Exhibit 17(g)(i)
IVY FUNDS
[PHOTO]
Ivy Fund is a registered open-end investment company consisting of sixteen
separate portfolios (the "Funds"). This prospectus relates to the fifteen funds
listed below. Investments in the Funds are not deposits of any bank and are not
federally insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy or accuracy of this Prospectus. Any
representation to the contrary is a criminal offense.
PROSPECTUS APRIL 30, 2002
IVY CUNDILL GLOBAL VALUE FUND
IVY DEVELOPING MARKETS FUND
IVY EUROPEAN OPPORTUNITIES FUND
IVY GLOBAL FUND
IVY GLOBAL NATURAL RESOURCES FUND
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
IVY INTERNATIONAL FUND
IVY INTERNATIONAL SMALL COMPANIES FUND
IVY INTERNATIONAL VALUE FUND
IVY PACIFIC OPPORTUNITIES FUND
IVY GROWTH FUND
IVY US BLUE CHIP FUND
IVY US EMERGING GROWTH FUND
IVY BOND FUND
IVY MONEY MARKET FUND
[IVY LOGO] IVY FUNDS(R)
Embracing the world
BOARD OF TRUSTEES
John S. Anderegg, Jr.
James W. Broadfoot
Keith J. Carlson
Stanley Channick
Roy J. Glauber
Joseph G. Rosenthal
Richard Silverman
J. Brendan Swan
Edward M. Tighe
OFFICERS
Keith J. Carlson, Chairman
James W. Broadfoot, President
Beverly J. Yanowitch, Treasurer
LEGAL COUNSEL
Dechert
Boston, Massachusetts
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, Massachusetts
TRANSFER AGENT
PFPC, Inc.
P.O. Box 9770
Providence, RI 02940
AUDITORS
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
DISTRIBUTOR
Ivy Mackenzie Distributors, Inc.
925 South Federal Highway, Suite 600
Boca Raton, Florida 33432
800.456.5111
INVESTMENT MANAGER
Ivy Management, Inc.
925 South Federal Highway, Suite 600
Boca Raton, Florida 33432
800.456.5111
www.ivyfunds.com
E-mail; acctinfo@ivyfunds.com
TABLE OF
CONTENTS
WORLDWIDE FUNDS
Ivy Cundill Global Value Fund ................................... 1
Ivy Developing Markets Fund ..................................... 3
Ivy European Opportunities Fund ................................. 5
Ivy Global Fund ................................................. 7
Ivy Global Natural Resources Fund ............................... 9
Ivy Global Science & Technology Fund ............................ 11
Ivy International Fund .......................................... 13
Ivy International Small Companies Fund .......................... 15
Ivy International Value Fund .................................... 17
Ivy Pacific Opportunities Fund .................................. 19
DOMESTIC FUNDS
Ivy Growth Fund ................................................. 21
Ivy US Blue Chip Fund ........................................... 23
Ivy US Emerging Growth Fund ..................................... 25
FIXED INCOME FUNDS
Ivy Bond Fund ................................................... 27
Ivy Money Market Fund ........................................... 29
Additional Information About Principal Investment Strategies and Risks .... 31
Management ................................................................ 35
Shareholder Information ................................................... 37
Financial Highlights ...................................................... 44
IVY CUNDILL GLOBAL VALUE FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth. Any income realized will be incidental.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in equity securities (including
common stock, preferred stock and securities convertible into common stock)
throughout the world, including emerging market countries, that the Fund's
management team believes are trading below their estimated "intrinsic value."
"Intrinsic value" is the perceived realizable market value, determined through
the management team's analysis of the companies' financial statements (and
includes factors such as earnings, cash flows, dividends, business prospects,
management capabilities and other catalysts for potentially increasing
shareholder value). Up to 15% of the Fund's net assets may be invested in
illiquid securities.
To control its exposure to certain risks, the Fund might use certain derivative
investment techniques (such as foreign currency exchange transactions and
forward foreign currency contracts).
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK AND EMERGING-MARKET RISK - Investing in foreign securities
involves a number of economic, financial, and political considerations that are
not associated with the US markets and that could affect the Fund's performance
unfavorably, depending on the prevailing conditions at any given time. Among
these potential risks are greater price volatility; comparatively weak
supervision and regulations of security exchanges, brokers, and issuers; higher
brokerage costs; fluctuations in foreign currency exchange rates and related
conversion costs; adverse tax consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
ILLIQUID SECURITY RISK - The Fund may not be able to readily dispose of illiquid
securities promptly at an acceptable price.
DERIVATIVES RISK - The Fund may, but is not required to, use a range of
derivative investment techniques to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements) or to enhance potential gain. The use of these derivative
investment techniques involves a number of risks, including the possibility of
default by the counterparty to the transaction and, to the extent the judgement
of the Fund's manager as to the certain market movements is incorrect, the risk
of losses that are greater than if the derivative technique(s) had not been
used.
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by comparing the Fund's performance for the first
full calendar year since its commencement on April 17, 2000 with a broad measure
of market performance. The Fund's past performance (before and after taxes) is
not necessarily an indication of how the Fund will perform in the future.
ANNUAL TOTAL RETURN FOR ADVISOR
CLASS SHARES**
for the year ending December 31
[BAR GRAPH]
-2.13% BEST QUARTER 5.19%
2nd Quarter,2001
WORST QUARTER -10.54%
2001 3rd Quarter,2001
(**)Any applicable account fees are not reflected, and if they were, the returns
shown above would be lower. The returns for the Fund's other classes of
shares during these periods were different from those of Advisor Class
because variations in their respective expense structures.
- -------------------------------------------------------------------------------
(*)You should consult with your financial advisor before deciding whether the
Fund is an appropriate investment choice in light of your particular
financial needs and risk tolerance.
1
WORLDWIDE FUNDS (continued)
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31,2001
- ------------------------------------------------------------------
ADVISOR MSCI
CLASS(2) WORLD INDEX(2)(*)
- ------------------------------------------------------------------
1 YEAR
RETURN BEFORE TAXES -2.13% -16.82%
RETURN AFTER TAXES
ON DISTRIBUTIONS -8.88%
RETURN AFTER TAXES
ON DISTRIBUTIONS
AND SALE OF FUND SHARES -6.86%
SINCE INCEPTION
RETURN BEFORE TAXES 1.42% -15.31%
RETURN AFTER TAXES
ON DISTRIBUTIONS -3.54%
RETURN AFTER TAXES
ON DISTRIBUTIONS
AND SALE OF FUND SHARES -3.00%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. Since no other classes were outstanding for the entire
year, after-tax returns are presented for Advisor Class shares and after-tax
returns for other classes will vary.
(*)Reflects no deduction for fees, expenses or taxes.
(1)Performance figures reflect any applicable sales charges.
(2)The inception date for the Fund's Advisor Class shares was April 17, 2000.
The Fund has no outstanding Class I shares. Class A, B and C shares commenced
operations on September 4, 2001, September 26, 2001 and October
19, 2001, respectively. Index performance is calculated from April 19, 2000.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C CLASS I ADVISOR
- ------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE NONE
REDEMPTION/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets(3)
CLASS A CLASS B CLASS C CLASS I ADVISOR
- -----------------------------------------------------------------------------------------
MANAGEMENT FEES 1.00% 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE NONE
OTHER EXPENSES 9.85% 9.85% 9.85% 9.21% 9.30%
TOTAL ANNUAL FUND
OPERATING EXPENSES 11.10% 11.85% 11.85% 10.21% 10.30%
EXPENSES REIMBURSED(4) 8.90% 8.90% 8.90% 8.90% 8.90%
NET FUND
OPERATING EXPENSES 2.20% 2.95% 2.95% 1.31% 1.40%
(1)A contingent deferred sales charge ("CDSC") of 1.00% may apply to Class A
shares that are redeemed within two years of the end of the month in which
they were purchased.
(2)If you choose to receive your redemption proceeds via Federal Funds wire, a
$10 wire fee will be charged to your account. Class A shares redeemed or
exchanged within 30 days of purchase are subject to a 2.00% redemption/
exchange fee. This fee also applies to Class A shares purchased without a
sales charge.
(3)The Fund has had no outstanding Class I shares. Percentages shown are
estimates based on expenses for Advisor Class. Class A, B and C shares
commenced operations on September 4, 2001, September 26,2001 and October
19, 2001, respectively. The expense information shown above has been restated
to reflect current fees.
(4)The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31,2002, to the
extent necessary to ensure that the Fund's Annual Fund Operating Expenses,
when calculated at the Fund level, do not exceed 1.95% of the Fund's average
net assets (excluding 12b-1 fees and certain other expenses). For each of the
following nine years, the Investment Manager has contractually agreed to
ensure that these expenses do not exceed 2.50% of the Fund's average net
assets.
- --------------------------------------------------------------------------------
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I ADVISOR
1ST $ 785 $ 798 $ 298 $ 398 $ 298 $ 133 $ 143
3RD 1,330 1,323 1,023 1,023 1,023 531 559
5TH 1,900 1,970 1,770 1,770 1,770 955 1,001
10TH 3,440 3,570 3,570 3,738 3,738 2,135 2,230
2
IVY DEVELOPING MARKETS FUND
INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term growth. Consideration of
current income is secondary to this principal objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in equity securities (including common
stock, preferred stock and securities convertible into common stock) of
companies that are located in, or are expected to profit from, countries whose
markets are generally viewed as "developing" or "emerging" by the World Bank and
the International Finance Corporation, or classified as "emerging" by the United
Nations.
For these purposes, a company "located in" or "expected to profit" from emerging
market countries is one:
- - whose securities are principally trading in one or more emerging market
countries,
- - that derives at least 50% of its total revenue from goods, sales or services
in one or more emerging market countries, or
- - that is organized under the laws of (and has a principal office in) an
emerging market country.
The Fund may invest more than 25% of its assets in a single country, but usually
will hold securities from at least three emerging market countries in its
portfolio.
The Fund's management team uses an investment approach that focuses on analyzing
a company's financial statements and taking advantage of over-valued or
undervalued markets. Some of the Fund's investments may produce income (such as
dividends), although it is expected that any income realized would be
incidental.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK AND EMERGING-MARKET RISK - Investing in foreign securities
involves a number of economic, financial, and political considerations that are
not associated with the US markets and that could affect the Fund's performance
unfavorably, depending on the prevailing conditions at any given time. Among
these potential risks are greater price volatility; comparatively weak
supervision and regulations of security exchanges, brokers, and issuers; higher
brokerage costs; fluctuations in foreign currency exchange rates and related
conversion costs; adverse tax consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the Fund normally invests a substantial portion of
its assets in these countries, it is exposed to the following additional
risks: securities that are even less liquid and more volatile than those in more
developed foreign countries; unusually long settlement delays; less stable
governments that are susceptible to sudden adverse actions (such as
nationalization of businesses, restrictions on foreign ownership or prohibitions
against repatriation of assets); abrupt changes in exchange rate regime or
monetary policy; unusually large currency fluctuations and currency conversion
costs; and high national debt levels (which may impede an issuer's payment of
principal and/or interest on external debt).
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking long-term growth potential in
the developing nations sector, but who can accept potentially dramatic
fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance (before and
after taxes) is not necessarily an indication of how the Fund will perform in
the future.
- --------------------------------------------------------------------------------
(*)You should consult with your financial advisor before deciding whether the
Fund is an appropriate investment choice in light of your particular financial
needs and risk tolerance.
3
WORLDWIDE FUNDS (continued)
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
46.70%
11.83% BEST QUARTER 35.74%
6.40% -27.42% -11.67% -23.79% -04.50% 2nd Quarter,1999
WORST QUARTER -27.28%
1995 1996 1997 1998 1999 2000 2001 4th Quarter,1997
(**) Any applicable sales charges and account fees are not reflected, and if
they were, the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31,2001
- --------------------------------------------------------------------------------------
MSCI
EMERGING
ADVISOR MARKETS FREE
CLASS A(2) CLASS B(2) CLASS C(3) CLASS(4) INDEX(2)(*)
- --------------------------------------------------------------------------------------
1 YEAR
RETURN BEFORE TAXES -10.00% -10.71% -6.92% -5.07% -2.37%
RETURN AFTER TAXES
ON DISTRIBUTIONS -9.74%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -8.57%
5 YEARS
RETURN BEFORE TAXES -8.39% -8.53% -8.13% N/A -5.74%
RETURN AFTER TAXES
ON DISTRIBUTIONS -8.58%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -6.86%
SINCE INCEPTION
RETURN BEFORE TAXES -5.55% -5.60% -6.92% -3.87% -5.79%
RETURN AFTER TAXES
ON DISTRIBUTIONS -5.74%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -4.49%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
(*)Reflects no deduction for fees, expenses or taxes.
(1)Performance figures reflect any applicable sales charges.
(2)The inception date for the Fund's Class A and Class B shares was November 1,
1994. Index performance is calculated from October 31,1994.
(3)The inception date for the Fund's Class C shares was April 30,1996.
(4)The inception date for Advisor Class shares was April 30,1998.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C ADVISOR
- ------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% 2.00% 2.00% 2.00%
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C ADVISOR
- ------------------------------------------------------------------------------
MANAGEMENT FEES 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE
OTHER EXPENSES 3.10% 3.12% 3.17% 3.00%
TOTAL ANNUAL FUND
OPERATING EXPENSES 4.35% 5.12% 5.17% 4.00%
EXPENSES REIMBURSED(3) 2.16% 2.16% 2.16% 2.16%
NET FUND
OPERATING EXPENSES 2.19% 2.96% 3.01% 1.84%
(1)A CDSC of 1.00% may apply to Class A shares that are redeemed within two
years of the end of the month in which they were purchased.
(2)If you choose to receive your redemption proceeds via Federal Funds wire, a
$10 wire fee will be charged to your account. Following an exchange into the
Fund, shares redeemed (or exchanged) within 30 days of purchase are subject
to a 2.00% redemption fee. This fee also applies to Class A shares purchased
without a sales charge.
(3)The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31, 2002, to the
extent necessary to ensure that the Fund's Annual Fund Operating Expenses,
when calculated at the Fund level, do not exceed 1.95% of the Fund's average
net assets (excluding 12b-1 fees and certain other expenses). For each of the
following nine years, the Investment Manager has contractually agreed to
ensure that these expenses do not exceed 2.50% of the Fund's average net
assets.
- --------------------------------------------------------------------------------
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C ADVISOR
- -----------------------------------------------------------------------------------------------------
1ST $ 784 $ 799 $ 299 $ 404 $ 304 $ 187
3RD 1,327 1,326 1,026 1,041 1,041 693
5TH 1,895 1,975 1,775 1,799 1,799 1,226
10TH 3,431 3,575 3,575 3,791 3,791 2,684
4
IVY EUROPEAN OPPORTUNITIES FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital growth by investing in the
securities markets of Europe.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in the equity securities (including common
stock, preferred stock and securities convertible into common stock) of European
companies, which may include:
- - large European companies, or European companies of any size that
provide special investment opportunities (such as privatized companies,
those providing exceptional value, or those engaged in initial public
offerings);
- - small-capitalization companies in the more developed markets of Europe;
and
- - companies operating in Europe's emerging markets.
The Fund may also invest in European debt securities, up to 20% of which may be
low-rated (commonly referred to as "high yield" or "junk" bonds). These
securities typically are rated Ba or below by Moody's or BB or below by S&P (or
are judged by the Fund's manager to be of comparable quality).
The Fund's manager uses a "bottom-up" investment approach, focusing on prospects
for long-term earnings growth.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK AND EMERGING-MARKET RISK: Investing in foreign securities
involves a number of economic, financial, and political considerations that are
not associated with the US markets and that could affect the Fund's performance
unfavorably, depending on the prevailing conditions at any given time. Among
these potential risks are greater price volatility; comparatively weak
supervision and regulations of security exchanges, brokers, and issuers; higher
brokerage costs; fluctuations in foreign currency exchange rates and related
conversion costs; adverse tax consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
SMALL AND MEDIUM SIZED COMPANY RISK - Securities of smaller companies may be
subject to more abrupt or erratic market movements than the securities of
larger, more established companies, since smaller companies tend to be more
thinly traded and because they are subject to greater business risk. Transaction
costs of smaller-company stocks may also be higher than those of larger
companies.
IPO RISK - Securities issued through an initial public offering (IPO) can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. The Fund may engage in short term trading
in connection with its IPO investments, which could produce higher trading costs
and adverse tax consequences. The number of securities issued in an IPO is also
limited, so it is likely that IPO securities will represent a smaller component
of the Fund's portfolio as the Fund's assets increase (and thus have a more
limited effect on the Fund's performance).
INTEREST RATE AND MATURITY RISK - The Fund's debt security investments are
susceptible to decline in a rising interest rate environment. The risk is more
acute for debt securities with longer maturities.
CREDIT RISK - The market value of debt securities also tends to vary according
to the relative financial condition of the issuer. Certain of the Fund's debt
security holdings may be considered below investment grade (commonly referred to
as "high yield" or "junk" bonds). Low-rated debt securities are considered
speculative and could weaken the Fund's returns if the issuer defaults on its
payment obligations.
EURO CONVERSION RISK - On January 1, 2002, euro notes and coins - the official
currency of 12 of the 15 members of the European Union - officially entered
circulation. The Fund could be affected by certain euro-related issues such as
accounting differences, calculation problems and consumer confusion. In
addition, certain European Union members, including the United Kingdom, did not
officially implement the euro and may cause market disruptions when and if they
do decide to do so. Should this occur, the Fund could experience investment
losses.
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare
* You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
5
WORLDWIDE FUNDS (continued)
with those of a broad measure of market performance. The Fund's past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future.
ANNUAL TOTAL RETURNS FOR CLASS A SHARES**
for the years ending December 31
[BAR GRAPH]
4.51% BEST QUARTER 59.30%
-20.67% 4th Quarter, 1999
WORST QUARTER -16.96%
2000 2001 3rd Quarter, 2001
** Any applicable sales charges and account fees are not reflected, and if
they were, the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
ADVISOR MSCI
CLASS A(2) CLASS B(3) CLASS C(4) CLASS I(5) CLASS(6) EUROPE(2)*
---------- ---------- ---------- ---------- -------- -----------
1 YEAR
RETURN BEFORE TAXES -25.22% -25.28% -22.12% -20.46% -20.44% 19.90%
RETURN AFTER TAXES
ON DISTRIBUTIONS -25.30%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -11.16%
SINCE INCEPTION
RETURN BEFORE TAXES 40.40% 42.05% 10.41% -28.07% 43.97% -6.19%
RETURN AFTER TAXES
ON DISTRIBUTIONS 39.68%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 33.03%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
* Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A shares was May 4, 1999
(performance is calculated based on the date the Fund first became
available for sale to the public, May 5, 1999.) Index performance is
calculated from April 30, 1999.
(3) The inception date for the Fund's Class B shares was May 24, 1999.
(4) The inception date for the Fund's Class C shares was October 24, 1999.
(5) The inception date for the Fund's Class I shares was March 16, 2000.
(6) The inception date for the Fund's Advisor Class shares was May 3, 1999.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C CLASS I ADVISOR
------- ------- ------- ------- -------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE NONE
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets(5)
CLASS A CLASS B CLASS C CLASS I ADVISOR
------- ------- ------- ------- -------
MANAGEMENT FEES(3) 1.00% 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE NONE
OTHER EXPENSES 0.92% 0.91% 0.93% 0.73% 0.74%
TOTAL ANNUAL FUND
OPERATING EXPENSES(4) 2.17% 2.91% 2.93% 1.73% 1.74%
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a 2.00%
redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
(3) Management fees are reduced to 0.85% for net assets over $250 million,
and reduced to 0.75% on net assets over $500 million.
(4) The Fund's Investment Manager has contractually agreed to waive1 2% of
the 1.00% fee that it is entitled to receive from the Fund for the one
year period from November 1, 2001 through October 31, 2002, which is
not reflected in the table above.
(5) The expense information shown above has been restated to reflect
current fees.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(NO REDEMPTION) (NO REDEMPTION)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I ADVISOR
- ---- ------- ------- --------------- ------- --------------- ------- -------
1ST $ 782 $ 794 $ 294 $ 396 $ 296 $ 176 $ 177
3RD 1,215 1,201 901 907 907 545 548
5TH 1,672 1,733 1,533 1,543 1,543 939 944
10TH 2,934 3,058 3,058 3,252 3,252 2,041 2,052
6
IVY GLOBAL FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth. Any income realized will be incidental.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in the equity securities (including
common stock, preferred stock and securities convertible into common stock) of
companies in at least three different countries, including the United States.
The Fund might engage in foreign currency exchange transactions and forward
foreign currency contracts to control its exposure to certain risks.
The Fund's management team uses an investment approach that focuses on analyzing
a company's financial statements and taking advantage of overvalued or
undervalued markets. The Fund is expected to have some emerging markets exposure
in an attempt to achieve higher returns over the long term.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK AND EMERGING-MARKET RISK - Investing in foreign securities
involves a number of economic, financial, and political considerations that are
not associated with the US markets and that could affect the Fund's performance
unfavorably, depending on the prevailing conditions at any given time. Among
these potential risks are greater price volatility; comparatively weak
supervision and regulation of security exchanges, brokers, and issuers; higher
brokerage costs; fluctuations in foreign currency exchange rates and related
conversion costs; adverse tax consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the Fund normally invests a substantial portion of
its assets in these countries, it is exposed to the following additional risks:
securities that are even less liquid and more volatile than those in more
developed foreign countries; unusually long settlement delays; less stable
governments that are susceptible to sudden adverse actions (such as
nationalization of businesses, restrictions on foreign ownership or prohibitions
against repatriation of assets); abrupt changes in exchange rate regime or
monetary policy; unusually large currency fluctuations and currency conversion
costs; and high national debt levels (which may impede an issuer's payment of
principal and/or interest on external debt).
DERIVATIVES RISK - The Fund may, but is not required to, use a range of
derivative investment techniques to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements) or to enhance potential gain. The use of these derivative
investment techniques involves a number of risks, including the possibility of
default by the counterparty to the transaction and, to the extent the judgement
of the Fund's manager as to the certain market movements is incorrect, the risk
of losses that are greater than if the derivative technique(s) had not been
used.
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance (before and
after taxes) is not necessarily an indication of how the Fund will perform in
the future.
* You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
7
WORLDWIDE FUNDS (continued)
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
29.63% 26.51%
16.21%
BEST QUARTER 24.15%
12.08% 8.59% 4th Quarter, 1998
2.74% -4.60% -8.72% -13.91% -18.06% WORST QUARTER -20.47%
3rd Quarter, 1997
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
** Any applicable sales charges and account fees are not reflected, and if
they were, the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
MSCI
ADVISOR WORLD
CLASS A(2) CLASS B(3) CLASS C(4) CLASS(5) INDEX(2)*
---------- ---------- ---------- -------- ---------
1 YEAR
RETURN BEFORE TAXES -22.41% -22.89% -19.74% -17.99% -16.82%
RETURN AFTER TAXES
ON DISTRIBUTIONS -22.41%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -15.27%
5 YEARS
RETURN BEFORE TAXES -3.57% -3.63% -3.49% N/A 5.37%
RETURN AFTER TAXES
ON DISTRIBUTIONS -4.70%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -2.41%
10 YEARS
RETURN BEFORE TAXES 3.27% N/A N/A N/A 8.06%
RETURN AFTER TAXES
ON DISTRIBUTIONS 1.80%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 2.35%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
* Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A shares was April 18, 1991.
Index performance is calculated from April 30,1991.
(3) The inception date for the Fund's Class B shares was April 1, 1994.
(4) The inception date for the Fund's Class C shares was April 30, 1996.
(5) The inception date for the Fund's Advisor Class shares was April
30, 1998.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C ADVISOR
------- ------- ------- -------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C ADVISOR
------- ------- ------- -------
MANAGEMENT FEES(3) 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE
OTHER EXPENSES 2.96% 3.12% 3.27% 3.09%
TOTAL ANNUAL FUND
OPERATING EXPENSES 4.21% 5.12% 5.27% 4.09%
EXPENSES REIMBURSED(4) 2.07% 2.07% 2.07% 2.07%
NET FUND
OPERATING EXPENSES 2.14% 3.05% 3.20% 2.02%
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a 2.00%
redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
(3) Management fees are reduced to 0.75% for net assets over $500 million.
(4) The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31, 2002,to
the extent necessary to ensure that the Fund's Annual Fund Operating
Expenses, when calculated at the Fund level, do not exceed 1.95% of the
Fund's average net assets (excluding 12b-1 fees and certain other
expenses). For each of the following nine years, the Investment Manager
has contractually agreed to ensure that these expenses do not exceed
2.50% of the Fund's average net assets.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(NO REDEMPTION) (NO REDEMPTION)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C ADVISOR
- ---- ------- ------- --------------- ------- --------------- -------
1ST $ 780 $ 808 $ 308 $ 423 $ 323 $ 205
3RD 1,313 1,352 1,052 1,096 1,096 747
5TH 1,872 2,018 1,818 1,888 1,888 1,316
10TH 3,385 3,625 3,625 3,958 3,958 2,864
8
IVY GLOBAL NATURAL RESOURCES FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term growth. Any income realized will be incidental.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in equity securities (including common
stock, preferred stock and securities convertible into common stock) of
companies of any size throughout the world that own, explore or develop natural
resources and other basic commodities or supply goods and services to such
companies.
For these purposes, "natural resources" generally include:
- - precious metals (such as gold, silver and platnium);
- - ferrous and nonferrous metals (such as iron, aluminum, copper and
steel);
- - strategic metals (such as uranium and titanium);
- - fossil fuels and chemicals;
- - forest products and agricultural commodities; and
- - undeveloped real property.
The Fund's manager uses an equity style that focuses on both growth and value.
Companies targeted for investment have strong management and financial
positions, adding balance with established low cost, low debt producers and
positions that are based on anticipated commodity price trends. The Fund may
have some emerging markets exposure in an attempt to achieve higher returns over
the long term.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK AND EMERGING-MARKET RISK - Investing in foreign securities
involves a number of economic, financial, and political considerations that are
not associated with the US markets and that could affect the Fund's performance
unfavorably, depending on the prevailing conditions at any given time. Among
these potential risks are greater price volatility; comparatively weak
supervision and regulations of security exchanges, brokers, and issuers; higher
brokerage costs; fluctuations in foreign currency exchange rates and related
conversion costs; adverse tax consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
SMALL AND MEDIUM SIZED COMPANY RISK - Many of the companies in which the Fund
may invest have relatively small market capitalizations. Securities of smaller
companies may be subject to more abrupt or erratic market movements than the
securities of larger, more established companies, since smaller companies tend
to be more thinly traded and because they are subject to greater business risk.
Transaction costs of smaller-company stocks may also be higher than those of
larger companies.
INDUSTRY CONCENTRATION RISK - Since the Fund can invest a significant portion of
its assets in securities of companies principally engaged in natural resources
activities, the Fund could experience wider fluctuations in value than funds
with more diversified portfolios.
NATURAL RESOURCE AND PHYSICAL COMMODITY RISK - Investing in natural resources
can be riskier than other types of investment activities because of a range of
factors, including price fluctuation caused by real and perceived inflationary
trends and political developments; and the cost assumed by natural resource
companies in complying with environmental and safety regulations. Investing in
physical commodities, such as gold, exposes the Fund to other risk
considerations such as potentially severe price fluctuations over short periods
of time, storage costs that exceed the custodial and/or brokerage costs
associated with the Fund's other portfolio holdings.
WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept potentially dramatic fluctuations in capital value in the
short term.
PERFORMANCE BAR CHART AND TABLE The information in the following chart and table
provides some indication of the risks of investing in the Fund by showing
changes in the Fund's performance from year to year and how the Fund's average
annual returns compare with those of a broad measure of market performance. The
Fund's past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future.
* You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
9
WORLDWIDE FUNDS (continued)
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
40.98%
15.40% BEST QUARTER 24.19%
6.95% 9.86% 4th Quarter, 2001
-29.35% WORST QUARTER -23.28%
4th Quarter, 1997
1997 1998 1999 2000 2001
** Any applicable sales charges and account fees are not reflected, and if
they were, the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
MSCI
COMMODITY
ADVISOR RELATED
CLASS A(2) CLASS B(2) CLASS C(2) CLASS(3) INDEX(2)*
---------- ---------- ---------- -------- ---------
1 YEAR
RETURN BEFORE TAXES 8.76% 9.73% 13.61% 15.71% -1.50%
RETURN AFTER TAXES
ON DISTRIBUTIONS 8.24%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 3.10%
SINCE INCEPTION
RETURN BEFORE TAXES 4.95% 5.04% 5.16% 19.32% 2.91%
RETURN AFTER TAXES
ON DISTRIBUTIONS 3.76%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 3.31%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
* Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A, Class B and Class C shares
was January 1, 1997. Index performance is calculated from December 31,
1996. (3)The inception date for the Fund's Advisor Class shares was
April 8, 1999.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C ADVISOR
------- ------- ------- -------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C ADVISOR
------- ------- ------- -------
MANAGEMENT FEES 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE
OTHER EXPENSES 2.46% 2.33% 2.32% 2.24%
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.71% 4.33% 4.32% 3.24%
EXPENSES REIMBURSED(3) 1.46% 1.46% 1.46% 1.46%
NET FUND
OPERATING EXPENSES 2.25% 2.87% 2.86% 1.78%
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a 2.00%
redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
(3) The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31, 2002,
to the extent necessary to ensure that the Fund's Annual Fund Operating
Expenses, when calculated at the Fund level, do not exceed 1.95% of the
Fund's average net assets (excluding 12b-1 fees and certain other
expenses). For each of the following nine years, the Investment Manager
has contractually agreed to ensure that these expenses do not exceed
2.50% of the Fund's average net assets.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(NO REDEMPTION) (NO REDEMPTION)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C ADVISOR
- ---- ------- ------- --------------- ------- --------------- -------
1ST $ 790 $ 790 $ 290 $ 389 $ 289 $ 181
3RD 1,344 1,300 1,000 997 997 675
5TH 1,923 1,932 1,732 1,727 1,727 1,195
10TH 3,486 3,527 3,527 3,657 3,657 2,624
10
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital growth. Any income realized
will be incidental.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in the equity securities (including common
stock, preferred stock and securities convertible into common stock) of
companies throughout the world that are expected to profit from the development,
advancement and use of science and technology.
The Fund intends to invest its assets in at least three different countries, but
may at any given time have a substantial portion of its assets invested in the
United States. Industries that are likely to be represented in the Fund's
portfolio holdings include:
- - Internet;
- - telecommunications and networking equipment;
- - semiconductors and semiconductor equipment;
- - software;
- - computers and peripherals;
- - electronic manufacturing services; and
- - telecommunications and information services.
The Fund's management team believes that technology is a fertile growth area,
and actively seeks to position the Fund to benefit from this growth by investing
in companies of any size that may deliver rapid earnings growth and potentially
high investment returns, which may include and purchase of stock in companies
engaged in initial public offerings.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK - Investing in foreign securities involves a number of
economic, financial, and political considerations that are not associated with
the US markets and that could affect the Fund's performance unfavorably,
depending on the prevailing conditions at any given time. Among these potential
risks are greater price volatility; comparatively weak supervision and
regulations of security exchanges, brokers, and issuers; higher brokerage costs;
fluctuations in foreign currency exchange rates and related conversion costs;
adverse tax consequences; and settlement delays.
SMALL AND MEDIUM SIZED COMPANY RISK- Many of the companies in which the Fund may
invest have relatively small market capitalizations. Securities of smaller
companies may be subject to more abrupt or erratic market movements than the
securities of larger, more established companies, since smaller companies tend
to be more thinly traded and because they are subject to greater business risk.
Transaction cost of smaller-company stocks may also be higher than those of
larger companies.
IPO RISK - Securities issued through an initial public offering (IPO) can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. The Fund may engage in short term trading
in connection with its IPO investments, which could produce higher trading costs
and adverse tax consequences. The number of securities issued in an IPO is also
limited, so it is likely that IPO securities will represent a smaller component
of the Fund's portfolio as the Fund's assets increase (and thus have a more
limited effect on the Fund's performance).
INDUSTRY CONCENTRATION RISK - Since the Fund focuses its investments in
securities of companies principally engaged in the science and technology
industries, the Fund could experience wider fluctuations in value than funds
with more diversified portfolios. For example, rapid advances in these
industries tend to cause existing products to become obsolete, and the Fund's
returns could suffer to the extent it holds an affected company's shares.
Companies in a number of science and technology industries are also subject to
government regulations and approval processes that may affect their overall
profitability and cause their stock prices to be more volatile.
WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept significant fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance (before and
after taxes) is not necessarily an indication of how the Fund will perform in
the future.
* You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
11
WORLDWIDE FUNDS (continued)
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
122.56% BEST QUARTER 65.43%
35.26% 4th Quarter, 1999
6.53% -42.99% -51.65% WORST QUARTER -44.97%
1st Quarter, 2001
1997 1998 1999 2000 2001
**Any applicable sales charges and account fees are not reflected, and if they
were, the returns shown above would be lower. The returns for the Fund's other
classes of shares during these periods were different from those of Class A
because of variations in their respective expense structures.
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
- -------------------------------------------------------------------------------------------------
RUSSELL
3000
ADVISOR TECH.
CLASS A(2) CLASS B(2) CLASS C(2) CLASS I(3) CLASS(4) INDEX(2)(*)
- -------------------------------------------------------------------------------------------------
1 YEAR
RETURN BEFORE TAXES -54.43% -54.41% -52.54% N/A -51.56% -29.31%
RETURN AFTER TAXES
ON DISTRIBUTION
-54.43%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 1.17%
5 YEARS
RETURN BEFORE TAXES -3.59% -3.58% -3.16% N/A N/A 10.69%
RETURN AFTER TAXES ON
ON DISTRIBUTION -3.91%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -1.95%
SINCE INCEPTION
RETURN BEFORE TAXES 5.93% 6.22% 6.43% N/A -8.45% 14.92%
RETURN AFTER TAXES 5.60%
ON DISTRIBUTION
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 5.25%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
(*)Reflects no deduction for fees, expenses or taxes.
(1)Performance figures reflect any applicable sales charges.
(2)The inception date for the Fund's Class A, Class B and Class C shares was
July 22, 1996. Index performance is calculated from July 30, 1996.
(3)The Fund has had no outstanding Class I shares.
(4)The inception date for the Fund's Advisor Class shares was April 15, 1998.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C CLASS I ADVISOR
- -------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE NONE
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C CLASS I(3) ADVISOR
- --------------------------------------------------------------------------------------------
MANAGEMENT FEES 1.00% 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE NONE
OTHER EXPENSES 1.21% 1.22% 1.24% 1.12% 1.27%
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.46% 3.22% 3.24% 2.12% 2.27%
EXPENSES REIMBURSED(4) 0.26% 0.26% 0.26% 0.26% 0.26%
NET FUND
OPERATING EXPENSES 2.20% 2.96% 2.98% 1.86% 2.01%
(1)A CDSC of 1.00% may apply to Class A shares that are redeemed within two
years of the end of the month in which they were purchased.
(2)If you choose to receive your redemption proceeds via Federal Funds wire, a
$10 wire fee will be charged to your account. Class A shares redeemed or
exchanged within 30 days of purchase are subject to a 2.00% redemption/
exchange fee. This fee also applies to Class A shares purchased without a
sales charge.
(3)The Fund has had no outstanding Class I shares. Percentages shown are
estimates based on expenses for Class A shares.
(4)The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31, 2002, to the
extent necessary to ensure that the Fund's Annual Fund Operating Expenses,
when calculated at the Fund level, do not exceed 1.95% of the Fund's average
net assets (excluding 12b-1 fees and certain other expenses). For each of the
following nine years, the Investment Manager has contractually agreed to
ensure that these expenses do not exceed 2.50% of the Fund's average net
assets.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I ADVISOR
1ST $ 785 $ 799 $ 299 $ 401 $ 301 $ 189 $ 204
3RD 1,274 1,268 968 974 974 639 684
5TH 1,788 1,861 1,661 1,670 1,670 1,115 1,191
10TH 3,192 3,330 3,330 3,522 3,522 2,431 2,585
12
IVY INTERNATIONAL FUND
INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its total assets in equity securities
(including common stock, preferred stock and securities convertible into common
stock) principally traded in European, Pacific Basin and Latin American markets.
To enhance potential return, the Fund my invest in countries with new or
comparatively undeveloped economies.
The Fund's manager uses an investment approach that focuses on:
- - analyzing a company's financial statements;
- - taking advantage of overvalued or undervalued markets; and
- - building a portfolio that is diversified by both region and sector.
Some of the Fund's investments may produce income (such as dividends), although
it is expected that any income realized would be incidental.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. As a result, the value of equity securities rises and
falls with a company's success or failure. The market value of equity securities
can fluctuate significantly even where "management risk" is not a factor. You
could lose money if you redeem your Fund shares at a time when the Fund's
portfolio is not performing as well as expected.
FOREIGN SECURITY RISK - Investing in foreign securities involves a number of
economic, financial, and political considerations that are not associated with
the US markets and that could affect the Fund's performance unfavorably,
depending on the prevailing conditions at any given time. Among these potential
risks are greater price volatility; comparatively weak supervision and
regulations of security exchanges, brokers, and issuers; higher brokerage costs;
fluctuations in foreign currency exchange rates and related conversion costs;
adverse tax consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance (before and
after taxes) is not necessarily an indication of how the Fund will perform in
the future.
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
48.37%
21.05% BEST QUARTER 16.41%
19.72% 4th Quarter, 1998
12.65% 10.38% WORST QUARTER -17.10%
3.92% 7.34% 3rd Quarter, 2001
0.07% -17.26% -21.03%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
**Any applicable sales charges and account fees are not reflected, and if they
were, the returns shown above would be lower. The returns for the Fund's other
classes of shares during these periods were different from those of Class A
because of variations in their respective expense structures.
- ---------------
*You should consult with your financial advisor before deciding whether the
Fund is an appropriate investment choice in light of your particular financial
needs and risk tolerance.
13
\
WORLDWIDE FUNDS (continued)
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
- ------------------------------------------------------------------------------------------------------------------
MSCI
ADVISOR EAFE
CLASS A(2) CLASS B(3) CLASS C(4) CLASS I(5) CLASS(6) INDEX(2)(*)
- -------------------------------------------------------------------------------------------------------------------
1 YEAR
RETURN BEFORE TAXES -25.57% -25.79% -22.62% -20.87% -21.26% -21.44%
RETURN AFTER TAXES
ON DISTRIBUTION -25.40%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -6.08%
5 YEARS
RETURN BEFORE TAXES -2.45% -2.53% -2.12% -0.91% N/A 0.89%
RETURN AFTER TAXES
ON DISTRIBUTIONS -4.08%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -4.35%
10 YEARS
RETURN BEFORE TAXES 6.27% N/A N/A N/A N/A 4.46%
RETURN AFTER TAXES
ON DISTRIBUTION 4.92%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 8.52%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
(*) Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A shares was April 30, 1986. Index
performance is calculated from April 30, 1986.
(3) The inception date for the Fund's Class B shares was October 22, 1993.
(4) The inception date for the Fund's Class C shares was April 30, 1996.
(5) The inception date for the Fund's Class I shares was October 6, 1994.
(6) The inception date for the Fund's Advisor Class shares was August 31, 2000.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C CLASS I ADVISOR
- --------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE NONE
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets(4)
CLASS A CLASS B CLASS C CLASS I ADVISOR
- --------------------------------------------------------------------------------------------
MANAGEMENT FEES(3) 1.00% 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE NONE
OTHER EXPENSES 0.35% 0.54% 0.54% 0.24% 0.35%
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.60% 2.54% 2.54% 1.24% 1.35%
(1)A CDSC of 1.00% may apply to Class A shares that are redeemed within two
years of the end of the month in which they were purchased.
(2)If you choose to receive your redemption proceeds via Federal Funds wire, a
$10 wire fee will be charged to your account. Class A shares redeemed or
exchanged within 30 days of purchase are subject to a 2.00% redemption/
exchange fee. This fee also applies to Class A shares purchased without a
sales charge.
(3)Management fees are reduced to 0.90% for net assets over $2.0 billion,
reduced to 0.80% for net assets over $2.5 billion and reduced to 0.70% for
net assets over $3.0 billion.
(4)The expense information shown above has been restated to reflect current
fees.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I ADVISOR
1ST $ 728 $ 757 $ 257 $ 357 $ 257 $ 126 $ 137
3RD 1,051 1,091 791 791 791 393 428
5TH 1,396 1,550 1,350 1,350 1,350 681 739
10TH 2,366 2,645 2,645 2,875 2,875 1,500 1,624
14
IVY INTERNATIONAL SMALL COMPANIES FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term growth. Consideration of current income is secondary to
this principal objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in the equity securities (including common
stock, preferred stock and securities convertible into common stock) of foreign
issuers having total market capitalization of less than $2 billion at the time
of initial purchase.
To enhance potential return, the Fund may invest in countries with new or
comparatively undeveloped economies. The Fund may also purchase stock in
companies engaged in initial public offerings.
The Fund might also engage in foreign currency exchange transactions and forward
foreign currency contracts to control its exposure to certain risks.
The Fund is managed by a team that focuses on both value and growth factors.
Some of the Fund's investments may produce income (such as dividends), although
it is expected that any income realized would be incidental.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK AND EMERGING-MARKET RISK - Investing in foreign securities
involves a number of economic, financial, and political considerations that are
not associated with the US markets and that could affect the Fund's performance
unfavorably, depending on the prevailing conditions at any given time. Among
these potential risks are greater price volatility; comparatively weak
supervision and regulations of security exchanges, brokers, and issuers; higher
brokerage costs; fluctuations in foreign currency exchange rates and related
conversion costs; adverse tax consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
SMALL COMPANY RISK - Securities of smaller companies may be subject to more
abrupt or erratic market movements than the securities of larger, more
established companies, since smaller companies tend to be more thinly traded and
because they are subject to greater business risk. Transaction costs of
smaller-company stocks may also be higher than those of larger companies.
IPO RISK - Securities issued through an initial public offering (IPO) can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. The Fund may engage in short term trading
in connection with its IPO investments, which could produce higher trading costs
and adverse tax consequences. The number of securities issued in an IPO is also
limited, so it is likely that IPO securities will represent a smaller component
of the Fund's portfolio as the Fund's assets increase (and thus have a more
limited effect on the Fund's performance).
DERIVATIVES RISK - The Fund may, but is not required to, use a range of
derivative investment techniques to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements) or to enhance potential gain. The use of these derivative
investment techniques involves a number of risks, including the possibility of
default by the counterparty to the transaction and, to the extent the judgement
of the Fund's manager as to the certain market movements is incorrect, the risk
of losses that are greater than if the derivative technique(s) had not been
used.
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking long-term growth
potential, but who can accept significant fluctuations in capital value in the
short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance (before and
after taxes) is not necessarily an indication of how the Fund will perform in
the future.
- --------------
(*) You should consult with your financial advisor before deciding whether the
Fund is an appropriate investment choice in light of your particular
financial needs and risk tolerance.
15
WORLDWIDE FUNDS (continued)
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
39.45% BEST QUARTER 26.58%
4th Quarter, 1999
5.24% 4.94% WORST QUARTER -22.43%
- -12.52% -35.65% 3rd Quarter, 2001
1997 1998 1999 2000 2001
(**)Any applicable sales charges and account fees are not reflected, and if they
were, the returns shown above would be lower. The returns for the Fund's
other classes of shares during these periods were different from those of
Class A because of variations in their respective expense structures.
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
- -----------------------------------------------------------------------------------------------------------------
SSB EMI
WORLD
ADVISOR EX-US
CLASS A(2) CLASS B(2) CLASS C(2) CLASS I(3) CLASS(4) INDEX(2)(*)
- -----------------------------------------------------------------------------------------------------------------
1 YEAR
RETURN BEFORE TAXES -39.36% -39.28% -36.76% N/A -35.44% -15.64%
RETURN AFTER TAXES
ON DISTRIBUTION -39.27%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -21.52%
SINCE INCEPTION
RETURN BEFORE TAXES -3.97% -3.93% -3.50% N/A N/A -1.03%
RETURN AFTER TAXES
ON DISTRIBUTION -4.12%
RETURN AFTER TAXES ON
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -3.22%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
(*)Reflects no deduction for fees, expenses or taxes.
(1)Performance figures reflect any applicable sales charges.
(2)The inception date for the Fund's Class A, Class B and Class C shares was
January 1, 1997. Index performance is calculated from December 31, 1996.
(3)The Fund has had no outstanding Class I shares.
(4)The inception date for the Fund's Advisor Class shares was July 1, 1999.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C CLASS I ADVISOR
- --------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE NONE
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C CLASS I(3) ADVISOR
- ------------------------------------------------------------------------------------------
MANAGEMENT FEES 1.00% 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE NONE
OTHER EXPENSES 1.90% 1.86% 1.87% 1.69% 1.78%
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.15% 3.86% 3.87% 2.69% 2.78%
EXPENSES REIMBURSED(4) 0.91% 0.91% 0.91% 0.91% 0.91%
NET FUND
OPERATING EXPENSES 2.24% 2.95% 2.96% 1.78% 1.87%
(1)A CDSC of 1.00% may apply to Class A shares that are redeemed within two
years of the end of the month in which they were purchased.
(2)If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a 2.00%
redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
(3)The Fund has had no outstanding Class I shares. Percentages shown are
estimates based on expenses for Class A shares.
(4)The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31, 2002, to
the extent necessary to ensure that the Fund's Annual Fund Operating
Expenses, when calculated at the Fund level, do not exceed 1.95% of the
Fund's average net assets (excluding 12b-1 fees and certain other
expenses). For each of the following nine years, the Investment Manager
has contractually agreed to ensure that these expenses do not exceed
2.50% of the Fund's average net assets.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I ADVISOR
1ST $ 789 $ 798 $ 298 $ 399 $ 299 $ 181 $ 190
3RD 1,341 1,323 1,023 1,026 1,026 675 702
5TH 1,919 1,970 1,770 1,775 1,775 1,195 1,241
10TH 3,477 3,579 3,579 3,747 3,747 2,624 2,715
16
IVY INTERNATIONAL VALUE FUND
INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 65% of its assets in equity securities (including
common stock, preferred stock and securities convertible into common stock)
principally traded in European, Pacific Basin and Latin American markets.
To control its exposure to certain risks, the Fund might engage in foreign
currency exchange transactions and forward foreign currency contracts.
The Fund's manager uses a disciplined value approach while looking for
investment opportunities around the world (including countries with new or
comparatively undeveloped economies). Some of the Fund's investments may produce
income (such as dividends), although it is expected that any income realized
would be incidental.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK AND EMERGING-MARKET RISK - Investing in foreign securities
involves a number of economic, financial, and political considerations that are
not associated with the US markets and that could affect the Fund's performance
unfavorably, depending on the prevailing conditions at any given time. Among
these potential risks are greater price volatility; comparatively weak
supervision and regulations of security exchanges, brokers, and issuers; higher
brokerage costs; fluctuations in foreign currency exchange rates and related
conversion costs; adverse tax consequences; and settlement delays. The risks of
investing in foreign securities are more acute in countries with developing
economies.
DERIVATIVES RISK - The Fund may, but is not required to, use a range of
derivative investment techniques to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements) or to enhance potential gain. The use of these derivative
investment techniques involves a number of risks, including the possibility of
default by the counterparty to the transaction and, to the extent the judgment
of the Fund's manager as to the certain market movements is incorrect, the risk
of losses that are greater than if the derivative technique(s) had not been
used.
WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance (before and
after taxes) is not necessarily an indication of how the Fund will perform in
the future.
* You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
17
WORLDWIDE FUNDS (continued)
ANNUAL TOTAL RETURNS FOR CLASS A SHARES**
for the years ending December 31
[BAR GRAPH]
27.79% BEST QUARTER 16.49%
6.63% 4th Quarter, 1998
-7.25% -17.17% WORST QUARTER -18.29%
3rd Quarter, 1998
1998 1999 2000 2001
** Any applicable sales charges and account fees are not reflected, and if
they were, the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31,2001
MSCI
ADVISOR EAFE
CLASS A(2) CLASS B(2) CLASS C(2) CLASS I(3) CLASS(4) INDEX(2)*
---------- ---------- ---------- ---------- -------- ---------
1 YEAR
RETURN BEFORE TAXES -21.94% -21.94% -18.65% N/A -17.03% -21.44%
RETURN AFTER TAXES
ON DISTRIBUTIONS -21.79%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -14.33%
SINCE INCEPTION
RETURN BEFORE TAXES -2.60% -2.53% -2.11% N/A -0.25% 1.19%
RETURN AFTER TAXES
ON DISTRIBUTIONS -2.62%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -2.22%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
* Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A, Class B and Class C shares
was May 13, 1997. Index performance is calculated from May 31, 1997.
(3) The Fund has had no outstanding Class I shares.
(4) The inception date for the Fund's Advisor Class shares was February
23, 1998.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C CLASS I ADVISOR
------- ------- ------- ------- -------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE NONE
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C CLASS I(3) ADVISOR
------- ------- ------- ---------- -------
MANAGEMENT FEES 1.00% 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE NONE
OTHER EXPENSES 0.90% 0.88% 0.89% 0.76% 0.85%
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.15% 2.88% 2.89% 1.76% 1.85%
EXPENSES REIMBURSED(4) 0.38% 0.38% 0.38% 0.38% 0.38%
NET FUND
OPERATING EXPENSES 1.77% 2.50% 2.51% 1.38% 1.47%
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a 2.00%
redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
(3) The Fund has had no outstanding Class I shares. Percentages shown are
estimates based on expenses for Advisor Class shares.
(4) The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31,2002,to
the extent necessary to ensure that the Fund's Annual Fund Operating
Expenses, when calculated at the Fund level, do not exceed 1.50% of the
Fund's average net assets (excluding 12b-1 fees and certain other
expenses). For each of the following nine years, the Investment Manager
has contractually agreed to ensure that these expenses do not exceed
2.50% of the Fund's average net assets.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(NO REDEMPTION) (NO REDEMPTION)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I ADVISOR
- ---- ------- ------- --------------- ------- --------------- ------- -------
1ST $ 745 $ 753 $ 253 $ 354 $ 254 $ 140 $ 150
3RD 1,175 1,156 856 859 859 517 545
5TH 1,630 1,685 1,485 1,490 1,490 919 965
10TH 2,887 3,004 3,004 3,187 3,187 2,042 2,138
18
IVY PACIFIC OPPORTUNITIES FUND
INVESTMENT OBJECTIVE
The Fund's principal investment objective is long-term capital growth.
Consideration of current income is secondary to this principal objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 80% of its total net assets, plus the amount of any
borrowings for investment purposes, in the equity securities (including common
stock, preferred stock and securities convertible into common stock) of
companies such as those whose securities are traded mainly on markets in the
Pacific region, organized under the laws of a Pacific region country or issued
by any company with more than half of its business in the Pacific region.
Examples of Pacific region countries include China, Hong Kong, Malaysia, Sri
Lanka, Australia and India. Although it is permitted to invest in Japan, the
Fund does not currently anticipate doing so.
The Fund's management team uses an investment approach that focuses on analyzing
a company's financial statements and taking advantage of overvalued or
undervalued markets. Some of the Fund's investments may produce income (such as
dividends), although it is expected that any income realized would be
incidental.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose money
if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
FOREIGN SECURITY RISK AND EMERGING-MARKET RISK - Investing in foreign securities
involves a number of economic, financial, and political considerations that are
not associated with the US markets and that could affect the Fund's performance
unfavorably, depending on the prevailing conditions at any given time. Among
these potential risks are greater price volatility; comparatively weak
supervision and regulation of security exchanges, brokers, and issuers; higher
brokerage costs; fluctuations in foreign currency exchange rates and related
conversion costs; adverse tax consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies. Since the Fund normally invests a substantial portion of
its assets in these countries, it is exposed to the following additional risks:
securities that are even less liquid and more volatile than those in more
developed foreign countries; unusually long settlement delays; less stable
governments that are susceptible to sudden adverse actions (such as
nationalization of businesses, restrictions on foreign ownership or prohibitions
against repatriation of assets); abrupt changes in exchange rate regime or
monetary policy; unusually large currency fluctuations and currency conversion
costs; and high national debt levels (which may impede an issuer's payment of
principal and/or interest on external debt).
REGIONAL RISK - Investing in the Pacific region involves special risks beyond
those described above. For example, certain Pacific region countries may be
vulnerable to trade barriers and other protectionist measures that could have an
adverse effect on the value of the Fund's portfolio. The limited size of the
markets for some Pacific region securities can also make them more susceptible
to investor perceptions, which can impact their value and liquidity.
WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential in
this sector of the world, but who can accept potentially dramatic fluctuations
in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance (before and
after taxes) is not necessarily an indication of how the Fund will perform in
the future.
* You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
19
WORLDWIDE FUNDS (continued)
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
46.72% BEST QUARTER 40.73%
20.50% 2nd Quarter, 1999
WORST QUARTER -30.21%
- -24.88% 1.59% -21.94% -20.56% -18.25% -9.29% 4th Quarter, 1997
1994 1995 1996 1997 1998 1999 2000 2001
** Any applicable sales charges and account fees are not reflected, and if
5 they were, the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
MSCI
ASIA PACIFIC
ADVISOR EX-JAPAN
CLASS A(2) CLASS B(2) CLASS C(3) CLASS(4) INDEX(2)*
---------- ---------- ---------- -------- ------------
1 YEAR
RETURN BEFORE TAXES -14.50% -14.84% -11.15% 9.58% -2.42%
RETURN AFTER TAXES
ON DISTRIBUTIONS -14.56%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -11.82%
5 YEARS
RETURN BEFORE TAXES -8.66% -8.72% -8.28% N/A -8.43%
RETURN AFTER TAXES
ON DISTRIBUTIONS -8.87%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -7.08%
SINCE INCEPTION
RETURN BEFORE TAXES -4.66% -4.74% -5.86% -3.68% -2.77%
RETURN AFTER TAXES
ON DISTRIBUTIONS -4.92%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -3.81%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
* Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A and Class B shares was
October 22, 1993. Index performance is calculated from October 31,1993.
(3) The inception date for the Fund's Class C shares was April 30,1996.
