Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6569
IVY FUNDS
(Exact name of registrant as specified in charter)
6300 Lamar Avenue, Overland Park, Kansas 66202
(Address of principal executive offices) (Zip code)
Mara D. Herrington
6300 Lamar Avenue
Overland Park, Kansas 66202
(Name and address of agent for service)
Registrant’s telephone number, including area code: 913-236-2000
Date of fiscal year end: March 31
Date of reporting period: March 31, 2014
Table of Contents
ITEM 1. REPORTS TO STOCKHOLDERS.
1
Table of Contents
Annual Report
March 31, 2014
Ivy Funds
Ivy Asset Strategy Fund
Ivy Balanced Fund
Ivy Energy Fund
Ivy Global Natural Resources Fund
Ivy Global Real Estate Fund
Ivy Global Risk-Managed Real Estate Fund
Ivy Real Estate Securities Fund
Ivy Science and Technology Fund
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Table of Contents
| Ivy Funds |
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| Management Discussion, Portfolio Highlights and Schedule of Investments: |
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This report is submitted for the general information of the shareholders of Ivy Funds. It is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by a current Ivy Funds prospectus, or summary prospectus, and current performance information, including current Lipper ranking information.
| 2 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Funds |
MARCH 31, 2014 (UNAUDITED) |
Henry J. Herrmann, CFA
| 2014 | ANNUAL REPORT | 3 |
Table of Contents
| Ivy Funds |
(UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Asset Strategy Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,081.90 | $ | 5.00 | $ | 1,000 | $ | 1,020.16 | $ | 4.85 | 0.96% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,077.80 | $ | 8.73 | $ | 1,000 | $ | 1,016.50 | $ | 8.47 | 1.69% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,077.90 | $ | 8.62 | $ | 1,000 | $ | 1,016.60 | $ | 8.37 | 1.67% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,081.40 | $ | 5.20 | $ | 1,000 | $ | 1,019.94 | $ | 5.05 | 1.00% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,083.00 | $ | 3.75 | $ | 1,000 | $ | 1,021.29 | $ | 3.64 | 0.73% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,080.00 | $ | 6.86 | $ | 1,000 | $ | 1,018.30 | $ | 6.66 | 1.33% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,082.10 | $ | 5.00 | $ | 1,000 | $ | 1,020.16 | $ | 4.85 | 0.96% | |||||||||||||||
| Ivy Balanced Fund |
| |||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,076.70 | $ | 5.92 | $ | 1,000 | $ | 1,019.27 | $ | 5.75 | 1.13% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,072.60 | $ | 9.64 | $ | 1,000 | $ | 1,015.61 | $ | 9.37 | 1.87% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,072.80 | $ | 9.43 | $ | 1,000 | $ | 1,015.85 | $ | 9.17 | 1.82% | |||||||||||||||
| Class E*** |
$ | 1,000 | $ | 1,077.60 | $ | 5.09 | $ | 1,000 | $ | 1,020.03 | $ | 4.95 | 0.98% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,078.20 | $ | 4.47 | $ | 1,000 | $ | 1,020.59 | $ | 4.34 | 0.87% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,074.90 | $ | 7.57 | $ | 1,000 | $ | 1,017.60 | $ | 7.36 | 1.47% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,076.80 | $ | 5.82 | $ | 1,000 | $ | 1,019.36 | $ | 5.65 | 1.12% | |||||||||||||||
See footnotes on page 6.
| 4 | ANNUAL REPORT | 2014 |
Table of Contents
ILLUSTRATION OF FUND EXPENSES
| Ivy Funds |
(UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Energy Fund |
| |||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,085.50 | $ | 8.34 | $ | 1,000 | $ | 1,016.98 | $ | 8.07 | 1.60% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,081.70 | $ | 12.07 | $ | 1,000 | $ | 1,013.32 | $ | 11.68 | 2.33% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,082.90 | $ | 11.04 | $ | 1,000 | $ | 1,014.28 | $ | 10.68 | 2.14% | |||||||||||||||
| Class E*** |
$ | 1,000 | $ | 1,087.50 | $ | 6.37 | $ | 1,000 | $ | 1,018.80 | $ | 6.16 | 1.23% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,088.10 | $ | 5.85 | $ | 1,000 | $ | 1,019.34 | $ | 5.65 | 1.12% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,084.90 | $ | 8.97 | $ | 1,000 | $ | 1,016.37 | $ | 8.67 | 1.72% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,086.70 | $ | 7.09 | $ | 1,000 | $ | 1,018.09 | $ | 6.86 | 1.37% | |||||||||||||||
| Ivy Global Natural Resources Fund |
| |||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,071.40 | $ | 8.08 | $ | 1,000 | $ | 1,017.13 | $ | 7.87 | 1.57% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,066.50 | $ | 12.30 | $ | 1,000 | $ | 1,013.02 | $ | 11.98 | 2.39% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,067.60 | $ | 11.17 | $ | 1,000 | $ | 1,014.16 | $ | 10.88 | 2.16% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,072.60 | $ | 6.63 | $ | 1,000 | $ | 1,018.55 | $ | 6.46 | 1.27% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,073.90 | $ | 5.60 | $ | 1,000 | $ | 1,019.55 | $ | 5.45 | 1.08% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,070.90 | $ | 8.70 | $ | 1,000 | $ | 1,016.53 | $ | 8.47 | 1.68% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,072.50 | $ | 6.84 | $ | 1,000 | $ | 1,018.32 | $ | 6.66 | 1.33% | |||||||||||||||
| Ivy Global Real Estate Fund |
| |||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,026.90 | $ | 7.60 | $ | 1,000 | $ | 1,017.41 | $ | 7.57 | 1.51% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,020.00 | $ | 13.64 | $ | 1,000 | $ | 1,011.43 | $ | 13.58 | 2.71% | (3) | ||||||||||||||
| Class C |
$ | 1,000 | $ | 1,021.40 | $ | 13.54 | $ | 1,000 | $ | 1,011.52 | $ | 13.48 | 2.69% | (4) | ||||||||||||||
| Class I |
$ | 1,000 | $ | 1,026.40 | $ | 8.81 | $ | 1,000 | $ | 1,016.27 | $ | 8.77 | 1.74% | (5) | ||||||||||||||
| Class R |
$ | 1,000 | $ | 1,024.00 | $ | 11.44 | $ | 1,000 | $ | 1,013.63 | $ | 11.38 | 2.27% | (6) | ||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,027.30 | $ | 7.60 | $ | 1,000 | $ | 1,017.41 | $ | 7.57 | 1.51% | |||||||||||||||
| Ivy Global Risk-Managed Real Estate Fund |
| |||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,038.90 | $ | 7.65 | $ | 1,000 | $ | 1,017.41 | $ | 7.57 | 1.51% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,033.50 | $ | 12.91 | $ | 1,000 | $ | 1,012.27 | $ | 12.78 | 2.54% | (7) | ||||||||||||||
| Class C |
$ | 1,000 | $ | 1,033.60 | $ | 12.91 | $ | 1,000 | $ | 1,012.25 | $ | 12.78 | 2.54% | (8) | ||||||||||||||
| Class I |
$ | 1,000 | $ | 1,037.90 | $ | 8.36 | $ | 1,000 | $ | 1,016.72 | $ | 8.27 | 1.65% | (9) | ||||||||||||||
| Class R |
$ | 1,000 | $ | 1,034.50 | $ | 11.49 | $ | 1,000 | $ | 1,013.66 | $ | 11.38 | 2.26% | (10) | ||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,038.00 | $ | 7.64 | $ | 1,000 | $ | 1,017.43 | $ | 7.57 | 1.50% | |||||||||||||||
| Ivy Real Estate Securities Fund |
| |||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,087.40 | $ | 8.14 | $ | 1,000 | $ | 1,017.13 | $ | 7.87 | 1.56% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,082.40 | $ | 13.43 | $ | 1,000 | $ | 1,012.05 | $ | 12.98 | 2.58% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,083.50 | $ | 11.88 | $ | 1,000 | $ | 1,013.54 | $ | 11.48 | 2.28% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,087.50 | $ | 8.66 | $ | 1,000 | $ | 1,016.59 | $ | 8.37 | 1.67% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,090.30 | $ | 5.33 | $ | 1,000 | $ | 1,019.82 | $ | 5.15 | 1.02% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,087.50 | $ | 8.66 | $ | 1,000 | $ | 1,016.63 | $ | 8.37 | 1.67% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,089.50 | $ | 6.58 | $ | 1,000 | $ | 1,018.62 | $ | 6.36 | 1.27% | |||||||||||||||
See footnotes on page 6.
| 2014 | ANNUAL REPORT | 5 |
Table of Contents
ILLUSTRATION OF FUND EXPENSES
| Ivy Funds |
(UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Science and Technology Fund |
| |||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,137.70 | $ | 6.63 | $ | 1,000 | $ | 1,018.75 | $ | 6.26 | 1.24% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,133.40 | $ | 10.67 | $ | 1,000 | $ | 1,014.89 | $ | 10.07 | 2.01% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,133.80 | $ | 10.46 | $ | 1,000 | $ | 1,015.18 | $ | 9.87 | 1.96% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,136.60 | $ | 7.58 | $ | 1,000 | $ | 1,017.80 | $ | 7.16 | 1.43% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,139.20 | $ | 5.24 | $ | 1,000 | $ | 1,020.05 | $ | 4.95 | 0.98% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,135.80 | $ | 8.44 | $ | 1,000 | $ | 1,017.06 | $ | 7.97 | 1.58% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,137.70 | $ | 6.20 | $ | 1,000 | $ | 1,019.10 | $ | 5.86 | 1.17% | |||||||||||||||
| * | Fund expenses for each share class are equal to the Fund’s annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by 182 days in the six-month period ended March 31, 2014, and divided by 365. |
| ** | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| ***Class | share is closed to investment. |
| (1) | This section uses the Fund’s actual total return and actual Fund expenses. It is a guide to the actual expenses paid by the Fund in the period. The “Ending Account Value” shown is computed using the Fund’s actual return and the “Expenses Paid During Period” column shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. A shareholder may use the information here, together with the dollar amount invested, to estimate the expenses that were paid over the period. For every thousand dollars a shareholder has invested, the expenses are listed in the last column of this section. |
| (2) | This section uses a hypothetical five percent annual return and actual Fund expenses. It helps to compare the Fund’s ongoing costs with other mutual funds. A shareholder can compare the Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
| (3) | Annualized expense ratio based on the period excluding offering cost was 2.40%. |
| (4) | Annualized expense ratio based on the period excluding offering cost was 2.39%. |
| (5) | Annualized expense ratio based on the period excluding offering cost was 1.43%. |
| (6) | Annualized expense ratio based on the period excluding offering cost was 1.99%. |
| (7) | Annualized expense ratio based on the period excluding offering cost was 2.15%. |
| (8) | Annualized expense ratio based on the period excluding offering cost was 2.15%. |
| (9) | Annualized expense ratio based on the period excluding offering cost was 1.27%. |
| (10) | Annualized expense ratio based on the period excluding offering cost was 1.88%. |
| The | above illustrations are based on ongoing costs only and do not include any transactional costs, such as sales loads, or exchange fees. |
| 6 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Asset Strategy Fund |
(UNAUDITED) |
Showing potential for more global growth
The U.S. Federal Reserve (Fed) kept financial markets on their toes during the fiscal year ended March 31, 2014. In anticipation of an improving U.S. economy, the Fed’s decision in May 2013 to “taper” its bond-buying program was the highlight. The remainder of the year brought turmoil in the emerging markets in reaction to the Fed taper, inconclusive economic data and a U.S. government shutdown followed by a budget agreement. Despite these events, the long-term effect on market sentiment appears to have been relatively modest; bond yields initially increased and then settled in a range of 2.6% to 2.9%, while equity markets largely looked past them and moved to record highs.
The Fed later implemented a reduction in its bond purchases, tapering from $85 billion to $75 billion per month in a small step toward reducing economic stimulus while maintaining its accommodative monetary policy stance. The Fed added it would not raise interest rates until after unemployment falls well below 6.5%, but emphasized that level was not a trigger for rate hikes. Then in early 2014, the Fed dropped its link between interest rates and an unemployment rate threshold, saying it instead would consider a range of factors to determine how long to keep rates low. It again reduced the pace of its bond-buying program, taking it to $55 billion per month.
Global economic growth in general remained slow, but the U.S. and more recently Europe began to improve. Moderate gains in consumer spending and business investment along with improvements in productivity and a slowly recovering housing sector all contributed to the U.S. recovery. The labor markets also showed progress, with continued gains in job growth and unemployment declining from 7.5% to 6.5%.
The economic landscape remained mixed elsewhere. Europe’s sovereign debt crisis returned as an issue early in the fiscal year as Greece struggled to address austerity demands and Spain faced difficulties in its banking system. Fears also resurfaced about an economic slowdown in China. In spite of the concerns, recession in the eurozone — which had reported declining gross domestic product (GDP) for six consecutive quarters — ended in the second quarter of the year. In addition, China’s GDP ultimately grew an estimated 7.6% in 2013, but is forecast to be lower in 2014, partly because of ambitious reforms announced in 16 major areas and a target of 2020 for “decisive” results. GDP growth in Japan was better than expected during the year, rising about 1.7% with support from Prime Minister Shinzo Abe’s plan to end deflation and boost economic growth. The effects of the reforms slowed in late 2013 and could generate market concerns if they do not show the intended results of higher inflation and growth.
Geopolitics took center stage in early 2014 after protests in Ukraine led to violence and a change in leadership there. Russia then moved to annex Crimea — home to Russia’s Black Sea naval fleet and key ports — from Ukraine via a referendum vote of the largely Russian population in Crimea. The U.S. and European Union followed with economic sanctions on Russia because of its actions against the Ukrainian territory.
Given the macro environment, investors continue to closely monitor global monetary and fiscal policy actions and their impact on markets. For now, the risks of uncertainty from both have lessened and market prices have reacted accordingly.
