Security - 2.50%
Supranational
Central American Bank for Economic Integration            (Barclays Bank PLC),
5.25%, 10-24-06		6,700		6,677,527
TOTAL SHORT-TERM SECURITIES - 4.30%			$	15,932,152
(Cost: $15,932,152)
TOTAL INVESTMENT SECURITIES - 99.88%			$	370,409,922
(Cost: $301,850,110)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.12%				459,171
NET ASSETS - 100.00%			$	370,869,093

Notes to Schedule of Investments

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

*No dividends were paid during the preceding 12 months.

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

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2006, the total value of these securities amounted to $5,527,867or 1.49% of net assets.

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

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

Statement of Assets and Liabilities
     IVY EUROPEAN OPPORTUNITIES FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $301,850) (Notes 1 and 3)	$	370,410
Receivables:
Fund shares sold		1,233
Dividends and interest		471
Investment securities sold		428
Prepaid and other assets		40
Total assets		372,582
LIABILITIES
Payable to Fund shareholders		714
Accrued management fee (Note 2)		285
Due to custodian		231
Accrued service fee (Note 2)		131
Accrued shareholder servicing (Note 2)		125
Accrued distribution fee (Note 2)		57
Payable for investment securities purchased		52
Accrued accounting services fee (Note 2)		8
Accrued administrative fee (Note 2)		3
Other		107
Total liabilities		1,713
Total net assets	$	370,869
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	316,440
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		3,091
Accumulated undistributed net realized loss on investment transactions		(17,222	)
Net unrealized appreciation in value of investments		68,560
Net assets applicable to outstanding units of capital	$	370,869
Net asset value per share (net assets divided by shares outstanding):
Class A		$34.18
Class B		$32.85
Class C		$32.98
Class Y		$34.23
Advisor Class		$34.57
Capital shares outstanding:
Class A		7,931
Class B		1,284
Class C		1,556
Class Y		124
Advisor Class		60

See Notes to Financial Statements.

Statement of Operations
     IVY EUROPEAN OPPORTUNITIES FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $706)	$	5,856
Interest and amortization		380
Total income		6,236
Expenses (Note 2):
Accounting services fee		40
Administrative fee		17
Audit fees		22
Custodian fees		60
Distribution fee:
Class A		14
Class B		160
Class C		191
Class Y		–	*
Investment management fee		1,681
Service fee:
Class A		301
Class B		56
Class C		67
Class Y		5
Shareholder servicing:
Class A		409
Class B		71
Class C		68
Class Y		4
Advisor Class		1
Other		107
Total expenses		3,274
Net investment income		2,962
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		14,361
Realized net gain on foreign currency transactions		155
Realized net gain on investments		14,516
Unrealized depreciation in value of investments during the period	(11,921		)
Net gain on investments		2,595
Net increase in net assets resulting from operations	$	5,557

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	2,962		$	503
Realized net gain on investments			14,516			28,234
Unrealized appreciation (depreciation)			(11,921	)		24,816
Net increase in net assets resulting                       from operations			5,557			53,553
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(–	)		(1,364	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(28	)
Advisor Class			(–	)		(36	)
Realized gains on investment transactions:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
Advisor Class			(–	)		(–	)
			(–	)		(1,428	)
Capital share transactions (Note 5)			29,377			20,922
Total increase			34,934			73,047
NET ASSETS
Beginning of period			335,935			262,888
End of period		$	370,869		$	335,935
Undistributed net investment income (loss)		$	3,091		$	(26	)

(1)See "Financial Highlights" on pages 82 - 86.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	33.58		$	28.31		$	22.30		$	19.89		$	13.20		$	13.65		$	17.25
Income (loss) from       investment       operations:
Net investment             income (loss)			0.29			0.10			(0.03	)		(0.03	)		0.02			0.01	(1)		(0.08	)
Net realized and             unrealized gain             (loss) on             investments			0.31			5.37			6.05			2.44			6.71			(0.46	) (2)		(3.49	)(2)
Total from investment       operations			0.60			5.47			6.02			2.41			6.73			(0.45	)		(3.57	)
Less distributions from:
Net investment             income			(0.00	)		(0.20	)		(0.01	)		(0.00	)		(0.04	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.03	)
Total distributions			(0.00	)		(0.20	)		(0.01	)		(0.00	)		(0.04	)		(0.00	)		(0.03	)
Net asset value,       end of period		$	34.18		$	33.58		$	28.31		$	22.30		$	19.89		$	13.20		$	13.65
Total return(3)			1.79	%		19.41	%		27.02	%		12.12	%		51.02	%		- -3.30	%(2)	- -20.67		%(2)
Net assets,       end of period       (in millions)			$271			$235			$170			$79			$38			$20			$31
Ratio of expenses to       average net assets       including       reimbursement			1.68	%(4)		1.72	%		1.79	%		1.72	%(4)		2.26	%		2.15	%		2.15	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			1.85	%(4)		0.35	%		- -0.07	%		- -0.61	%(4)		0.18	%		0.06	%		- -0.44	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.68	%(4)(5)		1.72	%(5)		1.79	%(5)		1.72	%(4)(5)		2.26	%(5)		2.15	%(5)		2.17	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			1.85	%(4)(5)		0.35	%(5)		- -0.07	%(5)		- -0.61	%(4)(5)		0.18	%(5)		0.06	%(5)		- -0.46	%
Portfolio turnover rate			18	%		62	%		63	%		31	%		123	%		69	%		66	%

(1)Based on average shares outstanding.
(2)Includes redemption fees added to capital.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	32.40		$	27.32		$	21.66		$	19.36		$	12.93		$	13.54		$	17.26
Income (loss) from       investment       operations:
Net investment             income (loss)			0.19			(0.11	)		(0.17	)		(0.09	)		(0.07	)		(0.10	)(1)		(0.20	)
Net realized and             unrealized gain             (loss) on             investments			0.26			5.19			5.83			2.39			6.50			(0.51	)		(3.49	)
Total from             investment             operations			0.45			5.08			5.66			2.30			6.43			(0.61	)		(3.69	)
Less distributions from:
Net investment             income			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.03	)
Total distributions			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.03	)
Net asset value,       end of period		$	32.85		$	32.40		$	27.32		$	21.66		$	19.36		$	12.93		$	13.54
Total return			1.39	%		18.59	%		26.13	%		11.88	%		49.73	%	-4.51		%	- -21.35		%
Net assets,       end of period       (in millions)			$42			$44			$40			$32			$29			$25			$34
Ratio of expenses to       average net assets       including       reimbursement			2.45	%(2)		2.45	%		2.53	%		2.58	%(2)		3.00	%		2.92	%		2.89	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			1.18	%(2)		- -0.30	%		- -0.73	%		- -1.57	%(2)		- -0.47	%		- -0.70	%		- -1.18	%
Ratio of expenses to       average net assets       excluding       reimbursement			2.45	%(2)(3)		2.45	%(3)		2.53	%(3)		2.58	%(2)(3)		3.00	%(3)		2.92	%(3)		2.91	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			1.18	%(2)(3)		- -0.30	%(3)		- -0.73	%(3)		- -1.57	%(2)(3)		- -0.47	%(3)		- -0.70	%(3)		- -1.20	%
Portfolio turnover rate			18	%		62	%		63	%		31	%		123	%		69	%		66	%

(1)Based on average shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	32.52		$	27.42		$	21.74		$	19.43		$	12.98		$	13.59		$	17.32
Income (loss) from       investment       operations:
Net investment             income (loss)			0.20			(0.09	)		(0.14	)		(0.08	)		(0.07	)		(0.10	)(1)		(0.22	)
Net realized and             unrealized gain             (loss) on             investments			0.26			5.19			5.82			2.39			6.52			(0.51	)		(3.48	)
Total from investment       operations			0.46			5.10			5.68			2.31			6.45			(0.61	)		(3.70	)
Less distributions from:
Net investment       income			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.03	)
Total distributions			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.03	)
Net asset value,       end of period		$	32.98		$	32.52		$	27.42		$	21.74		$	19.43		$	12.98		$	13.59
Total return			1.44	%		18.60	%		26.13	%		11.89	%		49.69	%	-4.49		%	- -21.32		%
Net assets,       end of period       (in millions)			$52			$51			$45			$27			$23			$19			$25
Ratio of expenses to       average net assets       including       reimbursement			2.37	%(2)		2.42	%		2.51	%		2.56	%(2)		2.98	%		2.92	%		2.91	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			1.23	%(2)		- -0.29	%		- -0.79	%		- -1.54	%(2)		- -0.43	%		- -0.70	%		- -1.20	%
Ratio of expenses to       average net assets       excluding       reimbursement			2.37	%(2)(3)		2.42	%(3)		2.51	%(3)		2.56	%(2)(3)		2.98	%(3)		2.92	%(3)		2.93	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			1.23	%(2)(3)		- -0.29	%(3)		- -0.79	%(3)		- -1.54	%(2)(3)		- -0.43	%(3)		- -0.70	%(3)		- -1.22	%
Portfolio turnover rate			18	%		62	%		63	%		31	%		123	%		69	%		66	%

(1)Based on average shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended				For the period from 7-24-03(1) to
	9-30-06				2006			2005			3-31-04				12-31-03
Net asset value,       beginning of period		$	33.60		$	28.33		$	22.30			$	19.89		$	14.88
Income (loss) from       investment operations:
Net investment             income (loss)			0.36			0.18			0.09				(0.02	)		(0.04	)
Net realized and             unrealized gain             on investments			0.27			5.34			6.00				2.43			5.12
Total from investment       operations			0.63			5.52			6.09				2.41			5.08
Less distributions from:
Net investment income			(0.00	)		(0.25	)		(0.06	)			(0.00	)		(0.07	)
Capital gains			(0.00	)		(0.00	)		(0.00	)			(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.25	)		(0.06	)			(0.00	)		(0.07	)
Net asset value,       end of period		$	34.23		$	33.60		$	28.33			$	22.30		$	19.89
Total return			1.88	%		19.60	%		27.32	%			12.12	%		34.14	%
Net assets, end of period       (in millions)			$4			$4			$4				$4			$3
Ratio of expenses to       average net assets			1.48	%(2)		1.55	%		1.61	%			1.75	%(2)		1.51	%(2)
Ratio of net investment       income (loss) to       average net assets			2.15	%(2)		0.60	%		0.53	%			- -0.71	%(2)		- -0.58	%(2)
Portfolio turnover rate			18	%		62	%		63	%			31	%		123	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	33.88		$	28.55		$	22.48		$	20.03		$	13.34		$	13.80		$	17.39
Income (loss) from       investment       operations:
Net investment             income (loss)			0.71			0.35	(2)		0.21			(0.01	)		0.24			0.06	(2)		(0.02	)
Net realized and             unrealized gain             (loss) on             investments			(0.02	)		5.32	(2)		5.99			2.46			6.58			(0.52	)		(3.54	)
Total from investment       operations			0.69			5.67			6.20			2.45			6.82			(0.46	)		(3.56	)
Less distributions from:
Net investment             income			(0.00	)		(0.34	)		(0.13	)		(0.00	)		(0.13	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.03	)
Total distributions			(0.00	)		(0.34	)		(0.13	)		(0.00	)		(0.13	)		(0.00	)		(0.03	)
Net asset value,       end of period		$	34.57		$	33.88		$	28.55		$	22.48		$	20.03		$	13.34		$	13.80
Total return			2.04	%		20.00	%		27.64	%		12.23	%		51.12	%		- -3.33	%	- -20.44		%
Net assets,       end of period       (in millions)			$2			$2			$4			$4			$4			$6			$9
Ratio of expenses to       average net assets       including       reimbursement			1.23	%(3)		1.25	%		1.36	%		1.41	%(3)		1.96	%		1.81	%		1.72	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			2.50	%(3)		1.13	%		0.51	%		- -0.41	%(3)		1.02	%		0.40	%		0.00	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.23	%(3)(4)		1.25	%(4)		1.36	%(4)		1.41	%(3)(4)		1.96	%(4)		1.81	%(4)		1.74	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			2.50	%(3)(4)		1.13	%(4)		0.51	%(4)		- -0.41	%(3)(4)		1.02	%(4)		0.40	%(4)		- -0.02	%
Portfolio turnover rate			18	%		62	%		63	%		31	%		123	%		69	%		66	%

(1)See Note 5 to financial statements.
(2)Based on average shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF
IVY GLOBAL NATURAL RESOURCES FUND

Portfolio Highlights

On September 30, 2006, Ivy Global Natural Resources Fund had net assets totaling $3,946,862,021 invested in a diversified portfolio of:

44.93%	Foreign Common Stocks
38.45%	Domestic Common Stocks
16.62%	Cash and Cash Equivalents, Corporate Debt Security and Unrealized Gain       on Open Forward Currency Contracts

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006, your Fund was invested by country and by industry, respectively, as follows:

United States	$	38.45
Cash and Cash Equivalents, Corporate Debt Security and       Unrealized Gain on Open Forward Currency Contracts	$	16.62
Brazil	$	13.24
Canada	$	10.58
Cayman Islands	$	5.00
South Africa	$	3.51
Thailand	$	3.41
Europe	$	2.69
Other Pacific Basin	$	2.39
Other North America	$	2.10
Other	$	2.01

Raw Materials Stocks	$	35.36
Energy Stocks	$	31.13
Cash and Cash Equivalents, Corporate Debt Security and       Unrealized Gain on Open Forward Currency Contracts	$	16.62
Miscellaneous Stocks	$	9.24
Shelter Stocks	$	3.91
Capital Goods Stocks	$	3.74

The Investments of Ivy Global Natural Resources Fund
September 30, 2006
COMMON STOCKS			Shares		Value
Australia - 1.20%
Lihir Gold Limited (A)*		20,500,000		$	44,155,350
Sino Gold Limited (A)*			1,086,900		3,402,284
					47,557,634
Bermuda - 1.16%
China Gas Holdings Limited (A)	145,001,000				23,823,594
Tsakos Energy Navigation Limited			114,900		5,124,540
Weatherford International Ltd.*			400,000		16,688,000
					45,636,134
Brazil - 13.24%
Aracruz Celulose S.A., ADR			779,300		38,785,761
Arcelor Brasil S.A. (A)			700,000		12,307,869
Bradespar S.A. (A)			850,000		28,420,641
CPFL Energia S.A., ADR			250,000		9,607,500
Companhia de Saneamento Basico do Estado       de Sao Paulo - SABESP, ADR			850,000		25,585,000
Companhia Energetica de Minas Gerais - CEMIG, ADR			820,600		32,208,550
Companhia Siderurgica Nacional (A)			1,414,800		40,180,242
Companhia Siderurgica Nacional, ADR			1,800,000		51,174,000
Companhia Vale do Rio Doce, ADR			5,600,000		120,736,000
Companhia Vale do Rio Doce, Class A (A)			699,550		12,933,776
Cosan S.A. Industria e Comercio (A)*			995,000		16,131,054
Petroleo Brasileiro S.A. - Petrobras, ADR			225,000		18,861,750
Suzano Bahia Sul Papel E Celulose S.A. (A)	10,525,000				73,335,671
Votorantim Celulose e Papel S.A. (A)			750,000		12,676,494
Votorantim Celulose e Papel S.A., ADR			1,750,000		29,645,000
					522,589,308
Canada - 10.58%
Agnico-Eagle Mines Limited (A)			488,400		15,122,813
Barrick Gold Corporation (A)			5,000,000		153,567,435
Breaker Energy Ltd., Class A (A)*			2,300,000		12,346,231
Cambior Inc. (A)*	14,850,000				52,079,624
Canadian National Railway Company (A)			100,000		4,182,510
Crew Energy Inc. (A)*			1,050,000		11,141,132
Eldorado Gold Corporation (A)*			4,000,000		17,356,296
Ferus Gas Industries Trust (A)(B)(C)*			615,000		1,925,744
Highpine Oil & Gas Limited (A)*			400,000		6,080,072
IAMGOLD Corporation (A)			2,850,000		24,095,281
Kinross Gold Corporation (A)*			5,200,000		65,084,321
Pason Systems Inc. (A)			993,600		14,027,294
Pure Energy Services Ltd. (A)(B)*			481,500		6,526,258
Savanna Energy Services Corp. (A)*			500,000		8,186,088
Trican Well Service Ltd. (A)			1,200,000		20,215,612
zed.i solutions inc. (A)*			4,000,000		4,151,197
zed.i solutions inc. (A)(B)*			1,300,000		1,349,139
					417,437,047
Cayman Islands - 5.00%
Apex Silver Mines Limited*			2,492,500		41,525,050
Noble Corporation			2,100,000		134,778,000
Transocean Inc.*			290,000		21,236,700
					197,539,750
France - 0.26%
L'Air Liquide S.A. (A)*			50,000		10,201,494
Germany - 0.91%
Siemens AG (A)			175,000		15,269,588
Wacker Chemie AG (A)*			175,000		20,637,577
					35,907,165
Japan - 0.11%
Sumitomo Titanium Corporation (A)			36,000		4,281,905
Mexico - 2.10%
Cemex, S.A. de C.V., ADR*			2,750,000		82,720,000
Peru - 0.85%
Compania de Minas Buenaventura S.A.A., ADR			1,250,000		33,750,000
South Africa - 3.51%
Gold Fields Limited, ADR			6,000,000		107,040,000
Impala Platinum Holdings Limited (A)			139,500		23,014,925
Mvelaphanda Resources Limited (A)*			2,000,000		8,666,346
					138,721,271
South Korea - 1.08%
GS Holdings Corp. (A)			1,215,940		42,533,806
Thailand - 3.41%
Banpu Public Company Limited, Registered Shares (A)			3,292,800		12,797,785
PTT Public Company Limited (A)	13,200,000				75,900,439
Rayong Refinery Public Company Limited (A)*	15,000,000				7,626,780
Thai Oil Public Company Limited (A)	24,000,000				38,333,555
					134,658,559
United Kingdom - 1.52%
Randgold Resources Limited, ADR*			2,230,900		45,454,587
Titanium Resources Group Ltd. (A)*	12,404,200				14,399,453
					59,854,040
United States - 38.45%
Air Products and Chemicals, Inc.			1,900,000		126,103,000
Alpha Natural Resources, Inc.*			2,402,800		37,868,128
Applied Materials, Inc.			500,000		8,860,000
Arch Coal, Inc.			4,000,000		115,640,000
Atwood Oceanics, Inc.*			1,200,000		53,964,000
Aventine Renewable Energy Holdings, Inc.*			760,231		16,261,341
Avery Dennison Corporation			375,000		22,563,750
Baker Hughes Incorporated			1,150,000		78,430,000
Bunge Limited			1,100,000		63,745,000
CONSOL Energy Inc.			1,000,000		31,730,000
Cameron International Corporation*			850,000		41,063,500
Celanese Corporation, Series A			1,815,400		32,495,660
ConocoPhillips			500,000		29,765,000
Diamond Offshore Drilling, Inc.			1,000,000		72,370,000
Exxon Mobil Corporation			600,000		40,260,000
Foundation Coal Holdings, Inc.			1,000,000		32,370,000
GlobalSanteFe Corporation			1,500,000		74,985,000
Grant Prideco, Inc.*			1,113,700		42,354,011
Helmerich & Payne, Inc.			750,000		17,272,500
Hexcel Corporation*			2,000,000		28,300,000
Horizon Offshore, Inc.*			400,000		6,836,000
iShares Silver Trust*			150,000		17,176,500
MEMC Electronic Materials, Inc.*			1,000,000		36,630,000
Nalco Holdings LLC*			1,500,000		27,780,000
Peabody Energy Corporation			2,200,000		80,916,000
Praxair, Inc.			1,500,000		88,740,000
Rohm and Haas Company			1,100,000		52,085,000
Smith International, Inc.			2,400,000		93,120,000
streetTRACKS Gold Trust*			350,000		20,804,000
Valero Energy Corporation			2,000,000		102,940,000
VeraSun Energy Corporation*			1,500,000		24,075,000
					1,517,503,390
TOTAL COMMON STOCKS - 83.38%				$	3,290,891,503
(Cost: $2,966,790,614)

CORPORATE DEBT SECURITY - 0.13%		Principal Amount in Thousands
Brazil
Bahia Sul Celulose S.A.,
0.0%, 12-1-12 (B)(D)	BRL10,692			$	5,280,992
(Cost: $5,312,130)
UNREALIZED GAIN (LOSS) ON OPEN FORWARD CURRENCY CONTRACTS - 0.01%		Face Amount in Thousands
Brazilian Real, 10-18-06 (D)	BRL31,600				(532,783	)
Brazilian Real, 11-22-06 (D)			73,000		248,336
Canadian Dollar, 10-18-06 (D)	CAD168,500				(1,962,324	)
Canadian Dollar, 11-22-06 (D)			225,000		476,717
South African Rand, 10-18-06 (D)	ZAR124,440				928,655
South African Rand, 11-22-06 (D)			60,300		787,703
South African Rand, 12-13-06 (D)			70,000		627,788
				$	574,092

SHORT-TERM SECURITIES	Principal Amount in Thousands
Certificate of Deposit - 0.25%
Banks
Wells Fargo Bank, N.A.,
5.27%, 10-18-06	$	10,000	10,000,000
Commercial Paper
Banks - 1.03%
LaSalle Bank Corporation,
5.23%, 10-23-06		20,000	19,936,078
Rabobank USA Financial Corp. (Rabobank Nederland),
5.35%, 10-2-06		20,546	20,542,947
			40,479,025
Beverages - 1.18%
Anheuser-Busch Companies, Inc.,
5.3%, 10-2-06		15,000	14,997,792
Concentrate Manufacturing Company of            Ireland (The) (PepsiCo, Inc.),
5.25%, 10-12-06		31,500	31,449,469
			46,447,261

Capital Equipment - 0.63%
Caterpillar Financial Services Corp.,
5.19%, 10-2-06	25,000		24,996,396
Finance Companies - 1.33%
Ciesco, LLC,
5.35%, 10-2-06	8,520		8,518,734
Kitty Hawk Funding Corp.,
5.26%, 10-3-06	10,000		9,997,078
Preferred Receivables Funding Corp.,
5.27%, 10-25-06	10,000		9,964,867
Prudential Funding LLC,
5.23%, 10-  4-06	17,000		16,992,591
Three Pillars Funding LLC,
5.26%, 10-20-06	7,000		6,980,567
			52,453,837
Food and Related - 0.35%
Nestle Capital Corp.,
5.225%, 10-3-06	13,889		13,884,968
Forest and Paper Products - 1.01%
Kimberly-Clark Worldwide Inc.,
5.2%, 10-17-06	40,000		39,907,556
Health Care - Drugs - 1.14%
Alcon Capital Corporation (Nestle S.A.):
5.23%, 10-5-06	30,000		29,982,567
5.22%, 10-11-06	15,000		14,978,250
			44,960,817
Household - General Products - 0.77%
Colgate-Palmolive Company,
5.2%, 10-18-06	30,545		30,469,995
Mining - 0.25%
BHP Billiton Finance (USA) Limited            (BHP Billiton Limited),
5.27%, 10-11-06	10,000		9,985,361
Motor Vehicles- 0.17%
Harley-Davidson Funding Corp.,
5.21%, 10-26-06	7,000		6,974,674
Multiple Industry - 0.91%
Honeywell International Inc.,
5.26%, 10-3-06	16,000		15,995,324
Scripps (E.W.) Co.,
5.23%, 10-17-06	20,000		19,953,511
			35,948,835
Petroleum - International - 0.99%
Shell International Finance B.V. and Royal Dutch            Shell plc (Royal Dutch Shell plc):
5.22%, 10-3-06	25,000		24,992,750
5.21%, 10-30-06	13,900		13,841,663
			38,834,413
Publishing - 0.50%
Gannett Co., Inc.,
5.22%, 10-11-06	19,800		19,771,290
Retail - General Merchandise - 1.77%
Target Corporation,
5.21%, 10-10-06	15,000		14,980,462
Wal-Mart Stores, Inc.,
5.2%, 10-11-06	55,000		54,920,555
			69,901,017
Retail - Specialty Stores - 1.43%
Home Depot, Inc. (The):
5.36%, 10-2-06	38,217		38,211,310
5.21%, 10-18-06	18,057		18,012,575
			56,223,885
Security and Commodity Brokers - 1.23%
American Express Credit Corp.,
5.23%, 10-30-06	25,000		24,894,674
UBS Finance Delaware LLC (UBS AG),
5.34%, 10-2-06	23,647		23,643,492
			48,538,166
Trucking and Shipping - 0.38%
United Parcel Service Inc.,
5.18%, 10-13-06	15,000		14,974,100
Utilities - Telephone - 0.89%
BellSouth Corporation:
5.24%, 10-10-06	20,000		19,973,800
5.25%, 10-12-06	15,000		14,975,938
			34,949,738
Total Commercial Paper - 15.96%			629,701,334
Commercial Paper (backed by irrevocable       bank letter of credit)
Food and Related - 0.31%
COFCO Capital Corp. (Rabobank Nederland),
5.26%, 10-18-06	12,000		11,970,193
Multiple Industry - 0.30%
Louis Dreyfus Corporation (Barclays Bank            PLC, New York Branch),
5.27%, 10-20-06	12,000		11,966,623
Total Commercial Paper (backed by       irrevocable bank letter of credit) - 0.61%			23,936,816
Municipal Obligation - 0.06%
Kansas
City of Park City, Kansas, Taxable Industrial Revenue            Bonds (The Hayes Company, Inc.), Series 2001            (U.S. Bank, National Association),
5.4%, 10-2-06	2,445		2,445,000
TOTAL SHORT-TERM SECURITIES - 16.88%		$	666,083,150
(Cost: $666,083,150)
TOTAL INVESTMENT SECURITIES - 100.40%		$	3,962,829,737
(Cost: $3,638,185,894)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.40%)			(15,967,716	)
NET ASSETS - 100.00%		$	3,946,862,021

Notes to Schedule of Investments

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

*No dividends were paid during the preceding 12 months.

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

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2006, the total value of these securities amounted to $15,082,133 or 0.38% of net assets.

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

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

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

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

Statement of Assets and Liabilities
     IVY GLOBAL NATURAL RESOURCES FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $3,638,186) (Notes 1 and 3)	$	3,962,830
Cash		2,956
Cash denominated in foreign currencies (cost - $11,908)		12,249
Receivables:
Fund shares sold		14,696
Investment securities sold		8,745
Dividends and interest		5,313
Prepaid and other assets		126
Total assets		4,006,915
LIABILITIES
Payable for investment securities purchased		49,154
Payable to Fund shareholders		3,739
Accrued management fee (Note 2)		2,700
Accrued service fee (Note 2)		1,851
Accrued shareholder servicing (Note 2)		784
Accrued distribution fee (Note 2)		707
Accrued accounting services fee (Note 2)		14
Accrued administrative fee (Note 2)		8
Other		1,096
Total liabilities		60,053
Total net assets	$	3,946,862
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	3,144,955
Accumulated undistributed income:
Accumulated undistributed net investment income		20,419
Accumulated undistributed net realized gain on investment transactions		456,890
Net unrealized appreciation in value of investments		324,598
Net assets applicable to outstanding units of capital	$	3,946,862
Net asset value per share (net assets divided by shares outstanding):
Class A		$29.84
Class B		$28.18
Class C		$27.66
Class Y		$30.00
Class R		$29.77
Advisor Class		$29.67
Capital shares outstanding:
Class A		88,421
Class B		8,346
Class C		32,672
Class Y		5,620
Class R		28
Advisor Class		10

See Notes to Financial Statements.

Statement of Operations
     IVY GLOBAL NATURAL RESOURCES FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $1,823)	$	30,272
Interest and amortization		10,684
Total income		40,956
Expenses (Note 2):
Accounting services fee		84
Administrative fee		51
Audit fees		26
Custodian fees		337
Distribution fee:
Class A		137
Class B		899
Class C		3,376
Class Y		4
Class R		–	*
Investment management fee		16,210
Legal fees		9
Service fee:
Class A		3,118
Class B		313
Class C		1,125
Class Y		194
Class R		–	*
Shareholder servicing:
Class A		2,440
Class B		295
Class C		754
Class Y		121
Class R		–	*
Advisor Class		–	*
Other		790
Total		30,283
Less expenses in excess of voluntary limit (Note 2)		(68	)
Total expenses		30,215
Net investment income		10,741

REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities	$319,298
Realized net loss on forward currency contracts		(2,080	)
Realized net loss on foreign currency transactions		(726	)
Realized net gain on investments	316,492
Unrealized depreciation in value of securities during the period	(390,985		)
Unrealized depreciation in value of forward currency contracts            during the period		(2,578	)
Unrealized depreciation in value of foreign currency exchange            during the period		(152	)
Unrealized depreciation in value of investments during the period	(393,715		)
Net loss on investments		(77,223	)
Net decrease in net assets resulting from operations	$	(66,482	)

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	10,741		$	12,286
Realized net gain on investments			316,492			193,237
Unrealized appreciation (depreciation)			(393,715	)		598,047
Net increase (decrease) in net assets resulting                       from operations			(66,482	)		803,570
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
Class R			(–	)		(–	)
Advisor Class			(–	)		(–	)
Realized gains on investment transactions:
Class A			(–	)		(88,621	)
Class B			(–	)		(10,090	)
Class C			(–	)		(33,629	)
Class Y			(–	)		(3,474	)
Class R			(–	)		(–	)
Advisor Class			(–	)		(18	)
			(–	)		(135,832	)
Capital share transactions (Note 5)			529,819			1,476,705
Total increase			463,337			2,144,443
NET ASSETS
Beginning of period			3,483,525			1,339,082
End of period		$	3,946,862		$	3,483,525
Undistributed net investment income		$	20,419		$	10,404

(1)See "Financial Highlights" on pages 100 - 105.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	30.13		$	22.65		$	17.63		$	16.69		$	11.50		$	11.05		$	9.74
Income (loss) from       investment operations:
Net investment             income (loss)			0.10			0.12			(0.04	)		0.03			0.10			(0.11	)(1)		0.04	(1)
Net realized and             unrealized gain             (loss) on             investments			(0.39	)		8.88			5.06			0.91			5.14			0.63	(2)		1.45
Total from investment       operations			(0.29	)		9.00			5.02			0.94			5.24			0.52			1.49
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)*		(0.00	)		(0.05	)		(0.00	)		(0.18	)
Capital gains			(0.00	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.07	)		(0.00	)
Total distributions			(0.00	)		(1.52	)		(0.00	)*		(0.00	)		(0.05	)		(0.07	)		(0.18	)
Net asset value,       end of period		$	29.84		$	30.13		$	22.65		$	17.63		$	16.69		$	11.50		$	11.05
Total return(3)			- -0.96	%		40.76	%		28.50	%		5.63	%		45.61	%		4.66	%(2)		15.40	%
Net assets, end of period       (in millions)		$2,638			$2,343			$895			$192			$95			$17			$8
Ratio of expenses to       average net assets       including       reimbursement			1.34	%(4)		1.40	%		1.55	%		1.65	%(4)		1.89	%		2.22	%		2.25	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			0.76	%(4)		0.73	%		- -0.52	%		- -0.80	%(4)		- -0.66	%		- -0.91	%		0.38	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.34	%(4)(5)		1.40	%(5)		1.55	%(5)		1.65	%(4)(5)		1.89	%(5)		2.38	%		3.71	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			0.76	%(4)(5)		0.73	%(5)		- -0.52	%(5)		- -0.80	%(4)(5)		- -0.66	%(5)		- -1.07	%		- -1.08	%
Portfolio turnover rate			65	%		104	%		110	%		29	%		58	%		67	%		169	%

*Not shown due to rounding.

(1)Based on average shares outstanding.