(4) The inception date for Advisor Class shares was February 10,1998.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C ADVISOR
------- ------- ------- -------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE
REDEMPTION/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% 2.00% 2.00% 2.00%
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C ADVISOR
------- ------- ------- -------
MANAGEMENT FEES 1.00% 1.00% 1.00% 1.00%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE
OTHER EXPENSES 2.32% 2.31% 2.26% 2.39%
TOTAL ANNUAL FUND
OPERATING EXPENSES 3.57% 4.31% 4.26% 3.39%
EXPENSES REIMBURSED(3) 1.36% 1.36% 1.36% 1.36%
NET FUND
OPERATING EXPENSES 2.21% 2.95% 2.90% 2.03%
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Following an
exchange into the Fund, shares redeemed (or exchanged) within one month
are subject to a 2.00% redemption fee. This fee also applies to Class A
shares purchased without a sales charge.
(3) The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31,2002,to
the extent necessary to ensure that the Fund's Annual Fund Operating
Expenses, when calculated at the Fund level, do not exceed 1.95% of the
Fund's average net assets (excluding 12b-1 fees and certain other
expenses). For each of the following nine years, the Investment Manager
has contractually agreed to ensure that these expenses do not exceed
2.50% of the Fund's average net assets.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(NO REDEMPTION) (NO REDEMPTION)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C ADVISOR
- ---- ------- ------- --------------- ------- --------------- -------
1ST $ 786 $ 798 $ 298 $ 393 $ 293 $ 206
3RD 1,333 1,323 1,023 1,008 1,008 750
5TH 1,905 1,970 1,770 1,746 1,746 1,321
10TH 3,449 3,573 3,573 3,693 3,693 2,874
20
IVY GROWTH FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term growth, with current income being a secondary
consideration.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in the equity securities (including common stock,
preferred stock and securities convertible into common stock) of US companies of
any size.
The Fund's portfolio is divided into two segments, each of which is managed
according to the investment style of its portfolio manager. Some of the Fund's
investments may produce income (such as dividends), although it is expected that
any income realized would be incidental.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. As a result, the value of equity securities rises and
falls with a company's success or failure. The market value of equity securities
can fluctuate significantly even where "management risk" is not a factor. You
could lose money if you redeem your Fund shares at a time when the Fund's
portfolio is not performing as well as expected.
SMALL AND MEDIUM SIZED COMPANY RISK - Securities of smaller companies may be
subject to more abrupt or erratic market movements than the securities of
larger, more established companies, since smaller companies tend to be more
thinly traded and because they are subject to greater business risk. Transaction
costs of smaller-company stocks may also be higher than those of larger
companies.
WHO SHOULD INVEST*
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance (before and
after taxes) not necessarily an indication of how the Fund will perform in the
future.
ANNUAL TOTAL RETURNS FOR CLASS A SHARES**
for the years ending December 31
[BAR GRAPH]
BEST QUARTER 22.79%
4th Quarter, 1999
WORST QUARTER -23.58%
3rd Quarter, 2001
31.87%
27.33%
17.22%
14.05%
12.29% 11.69%
5.21%
-2.97% -22.31% -22.43%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
** Any applicable sales charges and account fees are not reflected, and if
they were, the returns shown above would be lower. The returns for the
Fund's other classes of shares during these periods were different from
those of Class A because of variations in their respective expense
structures.
* You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
21
DOMESTIC FUNDS (continued)
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31,2001
RUSSELL
3000 S&P
ADVISOR GROWTH 500
CLASS A(2) CLASS B(3) CLASS C(4) CLASS(5) INDEX(6)* INDEX(7)*
---------- ---------- ---------- -------- --------- ---------
1 YEAR
RETURN BEFORE TAXES - 26.89 -27.05% -23.97% -22.68% -19.63% -11.89%
RETURN AFTER TAXES
ON DISTRIBUTIONS -26.90%
RETURN AFTER TAXES ON
DISTRIBUTIONS AND
SALE OF FUND SHARES -13.73%
5 YEARS
RETURN BEFORE TAXES -0.93% -1.11% -0.80% N/A 7.72% 10.70%
RETURN AFTER TAXES
ON DISTRIBUTIONS -2.75%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 0.43%
10 YEARS
RETURN BEFORE TAXES 5.02% N/A N/A N/A N/A 12.94%
RETURN AFTER TAXES
ON DISTRIBUTIONS 2.66%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 4.17%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you hold
the fund shares at the end of the period, thus not having any taxable gain or
loss on your investment in shares of the fund. The fund's return after taxes on
distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual federal
marginal income tax rates. State and local tax rates are not included in the tax
effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their fund
shares in a tax-deferred account (including a 401(k) or IRA account), or to
tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
* Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A shares was December 31, 1960.
(3) The inception date for the Fund's Class B shares was October 22, 1993.
(4) The inception date for the Fund's Class C shares was April 30, 1996.
(5) The inception date for the Fund's Advisor Class shares was
April 30, 1998.
(6) Index performance is calculated from June 30, 1995, the earliest year
of the Russell 3000 Growth Index. The Fund recently changed its
benchmark to one that more accurately reflects the universe of
securities in which it invests.
(7) Index performance is calculated from December 31, 1969, the earliest
year of the S&P 500 Index.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C ADVISOR
------- ------- ------- -------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE
REDEMPTION/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C ADVISOR
------- ------- ------- -------
MANAGEMENT FEES(3) 0.85% 0.85% 0.85% 0.85%
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE
OTHER EXPENSES 0.41% 0.65% 0.70% 0.73%
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.51% 2.50% 2.55% 1.58%
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a 2.00%
redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
(3) Management fees are reduced to 0.75% for net assets over $350 million.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(NO REDEMPTION) (NO REDEMPTION)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C ADVISOR
- ---- ------- ------- --------------- ------- --------------- -------
1ST $ 720 $ 753 $ 253 $ 358 $ 258 $ 161
3RD 1,025 1,079 779 793 793 499
5TH 1,351 1,531 1,331 1,355 1,355 860
10TH 2,273 2,592 2,592 2,885 2,885 1,878
22
IVY US BLUE CHIP FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term growth, with current income being a secondary
consideration.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in the equity securities (including common
stock, preferred stock and securities convertible into common stock) of US
companies that the Fund's investment manager believes are "blue chip"
companies. US blue chip companies are large, well known companies that
typically have an established earnings and dividend history are traded mainly
on US markets, and that are organized under the laws of the US or that have
more than half their business in the US.
The Fund's manager uses an equity style that focuses on both growth and value.
The median market capitalization of companies targeted for investment is
expected to be at least $5 billion.
Some of the Fund's investments may produce income (such as dividends), although
it is expected that any income realized would be incidental.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose
money if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept moderate fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of
the risks of investing in the Fund by showing changes in the Fund's performance
from year to year and how the Fund's average annual returns compare with those
of a broad measure of market performance. The Fund's past performance (before
and after taxes) is not necessarily an indication of how the Fund will perform
in the future.
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
15.35% BEST QUARTER 12.62%
4th Quarter, 1999
-12.69% -11.61% WORST QUARTER -14.21%
3rd Quarter, 2001
1999 2000 2001
(**) Any applicable sales charges and account fees are not reflected, and
if they were, the returns shown above would be lower. The returns for
the Fund's other classes of shares during these periods were different
from those of Class A because of variations in their respective
expense structures.
- ------------
(*) You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
23
DOMESTIC FUNDS (continued)
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
- -----------------------------------------------------------------------------------------------------------
S&P
ADVISOR 500
CLASS A(2) CLASS B(3) CLASS C(3) CLASS I(4) CLASS(2) INDEX(2)(*)
- -----------------------------------------------------------------------------------------------------------
1 YEAR
- ------
RETURN BEFORE TAXES -16.70% -16.60% -13.27% N/A -11.36% -11.89%
RETURN AFTER TAXES
ON DISTRIBUTIONS -16.70%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -11.89%
SINCE INCEPTION
- ---------------
RETURN BEFORE TAXES -3.25% -3.93% -3.04% N/A -1.08% 2.70%
RETURN AFTER TAXES
ON DISTRIBUTIONS -3.40%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -2.95%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you
hold the fund shares at the end of the period, thus not having any taxable gain
or loss on your investment in shares of the fund. The fund's return after taxes
on distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates. State and local tax rates are not included
in the tax effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their
fund shares in a tax-deferred account (including a 401 (k) or IRA account), or
to tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
(*) Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A and Advisor Class shares was
November 2, 1998. Index performance is calculated from October 31,
1998.
(3) The inception date for the Fund's Class B and Class C shares was
November 6, 1998.
(4) The Fund had no Class I shares outstanding.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C CLASS I ADVISOR
- --------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE NONE
- --------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C CLASS I(3) ADVISOR
- --------------------------------------------------------------------------------------------------
MANAGEMENT FEES 0.75% 0.75% 0.75% 0.75% 0.75%
- --------------------------------------------------------------------------------------------------
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE NONE
- --------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.83% 0.83% 0.88% 0.74% 0.78%
- --------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.83% 2.58% 2.63% 1.49% 1.53%
- --------------------------------------------------------------------------------------------------
EXPENSES REIMBURSED(4) 0.27% 0.27% 0.27% 0.27% 0.27%
- --------------------------------------------------------------------------------------------------
NET FUND
OPERATING EXPENSES 1.56% 2.31% 2.36% 1.22% 1.26%
- --------------------------------------------------------------------------------------------------
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a
2.00% redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
(3) The Fund has had no outstanding Class I shares. Percentages shown are
estimates based on expenses for Class A shares.
(4) The Fund's Investment Manager has contractually agreed to reimburse
the Fund's expenses for the current fiscal year ending December
31, 2002, to the extent necessary to ensure that the Fund's Annual Fund
Operating Expenses, when calculated at the Fund level, do not exceed
1.34% of the Fund's average net assets (excluding 12b-1 fees and
certain other expenses). For each of the following nine years, the
Investment Manager has contractually agreed to ensure that these
expenses do not exceed 2.50% of the Fund's average net assets.
- ------------
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I ADVISOR
1ST $ 725 $ 734 $ 234 $ 339 $ 239 $ 124 $ 128
3RD 1,093 1,077 777 792 792 445 457
5TH 1,485 1,546 1,346 1,371 1,371 788 809
10TH 2,579 2,712 2,712 2,944 2,944 1,756 1,801
24
IVY US EMERGING GROWTH FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term growth, with current income being a secondary
consideration.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in equity securities (including common
stock, preferred stock and securities convertible into common stock) of small-
and medium-sized US companies that are in the early stages of their life cycles
and that the Fund's manager believes have the potential to increase their sales
and earnings at above-average rates. US companies are companies whose
securities are traded mainly on US markets and are organized under the laws of
the US or that have more than half their business in the US.
The Fund's manager uses a growth strategy of investing.
Companies typically are selected from within the technology, healthcare,
entertainment, and business and consumer services sectors, and may include
companies engaged in initial public offerings.
Some of the Fund's investments may produce income (such as dividends), although
it is expected that any income realized would be incidental.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
MARKET RISK - Equity securities typically represent a proportionate ownership
interest in a company. The market value of equity securities can fluctuate
significantly even where "management risk" is not a factor. You could lose
money if you redeem your Fund shares at a time when the Fund's portfolio is not
performing as well as expected.
SMALL AND MEDIUM SIZED COMPANY RISK - Securities of smaller companies may be
subject to more abrupt or erratic market movements than the securities of
larger, more established companies, since smaller companies tend to be more
thinly traded and because they are subject to greater business risk.
Transaction costs of smaller-company stocks may also be higher than those of
larger companies.
IPO RISK - Securities issued through an initial public offering (IPO) can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and
may not have lengthy operating histories. The Fund may engage in short term
trading in connection with its IPO investments, which could produce higher
trading costs and adverse tax consequences. The number of securities issued in
an IPO is also limited, so it is likely that IPO securities will represent a
smaller component of the Fund's portfolio as the Fund's assets increase (and
thus have a more limited effect on the Fund's performance).
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking long-term growth potential,
but who can accept fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of
the risks of investing in the Fund by showing changes in the Fund's performance
from year to year and how the Fund's average annual returns compare with those
of a broad measure of market performance. The Fund's past performance (before
and after taxes) is not necessarily an indication of how the Fund will perform
in the future.
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
BEST QUARTER 51.31%
4th Quarter, 1999
WORST QUARTER -35.18%
3rd Quarter,2001
62.47%
42.07%
18.52% 18.00%
3.29 4.26% -25.81% -33.49%
1994 1995 1996 1997 1998 1999 2000 2001
(**) Any applicable sales charges and account fees are not reflected, and
if they were, the returns shown above would be lower. The returns for
the Fund's other classes of shares during these periods were different
from those of Class A because of variations in their respective
expense structures.
- ------------
(*) You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
25
DOMESTIC FUNDS (continued)
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
- ------------------------------------------------------------------------------------------------------
RUSSELL
2500
ADVISOR GROWTH
CLASS A(2) CLASS B(3) CLASS C(4) CLASS(5) INDEX(2)(*)
- ------------------------------------------------------------------------------------------------------
1 YEAR
- ------
RETURN BEFORE TAXES -37.31% -37.35% -34.70% -33.40% -10.83%
RETURN AFTER TAXES
ON DISTRIBUTIONS -37.31%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -5.66%
5 YEARS
- -------
RETURN BEFORE TAXES -1.45% -1.43% -1.00% N/A 6.60%
RETURN AFTER TAXES
ON DISTRIBUTIONS -2.42%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 0.25%
SINCE INCEPTION
- ---------------
RETURN BEFORE TAXES 10.34% 6.02% -1.68% -2.22% 10.94%
RETURN AFTER TAXES
ON DISTRIBUTIONS 9.08%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 8.78%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you
hold the fund shares at the end of the period, thus not having any taxable gain
or loss on your investment in shares of the fund. The fund's return after taxes
on distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates. State and local tax rates are not included
in the tax effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their
fund shares in a tax-deferred account (including a 401(k) or IRA account), or
to tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
(*) Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A shares was March 3, 1993
(performance is calculated based on the date the Fund first became
available for sale to the public, April 30, 1993).Index performance is
calculated from April 30, 1993.
(3) The inception date for the Fund's Class B shares was October 22, 1993.
(4) The inception date for the Fund's Class C shares was April 30, 1996.
(5) The inception date for the Fund's Advisor Class shares was February
18, 1998.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C ADVISOR
- --------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 5.75% NONE NONE NONE
- --------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE
- --------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE
- --------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C ADVISOR
- --------------------------------------------------------------------------------------------
MANAGEMENT FEES 0.85% 0.85% 0.85% 0.85%
- --------------------------------------------------------------------------------------------
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE
- --------------------------------------------------------------------------------------------
OTHER EXPENSES 0.70% 0.76% 0.76% 0.78%
- --------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.80% 2.61% 2.61% 1.63%
- --------------------------------------------------------------------------------------------
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a
2.00% redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
- ------------
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C ADVISOR
1ST $ 747 $ 764 $ 264 $ 364 $ 264 $ 166
3RD 1,109 1,111 811 811 811 514
5TH 1,494 1,585 1,385 1,385 1,385 887
10TH 2,569 2,747 2,747 2,944 2,944 1,933
26
IVY BOND FUND
INVESTMENT OBJECTIVE
The Fund seeks a high level of current income.
PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 80% of its net assets, plus the amount of
any borrowings for investment purposes, in bonds rated in the four highest
rating categories used by Moody's and S&P and similar investment-grade fixed
income securities.
To increase its potential yield, the Fund may invest up to 20% of its net assets
in low-rated debt securities (commonly referred to as "high yield" or "junk"
bonds). These securities typically are rated Ba or below by Moody's or BB or
below by S&P (or are judged by the Fund's manager to be of comparable quality).
The Fund may invest a portion of its assets in foreign (including emerging
market) debt securities to diversify its holdings and to increase its potential
return. The Fund may also invest in zero coupon bonds.
The Fund's management team targets for investment companies whose
creditworthiness is believed to be stable or improving.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other mutual funds with investment objectives that are
similar to those of the Fund.
FOREIGN SECURITY RISK - The Fund may invest up to 20% of its net assets in
foreign issuers. Investing in foreign securities involves a number of economic,
financial, and political considerations that are not associated with the US
markets and that could affect the Fund's performance unfavorably, depending on
the prevailing conditions at any given time. Among these potential risks are
greater price volatility; comparatively weak supervision and regulations of
security exchanges, brokers, and issuers; higher brokerage costs; fluctuations
in foreign currency exchange rates and related conversion costs; adverse tax
consequences; and settlement delays.
The risks of investing in foreign securities are more acute in countries with
developing economies.
INTEREST RATE AND MATURITY RISK - The Fund's debt security investments are
susceptible to decline in a rising interest rate environment even where
"management risk" is not a factor. You could lose money if you redeem your
shares at a time when interest rates are rising. The risk is more acute for
debt securities with longer maturities.
CREDIT RISK - The market value of debt securities also tends to vary according
to the relative financial condition of the issuer. As much as 20% of the Fund's
debt security holdings may be considered below investment grade (commonly
referred to as "high yield" or "junk" bonds). Low-rated debt securities are
considered speculative and could significantly weaken the Fund's returns if the
issuer defaults on its payment obligations.
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking current income, but who can
accept moderate fluctuations in capital value in the short term.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of
the risks of investing in the Fund by showing changes in the Fund's performance
from year to year and how the Fund's average annual returns compare with those
of a broad measure of market performance. The Fund's past performance (before
and after taxes) is not necessarily an indication of how the Fund will perform
in the future.
ANNUAL TOTAL RETURNS FOR CLASS A SHARES(**)
for the years ending December 31
[BAR GRAPH]
BEST QUARTER 7.56%
2nd Quarter, 1995
WORST QUARTER -4.02%
2nd Quarter, 2000
17.41%
15.45%
11.87%
8.70%
8.16% 8.06%
1.89%
-4.10% 0.00% -6.17%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
(**) Any applicable sales charges and account fees are not reflected, and
if they were, the returns shown above would be lower. The returns for
the Fund's other classes of shares during these periods were different
from those of Class A because of variations in their respective
expense structures.
- ------------
(*) You should consult with your financial advisor before deciding whether
the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
27
FIXED INCOME FUNDS (continued)
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
- ------------------------------------------------------------------------------------------------------------
LEHMAN
BROTHERS
ADVISOR US CREDIT
CLASS A(2) CLASS B(3) CLASS C(4) CLASS I(5) CLASS(6) INDEX(2)(*)
- ------------------------------------------------------------------------------------------------------------
1 YEAR
- ------
RETURN BEFORE TAXES 3.53% 2.60% 6.50% N/A 9.07% 10.40%
RETURN AFTER TAXES
ON DISTRIBUTIONS 1.20%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 1.22%
5 YEARS
- -------
RETURN BEFORE TAXES 2.06% 1.64% 2.22% N/A N/A 6.57%
RETURN AFTER TAXES
ON DISTRIBUTIONS -0.66%
RETURN AFTER TAXES
ON DISTRIBUTIONS AND
SALE OF FUND SHARES -0.56%
10 YEARS
- --------
RETURN BEFORE TAXES 5.34% N/A N/A N/A N/A 7.35%
RETURN AFTER TAXES
ON DISTRIBUTIONS 2.28%
RETURN AFTER TAXES ON
ON DISTRIBUTIONS AND
SALE OF FUND SHARES 2.53%
After-tax returns are intended to show the impact federal income taxes have on
investments in the fund. The fund's return after taxes on distribution
calculation shows the effect of taxable distributions, but assumes that you
hold the fund shares at the end of the period, thus not having any taxable gain
or loss on your investment in shares of the fund. The fund's return after taxes
on distribution and sale of Fund shares calculation shows the effect of both a
distribution and any taxable gain or loss that would be realized if you
purchased fund shares at the beginning of a period and sold them at the end of
the period.
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates. State and local tax rates are not included
in the tax effect.
Your after-tax returns depend on your own tax situation and may differ from
those shown. After-tax returns are not relevant to investors who hold their
fund shares in a tax-deferred account (including a 401(k) or IRA account), or
to tax-exempt investors. After-tax returns are presented for Class A shares and
after-tax returns for other classes will vary.
(*) Reflects no deduction for fees, expenses or taxes.
(1) Performance figures reflect any applicable sales charges.
(2) The inception date for the Fund's Class A shares was September
9, 1985. Index performance is calculated from September 1, 1985.
(3) The inception date for the Fund's Class B shares was April 1, 1994.
(4) The inception date for the Fund's Class C shares was April 30, 1996.
(5) The Fund has had no outstanding Class I shares.
(6) The inception date for the Fund's Advisor Class shares was January
20, 1998.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C CLASS I ADVISOR
- --------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) 4.75% NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE) NONE(1) 5.00% 1.00% NONE NONE
- --------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------
REDEMPTION FEE/EXCHANGE FEE
(AS A % OF AMOUNT REDEEMED,
IF APPLICABLE)(2) 2.00% NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C CLASS I ADVISOR
- --------------------------------------------------------------------------------------------------
MANAGEMENT FEES(4) 0.50% 0.50% 0.50% 0.50% 0.50%
- --------------------------------------------------------------------------------------------------
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES 0.25% 1.00% 1.00% NONE NONE
- --------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.66% 0.75% 0.68% 0.57% 0.82%
- --------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.41% 2.25% 2.18% 1.07% 1.32%
- --------------------------------------------------------------------------------------------------
(1) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
(2) If you choose to receive your redemption proceeds via Federal Funds
wire, a $10 wire fee will be charged to your account. Class A shares
redeemed or exchanged within 30 days of purchase are subject to a
2.00% redemption/exchange fee. This fee also applies to Class A shares
purchased without a sales charge.
(3) The Fund has had no outstanding Class I shares. Percentages shown are
estimates based on expenses for Class A shares.
(4) Management fees are reduced to 0.40% of average net assets over $500
million.
- ------------
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
(no redemption) (no redemption)
YEAR CLASS A CLASS B CLASS B CLASS C CLASS C CLASS I ADVISOR
1ST $ 612 $ 728 $ 228 $ 321 $ 221 $ 109 $ 134
3RD 900 1,003 703 682 682 340 418
5TH 1,209 1,405 1,205 1,169 1,169 590 723
10TH 2,086 2,373 2,373 2,513 2,513 1,306 1,590
28
IVY MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks to obtain as high a level of current income as is consistent with
the preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in money market instruments maturing within thirteen months or
less and maintains a portfolio with a dollar-weighted average maturity of 90
days or less.
The Fund's emphasis on securities with relatively short term maturities is
designed to enable the Fund to maintain a constant net asset value of $1.00 per
share.
Among the types of money market instruments that are likely to be included in
the Fund's portfolio are:
- - debt securities issued or guaranteed by the US Government;
- - obligations of domestic banks and savings and loans associations
(including certificates of deposit and bankers' acceptances);
- - high-quality commercial paper;
- - high quality short term corporate notes, bonds and debentures; and
- - short term repurchase agreements involving US Government securities.
PRINCIPAL RISKS
The main risks to which the Fund is exposed in carrying out its investment
strategies are the following:
MANAGEMENT RISK - Securities selected for the Fund may not perform as well as
the securities held by other money market funds.
MARKET RISK - An investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money investing in the Fund.
INTEREST RATE AND MATURITY RISK - Many of the Fund's portfolio holdings are
susceptible to decline in a rising interest rate environment. The risk is more
acute for debt securities with longer maturities.
CREDIT RISK - The issuers of the Fund's portfolio holdings could fail to meet
their obligations on interest payments and/or principal repayments, which could
cause the Fund to lose money.
WHO SHOULD INVEST(*)
The Fund may be appropriate for investors seeking a combination of current
income and stability of capital.
PERFORMANCE BAR CHART AND TABLE
The information in the following chart and table provides some indication of the
risks of investing in the Fund by showing changes in the Fund's performance from
year to year and how the Fund's average annual returns compare with those of a
broad measure of market performance. The Fund's past performance is not
necessarily an indication of how the Fund will perform in the future.
ANNUAL TOTAL RETURNS FOR CLASS A SHARES
for the years ending December 31
[BAR GRAPH]
BEST QUARTER 1.42%
3rd Quarter, 2000
WORST QUARTER 0.53%
2nd Quarter, 1993
5.37%
4.80%
4.47% 4.60% 4.51%
4.21%
4.16%
3.12%
2.81%
2.42%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
AVERAGE ANNUAL TOTAL RETURNS(1)
For the periods ending December 31, 2001
- ------------------------------------------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------------
1 YEAR 3.12% 3.19% 3.10%
5 YEARS 4.44% 4.51% 4.40%
10 YEARS 4.03% N/A N/A
SINCE INCEPTION 4.91% 4.54% 4.41%
(1)The inception date for the Fund's three classes of shares were as
follows: Class A shares, April 3, 1987; Class B shares, January 1, 1996; and
Class C shares, April 30, 1996.
The Fund's seven day yield as of December 31, 2001 was 0.67%, 0.76% and
0.50% for Class A, Class B and Class C shares, respectively.
- ---------------
(*)You should consult with your financial advisor before deciding
whether the Fund is an appropriate investment choice in light of your
particular financial needs and risk tolerance.
29
FIXED INCOME FUNDS (continued)
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund:
SHAREHOLDER FEES
fees paid directly from your investment
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A % OF OFFERING PRICE) NONE NONE NONE
- --------------------------------------------------------------------
MAXIMUM DEFERRED SALES
CHARGE (LOAD) (AS A % OF
PURCHASE PRICE)(1) NONE NONE NONE
- --------------------------------------------------------------------
MAXIMUM SALES CHARGE
(LOAD) ON REINVESTED DIVIDENDS NONE NONE NONE
- --------------------------------------------------------------------
REDEMPTION/EXCHANGE FEE(2) NONE NONE NONE
- --------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets
CLASS A CLASS B CLASS C
- ----------------------------------------------------------------------
MANAGEMENT FEES 0.40% 0.40% 0.40%
- ----------------------------------------------------------------------
DISTRIBUTION AND/OR
SERVICE (12B-1) FEES NONE NONE NONE
- ----------------------------------------------------------------------
OTHER EXPENSES 1.19% 1.12% 1.20%
- ----------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.59% 1.52% 1.60%
- ----------------------------------------------------------------------
EXPENSES REIMBURSED(3) 0.72% 0.72% 0.72%
- ----------------------------------------------------------------------
NET FUND
OPERATING EXPENSES 0.87% 0.80% 0.88%
- ----------------------------------------------------------------------
(1) No CDSC applies to your purchase of Fund shares. If, however, you exchange
shares of another Ivy fund that are subject to a CDSC for shares of the
Fund, the CDSC may carry over to your investment in the Fund and be assessed
when you redeem your Fund shares (depending on how much time has elapsed
since your original purchase date).
(2) If you choose to receive your redemption proceeds via Federal Funds wire, a
$10 wire fee will be charged to your account.
(3) The Fund's Investment Manager has contractually agreed to reimburse the
Fund's expenses for the current fiscal year ending December 31, 2002, to the
extent necessary to ensure that the Fund's Annual Fund Operating Expenses,
when calculated at the Fund level, do not exceed 0.85% of the Fund's average
net assets, when calculated at the Fund level. For each of the following
nine years, the Investment Manager has contractually agreed to ensure that
these expenses do not exceed 1.25% of the Fund's average net assets.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (with additional
information shown for Class B and Class C shares based on the assumption that
you do not redeem your shares at that time). The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be as follows:
YEAR CLASS A CLASS B CLASS C
1ST $ 89 $ 82 $ 90
3RD 363 341 366
5TH 659 621 664
10TH 1,499 1,439 1,510
30
ADDITIONAL INFORMATION
ABOUT PRINCIPAL
INVESTMENT STRATEGIES
AND RISKS
PRINCIPAL STRATEGIES
IVY CUNDILL GLOBAL VALUE FUND: The Fund seeks to achieve its principal objective
of long-term capital growth by investing primarily in the equity securities of
companies throughout the world.