Emphasis on equities delivers strong year
The Fund reported strong performance for the fiscal year, although it trailed the return of its all-equities benchmark, the S&P 500 Index. We maintained a dominant allocation to equities as we entered the fiscal year, based on our ongoing belief that they provided more attractive relative value compared with other asset classes, including investment-grade and sovereign fixed income securities. Our view of the market cycle and changing equity market fundamentals then caused us to begin slowly reducing the number of equity holdings in the Fund, although the overall
| 2014 | ANNUAL REPORT | 7 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Asset Strategy Fund |
(UNAUDITED) |
allocation to equities remained elevated through the calendar year. We also began to move from a highly concentrated portfolio of about 45 equity positions to a broader mix of 92 positions by the end of 2013. As we entered 2014, our focus on market fundamentals such as relative stock valuations, equity-risk premiums and correlations prompted us to begin to re-concentrate the portfolio. We reduced the number of equity holdings during the final quarter of the fiscal year and ended with 76 positions. We continued to focus on companies that we view as growing, innovating, improving margins, returning capital through dividend growth or share buybacks, and offering what we consider sustainable high free cash flow.
The Fund’s cash position throughout the fiscal year allowed us to pursue opportunities we believed to be attractive at the company, sector or country level and reflected our willingness to be patient as we assessed opportunities. It also reflected our concerns about investor sentiment and expanding valuation multiples without much improvement in market outlook. For the fiscal year, the cash allocation negatively affected the overall performance of the Fund.
Although we do not target sector weightings, our investment process led to a substantial overweight during the year in consumer discretionary stocks, compared with the benchmark.
This allocation is a by-product of our investments in gaming, primarily in Macau, and media. The Macau-related gaming operators — Galaxy Entertainment Group Limited, Sands China Ltd. and Wynn Resorts, Limited — were the largest contributors to the Fund’s performance for the year. The Fund also continued its focus on businesses benefitting from consumption by the expanding middle-class populations across the emerging markets, especially in the Asia-Pacific region.
The Fund maintained a position in gold throughout the fiscal year of approximately 6% to 8%, although a good portion of that allocation was hedged at times using short gold futures. The price of gold fell by about 30% during the fiscal year and our hedging activities were not able to fully manage that decline. Our allocation to gold was the largest detractor from overall performance for the year. However, we continue to invest in gold as a hedge against aggressive monetary policy. We think such policy is likely to continue around the world in the wake of low inflation and modest global growth prospects.
For most of the year, we used derivatives to increase the equity exposure of the Fund. Equity derivatives usage was a contributor to performance for the fiscal year as a whole. The use of equity derivatives remained a small portion of the overall portfolio at the end of the period.
Improving economies, global outlook
We will remain alert to market developments and their impact as the year progresses. In the face of ongoing monetary stimulus, global stock markets also have continued to re-price risk. We think that is evident in rising valuations, decreasing correlations, decreasing volatility and other metrics. While equities may be a less compelling investment choice than earlier in the cycle, we continue to prefer them in relative value terms. We will keep the Fund positioned to seek to take advantage of potential opportunities in equities and fixed income that are appropriately priced for their level of risk.
We expect slow but better growth and low inflation in the U.S. in 2014 with continued aggressive monetary policy, given ongoing softness in the labor market and the outlook for inflation. We believe a growing labor force, support for productivity through new technology and growing access to low-cost energy are supportive factors for U.S. GDP.
As we analyze where growth will come from in the mid to long term, we have maintained our theme related to the growth in domestic consumption in emerging markets. We believe there still are opportunities to participate in the rising prosperity of these populations, especially across Asia.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The Fund may allocate from 0 to 100% of its assets between stocks, bonds and short-term instruments of issuers around the globe, as well as investments in precious metals and investments with exposure to various foreign securities.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. The value of the Fund’s investments, as measured in U.S. dollars, may be unfavorably affected by changes in foreign currency exchange rates and exchange control regulations. These and other risks are more fully described in the Fund’s prospectus.
Fixed-income securities are subject to interest-rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds.
The Fund may focus its investments in certain regions or industries, thereby increasing its potential vulnerability to market volatility.
| 8 | ANNUAL REPORT | 2014 |
Table of Contents
The Fund may seek to hedge market risk on various securities, manage exposure to various foreign currencies, precious metals and various markets, and seek to hedge certain event risks on positions held by the Fund. Such hedging involves additional risks, as the fluctuations in the values of the derivatives may not correlate perfectly with the overall securities markets or with the underlying asset from which the derivative’s value is derived.
Investing in commodities is generally considered speculative because of the significant potential for investment loss due to cyclical economic conditions, sudden political events, and adverse international monetary policies. Markets for commodities are likely to be volatile and the Fund may pay more to store and accurately value its commodity holdings than it does with the Fund’s other holdings.
The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The indexes noted are unmanaged, include reinvested dividends and do not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Asset Strategy Fund’s performance.
| 2014 | ANNUAL REPORT | 9 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Asset Strategy Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | ||
| Galaxy Entertainment Group |
Hong Kong |
Consumer Discretionary | ||
| Sands China Ltd. |
China |
Consumer Discretionary | ||
| Wynn Resorts Ltd. |
United States |
Consumer Discretionary | ||
| AIA Group Ltd. |
Hong Kong |
Financials | ||
| Delta Topco Ltd. |
United Kingdom |
Consumer Discretionary | ||
| Media Group Holdings LLC |
United States |
Consumer Discretionary | ||
| CBS Corp., Class B |
United States |
Consumer Discretionary | ||
| Nielsen Holdings N.V. |
United States |
Industrials | ||
| Sony Corp. |
Japan |
Consumer Discretionary | ||
| Mizuho Financial Group, Inc. |
Japan |
Financials |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 10 | ANNUAL REPORT | 2014 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Asset Strategy Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
10.71% | 12.58% | 16.59% | 10.66% | 17.72% | 17.03% | 17.47% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
10.86% | 11.16% | 11.35% | 10.84% | 12.43% | 11.80% | 12.19% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
11.27% | 11.01% | 11.09% | — | — | — | 11.94% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 8.21% | 9.52% | 5.93% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 7-31-08 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 11 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
| 12 | ANNUAL REPORT | 2014 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 13 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
| 14 | ANNUAL REPORT | 2014 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 15 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
| 16 | ANNUAL REPORT | 2014 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
Notes to Consolidated Schedule of Investments
| * | Not shown due to rounding. |
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | All or a portion of the security position is held in collateralized accounts for OTC derivatives collateral as governed by International Swaps and Derivatives Association, Inc. Master Agreements. |
| (C) | Listed on an exchange outside the United States. |
| (D) | Deemed to be an affiliate due to the Fund owning at least 5% of the voting securities. |
| (E) | Restricted securities. At March 31, 2014, the Fund owned the following restricted securities: |
| Security | Acquisition Date(s) | Shares | Cost | Market Value | ||||||||||
| Delta Topco Ltd. |
1–23–12 to 5–1–12 |
718,555 | $ | 486,355 | $ | 833,351 | ||||||||
| Legend Pictures LLC |
12–18–12 | 190 | 352,761 | 373,844 | ||||||||||
| Media Group Holdings LLC |
4–23–13 | 381 | 818,617 | 818,617 | ||||||||||
| Principal | ||||||||||||||
| Delta Topco Ltd., 10.000%, 11–24–60 |
1–23–12 to 6–18–12 |
$602,589 | 608,797 | 602,589 | ||||||||||
|
|
|
|||||||||||||
| $ | 2,266,530 | $ | 2,628,401 | |||||||||||
|
|
|
|||||||||||||
The total value of these securities represented 7.4% of net assets at March 31, 2014.
| 2014 | ANNUAL REPORT | 17 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
| (F) | Principal amount and exercise prices are denominated in the indicated foreign currency, where applicable (CHF - Swiss Franc, EUR - Euro, GBP - British Pound and JPY - Japanese Yen). |
| (G) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $135,486 or 0.4% of net assets. |
| (H) | Payment-in-kind bonds. |
| (I) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. |
| (J) | Interest-only security. Amount shown as principal represents notional amount for computation of interest. |
| (K) | Rate shown is the yield to maturity at March 31, 2014. |
| (L) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
| (M) | Investment is owned by an entity that is treated as a corporation for U.S. tax purposes and is owned by the Fund. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
Japanese Yen | State Street Global Markets | 2,714,584 | 4-28-14 | $ | 270 | $ | — | ||||||||||||
| Sell |
Japanese Yen | Goldman Sachs International | 26,935,967 | 4-28-14 | 1,809 | — | ||||||||||||||
| Sell |
Japanese Yen | UBS AG | 25,648,121 | 4-28-14 | 2,473 | — | ||||||||||||||
| Sell |
Japanese Yen | Citibank N.A. | 41,204,494 | 4-28-14 | 4,342 | — | ||||||||||||||
| Sell |
Japanese Yen | Morgan Stanley International | 73,426,234 | 4-28-14 | 5,113 | — | ||||||||||||||
| Sell |
Japanese Yen | Barclays Capital, Inc. | 118,805,123 | 4-28-14 | 10,762 | — | ||||||||||||||
| Sell |
Japanese Yen | Deutsche Bank AG | 161,536,861 | 4-28-14 | 11,463 | — | ||||||||||||||
|
|
|
|||||||||||||||||||
| $ | 36,232 | $ | — | |||||||||||||||||
|
|
|
|||||||||||||||||||
The following written options were outstanding at March 31, 2014 (contracts and exercise prices unrounded):
| Underlying Security | Counterparty, if OTC | Type | Number of Contracts |
Expiration Month |
Exercise Price | Premium Received |
Value | |||||||||||||||||
| Adobe Systems, Inc. |
Citibank N.A. |
Put | 5,412 | July 2014 | $ | 60.00 | $ | 809 | $ | (850 | ) | |||||||||||||
| Citibank N.A. |
Call | 5,412 | July 2014 | 80.00 | 622 | (198 | ) | |||||||||||||||||
| Alliance Data Systems Corp. |
Societe Generale Bank |
Put | 1,275 | June 2014 | 240.00 | 504 | (580 | ) | ||||||||||||||||
| Societe Generale Bank |
Call | 1,275 | June 2014 | 330.00 | 128 | (163 | ) | |||||||||||||||||
| Amazon.com, Inc. |
Bank of America N.A. |
Put | 2,467 | May 2014 | 330.00 | 2,344 | (3,441 | ) | ||||||||||||||||
| Bank of America N.A. |
Call | 2,467 | May 2014 | 420.00 | 950 | (231 | ) | |||||||||||||||||
| Apple, Inc. |
UBS AG |
Call | 1,358 | April 2014 | 570.00 | 499 | (77 | ) | ||||||||||||||||
| Goldman Sachs International |
Call | 240 | April 2014 | 605.00 | 74 | (3 | ) | |||||||||||||||||
| Bayerische Motoren Werke AG |
Bank of America N.A. |
Call | 5,970 | June 2014 | EUR | 96.00 | 891 | (1,283 | ) | |||||||||||||||
| BNP Paribas |
Bank of America N.A. |
Put | 11,148 | December 2014 | 48.00 | 3,339 | (3,118 | ) | ||||||||||||||||
| Bank of America N.A. |
Call | 11,148 | December 2014 | 72.00 | 1,483 | (753 | ) | |||||||||||||||||
| Boeing Co. (The) |
Morgan Stanley & Co., Inc. |
Put | 2,784 | May 2014 | $ | 115.00 | 467 | (312 | ) | |||||||||||||||
| Morgan Stanley & Co., Inc. |
Put | 2,784 | May 2014 | 120.00 | 763 | (596 | ) | |||||||||||||||||
| Morgan Stanley & Co., Inc. |
Call | 5,568 | May 2014 | 140.00 | 612 | (156 | ) | |||||||||||||||||
| ConocoPhillips |
JPMorgan Chase Bank N.A. |
Put | 6,762 | May 2014 | 62.50 | 622 | (101 | ) | ||||||||||||||||
| DIRECTV |
Societe Generale Bank |
Put | 3,325 | June 2014 | 67.50 | 515 | (382 | ) | ||||||||||||||||
| Societe Generale Bank |
Call | 3,325 | June 2014 | 90.00 | 323 | (306 | ) | |||||||||||||||||
| Dow Chemical Co. (The) |
Citibank N.A. |
Put | 11,934 | June 2014 | 44.00 | 1,214 | (794 | ) | ||||||||||||||||
| Citibank N.A. |
Call | 11,934 | June 2014 | 55.00 | 521 | (328 | ) | |||||||||||||||||
| FTSE 100 Index |
Barclays Bank plc |
Put | 4,767 | June 2014 | GBP | 5,900.00 | 8,356 | (2,050 | ) | |||||||||||||||
| Gilead Sciences, Inc. |
Barclays Bank plc |
Put | 10,740 | May 2014 | $ | 75.00 | 2,233 | (6,578 | ) | |||||||||||||||
| Barclays Bank plc |
Call | 10,740 | May 2014 | 100.00 | 839 | (32 | ) | |||||||||||||||||
| Google, Inc., Class A |
UBS AG |
Put | 796 | June 2014 | 1,000.00 | 1,193 | (1,182 | ) | ||||||||||||||||
| UBS AG |
Call | 796 | June 2014 | 1,300.00 | 777 | (617 | ) | |||||||||||||||||
| Hewlett-Packard Co. |
JPMorgan Chase Bank N.A. |
Put | 19,914 | June 2014 | 28.00 | 916 | (946 | ) | ||||||||||||||||
| JPMorgan Chase Bank N.A. |
Call | 19,914 | June 2014 | 38.00 | 578 | (528 | ) | |||||||||||||||||
| Nikkei 225 Index |
UBS AG |
Put | 795 | April 2014 | JPY | 14,000.00 | 2,196 | (308 | ) | |||||||||||||||
| UBS AG |
Put | 398 | April 2014 | 14,500.00 | 1,811 | (521 | ) | |||||||||||||||||
| UBS AG |
Call | 795 | April 2014 | 16,250.00 | 1,465 | (31 | ) | |||||||||||||||||
| UBS AG |
Call | 2,384 | April 2014 | 16,500.00 | 1,376 | (69 | ) | |||||||||||||||||
| Bank of America N.A. |
Call | 2,389 | April 2014 | 16,500.00 | 1,642 | (69 | ) | |||||||||||||||||
| UBS AG |
Put | 4,768 | June 2014 | 13,500.00 | 13,170 | (8,315 | ) | |||||||||||||||||
| 18 | ANNUAL REPORT | 2014 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
| Underlying Security | Counterparty, if OTC | Type | Number of Contracts |
Expiration Month |
Exercise Price | Premium Received |
Value | |||||||||||||||||
| Oracle Corp. |
Bank of America N.A. |
Call | 23,874 | May 2014 | $ | 44.00 | $ | 286 | $ | (477 | ) | |||||||||||||
| QUALCOMM, Inc. |
Citibank N.A. |
Put | 11,152 | June 2014 | 75.00 | 1,523 | (1,539 | ) | ||||||||||||||||
| Roche Holdings AG, Genusscheine |
Bank of America N.A. |
Put | 1,378 | December 2014 | CHF | 230.00 | 845 | (671 | ) | |||||||||||||||