(2)Includes redemption fees added to capital.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	28.57		$	21.72		$	17.04		$	16.16		$	11.19		$	10.81		$	9.56
Income (loss) from       investment operations:
Net investment             income (loss)			0.00			0.03			(0.04	)		(0.01	)		(0.06	)		(0.19	)(1)		(0.02	)(1)
Net realized and             unrealized gain             (loss) on             investments			(0.39	)		8.34			4.72			0.89			5.03			0.57			1.42
Total from investment       operations			(0.39	)		8.37			4.68			0.88			4.97			0.38			1.40
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.15	)
Capital gains			(0.00	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.15	)
Net asset value,       end of period		$	28.18		$	28.57		$	21.72		$	17.04		$	16.16		$	11.19		$	10.81
Total return			- -1.36	%		39.59	%		27.46	%		5.45	%		44.42	%		3.52	%		14.73	%
Net assets,       end of period       (in millions)		$235			$223			$110			$30			$21			$9			$5
Ratio of expenses to       average net assets       including       reimbursement			2.14	%(2)		2.23	%		2.39	%		2.42	%(2)		2.90	%		2.93	%		2.87	%
Ratio of net investment       loss to average net       assets including       reimbursement		- -0.04		%(2)		- -0.10	%		- -1.35	%		- -1.59	%(2)		- -1.54	%		- -1.62	%		- -0.24	%
Ratio of expenses to       average net assets       excluding       reimbursement			2.14	%(2)(3)		2.23	%(3)		2.39	%(3)		2.42	%(2)(3)		2.90	%(3)		3.09	%		4.33	%
Ratio of net investment       loss to average net       assets excluding       reimbursement		- -0.04		%(2)(3)		- -0.10	%(3)		- -1.35	%(3)		- -1.59	%(2)(3)		- -1.54	%(3)		- -1.78	%		- -1.70	%
Portfolio turnover rate			65	%		104	%		110	%		29	%		58	%		67	%		169	%

(1)Based on average shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	28.04		$	21.32		$	16.72		$	15.86		$	10.97		$	10.61		$	9.40
Income (loss) from       investment operations:
Net investment             income (loss)			0.01			0.02			(0.09	)		0.00			0.04			(0.18	)(1)		(0.02	)(1)
Net realized and             unrealized gain             (loss) on             investments			(0.39	)		8.22			4.69			0.86			4.85			0.55			1.39
Total from investment       operations			(0.38	)		8.24			4.60			0.86			4.89			0.37			1.37
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.16	)
Capital gains			(0.00	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.01	)		(0.00	)
Total distributions			(0.00	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.01	)		(0.16	)
Net asset value,       end of period		$	27.66		$	28.04		$	21.32		$	16.72		$	15.86		$	10.97		$	10.61
Total return			- -1.36	%		39.72	%		27.51	%		5.42	%		44.58	%		3.46	%		14.62	%
Net assets, end of period       (in millions)		$904			$801			$312			$64			$34			$5			$2
Ratio of expenses to       average net assets       including       reimbursement			2.07	%(2)		2.15	%		2.31	%		2.38	%(2)		2.65	%		2.94	%		2.86	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			0.03	%(2)		- -0.02	%		- -1.28	%		- -1.54	%(2)		- -1.48	%		- -1.64	%		- -0.23	%
Ratio of expenses to       average net assets       excluding       reimbursement			2.07	%(2)(3)		2.15	%(3)		2.31	%(3)		2.38	%(2)(3)		2.65	%(3)		3.10	%		4.32	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			0.03	%(2)(3)		- -0.02	%(3)		- -1.28	%(3)		- -1.54	%(2)(3)		- -1.48	%(3)		- -1.80	%		- -1.69	%
Portfolio turnover rate			65	%		104	%		110	%		29	%		58	%		67	%		169	%

(1)Based on average shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the period from 7-24-03(1) to
	9-30-06				2006			2005		3-31-04				12-31-03
Net asset value,       beginning of period		$	30.27		$	22.70		$	17.66		$	16.70			$	12.60
Income (loss) from       investment operations:
Net investment             income (loss)			0.14	(2)		0.24	(2)		(0.02	)		0.01				0.00
Net realized and             unrealized gain (loss)             on investments			(0.41	)(2)		8.85	(2)		5.13			0.95				4.16
Total from investment operations			(0.27	)		9.09			5.11			0.96				4.16
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.07	)		(0.00	)			(0.06	)
Capital gains			(0.00	)		(1.52	)		(0.00	)		(0.00	)			(0.00	)
Total distributions			(0.00	)		(1.52	)		(0.07	)		(0.00	)			(0.06	)
Net asset value, end of period		$	30.00		$	30.27		$	22.70		$	17.66			$	16.70
Total return			- -0.89	%		41.07	%		28.98	%		5.75	%			33.03	%
Net assets, end of period       (in millions)		$169			$116			$21			$4				$1
Ratio of expenses to average       net assets including       reimbursement			1.19	%(3)(4)		1.20	%(4)		1.20	%(4)		1.20	%(3)(4)			1.39	%(3)
Ratio of net investment income       (loss) to average net assets       including reimbursement			0.88	%(3)(4)		0.91	%(4)		- -0.19	%(4)		- -0.35	%(3)(4)			- -0.54	%(3)
Ratio of expenses to average       net assets excluding       reimbursement			1.28	%(3)(4)		1.35	%(4)		1.48	%(4)		1.63	%(3)(4)			1.39	%(3)(5)
Ratio of net investment income       (loss) to average net assets       excluding reimbursement			0.80	%(3)(4)		0.76	%(4)		- -0.47	%(4)		- -0.79	%(3)(4)			- -0.54	%(3)(5)
Portfolio turnover rate			65	%		104	%		110	%		29	%			58	%(6)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)See Note 2.
(5)There was no waiver of expenses during the period.
(6)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

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

	For the six months ended				For the period from 12-29-05(1) to
	9-30-06				3-31-06
Net asset value, beginning of period		$	30.10		$	26.11
Income (loss) from investment operations:
Net investment income (loss)			(0.03	)		0.06
Net realized and unrealized gain (loss)             on investments			(0.30	)		3.93
Total from investment operations			(0.33	)		3.99
Less distributions from:
Net investment income			(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.00	)
Net asset value, end of period		$	29.77		$	30.10
Total return			- -1.10	%		15.28	%
Net assets, end of period (in thousands)		$837			$115
Ratio of expenses to average net assets			1.65	%(2)		1.69	%(2)
Ratio of net investment income to average net assets			0.54	%(2)		0.82	%(2)
Portfolio turnover rate			65	%		104	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the fiscal year ended March 31, 2006.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	29.92		$	22.45		$	17.47		$	16.54		$	11.43		$	11.02		$	9.74
Income (loss) from       investment operations:
Net investment             income (loss)			0.17			0.13			(0.14	)		(0.03	)		(0.58	)		(0.07	)		0.09	(2)
Net realized and             unrealized gain             (loss) on             investments			(0.42	)		8.86			5.14			0.96			5.78			0.56			1.43
Total from investment       operations			(0.25	)		8.99			5.00			0.93			5.20			0.49			1.52
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.02	)		(0.00	)		(0.09	)		(0.00	)		(0.24	)
Capital gains			(0.00	)		(1.52	)		(0.00	)		(0.00	)		(0.00	)		(0.08	)		(0.00	)
Total distributions			(0.00	)		(1.52	)		(0.02	)		(0.00	)		(0.09	)		(0.08	)		(0.24	)
Net asset value,       end of period		$	29.67		$	29.92		$	22.45		$	17.47		$	16.54		$	11.43		$	11.02
Total return			- -0.84	%		41.09	%		28.63	%		5.62	%		45.55	%		4.46	%		15.71	%
Net assets, end of period       (in thousands)		$307			$368			$476			$512			$484			$570			$465
Ratio of expenses to       average net assets       including       reimbursement			1.02	%(3)		1.25	%		1.47	%		1.57	%(3)		2.19	%		1.82	%		1.78	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			1.08	%(3)		0.97	%		- -0.36	%		- -0.74	%(3)		- -0.41	%		- -0.51	%		0.85	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.02	%(3)(4)		1.25	%(4)		1.47	%(4)		1.57	%(3)(4)		2.19	%(4)		1.98	%		3.24	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			1.08	%(3)(4)		0.97	%(4)		- -0.36	%(4)		- -0.74	%(3)(4)		- -0.41	%(4)		- -0.67	%		- -0.61	%
Portfolio turnover rate			65	%		104	%		110	%		29	%		58	%		67	%		169	%

(1)See Note 5 to financial statements.
(2)Based on average shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY INTERNATIONAL FUND

Portfolio Highlights

On September 30, 2006, Ivy International Fund had net assets totaling $218,320,066 invested in a diversified portfolio of:

96.38%	Foreign Common Stocks
1.44%	Other Government Security
1.25%	Domestic Common Stocks
0.93%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006, your Fund was invested by country and by industry, respectively, as follows:

Japan	$	19.11
Germany	$	15.60
United Kingdom	$	13.21
France	$	12.02
Switzerland	$	10.56
Other Europe	$	7.74
Other	$	6.47
Italy	$	5.37
Ireland	$	4.20
Norway	$	2.52
Spain	$	2.27
Cash and Cash Equivalents	$	0.93

Financial Services Stocks	$	24.40
Capital Goods Stocks	$	11.96
Consumer Nondurables Stocks	$	11.08
Technology Stocks	$	9.45
Health Care Stocks	$	7.86
Utilities Stocks	$	7.69
Miscellaneous Stocks	$	7.00
Energy Stocks	$	5.39
Raw Materials Stocks	$	4.73
Consumer Durables Stocks	$	4.17
Business Equipment and Services Stocks	$	3.90
Other Government Security	$	1.44
Cash and Cash Equivalents	$	0.93

The Investments of Ivy International Fund
September 30, 2006
COMMON STOCKS		Shares		Value
Australia - 1.45%
Novogen LTD (A)*		474,580	$	1,092,948
QBE Insurance Group Limited (A)		113,000		2,063,365
				3,156,313
Belgium - 1.22%
InBev NV (A)		21,000		1,156,237
KBC Group NV (A)		14,300		1,505,960
				2,662,197
Brazil - 0.47%
Gol Linhas Aereas Inteligentes S.A., ADR		30,000		1,030,500
Canada - 1.82%
EnCana Corporation (A)		43,000		2,000,832
Shoppers Drug Mart Corporation (A)(B)		48,450		1,979,179
				3,980,011
China - 0.45%
China Mobile (Hong Kong) Limited (A)		140,000		989,263
Finland - 0.76%
Nokia OYJ (A)		84,500		1,677,978
France - 12.02%
ALSTOM (A)*		23,400		2,117,130
Cap Gemini SA (A)		25,500		1,352,589
Pernod Ricard (A)		11,650		2,424,221
Pinault-Printemps-Redoute SA (A)		10,450		1,549,061
Sanofi-Aventis (A)		12,800		1,139,423
SR.Teleperformance (A)(B)		50,000		1,864,039
STMicroelectronics N.V. (A)		84,700		1,468,215
TOTAL S.A. (A)		51,000		3,346,711
VINCI (A)		62,000		6,902,778
Vivendi Universal (A)		113,000		4,073,737
				26,237,904
Germany - 14.16%
Allianz Aktiengesellschaft, Registered Shares (A)		14,800		2,561,347
Commerzbank Aktiengesellschaft (A)		48,500		1,643,296
Continental Aktiengesellschaft (A)		17,000		1,974,829
E.ON AG (A)		20,000		2,376,587
elexis AG (A)		48,000		1,039,601
Fresenius AG (A)		7,530		1,343,944
Hypo Real Estate Holding AG (A)		28,000		1,746,161
Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft,       Registered Shares (A)		7,150		1,131,057
RWE Aktiengesellschaft (A)		28,300		2,614,290
SAP Aktiengesellschaft (A)		21,200		4,207,149
Salzgitter AG (A)		20,000		1,881,792
Siemens AG (A)		60,900		5,313,817
Vivacon AG (A)*		20,000		489,976
Wacker Chemie AG (A)*		22,000		2,594,438
				30,918,284
Greece - 1.90%
Bank of Cyprus Limited (A)		250,000		2,542,448
Piraeus Bank S.A. (A)		62,500		1,619,939
				4,162,387
Ireland - 4.20%
Anglo Irish Bank Corporation plc (Great Britain) (A)		280,000		4,601,514
Anglo Irish Bank Corporation plc (Ireland) (A)		145,000		2,381,088
CRH public limited company (A)		64,700		2,189,730
				9,172,332
Italy - 5.37%
Banca Intesa S.p.A. (A)		430,000		2,829,916
Banca Italease S.p.A. (A)		29,300		1,445,290
Banco Popolare di Verona e Novara S.c. a r.l. (A)		38,000		1,049,974
Saipem S.p.A. (A)		78,300		1,701,807
UniCredito Italiano S.p.A. (A)		567,001		4,705,775
				11,732,762
Japan - 19.11%
Astellas Pharma Inc. (A)		58,000		2,332,275
Canon Inc. (A)		79,200		4,130,133
Central Japan Railway Company (A)		210		2,240,000
Chubu Electric Power Company, Incorporated (A)		44,000		1,143,534
CREDIT SAISON CO., LTD. (A)		48,000		2,023,619
DENSO CORPORATION (A)		37,700		1,324,487
Hoya Corporation (A)		58,000		2,184,974
Japan Tobacco Inc. (A)		400		1,554,286
Kabushiki Kaisha Mitsubishi Tokyo Financial Group (A)		85		1,093,757
Mitsubishi Estate Co., Ltd. (A)		145,000		3,166,984
Mizuho Financial Group, Inc. (A)		510		3,954,794
SMC Corporation (A)		20,400		2,699,276
SUMCO Corporation (A)		30,000		2,222,222
Sega Sammy Holdings Inc. (A)		72,000		2,316,190
Shin-Etsu Chemical Co., Ltd. (A)*		28,500		1,819,175
Sumitomo Mitsui Financial Group, Inc. (A)		114		1,196,698
Tokyo Electric Power Company, Incorporated (The) (A)		42,000		1,208,889
Toyota Motor Corporation (A)		80,000		4,347,937
YAMADA-DENKI Co., Ltd. (A)		7,500		751,746
				41,710,976
Korea - 1.03%
Samsung Electronics Co., Ltd. (A)		3,200		2,245,495
Luxembourg - 0.83%
Tenaris S.A., ADR		51,000		1,804,380
Netherlands - 0.53%
Euronext N.V. (A)		12,000		1,166,356
Norway - 2.52%
Acergy S.A. (A)*		87,000		1,486,302
Orkla ASA (A)		45,000		2,140,854
Statoil ASA (A)		79,000		1,867,090
				5,494,246
Russia - 1.50%
OAO LUKOIL, ADR		43,500		3,284,250
Spain - 2.27%
Enagas, S.A. (A)		159,000		3,852,969
Telefonica, S.A. (A)		63,000		1,092,061
				4,945,030
Sweden - 1.00 %
Telefonaktiebolaget LM Ericsson, B Shares (A)		628,000		2,176,702
Switzerland - 10.56%
Compagnie Financiere Richemont SA (A)		30,100		1,449,094
Credit Suisse Group, Registered Shares (A)		56,800		3,286,401
Holcim Ltd, Registered Shares (A)		32,700		2,672,590
Nestle S.A., Registered Shares (A)		14,680		5,118,541
Novartis AG, Registered Shares (A)		113,400		6,620,177
UBS AG (A)		20,800		1,244,224
Zurich Financial Services, Registered Shares (A)		10,800		2,653,685
				23,044,712
United Kingdom - 13.21%
BAE SYSTEMS plc (A)		285,000		2,109,125
BHP Billiton Plc (A)		129,200		2,230,381
Barclays PLC (A)		141,000		1,779,363
British American Tobacco p.l.c. (A)		170,000		4,596,229
Cadbury Schweppes plc (A)		107,000		1,138,937
Diageo plc (A)		56,000		989,272
GlaxoSmithKline plc (A)		174,000		4,632,702
IG Group Holdings plc (A)(B)		272,000		1,319,029
Reckitt Benckiser plc (A)		87,500		3,627,198
Royal Bank of Scotland Group plc (The) (A)		119,600		4,118,115
Vodafone Group Plc (A)	1,000,000			2,288,940
				28,829,291
United States -1.25%
Research In Motion Limited*		14,250		1,463,119
Schlumberger Limited		20,400		1,265,412
				2,728,531
TOTAL COMMON STOCKS - 97.63%			$	213,149,900
(Cost: $173,010,238)

OTHER GOVERNMENT SECURITY - 1.44%		Principal Amount in Thousands
Germany
German Treasury Bill,
0.0%, 1-17-07 (C)	EUR2,500			$	3,140,949
(Cost: $3,164,092)
SHORT-TERM SECURITY - 1.05%
Security and Commodity Brokers
UBS Finance Delaware LLC (UBS AG),
5.34%, 10-2-06		$	2,289	$	2,288,660
(Cost: $2,288,660)
TOTAL INVESTMENT SECURITIES - 100.12%				$	218,579,509
(Cost: $178,462,990)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.12%)					(259,443	)
NET ASSETS - 100.00%				$	218,320,066

Notes to Schedule of Investments

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

*No dividends were paid during the preceding 12 months.

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

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2006, the total value of these securities amounted to $5,162,247 or 2.36% of net assets.

(C)Principal amounts are denominated in the indicated foreign currency, where applicable (EUR = Euro).

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 FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $178,463) (Notes 1 and 3)	$	218,580
Receivables:
Dividends and interest		681
Fund shares sold		95
Prepaid and other assets		33
Total assets		219,389
LIABILITIES
Payable to Fund shareholders		547
Accrued management fee (Note 2)		152
Accrued service fee (Note 2)		84
Accrued shareholder servicing (Note 2)		84
Accrued distribution fee (Note 2)		40
Due to custodian		18
Accrued accounting services fee (Note 2)		6
Accrued administrative fee (Note 2)		2
Other		136
Total liabilities		1,069
Total net assets	$	218,320
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	463,058
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		650
Accumulated undistributed net realized loss
on investment transactions	(285,523		)
Net unrealized appreciation in value of investments		40,135
Net assets applicable to outstanding units of capital	$	218,320
Net asset value per share (net assets divided by shares outstanding):
Class A		$30.11
Class B		$27.76
Class C		$27.70
Class Y		$30.11
Advisor Class		$28.83
Class I		$30.49
Capital shares outstanding:
Class A		4,943
Class B		420
Class C		1,920
Class Y		145
Advisor Class		–	*
Class I		9

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Operations
     IVY INTERNATIONAL FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $289)	$	2,568
Interest and amortization		219
Total income		2,787
Expenses (Note 2):
Accounting services fee		36
Administrative fee		11
Audit fees		34
Custodian fees		90
Distribution fee:
Class A		7
Class B		46
Class C		204
Class Y		–	*
Investment management fee		952
Service fee:
Class A		158
Class B		15
Class C		68
Class Y		7
Shareholder servicing:
Class A		177
Class B		34
Class C		154
Class Y		6
Advisor Class		–	*
Class I		–	*
Other		75
Total expenses		2,074
Net investment income		713
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		20,505
Realized net gain on foreign currency transactions		3
Realized net gain on investments		20,508
Unrealized depreciation in value of investments during the period	(19,319		)
Net gain on investments		1,189
Net increase in net assets resulting from operations	$	1,902

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30, 2006				For the fiscal year ended March 31, 2006
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income		$	713		$	212
Realized net gain on investments			20,508			21,213
Unrealized appreciation (depreciation)			(19,319	)		19,510
Net increase in net assets resulting                       from operations			1,902			40,935
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(–	)		(831	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(3	)
Advisor Class			(–	)		(–	)
Class I			(–	)		(2	)
Realized gains on investment transactions:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
Advisor Class			(–	)		(–	)
Class I			(–	)		(–	)
			(–	)		(836	)
Capital share transactions (Note 5)			(14,679	)		41,908
Total increase (decrease)			(12,777	)		82,007
NET ASSETS
Beginning of period			231,097			149,090
End of period		$	218,320		$	231,097
Undistributed net investment income (loss)		$	650		$	(66	)

(1)See "Financial Highlights" on pages 115 - 120.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	29.74		$	22.86		$	21.34		$	20.64		$	16.35		$	20.69		$	26.20
Income (loss) from       investment operations:
Net investment             income (loss)			0.16			0.08			(0.02	)		(0.01	)		(0.02	)		0.06	(1)		0.05
Net realized and             unrealized gain             (loss) on             investments			0.21			6.97			1.54			0.71			4.31			(4.40	)(2)		(5.56	)
Total from investment       operations			0.37			7.05			1.52			0.70			4.29			(4.34	)		(5.51	)
Less distributions from:
Net investment             income			(0.00	)		(0.17	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.17	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value,       end of period		$	30.11		$	29.74		$	22.86		$	21.34		$	20.64		$	16.35		$	20.69
Total return(3)			1.28	%		30.92	%		7.12	%		3.39	%		26.24	%	- -20.96		%(2)	- -21.03		%
Net assets, end of period       (in millions)		$149			$156			$122			$125			$124			$127			$345
Ratio of expenses to       average net assets       including       reimbursement			1.52	%(4)		1.59	%		1.61	%		1.69	%(4)		1.81	%		1.89	%		1.60	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			0.97	%(4)		0.25	%		- -0.15	%		- -0.26	%(4)		- -0.07	%		0.32	%		0.18	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.52	%(4)(5)		1.59	%(5)		1.61	%(5)		1.69	%(4)(5)		1.81	%(5)		1.89	%(5)		1.66	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			0.97	%(4)(5)		0.25	%(5)		- -0.15	%(5)		- -0.26	%(4)(5)		- -0.07	%(5)		0.32	%(5)		0.12	%
Portfolio turnover rate			46	%		75	%		76	%		27	%		136	%		34	%		43	%

(1)Based on average weekly shares outstanding.
(2)Includes redemption fees added to capital.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	27.58		$	21.30		$	20.12		$	19.52		$	15.62		$	20.03		$	25.64
Income (loss) from       investment operations:
Net investment loss			(0.02	)(1)		(0.17	)(1)		(0.22	)(1)		(0.07	)		(0.23	)		(0.12	)(1)		(0.21	)
Net realized and             unrealized gain             (loss) on             investments			0.20	(1)		6.45	(1)		1.40	(1)		0.67			4.13			(4.29	)		(5.40	)
Total from investment       operations			0.18			6.28			1.18			0.60			3.90			(4.41	)		(5.61	)
Less distributions from:
Net investment             income			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value,       end of period		$	27.76		$	27.58		$	21.30		$	20.12		$	19.52		$	15.62		$	20.03
Total return			0.65	%		29.48	%		5.87	%		3.08	%		24.97	%	- -22.00		%	- -21.88		%
Net assets, end of period       (in millions)		$12			$13			$17			$49			$55			$68			$137
Ratio of expenses to       average net assets       including       reimbursement			2.67	%(2)		2.74	%		2.75	%		2.75	%(2)		2.84	%		2.85	%		2.54	%
Ratio of net investment       loss to average net       assets including       reimbursement			- -0.18	%(2)		- -0.72	%		- -1.09	%		- -1.35	%(2)		- -1.06	%		- -0.64	%		- -0.76	%
Ratio of expenses to       average net assets       excluding       reimbursement			2.67	%(2)(3)		2.74	%(3)		2.75	%(3)		2.75	%(2)(3)		2.84	%(3)		2.85	%(3)		2.60	%
Ratio of net investment       loss to average net       assets excluding       reimbursement			- -0.18	%(2)(3)		- -0.72	%(3)		- -1.09	%(3)		- -1.35	%(2)(3)		- -1.06	%(3)		- -0.64	%(3)		- -0.82	%
Portfolio turnover rate			46	%		75	%		76	%		27	%		136	%		34	%		43	%

(1)Based on average weekly shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	27.52		$	21.20		$	20.00		$	19.39		$	15.52		$	19.90		$	25.46
Income (loss) from       investment operations:
Net investment loss			(0.02	)		(0.09	)(1)		(0.32	)		(0.07	)		(0.20	)		(0.11	)(1)		(0.21	)
Net realized and             unrealized gain             (loss) on             investments			0.20			6.41	(1)		1.52			0.68			4.07			(4.27	)		(5.35	)
Total from investment       operations			0.18			6.32			1.20			0.61			3.87			(4.38	)		(5.56	)
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value,       end of period		$	27.70		$	27.52		$	21.20		$	20.00		$	19.39		$	15.52		$	19.90
Total return			0.65	%		29.81	%		6.00	%		3.15	%		24.94	%	- -22.00		%	- -21.84		%
Net assets, end of period       (in millions)		$53			$56			$9			$11			$12			$14			$26
Ratio of expenses to       average net assets       including       reimbursement			2.64	%(2)		2.43	%		2.64	%		2.67	%(2)		2.80	%		2.83	%		2.54	%
Ratio of net investment       loss to average net       assets including       reimbursement			- -0.16	%(2)		- -0.39	%		- -1.14	%		- -1.25	%(2)		- -0.94	%		- -0.62	%		- -0.76	%
Ratio of expenses to       average net assets       excluding       reimbursement			2.64	%(2)(3)		2.43	%(3)		2.64	%(3)		2.67	%(2)(3)		2.80	%(3)		2.83	%(3)		2.60	%
Ratio of net investment       loss to average net       assets excluding       reimbursement			- -0.16	%(2)(3)		- -0.39	%(3)		- -1.14	%(3)		- -1.25	%(2)(3)		- -0.94	%(3)		- -0.62	%(3)		- -0.82	%
Portfolio turnover rate			46	%		75	%		76	%		27	%		136	%		34	%		43	%

(1)Based on average weekly shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended				For the period from 7-24-03(1) to
	9-30-06				2006			2005			3-31-04				12-31-03
Net asset value,       beginning of period		$	29.74		$	22.86		$	21.35			$	20.65			$	17.69
Income (loss) from       investment operations:
Net investment             income (loss)			0.25			0.18	(2)		(0.09	)			(0.02	)			0.02
Net realized and unrealized             gain on investments			0.12			6.87	(2)		1.60				0.72				2.94
Total from investment operations			0.37			7.05			1.51				0.70				2.96
Less distributions from:
Net investment income			(0.00	)		(0.17	)		(0.00	)			(0.00	)			(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)			(0.00	)			(0.00	)
Total distributions			(0.00	)		(0.17	)		(0.00	)			(0.00	)			(0.00	)
Net asset value, end of period		$	30.11		$	29.74		$	22.86			$	21.35			$	20.65
Total return			1.25	%		30.95	%		7.07	%			3.39	%			16.73	%
Net assets, end of period       (in thousands)		$4,354			$6,144			$229				$140				$135
Ratio of expenses to       average net assets			1.53	%(3)		1.58	%		1.66	%			1.76	%(3)			0.59	%(3)
Ratio of net investment income       (loss) to average net assets			1.07	%(3)		0.81	%		- -0.33	%			- -0.32	%(3)			0.24	%(3)
Portfolio turnover rate			46	%		75	%		76	%			27	%			136	%(4)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003		2002(2)				2001
Net asset value,       beginning of period		$	28.96		$	22.84		$	21.66		$	21.00		$	16.85		$	20.67		$	26.25
Income (loss) from       investment operations:
Net investment             income (loss)			(0.33	)		(0.75	)		(0.38	)		(0.08	)		(1.00	)		(0.24	)		0.01
Net realized and             unrealized gain             (loss) on             investments			0.20			6.87			1.56			0.74			5.15			(3.58	)		(5.59	)
Total from investment       operations			(0.13	)		6.12			1.18			0.66			4.15			(3.82	)		(5.58	)
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value,       end of period		$	28.83		$	28.96		$	22.84		$	21.66		$	21.00		$	16.85		$	20.67
Total return			- -0.42	%		26.80	%		5.45	%		3.14	%		25.00	%	- -18.71		%	- -21.26		%
Net assets, end of period       (in thousands)		$1			$1			$1			$1			$1			$2			$5
Ratio of expenses to       average net assets       including       reimbursement			4.73	%(3)		4.71	%		3.11	%		2.35	%(3)		2.72	%		3.46	%		1.69	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			- -2.36	%(3)		- -3.03	%		- -1.75	%		- -1.58	%(3)		- -0.98	%		- -1.24	%		0.09	%
Ratio of expenses to       average net assets       excluding       reimbursement			4.73	%(3)(4)		4.71	%(4)		3.11	%(4)		2.35	%(3)(4)		2.72	%(4)		3.46	%(4)		1.75	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			- -2.36	%(3)(4)		- -3.03	%(4)		- -1.75	%(4)		- -1.58	%(3)(4)		- -0.98	%(4)		- -1.24	%(4)		0.03	%
Portfolio turnover rate			46	%		75	%		76	%		27	%		136	%		34	%		43	%

(1)See Note 5 to financial statements.
(2)Advisor Class Shares were outstanding for the period from 1-1-02 through 6-11-02 and from 7-3-02 through 12-31-02.
(3)Annualized.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	30.07		$	23.13		$	21.58		$	20.86		$	16.48		$	20.85		$	26.35
Income (loss) from       investment operations:
Net investment             income (loss)			0.33			0.15	(2)		0.29			(0.00	)		(0.08	)		0.14	(2)		0.15
Net realized and             unrealized gain             (loss) on             investments			0.09			7.02	(2)		1.26			0.72			4.46			(4.51	)		(5.65	)
Total from investment       operations			0.42			7.17			1.55			0.72			4.38			(4.37	)		(5.50	)
Less distributions from:
Net investment income			(0.00	)		(0.23	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.23	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net asset value,       end of period		$	30.49		$	30.07		$	23.13		$	21.58		$	20.86		$	16.48		$	20.85
Total return			1.43	%		31.12	%		7.18	%		3.45	%		26.58	%	- -20.95		%	- -20.87		%
Net assets, end of period       (in thousands)		$263			$299			$345			$669			$684			$1,304		$17,062
Ratio of expenses to       average net assets       including       reimbursement			1.22	%(3)		1.39	%		1.47	%		1.38	%(3)		1.66	%		1.51	%		1.24	%
Ratio of net investment       income to average       net assets including       reimbursement			1.27	%(3)		0.51	%		0.20	%		0.04	%(3)		0.06	%		0.70	%		0.54	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.22	%(3)(4)		1.39	%(4)		1.47	%(4)		1.38	%(3)(4)		1.66	%(4)		1.51	%(4)		1.30	%
Ratio of net investment       income to average net       assets excluding       reimbursement			1.27	%(3)(4)		0.51	%(4)		0.20	%(4)		0.04	%(3)(4)		0.06	%(4)		0.70	%(4)		0.48	%
Portfolio turnover rate			46	%		75	%		76	%		27	%		136	%		34	%		43	%

(1)See Note 5 to financial statements.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY INTERNATIONAL BALANCED FUND

Portfolio Highlights

On September 30, 2006, Ivy International Balanced Fund had net assets totaling $172,866,836 invested in a diversified portfolio of:

66.06%	Foreign Common Stocks
23.40%	Other Government Securities
5.89%	Cash and Cash Equivalents
4.65%	Corporate Debt Security

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006, your Fund was invested by country and by industry, respectively, as follows:

United Kingdom	$	18.56
Germany	$	8.27
South Korea	$	5.97
Cash and Cash Equivalents	$	5.89
France	$	5.85
Other	$	5.52
Other Pacific Basin	$	5.09
Norway	$	4.52
Canada	$	4.45
Other Europe	$	4.44
Netherlands	$	4.37
Singapore	$	4.18
Sweden	$	4.11
Spain	$	3.54
Taiwan	$	3.46
Poland	$	2.95
Japan	$	2.52
Finland	$	2.22
Switzerland	$	2.12
Italy	$	1.97

Other Government Securities	$	23.40
Financial Services Stocks	$	14.83
Utilities Stocks	$	11.24
Cash and Cash Equivalents	$	5.89
Consumer Services Stocks	$	4.97
Technology Stocks	$	4.68
Corporate Debt Security	$	4.65
Miscellaneous Stocks	$	4.54
Energy Stocks	$	4.39
Retail Stocks	$	4.09
Capital Goods Stocks	$	3.43
Consumer Nondurables Stocks	$	3.34
Shelter Stocks	$	3.27
Consumer Durables Stocks	$	2.65
Health Care Stocks	$	2.45
Business Equipment and Services Stocks	$	2.18