The investment approach of Peter Cundill & Associates, Inc. ("Cundill"), the
Fund's sub-advisor, is based on a contrarian "value" philosophy. Cundill looks
for securities that are trading below their estimated intrinsic value. To
determine the intrinsic value of a particular company, Cundill focuses primarily
on the company's financial statements. Cundill also considers factors such as
earnings, dividends, business prospects, management capabilities and potential
catalysts (such as a change in management) to realize shareholder value. A
security is purchased when the price reflects a significant discount to
Cundill's estimate of the company's intrinsic value. Given the bottom-up or
company-specific approach, Cundill does not forecast economies or corporate
earnings and does not rely on market timing.
IVY DEVELOPING MARKETS FUND: The Fund seeks to achieve its principal objective
of long-term capital growth by investing primarily in the equity securities of
companies that the Fund's manager believes will increase shareholder value
through the economic development and growth of emerging markets. The Fund
considers an emerging market country to be one that is generally viewed as
"developing" or "emerging" by the World Bank and the International Finance
Corporation, or classified as "emerging" by the United Nations. The Fund usually
invests its assets in at least three different emerging market countries, and
may invest more than 25% of its assets in the securities of issuers located in a
single country. The countries in which the Fund invests are selected on the
basis of a mix of factors that include long-term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using an approach which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Securities purchased are
believed to be attractively valued on one or more of these measures relative to
a broad universe of comparable securities.
IVY EUROPEAN OPPORTUNITIES FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing primarily in the equity
securities of companies located or otherwise doing business in European
countries and covering a broad range of economic and industry sectors. The Fund
may also invest a significant portion of its assets in European debt securities,
up to 20% of which is considered below investment grade (commonly referred to as
"high yield" or "junk" bonds). The Fund's manager follows a "bottom-up" approach
to investing, which focuses on prospects for long-term earnings growth. Company
selection is generally based on an analysis of a wide range of financial
indicators (such as growth, earnings, cash, book and enterprise value), as well
as factors such as market position, competitive advantage and management
strength. Country and sector allocation decisions are driven by the company
selection process.
IVY GLOBAL FUND: The Fund seeks to achieve its principal objective of long-term
capital growth by investing primarily in the equity securities of companies
throughout the world. The Fund invests in a variety of economic sectors,
industry segments and individual securities to reduce the effects of price
volatility in any one area, and normally invests its assets in at least three
different countries (including the United States). Countries are selected on the
basis of a mix of factors that include long-term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using an approach which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Securities purchased are
believed to be attractively valued on one or more of these measures relative to
a broad universe of comparable securities.
IVY GLOBAL NATURAL RESOURCES FUND: The Fund seeks to achieve its principal
objective of long-term growth by investing primarily in the equity securities of
companies throughout the world that own, explore or develop natural resources
and other basic commodities or that supply goods and services to such companies.
The Fund's manager targets for investment well managed companies that are
expected to increase shareholder value through successful exploration and
development of natural resources, balancing the Fund's portfolio with low cost,
low debt producers that have outstanding asset bases, and positions that are
based on anticipated commodity price trends. Additional emphasis is placed on
sectors that are out of favor but appear to offer the most significant recovery
potential over a one to three year period. All investment decisions are reviewed
systematically and cash reserves may be allowed to build up when valuations seem
unattractive. The Fund's manager attempts to minimize risk through diversifying
the Fund's portfolio by commodity, country, issuer and asset class.
IVY GLOBAL SCIENCE & TECHNOLOGY FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing in the equity securities of
companies throughout the world that are expected to increase shareholder value
through the development, advancement and use of science and technology. The Fund
may also invest in companies that are expected to profit indirectly from the
commercialization of technological and scientific advances. Industries likely to
be represented in the Fund's overall portfolio holdings include Internet,
computers and peripheral products, software, electronic components and systems,
telecommunications, and media and information services. The Fund intends to
invest its assets in at least three different countries, but may at any given
time have a substantial portion of its assets invested in the United States.
31
IVY INTERNATIONAL FUND: The Fund seeks to achieve its principal objective of
long-term capital growth by investing primarily in equity securities principally
traded in European, Pacific Basin and Latin American markets. The Fund invests
in a variety of economic sectors and industry segments to reduce the effects of
price volatility in any one area, and usually is invested in at least three
different countries. The Fund's manager focuses on expanding foreign economies
and companies that generally have at least $1 billion in capitalization at the
time of investment and a solid history of operations. Individual securities are
selected on the basis of various indicators (such as earnings, cash flow, assets
and long term growth potential) and are reviewed for fundamental financial
strength.
IVY INTERNATIONAL SMALL COMPANIES FUND: The Fund seeks to achieve its principal
objective of long-term capital growth by investing in equity securities of
foreign issuers having total market capitalization of less than $2 billion at
initial purchase across a wide range of geographic, economic and industry
sectors. Countries are selected on the basis of a mix of factors that include
long-term economic growth prospects, anticipated inflation levels, and the
effect of applicable government policies on local business conditions.
The Fund's portfolio is managed using a "bottom-up" approach, which focuses on
prospects for long-term earnings growth. Company selection for this segment of
the Fund is generally based on an analysis of a wide range of financial
indicators (such as growth, earnings, cash, book and enterprise value), as well
as factors such as market position, competitive advantage and management
strength. Country and sector allocation decisions for this segment are driven by
the company selection process.
IVY INTERNATIONAL VALUE FUND: The Fund seeks to achieve its principal objective
of long-term capital growth by investing in equity securities principally traded
in European, Pacific Basin and Latin American markets. The Fund invests in a
variety of economic sectors and industry segments to reduce the effects of price
volatility in any one area. The Fund's manager seeks out rapidly expanding
foreign economies and companies that generally have at least $1 billion in
capitalization at the time of investment and a solid history of operations.
Other factors that the Fund's manager considers in selecting particular
countries include long term economic growth prospects, anticipated inflation
levels, and the effect of applicable government policies on local business
conditions. The Fund is managed using a value approach, which focuses on
financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Securities purchased are believed to
be attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
IVY PACIFIC OPPORTUNITIES FUND: The Fund seeks to achieve its investment
objective of long-term capital growth by investing primarily in equity
securities of companies traded mainly on markets in the Pacific region, issued
by companies organized under the laws of a Pacific region country or issued by
any company with more than half of its business in the Pacific region. Examples
of Pacific region countries include China, Hong Kong, Malaysia, Sri Lanka,
Australia and India. The Fund usually invests in at least three different
countries, and does not intend to concentrate its investments in any particular
industry. The countries in which the Fund invests are selected on the basis of a
mix of factors that include long-term economic growth prospects, anticipated
inflation levels, and the effect of applicable government policies on local
business conditions. The Fund is managed using an approach which focuses on
financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Securities purchased are believed to
be attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
IVY GROWTH FUND: The Fund seeks to achieve its principal objective of long-term
growth by investing primarily in mid- and large-cap US stocks, and seeks to
provide additional diversification by investing a portion of its assets in
small-cap US stocks. The Fund is managed using a combination of investment
styles. Approximately one half of the Fund's portfolio is comprised of companies
that have had a proven and consistent record of earnings, but whose prices
appear to be low relative to their underlying profitability. The other half of
the Fund's portfolio is invested in equity securities of small- and medium-sized
US companies that are in the early stages of their life cycles and that are
believed to have the potential to increase their sales and earnings at above
average rates.
IVY US BLUE CHIP FUND: The Fund seeks to achieve its principal objective of
long-term growth by investing primarily in equity securities of US companies
occupying leading market positions that are expected to be maintained or
enhanced over time (commonly known as "Blue Chip" companies). Blue Chip
companies tend to have a lengthy history of profit growth and dividend payment,
and a reputation for quality management structure, products and services.
Securities of Blue Chip companies are generally considered to be highly liquid,
since they are well supplied in the marketplace relative to their
smaller-capitalized counterparts and because their trading volume tends to be
higher. The median market capitalization of companies targeted for investment is
expected to be at least $5 billion.
IVY US EMERGING GROWTH FUND: The Fund seeks to achieve its principal objective
of long-term growth by investing primarily in the equity securities of domestic
corporations that are small and medium sized. Companies targeted for investment
typically are in the early stages of their life cycles and are believed by the
Fund's manager to have the potential to increase their sales and earnings at
above-average rates. These companies typically are selected from within the
technology, healthcare, entertainment, and business and consumer services
sectors, which have presented attractive growth opportunities in recent years.
Portfolio holdings are reviewed regularly for valuation, relative strength and
changes in earnings estimates.
IVY BOND FUND: The Fund seeks to achieve its investment objective of a high
level of current income by investing
32
primarily in investment grade bonds (which are those rated in the four highest
rating categories used by Moody's and S&P) and US Government securities that
mature in more than 13 months. The Fund may invest up to 20% of its net assets
in debt securities that are considered below investment grade (commonly referred
to as "high yield" or "junk" bonds). As much as 20% of the Fund's net assets may
be invested in foreign securities (including those in emerging markets).
The Fund's manager targets for investment issuers with stable or improving
credit profiles. Individual securities are selected on the basis of factors such
as comparative yields and credit quality, and where appropriate,
country-specific currency and interest rate trends.
IVY MONEY MARKET FUND: The Fund seeks to achieve its investment objective of as
high a level of current income as is consistent with the preservation of capital
and liquidity by investing in high-quality, short term debt securities. The
Fund's debt investments are required to present minimal credit risk and be
included in one of the two highest short term rating categories that apply to
debt securities. By purchasing these types of securities, the Fund expects to
maintain a constant net asset value of $1.00 per share (although there is no
guarantee that the Fund's efforts will be successful). The Fund's portfolio is
actively monitored on a daily basis to maintain competitive yields.
ALL FUNDS: Each Fund may from time to time take a temporary defensive position
and invest without limit in US Government securities, investment-grade debt
securities (which are those rated in the four highest rating categories used by
Moody's and S&P), and cash and cash equivalents such as commercial paper, short
term notes and other money market securities. When a Fund assumes such a
defensive position it may not achieve its investment objective. Investing in
debt securities also involves both interest rate and credit risk.
PRINCIPAL RISKS
GENERAL MARKET RISK:
As with any mutual fund, the value of the fund investments and the income they
generate will vary daily and generally reflect market conditions, interest rates
and other issuer-specific, political or economic developments.
The Funds' share value will decrease at any time during which its security
holdings or other investment techniques are not performing as well as
anticipated. You could lose money by investing in the Funds depending upon the
timing of your initial purchase and any subsequent redemption or exchange.
OTHER RISKS: Funds that invest heavily in the equity securities of foreign
issuers are more susceptible to the risks associated with these types of
securities than Funds that invest primarily in the securities of U.S. issuers
and/or debt securities. Following is a description of these risks, along with
the risks commonly associated with the other securities and investment
techniques that the Funds' portfolio managers consider important in achieving
the Funds' investment objectives or in managing the Funds' exposure to risk (and
that could therefore have a significant effect on the Funds' returns). Other
investment methods that the Funds may use (such as derivative investments), but
that do not play a key role in the Funds' overall investment strategy, are
described in the Funds' Statement of Additional Information (see back cover page
for information on how you can receive a free copy).
BORROWING: For temporary or emergency purposes (such as meeting shareholder
redemption requests within the time periods specified under the Investment
Company Act of 1940), the Funds (with the exception of Ivy Global Natural
Resources Fund and Ivy International Small Companies Fund, which may borrow up
to 33%) may borrow up to 10% of the value of its total assets from qualified
banks. Borrowing may exaggerate the effect on the Funds' share value of any
increase or decrease in the value of the securities it holds. Money borrowed
will also be subject to interest costs.
DEBT SECURITIES, IN GENERAL: Investing in debt securities involves both interest
rate and credit risk. The value of debt instruments generally increase as
interest rates decline. Conversely, rising interest rates tend to cause the
value of debt securities to decrease. The Funds' portfolio is therefore
susceptible to losses in a rising interest rate environment. The market value of
debt securities also tends to vary according to the relative financial condition
of the issuer. Bonds with longer maturities also tend to be more volatile than
bonds with shorter maturities.
DEPOSITORY RECEIPTS: The Funds may acquire interests in foreign issuers in the
form of sponsored or unsponsored American Depository Receipts ("ADRs"), Global
Depository Receipts ("GDRs") and similar types of depository receipts. ADRs
typically are issued by a U.S. bank or trust company and represent ownership of
the underlying securities issued by a foreign corporation. GDRs and other types
of depository receipts are usually issued by foreign banks or trust companies.
The Funds' investments in ADRs, GDRs and other depository receipts are viewed as
investments in the underlying securities.
Depository receipts can be difficult to price and are not always
exchange-listed. Unsponsored depository programs also are organized
independently without the cooperation of the issuer of the underlying
securities. As a result,information concerning the issuer may not be as current
or as readily available as in the case of sponsored depository instruments, and
their prices may be more volatile than if they were sponsored by the issuers of
the underlying securities.
DERIVATIVE INVESTMENT TECHNIQUES: The Funds may, but are not required to, use
certain derivative investment techniques to hedge various market risks (such as
interest rates, currency exchange rates and broad or specific market movements)
or to enhance potential gain. Among the derivative techniques the Funds might
use are options, futures, forward foreign currency contracts and foreign
currency exchange transactions.
Using put and call options could cause the Funds to lose money by forcing the
sale or purchase of portfolio securities
33
at inopportune times or for prices higher (in the case of put options) or lower
(in the case of call options) than current market values, by limiting the amount
of appreciation the Funds can realize on its investments, or by causing the
Funds to hold a security it might otherwise sell.
Futures transactions (and related options) involve other types of risks. For
example, the variable degree of correlation between price movements of futures
contracts and price movements in the related portfolio position of the Funds
could cause losses on the hedging instrument that are greater than gains in the
value of the Funds' position. In addition, futures and options markets may not
be liquid in all circumstances and certain over-the-counter options may have no
markets. As a result, the Funds might not be able to close out a transaction
before expiration without incurring substantial losses (and it is possible that
the transaction cannot even be closed). In addition, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium.
Foreign currency transactions and forward foreign currency contracts involve a
number of risks, including the possibility of default by the counterparty to the
transaction and, to the extent the advisors' judgment as to certain market
movements is incorrect, the risk of losses that are greater than if the
investment technique had not been used. For example, changes in currency
exchange rates may result in poorer overall performance for a Fund than if it
had not engaged in such transactions. There may also be an imperfect correlation
between the Funds' portfolio holdings of securities denominated in a particular
currency and the forward contracts entered into by the Funds. An imperfect
correlation of this type may prevent the Funds from achieving the intended hedge
or expose the Funds to the risk of currency exchange loss. These investment
techniques also tend to limit any potential gain that might result from an
increase in the value of the hedged position.
EQUITY SECURITIES: Equity securities typically represent a proportionate
ownership interest in a company. As a result, the value of equity securities
rises and falls with a company's success or failure. The market value of equity
securities can fluctuate significantly, with smaller companies being
particularly susceptible to price swings. Transaction costs in smaller-company
securities may also be higher than those of larger companies.
FOREIGN CURRENCIES: Foreign securities may be denominated in foreign currencies.
The value of the Funds' investments, as measured in U.S. dollars, may be
affected unfavorably by changes in foreign currency exchange rates and exchange
control regulations. Currency conversion can also be costly.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS AND FORWARD FOREIGN CURRENCY CONTRACTS:
The Funds (not including Ivy Money Market Fund) may, but are not required to,
use foreign currency exchange transactions and forward foreign currency
contracts to hedge certain market risks (such as interest rates, currency
exchange rates and broad or specific market movement). These investment
techniques involve a number of risks, including the possibility of default by
the counterparty to the transaction and, to the extent the Funds' judgment as to
certain market movements is incorrect, the risk of losses that are greater than
if the investment technique had not been used. For example,there may be an
imperfect correlation between the Funds' portfolio holdings of securities
denominated in a particular currency and the forward contracts entered into by
the Funds. An imperfect correlation of this type may prevent the Funds from
achieving the intended hedge or expose the Funds to the risk of currency
exchange loss. These investment techniques also tend to limit any potential gain
that might result from an increase in the value of the hedged position.
FOREIGN SECURITIES: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated with
the U.S. markets and that could affect the Funds' performance unfavorably,
depending upon prevailing conditions at any given time. For example, the
securities markets of many foreign countries may be smaller, less liquid and
subject to greater price volatility than those in the U.S. Foreign investing may
also involve brokerage costs and tax considerations that are not usually present
in the U.S. markets.
Other factors that can affect the value of the Funds' foreign investments
include the comparatively weak supervision and regulation by some foreign
governments of securities exchanges, brokers and issuers, and the fact that many
foreign companies may not be subject to uniform accounting, auditing and
financial reporting standards. It may also be difficult to obtain reliable
information about the securities and business operations of certain foreign
issuers. Settlement of portfolio transactions may also be delayed due to local
restrictions or communication problems, which can cause the Funds to miss
attractive investment opportunities or impair its ability to dispose of
securities in a timely fashion (resulting in a loss if the value of the
securities subsequently declines).
ILLIQUID SECURITIES:The Funds (not including Ivy Money Market Fund) may invest
up to 15% of their net assets in illiquid securities, which are assets that may
not be disposed of in the ordinary course of business within seven days at
roughly the value at which the Funds have valued the assets. Some of these may
be "restricted securities," which cannot be sold to the public without
registration under the Securities Act of 1933 (in the absence of an exemption)
or because of other legal or contractual restrictions on resale. There is a risk
that the Funds will not be able to dispose of its illiquid securities on a
timely basis at an acceptable price.
LOW-RATED DEBT SECURITIES: In general, low-rated debt securities (commonly
referred to as "high yield" or "junk" bonds) offer higher yields due to the
increased risk that the issuer will be unable to meet its obligations on
interest or principal payments at the time called for by the debt
34
instrument. For this reason, these bonds are considered speculative and could
significantly weaken the Funds' returns.
PRECIOUS METALS AND OTHER PHYSICAL COMMODITIES: Ivy Global Natural Resources
Fund can invest in precious metals and other physical commodities. Commodities
trading is generally considered speculative because of the significant potential
for investment loss. Among the factors that could affect the value of the Fund's
investments in commodities are cyclical economic conditions, sudden political
events and adverse international monetary policies. Markets for precious metals
and other commodities are likely to be volatile and there may be sharp price
fluctuations even during periods when prices overall are rising. The Fund may
also pay more to store and accurately value its commodity holdings than it does
with its other portfolio investments.
SPECIAL EMERGING MARKET CONCERNS: The risks of investing in foreign securities
are heightened in countries with new or developing economies. Among these
additional risks are the following:
- - securities that are even less liquid and more volatile than those in
more developed foreign countries;
- - less stable governments that are susceptible to sudden adverse actions
(such as nationalization of businesses, restrictions on foreign
ownership or prohibitions against repatriation of assets);
- - increased settlement delays;
- - unusually high inflation rates (which in extreme cases can cause the
value of a country's assets to erode sharply);
- - abrupt changes in exchange rate regime or monetary policy;
- - unusually large currency fluctuations and currency conversion costs
(see "Foreign Currencies" above); and
- - high national debt levels (which may impede an issuer's payment of
principal and/or interest on external debt).
WARRANTS: As a holder of certain securities, the Funds may have the opportunity
to purchase warrants. The holder of a warrant pays for the right to purchase a
given number of an issuer's shares at a specified price until the warrant
expires. If a warrant is not exercised by the date of its expiration (such as
when the underlying securities are no longer an attractive investment), the
Funds would lose what it paid for the warrant.
ZERO COUPON BONDS: Zero coupon bonds are debt obligations issued without any
requirement for the periodic payment of interest (and are issued at a
significant discount from face value). Because the income from zero coupon bonds
is recognized currently for Federal income tax purposes, the amount of the
unpaid, accrued interest a Fund generally would be required to distribute as
dividends includes that income (even though the Fund has not actually received
any income proceeds). The Fund could be forced to sell other portfolio
securities at a disadvantageous time and/or price in order to meet its
distribution obligations.
RISK CHARACTERISTICS
Investors in Ivy European Opportunities Fund, Ivy Global Science & Technology
Fund, and Ivy US Emerging Growth Fund should note that the aforementioned risks
may be heightened in the case of securities issued through IPOs.
OTHER IMPORTANT INFORMATION
European Monetary Union ("EMU"): On January 1, 2002, euro notes and coins - the
official currency of 12 of the 15 members of the EMU - officially entered
circulation. The Funds could be affected by certain euro-related issues such as
accounting differences, valuation problems and consumer confusion during this
transitional period. In addition, certain European Union members, including the
United Kingdom, did not officially implement the euro and may cause market
disruptions if they decide to do so. Should this occur, the Funds could
experience investment losses.
MANAGEMENT
INVESTMENT ADVISOR
Ivy Management, Inc. ("IMI")
925 South Federal Highway, Suite 600
Boca Raton, Florida 33432
IMI provides business management services to the Funds and investment advisory
services to all Funds other than Ivy Global Natural Resources Fund. IMI is an
SEC-registered investment advisor with approximately $3.1 billion in assets
under management as of December 31, 2001. For the Funds' fiscal year ended
December 31, 2001, all Funds paid IMI a fee that was equal to the following
percentages of the Funds' respective average net assets as listed below:
FEE PAID TO IMI AS A
PERCENTAGE OF THE
FUND NAME FUND'S AVERAGE NET ASSETS
- --------- -------------------------
IVY GLOBAL NATURAL RESOURCES FUND .50%
IVY GROWTH FUND .85%
IVY US BLUE CHIP FUND .75%
IVY US EMERGING GROWTH FUND .85%
IVY BOND FUND .50%
IVY MONEY MARKET FUND .40%
ALL OTHER FUNDS 1.00%
Cundill, an SEC-registered investment adviser located at Suite A1, 1470 East
Valley Road, P.O. Box 50133, Montecito, California, 93150-0133, serves as
subadvisor to Ivy Cundill Global Value Fund under an agreement with IMI. Cundill
began operations in 1984, and as of December 31, 2001 (along with its
affiliates) had approximately $2 billion in assets under management. For its
services, Cundill receives a fee from IMI that is equal, on an annual basis, to
0.50% of Ivy Cundill Global Value Fund's average net assets.
Henderson Investment Management Limited ("Henderson"), 4 Broadgate Avenue,
London, England EC2M 2DA, serves as subadvisor to Ivy European Opportunities
Fund and Ivy International Small Companies Fund under an agreement with IMI. For
its services, Henderson receives a fee from IMI that is equal,on an annual
basis, to 0.22% of the Fund's
35
average net assets. Henderson is an indirect, wholly owned subsidiary of AMP
Limited, an Australian life insurance and financial services company located in
New South Wales, Australia.
Mackenzie Financial Corporation ("MFC"),150 Bloor Street West, Suite
400, Toronto,Ontario, Canada M5S 3B5, serves as the investment adviser to Ivy
Global Natural Resources Fund and is responsible for selecting Ivy Global
Natural Resources Funds' portfolio investments. MFC has been an investment
counsel and mutual fund manager in Toronto for more than 33 years, and as of
December 31, 2001 had over $38.7 billion in assets under management. For its
services, MFC receives a fee from the Fund that is equal, on an annual basis, to
0.50% of the Fund's average net assets.
The Funds' investment advisor, IMI, is an indirect subsidiary of MFC which is a
wholly owned subsidiary of Investors Group, Inc. ("IGI"), One Canada Centre, 447
Portage Avenue, Winnipeg, Manitoba, Canada R3C3B6.
PORTFOLIO MANAGEMENT
IVY CUNDILL GLOBAL VALUE FUND: The Fund is managed by investment professionals
who are supported by a team of research analysts who are responsible for
providing information on regional and country-specific economic and political
developments and monitoring individual companies.
F. Peter Cundill has over 31 years of value-investing experience and has managed
MFC's Cundill Value Fund since 1975. He is a Chartered Financial Analyst, a
Chartered Accountant and holds a Bachelor of Commerce degree from McGill
University, Montreal. In December 2001,the Canadian Mutual Fund Awards,
sponsored by Morningstar Canada, honored Mr. Cundill with an Analysts' Choice
Career Achievement Award.
Hiok Hhu Ng assists in the management of the Fund. Mr. Ng holds a degree in
finance from the University of British Columbia and is a Chartered Financial
Analyst. He has been with Cundill since 1998 and has four years of professional
investment experience.
IVY DEVELOPING MARKETS FUND, IVY INTERNATIONAL FUND, IVY INTERNATIONAL VALUE
FUND AND IVY PACIFIC OPPORTUNITIES FUND: Moira McLachlan, Vice President of IMI
is the lead manager for the Funds, supported by IMI's international equities
team. Ms. McLachlan joined IMI in 1995 and has 7 years of professional
investment experience. She holds a master's degree in international business, a
bachelor of science degree in multinational business operations and a bachelor
of arts degree in Spanish literature. A Chartered Financial Analyst, Ms.
McLachlan is fluent in Spanish and Portuguese and has corporate experience
working in Brazil, Spain and the United Kingdom.
IVY EUROPEAN OPPORTUNITIES FUND: Stephen Peak, Executive Director of Henderson
and head of Henderson's European equities team, is primarily responsible for
selecting the Fund's portfolio of investments. Formerly a director and portfolio
manager with Touche Remnant &Co., Mr. Peak has 27 years of investment
experience. He joined Henderson in 1986 and since that time has won numerous
awards in recognition of his long-term performance record (eight S&P Micropal
awards, two Lipper awards, three Investment Week awards and one Canadian Mutual
Funds award.) The awards were based on the performance of other funds that he
manages, such as the TR European Growth Trust and the Mackenzie Universal
European Opportunities Fund.
IVY GLOBAL FUND: The Fund's portfolio is divided into two different segments,
which are managed by a team of professionals and headed by the following
individuals:
Moira McLachlan, Vice President of IMI, supported by IMI's international
equities team (comprised of portfolio managers and analysts).
Paul P. Baran, Senior Vice President of IMI, manages the core growth segment of
the Fund's portfolio. Mr. Baran joined IMI in 1998 and has 27 years of
professional investment experience and is a Chartered Financial Analyst. He has
an MBA from Wayne State University. Prior to joining IMI in 1998, Mr. Baran was
named by Morningstar as one of only 13 US fund managers to add value while
decreasing volatility.
Team members use a variety of research sources that include: brokerage reports;
economic and financial news services; company reports; and information from
third party research firms (ranging from large investment banks with global
coverage to local research houses).
In many cases, particularly in international markets, IMI's research analysts
also conduct primary research by: meeting with company management; touring
facilities; and speaking with local research professionals.
IVY GLOBAL NATURAL RESOURCES FUND: Frederick Sturm, a Senior Vice President of
MFC, has managed the Fund since its inception. Mr. Sturm joined MFC in 1983 and
has 17 years of professional investment experience. He is a Chartered Financial
Analyst and holds a graduate degree in commerce and finance from the University
of Toronto.
IVY GLOBAL SCIENCE & TECHNOLOGY FUND: The Fund is managed by IMI's Global
Technology Team. James W. Broadfoot, President of IMI and President of Ivy Fund,
is the Team's lead manager. Mr. Broadfoot joined IMI in 1990,has over 28 years
of professional investment experience, holds an MBA from the Wharton School of
Business and is a Chartered Financial Analyst.