| S&P 500 Index |
N/A |
Put | 7,962 | April 2014 | $ | 1,775.00 | 2,452 | (279 | ) | |||||||||||||||
| Texas Instruments, Inc. |
Deutsche Bank AG |
Put | 8,276 | July 2014 | 38.00 | 248 | (157 | ) | ||||||||||||||||
| Visa, Inc., Class A |
Barclays Bank plc |
Put | 3,982 | May 2014 | 200.00 | 796 | (771 | ) | ||||||||||||||||
| Barclays Bank plc |
Call | 3,982 | May 2014 | 235.00 | 398 | (422 | ) | |||||||||||||||||
| Wells Fargo & Co. |
Morgan Stanley & Co., Inc. |
Put | 17,922 | June 2014 | 44.00 | 466 | (403 | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| $ | 60,246 | $ | (39,637 | ) | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 9,615,612 | $ | — | $ | 2,025,812 | ||||||
| Consumer Staples |
476,893 | — | — | |||||||||
| Energy |
1,414,907 | — | — | |||||||||
| Financials |
7,003,296 | — | — | |||||||||
| Health Care |
1,448,300 | — | — | |||||||||
| Industrials |
1,343,812 | — | — | |||||||||
| Information Technology |
3,227,767 | — | — | |||||||||
| Materials |
447,460 | — | — | |||||||||
| Telecommunication Services |
319,681 | — | — | |||||||||
| Total Common Stocks |
$ | 25,297,728 | $ | — | $ | 2,025,812 | ||||||
| Purchased Options |
727 | 64,782 | — | |||||||||
| Corporate Debt Securities |
— | 135,486 | 954,289 | |||||||||
| Loans |
— | — | 194,757 | |||||||||
| United States Government Agency Obligations |
— | 2,300 | — | |||||||||
| Bullion |
2,345,035 | — | — | |||||||||
| Short-Term Securities |
— | 4,483,993 | — | |||||||||
| Total |
$ | 27,643,490 | $ | 4,686,561 | $ | 3,174,858 | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 36,232 | $ | — | ||||||
| Liabilities |
||||||||||||
| Written Options |
$ | 279 | $ | 39,358 | $ | — | ||||||
The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Common Stocks | Corporate Debt Securities |
Loans | Short-Term Securities |
|||||||||||||
| Beginning Balance 4-1-13 |
$ | 958,998 | $ | 945,808 | $ | 199,929 | $ | 5,846 | ||||||||
| Net realized gain (loss) |
— | — | — | — | ||||||||||||
| Net change in unrealized appreciation (depreciation) |
247,672 | — | * | (3,374 | ) | — | ||||||||||
| Purchases |
819,142 | 59,410 | — | — | ||||||||||||
| Sales |
— | (50,929 | ) | (2,086 | ) | — | ||||||||||
| Amortization/Accretion of premium/discount |
— | — | 288 | — | ||||||||||||
| Transfers into Level 3 during the period |
— | — | — | — | ||||||||||||
| Transfers out of Level 3 during the period |
— | — | — | (5,846 | ) | |||||||||||
| Ending Balance 3-31-14 |
$ | 2,025,812 | $ | 954,289 | $ | 194,757 | $ | — | ||||||||
| Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 3-31-14 |
$ | 247,672 | $ | — | * | $ | (3,374 | ) | $ | — | ||||||
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period. There were no transfers between Levels 1 and 2 during the period ended March 31, 2014.
| 2014 | ANNUAL REPORT | 19 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Asset Strategy Fund (in thousands) |
MARCH 31, 2014 |
Information about Level 3 fair value measurements:
| Fair Value at 3-31-14 |
Valuation Technique(s) | Unobservable Input(s) | Input Value(s) | |||||||||||||
| Assets |
||||||||||||||||
| Common Stocks |
$ | 1,207,195 | Discounted cash flows model | Long-term growth rate | 2.5% | |||||||||||
| Weighted average cost of capital | 8.5 to 9.5% | |||||||||||||||
| Illiquidity discount | 7.5 to 10% | |||||||||||||||
| 818,617 | Purchase price | Purchase price | $ | 2,147.47 | ||||||||||||
| Corporate Debt Securities |
351,700 | Purchase price | Purchase price | 100 | ||||||||||||
| 602,589 | Discounted cash flows model | Long-term growth rate | 2.5% | |||||||||||||
| Weighted average cost of capital | 8.5% | |||||||||||||||
| Illiquidity discount | 7.5% | |||||||||||||||
| Loans |
194,757 | Third-party valuation service | Broker quotes | 100 to 104.125 | ||||||||||||
Significant increase in price-earnings ratio or long-term growth rate inputs could result in a higher fair value measurement. However, significant increase in weighted average cost of capital of illiquidity discount inputs could result in a lower fair value measurement.
The following acronyms are used throughout this schedule:
CMO = Collateralized Mortgage Obligation
GTD = Guaranteed
OTC = Over the Counter
REMIC = Real Estate Mortgage Investment Conduit
| + | Includes gold bullion, options, cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 20 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Balanced Fund |
(UNAUDITED) |
Key drivers
Underperformance of the Fund was due to the Fund’s fixed-income allocation. The Fund ordinarily invests at least 25% of its assets in fixed-income securities. During the period, equities generally outperformed fixed-income securities and, as a result, the bond portfolio acted as a drag on the performance relative to the all-equities benchmark. The Fund’s equities portion of the portfolio performed better than the S&P 500 benchmark during the fiscal year.
The Fund’s relative outperformance to the Lipper Mixed-Asset Target Allocation Growth Funds Universe Average was influenced by a number of factors. First, asset allocation played a key role in overall performance. Our decision to overweight equities for the year drove strong relative performance as equities significantly outperformed bonds for the year. This decision to target the Fund’s maximum allocation in equities was based primarily on the absolute low level of interest rates, where, in our opinion, equities offered a more compelling long-term return potential than bonds.
Other key drivers of outperformance compared to the Lipper average were the Fund’s security selection and sector emphasis within the equities portion of the portfolio. The main drivers in sector emphasis came from our decision to overweight industrials and consumer discretionary. While every industry sector posted positive returns for the year, industrials and consumer discretionary represented two of the top three categories. Utilities and telecommunications were the two laggards for the period, where the Fund had no exposure for the majority of the year. From a stock selection standpoint, the Fund had strong security selection within its consumer discretionary and industrials holdings. The majority of adverse stock selection came from our health care and technology selections. While the health care holdings posted positive returns, they significantly lagged a very strong move in major pharmaceuticals, where we had limited exposure. In addition to strong relative equity performance, the Fund’s fixed-income returns were slightly positive, better than the negative return by the Barclays U.S. Government/Credit Index benchmark.
From a macro perspective, we witnessed a wide range of events that drove volatility throughout the year. While the first quarter S&P 500 return was impressive, consumer staples and utilities were the sectors that posted strongest performance. While these areas are generally considered to be defensive in nature, we saw this move as a symptom of a broader trend in investors’ quest for yield outside of what was generally available in the credit markets. This quest drove more companies to return excess capital in the form of dividends and buybacks, highlighted by a surge in dividend increases for the year.
The fixed-income portion of the Fund generated a positive return for the year in an environment where most high quality fixed-income benchmarks including the Barclays U.S. Government/Credit Index experienced negative returns. The fixed-income portfolio has long been short duration to its benchmark given the absolute low level of interest rates. It has also developed a substantial overweight in credit given the relatively good health of corporate balance sheets and abundant liquidity available within the financial system. Both the short duration and overweight in credit were strong drivers of outperformance. Credit outperformance also benefited from a significant position in financials, mainly banks and a heavier weighting to the BBB credit rating bucket. Given the uncertainty surrounding the pace of the Federal Reserve’s exit program and its effects on longer-term interest rates, we prefer not to make substantial bets on the future levels of interest rates. Instead we are pursuing strategies that focus on generating outperformance from the steepness exhibited in the intermediate part of the yield curve and credit markets.
Contributors and detractors
Top contributors to overall performance were names that fell into either consumer discretionary or industrials. Within consumer discretionary, mass media company CBS Corporation demonstrated strong performance for the year. While the Fund has held this stock for a number of years, the secular trend for retransmission revenues continued to be a key metric for stock performance. The thesis is that broadcast networks have a roughly 40% share of spend on programming and viewership, but only receive 4% of the consumer bill or 10% of the total spend by MVPDs (multichannel video programming distributors), such as cable TV systems and direct-broadcast satellite providers. It is estimated that retransmission payments to
| 2014 | ANNUAL REPORT | 21 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Balanced Fund |
(UNAUDITED) |
CBS will go from $300 million to $1 billion by 2016, with potential to go higher over the next five years. In addition, it is our view that the company has done a spectacular job managing its balance sheet and assets, returning more than $2 billion through dividends and share repurchase.
The top absolute performer for the year was Dow Chemical Company (The). The Fund’s acquisition of the stock was based on analysis that Dow was not being adequately valued due to its higher quality mix of assets since its Rohm & Haas acquisition and the competitive position of its commodity assets based on lower feed stock costs of U.S. natural gas. Looking ahead, the company has stated its commitment to continue its progression toward a more fully integrated value-added business, further supporting the case for a higher valuation.
Detractors from performance were found in technology and health care. A notable underperformer was the drug manufacturer, Allergan, Inc. On July 21, 2013, the U.S. Food and Drug Administration issued surprising draft guidance regarding the generic path for Restasis (dry eye drug), a key Allergan compound. In our opinion, that news combined with multiple pipeline delays on new compounds, marked a notable change in the risk profile for Allergan. We exited the position during the year.
Outlook
As we look forward, we believe profit growth will ultimately be the driver of market performance. Stock prices have been remarkably resilient in the face of innumerable macro events since 2009, primarily as a result of a more than doubling in corporate profits. This outstanding profits recovery has occurred in a modest growth environment as corporations have become lean and mean. A return of confidence will be needed for housing to sustain its recovery and capital expenditures to resume. Otherwise, stock performance may have borrowed from the future as we move through 2014. In addition, there was much discussion about this year’s never-ending winter and how markets will interpret weakness in the headline numbers. While it is difficult to predict, we expect a bounce back in the second quarter, with a lot of noise in the numbers. While there is never any shortage of things for investors to worry about these days — and the latest quarter was no exception — we will continue to focus on the long-term potential of investments we make in the Fund’s portfolio.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Fixed-income securities are subject to interest rate risk and, as such, the Fund’s net asset value may fall as interest rates rise. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The indexes noted are unmanaged, include reinvested dividends and do not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Balanced Fund’s performance.
| 22 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Balanced Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
|
|
Top 10 Equity Holdings
| Company | Sector | |||
| PNC Financial Services Group, Inc. (The) |
Financials |
|||
| JPMorgan Chase & Co. |
Financials |
|||
| Limited Brands, Inc. |
Consumer Discretionary |
|||
| Brown-Forman Corp., Class B |
Consumer Staples |
|||
| Applied Materials, Inc. |
Information Technology |
|||
| Anheuser-Busch InBev S.A. ADR |
Consumer Staples |
|||
| Cognizant Technology Solutions Corp., Class A |
Information Technology |
|||
| Estee Lauder Co., Inc. (The), Class A |
Consumer Staples |
|||
| PPG Industries, Inc. |
Materials |
|||
| American Express Co. |
Financials |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 23 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Balanced Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E(4) | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
9.22% | 11.01% | 15.11% | 9.43% | 16.21% | 15.51% | 15.91% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
13.87% | 14.20% | 14.48% | 14.18% | 15.60% | — | 15.28% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
7.30% | 7.00% | 7.16% | — | — | — | 8.05% | |||||||||||||||||||||
| Since inception of Class |
— | — | — | 7.38% | 8.37% | 18.09% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class E shares are not currently available for investment. |
| (5) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
The Advantus Spectrum Fund merged into the Ivy Balanced Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Spectrum Fund Class A shares, restated to reflect current sales charges applicable to Ivy Balanced Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Balanced Fund. If these expenses were reflected, performance shown would differ.
| 24 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Balanced Fund (in thousands) MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 25 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Balanced Fund (in thousands) MARCH 31, 2014 |
| 26 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Balanced Fund (in thousands) MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 27 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Balanced Fund (in thousands) MARCH 31, 2014 |
| 28 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Balanced Fund (in thousands) MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $91,791 or 5.0% of net assets. |
| (C) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. |
| (D) | Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy. |
| (E) | Rate shown is the yield to maturity at March 31, 2014. |
| (F) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
| 2014 | ANNUAL REPORT | 29 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Balanced Fund (in thousands) MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 1,285,551 | $ | — | $ | — | ||||||
| Corporate Debt Securities |
— | 402,814 | — | |||||||||
| Other Government Securities |
— | 1,556 | — | |||||||||
| United States Government Agency Obligations |
— | 922 | — | |||||||||
| United States Government Obligations |
— | 44,160 | — | |||||||||
| Short-Term Securities |
— | 78,904 | — | |||||||||
| Total |
$ | 1,285,551 | $ | 528,356 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
CMO = Collateralized Mortgage Obligation
GTD = Guaranteed
REMIC = Real Estate Mortgage Investment Conduit
See Accompanying Notes to Financial Statements.