The Investments of Ivy International Balanced Fund
September 30, 2006
COMMON STOCKS		Shares			Value
Australia - 1.35%
National Australia Bank Limited (A)			54,242	$	1,483,657
Qantas Airways Limited (A)			238,698		695,596
Qantas Airways Limited (A)(B)			54,528		158,901
					2,338,154
Belgium - 1.52%
Agfa-Gevaert N.V. (A)			53,270		1,263,171
Belgacom SA (A)			35,110		1,368,587
					2,631,758
Bermuda - 1.15%
ACE Limited			22,750		1,245,108
XL Capital Ltd, Class A			10,870		746,769
					1,991,877
Canada - 1.14%
Barrick Gold Corporation (A)			17,500		537,486
Domtar Inc. (A)			156,610		919,134
Quebecor World Inc. (A)			50,200		523,221
					1,979,841
China - 0.64%
China Telecom Corporation Limited (A)	2,700,000				977,325
China Telecom Corporation Limited (A)(B)			360,000		130,310
					1,107,635
Denmark - 1.38%
Vestas Wind Systems A/S (A)*			89,660		2,394,053
Finland - 1.66%
Stora Enso Oyj, Class R (A)			70,140		1,063,738
UPM-Kymmene Corporation (A)			76,130		1,809,102
					2,872,840
France - 5.85%
AXA S.A. (A)			49,520		1,826,050
France Telecom (A)			123,814		2,841,751
Sanofi-Aventis (A)			22,948		2,042,771
THOMSON (A)			134,500		2,113,155
TOTAL S.A. (A)			19,680		1,291,437
					10,115,164
Germany - 3.49%
Deutsche Post AG (A)			70,260		1,842,453
E.ON AG (A)			5,810		690,398
Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft,       Registered Shares (A)			13,690		2,165,617
Siemens AG (A)			15,270		1,332,381
					6,030,849
Hong Kong - 1.22%
Hutchison Whampoa Limited, Ordinary Shares (A)			239,000		2,110,633
Israel - 1.16%
Check Point Software Technologies Ltd.*			105,440		2,009,159
Italy - 1.97%
Eni S.p.A. (A)			52,440		1,554,029
Mediaset S.p.A. (A)			171,865		1,846,991
					3,401,020
Japan - 2.52%
KDDI CORPORATION (A)			196		1,221,215
Konica Minolta Holdings, Inc. (A)			76,500		1,024,533
Sony Corporation (A)*			25,900		1,048,059
Takeda Pharmaceutical Company Limited (A)			16,900		1,054,417
					4,348,224
Netherlands - 4.37%
Akzo Nobel N.V. (A)			16,030		987,481
ING Groep N.V., Certicaaten Van Aandelen (A)			56,890		2,502,522
Koninklijke Philips Electronics N.V., Ordinary Shares (A)			40,460		1,419,622
Reed Elsevier NV (A)			158,290		2,639,471
					7,549,096
Norway - 2.31%
Norske Skogindustrier ASA (A)			124,071		1,864,892
Telenor ASA (A)			163,300		2,129,260
					3,994,152
Portugal - 0.24%
Portugal Telecom, SGPS, S.A., Ordinary Shares (A)			33,040		412,681
Singapore - 1.84%
DBS Group Holdings Ltd (A)			33,000		398,930
Flextronics International Ltd.*			78,020		985,003
Venture Corporation Limited (A)			226,000		1,792,917
					3,176,850
South Korea - 3.29%
KT Corporation, ADR			48,730		1,046,233
Kookmin Bank, ADR*			16,440		1,282,813
POSCO, ADR			9,340		606,446
SK Telecom Co., Ltd., ADR (A)			41,000		968,830
Samsung Electronics Co., Ltd. (A)			530		371,910
Samsung Electronics Co., Ltd., GDR (B)			4,010		1,407,510
					5,683,742
Spain - 3.28%
Gamesa Corporacion Tecnologica, S.A. (A)			53,110		1,163,745
Iberdrola, S.A. (A)			17,743		794,218
Repsol YPF, S.A. (A)			70,566		2,100,131
Telefonica, S.A., ADR			30,685		1,589,790
Telefonica, S.A., Brazilian Depositary Receipts (A)			569		9,761
					5,657,645
Sweden - 1.54%
Nordea Bank AB, Finnish Depositary Receipts (A)			89,560		1,175,418
Securitas AB, Class B (A)			78,750		988,653
Securitas Direct AB, Class B (A)*			78,750		197,731
Securitas Systems AB, Class B (A)*			78,750		295,521
					2,657,323
Switzerland - 2.12%
Lonza Group Ltd, Registered Shares (A)			5,800		401,679
Nestle S.A., Registered Shares (A)			4,100		1,429,565
Swiss Reinsurance Company, Registered Shares (A)			23,920		1,830,656
					3,661,900
Taiwan - 3.46%
Chunghwa Telecom Co., Ltd., ADR			124,989		2,163,553
Compal Electronics Inc., GDR			54,799		242,557
Compal Electronics Inc., GDR (B)			133,829		592,367
Lite-On Technology Corporation, GDR			103,504		1,277,477
Mega Financial Holding Company (A)	2,404,000				1,703,265
					5,979,219
United Kingdom - 18.56%
AMVESCAP PLC (A)			26,400		286,693
Alliance Boots plc (A)			61,929		898,635
Aviva plc (A)			114,650		1,680,821
BAE SYSTEMS plc (A)			93,350		690,831
BBA Group plc (A)			206,090		1,027,382
BP p.l.c. (A)			156,820		1,708,874
British Sky Broadcasting Group plc (A)			230,870		2,360,183
Cadbury Schweppes plc (A)			72,900		775,968
Compass Group PLC (A)			740,110		3,717,248
GlaxoSmithKline plc (A)			42,970		1,144,064
Group 4 Securicor plc (A)			549,350		1,738,287
HSBC Holdings plc (A)			75,570		1,378,849
Old Mutual plc (A)			661,240		2,073,765
Pearson plc (A)			86,110		1,226,135
Rentokil Initial plc (A)			376,520		1,032,788
Royal Bank of Scotland Group plc (The) (A)			75,290		2,592,415
Royal Dutch Shell plc, Class B (A)			27,641		938,290
tesco plc (A)			157,950		1,064,652
Unilever PLC (A)			52,092		1,284,524
Vodafone Group Plc (A)	1,279,188				2,927,984
Vodafone Group Plc, ADR			6,590		150,647
Wm MORRISON SUPERMARKETS PLC (A)			304,810		1,388,250
					32,087,285
TOTAL COMMON STOCKS - 66.06%				$	114,191,100
(Cost: $94,333,748)

CORPORATE DEBT SECURITY - 4.65%		Principal Amount in Thousands
Germany
KfW, Frankfurt am Main,
0.201%, 8-8-11 (C)	JPY950,000			$	8,046,985
(Cost: $8,289,643)
OTHER GOVERNMENT SECURITIES
Australia - 0.53%
Queensland Treasury Corporation:
6.0%, 8-14-13 (C)	AUD1,200				904,480
6.0%, 10-14-15 (C)			10		7,588
					912,068
Austria - 0.32%
Republic of Austria:
5.5%, 10-20-07 (C)	EUR360				465,022
4.0%, 7-15-09 (C)			70		89,675
					554,697
Belgium - 0.40%
Belgium Government Bond:
7.5%, 7-29-08 (C)			405		547,891
5.0%, 9-28-12 (C)			100		135,883
					683,774
Canada - 3.31%
Canadian Government Bond:
3.25%, 12-1-06 (C)	CAD4,210				3,760,657
7.0%, 12-1-06 (C)			330		296,517
4.5%, 9-1-07 (C)			1,040		934,023
6.0%, 6-1-11 (C)			748		728,694
					5,719,891

Finland - 0.56%
Finland Government Bond:
3.0%, 7-4-08 (C)	EUR400				502,403
5.0%, 4-25-09 (C)			60		78,670
5.75%, 2-23-11 (C)			280		385,341
					966,414
Germany - 0.13%
Deutsche Bundesrepublik,
5.0%, 7-4-11 (C)			170		228,391
Ireland - 0.43%
Ireland Government Bond,
5.0%, 4-18-13 (C)			540		738,242
New Zealand - 0.15%
New Zealand Government Bond,
6.0%, 11-15-11 (C)	NZD410				265,709
Norway - 2.21%
Norway Government Bond,
6.75%, 1-15-07 (C)	NOK17,135				2,648,078
Norway Treasury Bill,
0.0%, 6-20-07 (C)			7,800		1,166,736
					3,814,814
Poland - 2.95%
Poland Government Bond:
8.5%, 11-12-06 (C)	PLN2,410				773,172
8.5%, 5-12-07 (C)			5,300		1,733,086
6.0%, 5-24-09 (C)			4,275		1,393,146
6.25%, 10-24-15 (C)			3,250		1,091,976
5.75%, 9-23-22 (C)			320		101,660
					5,093,040
Singapore - 2.34%
Singapore Government Bond,
2.625%, 10-1-07 (C)	SGD6,450				4,046,454
South Korea - 2.68%
South Korea Treasury Bond:
4.75%, 3-3-07 (C)	KRW2,300,000				2,432,040
3.75%, 9-10-07 (C)	1,100,000				1,153,438
4.5%, 9-9-08 (C)	1,000,000				1,054,271
					4,639,749
Spain - 0.26%
Spain Government Bond,
6.0%, 1-31-08 (C)	EUR350				457,293
Supranational - 3.21%
European Investment Bank,
2.125%, 9-20-07 (C)	JPY645,000				5,544,712
Sweden - 2.57%
Sweden Government Bond:
8.0%, 8-15-07 (C)	SEK24,480				3,477,171
6.5%, 5-5-08 (C)			4,400		629,245
Sweden Treasury Bill,
0.0%, 6-20-07 (C)	2,500				334,510
					4,440,926
Thailand - 1.35%
Thailand Government Bond,
8.0%, 12-8-06 (C)	THB41,250				1,103,768
Thailand Treasury Bills:
0.0%, 10-5-06 (C)	16,300				433,740
0.0%, 3-8-07 (C)			4,100		107,083
0.0%, 5-3-07 (C)			27,000		698,360
					2,342,951
TOTAL OTHER GOVERNMENT SECURITIES - 23.40%				$	40,449,125
(Cost: $38,012,658)
SHORT-TERM SECURITIES
Commercial Paper
Banks - 3.01%
Rabobank USA Financial Corp. (Rabobank Nederland),
5.35%, 10-2-06		$5,198			5,197,228
Food and Related - 1.73%
General Mills, Inc.,
5.3%, 10-2-06			3,000		2,999,558
Total Commercial Paper - 4.74%					8,196,786

Commercial Paper (backed by irrevocable       bank letter of credit)
Multiple Industry - 1.73%
Louis Dreyfus Corporation (Barclays Bank PLC,            New York Branch),
5.27%, 10-20-06	$	3,000		2,991,656
Food and Related - 1.16%
COFCO Capital Corp. (Rabobank Nederland),
5.27%, 10-18-06		2,000		1,995,023
Total Commercial Paper (backed by irrevocable       bank letter of credit) - 2.89%				4,986,679
TOTAL SHORT-TERM SECURITIES - 7.63%			$	13,183,465
(Cost: $13,183,465)
TOTAL INVESTMENT SECURITIES - 101.74%			$	175,870,675
(Cost: $153,819,514)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.74%)				(3,003,839	)
NET ASSETS - 100.00%			$	172,866,836

Notes to Schedule of Investments

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

*No dividends were paid during the preceding 12 months.

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

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2006, the total value of these securities amounted to $2,289,088 or 1.32% of net assets.

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

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

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

Statement of Assets and Liabilities
     IVY INTERNATIONAL BALANCED FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $153,820) (Notes 1 and 3)	$	175,871
Cash		7
Cash denominated in foreign currencies (cost - $275)		277
Receivables:
Dividends and interest		1,124
Fund shares sold		901
Investment securities sold		624
Prepaid and other assets		26
Total assets		178,830
LIABILITIES
Payable for investment securities purchased		5,529
Payable to Fund shareholders		146
Accrued management fee (Note 2)		96
Accrued shareholder servicing (Note 2)		50
Accrued service fee (Note 2)		48
Accrued distribution fee (Note 2)		13
Accrued accounting services fee (Note 2)		6
Other		75
Total liabilities		5,963
��    Total net assets	$	172,867
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	143,556
Accumulated undistributed income:
Accumulated undistributed net investment income		1,669
Accumulated undistributed net realized gain on                 investment transactions		5,571
Net unrealized appreciation in value of investments		22,071
Net assets applicable to outstanding units of capital	$	172,867
Net asset value per share (net assets divided by shares outstanding):
Class A		$15.81
Class B		$15.76
Class C		$15.78
Class Y		$15.81
Capital shares outstanding:
Class A		9,355
Class B		495
Class C		1,043
Class Y		46

See Notes to Financial Statements.

Statement of Operations
     IVY INTERNATIONAL BALANCED FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $222)	$	1,717
Interest and amortization		894
Total income		2,611
Expenses (Note 2):
Accounting services fee		33
Audit fees		15
Custodian fees		33
Distribution fee:
Class A		9
Class B		24
Class C		42
Investment management fee		512
Legal fees		1
Service fee:
Class A		151
Class B		8
Class C		14
Class Y		1
Shareholder servicing:
Class A		189
Class B		19
Class C		18
Class Y		1
Other		64
Total expenses		1,134
Net investment income		1,477
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		2,091
Realized net gain on foreign currency transactions		1,407
Realized net gain on investments		3,498
Unrealized appreciation in value of investments during the period		3,102
Net gain on investments		6,600
Net increase in net assets resulting from operations	$	8,077

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	1,477		$	2,184
Realized net gain on investments			3,498			7,222
Unrealized appreciation			3,102			2,100
Net increase in net assets resulting                       from operations			8,077			11,506
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(1,741	)		(2,545	)
Class B			(52	)		(62	)
Class C			(107	)		(125	)
Class Y			(10	)		(14	)
Realized gains on investment transactions:
Class A			(–	)		(3,892	)
Class B			(–	)		(186	)
Class C			(–	)		(309	)
Class Y			(–	)		(19	)
			(1,910	)		(7,152	)
Capital share transactions (Note 5)			38,834			18,804
Total increase			45,001			23,158
NET ASSETS
Beginning of period			127,866			104,708
End of period		$	172,867		$	127,866
Undistributed net investment income		$	1,669		$	695

(1)See "Financial Highlights" on pages 133 - 136.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended September 30,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	15.15		$	14.63		$	13.07		$	11.33		$	8.72		$	9.28		$	11.59
Income (loss) from       investment operations:
Net investment income			0.15			0.29			0.22			0.09			0.21			0.18			0.18
Net realized and             unrealized gain             (loss) on             investments			0.72			1.14			1.69			1.83			2.40		(0.59		)		(1.28	)
Total from investment       operations			0.87			1.43			1.91			1.92			2.61		(0.41		)		(1.10	)
Less distributions from:
Net investment income			(0.21	)		(0.36	)		(0.28	)		(0.18	)		(0.00	)	(0.00		)		(0.11	)
Capital gains			(0.00	)		(0.55	)		(0.07	)		(0.00	)		(0.00	)	(0.13		)		(1.10	)
Tax return of capital			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)	(0.02		)		(0.00	)
Total distributions			(0.21	)		(0.91	)		(0.35	)		(0.18	)		(0.00	)	(0.15		)		(1.21	)
Net asset value,       end of period		$	15.81		$	15.15		$	14.63		$	13.07		$	11.33		$	8.72		$	9.28
Total return(1)			5.80	%		10.14	%		14.81	%		17.05	%		29.93	%	-4.62		%	- -10.57		%
Net assets, end of period       (in millions)			$148			$112			$97			$60			$46			$36			$40
Ratio of expenses to       average net assets       including       reimbursement			1.44	%(2)		1.45	%		1.42	%		1.54	%(2)(3)		1.67	%		1.62	%		1.62	%
Ratio of net investment       income to average       net assets including       reimbursement			2.13	%(2)		1.94	%		1.71	%		1.43	%(2)(3)		2.06	%		1.84	%		1.60	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.44	%(2)(4)		1.45	%(4)		1.42	%(4)		1.60	%(2)(3)		1.71	%		1.72	%		1.73	%
Ratio of net investment       income to average       net assets excluding       reimbursement			2.13	%(2)(4)		1.94	%(4)		1.71	%(4)		1.37	%(2)(3)		2.02	%		1.74	%		1.49	%
Portfolio turnover rate			16	%		27	%		16	%		15	%		39	%		48	%		36	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.
(2)Annualized.
(3)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from October 1, 2003 up to the time of merger. Actual expenses that applied to Class A shareholders were lower than shown above.
(4)There is no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	15.11		$	14.59		$	13.04		$	12.34
Income from investment operations:
Net investment income			0.07			0.08			0.03	(2)		0.19
Net realized and unrealized             gain on investments			0.71			1.18			1.70	(2)		0.69
Total from investment operations			0.78			1.26			1.73			0.88
Less distributions from:
Net investment income			(0.13	)		(0.19	)		(0.11	)		(0.18	)
Capital gains			(0.00	)		(0.55	)		(0.07	)		(0.00	)
Total distributions			(0.13	)		(0.74	)		(0.18	)		(0.18	)
Net asset value, end of period		$	15.76		$	15.11		$	14.59		$	13.04
Total return			5.20	%		8.93	%		13.37	%		7.18	%
Net assets, end of period (in thousands)		$	7,808		$	5,548		$	3,049			$225
Ratio of expenses to average net assets			2.51	%(3)		2.59	%		2.64	%		3.01	%(3)
Ratio of net investment income       to average net assets			1.05	%(3)		0.73	%		0.20	%		1.09	%(3)
Portfolio turnover rate			16	%		27	%		16	%		15	%(4)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)For the six months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	15.12		$	14.60		$	13.04		$	12.34
Income from investment operations:
Net investment income			0.09			0.11			0.07	(2)		0.19
Net realized and unrealized             gain on investments			0.72			1.19			1.69	(2)		0.69
Total from investment operations			0.81			1.30			1.76			0.88
Less distributions from:
Net investment income			(0.15	)		(0.23	)		(0.13	)		(0.18	)
Capital gains			(0.00	)		(0.55	)		(0.07	)		(0.00	)
Total distributions			(0.15	)		(0.78	)		(0.20	)		(0.18	)
Net asset value, end of period		$	15.78		$	15.12		$	14.60		$	13.04
Total return			5.40	%		9.21	%		13.58	%		7.18	%
Net assets, end of period (in thousands)	$16,458				$9,422			$3,968				$307
Ratio of expenses to average net assets			2.24	%(3)		2.29	%		2.44	%		2.86	%(3)
Ratio of net investment income       to average net assets			1.28	%(3)		0.98	%		0.44	%		1.13	%(3)
Portfolio turnover rate			16	%		27	%		16	%		15	%(4)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)For the six months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value,       beginning of period		$	15.15		$	14.63		$	13.07		$	12.34
Income from investment operations:
Net investment income			0.17			0.29	(2)		0.24	(2)		0.21
Net realized and unrealized             gain on investments			0.70			1.14	(2)		1.67	(2)		0.70
Total from investment operations			0.87			1.43			1.91			0.91
Less distributions from:
Net investment income			(0.21	)		(0.36	)		(0.28	)		(0.18	)
Capital gains			(0.00	)		(0.55	)		(0.07	)		(0.00	)
Total distributions			(0.21	)		(0.91	)		(0.35	)		(0.18	)
Net asset value, end of period		$	15.81		$	15.15		$	14.63		$	13.07
Total return			5.83	%		10.18	%		14.84	%		7.47	%
Net assets, end of period (in thousands)			$725			$662			$397			$185
Ratio of expenses to average net assets			1.38	%(3)		1.41	%		1.40	%		1.79	%(3)
Ratio of net investment income       to average net assets			2.29	%(3)		1.99	%		1.72	%		2.00	%(3)
Portfolio turnover rate			16	%		27	%		16	%		15	%(4)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)For the six months ended March 31, 2004.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY INTERNATIONAL VALUE FUND

Portfolio Highlights

On September 30, 2006, Ivy International Value Fund had net assets totaling $138,842,070 invested in a diversified portfolio of:

93.84%	Foreign Common Stocks
4.38%	Cash and Cash Equivalents
1.78%	Other Government Securities

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006, your Fund was invested by country and by industry, respectively, as follows:

Japan	$	23.48
United Kingdom	$	16.70
France	$	15.51
Germany	$	8.07
Switzerland	$	5.29
Cash and Cash Equivalents	$	4.38
Other Pacific Basin	$	4.29
Other Europe	$	4.19
Australia	$	3.65
Norway	$	3.08
Other	$	2.94
Belgium	$	2.60
Ireland	$	2.18
Netherlands	$	1.89
Italy	$	1.75

Financial Services Stocks	$	30.28
Capital Goods Stocks	$	10.58
Utilities Stocks	$	10.11
Consumer Nondurables Stocks	$	8.66
Consumer Durables Stocks	$	7.16
Technology Stocks	$	5.31
Energy Stocks	$	5.24
Cash and Cash Equivalents	$	4.38
Transportation Stocks	$	3.75
Miscellaneous Stocks	$	3.71
Consumer Services Stocks	$	2.49
Shelter Stocks	$	2.33
Multi-Industry Stocks	$	2.22
Raw Materials Stocks	$	2.00
Other Government Securities	$	1.78

The Investments of Ivy International Value Fund
September 30, 2006
COMMON STOCKS		Shares			Value
Australia - 3.65%
Foster's Group Limited (A)			300,000	$	1,439,921
Metcash Limited (A)			396,660		1,283,039
National Australia Bank Limited (A)			47,210		1,291,314
Rio Tinto Limited (A)			20,020		1,045,957
					5,060,231
Belgium - 2.60%
Almancora Comm. VA (A)			12,250		1,584,433
Fortis (A)			50,000		2,028,886
					3,613,319
Brazil - 0.87%
Petroleo Brasileiro S.A. - Petrobras, ADR			14,460		1,212,182
Canada - 1.76%
EnCana Corporation (A)			23,550		1,095,804
Petro-Canada (A)			33,400		1,344,964
					2,440,768
Cayman Islands - 0.31%
Actions Semiconductor Co., Ltd.*			51,200		435,712
Finland - 1.26%
Nokia Corporation, Series A, ADR			89,060		1,753,591
France - 15.51%
ALSTOM (A)*			12,270		1,110,136
BNP Paribas (A)			27,190		2,925,491
Compagnie de Saint-Gobain (A)			16,480		1,195,339
Compagnie Generale des Etablissements Michelin, Class B (A)			24,850		1,821,344
France Telecom (A)			75,700		1,737,449
Natexis Banques Populaires (A)			5,000		1,384,715
SUEZ (A)			28,640		1,259,476
Sanofi-Aventis (A)			17,632		1,569,555
Technip-Coflexip (A)			22,590		1,283,884
TOTAL S.A. (A)			37,090		2,433,912
VINCI (A)			12,190		1,357,175
Vivendi Universal (A)			95,940		3,458,711
					21,537,187
German - 6.90%
Commerzbank Aktiengesellschaft (A)			81,550		2,763,110
Deutsche Bank AG (A)			17,100		2,069,278
E.ON AG (A)			17,740		2,108,032
Infineon Technologies AG, ADR*			63,780		754,517
Siemens AG (A)			21,550		1,880,341
					9,575,278
Hong Kong - 1.35%
Agile Property Holdings Limited (A)(B)		1,478,000			1,202,791
Cheung Kong (Holdings) Limited (A)			63,000		676,445
					1,879,236
Ireland - 2.18%
Allied Irish Banks, p.l.c. (A)			45,710		1,215,479
Irish Life & Permanent plc (A)			72,120		1,807,092
					3,022,571
Italy - 1.75%
UniCredito Italiano S.p.A. (A)			291,860		2,422,267
Japan - 23.48%
Central Japan Railway Company (A)			187		1,994,667
Chubu Electric Power Company, Incorporated (A)			134,400		3,492,978
Daiwa Securities Group Inc. (A)			169,000		1,971,488
DENSO CORPORATION (A)			44,500		1,563,386
Hitachi Transport System, Ltd. (A)			131,500		1,285,778
JFE Holdings, Inc. (A)			19,900		779,996
Kurita Water Industries Ltd. (A)*			71,000		1,376,423
Matsushita Electric Industrial Co., Ltd. (A)*			61,000		1,291,005
Mitsubishi Corporation (A)			48,500		911,492
Mitsubishi Estate Co., Ltd. (A)			62,000		1,354,159
Mizuho Financial Group, Inc. (A)			240		1,861,079
NTT DoCoMo, Inc. (A)			840		1,294,222
Nissan Motor Co., Ltd. (A)*			126,500		1,416,800
Nissin Kogyo Co., Ltd. (A)*			30,900		690,590
Sega Sammy Holdings Inc. (A)			42,900		1,380,063
SHIMA SEIKI MFG., Ltd. (A)			21,000		487,111
Shimachu Co., Ltd. (A)*			45,000		1,321,905
Shimizu Corporation (A)			289,000		1,651,429
Sumitomo Metal Industries, Ltd. (A)			193,000		740,140
Sumitomo Mitsui Financial Group, Inc. (A)			190		1,994,497
Sumitomo Mitsui Financial Group, Inc. (A)(B)			29		304,423
Tokyo Electric Power Company, Incorporated (The) (A)			45,800		1,318,265
Toyota Motor Corporation (A)			39,000		2,119,619
					32,601,515
Netherlands - 1.89%
Koninklijke Philips Electronics N.V., Ordinary Shares (A)			36,600		1,284,186
TNT N.V. (A)			35,120		1,332,014
					2,616,200
New Zealand - 0.96%
Fletcher Building Limited (A)			237,830		1,332,094
Norway - 3.08%
Cermaq ASA (A)(B)			81,600		875,188
Orkla ASA (A)			34,300		1,631,807
Songa Offshore ASA (A)*			74,860		587,837
Statoil ASA (A)			50,000		1,181,703
					4,276,535
South Korea - 2.32%
Hynix Semiconductor Inc. (A)*			34,630		1,365,072
Korea Exchange Bank (A)*			83,500		1,067,741
Kyeryong Construction Industrial Co. Ltd (A)			20,000		789,432
					3,222,245
Spain - 1.11%
Tecnicas Reunidas, S.A. (A)(B)*			50,500		1,545,846
Sweden - 0.86%
Telefonaktiebolaget LM Ericsson, ADR			34,600		1,192,143
Switzerland - 5.29%
Credit Suisse Group, Registered Shares (A)			36,360		2,103,759
Nestle S.A., Registered Shares (A)			5,770		2,011,852
Swiss Reinsurance Company, Registered Shares (A)			17,740		1,357,686
Zurich Financial Services, Registered Shares (A)			7,640		1,877,236
					7,350,533
Taiwan - 0.62%
Himax Technologies, Inc., ADR*			149,380		853,707
United Kingdom - 16.09%
BAE SYSTEMS plc (A)			228,920		1,694,108
Barclays PLC (A)			218,160		2,753,091
British American Tobacco p.l.c. (A)			70,970		1,918,790
Cadbury Schweppes plc (A)			152,280		1,620,910
Diageo plc (A)			70,570		1,246,659
HSBC Holdings plc (A)			73,450		1,340,168
Old Mutual plc (A)			372,070		1,166,877
Prudential plc (A)			143,720		1,785,434
Royal Bank of Scotland Group plc (The) (A)			64,620		2,225,022
Smiths Group plc (A)			69,390		1,164,750
Vodafone Group Plc (A)		1,232,179			2,820,383
WPP Group plc (A)			108,490		1,344,724
Xstrata plc (A)			30,560		1,262,819
					22,343,735
TOTAL COMMON STOCKS - 93.84%				$	130,286,895
(Cost: $119,976,035)
OTHER GOVERNMENT SECURITIES		Principal Amount in Thousands
Germany - 1.17%
Bundesschatzanweisungen Federal Treasury Notes,
2.0%, 6-15-07 (C)	EUR1,300				1,631,029
United Kingdom - 0.61%
United Kingdom Treasury,
4.5%, 3-7-07 (C)		GBP450			840,922
OTHER GOVERNMENT SECURITIES - 1.78%				$	2,471,951
(Cost: $2,455,697)

SHORT-TERM SECURITIES
Commercial Paper - 3.03%
Security and Commodity Brokers
UBS Finance Delaware LLC (UBS AG),
5.34%, 10-2-06	$	4,217		4,216,375
Commercial Paper (backed by irrevocable       bank letter of credit) - 1.44%
Multiple Industry
Louis Dreyfus Corporation (Barclays Bank PLC,            New York Branch),
5.26%, 10-18-06		2,000		1,995,032
TOTAL SHORT-TERM SECURITIES - 4.47%			$	6,211,407
(Cost: $6,211,407)
TOTAL INVESTMENT SECURITIES - 100.09%			$	138,970,253
(Cost: $128,643,139)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.09%)				(128,183	)
NET ASSETS - 100.00%			$	138,842,070

Notes to Schedule of Investments

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

*No dividends were paid during the preceding 12 months.

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

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2006, the total value of these securities amounted to $3,928,248 or 2.83% of total net assets.

(C)Principal amounts are denominated in the indicated foreign currency, where applicable (EUR - Euro, GBP - Great Britain Pound)

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 VALUE FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $128,643) (Notes 1 and 3)	$	138,970
Receivables:
Investment securities sold		1,254
Fund shares sold		914
Dividends and interest		409
Prepaid and other assets		31
Total assets		141,578
LIABILITIES
Payable for investment securities purchased		2,008
Payable to Fund shareholders		453
Accrued management fee (Note 2)		93
Accrued service fee (Note 2)		45
Accrued shareholder servicing (Note 2)		38
Due to custodian		29
Accrued distribution fee (Note 2)		21
Accrued accounting services fee (Note 2)		4
Accrued administrative fee (Note 2)		1
Other		44
Total liabilities		2,736
Total net assets	$	138,842
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	120,567
Accumulated undistributed income:
Accumulated undistributed net investment income		633
Accumulated undistributed net realized gain on                 investment transactions		7,315
Net unrealized appreciation in value of investments		10,327
Net assets applicable to outstanding units of capital	$	138,842
Net asset value per share (net assets divided by shares outstanding):
Class A		$16.14
Class B		$14.99
Class C		$14.97
Class Y		$16.20
Advisor Class		$16.07
Capital shares outstanding:
Class A		6,284
Class B		921
Class C		1,475
Class Y		96
Advisor Class		–	*

*Not shown due to rounding.

See Notes to Financial Statements.

Statement of Operations
     IVY INTERNATIONAL VALUE FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $217)	$	1,578
Interest and amortization		154
Total income		1,732
Expenses (Note 2):
Accounting services fee		27
Administrative fee		6
Audit fees		21
Custodian fees		25
Distribution fee:
Class A		4
Class B		50
Class C		67
Investment management fee		497
Legal fees		–	*
Service fee:
Class A		101
Class B		18
Class C		22
Class Y		2
Shareholder servicing:
Class A		113
Class B		18
Class C		24
Class Y		2
Advisor Class		–	*
Other		63
Total expenses		1,060
Net investment income		672
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities	10,617
Realized net loss on foreign currency transactions		(30	)
Realized net gain on investments	10,587
Unrealized depreciation in value of investments during the period	(8,280		)
Net gain on investments		2,307
Net increase in net assets resulting from operations	$	2,979

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)		$	672		$	(57	)
Realized net gain on investments			10,587			8,135
Unrealized appreciation (depreciation)			(8,280	)		11,320
Net increase in net assets resulting                       from operations			2,979			19,398
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
Advisor Class			(–	)		(–	)
Realized gains on investment transactions:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
Advisor Class			(–	)		(–	)
			(–	)		(–	)
Capital share transactions (Note 5)			37,463			34,858
Total increase			40,442			54,256
NET ASSETS
Beginning of period			98,400			44,144
End of period		$	138,842		$	98,400
Undistributed net investment income (loss)		$	633		$	(9	)

(1)See "Financial Highlights" on pages 147 - 151.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	15.73		$	11.61		$	10.14		$	9.73		$	7.65		$	9.10		$	11.01
Income (loss) from       investment operations:
Net investment             income (loss)			0.11	(1)		(0.06	)		(0.02	)		(0.01	)	(0.02		)		0.08	(1)		0.07
Net realized and             unrealized gain             (loss) on             investments			0.30	(1)		4.18			1.49			0.42			2.10		(1.53		)(1)	(1.96		)(2)
Total from investment       operations			0.41			4.12			1.47			0.41			2.08		(1.45		)	(1.89		)
Less distributions from:
Net investment             income			(0.00	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.02		)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)
Total distributions			(0.00	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.02		)
Net asset value,       end of period		$	16.14		$	15.73		$	11.61		$	10.14		$	9.73		$	7.65		$	9.10
Total return(3)			2.61	%		35.49	%		14.50	%		4.21	%	27.19		%	- -15.93		%(2)	- -17.17		%(2)
Net assets, end of       period (in millions)			$101			$67			$17			$10			$9			$8		$	$13
Ratio of expenses to       average net       assets including       reimbursement			1.60	%(4)		1.82	%		1.99	%		2.16	%(4)		2.28	%		1.77	%		1.77	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			1.34	%(4)		0.14	%		0.09	%		- -0.41	%(4)	- -0.19		%		0.91	%		0.58	%
Ratio of expenses to      average net       assets excluding       reimbursement			1.60	%(4)(5)		1.82	%(5)		1.99	%(5)		2.16	%(4)(5)		2.28	%(5)		2.32	%		2.15	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			1.34	%(4)(5)		0.14	%(5)		0.09	%(5)		- -0.41	%(4)(5)	- -0.19		%(5)		0.36	%		0.20	%
Portfolio turnover rate			53	%		90	%		106	%		23	%		148	%		48	%		39	%

(1)Based on average weekly shares outstanding.
(2)Includes redemption fees added to capital.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003				2002			2001
Net asset value,       beginning of period		$	14.67		$	10.91		$	9.60		$	9.24		$	7.32			$	8.97		$	10.94
Income (loss) from       investment operations:
Net investment             income (loss)			0.05	(1)		(0.12	)		(0.08	)	(0.03		)	(0.08		)			0.01	(1)		(0.02	)
Net realized and             unrealized gain             (loss) on             investments			0.27	(1)		3.88			1.39			0.39			2.00			(1.66		)(1)		(1.93	)
Total from investment       operations			0.32			3.76			1.31			0.36			1.92			(1.65		)		(1.95	)
Less distributions from:
Net investment             income			(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)		(0.02	)
Capital gains			(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)		(0.00	)
Total distributions			(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)		(0.02	)
Net asset value,       end of period		$	14.99		$	14.67		$	10.91		$	9.60		$	9.24			$	7.32		$	8.97
Total return			2.18	%		34.46	%		13.65	%		3.90	%	26.23		%	- -18.39			%	- -17.84		%
Net assets, end of       period (in millions)			$14			$15			$20			$24			$25				$28			$46
Ratio of expenses to       average net assets       including       reimbursement			2.37	%(2)		2.62	%		2.76	%		2.91	%(2)		2.95	%			2.50	%		2.50	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			0.69	%(2)		- -0.41	%		- -0.58	%	- -1.20		%(2)	- -0.82		%			0.18	%		- -0.15	%
Ratio of expenses       to average net       assets excluding       reimbursement			2.37	%(2)(3)		2.62	%(3)		2.76	%(3)		2.91	%(2)(3)		2.95	%(3)			3.05	%		2.88	%
Ratio of net investment       income (loss) to       average net assets       excluding ��     reimbursement			0.69	%(2)(3)		- -0.41	%(3)		- -0.58	%(3)	- -1.20		%(2)(3)	- -0.82		%(3)		- -0.37		%		- -0.53	%
Portfolio turnover rate			53	%		90	%		106	%		23	%		148	%			48	%		39	%