IVY INTERNATIONAL SMALL COMPANIES FUND: The Fund is managed by the Henderson
team. The Henderson team's investment process combines top down regional
allocation with a bottom up stock selection approach. Miranda Richards,
Divisional Director, International Investment, of Henderson, is the global small
companies strategist and is responsible for the Fund's regional allocations. Ms.
Richards has over 14 years of economic and investment experience and holds a
Master of Arts degree in economics and international relations from the
University of St. Andrews in Scotland. Regional allocations are based on factors
such as interest rates and current economic cycles, which are used to identify
economies with relatively strong prospects for real economic growth. Individual
stock selections are based largely on prospects for earnings growth.
36
IVY GROWTH FUND: The Fund's portfolio is divided into two different segments,
which are managed by the following individuals:
James W. Broadfoot, President of IMI and of Ivy Fund, manages the US emerging
growth segment of the Fund's portfolio (see "Ivy Global Science & Technology
Fund," above).
Paul P. Baran, a Senior Vice President of IMI, manages the core growth segment
of the Fund's portfolio (see "Ivy Global Fund," above).
IVY US BLUE CHIP FUND: The Fund is managed by Paul P. Baran (see "Ivy Global
Fund," above).
IVY US EMERGING GROWTH FUND: The Fund is managed by James W. Broadfoot (see "Ivy
Global Science & Technology Fund," above).
IVY BOND FUND AND IVY MONEY MARKET FUND: Richard A. Gluck, Senior Vice President
of IMI, is the Funds' portfolio manager. He has 12 years of professional
investment experience and holds a Masters Degree in management with a
concentration in finance from the M.I.T.S loan School of Management. Mr. Gluck
is supported by the members of IMI's Fixed Income Team, which is responsible for
providing information on regional and country-specific economic and political
developments and monitoring individual companies.
Team members use a variety of research sources that include:
- - brokerage reports;
- - economic and financial news services;
- - company reports; and
- - information from third party research firms (ranging from large
investment banks with global coverage to local research houses).
In many cases, particularly in emerging market countries, IMI's research
analysts also conduct primary research by:
- - meeting with company management;
- - touring facilities; and
- - speaking with local research professionals.
SHAREHOLDER
INFORMATION
PRICING OF FUND SHARES
Each Fund calculates its share price by dividing the value of the Funds' net
assets by the total number of its shares outstanding as of the close of regular
trading (usually 4:00 p.m. Eastern time) on the New York Stock Exchange on each
day the New York Stock Exchange is open for trading (normally any weekday that
is not a national holiday). Each portfolio security that is listed or traded on
a recognized stock market or the Nasdaq Stock Market, Inc. ("Nasdaq") system is
valued at the security's last quoted sale price on the market on which it is
principally traded.
If no sale is reported at that time, the average between the last bid and asked
prices is used. Securities and other Fund assets for which market prices are not
readily available are priced at their "fair value" as determined by IMI in
accordance with procedures approved by the Funds' Board of Trustees. IMI may
also price a foreign security or groups of securities at their fair value if
events materially affecting the estimated value of the security or groups of
securities occur between the close of the foreign exchange on which the security
is principally traded and the time as of which a Fund prices its shares. IMI
will monitor for significant events that may call into question the reliability
of market quotations. Such events may include situations relating to a single
security in a market sector, significant fluctuations in U.S. or foreign
markets, natural disasters, armed conflicts, governmental actions or other
developments not tied directly to the securities markets. Fair-value pricing
under these circumstances is designed to protect existing shareholders from the
actions of short term investors trading into and out of a Fund in an attempt to
profit from short term market movements. When such fair-value pricing occurs,
there may be some period of time during which a Fund's share price and/or
performance information is not available.
The number of shares you receive when you place a purchase or exchange order,
and the payment you receive after submitting a redemption request, is based on a
Funds' net asset value next determined after your instructions are received in
proper form by PFPC, Inc. (the Funds' transfer agent) or by your registered
securities dealer. Each purchase and redemption order is subject to any
applicable sales charge (see "Choosing the appropriate class of shares" below).
Since the Funds normally invest in securities that are listed on foreign
exchanges that may trade on weekends or other days when the Funds do not price
their shares, each Fund's share value may change on days when shareholders will
not be able to purchase or redeem the Fund's shares.
HOW TO BUY SHARES
Please read these sections below carefully before investing.
CHOOSING THE APPROPRIATE CLASS OF SHARES:
If you do not specify on your Account Application which class of shares you are
purchasing, it will be assumed that you are purchasing Class A shares.
Each Fund (except Ivy Money Market Fund) has adopted separate distribution plans
pursuant to Rule 12b-1 under the 1940 Act for its Class A, B and C shares that
allow the Fund to pay distribution and other fees for the sale and distribution
of its shares and for services provided to shareholders. Because these fees are
paid out of the Fund's assets on an ongoing basis, over time they will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
The following tables display the various investment minimums, sales charges and
expenses that apply to each class.
37
MINIMUM MINIMUM
INITIAL SUBSEQUENT
INVESTMENT(*) INVESTMENT(*)
------------- -------------
CLASS A $ 1,000 $ 100
CLASS B $ 1,000 $ 100
CLASS C $ 1,000 $ 100
CLASS I $ 5,000,000 $ 10,000
ADVISOR CLASS $ 10,000 $ 250
(*) minimum initial and subsequent investments for retirement plans are
$25.
INITIAL SERVICE &
SALES DISTRIBUTION
CHARGE CDSC FEES(*)
------- ---- ------------
CLASS A Maximum none, .25% service
5.75%,(**) with options except on fee
for a reduction certain NAV
or waiver purchases
CLASS B none Maximum .75%
5.00%; distribution
declines over fee and .25%
six years(***) service fee
CLASS C none 1.00% for .75%
the first year(***) distribution
fee and .25%
service fee
CLASS I none none none
ADVISOR CLASS none none none
(*) None for Ivy Money Market Fund.
(**) 4.75% for Ivy Bond Fund; none for Ivy Money Market Fund.
(***) For Ivy Money Market Fund, CDSC is applicable only on shares purchased
with proceeds from the exchange of other Ivy Fund shares that would
otherwise have been subject to a CDSC.
ADDITIONAL PURCHASE INFORMATION
All information in this section applies to all Funds except Ivy Money Market
Fund, which does not charge an initial sales charge or CDSC on any share class.
CLASS A SHARES: Class A shares are sold at a public offering price equal to
their net asset value per share plus an initial sales charge, as set forth in
the tables below (which is reduced as the amount invested increases):
ALL FUNDS (EXCEPT IVY BOND FUND)
SALES SALES PORTION OF
CHARGE AS CHARGE AS PUBLIC
A PERCENTAGE A PERCENTAGE OFFERING
AMOUNT OF PUBLIC OF NET AMOUNT PRICE RETAINED
INVESTED OFFERING PRICE INVESTED BY DEALER
- -------- -------------- ------------- --------------
Less than
$50,000 5.75% 6.10% 5.00%
$50,000 but
less than
$100,000 5.25% 5.54% 4.50%
$100,000 but
less than
$250,000 4.50% 4.71% 3.75%
$250,000 but
less than
$500,000 3.00% 3.09% 2.50%
$500,000 or
over(*) 0.00% 0.00% 0.00%
IVY BOND FUND
SALES SALES PORTION OF
CHARGE AS CHARGE AS PUBLIC
A PERCENTAGE A PERCENTAGE OFFERING
AMOUNT OF PUBLIC OF NET AMOUNT PRICE RETAINED
INVESTED OFFERING PRICE INVESTED BY DEALER
- -------- -------------- -------------- --------------
Less than
$100,000 4.75% 4.99% 4.00%
$100,000 but
less than
$250,000 3.75% 3.90% 3.00%
$250,000 but
less than
$500,000 2.50% 2.56% 2.00%
$500,000 or
over(*) 0.00% 0.00% 0.00%
(*) A CDSC of 1.00% may apply to Class A shares that are redeemed within
two years of the end of the month in which they were purchased.
Class A shares that are acquired through reinvestment of dividends or
distributions are not subject to any sales charges.
38
HOW TO REDUCE YOUR INITIAL SALES CHARGE:
- - "Rights of Accumulation" permits you to pay the sales charge that
applies to the cost or value (whichever is higher) of all Ivy Fund
Class A shares you own.
- - A "Letter of Intent" permits you to pay the sales charge that would
apply to your cumulative purchase of Fund shares over a 13-month period
(certain restrictions apply).
HOW TO ELIMINATE YOUR INITIAL SALES CHARGE:
You may purchase Class A shares at NAV (without an initial sales charge or a
CDSC) through any one of the following methods:
- - through certain investment advisors and financial planners who charge a
management, consulting or other fee for their services;
- - under certain qualified retirement plans;
- - as an employee or director of Mackenzie Investment Management Inc. or
its affiliates;
- - as an employee of a selected dealer; or
- - through the Merrill Lynch Daily K Plan (the "Plan"), provided the Plan
has at least $3 million in assets or over 500 or more eligible
employees. Class B shares of the Funds are made available to Plan
participants at NAV without a CDSC if the Plan has less than $3 million
in assets or fewer than 500 eligible employees. For further information
see "Group Systematic Investment Program" in the SAI.
Certain trust companies, bank trust departments, credit unions, savings and
loans and other similar organizations may also be exempt from the initial sales
charge on Class A shares.
You may also purchase Class A shares at NAV if you are investing at least
$500,000 through a dealer or agent. A CDSC of 1.00% may apply to shares redeemed
within two years of the end of the month in which they were purchased. Ivy
Mackenzie Distributors, Inc. ("IMDI"), the Funds' distributor, may pay the
dealer or agent (out of IMDI's own resources) for its distribution assistance
according to the following schedule:
PURCHASE AMOUNT COMMISSION
- --------------- ----------
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%
IMDI may from time to time pay a bonus or other cash incentive to dealers (other
than IMDI), including those that employ a registered representative who during a
specified time period sells a minimum dollar amount of the shares of a Fund
and/or other funds distributed by IMDI.
Each Fund may, from time to time, waive the initial sales charge on its Class A
shares sold to clients of certain dealers meeting criteria established by IMDI.
This privilege will apply only to Class A shares of a Fund that are purchased
using proceeds obtained by such clients through redemption of another mutual
fund's shares on which a sales charge was paid. Purchases must be made within 60
days of redemption from the other fund, and the Class A shares purchased are
subject to a 1.00% CDSC on shares redeemed within two years after purchase.
With respect solely to Ivy US Emerging Growth Fund, former class N shareholders
of Hudson Capital Appreciation Fund are exempt from the initial sales charge on
the Fund's Class A shares.
CLASS B AND CLASS C SHARES: Class B and Class C shares are not subject to an
initial sales charge but are subject to a CDSC. If you redeem your Class C
shares within one year of purchase they will be subject to a CDSC of 1.00%, and
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the following rates:
CDSC AS A PERCENTAGE OF DOLLAR
YEAR SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
- ------------------- ------------------------------
First 5.00%
Second 4.00%
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter 0.00%
The CDSC for both Class B and Class C shares will be assessed on an amount equal
to the lesser of the current market value or the original purchase cost of the
shares being redeemed. No charge will be assessed on reinvested dividends or
distributions, or on shares held over six years. If your shares have appreciated
in value, each share redeemed will include both your original cost (subject to
the above CDSC schedule) and any proportional increase in market value (not
subject to a CDSC). If your shares have depreciated in value, the CDSC will be
assessed on the market value of the shares being redeemed. At the time of
redemption, the calculation is performed on a share-by-share basis as described
below.
Shares will be redeemed in the following order:
- - Shares held more than six years
- - Shares acquired through reinvestment of dividends and distributions
- - Shares subject to the lowest CDSC percentage; on a first-in, first-out
basis with the portion of the lot attributable to capital appreciation,
which is not subject to a CDSC redeemed first; then the portion of the
lot attributable to your original basis, which is subject to a CDSC.
The CDSC for Class B shares is waived for:
- - Certain post-retirement withdrawals from an IRA or other retirement
plan if you are over 59 1/2 years old.
- - Redemptions by certain eligible 401(a) and 401(k) plans and certain
retirement plan rollovers.
- - Redemptions resulting from a tax-free return of excess contribution to
an IRA.
- - Withdrawals resulting from shareholder death or disability provided
that the redemption is requested within one year of death or
disability.
39
- - Withdrawals through the Systematic Withdrawal Plan of up to 12% per
year of your account value at the time the plan is established.
Both Class B shares and Class C shares are subject to an ongoing service and
distribution fee at a combined annual rate of up to 1.00% of the portfolio's
average net assets attributable to its Class B or Class C shares. The ongoing
distribution fees will cause these shares to have a higher expense ratio than
that of Class A, Class I and Advisor Class shares. IMDI uses the money that it
receives from the deferred sales charge and the distribution fees to cover
various promotional and sales-related expenses, as well as expenses related to
providing distributions services, such as compensating selected dealers and
agents for selling these shares.
Approximately eight years after the original date of purchase, your Class B
shares will be converted automatically to Class A shares. Class A shares are
subject to lower annual expenses than Class B shares. The conversion from Class
B shares to Class A shares is not considered a taxable event for federal income
tax purposes. Class C shares do not have a similar conversion privilege.
CLASS I SHARES: Class I shares are offered only to institutions and certain
individuals, and are not subject to an initial sales charge or a CDSC, nor to
ongoing service or distribution fees. Class I shares also bear lower fees than
Class A, Class B and Class C shares.
ADVISOR CLASS SHARES: Advisor Class shares are offered only to the following
investors:
- - trustees or other fiduciaries purchasing shares for employee benefit
plans that are sponsored by organizations that have at least 1,000
employees;
- - any account with assets of at least $10,000 if (a) a financial planner,
trust company, bank trust department or registered investment adviser
has investment discretion, and where the investor pays such person as
compensation for his advice and other services an annual fee of at
least 0.50% on the assets in the account, or (b) such account is
established under a "wrap fee" program and the account holder pays the
sponsor of the program an annual fee of at least 0.50% on the assets in
the account;
- - officers and Trustees of the Ivy Fund (and their relatives);
- - directors or employees of Mackenzie Investment Management Inc. or its
affiliates;
- - directors, officers, partners, registered representatives, employees
and retired employees (and their relatives) of dealers having a sales
agreement with IMDI (or trustees or custodians of any qualified
retirement plan or IRA established for the benefit of any such person.)
SUBMITTING YOUR PURCHASE ORDER
INITIAL INVESTMENTS: Complete and sign the Ivy Funds Account Application.
Enclose a check payable to the Fund in which you wish to invest. You should note
on the check the class of shares you wish to invest in (see page 38 for minimum
initial investments.) Deliver your application materials to your registered
representative or selling broker, or send them to the address below:
BY REGULAR MAIL: BY COURIER:
Ivy Funds Ivy Funds
P.O. Box 9770 c/o PFPC, Inc.
Providence, RI 02940 4400 Computer Drive
Westborough, MA 01581
BUYING ADDITIONAL SHARES
There are several ways to increase your investment in the Funds:
BY MAIL: Send your check with a completed investment slip (attached to your
account statement) or written instructions indicating the account registration,
Fund number or name, and account number. Mail to the address above.
THROUGH YOUR BROKER: Deliver to your registered representative or selling broker
the investment slip attached to your statement, or written instructions, along
with your payment.
BY FEDERAL FUNDS WIRE: Purchases may also be made by wiring money from your bank
account to your Ivy account. Your bank may charge a fee for wiring funds. Before
wiring any funds, please call PFPC at 800.777.6472. Wiring instructions are as
follows:
Mellon Bank
ABA #011001234
DDA #002593
For further credit to:
Your account registration
Your Fund Number and Account Number
BY AUTOMATIC INVESTMENT METHOD: You can authorize to have funds electronically
drawn each month from your bank account through Electronic Funds Transfer
("EFT") and invested as a purchase of shares into your Ivy Fund account.
Complete sections 8 and 9 of the Account Application.
HOW TO REDEEM SHARES
SUBMITTING YOUR REDEMPTION ORDER: You may redeem your Fund shares through your
registered securities dealer or directly through PFPC. If you choose to redeem
through your registered securities dealer, the dealer is responsible for
transmitting redemption orders in proper form and in a timely manner. If you
choose to redeem directly through PFPC, you have several ways to submit your
request:
BY MAIL: Send your written redemption request to PFPC at the address on this
page. Be sure that all registered owners listed on the account sign the request.
Medallion signature guarantees and supporting legal documentation may be
required.
When you redeem, PFPC will normally send redemption proceeds to you on the next
business day, but may take up to seven days (or longer in the case of shares
recently purchased by check).
40
BY TELEPHONE: Call PFPC at 800.777.6472 to redeem from your individual, joint or
custodial account. To process your redemption order by telephone, you must have
telephone redemption privileges on your account. PFPC employs reasonable
procedures that require personal identification prior to acting on redemption
instructions communicated by telephone to confirm that such instructions are
genuine. In the absence of such procedures, the Fund or PFPC may be liable for
any losses due to unauthorized or fraudulent telephone instructions. Requests by
telephone can only be accepted for amounts up to $50,000.
BY SYSTEMATIC WITHDRAWAL PLAN ("SWP"): You can authorize to have funds
electronically drawn each month from your Ivy Fund account and deposited
directly into your bank account through EFT. Certain minimum balances and
minimum distributions apply.
BY CHECK WRITING: The check writing privilege is only available to Ivy Money
Market Fund Class A shareholders and is not available for retirement accounts or
corporate accounts. You may write checks against your Ivy Money Market Fund
Account. Checks written must be for a minimum of $100. You may sign up for this
option by completing Section 14 of the Account Application. If you are redeeming
shares that have been purchased by check, payment may be delayed until your
check has cleared or for up to 15 calendar days after the date of purchase.
Please note that all registered owners named on the account must sign the
signature card, and only registered owners may have the check writing privilege
on an account.
In order to qualify for the check writing privilege, Class A shareholders must
maintain a minimum average account balance of $1,000. Shares must be
uncertificated (i.e., held by the Fund) for any account requesting check writing
privileges. Checks can be reordered by calling PFPC at 800.777.6472. Checking
activity is reported on your Ivy Funds statement. There is no limitation on the
number of checks a shareholder may write.
When a check is presented for payment, the Fund redeems a sufficient number of
shares to cover the amount of the check. Checks written on accounts with
insufficient shares will be returned to the payee marked "non-sufficient funds."
There may be a nominal charge for each supply of checks, copies of canceled
checks, stop payment orders, checks drawn for amounts less than the Fund minimum
(i.e.,$100) and checks returned for "non-sufficient funds." To pay for these
charges, the Fund automatically redeems an appropriate number of the
shareholder's Fund shares after the charges are incurred.
You may not close your Fund account by writing a check, because any earned
dividends will remain in your account. The Fund reserves the right to
change, modify or terminate the check writing service at any time upon
notification mailed to your address of record.
BY INTERNET: Select the Ivy Fund Internet option on your Account Application.
Mail the application form to PFPC. Once your request for this option has been
processed (which may take up to 10 days), you may place your redemption order at
www.ivyfunds.com.
RECEIVING YOUR REDEMPTION PROCEEDS: You can receive redemption proceeds through
a variety of payment methods:
BY CHECK: Unless otherwise instructed in writing, checks will be made payable to
the current account registration and sent to the address of record.
BY FEDERAL FUNDS WIRE: Proceeds will be wired on the next business day to a
pre-designated bank account. Your account will be charged $10 each time
redemption proceeds are wired to your bank, and your bank may also charge you a
fee for receiving a Federal Funds wire.
BY ELECTRONIC FUNDS TRANSFER ("EFT"): For SWP
redemptions only.
Other important redemption information:
Short term "market timers" who engage in frequent purchases and redemptions can
disrupt a fund's investment program and create additional transaction costs. For
these reasons, each Fund (other than Ivy Money Market Fund) will deduct a
redemption fee of 2.00% from any redemption or exchange proceeds if you sell or
exchange your Class A shares after holding them less than 30 days. For Ivy
Developing Markets Fund and Ivy Pacific Opportunities Fund this fee also applies
to Class B, Class C and Advisor Class shares. These fees are paid to the Fund
rather than IMI or PFPC, and are designed to offset the brokerage commissions,
market impact, and other costs associated with fluctuations in fund asset levels
and cash flow caused by short term shareholder trading.
If you bought your shares on different days, the "first-in, first-out" (FIFO)
method is used to determine the holding period. Under this method, the shares
you held longest will be redeemed first for purposes of determining whether the
redemption fee applies. The redemption fee does not apply to shares that were
acquired through reinvestment of distributions and generally is waived for Class
A shares purchased through certain retirement and educational plans. However, if
Class A shares are purchased through a broker, financial institution or
record keeper maintaining an omnibus account for the shares, the fee waiver may
not apply. (Before purchasing Class A shares, please check with your account
representative concerning the availability of the fee waiver.) In addition, the
fee waiver does not apply to any IRA or SEP-IRA accounts. The Funds reserve the
right to modify the terms of or terminate the redemption/exchange fee at any
time.
- - A CDSC may apply to certain Class A share redemptions, to Class B
shares redeemed within six years of purchase, and to Class C shares
that are redeemed within one year of purchase.
- - If you own shares of more than one class of a Fund, the Fund will
redeem first the shares having the highest 12b-1 fees, unless you
instruct otherwise.
41
- - Any shares subject to a CDSC will be redeemed last unless you
specifically elect otherwise.
- - Shares will be redeemed in the order described under "Additional
purchase information - Class B and Class C shares" above.
- - A Fund may (on 60 day's notice) redeem the accounts of shareholders
whose investment, including sales charges paid, has been less than
$1,000 for more than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares
recently purchased by check) to send redemption proceeds.
- - A Fund may make payment for redeemed shares in the form of securities
of the Fund taken at current values.
HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Ivy fund, subject to
certain restrictions (see "Important Exchange Information" below).
IVY MONEY MARKET FUND:
Class A shareholders of Ivy Money Market Fund may exchange their outstanding
shares for Class A shares of another Ivy Fund on the basis of the relative NAV
per Class A share, plus an amount equal to the sales charge payable with respect
to the new shares at the time of the exchange. Incremental sales charges are
waived for outstanding shares that have been invested for 12 months or longer.
Class B (or Class C) shareholders of Ivy Money Market Fund may exchange their
Class B (or Class C) shares for Class B (or Class C) shares of another Ivy fund
on the basis of the relative NAV per Class B (or Class C) share, subject to the
CDSC schedule of the fund into which the exchange is being made (beginning with
the date of the exchange).
Class B and Class C shareholders of another Ivy fund may exchange their shares
for Class B and Class C shares of Ivy Money Market Fund. Exchanges from another
Ivy Fund will continue to be subject to the CDSC schedule of the fund from which
the exchange was made, but will reflect the time the shares are held in the Ivy
Money Market Fund.
ALL FUNDS:
SUBMITTING YOUR EXCHANGE ORDER: You may submit an exchange request to PFPC as
follows:
BY MAIL: Send your written exchange request to PFPC at the address on page 40 of
this Prospectus. Be sure that all registered owners listed on the account sign
the request.
BY TELEPHONE: Call PFPC at 800.777.6472 to authorize an exchange transaction. To
process your exchange order by telephone, you must have telephone exchange
privileges on your account. PFPC employs reasonable procedures that require
personal identification prior to acting on exchange instructions communicated by
telephone to confirm that such instructions are genuine. In the absence of such
procedures, the Fund or PFPC may be liable for any losses due to unauthorized or
fraudulent telephone instructions.
BY INTERNET: You will be allowed to exchange by Internet if (1) you do not hold
physical share certificates; (2) you can provide proper identification
information; (3) you have established the Internet trading option.
IMPORTANT EXCHANGE INFORMATION
- - You must exchange into the same share class you currently own.
- - Exchanges are considered taxable events and may result in a capital
gain or a capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange
privilege for the purpose of timing short term market fluctuations. The
Funds may therefore limit the frequency of exchanges by a
shareholder, charge a redemption fee or cancel a shareholder's exchange
privilege if at any time it appears that such market-timing strategies
are being used. (See "Other important redemption information" on page
41).For example, shareholders exchanging more than five times in a
12-month period may be considered to be using market-timing strategies.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds generally declare and pay dividends and capital gain distributions (if
any) at least once a year. Dividends and distributions are "reinvested" in
additional Fund shares unless you request to receive them in cash. Reinvested
dividends and distributions are added to your account at NAV and are not subject
to a CDSC regardless of which share class you own. Cash dividends and
distributions can be sent to you:
BY MAIL: a check will be mailed to the address of record unless otherwise
instructed.
BY ELECTRONIC FUNDS TRANSFER: your proceeds will be directly deposited into your
bank account.
To change your dividend and/or distribution options, call PFPC at 800.777.6472.
Dividends ordinarily will vary from one class to another. The Funds, except for
Ivy Bond Fund and Ivy Money Market Fund, intend to declare and pay dividends
annually. Ivy Bond Fund intends to declare and pay dividends monthly. Ivy Money
Market Fund intends to declare dividends daily and pay accrued amounts monthly.
The Funds will distribute net investment income and net realized capital gains,
if any, at least once a year. Any capital gains distribution from Ivy Bond Fund
will be declared and paid annually. The Funds may make an additional
distribution of net investment income and net realized capital gains to comply
with the calendar year distribution requirement under the excise tax provisions
of Section 4982 of the Internal Revenue Code of 1986, as amended (the "Code").
Dividends paid out of a Funds' investment company taxable income (including
dividends, interest and net short term capital gains) will be taxable to you as
ordinary income. If a portion of a Funds' income consists of dividends paid by
US corporations, a portion of the dividends paid by the Fund
42
may be eligible for the corporate dividends-received deduction. Distributions of
net capital gains (the excess of net long-term capital gains over net short term
capital losses), if any, are taxable to you as long-term capital gains,
regardless of how long you have held your shares. Dividends are taxable to you
in the same manner whether received in cash or reinvested in additional Fund
shares. While the Funds' managers may at times pursue strategies that result in
tax efficient outcomes for Fund shareholders, they do not generally manage the
Funds to optimize tax efficiencies.
If shares of a Fund are held in a tax-deferred account, such as a retirement
plan, income and gain will not be taxable each year. Instead, the taxable
portion of amounts held in a tax-deferred account generally will be subject to
tax as ordinary income only when distributed from that account.
A distribution will be treated as paid to you on December 31 of the current
calendar year if it is declared by a Fund in October, November or December with
a record date in such a month and paid by the Fund during January of the
following calendar year. In certain years, you may be able to claim a credit or
deduction on your income tax return for your share of foreign taxes paid by your
Fund (in the case of a worldwide fund).
Each year, your fund will notify you of the tax status of dividends and other
distributions.
Upon the sale or exchange of your Fund shares, you may realize a capital gain or
loss which will be long-term or short-term, generally depending upon how long
you held your shares.
A Fund may be required to withhold US Federal income tax at the rate of 30% (for
2002 and 2003) of all taxable distributions payable to you if you fail to
provide the Fund with your correct taxpayer identification number or to make
required certifications, or if you have been notified by the Internal Revenue
Service that you are subject to backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against your US Federal
income tax liability.
Fund distributions may be subject to state, local and foreign taxes.
You should consult with your tax adviser as to the tax consequences of an
investment in the Funds, including the status of distributions from the Funds
under applicable state or local law.
43
FINANCIAL HIGHLIGHTS
The Financial Highlights tables are meant to help you understand each
Fund's financial performance for the past five years, if applicable. The total
returns in the table represent the rate you would have earned (or lost) on an
investment in each Fund, assuming reinvestment of all dividends and
distributions. This information has been derived from the Fund's financial
statements which were audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are included in the Fund's Annual Report,
which is available upon request.