| 30 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Energy Fund |
(UNAUDITED) |
Economic gains help settle markets
Equity markets were volatile during the fiscal year ended March 31, 2014, but moved steadily higher overall. Broad equity market indexes in the U.S. reached record highs by year-end. The energy sector enjoyed strong returns driven mostly by rising oil prices. Economic growth remained slow across the globe. Growth in the U.S. economy was largely based on consumer spending and the energy, industrials and, to a lesser degree, housing sectors, driven by accommodative monetary policy. There also was some improvement in the employment rate. Markets reacted negatively when the Federal Reserve (Fed) announced plans to begin “tapering” its bond-buying program, based on anticipated steady improvement in the U.S. economy. However, the markets quickly stabilized after the Fed indicated the end of the program was not imminent. The Fed later announced it would reduce its monthly purchases, taking a small step toward reducing economic stimulus. A federal budget agreement at the end of 2013 between U.S. House and Senate negotiators also helped reduce market uncertainty. The continued turmoil during the fiscal year across the Middle East — including continued fighting in Syria and unrest in Egypt, Iran and Iraq — also unsettled global markets. But the improving economy in the U.S., including growth in shale oil production that helped hold down costs for business and consumers, provided some market support. Geopolitics again took center stage in early 2014 after protests in Ukraine led to violence and a change in leadership there. Russia then moved to annex Crimea — home to Russia’s Black Sea naval fleet and key ports — from Ukraine via a referendum vote of the largely Russian population in Crimea. The U.S. and European Union followed with economic sanctions on Russia because of its actions against the Ukrainian territory. Despite the conflict and response, there was no major effect on energy markets by the end of the fiscal year. Russia is the world’s no. 2 energy producer and exports about 9 billion cubic feet (BCF) of gas to Europe, of which about 2.8 BCF goes through pipelines via Ukraine. Russia and Ukraine also are major coal producers. Worldwide oil production in general increased during the year against this backdrop of macro issues.
Strong performance as equities gain
The Fund delivered a strong return during the year, outperforming its benchmark index and finishing above its peer group average. Strong security selection within the energy sector — the dominant sector weighting in the Fund — was the greatest factor in driving relative performance. Key contributors included Core Laboratories NV; Halliburton Company; EOG Resources, Inc.; Continental Resources, Inc.; and Schlumberger NV.
A modest weighting in the industrials sector also contributed to relative performance, while small weightings to the materials and financials sectors were slight detractors for the year.
At the end of the fiscal year, energy sector holdings focused primarily on three industries: equipment & services, exploration & production and storage & transportation. We slightly reduced holdings in exploration & production companies during the fiscal year and increased those in the refining & marketing industry. In general, this increased the Fund’s exposure to companies we thought would be capable of “harvesting” from past capital expenditures and decreased the holdings in those that may face new costs for investment and exploration if the global economy continues to improve.
Outlook for continued supply and demand growth
We believe growth will continue in U.S. oil and gas production, especially through the expansion of the shale fields. We thus continue to see opportunities in oil and gas producers with exposure to the shale basins, services companies with North American exposure and U.S. refiners because of their cost advantage over world competitors. We still think this may provide ongoing opportunities in exploration, drilling, production, services and other companies.
In our view, the low feedstock costs from increasing supply also will benefit U.S. chemical and fertilizer companies and energy-intensive companies such as steel and refining. We think the supply/demand factors for natural gas and current inventories indicate prices are likely to remain in the current range for the near term.
| 2014 | ANNUAL REPORT | 31 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Energy Fund |
(UNAUDITED) |
We think a global economic upturn is likely in 2014, although the overall growth rate will remain sluggish. We think developed countries will show the largest improvement, which in turn is likely to help support growth rates in emerging markets. Those markets have shown the fastest and most consistent growth in energy demand for several years.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investments.
Investing in companies involved in one specific sector may be riskier and more volatile than investing with greater sector diversification. Investing in the energy sector 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 energy companies in complying with environmental safety regulations. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of Ivy Energy Fund’s performance.
| 32 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Energy Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | Industry | ||
| Schlumberger Ltd. |
Energy |
Oil & Gas Equipment & Services | ||
| Halliburton Co. |
Energy |
Oil & Gas Equipment & Services | ||
| Core Laboratories N.V. |
Energy |
Oil & Gas Equipment & Services | ||
| Baker Hughes, Inc. |
Energy |
Oil & Gas Equipment & Services | ||
| EOG Resources, Inc. |
Energy |
Oil & Gas Exploration & Production | ||
| Southwestern Energy Co. |
Energy |
Oil & Gas Exploration & Production | ||
| Fluor Corp. |
Industrials |
Construction & Engineering | ||
| Cabot Oil & Gas Corp. |
Energy |
Oil & Gas Exploration & Production | ||
| Cimarex Energy Co. |
Energy |
Oil & Gas Exploration & Production | ||
| Occidental Petroleum Corp. |
Energy |
Integrated Oil & Gas |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 33 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Energy Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E(4) | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
12.27% | 14.26% | 18.43% | 12.65% | 19.74% | 19.00% | 19.41% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
16.27% | 16.50% | 16.84% | 16.59% | 18.08% | — | 17.79% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Since inception of Class |
5.60% | 5.51% | 5.68% | 6.00% | 7.02% | 25.23% | 6.55% | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class E shares are not currently available for investment. |
| (5) | 4-3-06 for Class A, Class B, Class C, and Class Y shares, 4-2-07 for Class E and Class I shares, and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 34 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Energy Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Listed on an exchange outside the United States. |
| (C) | Rate shown is the yield to maturity at March 31, 2014. |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
| 2014 | ANNUAL REPORT | 35 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Energy Fund (in thousands) |
MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 191,880 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 7,553 | — | |||||||||
| Total |
$ | 191,880 | $ | 7,553 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronym is used throughout this schedule:
ADR = American Depositary Receipts
See Accompanying Notes to Financial Statements.
| 36 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Global Natural Resources Fund |
(UNAUDITED) |
Economic gains help settle markets
Equity markets were volatile during the fiscal year ended March 31, 2014, but moved steadily higher overall. Broad equity market indexes in the U.S. reached record highs by year-end. Economic growth remained slow across the globe. Growth in the U.S. economy was largely based on consumer spending and the energy, industrials and, to a lesser degree, housing sectors, driven by accommodative monetary policy. There also was some improvement in the employment rate. Markets reacted negatively when the Federal Reserve (Fed) announced plans to begin “tapering” its bond-buying program, based on anticipated steady improvement in the U.S. economy. However, the markets quickly stabilized after the Fed indicated the end of the program was not imminent. The Fed later announced it would reduce its monthly purchases, taking a small step toward reducing economic stimulus. Then in early 2014, the Fed completely dropped its link between interest rates and an unemployment rate threshold, saying it instead would consider a range of factors to determine how long to keep rates low. It again reduced the pace of its bond-buying program, taking it to $55 billion per month. The continued turmoil across the Middle East — including continued fighting in Syria and unrest in Egypt, Iran and Iraq — also unsettled global markets during the fiscal year. The improving economy in the U.S., including growth in energy production that helped hold down costs for business and consumers, provided some market support.
Geopolitics took center stage in early 2014 after protests in Ukraine led to violence and a change in leadership there. Russia then moved to annex Crimea — home to Russia’s Black Sea naval fleet and key ports — from Ukraine via a referendum vote of the largely Russian population in Crimea. The U.S. and European Union followed with economic sanctions on Russia because of its actions against the Ukrainian territory. Despite the conflict and response, there was no major effect on commodities prices by the end of the fiscal year.
Energy, materials sectors in focus
The Fund finished the fiscal year behind its commodity-related benchmark index and blended benchmark index, and well below its peer group average. We steadily increased the Fund’s dominant weighting in the energy sector during the year because we still think there are long-term opportunities, especially in oil and gas producers with exposure to shale basins. Security selection in that sector was the greatest contributor to performance during the year. Examples include Halliburton Company, Schlumberger Limited, Pioneer Natural Resources Co., EOG Resources Inc. and Continental Resources Inc. The underperformance relative to both the commodity-related index and the blended benchmark index was driven primarily by security selection in the materials sector, which was the Fund’s second-largest weighting. Examples of such securities include Detour Gold Corp., China Metal Recycling (Holdings) Limited and First Quantum Minerals. (Detour Gold Corp. and First Quantum Minerals no longer are held in the Fund.)
The oil industry remains a major focus for the Fund, especially through companies involved in the equipment & services, construction & engineering, drilling and transportation industries. We slightly reduced holdings in exploration & production companies late in 2013, seeking to increase exposure to companies that we think will be “harvesting” from past capital expenditures rather than those facing new costs for investment and exploration. The increase in shale oil production from key basins in North America also remains an important focus for energy holdings.
We used equity options and equity futures to modify the Fund’s equity exposure at various times during the year. The timing of the derivative usage led to those positions being a detractor from performance for the fiscal year as a whole.
| 2014 | ANNUAL REPORT | 37 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Global Natural Resources Fund |
(UNAUDITED) |
Outlook for better global growth
We believe a global economic upturn is likely in 2014, although we think the overall growth rate is likely to remain sluggish. We think developed countries will show the largest improvement, which in turn may help support growth rates in emerging markets.
We still believe there are relatively better prospects for energy ahead and continue to overweight the Fund toward that sector. We think growth will continue in U.S. oil and gas production through shale fields, which we believe may provide opportunities for the Fund.
Commodities prices in general remain weak globally as supplies broadly have increased without a significant increase in demand. We think this will continue until there is stronger global economic growth. We think major commodities companies will continue to focus on managing costs and capital expenditures. We also believe low feedstock costs, based on increased energy supplies, will continue to provide benefits to U.S. chemical and fertilizer companies, and other energy-intensive businesses.
We continue to use our top-down, fundamental research process in seeking companies that may benefit from any improvement in economic activity and the growth in demand that may result.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets.
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. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The indexes noted are unmanaged, include reinvested dividends and do not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Global Natural Resources Fund’s performance.
| 38 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Global Natural Resources Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Halliburton Co. |
United States |
Energy |
Oil & Gas Equipment & Services | |||
| Schlumberger Ltd. |
United States |
Energy |
Oil & Gas Equipment & Services | |||
| Dow Chemical Co. (The) |
United States |
Materials |
Diversified Chemicals | |||
| Baker Hughes, Inc. |
United States |
Energy |
Oil & Gas Equipment & Services | |||
| Rio Tinto plc |
United Kingdom |
Materials |
Diversified Metals & Mining | |||
| Suncor Energy, Inc. |
Canada |
Energy |
Integrated Oil & Gas | |||
| Weatherford International Ltd. |
Switzerland |
Energy |
Oil & Gas Equipment & Services | |||
| BHP Billiton plc |
United Kingdom |
Materials |
Diversified Metals & Mining | |||
| EOG Resources, Inc. |
United States |
Energy |
Oil & Gas Exploration & Production | |||
| Noble Energy, Inc. |
United States |
Energy |
Oil & Gas Exploration & Production |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 39 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Global Natural Resources Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| (2) | Blended index is represented by 55% of the MSCI AC World IMI Energy Index and 45% of the MSCI AC World IMI Materials Index. |
| Average Annual Total Return(3) | Class A | Class B(4) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
0.74% | 1.98% | 6.21% | 1.04% | 7.39% | 6.79% | 7.07% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
10.19% | 10.45% | 10.77% | 10.41% | 11.98% | 11.36% | 11.76% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
6.38% | 6.14% | 6.27% | — | — | — | 7.25% | |||||||||||||||||||||
| Since inception of Class |
— | — | — | -1.79% | -0.52% | 2.63% | — | |||||||||||||||||||||
| (3) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (4) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | 4-2-07 for Class E and Class I shares and 12-29-05 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 40 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Natural Resources Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 41 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Natural Resources Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| * | Not shown due to rounding. |
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Restricted security. At March 31, 2014, the Fund owned the following restricted security: |
| Security | Acquisition Date(s) | Shares | Cost | Market Value | ||||||||
| Konarka Technologies, Inc., 8.000% Cumulative |
8-31-07 | 3,500 | $ | 10,850 | $ | – | ||||||
|
|
|
|||||||||||
The total value of this security represented 0.0% of net assets at March 31, 2014.
| (C) | Rate shown is the yield to maturity at March 31, 2014. |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date the variable rate resets. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
British Pound | State Street Global Markets | 6,950 | 4-28-14 | $ | — | $ | 121 | ||||||||||||
| Sell |
British Pound | UBS AG | 53,070 | 4-28-14 | — | 947 | ||||||||||||||
| Sell |
Canadian Dollar | State Street Global Markets | 16,815 | 4-28-14 | — | 220 | ||||||||||||||
| Sell |
Canadian Dollar | UBS AG | 44,285 | 4-28-14 | — | 552 | ||||||||||||||
|
|
|
|||||||||||||||||||
| $ | — | $ | 1,840 | |||||||||||||||||
|
|
|
|||||||||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Energy |
$ | 1,115,798 | $ | — | $ | — | ||||||
| Financials |
22,780 | — | — | |||||||||
| Industrials |
195,112 | — | — | |||||||||
| Materials |
343,079 | — | — | * | ||||||||
| Total Common Stocks |
$ | 1,676,769 | $ | — | $ | — | * | |||||
| Short-Term Securities |
— | 4,551 | — | |||||||||
| Total |
$ | 1,676,769 | $ | 4,551 | $ | — | * | |||||
| Liabilities |
||||||||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 1,840 | $ | — | ||||||
There were no transfers between any levels during the period ended March 31, 2014.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GTD = Guaranteed
| + | Includes cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 42 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Global Real Estate Fund |
(UNAUDITED) |
Portfolio strategy and performance
The Fund finished its first fiscal year with a flat return, below that of its benchmark index and peer group average, which had small positive returns. The Fund’s lower relative returns were concentrated in the last three quarters of 2013.