(1)Based on average weekly shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003				2002			2001
Net asset value,       beginning of period		$	14.65		$	10.90		$	9.59		$	9.23		$	7.32			$	8.97		$	10.94
Income (loss) from       investment operations:
Net investment             income (loss)			0.04	(1)		(0.02	)		(0.07	)	(0.03		)	(0.08		)			0.01	(1)		(0.02	)
Net realized and             unrealized gain             (loss) on             investments			0.28	(1)		3.77			1.38			0.39			1.99			(1.66		)(1)		(1.93	)
Total from investment       operations			0.32			3.75			1.31			0.36			1.91			(1.65		)		(1.95	)
Less distributions from:
Net investment             income			(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)		(0.02	)
Capital gains			(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)		(0.00	)
Total distributions			(0.00	)		(0.00	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)		(0.02	)
Net asset value,       end of period		$	14.97		$	14.65		$	10.90		$	9.59		$	9.23			$	7.32		$	8.97
Total return			2.18	%		34.40	%		13.66	%		3.90	%	26.09		%	- -18.39			%	- -17.84		%
Net assets, end of       period (in millions)			$22			$15			$7			$8			$8				$9			$16
Ratio of expenses       to average net       assets including       reimbursement			2.38	%(2)		2.58	%		2.79	%		3.01	%(2)		3.01	%			2.50	%		2.51	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			0.60	%(2)		- -0.50	%		- -0.63	%	- -1.30		%(2)	- -0.82		%			0.18	%	- -0.16		%
Ratio of expenses       to average net       assets excluding       reimbursement			2.38	%(2)(3)		2.58	%(3)		2.79	%(3)		3.01	%(2)(3)		3.01	%(3)			3.05	%		2.89	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			0.60	%(2)(3)		- -0.50	%(3)		- -0.63	%(3)	- -1.30		%(2)(3)	- -0.82		%(3)		- -0.37		%		- -0.54	%
Portfolio turnover rate			53	%		90	%		106	%		23	%		148	%			48	%		39	%

(1)Based on average weekly shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the period from 7-24-03(1) to
	9-30-06				2006			2005		3-31-04				12-31-03
Net asset value, beginning of period		$	15.79		$	11.64		$	10.15		$	9.74		$	8.16
Income (loss) from       investment operations:
Net investment income (loss)			0.10	(2)		(0.06	)		(0.01	)		(0.01	)	(0.01		)
Net realized and unrealized             gain on investments			0.31	(2)		4.21			1.50			0.42			1.59
Total from investment operations			0.41			4.15			1.49			0.41			1.58
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		$	16.20		$	15.79		$	11.64		$	10.15		$	9.74
Total return			2.60	%		35.65	%		14.68	%		4.21	%	19.36		%
Net assets, end of period       (in thousands)		$1,562			$1,025				$294			$145		$125
Ratio of expenses to       average net assets			1.65	%(3)		1.72	%		1.82	%		2.08	%(3)		1.47	%(3)
Ratio of net investment income       (loss) to average net assets			1.24	%(3)		0.13	%		0.29	%		- -0.31	%(3)	- -0.38		%(3)
Portfolio turnover rate			53	%		90	%		106	%		23	%		148	%(4)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)For the 12 months ended December 31, 2003.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003				2002			2001
Net asset value,       beginning of period		$	15.65		$	11.52		$	10.04		$	9.63		$	7.54			$	9.14		$	11.03
Income (loss) from       investment operations:
Net investment             income (loss)			0.13			0.14	(2)		0.03	(2)		(0.00	)		0.67				0.10	(2)		0.11
Net realized and             unrealized gain             (loss) on             investments			0.29			3.99	(2)		1.45	(2)		0.41			1.42			(1.70		)(2)		(1.98	)
Total from investment       operations			0.42			4.13			1.48			0.41			2.09			(1.60		)		(1.87	)
Less distributions from:
Net investment             income			(0.00	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)		(0.00		)		(0.02	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)		(0.00		)		(0.00	)
Total distributions			(0.00	)		(0.00	)		(0.00	)		(0.00	)	(0.00		)		(0.00		)		(0.02	)
Net asset value,       end of period		$	16.07		$	15.65		$	11.52		$	10.04		$	9.63			$	7.54		$	9.14
Total return			2.68	%		35.85	%		14.74	%		4.26	%	27.72		%	- -17.51			%	- -17.03		%
Net assets, end of       period (in thousands)			$1			$1			$31			$41			$39			$124				$377
Ratio of expenses to       average net assets       including       reimbursement			1.38	%(3)		1.84	%		1.91	%		1.62	%(3)		2.59	%			1.50	%		1.47	%
Ratio of net investment       income to average       net assets including       reimbursement			1.67	%(3)		1.15	%		0.29	%		0.11	%(3)		1.43	%			1.18	%		0.89	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.38	%(3)(4)		1.84	%(4)		1.91	%(4)		1.62	%(3)(4)		2.59	%(4)			2.05	%		1.85	%
Ratio of net investment       income to average net       assets excluding       reimbursement			1.67	%(3)(4)		1.15	%(4)		0.29	%(4)		0.11	%(3)(4)		1.43	%(4)			0.63	%		0.51	%
Portfolio turnover rate			53	%		90	%		106	%		23	%		148	%			48	%		39	%

(1)See Note 5 to financial statements.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY MORTGAGE SECURITIES FUND

Portfolio Highlights

On September 30, 2006, Ivy Mortgage Securities Fund had net assets totaling $296,690,376 invested in a diversified portfolio of:

50.32%	Corporate Bonds
45.60%	United States Government Mortgage-Backed Obligations
4.08%	Cash and Cash Equivalents

On September 30, 2006, the breakdown of bonds (by ratings) held by the Fund was as follows:

AAA	64.63	%
AA	11.44	%
A	6.67	%
BBB	8.78	%
BB	3.55	%
Non-Rated	0.85	%
Cash and Cash Equivalents	4.08	%

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

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

The Investments of Ivy Mortgage Securities Fund
September 30, 2006
CORPORATE DEBT SECURITIES	Principal Amount in Thousands			Value
Finance Companies
ABFS Mortgage Loan Trust:       2001-2,
6.99%, 12-25-31	$	1,439	$	1,467,225
2002-4,
7.423%, 12-15-33		1,485		1,489,115
Asset Securitization Corporation:
1.7035%, 10-13-26 (A) (Interest Only)		5,233		224,381
2.55345%, 8-13-29 (Interest Only)		7,379		471,717
7.65%, 2-14-43		1,430		1,557,598
Associates Manufactured Housing Contract       Pass-Through Certificates,
7.9%, 3-15-27		1,800		1,843,317
Banc of America Alternative Loan Trust:
2004-11,
6.0%, 12-25-34		1,350		1,338,176
2005-6,
6.0%, 7-25-35		988		981,811
2005-8:
5.57297%, 9-25-35		2,095		2,044,132
5.57297%, 9-25-35		416		400,597
2005-10,
5.66792%, 11-25-35		1,178		1,078,277
2005-12,
5.80625%, 1-25-36		1,668		1,621,818
2006-4:
6.22471%, 5-25-36		909		860,180
6.22471%, 5-25-36		651		649,960
Banc of America Commercial Mortgage Inc.,       Commercial Mortgage Pass-Through Certificates:
Series 2001-PB1,
6.15%, 5-11-35 (A)		2,000		2,052,399
Series 2002-2,
6.2%, 7-11-43 (A)		1,200		1,244,009
Series 2003-1,
4.9%, 9-11-36 (A)		1,000		960,013
Series 2004-6,
5.104%, 12-10-42 (A)		800		778,206
Banc of America Funding 2004-2 Trust,
6.5%, 7-20-32		1,243		1,266,511
Banc of America Funding Corporation,
5.00871%, 9-20-34		1,432		1,390,698
Banc of America Mortgage 2005-J Trust,
5.09762%, 11-25-35		2,633		2,607,740
Banc of America Mortgage Alternative Loan Trust 2003-5,
5.5%, 7-25-33 (A)		1,298		1,196,856
Banc of America Mortgage Trust:
2004-2:
5.0%, 3-25-19		319		311,384
5.0%, 3-25-19		249		239,051
2004-3:
4.875%, 4-25-19		430		417,529
4.875%, 4-25-19		231		220,455
2004-7,
5.75%, 8-25-34		1,269		1,253,327
Banc of America Structured Securities Trust 2002-X1 F,
6.274%, 10-11-33 (A)		1,750		1,806,576
Banco Hipotecario Nacional:
7.916%, 7-25-09 (A)		23		582
2.57%, 3-25-11 (A)		10		250
7.54%, 5-31-17 (A)		6		189
BankAmerica Manufactured Housing Contract Trust:
7.8%, 10-10-26		2,000		2,041,597
7.015%, 1-10-28		1,448		1,465,958
Bear Stearns Commercial Mortgage Securities Inc.:       Series 2000-WF1 Trust Fund,
6.5%, 2-15-32		1,015		1,044,607
Series 2001-TOP2 Trust Fund:
7.50419%, 2-15-35 (A)		3,000		3,220,566
7.84419%, 2-15-35 (A)		795		871,362
Trust 2002-TOP6,
6.0%, 10-15-36 (A)		937		929,384
Bear Stearns Mortgage Securities Inc.,
8.0%, 11-25-29		522		519,624
BlackRock Capital Finance,
7.75%, 9-25-26 (A)		695		695,297
C-Bass:
2005-CB3 Trust,
5.109%, 12-25-34		1,254		1,186,225
2006-CB2 Trust,
5.717%, 12-25-36		977		973,448
2006-MH1 Trust,
5.97%, 9-25-36 (A)		1,445		1,459,902
CHL Mortgage Pass-Through Trust 2003-28,
4.15%, 8-25-33		1,500		1,416,565
COMM 2006-CNL2,
5.5699%, 2-5-19 (A)		925		925,842
CSAB Mortgage-Backed Trust 2006-2,
6.08%, 9-25-36		3,540		3,534,469
CWHEQ Home Equity Loan Trust, Series 2006-S3,
6.518%, 1-25-29		2,135		2,191,594
Capital Auto Receivables Asset Trust 2006-1,
7.16%, 1-15-13 (A)		1,140		1,153,893
Centex Home Equity Loan Trust 2005-C,
5.048%, 6-25-35		2,301		2,232,967
Charlie Mac Trust 2004-2,
5.0%, 10-25-34		2,547		2,426,906
Chase Mortgage Finance Trust:
Series 2003-S2,
5.0%, 3-25-18		2,008		1,983,562
Series 2003-S11,
5.5%, 10-25-33		956		932,255
Collateralized Mortgage Obligation Trust,
5.0%, 7-1-18		38		37,594
Conseco Finance Securitizations Corp.,
6.981%, 6-15-32		1,200		1,207,949
CountryPlace Manufactured Housing Contract       Trust 2005-1,
4.8%, 12-15-35 (A)		1,275		1,242,699
Countrywide Home Loans, Inc. Asset-Backed Certificates,       Series 2005-10,
4.915%, 2-25-36		5,000		4,864,211
Credit Suisse First Boston Mortgage Securities Corp.,
6.0%, 11-25-18		619		621,517
DLJ Commercial Mortgage Corp. 1998-CG1,
7.37751%, 6-10-31 (A)		1,640		1,799,893
FFCA Secured Lending Corporation:
6.43%, 2-18-22 (A)		1,500		1,413,661
6.68%, 2-18-22 (A)		1,000		934,287
Ford Credit Auto Owner Trust 2006-B,
7.12%, 2-15-13 (A)		635		645,384
GMAC Commercial Mortgage Securities,
5.94%, 7-1-13 (A)		215		213,309
Global Mortgage Securitization 2005-A Ltd. and       Global Mortgage Securitization 2005-A LLC:
5.25%, 4-25-32		832		796,463
5.40266%, 4-25-32		1,295		1,168,940
Global Mortgage Securitization Ltd. and Global       Mortgage Securitization, LLC:
5.25%, 11-25-32 (A)		1,156		1,125,012
5.25%, 11-25-32 (A)		539		528,216
Green Tree Financial Corporation:
7.65%, 4-15-19		872		904,189
8.3%, 11-15-19		668		693,208
9.1%, 4-15-25		1,075		1,358,153
9.0%, 6-15-25		1,052		1,251,583
Hilton Hotel Pool Trust:
5.83%, 10-3-15 (A)		500		505,286
7.653%, 10-3-15 (A)		1,955		2,059,641
Home Equity Loan Trust 2003-HS2,
5.09%, 7-25-33		323		318,248
J.P. Morgan Chase Commercial Mortgage Securities Corp.,
6.2207%, 10-12-37 (A)		2,300		2,393,045
J.P. Morgan Mortgage Acquisition Trust:
2006-CW2,
6.337%, 8-25-36		2,725		2,772,558
2006-WF1,
6.41%, 7-25-36		2,510		2,559,207
J.P. Morgan Mortgage Trust:
2004-A3,
4.30156%, 7-25-34		1,587		1,541,251
2005-S2,
5.66689%, 9-25-35		2,278		2,247,319
2006-S3,
6.187%, 8-25-36		1,222		1,231,892
Lehman ABS Manufactured Housing Contract Trust 2001-B,
5.873%, 5-15-22		922		924,330
Lehman XS Trust, Series 2005-8,
5.69%, 12-25-35		3,057		3,059,110
MASTR Asset Securitization Trust 2003-10,
5.5%, 11-25-33		1,568		1,534,983
MMCA Auto Owner Trust 2002-2,
4.67%, 3-15-10	589			586,629
MMCA Automobile Trust 2002-1,
5.37%, 1-15-10		74		73,493
Metropolitan Asset Funding, Inc.,
6.98%, 5-20-12 (A)		46		46,206
Mid-State Capital Corporation 2004-1 Trust:
6.005%, 8-15-37		386		392,558
6.497%, 8-15-37		1,403		1,403,084
Mid-State Trust:
7.4%, 7-1-35		1,460		1,516,994
7.79%, 7-1-35		642		664,426
Morgan Stanley Dean Witter Capital I Trust 2002-IQ3,
6.60835%, 9-15-37 (A)		768		786,069
Multi Security Asset Trust LP, Commercial       Mortgage-Backed Securities Pass-Through Certificates,       Series 2005-RR4:
1.0668%, 11-28-35 (A) (Interest Only)	33,100			867,165
5.88%, 11-28-35 (A)		680		651,946
5.88%, 11-28-35 (A)		340		332,744
NationsLink Funding Corporation, Commercial       Mortgage Pass-Through Certificates, Series 1998-2,
5.0%, 8-20-30 (A)		1,000		951,547
Nomura Asset Securities Corporation, Commercial Mortgage       Pass-Through Certificates, Series1998-D6,
6.0%, 3-15-30 (A)		1,650		1,698,425
Oakwood Mortgage Investors, Inc.:
8.1%, 10-15-21 (A)		477		480,448
7.375%, 8-15-27		424		428,804
Origen Manufactured Housing Contract Trust:
2004-A:
5.7%, 1-15-35		543		535,926
5.91%, 1-15-35		1,600		1,586,639
2004-B,
4.75%, 8-15-21		400		384,337
2005-A,
4.97%, 10-15-21		935		906,845
2005-B:
5.605%, 5-15-22		360		358,494
5.91%, 1-15-37		600		596,378
Paine Webber Mortgage Acceptance Corporation,
7.655%, 1-2-12 (A)		2,450		2,462,854
Prudential Home Mortgage Securities:
6.98001%, 9-28-08 (A)		11		11,120
6.73001%, 4-28-24 (A)		4		4,401
8.05012%, 9-28-24 (A)		29		28,765
RALI Series:
2003-QS10 Trust,
5.5%, 5-25-33		2,202		2,170,820
2003-QS11 Trust,
5.75%, 6-25-33		2,539		2,513,381
RAMP Series 2005-RS1 Trust,
5.145%, 1-25-35		1,075		1,046,097
RESI Finance Limited Partnership 2003-C and       RESI Finance DE Corporation 2003-C,
6.73%, 9-10-35 (A)		1,310		1,332,866
RFMSI Series 2004-S5 Trust:
4.5%, 5-25-19		359		343,200
4.5%, 5-25-19		179		168,517
Salomon Brothers Mortgage Securities VII, Inc., Mortgage       Pass-Through Certificates, Series 1997-HUD1,
7.75%, 12-25-30		1,572		1,615,880
Structured Adjustable Rate Mortgage Loan Trust,       Series 2005-21,
5.4%, 11-25-35		1,575		1,499,238
Structured Asset Mortgage Investments, Inc.:
6.75%, 4-30-30		22		21,909
6.75%, 4-30-30		10		10,176
Structured Asset Securities Corporation:
5.54%, 11-25-32		642		638,118
5.25%, 8-25-33		1,329		1,265,550
5.25%, 8-25-33		579		544,496
5.63%, 5-25-34		1,100		1,086,637
6.0%, 6-25-34		2,750		2,731,741
Vanderbilt Mortgage and Finance, Inc.:
7.07%, 12-7-14		96		95,993
7.955%, 12-7-24		878		923,345
7.525%, 11-7-26		915		928,948
Wachovia Bank Commercial Mortgage Trust (The),
4.942%, 11-15-34 (A)		964		927,536
Washington Mutual MSC Mortgage Pass-Through       Certificates Series 2002-MS11 Trust,
5.59932%, 12-25-32		993		978,889
Wells Fargo Mortgage Backed Securities:       2003-  4 Trust,
5.5%, 6-25-33		955		897,856
2004-1 Trust (The),
5.5%, 2-25-34		1,664		1,631,616
2005-16 Trust,
5.75%, 1-25-36		500		497,431
2006-9 Trust,
6.0%, 8-25-36		2,772		2,734,590
TOTAL CORPORATE DEBT SECURITIES - 50.32%			$	149,294,367
(Cost: $150,764,103)
UNITED STATES GOVERNMENT AGENCY OBLIGATIONS
Mortgage-Backed Obligations
Federal Home Loan Mortgage Corporation Agency       REMIC/CMO,
5.0%, 6-15-31		2,000		1,917,552
Federal Home Loan Mortgage Corporation Fixed       Rate Participation Certificates:
9.49673%, 3-15-09		565		590,672
5.5%, 12-1-17		821		823,037
5.5%, 9-1-19		1,515		1,515,951
5.5%, 5-1-20		1,879		1,879,009
5.5%, 6-1-20		1,561		1,561,196
3.5%, 2-15-30		2,000		1,874,942
6.5%, 9-1-32		1,281		1,315,268
5.0%, 7-15-33		2,505		2,388,335
5.5%, 5-1-34		1,031		1,021,089
5.5%, 5-1-34		1,418		1,404,606
6.5%, 5-1-34		1,006		1,026,201
5.5%, 10-1-34		1,159		1,145,713
5.5%, 7-1-35		5,212		5,142,283
5.0%, 8-1-35		980		942,719
5.5%, 10-1-35		1,854		1,830,064
5.0%, 12-1-35		947		911,081

Federal National Mortgage Association Fixed Rate       Pass-Through Certificates:
5.5%, 1-1-17		1,651		1,655,272
6.0%, 1-1-18		515		523,205
5.5%, 2-1-18		526		526,941
5.5%, 3-1-18		2,407		2,411,905
5.0%, 5-1-18		1,579		1,556,276
5.0%, 10-1-18		1,612		1,588,547
5.5%, 9-1-19		413		412,914
5.5%, 2-1-24		601		598,358
6.0%, 8-1-29		477		481,310
7.0%, 11-1-31		224		231,441
6.5%, 2-1-32		207		212,861
6.5%, 2-1-32		179		183,393
6.5%, 2-1-32		148		152,050
7.0%, 2-1-32		302		312,314
7.0%, 3-1-32		419		433,283
6.5%, 4-1-32		89		91,005
6.5%, 5-1-32		167		171,708
6.5%, 7-1-32		774		794,741
6.0%, 9-1-32		175		176,860
6.0%, 10-1-32		1,096		1,107,680
6.0%, 10-1-32		1,134		1,146,268
6.5%, 10-1-32		74		75,954
6.0%, 11-1-32		986		996,495
6.0%, 11-1-32		566		571,509
6.0%, 3-1-33		1,465		1,479,861
6.0%, 3-1-33		1,344		1,357,787
6.0%, 3-1-33		924		933,598
6.0%, 3-1-33		281		283,480
5.5%, 4-1-33		1,901		1,879,940
5.5%, 5-1-33		619		611,398
5.5%, 5-1-33		327		323,175
6.0%, 6-1-33		1,993		2,006,118
5.0%, 11-1-33		1,884		1,817,003
6.0%, 12-1-33		602		607,430
5.0%, 1-1-34		1,823		1,758,222
5.5%, 1-1-34		1,723		1,702,695
5.0%, 3-1-34		1,074		1,035,419
5.0%, 3-1-34		432		416,447
5.5%, 3-1-34		2,715		2,686,587
5.5%, 4-1-34		2,571		2,538,343
5.5%, 4-1-34		2,215		2,191,255
5.0%, 5-1-34		203		195,144
5.5%, 7-1-34		2,031		2,008,032
6.0%, 8-1-34		718		722,046
5.5%, 9-1-34		1,524		1,504,974
6.0%, 9-1-34		1,048		1,054,613
6.5%, 9-1-34		1,391		1,418,379
5.0%, 10-1-34		600		576,563
5.5%, 10-1-34		2,221		2,193,601
5.5%, 10-1-34		1,400		1,379,000
6.0%, 10-1-34		5,506		5,530,089
5.5%, 11-1-34		829		816,698
6.0%, 11-1-34		479		482,211
6.5%, 11-1-34		98		99,731
6.0%, 12-1-34		5,642		5,676,262
5.5%, 1-1-35		758		747,475
4.5%, 2-1-35		497		465,600
5.5%, 2-1-35		2,853		2,813,405
5.5%, 2-1-35		2,200		2,174,046
5.5%, 2-1-35		1,310		1,293,189
4.787%, 3-1-35		2,558		2,513,188
6.5%, 3-1-35		1,486		1,519,010
6.0%, 4-1-35		2,123		2,132,851
5.172%, 6-1-35		1,235		1,223,049
6.0%, 6-1-35		3,196		3,215,639
4.673%, 7-1-35		1,527		1,510,224
5.0%, 7-1-35		902		867,582
5.5%, 7-1-35		935		921,893
5.5%, 10-1-35		1,949		1,923,428
5.5%, 10-1-35		1,070		1,055,658
5.5%, 2-1-36		1,920		1,879,412
6.5%, 2-1-36		743		757,122
6.5%, 6-1-36		1,419		1,445,353
6.0%, 8-1-36		2,188		2,198,177
Government National Mortgage Association Agency       REMIC/CMO (Interest Only):
1.22286%, 3-16-34	8,281			388,936
0.9032%, 7-16-40		4,579		170,590
0.32318%, 3-16-42	20,033			298,825
0.97056%, 6-17-45	20,228			1,140,821
Government National Mortgage Association Fixed       Rate Pass-Through Certificates:
7.875%, 5-15-17		662		676,440
6.25%, 7-15-24		289		296,291
5.5%, 3-16-32		4,575		4,558,893
5.0%, 7-15-34		1,029		1,000,356
5.5%, 12-15-34		1,961		1,949,059
6.0%, 10-1-36		2,800		2,833,250
United States Department of Veterans Affairs,       Guaranteed REMIC Pass-Through Certificates,       Vendee Mortgage Trust:
1995-1 Class 1,
7.21222%, 2-15-25		253		262,562
1995-1 Class 2,
7.7925%, 2-15-25		85		88,701
TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS - 45.60%			$	135,309,134
(Cost: $137,825,739)
SHORT-TERM SECURITIES
Aluminum - 0.67%
Alcan Aluminum Corp.,
5.5%, 10-2-06		1,988		1,987,696
Beverages - 1.68%
Concentrate Manufacturing Company of Ireland       (The) (PepsiCo, Inc.),
5.25%, 10-12-06		5,000		4,991,979
Finance Companies - 1.68%
General Electric Capital Corporation,
5.23%, 10-27-06		5,000		4,981,114

Food and Related - 1.69%
General Mills, Inc.,
5.3%, 10-2-06	5,000		4,999,264
Publishing - 1.35%
Gannett Co., Inc.,
5.26%, 10-3-06	4,000		3,998,831
Retail - General Merchandise - 0.62%
Home Depot, Inc. (The),
5.36%, 10-2-06	1,850		1,849,725
TOTAL SHORT-TERM SECURITIES - 7.69%		$	22,808,609
(Cost: $22,808,609)
TOTAL INVESTMENT SECURITIES - 103.61%		$	307,412,110
(Cost: $311,398,451)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (3.61%)			(10,721,734	)
NET ASSETS - 100.00%		$	296,690,376

Notes to Schedule of Investments

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

(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 September 30, 2006, the total value of these securities amounted to $40,962,232 or 13.81% 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 MORTGAGE SECURITIES FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $311,398) (Notes 1 and 3)	$	307,412
Receivables:
Investment securities sold		5,901
Interest		1,414
Fund shares sold		738
Prepaid and other assets		26
Total assets		315,491
LIABILITIES
Payable for investment securities purchased		17,716
Payable to Fund shareholders		411
Accrued management fee (Note 2)		120
Dividends payable		117
Due to custodian		112
Accrued service fee (Note 2)		108
Accrued shareholder servicing (Note 2)		85
Accrued distribution fee (Note 2)		18
Accrued accounting services fee (Note 2)		8
Other		106
Total liabilities		18,801
Total net assets	$	296,690
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	301,784
Accumulated undistributed income (loss):
Accumulated undistributed net investment income		–
Accumulated undistributed net realized loss on                 investment transactions		(1,108	)
Net unrealized depreciation in value of investments		(3,986	)
Net assets applicable to outstanding units of capital	$	296,690
Net asset value per share (net assets divided by shares outstanding):
Class A		$10.56
Class B		$10.56
Class C		$10.56
Class Y		$10.56
Capital shares outstanding:
Class A		24,403
Class B		1,046
Class C		1,743
Class Y		884

See Notes to Financial Statements.

Statement of Operations
     IVY MORTGAGE SECURITIES FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Interest and amortization	$	8,550
Expenses (Note 2):
Accounting services fee		48
Audit fees		14
Custodian fees		14
Distribution fee:
Class A		11
Class B		40
Class C		69
Class Y		–	*
Investment management fee		707
Legal fees		2
Service fee:
Class A		297
Class B		13
Class C		23
Class Y		10
Shareholder servicing:
Class A		362
Class B		29
Class C		30
Class Y		7
Other		102
Total		1,778
Net investment income		6,772
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net loss on securities		(252	)
Realized net loss on futures		(27	)
Realized net loss on investments		(279	)
Unrealized appreciation in value of investments                 during the period		3,158
Net gain on investments		2,879
Net increase in net assets resulting from operations	$	9,651

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	6,772		$	11,152
Realized net loss on investments			(279	)		(761	)
Unrealized appreciation (depreciation)			3,158			(5,078	)
Net increase in net assets resulting                       from operations			9,651			5,313
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(5,984	)		(9,905	)
Class B			(204	)		(323	)
Class C			(377	)		(623	)
Class Y			(207	)		(301	)
Realized gains on investment transactions:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
			(6,772	)		(11,152	)
Capital share transactions (Note 5)			13,922			72,999
Total increase			16,801			67,160
NET ASSETS
Beginning of period			279,889			212,729
End of period		$	296,690		$	279,889
Undistributed net investment income (loss)		$	–		$	(–	)*

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 167 - 170.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended September 30,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	10.44		$	10.68		$	10.96		$	10.97		$	11.07		$	10.99		$	10.37
Income (loss) from       investment operations:
Net investment income			0.25			0.48			0.49			0.25			0.59			0.70			0.73
Net realized and             unrealized gain             (loss) on             investments			0.12			(0.24	)		(0.27	)		0.03			(0.12	)		0.11			0.65
Total from investment       operations			0.37			0.24			0.22			0.28			0.47			0.81			1.38
Less distributions from:
Net investment income			(0.25	)		(0.48	)		(0.49	)		(0.25	)		(0.57	)		(0.72	)		(0.72	)
Capital gains			(0.00	)		(0.00	)		(0.01	)		(0.04	)		(0.00	)		(0.00	)		(0.00	)
Tax return of capital			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.01	)		(0.04	)
Total distributions			(0.25	)		(0.48	)		(0.50	)		(0.29	)		(0.57	)		(0.73	)		(0.76	)
Net asset value,       end of period		$	10.56		$	10.44		$	10.68		$	10.96		$	10.97		$	11.07		$	10.99
Total return(1)			3.66	%		2.24	%		2.12	%		2.70	%		4.19	%(2)		7.88	%		13.90	%
Net assets, end of period       (in millions)			$258			$243			$188			$134			$91			$67			$42
Ratio of expenses to       average net assets       including       reimbursement			1.17	%(3)		1.05	%		0.95	%		1.05	%(3)(4)		0.97	%		0.95	%		0.95	%
Ratio of net investment       income to average       net assets including       reimbursement			4.87	%(3)		4.51	%		4.59	%		4.56	%(3)(4)		5.27	%		6.24	%		6.75	%
Ratio of expenses to       average net assets       excluding       reimbursement			1.17	%(3)(5)		1.16	%		1.23	%		1.38	%(3)(4)		1.12	%		1.21	%		1.31	%
Ratio of net investment       income to average       net assets excluding       reimbursement			4.87	%(3)(5)		4.40	%		4.31	%		4.22	%(3)(4)		5.12	%		5.98	%		6.39	%
Portfolio turnover rate			70	%		154	%		200	%		57	%		83	%		99	%		55	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.
(2)Advantus Capital reimbursed the Fund for losses related to certain investment trades. With reimbursed losses, the total return for Class A, for the year ended September 30, 2003, would have been 4.28%.
(3)Annualized.
(4)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown reflect a blended rate that includes income and expenses for those Class B and Class C shares before October 1, 2003 up to the time of merger. Expenses for Class A shares before and after the merger were limited to 0.95% of average net assets.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	10.44		$	10.68		$	10.96		$	10.87
Income (loss) from investment operations:
Net investment income			0.19			0.36			0.37			0.12
Net realized and unrealized gain             (loss) on investments			0.12			(0.24	)		(0.27	)		0.13
Total from investment operations			0.31			0.12			0.10			0.25
Less distributions from:
Net investment income			(0.19	)		(0.36	)		(0.37	)		(0.12	)
Capital gains			(0.00	)		(0.00	)		(0.01	)		(0.04	)
Total distributions			(0.19	)		(0.36	)		(0.38	)		(0.16	)
Net asset value, end of period		$	10.56		$	10.44		$	10.68		$	10.96
Total return			3.12	%		1.12	%		0.92	%		2.32	%
Net assets, end of period (in millions)			$11			$11			$7			$1
Ratio of expenses to average net assets			2.20	%(2)		2.16	%		2.16	%		1.89	%(2)
Ratio of net investment income       to average net assets			3.85	%(2)		3.41	%		3.29	%		3.59	%(2)
Portfolio turnover rate			70	%		154	%		200	%		57	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	10.44		$	10.68		$	10.96		$	10.87
Income (loss) from investment operations:
Net investment income			0.21			0.38			0.38			0.12
Net realized and unrealized             gain (loss) on investments			0.12			(0.24	)		(0.27	)		0.13
Total from investment operations			0.33			0.14			0.11			0.25
Less distributions from:
Net investment income			(0.21	)		(0.38	)		(0.38	)		(0.12	)
Capital gains			(0.00	)		(0.00	)		(0.01	)		(0.04	)
Total distributions			(0.21	)		(0.38	)		(0.39	)		(0.16	)
Net asset value, end of period		$	10.56		$	10.44		$	10.68		$	10.96
Total return			3.25	%		1.34	%		1.05	%		2.32	%
Net assets, end of period (in millions)			$19			$19			$12			$2
Ratio of expenses to average net assets			1.95	%(2)		1.93	%		2.03	%		1.86	%(2)
Ratio of net investment income       to average net assets			4.09	%(2)		3.63	%		3.41	%		3.61	%(2)
Portfolio turnover rate			70	%		154	%		200	%		57	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	10.44		$	10.68		$	10.96		$	10.87
Income (loss) from investment operations:
Net investment income			0.25			0.48			0.48			0.15
Net realized and unrealized             gain (loss) on investments			0.12			(0.24	)		(0.27	)		0.13
Total from investment operations			0.37			0.24			0.21			0.28
Less distributions from:
Net investment income			(0.25	)		(0.48	)		(0.48	)		(0.15	)
Capital gains			(0.00	)		(0.00	)		(0.01	)		(0.04	)
Total distributions			(0.25	)		(0.48	)		(0.49	)		(0.19	)
Net asset value, end of period		$	10.56		$	10.44		$	10.68		$	10.96
Total return			3.73	%		2.26	%		1.95	%		2.56	%
Net assets, end of period (in millions)			$9			$7			$6			$3
Ratio of expenses to average net assets			1.03	%(2)		1.03	%		1.12	%		1.09	%(2)
Ratio of net investment income       to average net assets			5.02	%(2)		4.53	%		4.41	%		4.38	%(2)
Portfolio turnover rate			70	%		154	%		200	%		57	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the six months ended March 31, 2004.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY PACIFIC OPPORTUNITIES FUND

Portfolio Highlights

On September 30, 2006, Ivy Pacific Opportunities Fund had net assets totaling $293,521,571 invested in a diversified portfolio of:

91.84%	Foreign Common Stocks
7.65%	Cash and Cash Equivalents
0.51%	Domestic Common Stock

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006, your Fund was invested by country and by industry, respectively, as follows:

Taiwan	$	20.47
South Korea	$	19.57
Hong Kong	$	13.63
China	$	11.24
Cash and Cash Equivalents	$	7.65
India	$	7.32
Singapore	$	6.58
Other	$	5.18
Other Pacific Basin	$	5.10
Thailand	$	3.26

Technology Stocks	$	19.64
Financial Services Stocks	$	16.54
Multi-Industry Stocks	$	9.92
Shelter Stocks	$	8.54
Cash and Cash Equivalents	$	7.65
Miscellaneous Stocks	$	6.94
Capital Goods Stocks	$	6.57
Energy Stocks	$	6.55
Business Equipment and Services Stocks	$	5.68
Utilities Stocks	$	5.61
Consumer Nondurables Stocks	$	3.41
Raw Materials Stocks	$	2.95