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
NET (LOSS)
NET ASSET NET GAIN ON
VALUE, INVESTMENT SECURITIES TOTAL FROM
SHARE BEGINNING INCOME (REALIZED AND INVESTMENT
FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) OPERATIONS
IVY CUNDILL GLOBAL VALUE A 09/04(e) to 12/31/2001 $10.15 $ .01(c) $ (.23) $ (.22)
FUND B 09/26(e) to 12/31/2001 9.26 .01(c) .62 .63
C 10/19(e) to 12/31/2001 9.44 .01(c) .40 .41
ADVISOR 01/01 to 12/31/2001 10.07 .03(c) (.25) (.22)
04/19(e) to 12/31/2000 10.00 .05(c) .41 .46
------------------------------------------------------------------------------------------------
IVY DEVELOPING A 01/01 to 12/31/2001 6.66 .01(c) (.31)(h) (.30)
MARKETS FUND 01/01 to 12/31/2000 8.77 (.02)(c) (2.07) (2.09)
01/01 to 12/31/1999 6.02 .01(c) 2.80 2.81
01/01 to 12/31/1998 6.82 .06(c)(d) (.86)(d) (.80)
01/01 to 12/31/1997 10.12 .01(c) (2.80) (2.79)
B 01/01 to 12/31/2001 6.49 (.05)(c) (.34) (.39)
01/01 to 12/31/2000 8.63 (.10)(c) (2.02) (2.12)
01/01 to 12/31/1999 5.93 (.04)(c) 2.76 2.72
01/01 to 12/31/1998 6.77 .01(c)(d) (.85)(d) (.84)
01/01 to 12/31/1997 10.04 (.06)(c) (2.76) (2.82)
C 01/01 to 12/31/2001 6.52 (.05)(c) (.34) (.39)
01/01 to 12/31/2000 8.67 (.14)(c) (1.99) (2.13)
01/01 to 12/31/1999 5.96 (.03)(c) 2.76 2.73
01/01 to 12/31/1998 6.79 .01(c)(d) (.84)(d) (.83)
01/01 to 12/31/1997 10.06 (.07)(c) (2.76) (2.83)
ADVISOR 01/01 to 12/31/2001 6.70 .04(c) (.38) (.34)
01/01 to 12/31/2000 8.80 .02(c) (2.10) (2.08)
01/01 to 12/31/1999 6.05 .03(c) 2.83 2.86
04/30(e) to 12/31/1998 7.48 .04(c)(d) (1.47)(d) (1.43)
------------------------------------------------------------------------------------------------
IVY EUROPEAN A 01/01 to 12/31/2001 17.25 (.08)(c) (3.49)(h) (3.57)
OPPORTUNITIES FUND 01/01 to 12/31/2000 17.13 (.07) .82 .75
05/04(e) to 12/31/1999 10.01 - (c) 16.35 16.35
B 01/01 to 12/31/2001 17.26 (.20)(c) (3.49) (3.69)
01/01 to 12/31/2000 17.13 (.18) .83 .65
05/24(e) to 12/31/1999 10.21 (.01)(c) 16.15 16.14
C 01/01 to 12/31/2001 17.32 (.22)(c) (3.48) (3.70)
01/01 to 12/31/2000 17.13 (.22) .88 .66
10/24(e) to 12/31/1999 11.57 (.01)(c) 6.00 5.99
I 01/01 to 12/31/2001 17.37 (.01)(c) (3.55) (3.56)
03/16(e) to 12/31/2000 26.00 (.01) (7.92) (7.93)
ADVISOR 01/01 to 12/31/2001 17.39 (.02)(c) (3.54) (3.56)
01/01 to 12/31/2000 17.23 (.02) .85 .83
05/03(e) to 12/31/1999 10.01 - (c) 16.46 16.46
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager. (h) Includes redemption fees added to Capital paid-in of
$0.06 and $0.02 per average shares outstanding for
na -- not applicable Developing Markets and European Opportunities,
respectively. Total return excluding redemption fees
would have been (5.41%) and (20.78%), respectively.
44
FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA
LESS DISTRIBUTIONS
DIVIDENDS
FROM NET DISTRIBUTIONS
INVESTMENT FROM TOTAL
INCOME REALIZED GAINS DISTRIBUTIONS
$ .27 $ .29
$ .02
.26 .28
.02
.26 .28
.02
.28 .30
.02
.20 .39
.19
- ---------------------------------------------------------
- -
-
.02 .02
-
.05 .06
.01
- -
-
.50 .51
.01
- -
-
.02 .02
-
.02 .02
-
- -
-
.44 .45
.01
- -
-
.02 .02
-
.02 .02
-
- -
-
.43 .44
.01
- -
-
.02 .02
-
.05 .11
.06
- -
-
- ---------------------------------------------------------
.03 .03
-
.63 .63
-
9.22 9.23
.01
.03 .03
-
.52 .52
-
9.22 9.22
-
.03 .03
-
.47 .47
-
.42 .43
.01
.03 .03
-
.70 .70
-
.03 .03
-
.67 .67
-
9.22 9.24
.02
45
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
RATIOS AND SUPPLEMENTAL DATA
RATIO OF
NET ASSET NET ASSETS, EXPENSES TO
VALUE, TOTAL END OF AVERAGE NET
END OF RETURN PERIOD ASSETS WITH
FUND NAME PERIOD (%)(A)(F) (000) REIMBURSEMENT (%)(B)
IVY CUNDILL GLOBAL VALUE $ 9.64 (2.07) $ 213 4.47(g)
FUND 9.61 6.91 867 6.04(g)
9.57 4.44 30 7.71(g)
9.55 (2.13) 964 1.40
10.07 4.66 747 1.95(g)
--------------------------------------------------------------------------------------
IVY DEVELOPING 6.36 (4.50)(h) 2,390 2.19
MARKETS FUND 6.66 (23.79) 4,213 2.12
8.77 46.70 5,652 2.30
6.02 (11.67) 5,487 2.18
6.82 (27.42) 8,584 2.31
6.10 (6.01) 2,506 2.96
6.49 (24.53) 4,525 2.90
8.63 45.82 7,676 2.92
5.93 (12.35) 6,145 2.96
6.77 (27.93) 8,488 3.09
6.13 (5.98) 619 3.01
6.52 (24.53) 1,173 2.85
8.67 45.84 3,474 2.85
5.96 (12.16) 2,641 2.96
6.79 (28.01) 2,420 3.12
6.36 (5.07) 83 1.84
6.70 (23.60) 120 1.71
8.80 47.38 337 1.74
6.05 (19.06) 82 1.68(g)
--------------------------------------------------------------------------------------
IVY EUROPEAN 13.65 (20.67)(h) 30,833 2.15
OPPORTUNITIES FUND 17.25 4.51 54,655 na
17.13 215.58 13,932 2.22(g)
13.54 (21.35) 33,705 2.89
17.26 4.12 57,283 na
17.13 209.41 5,900 2.96(g)
13.59 (21.32) 24,918 2.91
17.32 3.98 49,527 na
17.13 51.80 8,076 2.96(g)
13.78 (20.46) 13 1.80
17.37 (30.40) 17 na
13.80 (20.44) 9,186 1.72
17.39 5.01 19,178 na
17.23 217.16 5,246 1.93(g)
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager. (h) Includes redemption fees added to Capital paid-in of
$0.06 and $0.02 per average shares outstanding for
na -- not applicable Developing Markets and European Opportunities,
respectively. Total return excluding redemption fees
would have been (5.41%) and (20.78%), respectively.
46
FINANCIAL HIGHLIGHTS (continued)
RATIOS AND SUPPLEMENTAL DATA
RATIO OF RATIO OF
EXPENSES TO NET INVESTMENT
AVERAGE NET INCOME (LOSS) PORTFOLIO
ASSETS WITHOUT TO AVERAGE TURNOVER
REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%)
.94 (c)(g) 57
31.77(g)
.60 (c)(g) 57
39.53(g)
.99 (c)(g) 57
51.61(g)
.37(c) 57
10.30
.70 (c)(g) 53
19.15(g)
- --------------------------------------------------------------
.17(c) 14
4.35
(.27)(c) 76
3.50
.13(c) 37
3.28
.88(c) 47
3.47
.09(c) 42
2.39
(.59)(c) 14
5.12
(1.04)(c) 76
4.28
(.49)(c) 37
3.90
.10(c) 47
4.25
(.69)(c) 42
3.17
(.65)(c) 14
5.17
(1.00)(c) 76
4.23
(.43)(c) 37
3.83
.10(c) 47
4.25
(.72)(c) 42
3.20
.52(c) 14
4.00
.14(c) 76
3.09
.69(c) 37
2.72
1.38 (c)(g) 47
2.97(g)
- --------------------------------------------------------------
(.44)(c) 66
2.17
(.36) 46
1.83
(.15)(c)(g) 108
6.10(g)
(1.18)(c) 66
2.91
(1.12) 46
2.59
(.89)(c)(g) 108
6.84(g)
(1.20)(c) 66
2.93
(1.11) 46
2.58
(.89)(c)(g) 108
6.84(g)
(.08)(c) 66
1.82
(.07)(g) 46
1.54(g)
(.00)(c) 66
1.74
(.09) 46
1.55
.14 (c)(g) 108
5.81(g)
47
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
NET (LOSS)
NET ASSET NET GAIN ON
VALUE, INVESTMENT SECURITIES TOTAL FROM
SHARE BEGINNING INCOME (REALIZED AND INVESTMENT
FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) OPERATIONS
IVY GLOBAL FUND A 01/01 to 12/31/2001 $10.63 $(.06)(c) $(1.86) $(1.92)
01/01 to 12/31/2000 13.42 .02(c) (1.91) (1.89)
01/01 to 12/31/1999 11.32 .01(c) 2.98 2.99
01/01 to 12/31/1998 10.93 .02(c) .91 .93
01/01 to 12/31/1997 13.17 .08 (1.23) (1.15)
B 01/01 to 12/31/2001 10.30 (.17)(c) (1.77) (1.94)
01/01 to 12/31/2000 13.14 (.09)(c) (1.85) (1.94)
01/01 to 12/31/1999 11.19 (.10)(c) 2.94 2.84
01/01 to 12/31/1998 10.90 (.09)(c) .92 .83
01/01 to 12/31/1997 13.12 (.02) (1.20) (1.22)
C 01/01 to 12/31/2001 9.93 (.13)(c) (1.75) (1.88)
01/01 to 12/31/2000 12.75 (.11)(c) (1.81) (1.92)
01/01 to 12/31/1999 10.90 (.16)(c) 2.90 2.74
01/01 to 12/31/1998 10.67 (.16)(c) .93 .77
01/01 to 12/31/1997 12.94 (.02) (1.24) (1.26)
ADVISOR 01/01 to 12/31/2001 10.73 (.05)(c) (1.88) (1.93)
01/01 to 12/31/2000 13.50 .05(c) (1.92) (1.87)
01/01 to 12/31/1999 11.36 .08(c) 2.95 3.03
04/30(e) to 12/31/1998 13.26 .05(c) (1.41) (1.36)
------------------------------------------------------------------------------------------------
IVY GLOBAL NATURAL A 01/01 to 12/31/2001 9.74 .04(c)(d) 1.45(d) 1.49
RESOURCES FUND 01/01 to 12/31/2000 8.91 (.07)(c) .95 .88
01/01 to 12/31/1999 6.32 - (c)(d) 2.59(d) 2.59
01/01 to 12/31/1998 9.01 .03(c) (2.68) (2.65)
01/01 to 12/31/1997 10.00 (.11)(c) .70 .59
B 01/01 to 12/31/2001 9.56 (.02)(c)(d) 1.42(d) 1.40
01/01 to 12/31/2000 8.77 (.09)(c) .90 .81
01/01 to 12/31/1999 6.27 (.04)(c)(d) 2.54(d) 2.50
01/01 to 12/31/1998 9.00 (.04)(c) (2.65) (2.69)
01/01 to 12/31/1997 10.00 (.15)(c) .68 .53
C 01/01 to 12/31/2001 9.40 (.02)(c)(d) 1.39(d) 1.37
01/01 to 12/31/2000 8.63 (.07)(c) .89 .82
01/01 to 12/31/1999 6.21 (.04)(c)(d) 2.46(d) 2.42
01/01 to 12/31/1998 9.00 (.14)(c) (2.61) (2.75)
01/01 to 12/31/1997 10.00 (.17)(c) .68 .51
ADVISOR 01/01 to 12/31/2001 9.74 .09(c)(d) 1.43(d) 1.52
01/01 to 12/31/2000 8.90 (.05)(c) .95 .90
04/08(e) to 12/31/1999 7.00 .02(c)(d) 1.88(d) 1.90
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager.
na -- not applicable
48
FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA
LESS DISTRIBUTIONS
DIVIDENDS
FROM NET DISTRIBUTIONS
INVESTMENT FROM TOTAL
INCOME REALIZED GAINS DISTRIBUTIONS
$ - $ -
$ -
.90 .90
-
.89 .89
-
.54 .54
-
.99 1.09
.10
- -
-
.90 .90
-
.89 .89
-
.54 .54
-
.90 1.00
.10
- -
-
.90 .90
-
.89 .89
-
.54 .54
-
.91 1.01
.10
- -
-
.90 .90
-
.89 .89
-
.54 .54
-
- ---------------------------------------------------------
- .18
.18
- .05
.05
- -
-
- .04
.04
1.36 1.58
.22
- .15
.15
- .02
.02
- -
-
- .04
.04
1.36 1.53
.17
- .16
.16
- .05
.05
- -
-
- .04
.04
1.36 1.51
.15
- .24
.24
- .06
.06
- -
-
49
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
RATIOS AND SUPPLEMENTAL DATA
RATIO OF
NET ASSET NET ASSETS, EXPENSES TO
VALUE, TOTAL END OF AVERAGE NET
END OF RETURN PERIOD ASSETS WITH
FUND NAME PERIOD (%)(A)(F) (000) REIMBURSEMENT (%)(B)
IVY GLOBAL FUND $ 8.71 (18.06) $ 5,542 2.14
10.63 (13.91) 8,135 2.17
13.42 26.51 11,828 2.17
11.32 8.59 14,660 2.18
10.93 (8.72) 19,692 na
8.36 (18.83) 2,421 3.05
10.30 (14.58) 4,769 2.99
13.14 25.31 7,316 2.99
11.19 7.69 7,495 2.97
10.90 (9.33) 10,056 na
8.05 (18.93) 148 3.20
9.93 (14.88) 178 3.36
12.75 25.24 267 3.23
10.90 7.30 428 3.30
10.67 (9.72) 727 na
8.80 (17.99) 94 2.02
10.73 (13.67) 155 1.95
13.50 26.77 179 1.96
11.36 (10.19) 321 1.75(g)
--------------------------------------------------------------------------------------
IVY GLOBAL NATURAL 11.05 15.40 7,695 2.25
RESOURCES FUND 9.74 9.86 5,549 2.29
8.91 40.98 5,823 2.16
6.32 (29.35) 1,345 2.22
9.01 6.95 3,907 2.10
10.81 14.73 5,231 2.87
9.56 9.27 3,157 2.80
8.77 39.87 2,520 2.71
6.27 (29.82) 1,320 2.90
9.00 6.28 2,706 2.86
10.61 14.62 1,788 2.86
9.40 9.49 715 2.70
8.63 38.97 472 2.73
6.21 (30.49) 41 3.57
9.00 6.08 124 3.08
11.02 15.71 465 1.78
9.74 10.17 22 2.02
8.90 27.14 26 1.87(g)
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager.
na -- not applicable
50
FINANCIAL HIGHLIGHTS (continued)
RATIOS AND SUPPLEMENTAL DATA
RATIO OF RATIO OF
EXPENSES TO NET INVESTMENT
AVERAGE NET INCOME (LOSS) PORTFOLIO
ASSETS WITHOUT TO AVERAGE TURNOVER
REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%)
(.58)(c) 72
4.21
.16(c) 102
3.11
.09(c) 50
2.77
.16(c) 17
2.54
.58 45
2.07
(1.49)(c) 72
5.12
(.66)(c) 102
3.93
(.72)(c) 50
3.59
(.63)(c) 17
3.33
(.18) 45
2.82
(1.64)(c) 72
5.27
(1.03)(c) 102
4.30
(.96)(c) 50
3.83
(.96)(c) 17
3.66
(.18) 45
2.82
(.45)(c) 72
4.09
.38(c) 102
2.89
.31(c) 50
2.56
.59 (c)(g) 17
2.11(g)
- --------------------------------------------------------------
.38(c) 169
3.71
(.69)(c) 134
4.54
.02(c) 157
4.53
.29(c) 98
5.75
(1.10)(c) 199
2.88
(.24)(c) 169
4.33
(1.20)(c) 134
5.05
(.53)(c) 157
5.08
(.39)(c) 98
6.43
(1.86)(c) 199
3.64
(.23)(c) 169
4.32
(1.10)(c) 134
4.95
(.55)(c) 157
5.10
(1.06)(c) 98
7.10
(2.08)(c) 199
3.86
.85(c) 169
3.24
(.42)(c) 134
4.27
.31 (c)(g) 157
4.24(g)
51
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
NET (LOSS)
NET ASSET NET GAIN ON
VALUE, INVESTMENT SECURITIES TOTAL FROM
SHARE BEGINNING INCOME (REALIZED AND INVESTMENT
FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) OPERATIONS
IVY GLOBAL SCIENCE & A 01/01 to 12/31/2001 $27.53 $ (.31)(c) $(13.91) $(14.22)
TECHNOLOGY FUND 01/01 to 12/31/2000 48.90 (.64) (20.38) (21.02)
01/01 to 12/31/1999 23.63 (.43) 29.27 28.84
01/01 to 12/31/1998 17.47 (.36)(d) 6.52 (d) 6.16
01/01 to 12/31/1997 16.40 (.31)(d) 1.38 (d) 1.07
B 01/01 to 12/31/2001 26.80 (.45)(c) (13.49) (13.94)
01/01 to 12/31/2000 47.97 (.93) (19.89) (20.82)
01/01 to 12/31/1999 23.31 (.62) 28.67 28.05
01/01 to 12/31/1998 17.37 (.50)(d) 6.44 (d) 5.94
01/01 to 12/31/1997 16.44 (.32)(d) 1.25 (d) .93
C 01/01 to 12/31/2001 26.93 (.53)(c) (13.49) (14.02)
01/01 to 12/31/2000 48.19 (1.10) (19.81) (20.91)
01/01 to 12/31/1999 23.38 (.70) 28.87 28.17
01/01 to 12/31/1998 17.40 (.48)(d) 6.46 (d) 5.98
01/01 to 12/31/1997 16.46 (.42)(d) 1.36 (d) .94
ADVISOR 01/01 to 12/31/2001 27.54 (.27)(c) (13.93) (14.20)
01/01 to 12/31/2000 48.82 (.43) (20.50) (20.93)
01/01 to 12/31/1999 23.62 (.24) 29.07 28.83
04/15(e) to 12/31/1998 20.19 (.20)(d) 3.63 (d) 3.43
------------------------------------------------------------------------------------------------
IVY INTERNATIONAL FUND A 01/01 to 12/31/2001 26.20 .05(c) (5.56)(h) (5.51)
01/01 to 12/31/2000 47.09 .19 (12.44) (12.25)
01/01 to 12/31/1999 41.20 .30 8.31 8.61
01/01 to 12/31/1998 39.03 .37 2.50 2.87
01/01 to 12/31/1997 35.89 .24 3.47 3.71
B 01/01 to 12/31/2001 25.64 (.21)(c) (5.40) (5.61)
01/01 to 12/31/2000 46.78 (.17) (12.33) (12.50)
01/01 to 12/31/1999 40.97 (.06) 8.27 8.21
01/01 to 12/31/1998 38.82 - 2.50 2.50
01/01 to 12/31/1997 35.73 (.06) 3.44 3.38
C 01/01 to 12/31/2001 25.46 (.21)(c) (5.35) (5.56)
01/01 to 12/31/2000 46.57 (.19) (12.28) (12.47)
01/01 to 12/31/1999 40.79 (.05) 8.23 8.18
01/01 to 12/31/1998 38.64 - 2.50 2.50
01/01 to 12/31/1997 35.58 (.05) 3.42 3.37
I 01/01 to 12/31/2001 26.35 .15(c) (5.65) (5.50)
01/01 to 12/31/2000 47.09 .64 (12.74) (12.10)
01/01 to 12/31/1999 41.21 .52 8.34 8.86
01/01 to 12/31/1998 39.06 .55 2.48 3.03
01/01 to 12/31/1997 35.89 .32 3.56 3.88
ADVISOR 01/01 to 12/31/2001 26.25 .01(c) (5.59) (5.58)
08/31(e) to 12/31/2000 40.05 .02 (5.18) (5.16)
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager. (h) Includes redemption fees added to Capital paid-in of
$0.03 per average shares outstanding. Total return excluding
na -- not applicable redemption fees would have been (21.15%).
52
FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA
LESS DISTRIBUTIONS
DIVIDENDS
FROM NET DISTRIBUTIONS
INVESTMENT FROM TOTAL
INCOME REALIZED GAINS DISTRIBUTIONS
$ - $ -
$ -
.35 .35
-
3.57 3.57
-
- -
-
- -
-
- -
-
.35 .35
-
3.39 3.39
-
- -
-
- -
-
- -
-
.35 .35
-
3.36 3.36
-
- -
-
- -
-
- -
-
.35 .35
-
3.63 3.63
-
- -
-
- ---------------------------------------------------------
- -
-
8.60 8.64
.04
2.48 2.72
.24
.35 .70
.35
.36 .57
.21
- -
-
8.60 8.64
.04
2.40 2.40
-
.35 .35
-
.29 .29
-
- -
-
8.60 8.64
.04
2.40 2.40
-
.35 .35
-
.30 .31
.01
- -
-
8.60 8.64
.04
2.52 2.98
.42
.35 .88
.53
.39 .71
.32
- -
-
8.60 8.64
.04
53
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
RATIOS AND SUPPLEMENTAL DATA
RATIO OF
NET ASSET NET ASSETS, EXPENSES TO
VALUE, TOTAL END OF AVERAGE NET
END OF RETURN PERIOD ASSETS WITH
FUND NAME PERIOD (%)(A)(F) (000) REIMBURSEMENT (%)(B)
IVY GLOBAL SCIENCE & $13.31 (51.65) $ 13,472 2.20
TECHNOLOGY FUND 27.53 (42.99) 32,016 na
48.90 122.56 41,516 na
23.63 35.26 17,888 na
17.47 6.53 12,159 na
12.86 (52.01) 11,731 2.96
26.80 (43.41) 28,675 na
47.97 120.82 35,879 na
23.31 34.20 10,197 na
17.37 5.66 8,577 na
12.91 (52.06) 2,918 2.98
26.93 (43.40) 9,977 na
48.19 120.98 18,769 na
23.38 34.37 8,431 na
17.40 5.71 6,348 na
13.34 (51.56) 361 2.01
27.54 (42.88) 826 na
48.82 122.56 431 na
23.62 16.99 15 na
--------------------------------------------------------------------------------------
IVY INTERNATIONAL FUND 20.69 (21.03)(h) 344,641 1.60
26.20 (17.26) 588,282 na
47.09 21.05 1,573,615 na
41.20 7.34 1,613,797 na
39.03 10.38 1,705,772 na
20.03 (21.88) 136,831 2.54
25.64 (17.95) 280,782 na
46.78 20.15 540,514 na
40.97 6.43 542,997 na
38.82 9.46 568,521 na
19.90 (21.84) 26,430 2.54
25.46 (17.97) 57,337 na
46.57 20.16 143,320 na
40.79 6.46 154,378 na
38.64 9.50 174,880 na
20.85 (20.87) 17,062 1.24
26.35 (16.92) 33,907 na
47.09 21.66 166,816 na
41.21 7.75 156,999 na
39.06 10.87 115,046 na
20.67 (21.26) 5 1.69
26.25 (12.09) 4 na
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager. (h) Includes redemption fees added to Capital paid-in of
$0.03 per average shares outstanding. Total return excluding
na -- not applicable redemption fees would have been (21.15%).
54
FINANCIAL HIGHLIGHTS (continued)
RATIOS AND SUPPLEMENTAL DATA
RATIO OF RATIO OF
EXPENSES TO NET INVESTMENT
AVERAGE NET INCOME (LOSS) PORTFOLIO
ASSETS WITHOUT TO AVERAGE TURNOVER
REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%)
(1.65)(c) 135
2.46
(1.53) 69
1.82
(1.80) 62
1.98
(1.88) 73
2.16
(1.91) 54
2.11
(2.41)(c) 135
3.22
(2.26) 69
2.55
(2.55) 62
2.74
(2.67) 73
2.95
(2.72) 54
2.92
(2.43)(c) 135
3.24
(2.23) 69
2.53
(2.49) 62
2.68
(2.56) 73
2.84
(2.65) 54
2.85
(1.46)(c) 135
2.27
(1.34) 69
1.64
(1.71) 62
1.89
(1.91)(g) 73
2.18(g)
- --------------------------------------------------------------
.18(c) 43
1.66
.37 91
1.66
.63 7
1.66
.83 15
1.58
.68 8
1.59
(.76)(c) 43
2.60
(.47) 91
2.50
(.13) 7
2.42
(.01) 15
2.41
(.15) 8
2.42
(.76)(c) 43
2.60
(.46) 91
2.49
(.13) 7
2.42
.01 15
2.40
(.14) 8
2.41
.54(c) 43
1.30
.79 91
1.24
1.11 7
1.18
1.23 15
1.18
1.08 8
1.18
.09(c) 43
1.75
(.08)(g) 91
2.10(g)
55
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
NET (LOSS)
NET ASSET NET GAIN ON
VALUE, INVESTMENT SECURITIES TOTAL FROM
SHARE BEGINNING INCOME (REALIZED AND INVESTMENT
FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD (LOSS) UNREALIZED) OPERATIONS
IVY INTERNATIONAL SMALL A 01/01 to 12/31/2001 $12.71 $(.12)(c)(d) $(4.41)(d) $(4.53)
COMPANIES FUND 01/01 to 12/31/2000 12.45 (.03)(c)(d) .64 (d) .61
01/01 to 12/31/1999 8.95 (.05)(c) 3.58 3.53
01/01 to 12/31/1998 8.66 .04 (c) .41 .45
01/01 to 12/31/1997 10.00 (.01)(c) (1.24) (1.25)
B 01/01 to 12/31/2001 12.53 (.18)(c)(d) (4.34)(d) (4.52)
01/01 to 12/31/2000 12.30 (.13)(c) .65 .52
01/01 to 12/31/1999 8.92 (.13)(c) 3.54 3.41
01/01 to 12/31/1998 8.63 (.03)(c) .41 .38
01/01 to 12/31/1997 10.00 (.05)(c) (1.27) (1.32)
C 01/01 to 12/31/2001 12.60 (.18)(c)(d) (4.37)(d) (4.55)
01/01 to 12/31/2000 12.38 (.12)(c) .64 .52
01/01 to 12/31/1999 8.97 (.12)(c) 3.56 3.44
01/01 to 12/31/1998 8.65 (.03)(c) .42 .39
01/01 to 12/31/1997 10.00 (.06)(c) (1.25) (1.31)
ADVISOR 01/01 to 12/31/2001 12.76 (.08)(c)(d) (4.44)(d) (4.52)
01/01 to 12/31/2000 12.48 .02 (c)(d) .64 (d) .66
07/01(e) to 12/31/1999 9.94 - (c) 2.57 2.57
------------------------------------------------------------------------------------------------
IVY INTERNATIONAL A 01/01 to 12/31/2001 11.01 .07 (c) (1.96)(h) (1.89)
VALUE FUND 01/01 to 12/31/2000 11.99 .14 (c) (1.01) (.87)
01/01 to 12/31/1999 9.48 .09 (c) 2.54 2.63
01/01 to 12/31/1998 8.98 .08 (c) .52 .60
05/13(e) to 12/31/1997 10.01 - (c)(d) (1.03)(d) (1.03)
B 01/01 to 12/31/2001 10.94 (.02)(c) (1.93) (1.95)
01/01 to 12/31/2000 11.91 .02 (c) (.96) (.94)
01/01 to 12/31/1999 9.42 .01 (c) 2.51 2.52
01/01 to 12/31/1998 8.93 .01 (c) .51 .52
05/13(e) to 12/31/1997 10.01 (.02)(c)(d) (1.06)(d) (1.08)
C 01/01 to 12/31/2001 10.94 (.02)(c) (1.93) (1.95)
01/01 to 12/31/2000 11.92 .02 (c) (.97) (.95)
01/01 to 12/31/1999 9.42 .02 (c) 2.51 2.53
01/01 to 12/31/1998 8.93 .01 (c) .51 .52
05/13(e) to 12/31/1997 10.01 (.02)(c)(d) (1.06)(d) (1.08)
ADVISOR 01/01 to 12/31/2001 11.03 .11 (c) (1.98) (1.87)
01/01 to 12/31/2000 11.99 .50 (c) (1.33) (.83)
01/01 to 12/31/1999 9.48 .04 (c) 2.64 2.68
02/23(e) to 12/31/1998 9.63 .11 (c) (.13) (.02)
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager. (h) Includes redemption fees added to Capital paid-in of
$0.01 and $0.04 per average shares outstanding for
na -- not applicable International Value and Pacific Opportunities,
respectively. Total return excluding redemption fees
would have been (17.26%) and (9.83%), respectively.