Performance for the fiscal year was hurt by stock selection in Europe and the Asia-Pacific region. An important detractor from Fund performance was the underweight allocation relative to the index in small Japanese development companies with higher risk profiles, which dramatically outperformed in the fiscal year. Stock selection in North America helped results, driven by an overweight in large-cap blue-chip REITs, which outperformed, and an underweight in REITs with near bond-like cash flows, which were more negatively impacted by rising interest rates. Overweight positions in the hotel and apartment sectors also contributed to the positive U.S. results.
An overweight position to U.S. real estate companies and an underweight position to Singapore contributed positively to the Fund’s results. In the U.S., real estate companies strongly outperformed in the first quarter 2014, after the Fed clarified its position on economic stimulus and interest rate policy. An overweight position to Hong Kong and an underweight position to the U.K. detracted from relative performance. We think investors may have overreacted to concerns regarding slowing growth in China and believe that property companies in Hong Kong offer very good value to investors today. We maintained our overweight position in that market at the end of the fiscal year. In the U.K., despite the improving economy and expectation of improved earnings by real estate companies, we believe real estate companies are expensive relative to their fundamental prospects and the Fund was underweight in that market at the end of March 2014.
| 2014 | ANNUAL REPORT | 43 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Global Real Estate Fund |
(UNAUDITED) |
The Fund’s portfolio currently is tilted toward companies that we believe have better quality assets, management teams capable of adding shareholder value, and strong capital structures with financial flexibility. These characteristics should enable these companies to take advantage of opportunities in a recovering real estate market. In addition, we believe their strong operating earnings growth should help offset headwinds from a rising interest rate environment.
Outlook for more economic growth
We expect a pick-up in economic growth this year and next, although we think slower growth in China is likely to have some impact on its regional trading partners. We think the largest increase in growth rates will be in the eurozone, returning to modest growth from recession, followed by the U.S. In addition, property values in many markets are at or above pre-recession levels and higher interest rates have had little impact on real estate values. We are finding keen interest in real estate from investors around the world.
We think improving real estate fundamentals will lead to solid earnings growth for global real estate companies over the next several years, with the greatest strength in the U.S. and U.K. Many global real estate companies have made significant upgrades to their property portfolios and capital structures in recent quarters. We think these companies are well positioned to expand their activities and to potentially take advantage of any opportunities that may occur. In our view, dividend growth is likely to be in line with earnings growth over the next few years. The stocks in general traded at a moderate premium to our estimates of their net asset value on average around the globe at the end of March, which we believe is warranted based on the ability of the companies’ management teams to add value to their portfolios and expand their companies’ operations.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Investment risks associated with investing in real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values.
Because the Fund invests more than 25% of its total assets in the real estate industry, it may be more susceptible to a single economic, regulatory, or technical occurrence than a fund that does not concentrate its investments in this industry.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. These and other risks are more fully described in the Fund’s prospectus.
The Fund is non-diversified, meaning that it may invest a significant portion of its total assets in a limited number of issuers, and a decline in value of those investments would cause the Fund’s overall value to decline greater than that of a more diversified portfolio.
The opinions expressed in this report are those of the Fund’s portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Global Real Estate Fund’s performance.
| 44 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Global Real Estate Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Simon Property Group, Inc. |
United States |
Financials |
Retail REITs | |||
| AvalonBay Communities, Inc. |
United States |
Financials |
Residential REITs | |||
| Mitsubishi Estate Co. Ltd. |
Japan |
Financials |
Real Estate Development | |||
| Boston Properties, Inc. |
United States |
Financials |
Office REITs | |||
| Equity Residential |
United States |
Financials |
Residential REITs | |||
| Mitsui Fudosan Co. Ltd. |
Japan |
Financials |
Real Estate Development | |||
| HCP, Inc. |
United States |
Financials |
Specialized REITs | |||
| Westfield Group |
Australia |
Financials |
Retail REITs | |||
| Public Storage, Inc. |
United States |
Financials |
Specialized REITs | |||
| Sun Hung Kai Properties Ltd. |
Hong Kong |
Financials |
Real Estate Development |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 45 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Global Real Estate Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class I | Class R | Class Y | ||||||||||||||||||
| 1-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| 5-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| Since inception of Class through 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| Cumulative return since inception of Class |
-5.73% | -5.08% | -1.03% | -0.13% | -0.67% | 0.68% | ||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-1-13 (the date on which shares were first acquired by shareholders). Performance total returns are considered less than one year from the date on which shares were first acquired by shareholders. Returns for periods of less than one year are cumulative from the date indicated. |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 46 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Real Estate Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 47 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Real Estate Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| * | Not shown due to rounding. |
| (A)Variable | rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Financials |
$ | 24,926 | $ | — | $ | — | ||||||
| Telecommunication Services |
124 | — | — | |||||||||
| Total Common Stocks |
$ | 25,050 | $ | — | $ | — | ||||||
| Rights |
11 | — | — | |||||||||
| Short-Term Securities |
— | 440 | — | |||||||||
| Total |
$ | 25,061 | $ | 440 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronym is used throughout this schedule:
REIT = Real Estate Investment Trusts
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 48 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Global Risk-Managed Real Estate Fund |
(UNAUDITED) |
Portfolio strategy and performance
The Fund had a small negative return for its first fiscal year, below that of its benchmark index and peer group average, which had small positive returns.
The Fund seeks to provide superior risk-adjusted returns relative to its peers and benchmark over a full market cycle by maintaining a lower-risk profile than its investment universe. We attempt to manage downside risk — the risk of material relative loss of value in an economic and/or capital market downturn.
We have identified certain factors that we believe tend to increase downside risk and drive volatility, such as higher leverage, higher business risk (too much development and not enough ownership), and higher-risk property types (such as hotels and home builders) when compared to the broader universe of global real estate securities. We screen the global real estate securities universe for these higher risk factors to build a portfolio of companies that we believe have a reduced risk profile.
This structural focus drove the underperformance of the Fund in the “risk-on” environment that characterized the first three quarters of the fiscal year. For example, because of its goal of managing risk, the Fund is not invested in U.S. hotel companies or Japanese development companies, two of the best performing sub-sectors within their regions in 2013. Relative performance for the Fund improved significantly in the first quarter of 2014 (the last quarter of the fiscal year), and the Fund outperformed both its benchmark and its peer group average in that period. But this improvement was not sufficient to offset the underperformance in the first three quarters of the Fund’s fiscal year.
| 2014 | ANNUAL REPORT | 49 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Global Risk-Managed Real Estate Fund |
(UNAUDITED) |
An overweight position to U.S. real estate companies and an underweight position to Singapore contributed positively to the Fund’s results. In the U.S., real estate companies strongly outperformed in the first quarter of 2014 after the Fed clarified its position on economic stimulus and interest rate policy. An overweight position to Hong Kong and an underweight position to the U.K. detracted from relative performance. We think investors may have overreacted to concerns regarding slowing growth in China and believe that property companies in Hong Kong offer very good value to investors today. We maintained our overweight position in that market at the end of the fiscal year. In the U.K., despite the improving economy and expectation of improved earnings by real estate companies, we believe real estate companies are expensive relative to their fundamental prospects and the Fund was underweight in that market at the end of March 2014.
The Fund’s portfolio currently is tilted toward companies that we believe have better quality assets, management teams capable of adding shareholder value, and strong capital structures with financial flexibility. These characteristics should enable these companies to take advantage of opportunities in a recovering real estate market. In addition, their strong operating earnings growth should help offset headwinds from a rising interest rate environment.
Outlook for more economic growth
We expect a pick-up in economic growth this year and next, although we think slower growth in China is likely to have some impact on its regional trading partners. We think the largest increase in growth rates will be in the Eurozone, returning to modest growth from recession, followed by the U.S. In addition, property values in many markets are at or above pre-recession levels and higher interest rates have had little impact on real estate values. We are finding keen interest in real estate from investors around the world.
We think improving real estate fundamentals will lead to solid earnings growth for global real estate companies over the next several years, with the greatest strength in the U.S. and U.K. Many global real estate companies have made significant upgrades to their property portfolios and capital structures in recent quarters. We think these companies are well positioned to expand their activities and to potentially take advantage of any opportunities that may occur. In our view, dividend growth is likely to be in line with earnings growth over the next few years. The stocks in general trade at a moderate premium to our estimates of their net asset value on average around the globe today, which we believe is warranted based on the ability of the companies’ management teams to add value to their portfolios and expand their companies’ operations.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Investment risks associated with investing in real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values.
Because the Fund invests more than 25% of its total assets in the real estate industry, it may be more susceptible to a single economic, regulatory, or technical occurrence than a fund that does not concentrate its investments in this industry.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. These and other risks are more fully described in the Fund’s prospectus.
The Fund is non-diversified, meaning that it may invest a significant portion of its total assets in a limited number of issuers, and a decline in value of those investments would cause the Fund’s overall value to decline greater than that of a more diversified portfolio.
There is no guarantee that the Ivy Global Risk-Managed Real Estate Fund will not decline in value in comparison with funds that do not use a risk-managed approach.
The opinions expressed in this report are those of the Fund’s portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Global Risk-Managed Real Estate Fund’s performance.
| 50 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Global Risk-Managed Real Estate Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Simon Property Group, Inc. |
United States |
Financials |
Retail REITs | |||
| Boston Properties, Inc. |
United States |
Financials |
Office REITs | |||
| AvalonBay Communities, Inc. |
United States |
Financials |
Residential REITs | |||
| Public Storage, Inc. |
United States |
Financials |
Specialized REITs | |||
| Equity Residential |
United States |
Financials |
Residential REITs | |||
| HCP, Inc. |
United States |
Financials |
Specialized REITs | |||
| Hongkong Land Holdings Ltd. |
Bermuda |
Financials |
Real Estate Development | |||
| Nippon Building Fund, Inc. |
Japan |
Financials |
Office REITs | |||
| Federal Realty Investment Trust |
United States |
Financials |
Retail REITs | |||
| Westfield Group |
Australia |
Financials |
Retail REITs |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 51 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Global Risk-Managed Real Estate Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class I | Class R | Class Y | ||||||||||||||||||
| 1-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| 5-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| Since inception of Class through 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| Cumulative return since inception of Class |
-6.69% | -5.80% | -1.91% | -1.09% | -1.72% | -0.98% | ||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-1-13 (the date on which shares were first acquired by shareholders). Performance total returns are considered less than one year from the date on which shares were first acquired by shareholders. Returns for periods of less than one year are cumulative from the date indicated. |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 52 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Risk-Managed Real Estate Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| * | Not shown due to rounding. |
| (A) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Financials |
$ | 35,429 | $ | — | $ | — | ||||||
| Total Common Stocks |
$ | 35,429 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 185 | — | |||||||||
| Total |
$ | 35,429 | $ | 185 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
| 2014 | ANNUAL REPORT | 53 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Risk-Managed Real Estate Fund (in thousands) |
MARCH 31, 2014 |
See Accompanying Notes to Financial Statements.
| 54 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Real Estate Securities Fund |
(UNAUDITED) |
Slow economic growth overhangs market
After showing improvement in the second half of 2013, the economy slowed in the first quarter of 2014. Business sentiment waned and overall housing activity disappointed, although housing prices continued to rise. Retail sales, auto sales and industrial activity all fell below expectations. While the winter of 2013-14, one of the coldest and stormiest on record, had an impact, it would be hard to lay all the blame for the economy’s performance on weather.
The tepid growth outlook influenced interest rates, which moved down early in 2014 from highs reached at the end of 2013. The 10-year Treasury yield settled back to 2.5 to 3%, a range it has maintained over the last nine months. This proved to be a benefit for real estate investment trust (REIT) stocks during the most recent calendar quarter. Whereas the broader market largely outperformed REITs in 2013, stocks in early 2014 wavered on concerns about emerging markets and mixed economic data. Industrial and consumer cyclical stocks performed poorly in light of dampened growth prospects. Commercial real estate, on the other hand, performed well, as measured by the Fund’s benchmark index, thanks to strong investor demand for yield-oriented investments in a low-rate, low-inflation environment.
The real estate sectors more sensitive to economic growth registered the strongest performance during the period, most notably hotels, self-storage, industrial and apartment properties. Expectations for improved economic and employment growth combined with attractive valuation levels caused these sectors to rise more than the benchmark index. Urban/coastal centric office properties also outperformed other properties amid strengthening demand, rising rental rates and aggressive bidding from private investors.
Positioning reflects new environment
The Fund had a positive return for the fiscal year, slightly below its benchmark index, and just below its peer group average. Performance was positively affected by the Fund’s underweight allocation relative to its benchmark index in the healthcare sector, which underperformed other sectors largely because of the increase in interest rates throughout the second half of 2013. The Fund’s underweight to hotel REITs was the largest detractor, as a group of small-capitalization, highly leveraged companies reacted favorably to improvement in overall operating results and debt availability for hotel owners.
Strength in the economy and in real estate fundamentals led us to position the Fund for what we consider more sustainable growth opportunities. We favored companies that we judge to have quality balance sheets. When acquiring properties, these companies continued to have a strong cost-of-capital advantage over many of their peers.
As we entered 2014, we eliminated exposure to non-REIT holdings in the land/timber, cell tower and data center sectors, preferring to concentrate on traditional commercial real estate holdings. We also eliminated holdings in Canadian companies. We believe the growth prospects for U.S. companies outstrip those of Canadian companies. We reduced holdings in the most interest-rate-sensitive REITs by reducing ownership in both the net lease and healthcare sectors.