The Investments of Ivy Pacific Opportunities Fund
September 30, 2006
COMMON STOCKS		Shares		Value
Australia - 1.97%
Macquarie Bank Limited (A)		35,000	$	1,803,814
Macquarie Infrastructure Group (A)		600,000		1,430,978
Rio Tinto Limited (A)		48,620		2,540,181
				5,774,973
Bermuda - 0.60%
REXCAPITAL Financial Holdings Limited (A)*	37,575,000			1,760,428
Cayman Islands - 3.18%
Actions Semiconductor Co., Ltd.*		220,800		1,879,008
China Techfaith Wireless Communication      Technology Limited, ADR*		272,100		2,172,718
KongZhong Corporation, ADR*		300,000		2,176,500
New Oriental Education & Technology Group Inc., ADR*		66,000		1,600,500
Shanda Interactive Entertainment Limited, ADR*		100,000		1,499,500
				9,328,226
China - 11.24%
China GrenTech Corporation Limited, ADR*		375,504		3,865,814
China Life Insurance Company Limited, H Shares (A)		1,000,000		1,956,191
China Mobile (Hong Kong) Limited (A)		459,000		3,243,369
China Resources Power Holdings Company Limited (A)		1,600,000		1,692,285
China Shenhua Energy Company Limited, H Shares (A)(B)		1,200,000		1,931,546
Heng Tai Consumables Group Limited (A)	18,000,000			1,501,800
Mindray Medical International Limited, ADR*		40,000		667,600
NetEase.com, Inc., ADR*		91,280		1,494,254
PetroChina Company Limited, H Shares (A)		3,500,000		3,764,769
PetroChina Company Limited, H Shares (A)(B)		1,526,000		1,641,439
Suntech Power Holdings Co., Ltd., ADR*		100,000		2,583,000
Tong Ren Tang Technologies Co. Ltd. (A)		1,000,000		1,730,279
Vimicro International Corporation, ADR*		225,000		2,477,250
Wah Sang Gas Holdings Limited (A)(C)*		736,000		15,116
ZTE Corporation, H Shares (A)		1,200,000		4,436,087
				33,000,799
Hong Kong - 13.63%
Agile Property Holdings Limited (A)		1,000,000		813,796
Agile Property Holdings Limited (A)(B)		3,000,000		2,441,388
Beijing Enterprises Holdings Limited (A)		2,000,000		3,773,754
Cheung Kong (Holdings) Limited (A)		450,000		4,831,753
China BlueChemical Ltd. (A)(B)*		500,000		145,046
China Merchants Bank Co., Limited (A)(B)*		2,000,000		2,818,763
China Oilfield Services Limited (A)		5,800,000		3,119,380
China Yurun Food Group Limited (A)		3,500,000		2,911,182
Hutchison Whampoa Limited, Ordinary Shares (A)		370,000		3,267,507
Lee & Man Paper Manufacturing Limited (A)		1,658,000		3,111,417
Panva Gas Holdings Limited (A)*		5,000,000		1,707,175
Shimao Property Holdings Limited (A)*		2,000,000		2,141,028
Shui On Land Limited (A)(B)*		2,500,000		1,716,802
Singamas Container Holdings Limited (A)		3,500,000		1,841,952
Sinolink Worldwide Holdings Limited (A)	11,680,000			2,623,658
Sun Hung Kai Properties Limited (A)		250,000		2,729,233
				39,993,834
India - 7.32%
Bharat Heavy Electricals Limited (A)		84,570		4,417,344
Bharti Airtel Limited (A)*		36,600		398,276
ICICI Bank Limited, ADR		150,000		4,606,500
Infosys Technologies Limited (A)		90,000		3,624,790
ONGC Videsh Limited (A)		200,000		5,094,611
Tata Motors Limited (A)		178,000		3,339,850
				21,481,371
Indonesia - 0.93%
Perusahaan Perseroan (Persero) PT Telekomunikasi       Indonesia Tbk., Series B Shares (A)		2,982,000		2,731,480
Malaysia - 2.20%
Genting Berhad (A)		200,000		1,306,941
IOI Corporation Berhad (A)		535,700		2,353,129
LION DIVERSIFIED HOLDINGS BERHAD (A)		2,000,000		2,792,842
				6,452,912
Singapore - 6.58%
DBS Group Holdings Ltd (A)		266,000		3,215,615
Hongkong Land Holdings Limited		848,300		3,291,404
K-REIT Asia (A)		2,092,400		2,345,016
Keppel Corporation Limited (A)		362,540		3,378,304
Keppel Land Limited (A)		1,000,000		3,122,934
SembCorp Industries Ltd (A)		1,000,000		2,115,536
Singapore Telecommunications Limited (A)		1,209,350		1,857,903
				19,326,712
South Korea - 19.57%
Daegu Bank, Ltd. (A)		180,000		3,015,059
Daelim Industrial Co., Ltd. (A)		37,000		2,522,061
GMARKET INC., ADR*		43,000		625,650
Hana Financial Group, Inc. (A)		115,000		5,262,351
Hynix Semiconductor Inc. (A)*		140,000		5,518,626
Kookmin Bank (A)		108,000		8,514,452
Korea Exchange Bank (A)*		200,000		2,557,464
Kyeryong Construction Industrial Co. Ltd (A)		78,000		3,078,785
LG Chem, Ltd. (A)		48,500		1,927,186
Lotte Shopping Co., Ltd., GDR*		106,820		1,867,214
Lotte Shopping Co., Ltd., GDR (B)*		50,000		874,000
Phicom Corporation (A)		160,000		929,987
SK Corporation (A)		46,000		3,057,754
SK Telecom Co., Ltd. (A)		15,000		3,194,188
Samsung Electronics Co., Ltd. (A)		16,960		11,901,125
Shinsegae Co., Ltd. (A)		5,000		2,589,168
				57,435,070
Taiwan - 20.47%
ASE Test Limited*		150,000		1,284,000
Asustek Computer Inc. (A)		1,281,500		3,008,461
Cathay Financial Holding Co., Ltd. (A)		1,259,662		2,523,320
Chunghwa Telecom Co., Ltd., ADR		190,740		3,301,709
E.Sun Financial Holding Co., Ltd. (A)		5,100,000		3,058,690
Far Eastern Textile Ltd. (A)		3,816,000		2,830,510
Foxconn Technology Co., Ltd. (A)		397,900		3,582,573
Himax Technologies, Inc., ADR*		500,000		2,857,500
Hon Hai Precision Ind. Co., Ltd. (A)		744,000		4,529,526
iShares MSCI Taiwan Index Fund		650,000		8,417,500
MediaTek Incorporation (A)		372,900		3,537,748
Nan Ya Printed Circuit Board Corporation (A)		375,000		2,594,607
TSRC Corporation (A)		3,195,000		1,766,553
Taiwan Fertilizer Co., Ltd. (A)		1,500,000		2,438,251
Taiwan Semiconductor Manufacturing Company Ltd. (A)		3,077,367		5,550,837
Wistron Corporation (A)		3,151,470		3,575,427
Yuanta Core Pacific Securities Co., Ltd. (A)		4,000,000		2,664,854
ZyXEL Communications Corporation (A)		1,966,200		2,563,382
				60,085,448
Thailand - 3.26%
Bangkok Bank Public Company Limited (A)		824,000		2,412,884
Banpu Public Company Limited, Registered Shares (A)		650,000		2,526,288
LAND AND HOUSES PUBLIC COMPANY LIMITED (A)		3,405,700		675,428
PTT Public Company Limited (A)		315,000		1,811,260
Thai Oil Public Company Limited (A)		1,000,000		1,597,231
Thai Oil Public Company Limited (A)(B)		350,000		559,031
				9,582,122
United Kingdom - 0.89%
Standard Chartered PLC (A)(C)		103,050		2,624,129
United States - 0.51%
Comtech Group, Inc.*		100,000		1,497,500
TOTAL COMMON STOCKS - 92.35%			$	271,075,004
(Cost: $235,984,986)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Finance Companies - 1.02%
Three Pillars Funding LLC,
5.26%, 10-20-06	$	3,000		2,991,672
Multiple Industry - 1.70%
General Electric Capital Corporation,
5.23%, 10-27-06		5,000		4,981,114
Security and Commodity Brokers - 1.16%
UBS Finance Delaware LLC (UBS AG),
5.34%, 10-2-06		3,401		3,400,495
Total Commercial Paper - 3.88%				11,373,281
Commercial Paper (backed by irrevocable       bank letter of credit) - 1.36%
Multiple Industry
Louis Dreyfus Corporation (Barclays Bank PLC,            New York Branch),
5.27%, 10-18-06		4,000		3,990,046
TOTAL SHORT-TERM SECURITIES - 5.24%			$	15,363,327
(Cost: $15,363,327)
TOTAL INVESTMENT SECURITIES - 97.59%			$	286,438,331
(Cost: $251,348,313)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.41%				7,083,240
NET ASSETS - 100.00%			$	293,521,571

Notes to Schedule of Investments

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

*No dividends were paid during the preceding 12 months.

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

(B)Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2006, the total value of these securities amounted to $12,128,015 or 4.13% of net assets.

(C)Securities valued in good faith by management's valuation committee subject to the supervision of the Board of Trustees.

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

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

Statement of Assets and Liabilities
     IVY PACIFIC OPPORTUNITIES FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $251,348) (Notes 1 and 3)	$	286,438
Cash		707
Cash denominated in foreign currencies (cost - $7,217)		7,187
Receivables:
Dividends and interest		1,768
Fund shares sold		1,242
Prepaid and other assets		40
Total assets		297,382
LIABILITIES
Payable for investment securities purchased		2,497
Payable to Fund shareholders		390
Accrued management fee (Note 2)		236
Accrued shareholder servicing (Note 2)		123
Accrued service fee (Note 2)		65
Accrued distribution fee (Note 2)		22
Accrued accounting services fee (Note 2)		6
Accrued administrative fee (Note 2)		2
Other		519
Total liabilities		3,860
Total net assets	$	293,522
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	243,555
Accumulated undistributed income:
Accumulated undistributed net investment income		621
Accumulated undistributed net realized gain
on investment transactions		14,513
Net unrealized appreciation in value of investments		34,833
Net assets applicable to outstanding units of capital	$	293,522
Net asset value per share (net assets divided by shares outstanding):
Class A		$14.66
Class B		$13.53
Class C		$13.71
Class Y		$14.77
Advisor Class		$14.38
Capital shares outstanding:
Class A		17,151
Class B		1,039
Class C		1,642
Class Y		368
Advisor Class		6

See Notes to Financial Statements.

Statement of Operations
     IVY PACIFIC OPPORTUNITIES FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $444)	$	3,463
Interest and amortization		333
Total income		3,796
Expenses (Note 2):
Accounting services fee		35
Administrative fee		13
Audit fees		11
Custodian fee		130
Distribution fee:
Class A		14
Class B		48
Class C		78
Class Y		–	*
Investment management fee		1,311
Legal fees		2
Service fee:
Class A		266
Class B		16
Class C		26
Class Y		6
Shareholder servicing:
Class A		463
Class B		45
Class C		44
Class Y		4
Advisor Class		–	*
Other		69
Total expenses		2,581
Net investment income		1,215
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		8,740
Realized net loss on foreign currency transactions		(350	)
Realized net gain on investments		8,390
Unrealized depreciation in value of investments during the period	(4,199		)
Net gain on investments		4,191
Net increase in net assets resulting from operations	$	5,406

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	1,215		$	171
Realized net gain on investments			8,390			10,443
Unrealized appreciation (depreciation)			(4,199	)		32,645
Net increase in net assets resulting                       from operations			5,406			43,259
Distributions to shareholders from (Note 1F): (1)
Net investment income:
Class A			(–	)		(427	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(14	)
Advisor Class			(–	)		(1	)
Realized gains on investment transactions:
Class A			(–	)		(977	)
Class B			(–	)		(71	)
Class C			(–	)		(102	)
Class Y			(–	)		(19	)
Advisor Class			(–	)		(1	)
			(–	)		(1,612	)
Capital share transactions (Note 5)			64,090			103,589
Total increase			69,496			145,236
NET ASSETS
Beginning of period			224,026			78,790
End of period		$	293,522		$	224,026
Undistributed net investment income (loss)		$	621		$	(244	)

(1)See "Financial Highlights" on pages 180 - 184.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended					For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04					2003				2002			2001
Net asset value,       beginning of period		$	14.32		$	10.61		$	9.55		$	9.11			$	5.96			$	6.72		$	7.42
Income (loss) from       investment operations:
Net investment             income (loss)			0.07			0.02	(1)		(0.07	)		0.00		(0.02			)			0.01	(1)	(0.03		)(1)
Net realized and             unrealized gain             (loss) on             investments			0.27			3.83	(1)		1.13			0.44				3.17			(0.77		)(2)	(0.66		)(2)
Total from investment       operations			0.34			3.85			1.06			0.44				3.15			(0.76		)	(0.69		)
Less distributions from:
Net investment income			(0.00	)		(0.04	)		(0.00	)	(0.00		)	(0.00			)		(0.00		)	(0.01		)
Capital gains			(0.00	)		(0.10	)		(0.00	)	(0.00		)	(0.00			)		(0.00		)	(0.00		)
Total distributions			(0.00	)		(0.14	)		(0.00	)	(0.00		)	(0.00			)		(0.00		)	(0.01		)
Net asset value,       end of period		$	14.66		$	14.32		$	10.61		$	9.55			$	9.11			$	5.96		$	6.72
Total return(3)			2.37	%		36.51	%		11.10	%		4.83	%	52.85			%	- -11.31			%(2)	- -9.29		%(2)
Net assets, end of period       (in millions)		$251			$191			$64			$29				$18				$5			$6
Ratio of expenses to       average net assets       including       reimbursement			1.86	% (4)		1.95	%		2.22	%		2.07	%(4)			2.64	%			2.21	%		2.21	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			1.03	%(4)		0.24	%		- -0.80	%	- -1.07		%(4)		- -0.39		%			0.20	%	- -0.49		%
Ratio of expenses to       average net assets       excluding       reimbursement			1.86	%(4)(5)		1.95	%(5)		2.22	%(5)		2.07	%(4)(5)			2.73	%			3.52	%		3.57	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			1.03	%(4)(5)		0.24	%(5)		- -0.80	%(5)	- -1.07		%(4)(5)		- -0.48		%		- -1.11		%	- -1.85		%
Portfolio turnover rate			34	%		87	%		87	%		61	%			187	%			16	%		82	%

(1)Based on average shares outstanding.
(2)Includes redemption fees added to capital.
(3)Total return calculated without taking into account the sales load deducted on an initial purchase.
(4)Annualized.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003				2002				2001
Net asset value,       beginning of period		$	13.29		$	9.91		$	9.01		$	8.61		$	5.75			$	6.56			$	7.33
Income (loss) from       investment operations:
Net investment             income (loss)			0.03			(0.06	)(1)	(0.13		)	(0.04		)	(0.06		)		(0.04		)(1)		(0.08		)(1)
Net realized and             unrealized gain             (loss) on             investments			0.21			3.54	(1)		1.03			0.44			2.92			(0.77		)		(0.68		)
Total from investment       operations			0.24			3.48			0.90			0.40			2.86			(0.81		)		(0.76		)
Less distributions from:
Net investment income			(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)		(0.00		)		(0.01		)
Capital gains			(0.00	)		(0.10	)	(0.00		)	(0.00		)	(0.00		)		(0.00		)		(0.00		)
Total distributions			(0.00	)		(0.10	)	(0.00		)	(0.00		)	(0.00		)		(0.00		)		(0.01		)
Net asset value,       end of period		$	13.53		$	13.29		$	9.91		$	9.01		$	8.61			$	5.75			$	6.56
Total return			1.81	%		35.26	%		9.99	%		4.65	%	49.74		%	- -12.35			%	- -10.35			%
Net assets, end of period       (in millions)		$14			$11			$6			$6			$6				$3				$4
Ratio of expenses to       average net assets       including       reimbursement			2.91	%(2)		2.91	%		3.06	%		2.86	%(2)		3.46	%			2.96	%			2.95	%
Ratio of net investment       loss to average net       assets including       reimbursement			- -0.02	%(2)		- -0.51	%	- -1.57		%	- -1.92		%(2)	- -1.15		%		- -0.55		%		- -1.22		%
Ratio of expenses to       average net assets       excluding       reimbursement			2.91	%(2)(3)		2.91	%(3)		3.06	%(3)		2.86	%(2)(3)		3.55	%			4.27	%			4.31	%
Ratio of net investment       loss to average net       assets excluding       reimbursement			- -0.02	%(2)(3)		- -0.51	%(3)	- -1.57		%(3)	- -1.92		%(2)(3)	- -1.24		%		- -1.86		%		- -2.58		%
Portfolio turnover rate			34	%		87	%		87	%		61	%		187	%			16	%			82	%

(1)Based on average shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003				2002				2001
Net asset value,       beginning of period		$	13.45		$	10.01		$	9.09		$	8.68		$	5.75			$	6.55			$	7.31
Income (loss) from       investment operations:
Net investment             income (loss)			0.03		(0.06		)(1)		(0.09	)	(0.02		)	(0.05		)		(0.03		)(1)		(0.08		)(1)
Net realized and             unrealized gain             (loss) on             investments			0.23		3.60		(1)		1.01			0.43			2.98			(0.77		)		(0.67		)
Total from investment       operations			0.26			3.54			0.92			0.41			2.93			(0.80		)		(0.75		)
Less distributions from:
Net investment income			(0.00	)		(0.00	)	(0.00		)	(0.00		)	(0.00		)		(0.00		)		(0.01		)
Capital gains			(0.00	)		(0.10	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)		(0.00		)
Total distributions			(0.00	)		(0.10	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)		(0.01		)
Net asset value,       end of period		$	13.71		$	13.45		$	10.01		$	9.09		$	8.68			$	5.75			$	6.55
Total return			1.93	%		35.51	%		10.12	%		4.72	%	50.96		%	- -12.21			%	- -10.25			%
Net assets, end of period       (in millions)		$23			$18			$7			$3			$2				$1				$1
Ratio of expenses to       average net assets       including       reimbursement			2.61	%(2)		2.75	%		3.06	%		2.57	%(2)		3.48	%			2.94	%			2.90	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			0.29	%(2)		- -0.50	%		- -1.68	%	- -1.59		%(2)	- -1.14		%		- -0.53		%		- -1.18		%
Ratio of expenses to       average net assets       excluding       reimbursement			2.61	%(2)(3)		2.75	%(3)		3.06	%(3)		2.57	%(2)(3)		3.57	%			4.25	%			4.26	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			0.29	%(2)(3)		- -0.50	%(3)		- -1.68	%(3)	- -1.59		%(2)(3)	- -1.23		%		- -1.84		%		- -2.54		%
Portfolio turnover rate			34	%		87	%		87	%		61	%		187	%			16	%			82	%

(1)Based on average shares outstanding.
(2)Annualized.
(3)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the fiscal period ended				For the period from 7-24-03(1) to
	9-30-06				2006			2005			3-31-04				12-31-03
Net asset value,       beginning of period		$	14.41		$	10.67		$	9.58			$	9.13			$	6.85
Income (loss) from       investment operations:
Net investment             income (loss)			0.08			0.04	(2)		(0.04	)		(0.00		)		(0.01		)
Net realized and unrealized             in on investments			0.28			3.87	(2)		1.13				0.45				2.29
Total from investment operations			0.36			3.91			1.09				0.45				2.28
Less distributions from:
Net investment income			(0.00	)		(0.07	)		(0.00	)		(0.00		)		(0.00		)
Capital gains			(0.00	)		(0.10	)		(0.00	)		(0.00		)		(0.00		)
Total distributions			(0.00	)		(0.17	)		(0.00	)		(0.00		)		(0.00		)
Net asset value, end of period		$	14.77		$	14.41		$	10.67			$	9.58			$	9.13
Total return			2.50	%		36.90	%		11.38	%			4.93	%		33.28		%
Net assets, end of period       (in thousands)		$5,437			$3,790			$1,100				$707				$497
Ratio of expenses to average       net assets including       reimbursement			1.61	%(3)		1.68	%		1.88	%			1.64	%(3)			2.01	%(3)
Ratio of net investment       income (loss) to average       net assets including       reimbursement			1.30	%(3)		0.46	%		- -0.47	%		- -0.68		%(3)		- -0.40		%(3)
Ratio of expenses to average       net assets excluding       reimbursement			1.61	%(3)(5)		1.68	%(5)		1.88	%(5)			1.64	%(3)(5)			2.18	%(3)
Ratio of net investment       income (loss) to average       net assets excluding       reimbursement			1.30	%(3)(5)		0.46	%(5)		- -0.47	%(5)		- -0.68		%(3)(5)		- -0.57		%(3)
Portfolio turnover rate			34	%		87	%		87	%			61	%			187	%(4)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)For the 12 months ended December 31, 2003.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended December 31,
	9-30-06				2006			2005		3-31-04				2003				2002			2001
Net asset value,       beginning of period		$	14.01		$	10.38		$	9.28		$	8.85		$	5.81			$	6.59		$	7.30
Income (loss) from       investment operations:
Net investment             income (loss)			0.12			0.14	(2)		(0.01	)	(0.01		)	(0.01		)			0.04	(2)	(0.02		)(2)
Net realized and             unrealized gain             (loss) on             investments			0.25			3.70	(2)		1.11			0.44			3.05			(0.82		)	(0.68		)
Total from investment       operations			0.37			3.84			1.10			0.43			3.04			(0.78		)	(0.70		)
Less distributions from:
Net investment income			(0.00	)		(0.11	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)	(0.01		)
Capital gains			(0.00	)		(0.10	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)	(0.00		)
Total distributions			(0.00	)		(0.21	)		(0.00	)	(0.00		)	(0.00		)		(0.00		)	(0.01		)
Net asset value,       end of period		$	14.38		$	14.01		$	10.38		$	9.28		$	8.85			$	5.81		$	6.59
Total return			2.64	%		37.28	%		11.85	%		4.86	%	52.32		%	- -11.84			%	- -9.58		%
Net assets, end of period       (in thousands)		$78			$76			$64			$58			$55				$34			$3
Ratio of expenses to       average net assets       including       reimbursement			1.26	%(3)		1.42	%		1.56	%		1.82	%(3)		2.49	%			1.74	%		2.03	%
Ratio of net investment       income (loss) to       average net assets       including       reimbursement			1.65	%(3)		1.12	%		- -0.06	%	- -0.88		%(3)	- -0.09		%			0.67	%	- -0.31		%
Ratio of expenses to       average net assets       excluding       reimbursement			1.26	%(3)(4)		1.42	%(4)		1.56	%(4)		1.82	%(3)(4)		2.65	%			3.05	%		3.39	%
Ratio of net investment       income (loss) to       average net assets       excluding       reimbursement			1.65	%(3)(4)		1.12	%(4)		- -0.06	%(4)	- -0.88		%(3)(4)	- -0.25		%		- -0.64		%	- -1.67		%
Portfolio turnover rate			34	%		87	%		87	%		61	%		187	%			16	%		82	%

(1)See Note 5 to financial statements.
(2)Based on average shares outstanding.
(3)Annualized.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY REAL ESTATE SECURITIES FUND

Portfolio Highlights

On September 30, 2006, Ivy Real Estate Securities Fund had net assets totaling $580,375,769 invested in a diversified portfolio of:

96.45%	Common Stocks
3.55%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006,
your Fund owned:

Shelter Stocks	$	88.50
Business Equipment and Services Stocks	$	3.80
Cash and Cash Equivalents	$	3.55
Consumer Services Stocks	$	2.70
Miscellaneous Stocks	$	1.45

The Investments of Ivy Real Estate Securities Fund
September 30, 2006
COMMON STOCKS	Shares		Value
Business Equipment and Services - 3.80%
Brookfield Properties Corporation	581,400	$	20,535,048
CB Richard Ellis Group, Inc., Class A*	61,400		1,510,440
			22,045,488
Health Care - General - 0.43%
Brookdale Senior Living, Inc.	53,600		2,488,112
Hotels and Gaming - 2.70%
Hilton Hotels Corporation	176,200		4,907,170
Marriott International, Inc., Class A	69,700		2,693,208
Starwood Hotels & Resorts Worldwide, Inc.	141,600		8,098,104
			15,698,482
Multiple Industry - 1.02%
Forest City Enterprises, Inc., Class A	108,678		5,901,215
Real Estate Investment Trust - 88.50%
AMB Property Corporation	123,500		6,806,085
Acadia Realty Trust	82,900		2,113,950
Alexandria Real Estate Equities, Inc.	71,100		6,669,180
American Campus Communities, Inc.	317,200		8,091,772
American Financial Realty Trust	179,400		2,002,104
Apartment Investment and Management Company, Class A	179,500		9,766,595
Archstone-Smith Trust	375,900		20,463,996
Associated Estates Realty Corporation	35,400		547,638
AvalonBay Communities, Inc.	136,700		16,458,680
BioMed Realty Trust, Inc.	410,312		12,448,866
Boston Properties, Inc.	158,400		16,369,056
Brandywine Realty Trust	382,800		12,460,140
CBL & Associates Properties, Inc.	163,900		6,869,049
Camden Property Trust	215,000		16,342,150
Colonial Properties Trust	61,300		2,930,753
Columbia Equity Trust, Inc.	154,200		2,567,430
Corporate Office Properties Trust	126,500		5,662,140
Cousins Properties Incorporated	97,200		3,325,212
Developers Diversified Realty Corporation	291,900		16,276,344
Duke Realty Corporation	234,200		8,747,370
EastGroup Properties, Inc.	9,500		473,670
Equity Inns, Inc.	67,700		1,077,784
Equity Lifestyle Properties, Inc.	81,300		3,716,223
Equity Residential	435,200		22,012,416
Essex Property Trust, Inc.	20,700		2,512,980
First Industrial Realty Trust, Inc.	92,800		4,083,200
First Potomac Realty Trust	132,800		4,013,216
General Growth Properties, Inc.	383,932		18,294,360
Healthcare Realty Trust Incorporated	31,300		1,202,233
Home Properties, Inc.	91,800		5,247,288
Host Hotels & Resorts, Inc.	837,947		19,214,125
Innkeepers USA Trust	165,700		2,699,253
Kilroy Realty Corporation	63,100		4,753,954
Kimco Realty Corporation	473,200		20,286,084
Kite Realty Group Trust	434,100		7,397,064
LaSalle Hotel Properties	65,200		2,825,768
Liberty Property Trust	176,700		8,444,493
Macerich Company (The)	130,500		9,964,980
Mack-Cali Realty Corporation	120,300		6,231,540
Maguire Properties, Inc.	251,000		10,225,740
Mid-America Apartment Communities, Inc.	51,700		3,165,074
Newcastle Investment Corp.	118,600		3,250,826
Omega Healthcare Investors, Inc.	103,200		1,549,032
Parkway Properties, Inc.	52,000		2,417,480
ProLogis	627,565		35,808,859
Public Storage, Inc.	229,000		19,691,710
Regency Centers Corporation	122,200		8,402,472
SL Green Realty Corp.	102,300		11,426,910
Simon Property Group, Inc.	383,800		34,779,956
Sunstone Hotel Investors, Inc.	260,900		7,753,948
Taubman Centers, Inc.	92,400		4,104,408
U-Store-It Trust	227,200		4,875,712
United Dominion Realty Trust, Inc.	408,442		12,334,948
Ventas, Inc.	153,400		5,912,036
Vornado Realty Trust	193,800		21,124,200
Weingarten Realty Investors	127,000		5,463,540
			513,655,992
TOTAL COMMON STOCKS - 96.45%		$	559,789,289
(Cost: $409,702,742)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Finance Companies - 0.86%
PACCAR Financial Corp.,
5.24%, 10-5-06	$	3,000	2,998,253
Preferred Receivables Funding Corp.,
5.26%, 10-19-06		2,000	1,994,740
			4,992,993

Food and Related - 0.34%
General Mills, Inc.,
5.3%, 10-2-06	2,000		1,999,706
Forest and Paper Products - 0.62%
Sonoco Products Co.,
5.4%, 10-2-06	3,573		3,572,464
Insurance - Life - 0.86%
American General Finance Corporation,
5.25%, 10-11-06	5,000		4,992,708
Retail - General Merchandise - 0.72%
Home Depot, Inc. (The),
5.36%, 10-2-06	2,185		2,184,675
Target Corporation,
5.35%, 10-2-06	2,000		1,999,703
			4,184,378
TOTAL SHORT-TERM SECURITIES - 3.40%		$	19,742,249
(Cost: $19,742,249)
TOTAL INVESTMENT SECURITIES - 99.85%		$	579,531,538
(Cost: $429,444,991)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.15%			844,231
NET ASSETS - 100.00%		$	580,375,769

Notes to Schedule of Investments

*No dividends were paid during the preceding 12 months.

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

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

Statement of Assets and Liabilities
     IVY REAL ESTATE SECURITIES FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $429,445) (Notes 1 and 3)	$	579,532
Cash		54
Receivables:
Dividends and interest		1,884
Fund shares sold		1,509
Investment securities sold		783
Prepaid and other assets		35
Total assets		583,797
LIABILITIES
Payable for investment securities purchased		2,155
Payable to Fund shareholders		448
Accrued management fee (Note 2)		421
Accrued shareholder servicing (Note 2)		152
Accrued service fee (Note 2)		124
Accrued distribution fee (Note 2)		23
Accrued accounting services fee (Note 2)		14
Other		84
Total liabilities		3,421
Total net assets	$	580,376
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	408,448
Accumulated undistributed income:
Accumulated undistributed net investment income		160
Accumulated undistributed net realized gain on investment transactions		21,681
Net unrealized appreciation in value of investments		150,087
Net assets applicable to outstanding units of capital	$	580,376
Net asset value per share (net assets divided by shares outstanding):
Class A	$24.51
Class B	$24.36
Class C	$24.42
Class Y	$24.52
Class R	$24.51
Capital shares outstanding:
Class A		12,525
Class B		706
Class C		848
Class Y		9,598
Class R		5

See Notes to Financial Statements.

Statement of Operations
     IVY REAL ESTATE SECURITIES FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $32)	$	5,567
Interest and amortization		262
Total income		5,829
Expenses (Note 2):
Accounting services fee		73
Audit fees		14
Custodian fees		17
Distribution fee:
Class A		17
Class B		58
Class C		66
Class Y		4
Class R		–	*
Investment management fee		2,303
Legal fees		5
Service fee:
Class A		317
Class B		19
Class C		22
Class Y		260
Class R		–	*
Shareholder servicing:
Class A		476
Class B		48
Class C		39
Class Y		160
Class R		–	*
Other		137
Total expenses		4,035
Net investment income		1,794
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		15,450
Unrealized appreciation in value of investments during the period		16,532
Net gain on investments		31,982
Net increase in net assets resulting from operations	$	33,776

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	1,794		$	4,120
Realized net gain on investments			15,450			16,076
Unrealized appreciation			16,532			95,208
Net increase in net assets resulting                       from operations			33,776			115,404
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(947	)		(1,724	)
Class B			(–	)		(4	)
Class C			(–	)		(16	)
Class Y			(985	)		(2,078	)
Class R			(–	)*		(–	)*
Realized gains on investment transactions:
Class A			(–	)		(7,984	)
Class B			(–	)		(494	)
Class C			(–	)		(541	)
Class Y			(–	)		(6,941	)
Class R			(–	)		(–	)
			(1,932	)		(19,782	)
Capital share transactions (Note 5)			44,916			85,348
Total increase			76,760			180,970
NET ASSETS
Beginning of period			503,616			322,646
End of period		$	580,376		$	503,616
Undistributed net investment income		$	160		$	298

*Not shown due to rounding.