56
FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA
LESS DISTRIBUTIONS
DIVIDENDS
FROM NET DISTRIBUTIONS
INVESTMENT FROM TOTAL
INCOME REALIZED GAINS DISTRIBUTIONS
$ .01 $ .01
$ -
.35 .35
-
.03 .03
-
.01 .16
.15
.09 .09
-
.01 .01
-
.29 .29
-
.03 .03
-
.01 .09
.08
.05 .05
-
.01 .01
-
.30 .30
-
.03 .03
-
.01 .07
.06
.04 .04
-
.01 .01
-
.38 .38
-
.03 .03
-
- ---------------------------------------------------------
- .02
.02
.07 .11
.04
.02 .12
.10
.02 .10
.08
- -
-
- .02
.02
.02 .03
.01
.02 .03
.01
.02 .03
.01
- -
-
- .02
.02
.02 .03
.01
.02 .03
.01
.02 .03
.01
- -
-
- .02
.02
.08 .13
.05
.07 .17
.10
.02 .13
.11
57
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
RATIOS AND SUPPLEMENTAL DATA
RATIO OF
NET ASSET NET ASSETS, EXPENSES TO
VALUE, TOTAL END OF AVERAGE NET
END OF RETURN PERIOD ASSETS WITH
FUND NAME PERIOD (%)(A)(F) (000) REIMBURSEMENT (%)(B)
IVY INTERNATIONAL SMALL $ 8.17 (35.65) $ 3,583 2.24
COMPANIES FUND 12.71 4.94 8,976 2.24
12.45 39.45 1,069 2.33
8.95 5.24 980 2.47
8.66 (12.52) 992 2.50
8.00 (36.09) 3,190 2.95
12.53 4.27 5,553 2.96
12.30 38.24 1,238 3.10
8.92 4.46 1,027 3.24
8.63 (13.19) 1,007 3.31
8.04 (36.13) 2,308 2.96
12.60 4.25 4,522 2.96
12.38 38.36 1,196 3.04
8.97 4.55 1,125 3.16
8.65 (13.14) 1,574 3.23
8.23 (35.44) 982 1.87
12.76 5.32 4,165 1.89
12.48 25.87 291 1.83(g)
--------------------------------------------------------------------------------------
IVY INTERNATIONAL 9.10 (17.17)(h) 13,238 1.77
VALUE FUND 11.01 (7.25) 23,565 1.74
11.99 27.79 32,624 1.72
9.48 6.63 24,993 1.74
8.98 (10.29) 16,202 1.80(g)
8.97 (17.84) 46,210 2.50
10.94 (7.94) 75,609 2.51
11.91 26.81 95,363 2.51
9.42 5.84 80,938 2.49
8.93 (10.29) 53,652 2.63(g)
8.97 (17.84) 16,096 2.51
10.94 (7.97) 29,726 2.51
11.92 26.91 43,995 2.49
9.42 5.79 40,408 2.52
8.93 (10.79) 27,074 2.63(g)
9.14 (17.03) 377 1.47
11.03 (6.90) 668 1.35
11.99 28.30 2,748 1.38
9.48 (.15) 510 1.32(g)
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager. (h) Includes redemption fees added to Capital paid-in of
$0.01 and $0.04 per average shares outstanding for
na -- not applicable International Value and Pacific Opportunities,
respectively. Total return excluding redemption fees
would have been (17.26%) and (9.83%), respectively.
58
FINANCIAL HIGHLIGHTS (continued)
RATIOS AND SUPPLEMENTAL DATA
RATIO OF RATIO OF
EXPENSES TO NET INVESTMENT
AVERAGE NET INCOME (LOSS) PORTFOLIO
ASSETS WITHOUT TO AVERAGE TURNOVER
REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%)
(1.15)(c) 118
3.15
(.21)(c) 124
3.77
(.47)(c) 98
8.56
.39 (c) 18
6.38
(.11)(c) 10
4.87
(1.85)(c) 118
3.86
(.93)(c) 124
4.49
(1.23)(c) 98
9.33
(.38)(c) 18
7.15
(.91)(c) 10
5.68
(1.87)(c) 118
3.87
(.93)(c) 124
4.49
(1.18)(c) 98
9.27
(.30)(c) 18
7.07
(.83)(c) 10
5.60
(.78)(c) 118
2.78
.15 (c) 124
3.42
.03 (c)(g) 98
8.06(g)
- --------------------------------------------------------------
.58 (c) 39
2.15
.96 (c) 36
1.92
.92 (c) 21
1.87
.80 (c) 16
1.88
.12 (c)(g) 10
2.11(g)
(.15)(c) 39
2.88
.20 (c) 36
2.69
.12 (c) 21
2.66
.05 (c) 16
2.63
(.71)(c)(g) 10
2.94(g)
(.16)(c) 39
2.89
.19 (c) 36
2.69
.14 (c) 21
2.64
.03 (c) 16
2.66
(.71)(c)(g) 10
2.94(g)
.89 (c) 39
1.85
1.36 (c) 36
1.53
1.25 (c) 21
1.53
1.23 (c)(g) 16
1.45(g)
59
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
NET (LOSS)
NET ASSET NET GAIN ON
VALUE, INVESTMENT SECURITIES TOTAL FROM
SHARE BEGINNING (LOSS) (REALIZED AND INVESTMENT
FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD INCOME UNREALIZED) OPERATIONS
IVY PACIFIC A 01/01 to 12/31/2001 $ 7.42 $ (.03)(c)(d) $ (.66)(d)(h) $ (.69)
OPPORTUNITIES FUND 01/01 to 12/31/2000 9.15 .07 (c) (1.74) (1.67)
01/01 to 12/31/1999 6.30 .08 (c) 2.86 2.94
01/01 to 12/31/1998 8.04 .13 (c) (1.78) (1.65)
01/01 to 12/31/1997 10.30 .02 (c)(d) (2.28)(d) (2.26)
B 01/01 to 12/31/2001 7.33 (.08)(c)(d) (.68)(d) (.76)
01/01 to 12/31/2000 9.04 .01 (c) (1.71) (1.70)
01/01 to 12/31/1999 6.24 .02 (c) 2.81 2.83
01/01 to 12/31/1998 7.96 .05 (c) (1.73) (1.68)
01/01 to 12/31/1997 10.28 (.04)(c)(d) (2.28)(d) (2.32)
C 01/01 to 12/31/2001 7.31 (.08)(c)(d) (.67)(d) (.75)
01/01 to 12/31/2000 9.07 .01 (c) (1.71) (1.70)
01/01 to 12/31/1999 6.25 .02 (c) 2.82 2.84
01/01 to 12/31/1998 7.94 .08 (c) (1.75) (1.67)
01/01 to 12/31/1997 10.24 (.03)(c)(d) (2.27)(d) (2.30)
ADVISOR 01/01 to 12/31/2001 7.30 (.02)(c)(d) (.68)(d) (.70)
01/01 to 12/31/2000 9.03 .12 (c)(d) (1.82)(d) (1.70)
01/01 to 12/31/1999 6.27 .04 (c) 2.86 2.90
02/10(e) to 12/31/1998 7.89 .08 (c) (1.62) (1.54)
---------------------------------------------------------------------------------------------------
IVY GROWTH FUND A 01/01 to 12/31/2001 14.98 (.07)(d) (3.29)(d) (3.36)
01/01 to 12/31/2000 22.15 (.15) (4.84) (4.99)
01/01 to 12/31/1999 19.88 (.32) 6.61 6.29
01/01 to 12/31/1998 17.80 .01 2.49 2.50
01/01 to 12/31/1997 17.76 .02 1.98 2.00
B 01/01 to 12/31/2001 14.48 (.19)(d) (3.17)(d) (3.36)
01/01 to 12/31/2000 21.72 (.30) (4.76) (5.06)
01/01 to 12/31/1999 19.60 (.21) 6.17 5.96
01/01 to 12/31/1998 17.72 (.16) 2.46 2.30
01/01 to 12/31/1997 17.69 (.14) 1.96 1.82
C 01/01 to 12/31/2001 14.14 (.19)(d) (3.09)(d) (3.28)
01/01 to 12/31/2000 21.28 (.26) (4.70) (4.96)
01/01 to 12/31/1999 19.27 (.25) 6.08 5.83
01/01 to 12/31/1998 17.47 (.16) 2.38 2.22
01/01 to 12/31/1997 17.59 (.07) 1.86 1.79
ADVISOR 01/01 to 12/31/2001 14.99 (.08)(d) (3.32)(d) (3.40)
01/01 to 12/31/2000 22.18 (.15) (4.86) (5.01)
01/01 to 12/31/1999 19.91 (.04) 6.33 6.29
04/30(e) to 12/31/1998 20.36 .03 (.06) (.03)
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager. (h) Includes redemption fees added to Capital paid-in of
$0.01 and $0.04 per average shares outstanding for
na -- not applicable International Value and Pacific Opportunities,
respectively. Total return excluding redemption fees
would have been (17.26%) and (9.83%), respectively.
60
FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA
LESS DISTRIBUTIONS
DIVIDENDS
FROM NET DISTRIBUTIONS
INVESTMENT FROM TOTAL
INCOME REALIZED GAINS DISTRIBUTIONS
$ - $ .01
$ .01
- .06
.06
.01 .09
.08
- .09
.09
- -
-
- .01
.01
- .01
.01
.01 .03
.02
- .04
.04
- -
-
- .01
.01
- .06
.06
.01 .02
.01
- .02
.02
- -
-
- .01
.01
- .03
.03
.01 .14
.13
- .08
.08
- ---------------------------------------------------------
.01 .01
-
2.18 2.18
-
4.02 4.02
-
.40 .42
.02
1.81 1.96
.15
.01 .01
-
2.18 2.18
-
3.84 3.84
-
.40 .42
.02
1.72 1.79
.07
.01 .01
-
2.18 2.18
-
3.82 3.82
-
.40 .42
.02
1.78 1.91
.13
.01 .01
-
2.18 2.18
-
4.02 4.02
-
.40 .42
.02
61
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
RATIOS AND SUPPLEMENTAL DATA
RATIO OF
NET ASSET NET ASSETS, EXPENSES TO
VALUE, TOTAL END OF AVERAGE NET
END OF RETURN PERIOD ASSETS WITH
FUND NAME PERIOD (%)(A)(F) (000) REIMBURSEMENT (%)(B)
IVY PACIFIC $ 6.72 (9.29)(h) $ 6,291 2.21
OPPORTUNITIES FUND 7.42 (18.25) 9,096 2.16
9.15 46.72 12,738 2.19
6.30 (20.56) 9,061 2.30
8.04 (21.94) 12,020 2.44
6.56 (10.35) 3,966 2.95
7.33 (18.80) 6,462 2.92
9.04 45.33 7,508 2.97
6.24 (21.04) 6,080 3.08
7.96 (22.57) 7,893 3.17
6.55 (10.25) 917 2.90
7.31 (18.79) 1,539 3.03
9.07 45.41 776 3.03
6.25 (21.02) 704 2.98
7.94 (22.46) 1,129 3.05
6.59 (9.58) 3 2.03
7.30 (18.77) 42 1.77
9.03 46.29 313 1.79
6.27 (19.56) 10 2.92(g)
--------------------------------------------------------------------------------------
IVY GROWTH FUND 11.61 (22.43) 180,806 na
14.98 (22.31) 261,744 na
22.15 31.87 363,723 na
19.88 14.05 318,444 na
17.80 11.69 320,000 na
11.11 (23.21) 5,763 na
14.48 (23.07) 7,517 na
21.72 30.63 8,070 na
19.60 12.99 4,889 na
17.72 10.69 4,433 na
10.85 (23.20) 350 na
14.14 (23.08) 744 na
21.28 30.43 576 na
19.27 12.72 263 na
17.47 10.58 400 na
11.58 (22.68) 296 na
14.99 (22.37) 359 na
22.18 31.78 438 na
19.91 (.14) 347 na(g)
(a) Total return does not reflect a sales charge. (d) Based on average shares outstanding.
(b) For 1997, total expenses include fees paid indirectly, (e) Commencement.
if any, through an expense offset arrangement. (f) Total return represents aggregate total return.
(c) Net investment income (loss) is net of expenses (g) Annualized.
reimbursed by Manager. (h) Includes redemption fees added to Capital paid-in of
$0.01 and $0.04 per average shares outstanding for
na -- not applicable International Value and Pacific Opportunities,
respectively. Total return excluding redemption fees
would have been (17.26%) and (9.83%), respectively.
62
FINANCIAL HIGHLIGHTS (continued)
RATIOS AND SUPPLEMENTAL DATA
RATIO OF RATIO OF
EXPENSES TO NET INVESTMENT
AVERAGE NET INCOME (LOSS) PORTFOLIO
ASSETS WITHOUT TO AVERAGE TURNOVER
REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%)
(.49)(c) 82
3.57
.83 (c) 108
3.10
1.01 (c) 23
2.84
1.60 (c) 56
2.86
.28 (c) 20
2.51
(1.22)(c) 82
4.31
.07 (c) 108
3.86
.24 (c) 23
3.62
.82 (c) 56
3.64
(.45)(c) 20
3.24
(1.18)(c) 82
4.26
(.03)(c) 108
3.97
.18 (c) 23
3.68
.92 (c) 56
3.54
(.33)(c) 20
3.12
(.31)(c) 82
3.39
1.23 (c) 108
2.71
1.42 (c) 23
2.44
.98 (c)(g) 56
3.48(g)
- --------------------------------------------------------------
(.55) 114
1.51
(.73) 94
1.34
(.13) 51
1.38
.03 59
1.38
.13 39
1.38
(1.54) 114
2.50
(1.70) 94
2.31
(1.09) 51
2.34
(.90) 59
2.32
(.79) 39
2.30
(1.59) 114
2.55
(1.72) 94
2.33
(1.22) 51
2.47
(1.11) 59
2.53
(.82) 39
2.33
(.62) 114
1.58
(.80) 94
1.41
(.17) 51
1.42
.24 (g) 59
1.18(g)
63
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
NET (LOSS)
NET ASSET NET GAIN ON
VALUE, INVESTMENT SECURITIES
SHARE BEGINNING (LOSS) (REALIZED AND
FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD INCOME UNREALIZED)
IVY US BLUE CHIP FUND A 01/01 to 12/31/2001 $10.59 $ (.02)(c)(d) $ (1.21)(d)
01/01 to 12/31/2000 12.32 (.03)(c) (1.54)
01/01 to 12/31/1999 10.74 (.01)(c) 1.66
11/02(e) to 12/31/1998 10.00 - (c)(d) .74 (d)
B 01/01 to 12/31/2001 10.48 (.09)(c)(d) (1.19)(d)
01/01 to 12/31/2000 12.29 (.09)(c) (1.56)
01/01 to 12/31/1999 10.72 (.07)(c) 1.65
11/06(e) to 12/31/1998 10.30 (.01)(c)(d) .43 (d)
C 01/01 to 12/31/2001 10.49 (.09)(c)(d) (1.21)(d)
01/01 to 12/31/2000 12.30 (.12)(c) (1.53)
01/01 to 12/31/1999 10.72 (.07)(c) 1.66
11/06(e) to 12/31/1998 10.30 (.01)(c)(d) .43 (d)
ADVISOR 01/01 to 12/31/2001 10.65 .01 (c)(d) (1.22)(d)
01/01 to 12/31/2000 12.35 (.01)(c) (1.53)
01/01 to 12/31/1999 10.74 .02 (c) 1.69
11/02(e) to 12/31/1998 10.00 .01 (c)(d) .73(d)
--------------------------------------------------------------------------------------
IVY US EMERGING A 01/01 to 12/31/2001 30.31 (.37) (9.78)(h)
GROWTH FUND 01/01 to 12/31/2000 47.29 (.50) (11.94)
01/01 to 12/31/1999 32.65 (.49) 20.70
01/01 to 12/31/1998 27.67 (.44)(d) 5.42 (d)
01/01 to 12/31/1997 26.54 (.41)(d) 1.54 (d)
B 01/01 to 12/31/2001 29.10 (.58) (9.33)
01/01 to 12/31/2000 46.01 (.81) (11.56)
01/01 to 12/31/1999 31.93 (.77) 20.15
01/01 to 12/31/1998 27.26 (.65)(d) 5.32 (d)
01/01 to 12/31/1997 26.33 (.33)(d) 1.26 (d)
C 01/01 to 12/31/2001 29.08 (.61) (9.29)
01/01 to 12/31/2000 45.98 (.92) (11.44)
01/01 to 12/31/1999 31.91 (.80) 20.19
01/01 to 12/31/1998 27.23 (.63)(d) 5.31 (d)
01/01 to 12/31/1997 26.29 (.34)(d) 1.28 (d)
ADVISOR 01/01 to 12/31/2001 30.57 (.34) (9.87)
01/01 to 12/31/2000 47.57 (.40) (12.06)
01/01 to 12/31/1999 32.79 (.44) 20.85
02/18(e) to 12/31/1998 28.82 (.23)(d) 4.20 (d)
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
TOTAL FROM
INVESTMENT
FUND NAME OPERATIONS
IVY US BLUE CHIP FUND $ (1.23)
(1.57)
1.65
.74
(1.28)
(1.65)
1.58
.42
(1.30)
(1.65)
1.59
.42
(1.21)
(1.54)
1.71
.74
-------------------------------
IVY US EMERGING (10.15)
GROWTH FUND (12.44)
20.21
4.98
1.13
(9.91)
(12.37)
19.38
4.67
.93
(9.90)
(12.36)
19.39
4.68
.94
(10.21)
(12.46)
20.41
3.97
(a) Total return does not reflect a sales charge. (g) Annualized.
(b) For 1997, total expenses include fees paid indirectly, (h) Includes redemption fees added to Capital paid-in of
if any, through an expense offset arrangement. $0.01 per average shares outstanding for each of Emerging
(c) Net investment income (loss) is net of expenses Growth and Bond. Total return excluding redemption fees
reimbursed by Manager. would have been (33.52%) and 8.55%, respectively.
(d) Based on average shares outstanding.
(e) Commencement.
(f) Total return represents aggregate total return.
na -- not applicable
64
FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA
LESS DISTRIBUTIONS
DIVIDENDS
FROM NET DISTRIBUTIONS
INVESTMENT FROM TOTAL
INCOME REALIZED GAINS DISTRIBUTIONS
$ - $ -
$ -
.16 .16
-
- .07
.07
- -
-
- -
-
.16 .16
-
- .01
.01
- -
-
- -
-
.16 .16
-
- .01
.01
- -
-
- -
-
.16 .16
-
- .10
.10
- -
-
- ---------------------------------------------------------
- -
-
4.54 4.54
-
5.57 5.57
-
- -
-
- -
-
- -
-
4.54 4.54
-
5.30 5.30
-
- -
-
- -
-
- -
-
4.54 4.54
-
5.32 5.32
-
- -
-
- -
-
- -
-
4.54 4.54
-
5.63 5.63
-
- -
-
65
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
RATIOS AND SUPPLEMENTAL DATA
RATIO OF
NET ASSET NET ASSETS, EXPENSES TO
VALUE, TOTAL END OF AVERAGE NET
END OF RETURN PERIOD ASSETS WITH
FUND NAME PERIOD (%)(A)(F) (000) REIMBURSEMENT (%)(B)
IVY US BLUE CHIP FUND $ 9.36 (11.61) $ 38,754 1.56
10.59 (12.69) 57,584 1.57
12.32 15.35 3,353 1.46
10.74 7.40 726 1.43(g)
9.20 (12.21) 19,379 2.31
10.48 (13.37) 24,314 2.31
12.29 14.74 8,742 2.15
10.72 4.08 1,047 2.13(g)
9.19 (12.39) 1,119 2.36
10.49 (13.36) 2,965 2.30
12.30 14.84 2,497 2.08
10.72 4.08 110 2.22(g)
9.44 (11.36) 808 1.26
10.65 (12.42) 1,061 1.24
12.35 15.89 920 1.10
10.74 7.40 537 1.08(g)
--------------------------------------------------------------------------------------
IVY US EMERGING 20.16 (33.49)(h) 43,974 na
GROWTH FUND 30.31 (25.81) 78,840 na
47.29 62.47 101,798 na
32.65 18.00 62,961 na
27.67 4.26 64,910 na
19.19 (34.05) 26,856 na
29.10 (26.38) 56,036 na
46.01 61.27 79,659 na
31.93 17.13 52,940 na
27.26 3.53 47,789 na
19.18 (34.04) 3,998 na
29.08 (26.37) 9,048 na
45.98 61.32 15,438 na
31.91 17.19 9,664 na
27.23 3.58 9,484 na
20.36 (33.40) 991 na
30.57 (25.70) 1,987 na
47.57 62.85 1,432 na
32.79 13.78 740 na
(a) Total return does not reflect a sales charge. (g) Annualized.
(b) For 1997, total expenses include fees paid indirectly, (h) Includes redemption fees added to Capital paid-in of
if any, through an expense offset arrangement. $0.01 per average shares outstanding for each of Emerging
(c) Net investment income (loss) is net of expenses Growth and Bond. Total return excluding redemption fees
reimbursed by Manager. would have been (33.52%) and 8.55%, respectively.
(d) Based on average shares outstanding.
(e) Commencement.
(f) Total return represents aggregate total return.
na -- not applicable
66
FINANCIAL HIGHLIGHTS (continued)
RATIOS AND SUPPLEMENTAL DATA
RATIO OF RATIO OF
EXPENSES TO NET INVESTMENT
AVERAGE NET INCOME (LOSS) PORTFOLIO
ASSETS WITHOUT TO AVERAGE TURNOVER
REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%)
(.16)(c) 74
1.83
(.47)(c) 69
1.81
(.12)(c) 80
3.49
.02 (c)(g) 3
6.34(g)
(.90)(c) 74
2.58
(1.21)(c) 69
2.55
(.81)(c) 80
4.18
(.68)(c)(g) 3
7.04(g)
(.96)(c) 74
2.63
(1.20)(c) 69
2.54
(.74)(c) 80
4.11
(.77)(c)(g) 3
7.13(g)
.14 (c) 74
1.53
(.13)(c) 69
1.48
.24 (c) 80
3.13
.37 (c)(g) 3
5.99(g)
- --------------------------------------------------------------
(1.33) 133
1.80
(1.23) 83
1.55
(1.53) 107
1.69
(1.48) 67
1.70
(1.37) 65
1.67
(2.14) 133
2.61
(2.00) 83
2.31
(2.27) 107
2.43
(2.23) 67
2.45
(2.13) 65
2.43
(2.14) 133
2.61
(1.98) 83
2.30
(2.23) 107
2.39
(2.18) 67
2.40
(2.09) 65
2.39
(1.16) 133
1.63
(1.04) 83
1.36
(1.30) 107
1.46
(1.00)(g) 67
1.22(g)
67
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
NET (LOSS)
NET ASSET NET GAIN ON
VALUE, INVESTMENT SECURITIES
SHARE BEGINNING (LOSS) (REALIZED AND
FUND NAME CLASS FOR THE PERIOD FROM OF PERIOD INCOME UNREALIZED)
IVY BOND FUND A 01/01 to 12/31/2001 $ 7.89 $ .49(d) $ .18(d)(h)
01/01 to 12/31/2000 8.29 .55 (.40)
01/01 to 12/31/1999 9.54 .67 (1.24)
01/01 to 12/31/1998 10.22 .69 (.69)
01/01 to 12/31/1997 9.80 .80 .42
B 01/01 to 12/31/2001 7.88 .42(d) .17 (d)
01/01 to 12/31/2000 8.28 .48 (.40)
01/01 to 12/31/1999 9.53 .59 (1.24)
01/01 to 12/31/1998 10.22 .59 (.67)
01/01 to 12/31/1997 9.80 .68 .46
C 01/01 to 12/31/2001 7.91 .42(d) .16 (d)
01/01 to 12/31/2000 8.31 .48 (.40)
01/01 to 12/31/1999 9.55 .62 (1.25)
01/01 to 12/31/1998 10.24 .60 (.68)
01/01 to 12/31/1997 9.82 .64 .48
ADVISOR 01/01 to 12/31/2001 7.90 .49(d) .21 (d)
01/01 to 12/31/2000 8.28 .56 (.38)
01/01 to 12/31/1999 9.54 .67 (1.24)
01/20(e) to 12/31/1998 10.28 .69 (.72)
---------------------------------------------------------------------------------
IVY MONEY MARKET FUND A 01/01 to 12/31/2001 1.00 .03(c) -
01/01 to 12/31/2000 1.00 .05(c) -
01/01 to 12/31/1999 1.00 .04(c) -
01/01 to 12/31/1998 1.00 .05(c) -
01/01 to 12/31/1997 1.00 .05(c) -
B 01/01 to 12/31/2001 1.00 .03(c) -
01/01 to 12/31/2000 1.00 .05(c) -
01/01 to 12/31/1999 1.00 .04(c) -
01/01 to 12/31/1998 1.00 .05(c) -
01/01 to 12/31/1997 1.00 .05(c) -
C 01/01 to 12/31/2001 1.00 .03(c) -
01/01 to 12/31/2000 1.00 .05(c) -
01/01 to 12/31/1999 1.00 .04(c) -
01/01 to 12/31/1998 1.00 .05(c) -
01/01 to 12/31/1997 1.00 .05(c) -
SELECTED PER SHARE DATA
(LOSS) INCOME FROM INVESTMENT OPERATIONS
TOTAL FROM
INVESTMENT
FUND NAME OPERATIONS
IVY BOND FUND $ .67
.15
(.57)
-
1.22
.59
.08
(.65)
(.08)
1.14
.58
.08
(.63)
(.08)
1.12
.70
.18
(.57)
(.03)
----------------------------------------------------
IVY MONEY MARKET FUND .03
.05
.04
.05
.05
.03
.05
.04
.05
.05
.03
.05
.04
.05
.05
(a) Total return does not reflect a sales charge. (g) Annualized.