We believe the Fund is positioned for an environment characterized by modestly rising gross domestic product growth and interest rates, where we think REITs with solid balance sheets, improving fundamentals and above-average cash flow growth can perform well. We believe this will develop in the coming quarters as the economic impact of a difficult winter dissipates. We have rotated the Fund’s holdings toward more economically sensitive companies and property sectors in an effort to capitalize on this anticipated improvement.
| 2014 | ANNUAL REPORT | 55 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Real Estate Securities Fund |
(UNAUDITED) |
Economic improvement likely to help REIT fundamentals
Economic growth late in the fiscal year, although lackluster, has continued to fuel a commercial real estate recovery. We think the U.S. economy will improve somewhat in the second quarter of 2014 as weather becomes less of a factor. We believe the growth rate will trend toward 2.5% or higher. We do not expect growth to be strong enough or inflation to increase enough to trigger a spike in long-term rates. In our view, moderate economic growth combined with generally benign interest rates can provide a favorable backdrop for commercial real estate valuations.
We also think improving employment growth throughout 2014 will support further space demand across the commercial property sector. Most notably, companies who own assets with shorter lease duration, such as hotels, apartments, industrial and self-storage facilities, may be able to reset rental rates to current market levels more quickly than owners of other property types. We also believe that an improving labor market will provide support for consumer spending and result in higher occupancies at community shopping centers.
We believe the recovery in commercial real estate has been extended because of a lack of material new supply pressures across most property sectors. New supply remains in check as current market rental rates, moderate demand growth, increasing construction costs and financing availability remain headwinds for developers. In our view, excess supply will not become an impediment to the sector’s further recovery in 2014.
If interest rates rise sharply and exert an upward bias on real estate capitalization rates, we think REIT share prices may come under pressure. But we think most companies in this sector can deliver solid cash flow growth in 2014 through occupancy and rental rate increases. Higher cash flows can help offset value declines caused by rising capitalization rates.
We also think REITs are likely to show another year of dividend growth. Long-term annual dividend growth for the sector has averaged nearly 6%. However, we think earnings growth may exceed 8% and dividend payout ratios will be below average. In our view, this combination means 2014 dividend growth can stay above historic levels.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Investment risks associated with real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values. Real estate securities are subject to interest-rate risk and, as such, the Fund’s net asset value may fall as interest rates rise.
Because the Fund invests more than 25% of its total assets in the real estate industry, it may be more susceptible to a single economic, regulatory, or technical occurrence than a fund that does not concentrate its investments in this industry. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The indexes noted are unmanaged, include reinvested dividends and do not include fees. One cannot invest directly in an index, nor is an index representative of Ivy Real Estate Securities Fund’s performance.
| 56 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Real Estate Securities Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | Industry | ||
| Simon Property Group, Inc. |
Financials |
Retail REITs | ||
| ProLogis |
Financials |
Industrial REITs | ||
| Boston Properties, Inc. |
Financials |
Office REITs | ||
| AvalonBay Communities, Inc. |
Financials |
Residential REITs | ||
| Vornado Realty Trust |
Financials |
Diversified REITs | ||
| Public Storage, Inc. |
Financials |
Specialized REITs | ||
| Essex Property Trust, Inc. |
Financials |
Residential REITs | ||
| Ventas, Inc. |
Financials |
Specialized REITs | ||
| Host Hotels & Resorts, Inc. |
Financials |
Specialized REITs | ||
| Equity Residential |
Financials |
Residential REITs |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 57 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Real Estate Securities Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
-2.32% | -1.41% | 2.90% | -2.39% | 4.20% | 3.58% | 3.97% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
23.62% | 23.56% | 24.17% | 23.74% | 25.88% | 25.20% | 25.62% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
6.26% | 5.69% | 6.05% | — | — | — | 7.29% | |||||||||||||||||||||
| Since inception of Class |
— | — | — | 0.36% | 1.97% | 4.81% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-29-05 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
The Advantus Real Estate Securities Fund merged into the Ivy Real Estate Securities Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Real Estate Securities Fund Class A shares, restated to reflect current sales charges applicable to Ivy Real Estate Securities Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Real Estate Securities Fund. If these expenses were reflected, performance shown would differ.
| 58 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Real Estate Securities Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Rate shown is the yield to maturity at March 31, 2014. |
| (C) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 554,835 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 5,968 | — | |||||||||
| Total |
$ | 554,835 | $ | 5,968 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronym is used throughout this schedule:
REIT = Real Estate Investment Trusts
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 59 |
Table of Contents
| Ivy Science and Technology Fund |
(UNAUDITED) |
Uncertainty continues with slow-to-moderate global growth
Equity and fixed-income markets were volatile in the fiscal year ended March 31, 2014. Early in the year, economic growth remained slow, although it improved somewhat as the year progressed. During the second quarter of 2013, volatility in the markets spiked due to concerns regarding U.S. Federal Reserve (Fed) monetary policy. A sell-off in stocks and bonds rolled across the globe in June after former Fed Chairman Ben Bernanke remarked the central bank may begin to reduce purchases under its $85 billion bond purchase program before year end. As a result, money began to flee various emerging markets where currencies had been strengthening and yields had been high. Bond markets were hit hard and currencies weakened along with equities. Generally speaking, the markets posted solid gains towards the end of 2013. The accommodative stance of the Fed and the “great rotation” (bond investors moving to equities) were key contributors to market success. Moving into 2014, the U.S. economy slowed, but maintained steady economic growth in the quarter. Despite mixed economic reports, the markets continued to react positively to improvements in consumer spending, productivity and an increase in business investment.
On the year, information technology stocks performed well, with the Fund’s benchmark index advancing more than 25%. Key contributors included software, internet software and services, and technology hardware storage and peripherals. We believe strong balance sheet strength (large cash balances and relatively low debt levels), increases in dividend payments and strong management were key in providing stability and growth to the sector. On the health care front, political discussions seem to be the center of attention. Implementing the numerous provisions of the Affordable Care Act remains under debate and is adding a level of volatility to the market. These provisions, accompanied with rising costs, pose as a headwind for some companies in the health care sector. While challenges remain, we believe there are many investment opportunities in those companies that are able to provide innovative solutions or services to the end user.
Strong performance in a volatile year
While the information technology sector performed well during the year, worries related to capital spending in a somewhat challenging economic environment and uncertainty surrounding Fed policy resulted in weaker performance for the computer and peripherals, media, and information technology services areas. Generally speaking, companies continue to have robust balance sheets with healthy amounts of cash. Health care stocks also performed well.
The Fund significantly outperformed its benchmark and its peer-group average during the period. An overweight position in health care, compared to the benchmark, meaningfully contributed to performance for the year. We maintained an approximate 15 to 20% exposure to health care throughout the year, and we believe this is one of the sectors with the greatest opportunity for innovation and growth going forward. While the Fund was underweight the information technology sector relative to the benchmark, strong security selection in that sector was the largest contributor to the year’s performance — particularly in the IT services and semiconductors industries. The IT services industry returned more than 60%, with the most notable winners in the Fund being Alliance Data Systems, a provider of loyalty programs and marketing solutions, such as private label credit cards, collation loyalty programs and direct marketing services derived from the capture and analysis of transaction-rich data; and Acxiom, a company known worldwide for its marketing database and consumer data technologies as it powers marketing insight for a multitude of the Fortune 100 brands. Strength in semiconductors was led by Micron Technology, Inc., the greatest contributor for the year, and is an example of our longer-term investment philosophy for the Fund. The company designs and builds advanced memory and semiconductor technologies. We think Micron Technology is an example of one of several of the Fund’s long-term investments that began to materialize during the year, resulting in solid contributions from security selection. Biotechnology holding Isis Pharmaceuticals, a company currently working on new treatments for Crohn’s Disease, returned more than 150%, and was a top contributor on both an absolute and relative basis. We like the long-term positioning of the firm and believe it is poised to realize an increase in incremental revenue.
| 60 | ANNUAL REPORT | 2014 |
Table of Contents
A main detractor to performance was the Fund’s cash position in a rising market, averaging approximately 8% through the year. An additional area of weakness, in comparison to the benchmark, occurred in the software industry, where our relative underweight exposure to this strong-performing area detracted. In terms of specific holdings, a position in ARIAD Pharmaceuticals was the greatest detractor to performance for the year, followed by a holding in Tenet Healthcare. (The Fund no longer holds ARIAD Pharmaceuticals or Tenet Healthcare.)
Portfolio positioning
While we recognize the challenges of the world economic backdrop, we are excited about the innovation and growth that is taking place within certain companies. We believe many of the stocks in the information technology space remain relatively inexpensive and are well-positioned going forward. As confidence is restored, we believe there should be an increase in capital expenditure in various markets around the world as companies become more comfortable with the high cost transitions related to changes in internal infrastructure. As of March 31, 2014, the Fund had about 70% of its equity exposure in the information technology sector.
Our exposure to health care names over the year remained relatively stable, and as of the fiscal year-end, about 16% of the Fund’s equity holdings were in the health care sector. We believe managed care companies will benefit from the implementation of government initiatives. Also, in developing markets, as the standard of living increases, we believe the demand for quality health care increases as well. In our view, medical technology, biotechnology, medical records and pharmaceuticals are among the greatest innovators and early adopters of new science and technology, so we are paying particularly close attention to companies in those areas as well. We also are looking more closely at names that may benefit from a low interest rate environment.
The “applied science and technology” holdings span several industries and sectors and make up the remainder of the Fund’s equity composition, totaling approximately 15%. The Fund’s cash position as of March 31, 2014, was about 6%. We almost always have some cash on hand in an effort to take advantage of opportunities that may present themselves, or to use as a defensive measure to protect the Fund in adverse market conditions.
Seeking opportunities as global growth resumes
We believe global economic growth is fragile but showing positive momentum with extremely aggressive global monetary policy. However, during the fourth quarter, the Fed announced that it would reduce its current accommodative monetary stimulus efforts by decreasing its bond purchases from $85 billion to $75 billion per month. As a result, an element of uncertainty was removed from the market. We think improvement in economic growth will lead to tighter monetary and, to a lesser extent, fiscal policy. Additionally, we believe questions about the strength of China’s economy and overall stability in Europe may affect investor confidence. Despite these fiscal concerns and other geopolitical risks, we are generally positive about the path of economic growth for the upcoming fiscal year. In mixed economic environments, we believe there are many potential investment opportunities — especially in scarce resources, data, mobility and health care — around the world. As we look at the securities of such companies, we are attracted by what we believe are good growth prospects and sound capital structures. We believe there will be a modest improvement in capital spending trends, and we are looking for some restoration of mergers-and-acquisition activity as well. As always, we will carefully monitor the macroeconomic environment, but our focus remains primarily on security-specific fundamental research. Going forward, we believe this attention to bottom-up research, coupled with the innovation and transformation under way across the globe, will continue to provide investment opportunities.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted are unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy Science and Technology Fund.