(1)See "Financial Highlights" on pages 192 - 196.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended July 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	23.11		$	18.13		$	16.99		$	13.42		$	11.93		$	11.67		$	11.23
Income from investment       operations:
Net investment income			0.06			0.15			0.15	(1)		0.62			0.48			0.32			0.51
Net realized and       unrealized gain on       investments			1.42			5.81			1.93	(1)		3.38			1.72			1.01			0.47
Total from investment       operations			1.48			5.96			2.08			4.00			2.20			1.33			0.98
Less distributions from:
Net investment income			(0.08	)		(0.18	)		(0.25	)		(0.24	)		(0.48	)		(0.28	)		(0.54	)
Capital gains			(0.00	)		(0.80	)		(0.69	)		(0.19	)		(0.23	)		(0.79	)		(0.00	)
Total distributions			(0.08	)		(0.98	)		(0.94	)		(0.43	)		(0.71	)		(1.07	)		(0.54	)
Net asset value,       end of period		$	24.51		$	23.11		$	18.13		$	16.99		$	13.42		$	11.93		$	11.67
Total return(2)			6.42	%		33.53	%		12.09	%		29.78	%		19.65	%		12.31	%		9.10	%
Net assets, end of period       (in millions)			$307			$256			$155			$44			$60			$32			$17
Ratio of expenses to       average net assets       including voluntary       expense waiver			1.61	%(3)		1.64	%		1.67	%		1.48	%(3)(4)		1.46	%		1.50	%		1.50	%
Ratio of net investment       income to average       net assets including       voluntary expense       waiver			0.65	%(3)		0.91	%		0.95	%		4.35	%(3)(4)		2.95	%		2.83	%		4.29	%
Ratio of expenses to       average net assets       excluding voluntary       expense waiver			1.61	%(3)(5)		1.64	%(5)		1.67	%(5)		1.49	%(3)(4)		1.46	%(5)		1.69	%		1.99	%
Ratio of net investment       income to average       net assets excluding       voluntary expense       waiver			0.65	%(3)(5)		0.91	%(5)		0.95	%(5)		4.34	%(3)(4)		2.95	%(5)		2.64	%		3.81	%
Portfolio turnover rate			21	%		35	%		48	%		35	%		48	%		101	%		173	%

(1)Based on average weekly shares outstanding.
(2)Total return calculated without taking into account the sales load deducted on an initial purchase.
(3)Annualized.
(4)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from August 1, 2003 up to the time of merger. Actual expenses that applied to Class A shareholders were lower than shown above.
(5)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	23.00		$	18.08		$	16.97		$	15.18
Income (loss) from investment operations:
Net investment income (loss)			(0.04	)		0.01			(0.07	)(2)		0.07
Net realized and unrealized             gain on investments			1.40			5.72			1.95	(2)		2.08
Total from investment operations			1.36			5.73			1.88			2.15
Less distributions from:
Net investment income			(0.00	)		(0.01	)		(0.08	)		(0.17	)
Capital gains			(0.00	)		(0.80	)		(0.69	)		(0.19	)
Total distributions			(0.00	)		(0.81	)		(0.77	)		(0.36	)
Net asset value, end of period		$	24.36		$	23.00		$	18.08		$	16.97
Total return			5.91	%		32.19	%		10.91	%		14.46	%
Net assets, end of period (in millions)			$17			$15			$10			$2
Ratio of expenses to average net assets			2.64	%(3)		2.66	%		2.73	%		3.02	%(3)
Ratio of net investment income       (loss) to average net assets			- -0.34	%(3)		0.01	%		- -0.24	%		- -5.40	%(3)
Portfolio turnover rate			21	%		35	%		48	%		35	%(4)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	23.04		$	18.10		$	16.99		$	15.18
Income (loss) from investment operations:
Net investment income (loss)			(0.03	)		0.03			0.12			0.08
Net realized and unrealized             gain on investments			1.41			5.73			1.82			2.09
Total from investment operations			1.38			5.76			1.94			2.17
Less distributions from:
Net investment income			(0.00	)		(0.02	)		(0.14	)		(0.17	)
Capital gains			(0.00	)		(0.80	)		(0.69	)		(0.19	)
Total distributions			(0.00	)		(0.82	)		(0.83	)		(0.36	)
Net asset value, end of period		$	24.42		$	23.04		$	18.10		$	16.99
Total return			5.99	%		32.38	%		11.21	%		14.59	%
Net assets, end of period (in millions)			$21			$17			$10			$2
Ratio of expenses to average net assets			2.46	%(2)		2.46	%		2.49	%		2.82	%(2)
Ratio of net investment income       (loss) to average net assets			- -0.22	%(2)		0.15	%		0.14	%	-4.46		%(2)
Portfolio turnover rate			21	%		35	%		48	%		35	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3) For the eight months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	23.12		$	18.14		$	16.99		$	15.18
Income from investment operations:
Net investment income			0.11			0.27			0.26	(2)		0.04
Net realized and unrealized             gain on investments			1.40			5.75			1.87	(2)		2.15
Total from investment operations			1.51			6.02			2.13			2.19
Less distributions from:
Net investment income			(0.11	)		(0.24	)		(0.29	)		(0.19	)
Capital gains			(0.00	)		(0.80	)		(0.69	)		(0.19	)
Total distributions			(0.11	)		(1.04	)		(0.98	)		(0.38	)
Net asset value, end of period		$	24.52		$	23.12		$	18.14		$	16.99
Total return			6.54	%		33.86	%		12.40	%		14.78	%
Net assets, end of period (in millions)			$235			$216			$148			$91
Ratio of expenses to average net assets			1.38	%(3)		1.39	%		1.44	%		1.60	%(3)
Ratio of net investment income       to average net assets			0.91	%(3)		1.27	%		1.59	%		0.14	%(3)
Portfolio turnover rate			21	%		35	%		48	%		35	%(4)

(1)Commencement of operations of the class.
(2)Based on average weekly shares outstanding.
(3)Annualized.
(4)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the period from 12-29-05(1) to
	9-30-06				3-31-06
Net asset value, beginning of period		$	23.11		$	20.55
Income (loss) from investment operations:
Net investment income (loss)			0.08			(0.20	)
Net realized and unrealized             gain on investments			1.39			2.79
Total from investment operations			1.47			2.59
Less distributions from:
Net investment income			(0.07	)		(0.03	)
Capital gains			(0.00	)		(0.00	)
Total distributions			(0.07	)		(0.03	)
Net asset value, end of period		$	24.51		$	23.11
Total return			6.41	%		12.59	%
Net assets, end of period (in thousands)			$120			$113
Ratio of expenses to average net assets			1.69	%(2)		1.73	%(2)
Ratio of net investment income (loss)       to average net assets			0.65	%(2)		- -3.64	%(2)
Portfolio turnover rate			21	%		35	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the fiscal year ended March 31, 2006.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY SMALL CAP VALUE FUND

Portfolio Highlights

On September 30, 2006, Ivy Small Cap Value Fund had net assets totaling $127,164,909 invested in a diversified portfolio of:

96.38%	Common Stocks
3.62%	Cash and Cash Equivalents

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006,
your Fund owned:

Financial Services Stocks	$	22.50
Technology Stocks	$	11.86
Business Equipment and Services Stocks	$	10.75
Consumer Services Stocks	$	8.88
Consumer Nondurables Stocks	$	7.99
Health Care Stocks	$	6.95
Retail Stocks	$	6.01
Energy Stocks	$	5.11
Capital Goods Stocks	$	4.67
Shelter Stocks	$	4.33
Miscellaneous Stocks	$	4.02
Cash and Cash Equivalents	$	3.62
Utilities Stocks	$	3.31

The Investments of Ivy Small Cap Value Fund
September 30, 2006
COMMON STOCKS	Shares			Value
Aircraft - 1.67%
K&F Industries Holdings, Inc.		40,300	$	756,834
Orbital Sciences Corporation		72,900		1,368,333
				2,125,167
Apparel - 1.10%
Phillips-Van Heusen Corporation		33,535		1,400,757
Banks - 9.10%
Boston Private Financial Holdings, Inc.		63,700		1,775,638
Cathay General Bancorp		30,700		1,107,502
Central Pacific Financial Corp.		32,800		1,199,824
First Midwest Bancorp, Inc.		52,400		1,987,008
First Niagara Financial Group, Inc.	110,900			1,618,586
Taylor Capital Group, Inc.		34,700		1,025,559
Umpqua Holdings Corporation		54,774		1,565,989
Wintrust Financial Corporation		25,700		1,287,699
				11,567,805
Broadcasting - 0.51%
Outdoor Channel Holdings, Inc.		59,500		646,467
Business Equipment and Services - 7.70%
Brink's Company (The)		55,000		2,918,300
CACI International Inc		19,100		1,050,691
Education Realty Trust, Inc.		72,900		1,076,004
PRA International		32,791		875,520
Sunterra Corporation		17,765		201,366
Waste Connections, Inc.		49,500		1,876,545
Watson Wyatt & Company Holdings, Inc., Class A		43,800		1,792,296
				9,790,722
Capital Equipment - 1.33%
CARBO Ceramics Inc.		11,290		406,779
Goodman Global, Inc.		30,500		407,175
Warnaco Group, Inc. (The)		45,100		870,881
				1,684,835
Communications Equipment - 3.45%
Dycom Industries, Inc.		46,800		1,006,200
Emulex Corporation		38,700		703,179
LoJack Corporation		35,387		692,877
Polycom, Inc.		81,100		1,988,166
				4,390,422
Computers - Peripherals - 4.52%
Electronics for Imaging, Inc.		73,500		1,680,210
Imation Corp.		38,500		1,545,775
Lawson Software, Inc.	103,200			747,168
TIBCO Software Inc.	197,100			1,767,987
				5,741,140
Construction Materials - 0.96%
Texas Industries, Inc.		23,500		1,223,410
Containers - 3.34%
AptarGroup, Inc.		25,000		1,272,000
Jarden Corporation		55,050		1,814,998
Silgan Holdings Inc.		31,000		1,164,050
				4,251,048
Cosmetics and Toiletries - 0.62%
Bare Escentuals, Inc.		2,400		64,980
Nu Skin Enterprises, Inc., Class A		41,700		730,584
				795,564
Electronic Components - 1.75%
PMC-Sierra, Inc.	148,800			884,616
Trident Microsystems, Inc.		30,800		716,562
Varian Semiconductor Equipment Associates, Inc.		17,100		627,314
				2,228,492
Electronic Instruments - 0.47%
Progressive Gaming International Corporation		72,700		595,413
Finance Companies - 2.54%
Hanover Insurance Group, Inc. (The)		53,500		2,387,705
Jackson Hewitt Tax Service Inc.		28,200		846,282
				3,233,987
Food and Related - 2.98%
Hain Celestial Group, Inc. (The)		81,300		2,080,467
Pilgrim's Pride Corporation		30,800		842,380
Ralcorp Holdings, Inc.		17,900		863,317
				3,786,164
Health Care - Drugs - 0.81%
Axcan Pharma Inc.		75,782		1,032,909
Health Care - General - 5.17%
DJO Incorporated		84,797		3,521,619
Hologic, Inc.		18,500		804,935
PolyMedica Corporation		21,700		928,543
Radiation Therapy Services, Inc.		45,293		1,323,688
				6,578,785
Hospital Supply and Management - 0.97%
Magellan Health Services, Inc.		28,900		1,230,417
Hotels and Gaming - 4.91%
Gaylord Entertainment Company		28,100		1,232,185
Orient-Express Hotels Ltd.		44,200		1,652,196
Pinnacle Entertainment, Inc.		48,700		1,369,444
Shuffle Master, Inc.		24,700		666,777
Vail Resorts, Inc.		32,900		1,316,658
				6,237,260
Insurance - Property and Casualty - 4.17%
Aspen Insurance Holdings Limited		85,200		2,200,716
Endurance Specialty Holdings Ltd.		33,659		1,186,816
Platinum Underwriters Holdings, Ltd.		62,300		1,920,709
				5,308,241
Leisure Time Industry - 1.52%
Marvel Entertainment, Inc.		62,000		1,496,680
RC2 Corporation		13,066		438,560
				1,935,240
Motion Pictures - 1.16%
Regal Entertainment Group		74,500		1,476,590
Motor Vehicle Parts - 2.95%
Copart, Inc.		44,600		1,257,051
Directed Electronics, Inc.		83,897		1,267,264
Tenneco Automotive Inc.		52,700		1,232,653
				3,756,968
Non-Residential Construction - 2.38%
Washington Group International, Inc.		51,300		3,020,288
Petroleum - Domestic - 2.09%
Comstock Resources, Inc.		47,100		1,278,765
Goodrich Petroleum Corporation		45,676		1,375,761
				2,654,526
Petroleum - Services - 3.02%
Hercules Offshore, Inc.		33,783		1,048,793
Hornbeck Offshore Services, Inc.		26,000		871,000
Oceaneering International, Inc.		35,000		1,078,000
Universal Compression Holdings, Inc.		15,700		839,165
				3,836,958
Publishing - 0.78%
Scholastic Corporation		31,700		986,663
Real Estate Investment Trust - 4.33%
BioMed Realty Trust, Inc.		41,500		1,259,110
Corporate Office Properties Trust		35,600		1,593,456
Innkeepers USA Trust		72,000		1,172,880
Strategic Hotels & Resorts, Inc.		74,300		1,477,084
				5,502,530
Restaurants - 1.31%
Landry's Restaurants, Inc.		55,024		1,658,974
Retail - General Merchandise - 1.03%
Saks Incorporated		75,700		1,308,096
Retail - Specialty Stores - 3.67%
Big 5 Sporting Goods Corporation		34,000		774,180
Finish Line, Inc. (The), Class A		48,800		615,368
Genesco Inc.		18,500		637,695
Guitar Center, Inc.		16,900		754,669
Talbots, Inc. (The)		69,327		1,889,161
				4,671,073
Savings and Loans - 1.64%
Sterling Financial Corporation		38,548		1,249,533
WSFS Financial Corporation		13,492		838,865
				2,088,398
Security and Commodity Brokers - 5.05%
GFI Group Inc.		25,300		1,397,952
National Financial Partners Corp.		34,703		1,423,864
Piper Jaffray Companies		59,400		3,600,828
				6,422,644
Timesharing and Software - 3.05%
Hyperion Solutions Corporation		37,600		1,297,200
Per-Se Technologies, Inc.		77,400		1,765,107
TradeStation Group, Inc.		54,600		821,457
				3,883,764
Trucking and Shipping - 1.02%
Kirby Corporation		41,500		1,300,195
Utilities - Electric - 3.31%
Black Hills Corporation		33,100		1,112,491
El Paso Electric Company		7,980		178,273
ITC Holdings Corp.		18,500		577,200
PNM Resources, Inc.		42,900		1,182,753
Pike Electric Corporation		77,400		1,153,260
				4,203,977
TOTAL COMMON STOCKS - 96.38%			$	122,555,889
(Cost: $115,670,359)

SHORT-TERM SECURITIES	Principal Amount in Thousands
Forest and Paper Products - 1.56%
Sonoco Products Co.,
5.4%, 10-2-06	$	1,988		1,987,702
Retail - General Merchandise - 3.19%
Home Depot, Inc. (The),
5.36%, 10-2-06		4,060		4,059,395
TOTAL SHORT-TERM SECURITIES - 4.75%			$	6,047,097
(Cost: $6,047,097)
TOTAL INVESTMENT SECURITIES - 101.13%			$	128,602,986
(Cost: $121,717,456)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.13%)				(1,438,077	)
NET ASSETS - 100.00%			$	127,164,909

Notes to Schedule of Investments

*No dividends were paid during the preceding 12 months.

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

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

Statement of Assets and Liabilities
     IVY SMALL CAP VALUE FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $121,717) (Notes 1 and 3)	$	128,603
Receivables:
Investment securities sold		1,782
Fund shares sold		294
Dividends and interest		95
Prepaid and other assets		20
Total assets		130,794
LIABILITIES
Payable for investment securities purchased		3,057
Payable to Fund shareholders		322
Accrued management fee (Note 2)		88
Accrued shareholder servicing (Note 2)		62
Accrued service fee (Note 2)		31
Due to custodian		17
Accrued distribution fee (Note 2)		10
Accrued accounting services fee (Note 2)		5
Other		37
Total liabilities		3,629
Total net assets	$	127,165
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	109,779
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss		(392	)
Accumulated undistributed net realized gain on                 investment transactions		10,892
Net unrealized appreciation in value of investments		6,886
Net assets applicable to outstanding units of capital	$	127,165
Net asset value per share (net assets divided by shares outstanding):
Class A		$15.91
Class B		$15.32
Class C		$15.49
Class Y		$16.07
Capital shares outstanding:
Class A		5,611
Class B		457
Class C		667
Class Y		1,279

See Notes to Financial Statements.

Statement of Operations
     IVY SMALL CAP VALUE FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT LOSS
Income (Note 1B):
Dividends	$	648
Interest and amortization		114
Total income		762
Expenses (Note 2):
Accounting services fee		32
Audit fees		12
Custodian fees		8
Distribution fee:
Class A		6
Class B		26
Class C		37
Class Y		1
Investment management fee		526
Legal fees		1
Service fee:
Class A		101
Class B		9
Class C		12
Class Y		26
Shareholder servicing:
Class A		217
Class B		28
Class C		26
Class Y		16
Other		60
Total expenses		1,144
Net investment loss		(382	)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on investments		6,587
Unrealized depreciation in value of investments during the period		(8,710	)
Net loss on investments		(2,123	)
Net decrease in net assets resulting from operations	$	(2,505	)

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment loss		$	(382	)	$	(911	)
Realized net gain on investments			6,587			15,553
Unrealized appreciation (depreciation)			(8,710	)		3,388
Net increase (decrease) in net assets                       resulting from operations			(2,505	)		18,030
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
Realized gains on investment transactions:
Class A			(–	)		(13,964	)
Class B			(–	)		(1,186	)
Class C			(–	)		(1,589	)
Class Y			(–	)		(4,122	)
			(–	)		(20,861	)
Capital share transactions (Note 5)			2,570			26,322
Total increase			65			23,491
NET ASSETS
Beginning of period			127,100			103,609
End of period		$	127,165		$	127,100
Undistributed net investment loss		$	(392	)	$	(10	)

(1)See "Financial Highlights" on pages 206 - 209.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended July 31,
	9-30-06				2006			2005		3-31-04				2003			2002			2001
Net asset value,       beginning of period		$	16.24		$	16.88		$	16.68		$	13.02		$	12.25		$	15.05		$	11.47
Income (loss) from       investment operations:
Net investment loss			(0.04	)		(0.11	)		(0.13	)		(0.08	)		(0.09	)		(0.08	)		(0.06	)
Net realized and             unrealized gain             (loss) on             investments			(0.29	)		2.62			1.52			3.76			1.74			(1.84	)		4.04
Total from investment       operations			(0.33	)		2.51			1.39			3.68			1.65			(1.92	)		3.98
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)*		(0.00	)		(0.00	)
Capital gains			(0.00	)		(3.15	)		(1.19	)		(0.02	)		(0.88	)		(0.88	)		(0.40	)
Total distributions			(0.00	)		(3.15	)		(1.19	)		(0.02	)		(0.88	)		(0.88	)		(0.40	)
Net asset value,       end of period		$	15.91		$	16.24		$	16.88		$	16.68		$	13.02		$	12.25		$	15.05
Total return(1)			- -2.03	%		16.44	%		8.23	%		28.29	%		14.91	%	- -13.27		%		35.18	%
Net assets, end of       period (in millions)			$89			$86			$66			$65			$59			$53			$55
Ratio of expenses to       average net assets       including voluntary       expense waiver			1.79	% (2)		1.80	%		1.76	%		1.65	%(2)(3)		1.53	%		1.27	%		1.40	%
Ratio of net investment       loss to average net       assets including       voluntary expense       waiver			- -0.56	%(2)		- -0.76	%		- -0.79	%		- -0.76	%(2)(3)		- -0.82	%		- -0.57	%		- -0.56	%
Ratio of expenses to       average net assets       excluding voluntary       expense waiver			1.79	%(2)(4)		1.80	%(4)		1.76	%(4)		1.65	%(2,3,4)		1.53	%(4)		1.37	%		1.51	%
Ratio of net investment       loss to average net       assets excluding       voluntary expense       waiver			- -0.56	%(2)(4)		- -0.76	%(4)		- -0.79	%(4)		- -0.76	%(2,3,4)		-0.82	%(4)		- -0.67	%		- -0.67	%
Portfolio turnover rate			66	%		157	%		124	%		27	%		54	%		37	%		38	%

*Not shown due to rounding.

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.
(2)Annualized.
(3)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from August 1, 2003 up to the time of the merger. Actual expenses that applied to Class A shareholders were lower than shown above.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	15.72		$	16.59		$	16.61		$	15.27
Income (loss) from investment operations:
Net investment loss			(0.12	)		(0.25	)		(0.23	)		(0.05	)
Net realized and unrealized gain             (loss) on investments			(0.28	)		2.53			1.40			1.41
Total from investment operations			(0.40	)		2.28			1.17			1.36
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(3.15	)		(1.19	)		(0.02	)
Total distributions			(0.00	)		(3.15	)		(1.19	)		(0.02	)
Net asset value, end of period		$	15.32		$	15.72		$	16.59		$	16.61
Total return			- -2.55	%		15.28	%		6.92	%		8.93	%
Net assets, end of period (in millions)			$7			$7			$5			$1
Ratio of expenses to average net assets			2.89	%(2)		2.84	%		3.02	%		3.79	%(2)
Ratio of net investment loss       to average net assets			- -1.66	%(2)		- -1.80	%		- -1.88	%		- -2.93	%(2)
Portfolio turnover rate			66	%		157	%		124	%		27	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	15.87		$	16.67		$	16.63		$	15.27
Income (loss) from investment operations:
Net investment loss			(0.09	)		(0.21	)		(0.19	)		(0.05	)
Net realized and unrealized gain             (loss) on investments			(0.29	)		2.56			1.42			1.43
Total from investment operations			(0.38	)		2.35			1.23			1.38
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(3.15	)		(1.19	)		(0.02	)
Total distributions			(0.00	)		(3.15	)		(1.19	)		(0.02	)
Net asset value, end of period		$	15.49		$	15.87		$	16.67		$	16.63
Total return			- -2.39	%		15.64	%		7.28	%		9.06	%
Net assets, end of period (in millions)			$10			$10			$8			$2
Ratio of expenses to average net assets			2.57	%(2)		2.54	%		2.65	%		2.83	%(2)
Ratio of net investment loss       to average net assets			- -1.34	%(2)		- -1.50	%		- -1.53	%		- -2.00	%(2)
Portfolio turnover rate			66	%		157	%		124	%		27	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	16.36		$	16.92		$	16.68		$	15.27
Income (loss) from investment operations:
Net investment income (loss)			0.00			(0.06	)		(0.10	)		(0.04	)
Net realized and unrealized gain             (loss) on investments			(0.29	)		2.65			1.53			1.47
Total from investment operations			(0.29	)		2.59			1.43			1.43
Less distributions from:
Net investment income			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Capital gains			(0.00	)		(3.15	)		(1.19	)		(0.02	)
Total distributions			(0.00	)		(3.15	)		(1.19	)		(0.02	)
Net asset value, end of period		$	16.07		$	16.36		$	16.92		$	16.68
Total return			- -1.77	%		16.88	%		8.48	%		9.38	%
Net assets, end of period (in millions)			$21			$24			$25			$25
Ratio of expenses to average net assets			1.41	%(2)		1.41	%		1.53	%		1.60	%(2)
Ratio of net investment loss       to average net assets			- -0.17	%(2)		- -0.37	%		- -0.56	%		- -0.82	%(2)
Portfolio turnover rate			66	%		157	%		124	%		27	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

SHAREHOLDER SUMMARY OF IVY VALUE FUND

Portfolio Highlights

On September 30, 2006, Ivy Value Fund had net assets totaling $85,354,795 invested in a diversified portfolio of:

97.99%	Common Stocks
1.90%	Cash and Cash Equivalents
0.11%	Preferred Stock

As a shareholder of the Fund, for every $100 you had invested on September 30, 2006,
your Fund owned:

Financial Services Stocks	$	34.70
Energy Stocks	$	12.46
Technology Stocks	$	11.87
Health Care Stocks	$	8.26
Utilities Stocks	$	7.27
Miscellaneous Stocks	$	7.10
Retail Stocks	$	4.37
Multi-Industry Stocks	$	4.35
Capital Goods Stocks	$	2.91
Consumer Nondurables Stocks	$	2.54
Raw Materials Stocks	$	2.16
Cash and Cash Equivalents	$	1.90
Preferred Stock	$	0.11

The Investments of Ivy Value Fund
September 30, 2006
COMMON STOCKS	Shares			Value
Aircraft - 2.60%
Lockheed Martin Corporation (A)		9,600	$	826,176
Raytheon Company		29,100		1,397,091
				2,223,267
Banks - 11.64%
Bank of America Corporation		80,856		4,331,456
Citigroup Inc.		47,113		2,340,103
National City Corporation		29,800		1,090,680
Wachovia Corporation		20,950		1,169,010
Wells Fargo & Company		27,800		1,005,804
				9,937,053
Beverages - 1.17%
Diageo plc, ADR		14,050		998,112
Business Equipment and Services - 1.49%
Realogy Businesses of Cendant Corporation*		16,950		384,426
Waste Management, Inc. (A)		24,200		887,656
				1,272,082
Capital Equipment - 0.94%
Illinois Tool Works Inc.		17,880		802,812
Chemicals - Petroleum and Inorganic - 0.98%
E.I. du Pont de Nemours and Company		19,450		833,238
Chemicals - Specialty - 0.68%
Air Products and Chemicals, Inc.		8,800		584,056
Communications Equipment - 1.26%
Cisco Systems, Inc. (A)*		31,300		719,430
Nokia Corporation, Series A, ADR		17,900		352,451
				1,071,881
Computers - Main and Mini - 5.13%
Hewlett-Packard Company (A)		97,300		3,569,937
Xerox Corporation*		52,200		812,232
				4,382,169
Computers - Peripherals - 0.91%
Adobe Systems Incorporated (A)*		20,800		779,272
Defense - 1.48%
General Dynamics Corporation (A)		17,600		1,261,392
Electronic Components - 0.49%
Motorola, Inc.		16,800		420,000
Finance Companies - 5.52%
Capital One Financial Corporation		18,000		1,415,880
Fannie Mae		28,500		1,593,435
Freddie Mac		25,700		1,704,681
				4,713,996
Food and Related - 1.37%
General Mills, Inc.		20,700		1,171,620
Furniture and Furnishings - 0.73%
Masco Corporation		22,800		625,176
Health Care - Drugs - 4.12%
AmerisourceBergen Corporation		11,300		510,760
McKesson Corporation		25,400		1,339,088
Pfizer Inc.		58,800		1,667,568
				3,517,416
Health Care - General - 1.93%
Boston Scientific Corporation (A)*		47,700		705,483
Da Vita Inc. (A)*		16,200		937,494
				1,642,977
Hospital Supply and Management - 2.21%
Aetna Inc.		26,000		1,028,300
Coventry Health Care, Inc.*		16,700		860,384
				1,888,684
Hotels and Gaming - 0.44%
Wyndham Worldwide businesses of Cendant Corporation*		13,560		379,273
Insurance - Life - 3.71%
UnumProvident Corporation	163,100			3,162,509
Insurance - Property and Casualty - 5.50%
Assurant, Inc.		17,000		907,970
Everest Re Group, Ltd. (A)		11,900		1,160,607
MBIA Inc.		7,700		473,088
St. Paul Companies, Inc. (The)		45,952		2,154,689
				4,696,354
Leisure Time Industry - 0.15%
Avis Budget Group, Inc.		6,780		124,006
Metal Fabrication - 1.97%
Loews Corporation, Carolina Group (A)		30,300		1,678,317
Motion Pictures - 0.64%
News Corporation Limited, Class A (A)		27,600		542,340
Motor Vehicle Parts - 0.89%
American Axle & Manufacturing Holdings, Inc. (A)		45,700		762,733
Multiple Industry - 4.35%
Altria Group, Inc.		30,600		2,342,430
Genworth Financial, Inc.		18,000		630,180
Mirant Corporation*		27,000		737,370
				3,709,980
Petroleum - International - 12.06%
Anadarko Petroleum Corporation		22,400		981,792
ChevronTexaco Corporation		41,600		2,698,176
ConocoPhillips		15,800		940,574
Devon Energy Corporation		18,200		1,149,330
Exxon Mobil Corporation (A)		67,406		4,522,943
				10,292,815
Petroleum - Services - 0.40%
Halliburton Company		11,900		338,555
Railroad - 1.74%
Union Pacific Corporation		16,900		1,487,200
Real Estate Investment Trust - 1.02%
Duke Realty Corporation		23,400		873,990
Restaurants - 1.76%
McDonald's Corporation		38,400		1,502,208
Retail - General Merchandise - 2.61%
Dollar General Corporation		52,750		718,982
Family Dollar Stores, Inc.		30,600		894,744
J. C. Penney Company, Inc. (A)		9,000		615,510
				2,229,236
Security and Commodity Brokers - 8.33%
Bear Stearns Companies Inc. (The)		7,100		994,710
CIT Group Inc.		20,000		972,600
J.P. Morgan Chase & Co.		71,302		3,348,342
Morgan Stanley		24,600		1,793,586
				7,109,238
Steel - 0.50%
Mittal Steel Company N.V.		12,200		423,828
Utilities - Electric - 4.11%
Energy East Corporation		52,100		1,235,812
Exelon Corporation		8,800		532,752
NRG Energy, Inc.*		18,300		828,990
PPL Corporation		27,700		911,330
				3,508,884
Utilities - Telephone - 3.16%
AT&T Inc.		52,400		1,706,144
Verizon Communications Inc.		26,600		987,658
				2,693,802
TOTAL COMMON STOCKS - 97.99%			$	83,640,471
(Cost: $71,449,090)
PREFERRED STOCK - 0.11%
Finance Companies
Federal National Mortgage Association,       5.375% Convertible		1	$	96,273
(Cost: $100,000)

SHORT-TERM SECURITY - 2.01%	Principal Amount in Thousands
Aluminum
Alcoa Incorporated,
5.4%, 10-2-06	$	1,715	$	1,714,743
(Cost: $1,714,743)
TOTAL INVESTMENT SECURITIES - 100.11%			$	85,451,487
(Cost: $73,263,833)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.11%)				(96,692	)
NET ASSETS -100.00 %			$	85,354,795

Notes to Schedule of Investments
Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts and REMIC - Real Estate Mortgage Investment Conduit.
*No dividends were paid during the preceding 12 months.
(A)Securities serve as cover for the following written options outstanding at September 30, 2006. (See Note 6 to financial statements):
Underlying Security	Contracts Subject to Call	Expiration Month/ Exercise Price	Premium Received			Market Value
Adobe Systems Incorporated	208	November/42.5		$	8,632	$	5,720
Boston Scientific Corporation	159	October/19			3,975		155
Boston Scientific Corporation	159	November/19			8,014		496
Boston Scientific Corporation	159	December/19			6,201		1,397
Cisco Systems, Inc.	152	October/22.5			5,188		12,160
General Dynamics Corporation	30	November/72.5			3,840		5,100
Hewlett-Packard Company	171	November/40			7,951		10,260
J. C. Penney Company, Inc.	135	November/73			10,003		15,991
Lockheed Martin Corporation	23	November/90			2,369		2,921
News Corporation Limited,       Class A	105	October/20			4,095		1,575
Waste Management, Inc.	58	October/37.5			2,552		2,320
				$	62,820	$	58,095
Underlying Security	Contracts Subject to Put	Expiration Month/ Exercise Price	Premium Received			Market Value
American Axle & Manufacturing       Holdings, Inc.	245	October/12.5		$	11,759	$	1,225
American Axle & Manufacturing       Holdings, Inc.	215	November/12.5			6,074		5,375
American Axle & Manufacturing       Holdings, Inc.	215	November/15			19,597		15,050
Da Vita Inc.	53	October/45			2,332		398
Everest Re Group, Ltd.	44	October/85			4,488		110
J. C. Penney Company, Inc.	38	November/55			2,394		760
Loews Corporation, Carolina Group	36	October/55			3,230		3,240
				$	49,874	$	26,158
See Note 1 to financial statements for security valuation and other significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and depreciation of investments owned for Federal income tax purposes.

Statement of Assets and Liabilities
     IVY VALUE FUND
     September 30, 2006
     (In Thousands, Except for Per Share Amounts)

ASSETS
Investment securities - at value (cost - $73,264) (Notes 1 and 3)	$	85,451
Receivables:
Fund shares sold		548
Dividends and interest		84
Investment securities sold		50
Prepaid and other assets		18
Total assets		86,151
LIABILITIES
Payable for investment securities purchased		441
Payable to Fund shareholders		91
Outstanding written options - at value (premium received - $113) (Note 6)		84
Accrued management fee (Note 2)		48
Due to custodian		36
Accrued service fee (Note 2)		35
Accrued shareholder servicing (Note 2)		31
Accrued accounting services fee (Note 2)		4
Accrued distribution fee (Note 2)		4
Other		22
Total liabilities		796
Total net assets	$	85,355
NET ASSETS
Capital paid in (shares authorized - unlimited)	$	72,051
Accumulated undistributed income:
Accumulated undistributed net investment income		33
Accumulated undistributed net realized gain on                 investment transactions		1,055
Net unrealized appreciation in value of investments		12,216
Net assets applicable to outstanding units of capital	$	85,355
Net asset value per share (net assets divided by shares outstanding):
Class A		$17.83
Class B		$17.66
Class C		$17.71
Class Y		$17.83
Capital shares outstanding:
Class A		3,562
Class B		290
Class C		245
Class Y		694

See Notes to Financial Statements.

Statement of Operations
     IVY VALUE FUND
     For the Six Months Ended September 30, 2006
     (In Thousands)

INVESTMENT INCOME
Income (Note 1B):
Dividends (net of foreign withholding taxes of $1)	$	831
Interest and amortization		57
Total income		888
Expenses (Note 2):
Accounting services fee		23
Audit fees		12
Custodian fees		7
Distribution fee:
Class A		3
Class B		18
Class C		15
Class Y		–	*
Investment management fee		282
Legal fees		1
Service fee:
Class A		72
Class B		6
Class C		5
Class Y		15
Shareholder servicing:
Class A		107
Class B		14
Class C		10
Class Y		9
Other		38
Total expenses		637
Net investment income		251
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1 AND 3)
Realized net gain on securities		647
Realized net gain on written options		104
Realized net gain on investments		751
Unrealized appreciation in value of securities during the period		2,268
Unrealized appreciation in value of written options
during the period		25
Unrealized appreciation in value of investments during the period		2,293
Net gain on investments		3,044
Net increase in net assets resulting from operations	$	3,295

*Not shown due to rounding.

See Notes to Financial Statements.