(b) For 1997, total expenses include fees paid indirectly, (h) Includes redemption fees added to Capital paid-in of
if any, through an expense offset arrangement. $0.01 per average shares outstanding for each of Emerging
(c) Net investment income (loss) is net of expenses Growth and Bond. Total return excluding redemption fees
reimbursed by Manager. would have been (33.52%) and 8.55%, respectively.
(d) Based on average shares outstanding. (i) Dividend includes a return of capital distribution of
(e) Commencement. $0.01 per average share.
(f) Total return represents aggregate total return. (j) The seven day and thirty day yield for Class A shares at
December 31, 2001 was 0.67% and 0.95%, respectively. The
na -- not applicable seven day yield for Class B shares at December 31, 2001
was 0.76% and the thirty day yield was 1.05%. The seven
day yield for Class C shares at December 31, 2001 was
0.50% and the thirty day yield was 0.66% (unaudited).
68
FINANCIAL HIGHLIGHTS (continued)
SELECTED PER SHARE DATA
LESS DISTRIBUTIONS
DIVIDENDS
FROM NET DISTRIBUTIONS
INVESTMENT FROM TOTAL
INCOME REALIZED GAINS DISTRIBUTIONS
$ - $ .47
$ .47(i)
- .55
.55
- .68
.68
- .68
.68
- .80
.80
- .41
.41(i)
- .48
.48
- .60
.60
- .61
.61
- .72
.72
- .41
.41(i)
- .48
.48
- .61
.61
- .61
.61
- .70
.70
- .48
.48(i)
- .56
.56
- .69
.69
- .71
.71
- ---------------------------------------------------------
- .03
.03
- .05
.05
- .04
.04
- .05
.05
- .05
.05
- .03
.03
- .05
.05
- .04
.04
- .05
.05
- .05
.05
- .03
.03
- .05
.05
- .04
.04
- .05
.05
- .05
.05
69
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA
RATIOS AND SUPPLEMENTAL DATA
RATIO OF
NET ASSET NET ASSETS, EXPENSES TO
VALUE, TOTAL END OF AVERAGE NET
END OF RETURN PERIOD ASSETS WITH
FUND NAME PERIOD (%)(A)(F) (000) REIMBURSEMENT (%)(B)
IVY BOND FUND $ 8.09 8.70 (h) $ 36,401 na
7.89 1.89 52,305 na
8.29 (6.17) 69,249 na
9.54 - 109,445 na
10.22 11.87 106,497 na
8.06 7.61 19,305 na
7.88 1.03 20,079 na
8.28 (6.97) 27,550 na
9.53 (.81) 42,166 na
10.22 11.12 18,499 na
8.08 7.51 2,188 na
7.91 1.07 2,726 na
8.31 (6.81) 3,928 na
9.55 (.81) 11,266 na
10.24 11.11 6,580 na
8.12 9.07 170 na
7.90 2.26 192 na
8.28 (6.21) 332 na
9.54 (.30) 347 na
--------------------------------------------------------------------------------------
IVY MONEY MARKET FUND 1.00 3.12 12,904 .87
1.00 5.37 20,394 .85
1.00 4.16 18,524 .88
1.00 4.51 19,103 .87
1.00 4.60 15,385 .88
1.00 3.19 6,680 .80
1.00 5.35 5,872 .87
1.00 4.30 7,486 .77
1.00 4.59 6,636 .76
1.00 4.77 3,812 .70
1.00 3.10 519 .88
1.00 5.65 1,975 .72
1.00 4.14 372 .87
1.00 4.55 423 .81
1.00 4.78 405 .70
(a) Total return does not reflect a sales charge. (g) Annualized.
(b) For 1997, total expenses include fees paid indirectly, (h) Includes redemption fees added to Capital paid-in of
if any, through an expense offset arrangement. $0.01 per average shares outstanding for each of Emerging
(c) Net investment income (loss) is net of expenses Growth and Bond. Total return excluding redemption fees
reimbursed by Manager. would have been (33.52%) and 8.55%, respectively.
(d) Based on average shares outstanding. (i) Dividend includes a return of capital distribution of
(e) Commencement. $0.01 per average share.
(f) Total return represents aggregate total return. (j) The seven day and thirty day yield for Class A shares at
December 31, 2001 was 0.67% and 0.95%, respectively. The
na -- not applicable seven day yield for Class B shares at December 31, 2001
was 0.76% and the thirty day yield was 1.05%. The seven
day yield for Class C shares at December 31, 2001 was
0.50% and the thirty day yield was 0.66% (unaudited).
70
FINANCIAL HIGHLIGHTS (continued)
RATIOS AND SUPPLEMENTAL DATA
RATIO OF RATIO OF
EXPENSES TO NET INVESTMENT
AVERAGE NET INCOME (LOSS) PORTFOLIO
ASSETS WITHOUT TO AVERAGE TURNOVER
REIMBURSEMENT (%)(B) NET ASSETS (%) RATE (%)
6.03 22
1.41
6.71 26
1.62
7.40 28
1.52
6.88 43
1.39
7.08 71
1.47
5.19 22
2.25
5.88 26
2.45
6.55 28
2.36
6.13 43
2.13
6.35 71
2.21
5.25 22
2.18
5.93 26
2.40
6.65 28
2.26
6.15 43
2.12
6.35 71
2.20
6.12 22
1.32
6.84 26
1.49
7.49 28
1.43
7.16(g) 43
1.11(g)
- --------------------------------------------------------------
3.12(c) na
1.59
5.38(c) na
1.52
4.17(c) na
1.40
4.50(c) na
1.42
4.60(c) na
1.57
3.19(c) na
1.52
5.36(c) na
1.54
4.28(c) na
1.29
4.61(c) na
1.31
4.77(c) na
1.39
3.10(c) na
1.60
5.51(c) na
1.39
4.18(c) na
1.39
4.56(c) na
1.36
4.78(c) na
1.39
71
QUOTRON
SYMBOLS
AND
CUSIP
NUMBERS
FUND SYMBOL CUSIP
- ------------------------------------------------------------------------------------------------
Ivy Cundill Global Value Fund Class A (*) 465898880
Ivy Cundill Global Value Fund Class B (*) 465898799
Ivy Cundill Global Value Fund Class C (*) 465898781
Ivy Cundill Global Value Fund Class I (*) 465898773
Ivy Cundill Global Value Fund Advisor Class (*) 465898765
Ivy Developing Markets Fund Class A IVCAX 465897841
Ivy Developing Markets Fund Class B IVCBX 465897833
Ivy Developing Markets Fund Class C IVCCX 465897569
Ivy Developing Markets Fund Advisor Class IVCVX 465897163
Ivy European Opportunities Fund Class A IEOAX 465898815
Ivy European Opportunities Fund Class B IEOBX 465898823
Ivy European Opportunities Fund Class C IEOCX 465898831
Ivy European Opportunities Fund Class I (*) 465898849
Ivy European Opportunities Fund Advisor Class IEVOX 465898856
Ivy Global Fund Class A MCGLX 465897742
Ivy Global Fund Class B IVGBX 465897734
Ivy Global Fund Class C IVGCX 465897593
Ivy Global Fund Advisor Class IVGVX 465897239
Ivy Global Natural Resources Fund Class A IGNAX 465897429
Ivy Global Natural Resources Fund Class B IGNBX 465897411
Ivy Global Natural Resources Fund Class C IGNCX 465897395
Ivy Global Natural Resources Fund Advisor Class IGNVX 465897221
Ivy Global Science & Technology Fund Class A IVTAX 465897544
Ivy Global Science & Technology Fund Class B IVTBX 465897536
Ivy Global Science & Technology Fund Class C IVTCX 465897528
Ivy Global Science & Technology Fund Class I IVSIX 465897510
Ivy Global Science & Technology Fund Advisor Class IVTVX 465897213
Ivy International Fund Class A IVINX 465903102
Ivy International Fund Class B IVIBX 465903201
Ivy International Fund Class C IVNCX 465897585
Ivy International Fund Class I IVIIX 465897874
Ivy International Fund Advisor Class (*) 465898690
Ivy International Small Companies Fund Class A IYSAX 465897460
Ivy International Small Companies Fund Class B IYSBX 465897452
Ivy International Small Companies Fund Class C IYSCX 465897445
Ivy International Small Companies Fund Class I IYSIX 465897437
Ivy International Small Companies Fund Advisor Class IYSVX 465897189
Ivy International Value Fund Class A IVIAX 465897353
Ivy International Value Fund Class B IIFBX 465897346
Ivy International Value Fund Class C IVIFX 465897338
Ivy International Value Fund Class I (*) 465897320
Ivy International Value Fund Advisor Class IVIVX 465897197
Ivy Pacific Opportunities Fund Class A IPOAX 465897866
Ivy Pacific Opportunities Fund Class B IPOBX 465897858
Ivy Pacific Opportunities Fund Class C IPOCX 465897643
Ivy Pacific Opportunities Fund Advisor Class IPOVX 465897270
Ivy Growth Fund Class A IVYFX 466002102
Ivy Growth Fund Class B IVYBX 466002201
Ivy Growth Fund Class C IBYCX 465897627
Ivy Growth Fund Advisor Class IVYVX 465897254
Ivy US Blue Chip Fund Class A IBCAX 465898609
Ivy US Blue Chip Fund Class B IBCBX 465898708
Ivy US Blue Chip Fund Class C IBCCX 465898807
Ivy US Blue Chip Fund Class I IBCIX 465898872
Ivy US Blue Chip Fund Advisor Class IBCVX 465898864
Ivy US Emerging Growth Fund Class A IVEGX 465897106
Ivy US Emerging Growth Fund Class B IVEBX 465897205
Ivy US Emerging Growth Fund Class C IVGEX 465897635
Ivy US Emerging Growth Fund Advisor Class IVEVX 465897262
Ivy Bond Fund Class A MCFIX 465897791
Ivy Bond Fund Class B IVBBX 465897783
Ivy Bond Fund Class C IVBCX 465897668
Ivy Bond Fund Class I (*) 465897775
Ivy Bond Fund Advisor Class IVBVX 465897296
Ivy Money Market Fund Class A IVMXX 465897684
Ivy Money Market Fund Class B IVBXX 465897676
Ivy Money Market Fund Class C IVCXX 465897551
(*) No symbol assigned at time of printing
HOW TO RECEIVE MORE INFORMATION
ABOUT THE FUNDS
Additional information about the Funds and their investments is contained in
each Fund's Statement of Additional Information dated April 30, 2002 (the
"SAI"), which is incorporated by reference into this Prospectus, and each Fund's
annual and semiannual reports to shareholders. Each Fund's annual report
includes a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its most recent fiscal
year. The SAI and each Fund's annual and semiannual reports are available upon
request and without charge from the Distributor at the following address and
phone number:
Ivy Mackenzie Distributors, Inc.
925 South Federal Highway, Suite 600
Boca Raton, Florida 33432
800.456.5111
Information about the Funds (including the SAI and each Fund's annual and
semiannual reports) may also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. (please call 1-202-942-8090 for further
details). Reports and other information about the Funds are also available on
EDGAR Database on the SEC's Internet Website (www.sec.gov), and copies of this
information may be obtained, upon payment of a copying fee, by electronic
request at the following e-mail address: publicinfo@sec.gov, or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-6009 Investment Company
Act File No. 811-1028
IFPRO0402 [IVY MACKENZIE LOGO]
Supplement dated May 16, 2002 to Prospectus dated April 30, 2002
On page 36 ("Portfolio Management"), the Ivy International Small
Companies Fund paragraph should be replaced with:
The Fund is managed by the Henderson team. The Henderson team's
investment process combines top down regional allocation with a bottom-up stock
selection approach. Nitin Mehta, Henderson's Director of Mainstream
International Equities, is responsible for the Fund's regional allocations. Mr.
Mehta has 15 years of economic and investment experience and holds an MBA from
the London Business School. He has been managing international equity funds with
Henderson for over seven years. Regional allocations are based on factors such
as interest rates and current economic cycles, which are used to identify
economies with relatively strong prospects for real economic growth. Individual
stock selections are based on prospects for earnings growth.
Ivy Cundill Global Value Fund
Ivy Developing Markets Fund
Ivy European Opportunities Fund
Ivy Global Fund
Ivy Global Natural Resources Fund
Ivy Global Science & Technology Fund
Ivy International Fund
Ivy International Small Companies Fund
Ivy International Value Fund
Ivy Pacific Opportunities Fund
Ivy Growth Fund
Ivy US Blue Chip Fund
Ivy US Emerging Growth Fund
Ivy Bond Fund
Ivy Money Market Fund
Each, a series of Ivy Fund (the “Funds”)
Supplement Dated August 29, 2002 To Prospectus Dated April 30, 2002
(as supplemented on May 16, 2002)
Ivy Management, Inc. (“IMI”), which provides business management services to the Funds and investment advisory services to all Funds other than Ivy Global Natural Resources Fund, is a subsidiary of Mackenzie Investment Management Inc. (“MIMI”). MIMI has entered into a definitive agreement with Waddell & Reed Financial, Inc., (“Waddell & Reed”), a leading U.S. mutual fund firm, whereby Waddell & Reed will acquire MIMI’s entire operation, including IMI and Ivy Mackenzie Distributors, Inc., the Funds’ distributor.
Consummation of the transaction is subject to approval by the Board of Trustees of Ivy Fund, shareholders of the Funds and shareholders of MIMI, and certain other closing conditions. Under the Investment Company Act of 1940, the transaction would result in a change in control of IMI and, therefore, constitute an assignment of the Funds’ business management and, for all Funds other than Ivy Global Natural Resources Fund, investment advisory agreements, which would result in a termination of those agreements. Consequently, it is anticipated that IMI will seek approval of new agreements from the Board of Trustees of Ivy Fund and the shareholders of each Fund. The transaction is targeted to close in December 2002.
[IVY FUNDS LOGO]
Ivy Cundill Global Value Fund
Ivy Developing Markets Fund
Ivy European Opportunities Fund
Ivy Global Fund
Ivy Global Natural Resources Fund
Ivy Global Science & Technology Fund
Ivy International Fund
Ivy International Small Companies Fund
Ivy International Value Fund
Ivy Pacific Opportunities Fund
Ivy Growth Fund
Ivy US Blue Chip Fund
Ivy US Emerging Growth Fund
Ivy Bond Fund
Ivy Money Market Fund
Each, a series of Ivy Fund (the "Funds")
Supplement Dated December 23, 2002 To Prospectus Dated April 30, 2002
(as supplemented on May 16, 2002 and August 29, 2002)
On December 16, 2002, Waddell & Reed Financial, Inc. ("Waddell & Reed"), a
U.S. mutual fund firm, completed its acquisition of the entire operation
of Mackenzie Investment Management Inc. Ivy Management, Inc. ("IMI"),
which provides business management services to the Funds and investment
advisory services to all Funds other than Ivy Global Natural Resources
Fund, and Ivy Mackenzie Distributors, Inc., the Funds' distributor, are
now indirect subsidiaries of Waddell & Reed.
Under the Investment Company Act of 1940, the transaction resulted in a
change of control of IMI, and, therefore, constituted an assignment of the
Funds' business management and, for all Funds other than Ivy Global
Natural Resources Fund, investment advisory agreements and, for Ivy
Cundill Global Value Fund, Ivy European Opportunities Fund and Ivy
International Small Companies Fund, subadvisory agreements, which resulted
in a termination of those agreements. At meetings of shareholders held on
December 10, 2002, shareholders of the Funds approved new business
management and, if applicable, investment advisory agreements and
subadvisory agreements. The new agreements are substantially identical in
all respects to the agreements in effect prior to December 16, 2002 except
for the dates of execution and termination and other non-material changes,
with the exception of the new agreements between IMI, Henderson Global
Investors (North America) Inc. ("HGINA") and Henderson Investment Management
Ltd. ("Henderson") with respect to Ivy European Opportunities Fund and Ivy
International Small Companies Fund (the "New Henderson Agreements"). Under
the New Henderson Agreements, HGINA will act as subadviser to IMI for these
two Funds. Henderson, the two Funds' former subadviser, continues as a
subadviser, but pursuant to a subadvisory agreement with HGINA instead of
with IMI. The New Henderson Agreements also increased the subadvisory fee
rates that IMI pays to HGINA for the subadvisory services (although the
overall advisory fee rates each of the two Funds pays for advisory services
has not changed). Under the New Henderson Agreements, IMI pays HGINA for
its services a fee payable monthly at an annual rate of 0.45% of the first
$100,000,000 of net assets and 0.40% thereafter of the portion of each
Fund's average daily net assets managed by HGINA. Henderson's existing
portfolio management team continues to manage these two Funds.
The portions of the "Portfolio Management" section of the Prospectus
relating to the portfolio manager of the following Funds are revised as
follows:
Ivy Developing Markets Fund, Ivy Global Fund, Ivy International Fund, Ivy
International Value Fund and Ivy Pacific Opportunities Fund: Thomas A.
Mengel is primarily responsible for the management of the Ivy Developing
Markets Fund, Ivy Global Fund, Ivy International Fund, Ivy International
Value Fund and Ivy Pacific Opportunities Fund. Mr. Mengel has held his
responsibilities for these Funds since December 17, 2002. Since May 1996,
Mr. Mengel has managed other investment companies for which Waddell & Reed
Investment Management Company ("WRIMCO"), an affiliate of IMI, serves as
investment manager. Mr. Mengel is Senior Vice President of IMI and of
WRIMCO, Vice President of the Funds and Vice President of other investment
companies for which WRIMCO serves as investment manager.
Ivy Global Science & Technology Fund: Zachary F. Shafran is primarily
responsible for the management of the Ivy Global Science & Technology
Fund. Mr. Shafran has held his Fund responsibilities since December 17,
2002. Since February 2001, Mr. Shafran has managed other investment
companies for which WRIMCO serves as investment manager. Mr. Shafran is
Senior Vice President of IMI and of WRIMCO, Vice President of the Funds
and Vice President of other investment companies for which WRIMCO serves
as investment manager. Mr. Shafran has served as a portfolio manager for
WRIMCO since January 1996 and has been an employee of WRIMCO and its
predecessor since 1990.
Ivy Growth Fund: Antonio Intagliata is primarily responsible for the
management of the Ivy Growth Fund. Mr. Intagliata has held his Fund
responsibilities since December 17, 2002. Since November 1979, Mr.
Intagliata has managed other investment companies for which WRIMCO
serves as investment manager. Mr. Intagliata is Senior Vice President of
IMI and of WRIMCO, Vice President of the Funds and Vice President of other
investment companies for which WRIMCO serves as investment manager. Mr.
Intagliata has served as the portfolio manager for investment companies
managed by WRIMCO and its predecessor since February 1979 and has been an
employee of such since June 1973.
Ivy US Blue Chip Fund: Paul P. Baran CFA , is primarily responsible for
the management of the Ivy US Blue Chip Fund. Mr. Baran joined IMI in June
1998 and has held his Fund responsibilities since that time. He is Senior
Vice President of IMI. From September 1987 to June 1998, Mr. Baran was the
Chief Investment Officer of Central Fidelity National Bank.
Ivy US Emerging Growth Fund: Kimberly A. Scott CFA, is primarily
responsible for the management of the Ivy US Emerging Growth Fund. Ms.
Scott has held her Fund responsibilities since December 17, 2002. Since
February 2001, Ms. Scott has managed other investment companies for
which WRIMCO serves as investment manager. Ms. Scott is Senior Vice
President of IMI, Vice President of WRIMCO, Vice President of the Funds
and Vice President of other investment companies for which WRIMCO serves
as investment manager. Ms. Scott served as an investment analyst with
WRIMCO from April 1999 to February 2001. From 1994 to 1999, she was an
equity analyst for Bartlett & Company.
Ivy Bond Fund: James C. Cusser CFA, is primarily responsible for the
management of the Ivy Bond Fund. Mr. Cusser has held his Fund
responsibilities since December 17, 2002. Since August 1992, Mr. Cusser
has managed other investment companies for which WRIMCO serves as
investment manager. Mr. Cusser is Senior Vice President of IMI and of
WRIMCO, Vice President of the Funds and Vice President of other investment
companies for which WRIMCO serves as investment manager.
Ivy Money Market Fund: Mira Stevovich CFA, is primarily responsible for
the management of the Ivy Money Market Fund. Ms. Stevovich has held her Fund
responsibilities since December 17, 2002. Since May 1998, Ms. Stevovich
has managed other investment companies for which WRIMCO serves as
investment manager. Ms. Stevovich is Senior Vice President of IMI, Vice
President of WRIMCO, Vice President and Assistant Treasurer of the Funds
and Vice President and Assistant Treasurer of other investment companies
for which WRIMCO serves as investment manager. Ms. Stevovich had served
as the Assistant Portfolio Manager for investment companies managed by
WRIMCO and its predecessor since January 1989 and has been an employee of
such since March 1987.
[IVY LOGO]
Ivy Cundill Global Value Fund
Ivy Developing Markets Fund
Ivy European Opportunities Fund
Ivy Global Fund
Ivy Global Natural Resources Fund
Ivy Global Science & Technology Fund
Ivy International Fund
Ivy International Growth Fund
Ivy International Small Companies Fund
Ivy International Value Fund
Ivy Pacific Opportunities Fund
Ivy Growth Fund
Ivy US Blue Chip Fund
Ivy US Emerging Growth Fund
Ivy Bond Fund
Ivy Money Market Fund
Each, a series of Ivy Fund (the "Funds")
Supplement Dated January 10, 2003 To Prospectus Dated April 30, 2002
(as supplemented on May 16, 2002, August 29, 2002 and December 23, 2002)
and To Statement of Additional Information Dated April 30, 2002
(as supplemented on December 23, 2002)
Until December 31, 2002, Ivy Management, Inc. ("IMI") provided business
management services to the Funds and investment advisory services to all
Funds other than Ivy Global Natural Resources Fund.
On December 31, 2002, IMI, an indirect wholly owned subsidiary of Waddell &
Reed Financial, Inc. ("Waddell & Reed") and a wholly owned subsidiary of
Ivy Acquisition Corporation ("IAC"), merged with and into IAC, a wholly
owned subsidiary of Waddell & Reed. IAC is an SEC-registered investment
adviser with approximately $1.6 billion in assets under management as of
December 31, 2002 (after giving effect to the merger). Upon effectiveness
of the merger, IAC changed its name to Waddell & Reed Ivy Investment
Company ("WRIICO").
Effective December 31, 2002, WRIICO assumed all of IMI's duties with
respect to the Funds and began providing business management services to
the Funds and investment advisory services to all Funds other than Ivy
Global Natural Resources Fund. The terms and conditions of the agreements
under which WRIICO provides those services to the Funds are exactly the
same as the terms and conditions of the agreements in effect prior to
December 31, 2002 between the Funds and IMI. IMI employees or officers who
were serving as portfolio managers of the Funds continue to serve as
portfolio managers of the Funds after the merger, as employees or officers
of WRIICO. Each of the portfolio managers who was an employee or officer of
IMI has the same title with WRIICO as he or she had with IMI.
Effective December 31, 2002, Ivy Mackenzie Services, Inc. changed its name
to Ivy Services, Inc.
Currently Deloitte & Touche LLP serves as the independent auditors to the
Funds, and Bell, Boyd & Lloyd LLC serves as counsel for the Funds and to
the Independent Trustees.
[IVY LOGO]
Ivy Cundill Global Value Fund
Ivy Developing Markets Fund
Ivy European Opportunities Fund
Ivy Global Fund
Ivy Global Natural Resources Fund
Ivy Global Science & Technology Fund
Ivy International Fund
Ivy International Small Companies Fund
Ivy International Value Fund
Ivy Pacific Opportunities Fund
Ivy Growth Fund
Ivy US Blue Chip Fund
Ivy US Emerging Growth Fund
Ivy Bond Fund
Ivy Money Market Fund
Each, a series of Ivy Fund (the "Funds")
Supplement Dated February 6, 2003, To Prospectus Dated April 30, 2002
(as supplemented on May 16, 2002, August 29, 2002, December 23, 2002 and
January 10, 2003)
The following information replaces the disclosure regarding management of
Ivy International Small Companies Fund:
The Fund is managed by the Henderson team. The Henderson team's
investment process combines top-down regional allocation with a bottom-
up stock selection approach. Simon Chisholm, Henderson's Associate
Director of European Equities, is responsible for the Fund's regional
allocations. Mr. Chisholm has more than nine years of investment
experience and holds a BA degree in Business Studies from London
Guildhall University. He has been managing international equity funds
with Henderson since March of 2000. Regional allocations are based on
factors such as interest rates and current economic cycles, which are
used to identify economies with relatively strong prospects for real
economic growth. Individual stock selections are based on prospects for
earnings growth.
The following information replaces the disclosure regarding management of
Ivy US Blue Chip Fund:
James D. Wineland is primarily responsible for the management of the Ivy
US Blue Chip Fund. He has held his Fund responsibilities since February
3, 2003. Since January 1988, Mr. Wineland has managed investment
companies for which Waddell & Reed Investment Management Company, an
affiliate of Waddell & Reed Ivy Investment Company, serves as investment
manager.
Effective February 18, 2003, Class I shares of the Funds are closed to
further investment.
[IVY LOGO]
IVY BOND FUND
IVY DEVELOPING MARKETS FUND
IVY INTERNATIONAL SMALL COMPANIES FUND
IVY GLOBAL FUND
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
IVY GROWTH FUND
IVY US BLUE CHIP FUND
IVY US EMERGING GROWTH FUND
(the "Funds")
Supplement Dated March 4, 2003 To Prospectus Dated April 30, 2002
(as supplemented on May 16, 2002, August 29, 2002, December 23, 2002,
January 10, 2003 and February 6, 2003)
On January 21, 2003, the Board of Trustees of the Funds approved a proposal
to reorganize each of the Funds into the corresponding Acquiring Fund
listed below, subject to shareholder approval and the satisfaction of
certain other conditions. If shareholders of a Fund approve the proposal,
all of the assets of the Fund will be transferred to the corresponding
Acquiring Fund, and shareholders of the Fund will receive shares of the
corresponding Acquiring Fund in exchange for their shares. Shareholders of
each Fund are scheduled to vote on the proposal at a special meeting of
shareholders to be held in early June, 2003. If approved at the special
meeting, the reorganizations are proposed to take place in late June, 2003.
Shareholders of the Funds will be mailed more detailed information relating
to the proposal in April, 2003.
Funds Acquiring Funds
Ivy Bond Fund Waddell & Reed Advisors Bond Fund
Ivy Developing Markets Fund Ivy Pacific Opportunities Fund
Ivy Global Fund W&R International Growth Fund
Ivy International Small
Companies Fund
Ivy Global Science & W&R Science and Technology Fund
Technology Fund
Ivy Growth Fund Waddell & Reed Advisors Accumulative Fund
Ivy US Blue Chip Fund W&R Core Equity Fund
Ivy US Emerging Growth Fund W&R Mid-Cap Growth Fund