| 2014 | ANNUAL REPORT | 61 |
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PORTFOLIO HIGHLIGHTS
| Ivy Science and Technology Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | Industry | ||
| Micron Technology, Inc. |
Information Technology |
Semiconductors | ||
| Alliance Data Systems Corp. |
Information Technology |
Data Processing & Outsourced Services | ||
| Cree, Inc. |
Information Technology |
Semiconductors | ||
| Aspen Technology, Inc. |
Information Technology |
Application Software | ||
| Pentair, Inc. |
Industrials |
Industrial Machinery | ||
| Acxiom Corp. |
Information Technology |
IT Consulting & Other Services | ||
| Facebook, Inc., Class A |
Information Technology |
Internet Software & Services | ||
| Google, Inc., Class A |
Information Technology |
Internet Software & Services | ||
| Euronet Worldwide, Inc. |
Information Technology |
Data Processing & Outsourced Services | ||
| Vertex Pharmaceuticals, Inc. |
Health Care |
Biotechnology |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 62 | ANNUAL REPORT | 2014 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Science and Technology Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
28.15% | 30.91% | 35.02% | 28.01% | 36.37% | 35.56% | 36.02% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
21.72% | 22.02% | 22.27% | 21.70% | 23.59% | 22.88% | 23.28% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
13.06% | 12.63% | 12.83% | — | — | — | 13.87% | |||||||||||||||||||||
| Since inception of Class |
— | — | — | 12.52% | 14.32% | 12.79% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-29-05 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 63 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Science and Technology Fund (in thousands) |
MARCH 31, 2014 |
| 64 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Science and Technology Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Deemed to be an affiliate due to the Fund owning at least 5% of the voting securities. |
| (C) | Listed on an exchange outside the United States. |
| (D) | Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any. |
| (E) | Rate shown is the yield to maturity at March 31, 2014. |
| (F) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
| 2014 | ANNUAL REPORT | 65 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Science and Technology Fund (in thousands) |
MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 222,222 | $ | — | $ | — | ||||||
| Financials |
30,462 | — | — | |||||||||
| Health Care |
816,384 | — | — | |||||||||
| Industrials |
309,726 | — | — | |||||||||
| Information Technology |
3,477,178 | — | — | |||||||||
| Materials |
139,317 | — | — | |||||||||
| Telecommunication Services |
68,253 | — | — | |||||||||
| Total Common Stocks |
$ | 5,063,542 | $ | — | $ | — | ||||||
| Warrants |
2,399 | — | — | |||||||||
| Short-Term Securities |
— | 358,896 | — | |||||||||
| Total |
$ | 5,065,941 | $ | 358,896 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GTD = Guaranteed
REIT = Real Estate Investment Trust
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 66 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF ASSETS AND LIABILITIES
| Ivy Funds |
AS OF MARCH 31, 2014 |
| (In thousands, except per share amounts) | Ivy Asset Fund(1) |
Ivy Balanced |
Ivy Energy |
Ivy Global Natural Resources Fund |
Ivy Global Real Estate Fund |
Ivy Global Risk- Managed Real Estate Fund |
Ivy Real Estate Securities Fund |
Ivy Science and Technology Fund |
||||||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||||||
| Investments in unaffiliated securities at value+ |
$ | 28,385,978 | $ | 1,813,907 | $ | 199,433 | $ | 1,681,320 | $ | 25,501 | $ | 35,614 | $ | 560,803 | $ | 4,668,442 | ||||||||||||||||
| Investments in affiliated securities at value+ |
4,773,896 | — | — | — | — | — | — | 756,395 | ||||||||||||||||||||||||
| Bullion at value+ |
2,345,035 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Investments at Value |
35,504,909 | 1,813,907 | 199,433 | 1,681,320 | 25,501 | 35,614 | 560,803 | 5,424,837 | ||||||||||||||||||||||||
| Cash |
1,206 | — | * | — | 1 | 1 | 1 | 1 | 1 | |||||||||||||||||||||||
| Cash denominated in foreign currencies at value+ |
1,735 | — | — | — | 103 | 269 | — | — | ||||||||||||||||||||||||
| Restricted cash |
290 | — | — | 1,580 | — | — | — | — | ||||||||||||||||||||||||
| Investment securities sold receivable |
25,749 | 3,540 | 4,883 | 59,796 | 89 | 167 | 12,198 | 81 | ||||||||||||||||||||||||
| Dividends and interest receivable |
113,565 | 4,162 | 114 | 3,969 | 92 | 147 | 1,781 | 2,744 | ||||||||||||||||||||||||
| Capital shares sold receivable |
103,359 | 6,659 | 787 | 1,003 | 103 | 72 | 945 | 31,747 | ||||||||||||||||||||||||
| Receivable from affiliates |
194 | — | — | 26 | 89 | 71 | 4 | 11 | ||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
36,232 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Prepaid and other assets |
333 | 75 | 44 | 52 | 37 | 38 | 47 | 145 | ||||||||||||||||||||||||
| Total Assets |
35,787,572 | 1,828,343 | 205,261 | 1,747,747 | 26,015 | 36,379 | 575,779 | 5,459,566 | ||||||||||||||||||||||||
| LIABILITIES |
||||||||||||||||||||||||||||||||
| Investment securities purchased payable |
106,837 | 2,848 | 8,618 | 38,533 | 246 | 215 | 14,328 | 22,067 | ||||||||||||||||||||||||
| Capital shares redeemed payable |
35,683 | 1,476 | 221 | 5,250 | 20 | 7 | 2,437 | 15,190 | ||||||||||||||||||||||||
| Trustees and Chief Compliance Officer fees payable |
1,265 | 38 | 5 | 695 | — | * | — | * | 87 | 130 | ||||||||||||||||||||||
| Overdraft due to custodian |
— | — | 8 | — | — | — | — | — | ||||||||||||||||||||||||
| Distribution and service fees payable |
371 | 23 | 2 | 17 | — | * | — | * | 4 | 45 | ||||||||||||||||||||||
| Shareholder servicing payable |
6,626 | 343 | 63 | 763 | 8 | 8 | 193 | 946 | ||||||||||||||||||||||||
| Investment management fee payable |
543 | 34 | 5 | 41 | 1 | 1 | 12 | 118 | ||||||||||||||||||||||||
| Accounting services fee payable |
23 | 29 | 6 | 23 | 1 | 3 | 13 | 23 | ||||||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
— | — | — | 1,840 | — | — | — | — | ||||||||||||||||||||||||
| Written options at value+ |
39,637 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Other liabilities |
775 | 4 | 11 | 16 | 1 | 1 | 3 | 36 | ||||||||||||||||||||||||
| Total Liabilities |
191,760 | 4,795 | 8,939 | 47,178 | 277 | 235 | 17,077 | 38,555 | ||||||||||||||||||||||||
| Total Net Assets |
$ | 35,595,812 | $ | 1,823,548 | $ | 196,322 | $ | 1,700,569 | $ | 25,738 | $ | 36,144 | $ | 558,702 | $ | 5,421,011 | ||||||||||||||||
| NET ASSETS |
||||||||||||||||||||||||||||||||
| Capital paid in (shares authorized – unlimited) |
$ | 26,893,493 | $ | 1,531,497 | $ | 144,056 | $ | 3,488,694 | $ | 25,828 | $ | 36,904 | $ | 423,965 | $ | 3,874,481 | ||||||||||||||||
| Undistributed (distributions in excess of) net investment income |
126,972 | 1,190 | (331 | ) | (618 | ) | (68 | ) | (70 | ) | 297 | (8,914 | ) | |||||||||||||||||||
| Accumulated net realized gain (loss) |
606,375 | 18,774 | (8,505 | ) | (2,107,245 | ) | (202 | ) | (712 | ) | (8,503 | ) | 75,629 | |||||||||||||||||||
| Net unrealized appreciation |
7,968,972 | 272,087 | 61,102 | 319,738 | 180 | 22 | 142,943 | 1,479,815 | ||||||||||||||||||||||||
| Total Net Assets |
$ | 35,595,812 | $ | 1,823,548 | $ | 196,322 | $ | 1,700,569 | $ | 25,738 | $ | 36,144 | $ | 558,702 | $ | 5,421,011 | ||||||||||||||||
| CAPITAL SHARES OUTSTANDING: |
||||||||||||||||||||||||||||||||
| Class A |
305,540 | 35,375 | 7,614 | 52,846 | 2,229 | 2,041 | 15,784 | 37,911 | ||||||||||||||||||||||||
| Class B |
25,630 | 2,880 | 324 | 2,425 | 23 | 101 | 240 | 1,551 | ||||||||||||||||||||||||
| Class C |
321,903 | 21,585 | 1,902 | 17,866 | 54 | 214 | 570 | 16,447 | ||||||||||||||||||||||||
| Class E |
2,342 | 7 | 10 | 361 | N/A | N/A | 90 | 319 | ||||||||||||||||||||||||
| Class I |
424,102 | 8,680 | 814 | 11,410 | 211 | 863 | 350 | 24,804 | ||||||||||||||||||||||||
| Class R |
5,152 | 160 | 282 | 2,271 | 40 | 200 | 56 | 2,016 | ||||||||||||||||||||||||
| Class Y |
47,885 | 6,239 | 1,124 | 4,539 | 61 | 300 | 5,854 | 18,896 | ||||||||||||||||||||||||
| NET ASSET VALUE PER SHARE: |
||||||||||||||||||||||||||||||||
| Class A |
$31.61 | $24.38 | $16.38 | $19.07 | $9.83 | $9.72 | $24.35 | $52.71 | ||||||||||||||||||||||||
| Class B |
$30.54 | $24.19 | $15.35 | $16.67 | $9.79 | $9.70 | $23.77 | $45.73 | ||||||||||||||||||||||||
| Class C |
$30.69 | $24.26 | $15.55 | $16.26 | $9.80 | $9.70 | $24.02 | $47.21 | ||||||||||||||||||||||||
| Class E |
$31.67 | $24.48 | $16.65 | $19.36 | N/A | N/A | $24.35 | $52.57 | ||||||||||||||||||||||||
| Class I |
$31.88 | $24.36 | $16.80 | $19.63 | $9.82 | $9.72 | $24.50 | $56.87 | ||||||||||||||||||||||||
| Class R |
$31.45 | $24.37 | $16.35 | $18.87 | $9.81 | $9.70 | $24.35 | $52.04 | ||||||||||||||||||||||||
| Class Y |
$31.67 | $24.38 | $16.55 | $19.39 | $9.89 | $9.72 | $24.39 | $55.20 | ||||||||||||||||||||||||
| +COST |
||||||||||||||||||||||||||||||||
| Investments in unaffiliated securities at cost |
$ | 22,789,241 | $ | 1,541,820 | $ | 138,331 | $ | 1,359,796 | $ | 25,322 | $ | 35,595 | $ | 417,860 | $ | 3,338,256 | ||||||||||||||||
| Investments in affiliated securities at cost |
2,411,839 | — | — | — | — | — | — | 606,781 | ||||||||||||||||||||||||
| Bullion at cost |
2,392,298 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Cash denominated in foreign currencies at cost |
1,702 | — | — | — | 103 | 267 | — | — | ||||||||||||||||||||||||
| Written options premiums received at cost |
60,246 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Consolidated Statements of Assets and Liabilities (See Note 6 to Financial Statements). |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 67 |
Table of Contents
| Ivy Funds |
FOR THE YEAR ENDED MARCH 31, 2014 |
| (In thousands) | Ivy Asset Strategy Fund(1) |
Ivy Balanced Fund |
Ivy Energy |
Ivy Global Natural Resources Fund |
Ivy Global Real Estate Fund |
Ivy Global Risk- Managed Real Estate Fund |
Ivy Real Estate Securities Fund |
Ivy Science and Technology Fund |
||||||||||||||||||||||||
| INVESTMENT INCOME |
||||||||||||||||||||||||||||||||
| Dividends from unaffiliated securities |
$ | 435,884 | $ | 16,905 | $ | 1,598 | $ | 30,222 | $ | 500 | $ | 940 | $ | 12,330 | $ | 22,262 | ||||||||||||||||
| Dividends from affiliated securities |
45,422 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Foreign dividend withholding tax |
(21,727 | ) | (119 | ) | (37 | ) | (1,218 | ) | (25 | ) | (48 | ) | (56 | ) | (423 | ) | ||||||||||||||||
| Interest and amortization from unaffiliated securities |
40,504 | 6,869 | 9 | 76 | 1 | — | * | 9 | 896 | |||||||||||||||||||||||
| Interest and amortization from affiliated securities |
28,292 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Foreign interest withholding tax |
(1 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Payment in-kind bond security income |
59,411 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Total Investment Income |
587,785 | 23,655 | 1,570 | 29,080 | 476 | 892 | 12,283 | 22,735 | ||||||||||||||||||||||||
| EXPENSES |
||||||||||||||||||||||||||||||||
| Investment management fee |
175,215 | 9,131 | 1,315 | 17,446 | 171 | 292 | 4,911 | 29,243 | ||||||||||||||||||||||||
| Distribution and service fees: |
||||||||||||||||||||||||||||||||
| Class A |
21,560 | 1,594 | 255 | 2,800 | 36 | 37 | 902 | 3,318 | ||||||||||||||||||||||||
| Class B |
7,614 | 594 | 46 | 513 | 2 | 10 | 62 | 580 | ||||||||||||||||||||||||
| Class C |
90,326 | 3,861 | 241 | 3,307 | 5 | 20 | 143 | 4,992 | ||||||||||||||||||||||||
| Class E |
166 | — | * | 1 | 16 | N/A | N/A | 5 | 33 | |||||||||||||||||||||||
| Class R |
699 | 7 | 8 | 220 | 2 | 10 | 7 | 404 | ||||||||||||||||||||||||
| Class Y |
3,309 | 289 | 33 | 339 | 2 | 7 | 384 | 2,032 | ||||||||||||||||||||||||
| Shareholder servicing: |
||||||||||||||||||||||||||||||||
| Class A |
11,035 | 1,059 | 358 | 4,364 | 56 | 39 | 1,578 | 2,282 | ||||||||||||||||||||||||
| Class B |
979 | 93 | 18 | 248 | — | * | — | * | 45 | 118 | ||||||||||||||||||||||
| Class C |
9,452 | 413 | 42 | 858 | 1 | — | * | 57 | 686 | |||||||||||||||||||||||
| Class E |
194 | — | * | — | * | 62 | N/A | N/A | 19 | 71 | ||||||||||||||||||||||
| Class I |
17,853 | 210 | 15 | 495 | 4 | 12 | 12 | 1,277 | ||||||||||||||||||||||||
| Class R |
358 | 3 | 4 | 114 | 1 | 5 | 4 | 207 | ||||||||||||||||||||||||
| Class Y |
2,061 | 176 | 21 | 217 | 1 | 4 | 230 | 1,243 | ||||||||||||||||||||||||
| Registration fees |
705 | 167 | 97 | 128 | — | — | 116 | 211 | ||||||||||||||||||||||||
| Custodian fees |
2,002 | 20 | 2 | 15 | 24 | 15 | 16 | 179 | ||||||||||||||||||||||||
| Trustees and Chief Compliance Officer fees |
1,076 | 41 | 5 | 202 | 1 | 1 | 33 | 115 | ||||||||||||||||||||||||
| Accounting services fee |
271 | 268 | 71 | 271 | 12 | 29 | 153 | 271 | ||||||||||||||||||||||||
| Professional fees |
352 | 19 | 14 | 37 | 11 | 10 | 22 | 39 | ||||||||||||||||||||||||
| Offering Costs |
— | — | — | — | 132 | 133 | — | — | ||||||||||||||||||||||||
| Other |
1,886 | 90 | 35 | 197 | 6 | 5 | 51 | 178 | ||||||||||||||||||||||||
| Total Expenses |
347,113 | 18,035 | 2,581 | 31,849 | 467 | 629 | 8,750 | 47,479 | ||||||||||||||||||||||||
| Less: |
||||||||||||||||||||||||||||||||
| Expenses in excess of limit |
(443 | ) | — | — | (56 | ) | (179 | ) | (105 | ) | (553 | ) | (27 | ) | ||||||||||||||||||
| Total Net Expenses |
346,670 | 18,035 | 2,581 | 31,793 | 288 | 524 | 8,197 | 47,452 | ||||||||||||||||||||||||
| Net Investment Income (Loss) |
241,115 | 5,620 | (1,011 | ) | (2,713 | ) | 188 | 368 | 4,086 | (24,717 | ) | |||||||||||||||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||||||||||||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||||||||||||||||||
| Investments in unaffiliated securities |
3,029,505 | 42,826 | 7,858 | 169,734 | (184 | ) | (703 | ) | 29,166 | 144,208 | ||||||||||||||||||||||
| Investments in affiliated securities |
484,393 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Futures contracts |
(337,643 | ) | — | — | (32,221 | ) | — | — | — | — | ||||||||||||||||||||||
| Written options |
182,701 | — | — | — | — | — | 42 | 1,561 | ||||||||||||||||||||||||
| Forward foreign currency contracts |
136,592 | — | — | 4,499 | — | — | — | 2,983 | ||||||||||||||||||||||||
| Foreign currency exchange transactions |
(2,046 | ) | (8 | ) | (1 | ) | (509 | ) | (9 | ) | (20 | ) | — | * | (221 | ) | ||||||||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||||||||||||||
| Investments in unaffiliated securities |
(116,887 | ) | 142,574 | 21,482 | (46,911 | ) | 179 | 19 | (14,826 | ) | 751,936 | |||||||||||||||||||||
| Investments in affiliated securities |
1,223,734 | — | — | — | — | — | — | 149,614 | ||||||||||||||||||||||||
| Futures contracts |
— | — | — | 4,946 | — | — | — | — | ||||||||||||||||||||||||
| Written options |
8,071 | — | — | — | — | — | (3 | ) | — | |||||||||||||||||||||||
| Forward foreign currency contracts |
36,575 | — | — | (7,226 | ) | — | — | — | (2,238 | ) | ||||||||||||||||||||||
| Foreign currency exchange transactions |
1,421 | — | — | * | 107 | 1 | 3 | — | * | 20 | ||||||||||||||||||||||
| Net Realized and Unrealized Gain (Loss) |
4,646,416 | 185,392 | 29,339 | 92,419 | (13 | ) | (701 | ) | 14,379 | 1,047,863 | ||||||||||||||||||||||
| Net Increase (Decrease) in Net Assets Resulting from Operations |
$ | 4,887,531 | $ | 191,012 | $ | 28,328 | $ | 89,706 | $ | 175 | $ | (333 | ) | $ | 18,465 | $ | 1,023,146 | |||||||||||||||
| * | Not shown due to rounding. |
| (1) | Consolidated Statements of Operations (See Note 6 to Financial Statements). |
See Accompanying Notes to Financial Statements.