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

	For the six months ended September 30,				For the fiscal year ended March 31,
	2006				2006
INCREASE IN NET ASSETS
Operations:
Net investment income		$	251		$	464
Realized net gain on investments			751			4,588
Unrealized appreciation			2,293			708
Net increase in net assets resulting                       from operations			3,295			5,760
Distributions to shareholders from (Note 1F):(1)
Net investment income:
Class A			(191	)		(341	)
Class B			(–	)		(1	)
Class C			(–	)		(2	)
Class Y			(49	)		(160	)
Realized gains on investment transactions:
Class A			(–	)		(–	)
Class B			(–	)		(–	)
Class C			(–	)		(–	)
Class Y			(–	)		(–	)
			(240	)		(504	)
Capital share transactions (Note 5)			2,882			7,758
Total increase			5,937			13,014
NET ASSETS
Beginning of period			79,418			66,404
End of period		$	85,355		$	79,418
Undistributed net investment income		$	33		$	22

(1)See "Financial Highlights" on pages 219 - 222.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,					For the fiscal period ended				For the fiscal year ended			For the period from 10-1-01 to			For the fiscal year ended
	9-30-06				2006			2005		3-31-04				7-31-03			7-31-02			9-30-01
Net asset value,       beginning of period		$	17.17		$	16.04		$	14.54		$	12.54		$	11.81		$	12.59		$	15.08
Income (loss) from       investment operations:
Net investment             income			0.06			0.10			0.15			0.08			0.12			0.08			0.09
Net realized and             unrealized gain             (loss) on             investments			0.66			1.14			1.48			1.98			0.72			(0.78	)		(2.50	)
Total from investment       operations			0.72			1.24			1.63			2.06			0.84			(0.70	)		(2.41	)
Less distributions from:
Net investment             income			(0.06	)		(0.11	)		(0.13	)		(0.06	)		(0.11	)		(0.08	)		(0.08	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.06	)		(0.11	)		(0.13	)		(0.06	)		(0.11	)		(0.08	)		(0.08	)
Net asset value,       end of period		$	17.83		$	17.17		$	16.04		$	14.54		$	12.54		$	11.81		$	12.59
Total return(1)			4.18	%		7.75	%		11.21	%		16.32	%		7.23	%		- -5.72	%	- -15.97		%
Net assets, end of period       (in millions)			$64			$58			$41			$52			$64			$58			$66
Ratio of expenses to       average net assets       including expense       waiver			1.51	%(2)		1.53	%		1.47	%		1.45	%(2)(3)		1.29	%		1.24	%(2)		1.24	%
Ratio of net investment       income to average       net assets including       expense waiver			0.69	%(2)		0.65	%		0.92	%		0.61	%(2)(3)		1.05	%		0.70	%(2)		0.61	%
Ratio of expenses to       average net assets       excluding expense       waiver			1.51	%(2)(4)		1.53	%(4)		1.47	%(4)		1.52	%(2)(3)		1.50	%		1.41	%(2)		1.39	%
Ratio of net investment       income to average       net assets excluding       expense waiver			0.69	%(2)(4)		0.65	%(4)		0.92	%(4)		0.53	%(2)(3)		0.84	%		0.53	%(2)		0.46	%
Portfolio turnover rate			41	%		63	%		81	%		86	%		123	%		95	%		148	%

(1)Total return calculated without taking into account the sales load deducted on an initial purchase.
(2)Annualized.
(3)In connection with the reorganization plan effected December 8, 2003, Class B and Class C shares of the predecessor Advantus Fund were exchanged into Class A shares at the time of the merger. The ratios shown above reflect a blended rate that includes the effect of income and expenses for those Class B and Class C shares from August 1, 2003 up to the time of the merger. Actual expenses that applied to Class A shareholders were lower than shown above.
(4)There was no waiver of expenses during the period.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	17.04		$	15.97		$	14.50		$	13.63
Income (loss) from investment operations:
Net investment income (loss)			(0.02	)		(0.04	)		0.03			0.01
Net realized and unrealized             gain on investments			0.64			1.12			1.44			0.90
Total from investment operations			0.62			1.08			1.47			0.91
Less distributions from:
Net investment income			(0.00	)		(0.01	)		(0.00	)		(0.04	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.01	)		(0.00	)		(0.04	)
Net asset value, end of period		$	17.66		$	17.04		$	15.97		$	14.50
Total return			3.64	%		6.73	%		10.14	%		6.65	%
Net assets, end of period (in millions)			$5			$5			$2			$1
Ratio of expenses to average net assets			2.49	%(2)		2.50	%		2.53	%		3.12	%(2)
Ratio of net investment income (loss) to       average net assets			- -0.28	%(2)		- -0.33	%		0.07	%		- -1.29	%(2)
Portfolio turnover rate			41	%		63	%		81	%		86	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	17.08		$	16.00		$	14.51		$	13.63
Income (loss) from investment operations:
Net investment income (loss)			(0.01	)		(0.04	)		0.03			0.02
Net realized and unrealized             gain on investments			0.64			1.13			1.46			0.90
Total from investment operations			0.63			1.09			1.49			0.92
Less distributions from:
Net investment income			(0.00	)		(0.01	)		(0.00	)		(0.04	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.00	)		(0.01	)		(0.00	)		(0.04	)
Net asset value, end of period		$	17.71		$	17.08		$	16.00		$	14.51
Total return			3.69	%		6.80	%		10.27	%		6.73	%
Net assets, end of period (in millions)			$4			$4			$3			$1
Ratio of expenses to average net assets			2.40	%(2)		2.41	%		2.42	%		2.90	%(2)
Ratio of net investment income (loss) to       average net assets			- -0.19	%(2)		- -0.23	%		0.15	%		- -1.18	%(2)
Portfolio turnover rate			41	%		63	%		81	%		86	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

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

	For the six months ended				For the fiscal year ended March 31,						For the period from 12-8-03(1) to
	9-30-06				2006			2005			3-31-04
Net asset value, beginning of period		$	17.18		$	16.05		$	14.54		$	13.63
Income from investment operations:
Net investment income			0.08			0.13			0.17			0.01
Net realized and unrealized             gain on investments			0.64			1.15			1.49			0.95
Total from investment operations			0.72			1.28			1.66			0.96
Less distributions from:
Net investment income			(0.07	)		(0.15	)		(0.15	)		(0.05	)
Capital gains			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total distributions			(0.07	)		(0.15	)		(0.15	)		(0.05	)
Net asset value, end of period		$	17.83		$	17.18		$	16.05		$	14.54
Total return			4.28	%		7.99	%		11.44	%		7.05	%
Net assets, end of period (in millions)			$12			$12			$20			$22
Ratio of expenses to average net assets			1.28	%(2)		1.31	%		1.34	%		1.48	%(2)
Ratio of net investment income to       average net assets			0.92	%(2)		0.89	%		1.09	%		0.35	%(2)
Portfolio turnover rate			41	%		63	%		81	%		86	%(3)

(1)Commencement of operations of the class.
(2)Annualized.
(3)For the eight months ended March 31, 2004.

See Notes to Financial Statements.

Notes To Financial Statements
     September 30, 2006NOTE 1 - Significant Accounting Policies

Ivy Funds (formerly Ivy Fund) (the Trust) is organized as a Massachusetts business trust under a Declaration of Trust dated December 21, 1983 and is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Trust issues fourteen series of capital shares; each series represents ownership of a separate mutual fund (Fund). The assets belonging to each Fund are held separately by the custodian. The capital shares of each Fund represent a pro rata beneficial interest in the principal, net income and realized and unrealized capital gains or losses of its respective investments and other assets. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A. Security valuation - Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Restricted securities and securities for which quotations are not readily available or are deemed not to be reliable because of significant events or circumstances identified between the closing of their principal markets and the closing of the New York Stock Exchange are valued at fair value as det ermined in good faith under procedures established by and under the general supervision of the Trust's Board of Trustees. Management's valuation committee makes fair value determinations for the Trust, subject to the supervision of the Board of Trustees. Short-term debt securities, purchased with less than 60 days to maturity, are valued at amortized cost, which approximates market value. Short-term debt securities denominated in foreign currencies are valued at amortized cost in that currency.

B. Security transactions and related investment income - Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes over the remaining lives of the bonds. Dividend income is recorded on the ex-dividend date except 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 Trust combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.

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

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

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

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

H. Recently issued accounting standards - In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity, including mutual funds, in a tax return before being measured and recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Trust will adopt FIN 48 during 2007 and its potential impact on each Fund's financial statements, if any, is currently being assessed by management. In September 2006, FASB issued Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements." SFAS No. 157 defines  fair value for purposes of financial statement presentation, establishes a hierarchy for & nbsp;measuring fair value in generally accepted accounting principles and expands  financial statement disclosures about fair value measurements that are relevant  to mutual funds. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007.   The Trust will adopt SFAS No. 157 during  2008 and its potential impact, if any, on each Fund's financial statements is currently being assessed by management.

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

NOTE 2 - Investment Management And Payments To Affiliated Persons

Ivy Investment Management Company (IICO), a wholly owned subsidiary of Waddell & Reed Financial, Inc. (WDR), serves as the investment manager for each Fund. 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. The fee is payable by each Fund at the following annual rates:

Fund	Net Asset Breakpoints	Annual Rate
Ivy Balanced Fund	Up to $1 Billion	0.70%
	Over $1 Billion up to $2 Billion	0.65%
	Over $2 Billion up to $3 Billion	0.60%
	Over $3 Billion	0.55%
Ivy Bond Fund	Up to $500 Million	0.525%
	Over $500 Million and up to $1 Billion	0.50%
	Over $1 Billion and up to $1.5 Billion	0.45%
	Over $1.5 Billion	0.40%
Ivy Cundill Global Value Fund	Up to $500 Million	1.00%
	Over $500 Million and up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.76%
Ivy Dividend Income Fund	Up to $1 Billion	0.70%
	Over $1 Billion up to $2 Billion	0.65%
	Over $2 Billion up to $3 Billion	0.60%
	Over $3 Billion	0.55%
Ivy European Opportunities Fund	Up to $250 Million	1.00%
	Over $250 Million up to $500 Million	0.85%
	Over $500 Million	0.75%
Ivy Global Natural Resources Fund	Up to $500 Million	1.00%
	Over $500 Million and up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.76%
Ivy International Fund	Up to $1 Billion	0.85%
	Over $1 Billion up to $2 Billion	0.83%
	Over $2 Billion up to $3 Billion	0.80%
	Over $3 Billion	0.70%
Ivy International Balanced Fund	Up to $1 Billion	0.70%
	Over $1 Billion up to $2 Billion	0.65%
	Over $2 Billion up to $3 Billion	0.60%
	Over $3 Billion	0.55%
Ivy International Value Fund	Up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.70%
Ivy Mortgage Securities Fund	Up to $500 Million	0.50%
	Over $500 Million and up to $1 Billion	0.45%
	Over $1 Billion and up to $1.5 Billion	0.40%
	Over $1.5 Billion	0.35%
Ivy Pacific Opportunities Fund	Up to $500 Million	1.00%
	Over $500 Million and up to $1 Billion	0.85%
	Over $1 Billion and up to $2 Billion	0.83%
	Over $2 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.76%
Ivy Real Estate Securities Fund	Up to $1 Billion	0.90%
	Over $1 Billion up to $2 Billion	0.87%
	Over $2 Billion up to $3 Billion	0.84%
	Over $3 Billion	0.80%
Ivy Small Cap Value Fund	Up to $1 Billion	0.85%
	Over $1 Billion up to $2 Billion	0.83%
	Over $2 Billion up to $3 Billion	0.80%
	Over $3 Billion	0.76%
Ivy Value Fund	Up to $1 Billion	0.70%
	Over $1 Billion up to $2 Billion	0.65%
	Over $2 Billion up to $3 Billion	0.60%
	Over $3 Billion	0.55%

Prior to March 27, 2006, the fee was payable by Ivy International Fund and Ivy International Value Fund at the following annual rates:

Ivy International Fund	Up to $2 Billion	1.00%
	Over $2 Billion and up to $2.5 Billion	0.90%
	Over $2.5 Billion and up to $3 Billion	0.80%
	Over $3 Billion	0.70%
Ivy International Value Fund	Up to $500 Million	1.00%
	Over $500 Million to $1 Billion	0.85%
	Over $1 Billion up to $2 Billion	0.83%
	Over $2 Billion up to $3 Billion	0.80%
	Over $3 Billion	0.76%

These fees are accrued daily and are paid monthly. However, IICO has voluntarily agreed to waive its management fee for Ivy Dividend Income Fund on any day that the Fund's net assets are less than $25 million, subject to IICO's right to change or modify this waiver.

Mackenzie Financial Corporation (MFC) serves as subadvisor to Ivy Global Natural Resources under an agreement with IICO and receives a fee as follows: 0.50% of the Fund's average daily net assets up to $500 million, 0.425% of net assets over $500 million and up to $1 billion, 0.415% of net assets over $1 billion and up to $2 billion, 0.40% of net assets over $2 billion and up to $3 billion, and 0.38% of net assets over $3 billion.

Cundill Investment Research Ltd. served as subadvisor to Ivy Cundill Global Value Fund under an agreement with IICO and received a fee that is shown in the following table:

Fund	Net Asset Breakpoints	Annual Rate
Ivy Cundill Global Value Fund	On the first $500 Million	0.50%
	On the next $500 Million	0.425%
	On the next $1 Billion	0.415%
	On the next $1 Billion	0.40%
	On all assets exceeding $3 Billion	0.38%

Effective September 22, 2006, MFC became the interim subadvisor to Ivy Cundill Global Value Fund. Its fee is the same as that payable to Cundill Investment Research Ltd.

Henderson Global Investors (North America) Inc. (HGINA) serves as subadvisor to Ivy European Opportunities Fund under an agreement with IICO. Henderson Investment Management Ltd., under a subadvisory agreement with HGINA, serves as subadvisor to the Fund. Prior to July 1, 2004 HGINA received a fee payable monthly at an annual rate of 0.45% of the first $100,000,000 of net assets and 0.40% thereafter of the portion of the Fund's average daily net assets managed by HGINA.

Effective July 1, 2004, HGINA receives a fee payable monthly at an annual rate of 0.50% of average net assets.

Advantus Capital Management, Inc. serves as subadvisor to Ivy Bond Fund, Ivy Mortgage Securities Fund and Ivy Real Estate Securities Fund under an agreement with IICO and receives a fee equal to, on an annual basis, 0.27%, 0.30% and 0.55% of the respective Fund's average net assets.

BlackRock Financial Management, Inc. served as subadvisor to Ivy Small Cap Value Fund under an agreement with IICO and received a fee equal to, on an annual basis, 0.50% of the Fund's average net assets. Effective September 27, 2006, BlackRock Capital Management, Inc, became the interim subadvisor to the Fund. Its fee is the same as that payable to the predecessor.

Templeton Investment Counsel, LLC serves as subadvisor to Ivy International Balanced Fund under an agreement with IICO and receives a fee that is shown in the following table:

Fund	Net Asset Breakpoints	Annual Rate
Ivy International Balanced Fund	On the first $100 Million	0.50%
	All net assets exceeding $100 Million	0.40%

Pursuant to a Master Fund Accounting Services Agreement, IICO provides certain accounting and pricing services for each Fund. As of March 18, 2003, IICO assigned its responsibilities under the Accounting Services Agreement to Waddell & Reed Services Company (WRSCO), an indirect subsidiary of WDR. For these services, each Fund pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table:

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

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

Under the Shareholder Servicing Agreement, with respect to Class A, Class B, Class C, Class I and Advisor Class shares, for each shareholder account that was in existence at any time during the prior month: Ivy Balanced Fund, Ivy Dividend Income Fund, Ivy International Balanced Fund, Ivy Real Estate Securities Fund, Ivy Small Cap Value Fund and Ivy Value Fund pay WRSCO a monthly fee of $1.5792; Ivy Bond Fund and Ivy Mortgage Securities Fund pay WRSCO a monthly fee of $1.6958; and Ivy Cundill Global Value Fund, Ivy European Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Fund, Ivy International Value Fund and Ivy Pacific Opportunities Fund each pay WRSCO a monthly fee of $1.5042, except that, effective September 1, 2006, for broker-serviced accounts, each Fund pays a monthly charge of $0.50. For Class Y shares, each Fund pays WRSCO a monthly fee at an annual rate of 0.15% of the average daily net assets of the class for the preceding month. For Class R shares, each Fund pays WRSCO a m onthly fee at an annual rate of 0.20% of the average daily net assets of the class for the preceding month. Effective September 1, 2006, the Shareholder Servicing Agreement with respect to Class A, Class B and Class C shares has been revised so that each Fund pays WRSCO an annual fee (payable monthly) for each account of the Fund that is non-networked and is as shown above; however, WRSCO has agreed to reduce those fees if the number of total Fund accounts within the Waddell & Reed Fund Complex, which is comprised of the Ivy Family of Funds and the Waddell & Reed Advisors Funds, W&R Target Funds, Inc. and Waddell & Reed InvestEd Portfolios, Inc., reaches certain levels. For certain networked accounts (that is, those accounts whose Fund shares are purchased through certain financial companies who are agents of the Funds for the limited purpose of purchases and sales), WRSCO has agreed to reduce its monthly per account fees charged to the Funds to $0.50 per account, with the Funds bearing the r emainder of the costs charged by the financial services companies (which historically has averaged $6.00 per year per account but could be $20.00, or higher, per account). Each Fund also reimburses WRSCO for certain out-of-pocket costs for all classes. Certain broker-dealers that maintain shareholder accounts with each Fund through an omnibus account provide transfer agent and other shareholder-related services that would otherwise be provided by WRSCO if the individual accounts that comprise the omnibus account were opened by their beneficial owners directly. WRSCO pays such broker-dealers a per account fee for each open account within the omnibus account, or a fixed rate (e.g., 0.10%) fee, based on the average daily net asset value of the omnibus account (or a combination thereof).

Pursuant to an Administrative Services Agreement, IICO provides certain administrative services to each Fund. The administrative fee for each Fund is a monthly fee at the annual rate of 0.01% of each Fund's average daily net assets.

As principal underwriter for the Trust's shares, IFDI receives sales commissions (which are not an expense of the Trust) for Class A shares. A contingent deferred sales charge (CDSC) may be assessed against a shareholder's redemption amount of Class B, Class C or certain Class A shares and is paid to IFDI. During the six-month period ended September 30, 2006, IFDI received the following amounts in sales commissions and CDSC:

	Sales Commissions			CDSC
				Class A		Class B		Class C
Ivy Balanced Fund		$	54,618	$	–	$	1,833	$	121
Ivy Bond Fund			97,741		–		1,055		102
Ivy Cundill Global Value Fund			1,303,508		9,934		39,848		28,371
Ivy Dividend Income Fund			171,980		–		3,939		1,184
Ivy European Opportunities Fund			689,127		43,292		15,274		2,346
Ivy Global Natural Resources Fund			3,775,557		25,961		236,552		117,888
Ivy International Fund			81,297		–		4,892		938
Ivy International Balanced Fund			336,885		31,295		1,147		437
Ivy International Value Fund			291,505		101		1,469		1,460
Ivy Mortgage Securities Fund			539,602		253		20,120		3,638
Ivy Pacific Opportunities Fund			1,065,607		66,288		8,928		3,429
Ivy Real Estate Securities Fund			837,082		122		9,313		1,056
Ivy Small Cap Value Fund			217,503		99		2,946		336
Ivy Value Fund			130,638		–		797		160

With respect to Class A, Class B and Class C shares, IFDI pays sales commissions and all expenses in connection with the sale of the Trust's shares, except for registration fees and related expenses. During the six-month period ended September 30, 2006, IFDI paid the following amounts:

Ivy Balanced Fund	$	47,421
Ivy Bond Fund		90,920
Ivy Cundill Global Value Fund		1,471,380
Ivy Dividend Income Fund		161,776
Ivy European Opportunities Fund		677,159
Ivy Global Natural Resources Fund		5,729,088
Ivy International Fund		109,078
Ivy International Balanced Fund		354,819
Ivy International Value Fund		378,372
Ivy Mortgage Securities Fund		505,681
Ivy Pacific Opportunities Fund		972,534
Ivy Real Estate Securities Fund		769,760
Ivy Small Cap Value Fund		201,478
Ivy Value Fund		121,288

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

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

Under the Distribution and Service Plan for Class B shares and Class C shares adopted by the Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, each Fund may pay IFDI a distribution fee not to exceed 0.75% of the Fund's average annual net assets attributable to that class to compensate IFDI for its services in connection with the distribution of shares of that class. The Class B Plan and the Class C Plan each permit IFDI to receive compensation, through the distribution fee, for its distribution activities for that class.

Under the Class Y Plan, each Fund may pay IFDI a fee of up to 0.25%, on an annual basis, of the average daily net assets attributable to that class to compensate IFDI for, either directly or through third parties, distributing the Class Y shares of that Fund, providing personal service to Class Y shareholders and/or maintenance of Class Y shareholder accounts.

Under the Class R Plan, each Fund may pay IFDI a fee of up to 0.50%, on an annual basis, of the average daily net assets attributable to that class to compensate IFDI for, either directly or through third parties, distributing the Class R shares of that Fund, providing personal service to Class R shareholders and/or maintenance of Class R shareholder accounts.

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

Fund and Class	Expense Limitation (as a percentage of average net assets of each Class)
Ivy Cundill Global Value Fund, Class A		1.90%
Ivy Cundill Global Value Fund, Class C		2.55%
Ivy Cundill Global Value Fund, Class Y		1.20%
Ivy Global Natural Resources Fund, Class A		1.70%
Ivy Global Natural Resources Fund, Class C		2.40%
Ivy Global Natural Resources Fund, Class Y		1.20%

During the six-month period ended September 30, 2006, IFDI reimbursed the Fund's service fees (in thousands) as shown:

Ivy Cundill Global Value Fund, Class Y	$	18
Ivy Global Natural Resources Fund, Class Y		68

The Fund paid Trustees' regular compensation of $154,581, which is included in other expenses.

NOTE 3 - Investment Securities Transactions

Investment securities transactions for the six-month period ended September 30, 2006 are summarized as follows:

	Ivy Balanced Fund		Ivy Bond Fund		Ivy Cundill Global Value Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	12,472,933	$	16,156,611	$	143,747,646
Purchases of U.S. government securities		–		14,268,934		–
Purchases of short-term       securities		356,209,147		245,681,700		7,275,477,680
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government       securities		17,260,309		10,528,101		97,479,359
Proceeds from maturities and sales       of U.S. government securities		538,980		15,767,788		–
Proceeds from maturities and       sales of short-term securities		357,763,514		242,144,373		7,289,693,000

	Ivy Dividend Income Fund		Ivy European Opportunities Fund		Ivy Global Natural Resources Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	12,847,626	$	89,404,893	$	2,332,508,809
Purchases of U.S. government       securities		–		–		–
Purchases of short-term       securities		714,897,046		1,171,612,214		14,377,249,535
Proceeds from maturities and       sales of investment securities,       excluding short-term and       U.S. government securities		7,421,444		60,237,450		2,242,578,864
Proceeds from maturities and       sales of U.S. government       securities		–		–		–
Proceeds from maturities and       sales of short-term securities		702,951,000		1,166,210,434		13,824,055,617

	Ivy International Fund		Ivy International Balanced Fund		Ivy International Value Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities	$	100,472,933	$	60,633,823	$	97,727,081
Purchases of U.S. government       securities		–		–		–
Purchases of short-term securities		596,566,814		665,172,435		431,087,146
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government       securities		117,949,219		21,271,090		58,999,852
Proceeds from maturities and sales       of U.S. government securities		–		–		–
Proceeds from maturities and sales       of short-term securities		595,447,909		661,083,937		430,402,054

		Ivy Mortgage Securities Fund		Ivy Pacific Opportunities Fund		Ivy Real Estate Securities Fund
Purchases of investment securities,       excluding short-term and       U.S. government securities		$	40,865,457	$	139,528,786	$	145,401,043
Purchases of U.S. government       securities			165,227,952		–		–
Purchases of short-term securities	1,343,955,181				823,405,238		556,970,884
Proceeds from maturities and sales       of investment securities, excluding       short-term and U.S. government       securities			18,017,706		82,838,462		105,942,817
Proceeds from maturities and sales       of U.S. government securities			175,086,923		–		–
Proceeds from maturities and sales       of short-term securities	1,347,055,927				823,734,638		546,487,782

	Ivy Small Cap Value Fund		Ivy Value Fund
Purchases of investment securities, excluding       short-term and U.S. government securities	$	83,249,850	$	35,423,873
Purchases of U.S. government securities		–		–
Purchases of short-term securities		460,772,283		278,188,684
Proceeds from maturities and sales       of investment securities,       excluding short-term and       U.S. government securities		79,962,304		32,441,305
Proceeds from maturities and sales of       U.S. government securities		–		–
Proceeds from maturities and sales of       short-term securities		460,669,000		278,031,000

For Federal income tax purposes, cost of investments owned at September 30, 2006 and the related unrealized appreciation (depreciation) were as follows:

	Cost		Appreciation		Depreciation		Aggregate Appreciation (Depreciation)
Ivy Balanced Fund	$	80,141,665	$	15,060,824	$	584,613	$	14,476,211
Ivy Bond Fund		67,325,470		499,810		702,225		(202,415	)
Ivy Cundill Global       Value Fund		859,566,242		134,880,862		48,157,814		86,723,048
Ivy Dividend       Income Fund		85,319,846		16,863,434		379,139		16,484,295
Ivy European       Opportunities Fund		301,850,110		76,494,839		7,935,027		68,559,812
Ivy Global Natural       Resources Fund		3,642,055,234		412,543,416		91,768,913		320,774,503
Ivy International Fund		178,512,153		42,642,241		2,574,885		40,067,356
Ivy International       Balanced Fund		153,885,937		23,545,516		1,560,778		21,984,738
Ivy International       Value Fund		128,643,139		11,818,713		1,491,599		10,327,114
Ivy Mortgage       Securities Fund		311,398,451		1,722,616		5,708,957		(3,986,341	)
Ivy Pacific       Opportunities Fund		251,549,238		45,343,820		10,454,727		34,889,093
Ivy Real Estate       Securities Fund		430,078,102		149,453,726		290		149,453,436
Ivy Small Cap       Value Fund		121,758,905		9,841,397		2,997,316		6,844,081
Ivy Value Fund		73,411,194		13,396,580		1,356,287		12,040,293

NOTE 4 - Federal Income Tax Matters

For Federal income tax purposes, the Funds' distributed and undistributed earnings and profit for the fiscal year ended March 31, 2006 and the related Capital Loss Carryover and post-October activity were as follows:

	Ivy Balanced Fund			Ivy Bond Fund
Net ordinary income	$	1,023,512		$	2,232,116
Distributed ordinary income		939,508			2,232,474
Undistributed ordinary income		135,433	*		29,458	*
Realized long-term capital gains		–			–
Distributed long-term capital gains		–			–
Undistributed long-term capital gains		–			–
Capital loss carryover		–			–
Post-October losses deferred		–			317,165

	Ivy Cundill Global Value Fund			Ivy Dividend Income Fund				Ivy European Opportunities Fund
Net ordinary income		$	15,337,501		$	442,427			$	636,432
Distributed ordinary income			15,451,789			426,737				636,432
Undistributed ordinary income			114,827			39,689	*			–
Realized long-term capital gains			18,488,348			–				–
Distributed long-term capital gains			15,650,361			138,435				–
Undistributed long-term capital gains			3,596,793			–				–
Capital loss carryover			–			179,769				–
Post-October losses deferred			–			–				–

	Ivy Global Natural Resources Fund			Ivy International Fund			Ivy International Balanced Fund
Net ordinary income		$	135,371,619		$	144,755		$	4,471,422
Distributed ordinary income			101,176,422			144,755			3,209,232
Undistributed ordinary income			110,003,336			–			1,520,930	*
Realized long-term capital gains			79,698,894			–			4,959,351
Distributed long-term capital gains			34,655,535			–			3,943,335
Undistributed long-term capital gains			49,157,944			–			2,728,786
Capital loss carryover			–			–			–
Post-October losses deferred			1,346,087			–			–

	Ivy International Value Fund			Ivy Mortgage Securities Fund				Ivy Pacific Opportunities Fund
Net ordinary income		$	–		$	11,160,756			$	5,768,344
Distributed ordinary income			–			11,110,574				905,339
Undistributed ordinary income			–			171,655	*			4,863,005
Realized long-term capital gains			–			–				2,307,247
Distributed long-term capital gains			–			–				705,425
Undistributed long-term capital gains			–			–				1,601,822
Capital loss carryover			–			164,447				–
Post-October losses deferred			–			664,938				97,573

	Ivy Real Estate Securities Fund				Ivy Small Cap Value Fund			Ivy Value Fund
Net ordinary income		$	9,033,062			$	3,748,108		$	465,651
Distributed ordinary income			9,460,563				387,240			503,885
Undistributed ordinary income			1,908,079	*			3,360,868			29,140	*
Realized long-term capital gains			11,385,412				10,517,925			475,195
Distributed long-term capital gains			10,320,484				20,474,055			–
Undistributed long-term capital gains			5,490,304				1,066,976			475,195
Capital loss carryover			–				–			–
Post-October losses deferred			266				–			–

*This entire amount was distributed prior to September 30, 2006.

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

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

	Ivy Balanced Fund			Ivy Bond Fund			Ivy Dividend Income Fund
March 31, 2009		$	–		$	28,681		$	–
March 31, 2010			3,228,915			–			–
March 31, 2014			–			–			179,769
Total carryover		$	3,228,915		$	28,681		$	179,769

	Ivy European Opportunities Fund			Ivy Global Natural Resources Fund			Ivy International Fund
March 31, 2007		$	–		$	143,237		$	–
March 31, 2008			–			–			814,927
March 31, 2009			–			–			111,513,617
March 31, 2010			19,525,164			167,845			146,210,535
March 31, 2011			12,058,021			–			47,213,802
March 31, 2012			–			–			–
Total carryover		$	31,583,185		$	311,082		$	305,752,881

	Ivy International Value Fund			Ivy Mortgage Securities Fund			Ivy Pacific Opportunities Fund
March 31, 2007		$	–		$	–		$	157,220
March 31, 2008			–			–			157,220
March 31, 2009			–			–			157,220
March 31, 2010			–			–			157,220
March 31, 2011			1,139,666			–			–
March 31, 2012			2,150,883			–			–
March 31, 2014			–			164,447			–
Total carryover		$	3,290,549		$	164,447		$	628,880

Ivy Developing Markets Fund was merged into Ivy Pacific Opportunities Fund as of June 16, 2003. At the time of the merger, Ivy Developing Markets Fund had capital loss carryovers available to offset future gains of the Ivy Pacific Opportunities Fund. These carryovers are limited to $157,220 for each period ending from March 31, 2007 through 2010 plus any unused limitations from prior years.

Ivy International Growth Fund was merged into Ivy International Fund as of March 27, 2006 (see Note 9). At the time of the merger, Ivy International Growth Fund had capital loss carryovers available to offset future gains of the Ivy International Fund. These carryovers are limited to $4,168,614 for the period ending March 31, 2007 and $3,234,412 for each period ending from March 31, 2008 through 2010 plus any unused limitations from prior years and the amount of certain built-in gains realized, if any.

Note 5 - Multiclass Operations

Each Fund within the Trust offers four classes of shares, Class A, Class B, Class C and Class Y, each of which have equal rights as to assets and voting privileges. In addition, Ivy Global Natural Resources Fund and Ivy Real Estate Securities Fund offer Class R shares, which also have equal rights as to assets and voting privileges. Ivy Cundill Global Value Fund, Ivy European Opportunities Fund, Ivy Global Natural Resources Fund, Ivy International Fund, Ivy International Value Fund and Ivy Pacific Opportunities Fund also offered Advisor Class shares and Ivy Cundill Global Value Fund and Ivy International Fund also offered Class I shares. Advisor Class and Class I shares are no longer available for investment. A comprehensive discussion of the terms under which shares of each class are offered is contained in the Prospectuses and the Statement of Additional Information for the Trust.

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

Transactions in capital stock for the six-month period ended September 30, 2006 are summarized below. Amounts are in thousands.

	Ivy Balanced Fund				Ivy Bond Fund
Shares issued from sale of shares:
Class A			373				911
Class B			32				43
Class C			39				199
Class Y			78				3
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			19				57
Class B			–	*			2
Class C			–	*			3
Class Y			13				–	*
Shares redeemed:
Class A			(496	)			(412	)
Class B			(29	)			(21	)
Class C			(37	)			(128	)
Class Y			(412	)			(2	)
Increase (decrease) in outstanding capital shares			(420	)			655
Value issued from sale of shares:
Class A		$	5,692			$	9,367
Class B			480				444
Class C			598				2,048
Class Y			1,189				30
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			284				585
Class B			1				24
Class C			3				33
Class Y			200				1
Value redeemed:
Class A		(7,555		)		(4,232		)
Class B			(438	)			(218	)
Class C			(561	)			(1,327	)
Class Y		(6,261		)			(17	)
Increase (decrease) in outstanding capital		$	(6,368	)		$	6,738
*Not shown due to rounding

	Ivy Cundill Global Value Fund				Ivy Dividend Income Fund				Ivy European Opportunities Fund
Shares issued from sale of shares:
Class A			6,773				1,588				1,840
Class B			367				99				96
Class C			2,120				206				198
Class Y			112				28				44
Advisor Class			–				NA				–
Class I			–				NA				NA
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				27				–
Class B			–				1				–
Class C			–				2				–
Class Y			–				–	*			–
Advisor Class			–				NA				–
Class I			–				NA				NA
Shares redeemed:
Class A			(5,307	)			(623	)			(903	)
Class B			(417	)			(34	)			(167	)
Class C			(1,160	)			(86	)			(201	)
Class Y			(244	)			(10	)			(37	)
Advisor Class			(10	)			NA				(15	)
Class I			(–	)			NA				NA
Increase in outstanding capital shares			2,234				1,198				855
Value issued from sale of shares:
Class A		$	104,460			$	23,119			$	61,822
Class B			5,541				1,436				3,102
Class C			31,964				2,974				6,492
Class Y			1,732				404				1,484
Advisor Class			–				NA				–
Class I			–				NA				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				396				–
Class B			–				10				–
Class C			–				27				–
Class Y			–				5				–
Advisor Class			–				NA				–
Class I			–				NA				NA
Value redeemed:
Class A			(81,347	)		(9,060		)		(29,921		)
Class B			(6,182	)			(491	)		(5,402		)
Class C			(17,232	)			(1,246	)		(6,462		)
Class Y			(3,713	)			(147	)			(1,222	)
Advisor Class			(150	)			NA				(516	)
Class I			(–	)			NA				NA
Increase in outstanding capital		$	35,073			$	17,427			$	29,377
*Not shown due to rounding.

	Ivy Global Natural Resources Fund				Ivy International Fund				Ivy International Balanced Fund
Shares issued from sale of shares:
Class A			22,126				352				2,787
Class B			1,346				48				147
Class C			7,292				76				484
Class Y			2,435				21				8
Class R			26				NA				NA
Advisor Class			–				–				NA
Class I			NA				–				NA
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				–				107
Class B			–				–				3
Class C			–				–				6
Class Y			–				–				1
Class R			–				NA				NA
Advisor Class			–				–				NA
Class I			NA				–				NA
Shares redeemed:
Class A			(11,451	)			(636	)			(946	)
Class B			(813	)			(99	)			(22	)
Class C			(3,183	)			(198	)			(70	)
Class Y			(660	)			(83	)			(7	)
Class R			(2	)			NA				NA
Advisor Class			(2	)			(–	)			NA
Class I			NA				(1	)			NA
Increase (decrease) in outstanding       capital shares			17,114				(520	)			2,498
Value issued from sale of shares:
Class A		$	684,863			$	10,477			$	43,346
Class B			39,588				1,326				2,271
Class C			210,694				2,080				7,526
Class Y			76,502				616				129
Class R			757				NA				NA
Advisor Class			–				–				NA
Class I			NA				–				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				–				1,625
Class B			–				–				47
Class C			–				–				95
Class Y			–				–				8
Class R			–				NA				NA
Advisor Class			–				–				NA
Class I			NA				–				NA
Value redeemed:
Class A		(349,922		)		(18,643		)		(14,682		)
Class B			(23,357	)		(2,700		)			(335	)
Class C			(89,223	)			(5,403	)			(1,092	)
Class Y			(19,976	)			(2,392	)			(104	)
Class R			(47	)			NA				NA
Advisor Class			(60	)			(–	)			NA
Class I			NA				(40	)			NA
Increase (decrease) in outstanding capital		$	529,819			$	(14,679	)		$	38,834

	Ivy International Value Fund				Ivy Mortgage Securities Fund				Ivy Pacific Opportunities Fund
Shares issued from sale of shares:
Class A			2,518				5,038				5,994
Class B			201				208				338
Class C			545				411				454
Class Y			59				337				228
Advisor Class			–				NA				–
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				512				–
Class B			–				17				–
Class C			–				31				–
Class Y			–				17				–
Advisor Class			–				NA				–
Shares redeemed:
Class A			(535	)			(4,359	)			(2,153	)
Class B			(280	)			(198	)			(134	)
Class C			(99	)			(505	)			(183	)
Class Y			(27	)			(178	)			(123	)
Advisor Class			(–	)*			NA				(–	)*
Increase in outstanding capital shares			2,382				1,331				4,421
Value issued from sale of shares:
Class A		$	39,822			$	52,521			$	86,598
Class B			2,964				2,169				4,529
Class C			8,055				4,284				6,164
Class Y			917				3,509				3,272
Advisor Class			–				NA				–
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				5,346				–
Class B			–				181				–
Class C			–				327				–
Class Y			–				171				–
Advisor Class			–				NA				–
Value redeemed:
Class A			(8,366	)		(45,410		)		(30,481		)
Class B		(4,050		)			(2,060	)			(1,775	)
Class C			(1,454	)			(5,262	)			(2,447	)
Class Y			(425	)			(1,854	)			(1,770	)
Advisor Class			(–	)*			NA				(–	)*
Increase in outstanding capital		$	37,463			$	13,922			$	64,090
*Not shown due to rounding.

	Ivy Real Estate Securities Fund				Ivy Small Cap Value Fund				Ivy Value Fund
Shares issued from sale of shares:
Class A			2,678				1,023				832
Class B			103				63				69
Class C			198				117				64
Class Y			1,060				117				40
Class R			–	*			NA				NA
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			39				–				11
Class B			–				–				–
Class C			–				–				–
Class Y			42				–				3
Class R			–	*			NA				NA
Shares redeemed:
Class A			(1,273	)			(703	)			(687	)
Class B			(42	)			(47	)			(50	)
Class C			(75	)			(74	)			(55	)
Class Y			(840	)			(326	)			(63	)
Class R			(–	)*			NA				NA
Increase in outstanding capital shares			1,890				170				164
Value issued from sale of shares:
Class A		$	61,625			$	16,066			$	14,296
Class B			2,343				962				1,166
Class C			4,573				1,797				1,083
Class Y			24,701				1,871				690
Class R			–	*			NA				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			912				–				189
Class B			–				–				–
Class C			–				–				–
Class Y			984				–				49
Class R			–	*			NA				NA
Value redeemed:
Class A		(28,914		)		(11,018		)		(11,733		)
Class B			(956	)			(717	)			(836	)
Class C			(1,707	)			(1,145	)			(936	)
Class Y		(18,645		)		(5,246		)		(1,086		)
Class R			(–	)*			NA				NA
Increase in outstanding capital		$	44,916			$	2,570			$	2,882
*Not shown due to rounding.

Transactions in capital stock for the fiscal year ended March 31, 2006 are summarized below. Amounts are in thousands.

	Ivy Balanced Fund				Ivy Bond Fund
Shares issued from sale of shares:
Class A			699				1,197
Class B			61				104
Class C			93				154
Class Y			268				2
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			33				84
Class B			–	*			3
Class C			–	*			3
Class Y			29				–	*
Shares redeemed:
Class A			(836	)			(586	)
Class B			(37	)			(36	)
Class C			(26	)			(40	)
Class Y			(960	)			(4	)
Increase (decrease) in outstanding capital shares			(676	)			881
Value issued from sale of shares:
Class A		$	10,172			$	12,586
Class B			873				1,089
Class C			1,351				1,620
Class Y			3,925				24
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			493				885
Class B			1				30
Class C			1				33
Class Y			423				1
Value redeemed:
Class A		(12,215		)		(6,143		)
Class B			(531	)			(378	)
Class C			(386	)			(424	)
Class Y		(13,920		)			(39	)
Increase (decrease) in outstanding capital		$	(9,813	)		$	9,284
*Not shown due to rounding

	Ivy Cundill Global Value Fund				Ivy Dividend Income Fund				Ivy European Opportunities Fund
Shares issued from sale of shares:
Class A			20,739				2,368				3,307
Class B			1,345				173				262
Class C			7,470				352				406
Class Y			775				25				67
Advisor Class			–	*			NA				–
Class I			–				NA				NA
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			1,449				34				45
Class B			113				1				–
Class C			419				3				–
Class Y			45				1				1
Advisor Class			9				NA				1
Class I			–	*			NA				NA
Shares redeemed:
Class A			(5,174	)			(796	)			(2,346	)
Class B			(451	)			(142	)			(388	)
Class C			(1,104	)			(214	)			(481	)
Class Y			(483	)			(60	)			(86	)
Advisor Class			(20	)			NA				(75	)
Class I			(4	)			NA				NA
Increase in outstanding capital shares			25,128				1,745				713
Value issued from sale of shares:
Class A		$	301,972			$	31,516			$	96,107
Class B			19,035				2,256				7,330
Class C			106,253				4,637				11,400
Class Y			11,417				348				1,934
Advisor Class			2				NA				–
Class I			–				NA				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			21,288				459				1,325
Class B			1,631				20				–
Class C			6,019				37				–
Class Y			655				12				27
Advisor Class			134				NA				30
Class I			1				NA				NA
Value redeemed:
Class A			(75,706	)		(10,687		)		(68,210		)
Class B			(6,439	)			(1,916	)		(10,777		)
Class C			(15,720	)			(2,854	)		(13,590		)
Class Y			(7,160	)			(845	)			(2,464	)
Advisor Class			(292	)			NA				(2,190	)
Class I			(50	)			NA				NA
Increase in outstanding capital		$	363,040			$	22,983			$	20,922
*Not shown due to rounding.

	Ivy Global Natural Resources Fund				Ivy International Fund				Ivy International Balanced Fund
Shares issued from sale of shares:
Class A			44,945				824				4,510
Class B			3,329				45				205
Class C			14,993				32				458
Class Y			3,174				8				37
Class R			4				NA				NA
Advisor Class			–				–				NA
Class I			NA				–				NA
Shares issued in connection with merger       of Ivy International Growth Fund:
Class A			NA				622				NA
Class B			NA				159				NA
Class C			NA				1,691				NA
Class Y			NA				198				NA
Shares issued from reinvestment       of dividends and/or capital       gains distribution:
Class A			3,194				29				377
Class B			359				–				17
Class C			1,265				–				29
Class Y			120				–	*			2
Class R			–				NA				NA
Advisor Class			1				–				NA
Class I			NA				–	*			NA
Shares redeemed:
Class A			(9,897	)			(1,603	)			(4,132	)
Class B			(958	)			(540	)			(63	)
Class C			(2,318	)			(101	)			(136	)
Class Y			(395	)			(10	)			(23	)
Class R			(–	)			NA				NA
Advisor Class			(9	)			(–	)			NA
Class I			NA				(5	)			NA
Increase in outstanding capital shares			57,807				1,349				1,281
*Not shown due to rounding.
Value issued from sale of shares:
Class A		$	1,165,684			$	20,366			$	66,425
Class B			80,686				1,077				3,002
Class C			361,451				786				6,699
Class Y			83,597				197				545
Class R			100				NA				NA
Advisor Class			–				–				NA
Class I			NA				–				NA
Value issued in connection with merger       of Ivy International Growth Fund:
Class A			NA				18,225				NA
Class B			NA				4,308				NA
Class C			NA				45,833				NA
Class Y			NA				5,818				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			83,464				770				5,444
Class B			8,924				–				236
Class C			30,828				–				417
Class Y			3,158				3				31
Class R			–				NA				NA
Advisor Class			13				–				NA
Class I			NA				2				NA
Value redeemed:
Class A		(252,205		)		(40,726		)		(60,740		)
Class B			(22,930	)		(11,967		)			(934	)
Class C			(55,523	)			(2,389	)			(1,987	)
Class Y			(10,323	)			(274	)			(334	)
Class R			(–	)			NA				NA
Advisor Class			(219	)			(–	)			NA
Class I			NA				(121	)			NA
Increase in outstanding capital		$	1,476,705			$	41,908			$	18,804

	Ivy International Value Fund				Ivy Mortgage Securities Fund				Ivy Pacific Opportunities Fund
Shares issued from sale of shares:
Class A			3,440				11,305				8,544
Class B			321				527				437
Class C			515				1,124				795
Class Y			59				416				229
Advisor Class			–				NA				–
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				813				109
Class B			–				27				6
Class C			–				51				8
Class Y			–				27				3
Advisor Class			–				NA				–	*
Shares redeemed:
��     Class A			(610	)			(6,495	)			(1,357	)
Class B			(1,113	)			(182	)			(262	)
Class C			(146	)			(537	)			(164	)
Class Y			(20	)			(247	)			(72	)
Advisor Class			(3	)			NA				(1	)
Increase in outstanding capital shares			2,443				6,829				8,275
Value issued from sale of shares:
Class A		$	46,962			$	120,577			$	107,057
Class B			4,021				5,628				5,106
Class C			6,847				12,002				9,476
Class Y			800				4,437				2,865
Advisor Class			–				NA				–
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			–				8,651				1,371
Class B			–				287				67
Class C			–				542				97
Class Y			–				283				33
Advisor Class			–				NA				–	*
Value redeemed:
Class A			(8,349	)		(69,143		)			(16,746	)
Class B		(13,321		)			(1,932	)			(2,947	)
Class C			(1,794	)			(5,707	)			(1,903	)
Class Y			(276	)			(2,626	)			(879	)
Advisor Class			(32	)			NA				(8	)
Increase in outstanding capital		$	34,858			$	72,999			$	103,589
*Not shown due to rounding.

	Ivy Real Estate Securities Fund				Ivy Small Cap Value Fund				Ivy Value Fund
Shares issued from sale of shares:
Class A			4,941				1,808				1,674
Class B			233				145				161
Class C			299				186				110
Class Y			2,267				268				90
Class R			5				NA				NA
Shares issued from reinvestment of dividends       and/or capital gains distribution:
Class A			456				918				20
Class B			24				75				–	*
Class C			26				107				–	*
Class Y			436				273				10
Class R			–	*			NA				NA
Shares redeemed:
Class A			(2,833	)			(1,356	)			(828	)
Class B			(161	)			(97	)			(48	)
Class C			(169	)			(135	)			(48	)
Class Y			(1,526	)			(495	)			(654	)
Class R			(–	)			NA				NA
Increase in outstanding capital shares			3,998				1,697				487
Value issued from sale of shares:
Class A		$	102,220			$	30,229			$	27,487
Class B			4,734				2,371				2,626
Class C			6,148				3,069				1,795
Class Y			47,284				4,497				1,477
Class R			100				NA				NA
Value issued from reinvestment of dividends       and/or capital gains distribution:
Class A			9,405				13,765				334
Class B			484				1,091				1
Class C			540				1,564				2
Class Y			9,017				4,120				160
Class R			–	*			NA				NA
Value redeemed:
Class A			(56,847	)		(22,367		)		(13,682		)
Class B			(3,275	)			(1,545	)			(784	)
Class C			(3,453	)			(2,217	)			(792	)
Class Y			(31,009	)		(8,255		)		(10,866		)
Class R			(–	)			NA				NA
Increase in outstanding capital		$	85,348			$	26,322			$	7,758
*Not shown due to rounding.

NOTE 6 - Options

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

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

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

	Number of Contracts			Premiums Received
Outstanding at March 31, 2006		420			$	24,522
Options written		2,062				100,260
Options terminated in closing purchase transactions		(207	)		(14,115		)
Options exercised		(153	)		(7,113		)
Options expired		(763	)		(40,734		)
Outstanding at September 30, 2006		1,359			$	62,820

For Ivy Value Fund, transactions in written put options were as follows:

	Number of Contracts			Premiums Received
Outstanding at March 31, 2006		367			$	29,642
Options written		1,889				112,944
Options terminated in closing purchase transactions		(–	)			(–	)
Options exercised		(346	)		(27,125		)
Options expired		(1,064	)		(65,587		)
Outstanding at September 30, 2006		846			$	49,874

NOTE 7 - Futures

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

NOTE 8 - Swaps

Each Fund may invest in swap agreements, which are agreements to exchange the return generated by one instrument for the return generated by another instrument. The Fund may enter into credit default, total return, variance and other swap agreements to: 1) preserve a return or a spread on a particular investment or portion of its portfolio; 2) to protect against any increase in the price of securities the Fund anticipates purchasing at a later date; or 3) to attempt to enhance yield.

Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying security in the event of a defined credit event, such as payment default or bankruptcy. Under a credit default swap one party acts as a guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if the defined credit event occurs. Each Fund may enter into credit default swaps in which either it or its counterparty act as the guarantor.

Total return swaps involve a commitment to pay periodic interest payments in exchange for a market-linked return based on a security or a basket of securities representing a variety of securities or a particular index. To the extent the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.

Variance swaps involve a contract in which two parties agree to exchange cash flows based on the measured variance of a specified underlying or index during a certain time period. On the trade date, the two parties agree on the strike price of the contract (the reference level against which cash flows are exchanged), as well as the number of units in the transaction and the length of the contract. Like an option contract, the value of a variance swap is influenced by both realized and implied volatility, as well as the passage of time. Each Fund may enter into variance swaps to manage volatility risk.

The creditworthiness of firms with which a Fund enters into a swap agreement is monitored by IICO. If a firm's creditworthiness declines, the value of the agreement would likely decline, potentially resulting in losses. If a default occurs by the counterparty to such a transaction, the Fund will have contractual remedies pursuant to the agreement related to the transaction.

Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value, if any, are recorded as unrealized appreciation (depreciation) in the Statement of Operations. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with the custodian or counterparty. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities. These upfront payments, as well as any periodic payments, are recorded as realized gain or loss in the Statement of Operations. Gains or losses may be realized upon termination of the swap agreement.

Entering into swap agreements involves certain risks. Among these are possible failure of the counterparty to fulfill its obligations, possible lack of liquidity, and unfavorable changes in interest rates or underlying investments.

NOTE 9 - Acquisition of Ivy International Growth Fund

On March 27, 2006, Ivy International Fund acquired all the net assets of Ivy International Growth Fund pursuant to a plan of reorganization approved by the shareholders of Ivy International Growth Fund on March 17, 2006. The acquisition was accomplished by a tax-free exchange of 2,671,036 shares of Ivy International Fund (valued at $74,183,759) for the 5,422,375 shares of Ivy International Growth Fund outstanding on March 27, 2006. Ivy International Growth Fund had net assets of $74,183,759, including $17,373,263 of net unrealized appreciation in value of investments and $37,072,675 of accumulated net realized losses on investments, which were combined with those of Ivy International Fund. The aggregate net assets of Ivy International Fund and Ivy International Growth Fund immediately before the acquisition were $155,403,615 and $74,183,759, respectively. The aggregate net assets of Ivy International Fund and Ivy International Growth Fund immediately following the acquisition were $229,587,374 and $0, respec tively.

NOTE 10 - Liquidation of Ivy Cash Reserves Fund

On September 29, 2006, Ivy Cash Reserves Fund was liquidated.

Report of Independent Registered Public Accounting Firm

The Board of Trustees and Shareholders of Ivy Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Balanced Fund, Bond Fund, Cundill Global Value Fund, Dividend Income Fund, European Opportunities Fund, Global Natural Resources Fund, International Fund, International Balanced Fund, International Value Fund, Mortgage Securities Fund, Pacific Opportunities Fund, Real Estate Securities Fund, Small Cap Value Fund and Value Fund (collectively the "Funds") comprising Ivy Funds as of September 30, 2006, and the related statements of operations for the six-month period then ended, the statements of changes in net assets for the six-month period then ended and the year ended March 31, 2006, and the financial highlights for the periods presented (except as noted below). These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The fi nancial highlights of the Real Estate Securities Fund, Small Cap Value Fund and Value Fund for each of the periods ended July 31, 2003 and prior were audited by other auditors whose report, dated September 5, 2003, expressed an unqualified opinion on those financial highlights. The financial highlights of the Balanced Fund, Bond Fund, International Balanced Fund and Mortgage Securities Fund for each of the periods ended September 30, 2003 and prior were audited by other auditors whose report, dated November 7, 2003, expressed an unqualified opinion on those financial highlights. The financial highlights of the Cundill Global Value Fund, European Opportunities Fund, Global Natural Resources Fund, International Fund, International Value Fund and Pacific Opportunities Fund for the period ended December 31, 2001 were audited by other auditors whose report, dated February 8, 2002, expressed an unqualified opinion on those financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall f inancial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2006, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds of Ivy Funds as of September 30, 2006, the results of their operations for the six-month period then ended, the changes in their net assets for the six-month period then ended and the year ended March 31, 2006, and the financial highlights for the periods presented (except as noted above in references to the reports of other auditors), in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Kansas City, Missouri
November 16, 2006

Income Tax Information

Dividends are declared and recorded by Ivy Cash Reserves Fund on each day the New York Stock Exchange is open for business. Dividends are paid monthly usually on the 27th of the month or on the preceding business day if the 27th is a weekend or holiday. Dividends paid during the period beginning April 1, 2006 thru the date of liquidation of September 29, 2006 are not qualified dividend income for individuals and are not eligible for the dividends received deduction for corporations.

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

Renewal of Investment Management Agreements for the Ivy Funds

At a Meeting of the Board of Trustees of Ivy Funds (the Trust) held on August 15 and 16, 2006, the Trustees, including all of the Trustees who are not "interested persons" as defined in Section 2(a)(19) of the 1940 Act, unanimously approved the continuance of the existing management agreements between Ivy Investment Management Company (IICO) and the Trust. The existing management agreements considered were: (i) the Master Business Management and Investment Advisory Agreement between the Trust and IICO (with respect to the Ivy Cundill Global Value Fund, Ivy European Opportunities Fund, Ivy International Fund, Ivy International Value Fund and Ivy Pacific Opportunities Fund); (ii) the Investment Management Agreement between the Trust and IICO (with respect to the Ivy Dividend Income Fund); (iii) the Investment Management Agreement between the Trust and IICO (with respect to the Ivy Balanced Fund, Ivy Bond Fund, Ivy International Balanced Fund, Ivy Mortgage Securities Fund, Ivy Real Estate Securities Fund, Ivy Small Cap Value Fund, Ivy Value Fund and Ivy Global Natural Resources Fund); and (iv) the Subadvisory Agreements between IICO and:

• Henderson Investment Management Limited and Henderson Global Investors (North America) Inc. (Ivy European Opportunities Fund)
• Cundill Investment Research Ltd. (Ivy Cundill Global Value Fund)
• Advantus Capital Management, Inc. (Ivy Bond Fund, Ivy Mortgage Securities Fund, Ivy Real Estate Securities Fund)
• Templeton Investment Counsel, LLC (Ivy International Balanced Fund)
• BlackRock Financial Management, Inc. (Ivy Small Cap Value Fund)
• Mackenzie Financial Corporation (Ivy Global Natural Resources Fund)

(each such subadviser referred to herein as a "Subadviser").

The Board's Independent Trustees were assisted in their review by independent legal counsel and met with such counsel separately from representatives of IICO. Independent legal counsel provided the Board with a memorandum that discussed the various factors that the Board should consider as part of its review of the various agreements, including, among other things, the nature and the quality of the services provided by IICO, profitability (including any fall-out benefits) from the relationships with the Funds, economies of scale, the role played by the Independent Trustees, and information on comparative fees and expenses. The Board also considered the written responses and supplementary materials produced by IICO and each Subadviser in response to a 15(c) due diligence request list submitted by the Independent Trustees' counsel prior to the meeting. Included in those responses, which had been provided to the Board prior to the meeting, was a Fund-by-Fund profitability analysis prepared by IICO. The Board also received extensive materials on performance, expenses and comparable fund information from Lipper, Inc., an independent mutual fund rating service. Finally, the Independent Trustees received a report from two of the Independent Trustees who conducted a preliminary review of all of this information prior to the meeting. The Independent Trustees discussed this material extensively among themselves, with their independent legal counsel and with the other Board members, after which the Board considered various factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Board's determination to approve the agreements are discussed separately below.

Nature, Extent and Quality of Services

The Board considered the fact that they were provided with performance and expense information for each of the Funds during the year in regularly scheduled Board meetings, during which they met with the Funds' portfolio managers and other investment personnel. In that regard, they discussed the nature, extent and quality of services provided to each of the Funds by IICO and each Subadviser, taking into account the investment objective and strategy of the Fund and the knowledge the Board gained from those regular meetings, including from the materials provided in connection with those meetings. In addition, the Board reviewed the resources and key personnel of IICO and each Subadviser. The Board also considered other services provided to the Funds by IICO and each Subadviser, such as managing the quality of execution of portfolio transactions and the selection of broker-dealers for those transactions, monitoring adherence to the Funds' investment restrictions, producing reports, providing support s ervices for the Board and Board committees, communicating with shareholders and overseeing the activities of other service providers, including monitoring compliance with various Fund policies and procedures and with applicable securities laws and regulations. The Board concluded that the nature and extent of the services provided by IICO and each Subadviser were appropriate, that the quality of those services had been consistent with quality norms in the industry and that the Funds were likely to benefit from the continued provision of those services.

Benefits from the Relationship with the Funds

The Board next discussed whether IICO or any Subadviser derives any other direct or indirect benefits from serving the Funds. The Board considered benefits that accrue to each organization from its respective relationship with a Fund, including the fact that a variety of services are provided by affiliates of IICO, including distribution, shareholder servicing and transfer agency services. After full consideration of these and other factors, the Board concluded that none of IICO, any Subadviser or any of their affiliates receive any additional direct or indirect benefits that would preclude the Board from approving the continuation of the investment advisory contract with IICO or the investment sub-advisory agreements.

Economies of Scale

The Board discussed whether economies of scale are being realized by the Funds and whether fee levels reflect those economies of scale for the benefit of the Funds' shareholders. In that context, the Board discussed the current level of the Funds' advisory fee breakpoints and also considered the current and anticipated asset levels of the Funds and the potential for growth in each Fund. The Board concluded that the current asset size of the Funds and other relevant factors did not warrant further reevaluation or restructuring of the fee breakpoints for the Funds at this time.

Performance of the Funds and Costs of Services Provided

The Board considered, on a Fund-by-Fund basis, the performance of each Fund and the costs of the services provided. Among other things, the Board examined the short- and long-term performance of each Fund, as well as their expenses as compared to similar funds and peer groups, as described below.

Ivy Balanced Fund

The Board examined the investment performance of the Ivy Balanced Fund, including the Fund's performance for the one-, three-, five-, seven- and ten-year time periods. The Board also examined the performance of the Fund against the Lipper Mixed-Asset Target Allocation Growth Funds Universe Average for those same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO, comparing the Fund's expenses, including IICO's advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund, and considered the impact the small amount of assets in the Fund and the Fund's small average account size have on the Fund's expenses. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy Bond Fund

The Board examined the investment performance of the Ivy Bond Fund, including the Fund's performance for the one-, three-, five-, seven- and ten-year time periods. The Board also examined the performance of the Fund against the Lipper Corporate Debt Funds A Rated Universe Average for those same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO and Advantus Capital Management, Inc., comparing the Fund's expenses, including IICO's advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also considered the advisory fees that IICO (or its affiliated investment adviser) receives for managing separate account clients in the same asset class, noting IICO's explanation as to why its average fees are lower for those accounts, including, among other things, the additional services IICO performs for the Fund. The Board also made reference to the analysis of IICO's profitability in managing the Fund, and considered the assets in the Fund and the Fund's average account size. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy Cundill Global Value Fund

The Board examined the investment performance of the Ivy Cundill Global Value Fund, including the Fund's performance for the one- and three-year time periods. The Board also examined the performance of the Fund against the Lipper Global Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, as well as the Fund's current asset levels, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO and Cundill Investment Research Ltd., comparing the Fund's expenses, including the advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund, as well as the fact that the second breakpoint in IICO's advisory fee could shortly be reached. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy Dividend Income Fund

The Board examined the investment performance of the Ivy Dividend Income Fund, including the Fund's performance for the one-year time period. The Board also examined the performance of the Fund against the Lipper Equity Income Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO, comparing the Fund's expenses, including IICO's advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund, and considered the Fund's average account size and non-management expenses. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy European Opportunities Fund

The Board examined the investment performance of the Ivy European Opportunities Fund, including the Fund's performance for the one-, three-, five- and seven-year time periods. The Board also examined the performance of the Fund against the Lipper European Region Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO and Henderson Investment Management Limited (and Henderson Global Investors), comparing the Fund's expenses, including advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund, as well as the fact that the Fund's assets have reached the second breakpoint in the Fund's advisory fee schedule. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy Global Natural Resources Fund

The Board examined the investment performance of the Ivy Global Natural Resources Fund, including the Fund's performance for the one-, three-, five- and seven-year time periods. The Board also examined the performance of the Fund against the Lipper Natural Resources Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, including the size of the Fund, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO and Mackenzie Financial Corporation, comparing the Fund's expenses, including advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund, as well as the fact that the Fund's asset levels have reached the last breakpoint in the Fund's advisory fee schedule. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy International Fund

The Board examined the investment performance of the Ivy International Fund, including the Fund's performance for the one-, three-, five-, seven- and ten-year time periods. The Board also examined the performance of the Fund against the Lipper International Large-Cap Core Funds Universe Average for the same periods, as well as the Fund's recent performance. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO, comparing the Fund's expenses, including IICO's advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also considered the advisory fees that IICO (or its affiliated investment adviser) receives for managing separate account clients in the same asset class, noting IICO's explanation as to why its average fees are lower for those accounts, including, among other things, the additional services IICO performs for the Fund. The Board also made reference to the analysis of IICO's profitability in managing the Fund. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy International Balanced Fund

The Board examined the investment performance of the Ivy International Balanced Fund, including the Fund's performance for the one-, three-, five-, seven- and ten-year time periods. The Board also examined the performance of the Fund against the Lipper Mixed-Asset Target Allocation Growth Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO and Templeton Investment Counsel, comparing the Fund's expenses, including advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy International Value Fund

The Board examined the investment performance of the Ivy International Value Fund, including the Fund's performance for the one-, three-, five-, and seven-year time periods. The Board also examined the performance of the Fund against the Lipper International Multi-Cap Value Index and Lipper International Large-Cap Core Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO, comparing the Fund's expenses, including IICO's advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds, noting that other investment advisers appear to be waiving their fees in managing comparable funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy Mortgage Securities Fund

The Board examined the investment performance of the Ivy Mortgage Securities Fund, including the Fund's performance for the one-, three-, five-, seven- and ten-year time periods. The Board also examined the performance of the Fund against the Lipper U.S. Mortgage Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Funds performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO and Advantus Capital Management, comparing the Fund's expenses, including advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy Pacific Opportunities Fund

The Board examined the investment performance of the Ivy Pacific Opportunities Fund, including the Fund's performance for the one-, three-, five-, seven- and ten-year time periods. The Board also examined the performance of the Fund against the Lipper Pacific ex-Japan Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO, comparing the Fund's expenses, including IICO's advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Real Estate Securities Fund

The Board examined the investment performance of the Ivy Real Estate Securities Fund, including the Fund's performance for the one-, three-, five- and seven-year time periods. In light of recent performance, the Board determined to enhance its monitoring of the performance of this Fund. The Board also examined the performance of the Fund against the Lipper Real Estate Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO and Advantus Capital Management, comparing the Fund's expenses, including advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund, and considered the impact the Fund's average account size has on the Fund's expenses. After noting that the Fund's asset levels had reached half the amount needed to reach the Fund's first breakpoint, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy Small Cap Value Fund

The Board examined the investment performance of the Ivy Small Cap Value Fund, including the Fund's performance for the one-, three-, five- and seven-year time periods. The Board also examined the performance of the Fund against the Lipper Small-Cap Value Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable, although they agreed to closely monitor the performance of the Fund in the near future as a result of corporate changes involving the parent of the Fund's investment sub-adviser.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO and BlackRock Financial Management, comparing the Fund's expenses, including the advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also made reference to the analysis of IICO's profitability in managing the Fund. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Ivy Value Fund

The Board examined the investment performance of the Ivy Value Fund, including the Fund's one-, three-, five-, seven- and ten-year performance, as well as recent performance. The Board also examined the performance of the Fund against the Lipper Large-Cap Value Funds Universe Average for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Fund's performance in this asset class was acceptable.

The Board next considered the expenses of the Fund and the cost of the services provided by IICO, comparing the Fund's expenses, including IICO's advisory fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds. The Board also considered the advisory fees that IICO (or its affiliated investment adviser) receives for managing separate account clients in the same asset class, noting IICO's rationale as to why its average fees are lower for those accounts, including, among other things, the additional services IICO performs for the Fund. The Board also made reference to the analysis of IICO's profitability in managing the Fund. After completing this examination, the Board concluded that the Fund's expenses are acceptable at the current time.

Proxy Voting Information

Proxy Voting Guidelines

A description of the policies and procedures Ivy Funds uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 800.777.6472 and (ii) on the Securities and Exchange Commission's (SEC) website at www.sec.gov.

Proxy Voting Records

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

Quarterly Portfolio Schedule Information

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

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

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.

This page is for your notes and calculations.

THE IVY FUNDS FAMILY
Global/International Funds      

Cundill Global Value Fund
European Opportunities Fund
International Fund
International Balanced Fund
International Value Fund
Pacific Opportunities Fund

Domestic Equity Funds      

Capital Appreciation Fund
Core Equity Fund
Dividend Income Fund
Large Cap Growth Fund
Mid Cap Growth Fund
Small Cap Growth Fund
Small Cap Value Fund
Value Fund

Fixed Income Funds      

Bond Fund
High Income Fund
Limited-Term Bond Fund
Mortgage Securities Fund
Municipal Bond Fund

Money Market Funds      

Money Market Fund

Specialty Funds      

Asset Strategy Fund
Balanced Fund
Energy Fund
Global Natural Resources Fund
Real Estate Securities Fund
Science and Technology Fund

1.800.777.6472
Visit us online at www.ivyfunds.com

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

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

WRR3300SA (9-06)

ITEM 2. CODE OF ETHICS

Required in annual report only.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

Required in annual report only.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Required in annual report only.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

See Item 1 Shareholder Report.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END

MANAGEMENT INVESTMENT COMPANIES

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant's board of directors.

ITEM 11. CONTROLS AND PROCEDURES.

(a)

The Registrant's Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective and adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits is accumulated and communicated to the Registrant's management, including the Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

(b)

There were no significant changes in the registrant's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant's second fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Required in annual report only.

(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)).

Attached hereto as Exhibit 99.CERT.

(b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)).

Attached hereto as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Ivy Funds
(Registrant)

By     /s/Kristen A. Richards
         Kristen A. Richards, Vice President and Secretary

Date: December 6, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By     /s/Henry J. Herrmann
         Henry J. Herrmann, President and Principal Executive Officer

Date: December 6, 2006

By     /s/Theodore W. Howard
         Theodore W. Howard, Vice President and Principal Financial Officer

Date: December 6, 2006