| 68 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
| Ivy Funds |
| Ivy Asset Strategy Fund(1) | Ivy Balanced Fund | Ivy Energy Fund | ||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income (loss) |
$ | 241,115 | $ | 353,839 | $ | 5,620 | $ | 4,329 | $ | (1,011 | ) | $ | (721 | ) | ||||||||||
| Net realized gain on investments |
3,493,502 | 2,278,525 | 42,818 | 14,207 | 7,857 | 2,820 | ||||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
1,152,914 | (461,326 | ) | 142,574 | 46,320 | 21,482 | 6,123 | |||||||||||||||||
| Net Increase in Net Assets Resulting from Operations |
4,887,531 | 2,171,038 | 191,012 | 64,856 | 28,328 | 8,222 | ||||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
(43,848 | ) | (189,902 | ) | (2,994 | ) | (2,294 | ) | — | — | ||||||||||||||
| Class B |
(79 | ) | (9,774 | ) | — | (90 | ) | — | — | |||||||||||||||
| Class C |
(2,514 | ) | (117,197 | ) | — | (551 | ) | — | — | |||||||||||||||
| Class E |
(321 | ) | (1,329 | ) | (1 | ) | (1 | ) | — | — | ||||||||||||||
| Class I |
(75,738 | ) | (245,673 | ) | (1,040 | ) | (533 | ) | — | — | ||||||||||||||
| Class R |
(360 | ) | (2,254 | ) | (3 | ) | — | — | — | |||||||||||||||
| Class Y |
(6,832 | ) | (29,096 | ) | (546 | ) | (695 | ) | — | — | ||||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
— | — | (16,300 | ) | (2,200 | ) | — | — | ||||||||||||||||
| Class B |
— | — | (1,308 | ) | (267 | ) | — | — | ||||||||||||||||
| Class C |
— | — | (8,900 | ) | (1,424 | ) | — | — | ||||||||||||||||
| Class E |
— | — | (4 | ) | (1 | ) | — | — | ||||||||||||||||
| Class I |
— | — | (3,661 | ) | (389 | ) | — | — | ||||||||||||||||
| Class R |
— | — | (42 | ) | — | — | — | |||||||||||||||||
| Class Y |
— | — | (2,848 | ) | (643 | ) | — | — | ||||||||||||||||
| Total Distributions to Shareholders |
(129,692 | ) | (595,225 | ) | (37,647 | ) | (9,088 | ) | — | — | ||||||||||||||
| Capital Share Transactions |
2,918,600 | (285,857 | ) | 826,413 | 322,776 | 48,700 | (9,866 | ) | ||||||||||||||||
| Net Increase (Decrease) in Net Assets |
7,676,439 | 1,289,956 | 979,778 | 378,544 | 77,028 | (1,644 | ) | |||||||||||||||||
| Net Assets, Beginning of Period |
27,919,373 | 26,629,417 | 843,770 | 465,226 | 119,294 | 120,938 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 35,595,812 | $ | 27,919,373 | $ | 1,823,548 | $ | 843,770 | $ | 196,322 | $ | 119,294 | ||||||||||||
| Undistributed (distributions in excess of) net investment income |
$ | 126,972 | $ | 13,815 | $ | 1,190 | $ | 154 | $ | (331 | ) | $ | (36 | ) | ||||||||||
| (1) | Consolidated Statements of Changes in Net Assets (See Note 6 to Financial Statements). |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 69 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
| Ivy Funds |
| Ivy Global Natural Resources Fund |
Ivy Global Real Estate Fund |
Ivy Global Risk-Managed Real Estate Fund |
Ivy Real Estate Securities Fund |
|||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-14 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income (loss) |
$ | (2,713 | ) | $ | (5,028 | ) | $ | 188 | $ | 368 | $ | 4,086 | $ | 3,823 | ||||||||||
| Net realized gain (loss) on investments |
141,503 | (620,212 | ) | (193 | ) | (723 | ) | 29,208 | 26,898 | |||||||||||||||
| Net change in unrealized appreciation (depreciation) |
(49,084 | ) | 542,347 | 180 | 22 | (14,829 | ) | 26,496 | ||||||||||||||||
| Net Increase (Decrease) in Net Assets Resulting from Operations |
89,706 | (82,893 | ) | 175 | (333 | ) | 18,465 | 57,217 | ||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
— | (2,542 | ) | (313 | ) | (292 | ) | (3,489 | ) | (1,998 | ) | |||||||||||||
| Class B |
— | — | (2 | ) | (10 | ) | — | — | ||||||||||||||||
| Class C |
— | — | (5 | ) | (22 | ) | (45 | ) | (4 | ) | ||||||||||||||
| Class E |
— | (22 | ) | N/A | N/A | (17 | ) | (10 | ) | |||||||||||||||
| Class I |
— | (3,177 | ) | (4 | ) | (134 | ) | (107 | ) | (58 | ) | |||||||||||||
| Class R |
— | — | (33 | ) | (23 | ) | (13 | ) | (10 | ) | ||||||||||||||
| Class Y |
— | (960 | ) | (10 | ) | (50 | ) | (1,829 | ) | (1,500 | ) | |||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
— | — | — | — | — | — | ||||||||||||||||||
| Class B |
— | — | — | — | — | — | ||||||||||||||||||
| Class C |
— | — | — | — | — | — | ||||||||||||||||||
| Class E |
— | — | N/A | N/A | — | — | ||||||||||||||||||
| Class I |
— | — | — | — | — | — | ||||||||||||||||||
| Class R |
— | — | — | — | — | — | ||||||||||||||||||
| Class Y |
— | — | — | — | — | — | ||||||||||||||||||
| Total Distributions to Shareholders |
— | (6,701 | ) | (367 | ) | (531 | ) | (5,500 | ) | (3,580 | ) | |||||||||||||
| Capital Share Transactions |
(970,474 | ) | (1,514,653 | ) | 25,930 | 37,008 | 3,410 | 39,222 | ||||||||||||||||
| Net Increase (Decrease) in Net Assets |
(880,768 | ) | (1,604,247 | ) | 25,738 | 36,144 | 16,375 | 92,859 | ||||||||||||||||
| Net Assets, Beginning of Period |
2,581,337 | 4,185,584 | — | — | 542,327 | 449,468 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 1,700,569 | $ | 2,581,337 | $ | 25,738 | $ | 36,144 | $ | 558,702 | $ | 542,327 | ||||||||||||
| Undistributed (distributions in excess of) net investment income |
$ | (618 | ) | $ | (9,525 | ) | $ | (68 | ) | $ | (70 | ) | $ | 297 | $ | 1,706 | ||||||||
See Accompanying Notes to Financial Statements.
| 70 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy Science and Technology Fund |
||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| Operations: |
||||||||
| Net investment loss |
$ | (24,717 | ) | $ | (13,022 | ) | ||
| Net realized gain on investments |
148,531 | 51,826 | ||||||
| Net change in unrealized appreciation |
899,332 | 257,990 | ||||||
| Net Increase in Net Assets Resulting from Operations |
1,023,146 | 296,794 | ||||||
| Distributions to Shareholders From: |
||||||||
| Net investment income: |
||||||||
| Class A |
— | — | ||||||
| Class B |
— | — | ||||||
| Class C |
— | — | ||||||
| Class E |
— | — | ||||||
| Class I |
— | — | ||||||
| Class R |
— | — | ||||||
| Class Y |
— | — | ||||||
| Net realized gains: |
||||||||
| Class A |
(40,239 | ) | (3,161 | ) | ||||
| Class B |
(1,989 | ) | (203 | ) | ||||
| Class C |
(17,037 | ) | (1,328 | ) | ||||
| Class E |
(375 | ) | (41 | ) | ||||
| Class I |
(24,363 | ) | (1,087 | ) | ||||
| Class R |
(2,392 | ) | (252 | ) | ||||
| Class Y |
(22,454 | ) | (2,190 | ) | ||||
| Total Distributions to Shareholders |
(108,849 | ) | (8,262 | ) | ||||
| Capital Share Transactions |
2,490,373 | 294,440 | ||||||
| Net Increase in Net Assets |
3,404,670 | 582,972 | ||||||
| Net Assets, Beginning of Period |
2,016,341 | 1,433,369 | ||||||
| Net Assets, End of Period |
$ | 5,421,011 | $ | 2,016,341 | ||||
| Distributions in excess of net investment income |
$ | (8,914 | ) | $ | (3,487 | ) | ||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 71 |
Table of Contents
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY ASSET STRATEGY FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 27.04 | $ | 0.27 | $ | 4.45 | $ | 4.72 | $ | (0.15 | ) | $ | — | $ | (0.15 | ) | ||||||||||||
| Year ended 3-31-2013 |
25.44 | 0.39 | 1.88 | 2.27 | (0.67 | ) | — | (0.67 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
25.42 | 0.20 | 0.10 | 0.30 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
22.42 | 0.24 | 2.81 | 3.05 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
18.69 | 0.16 | 3.66 | 3.82 | (0.09 | ) | — | (0.09 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
26.20 | 0.05 | 4.29 | 4.34 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2013 |
24.55 | 0.19 | 1.82 | 2.01 | (0.36 | ) | — | (0.36 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.53 | 0.00 | 0.12 | 0.12 | (0.10 | ) | — | (0.10 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
21.77 | 0.04 | 2.72 | 2.76 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
18.23 | (0.01 | ) | 3.55 | 3.54 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
26.33 | 0.05 | 4.32 | 4.37 | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
24.67 | 0.20 | 1.83 | 2.03 | (0.37 | ) | — | (0.37 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.66 | 0.01 | 0.11 | 0.12 | (0.11 | ) | — | (0.11 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
21.87 | 0.05 | 2.74 | 2.79 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
18.30 | 0.01 | 3.56 | 3.57 | — | — | — | |||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
27.10 | 0.26 | 4.45 | 4.71 | (0.14 | ) | — | (0.14 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
25.49 | 0.38 | 1.89 | 2.27 | (0.66 | ) | — | (0.66 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
25.48 | 0.19 | 0.10 | 0.29 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
22.47 | 0.22 | 2.84 | 3.06 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
18.74 | 0.17 | 3.66 | 3.83 | (0.10 | ) | — | (0.10 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
27.25 | 0.34 | 4.48 | 4.82 | (0.19 | ) | — | (0.19 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
25.67 | 0.45 | 1.90 | 2.35 | (0.77 | ) | — | (0.77 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
25.64 | 0.25 | 0.11 | 0.36 | (0.33 | ) | — | (0.33 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
22.58 | 0.26 | 2.86 | 3.12 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
18.81 | 0.17 | 3.73 | 3.90 | (0.13 | ) | — | (0.13 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
26.94 | 0.16 | 4.43 | 4.59 | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
25.29 | 0.29 | 1.88 | 2.17 | (0.52 | ) | — | (0.52 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
25.28 | 0.11 | 0.11 | 0.22 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
22.35 | 0.13 | 2.83 | 2.96 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
18.65 | 0.03 | 3.72 | 3.75 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
27.09 | 0.27 | 4.46 | 4.73 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
25.49 | 0.39 | 1.88 | 2.27 | (0.67 | ) | — | (0.67 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
25.46 | 0.20 | 0.11 | 0.31 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
22.46 | 0.23 | 2.82 | 3.05 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
18.72 | 0.21 | 3.63 | 3.84 | (0.10 | ) | — | (0.10 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| 72 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio
of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 31.61 | 17.47 | % | $ | 9,659 | 0.96 | % | 0.92 | % | — | % | — | % | 65 | % | ||||||||||||||||
| Year ended 3-31-2013 |
27.04 | 9.09 | 7,853 | 0.98 | 1.55 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
25.44 | 1.31 | 8,019 | 0.97 | 0.81 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
25.42 | 13.60 | 9,083 | 0.99 | 1.00 | — | — | 94 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
22.42 | 20.46 | 8,765 | 1.05 | 0.79 | — | — | 96 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
30.54 | 16.58 | 783 | 1.71 | 0.16 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
26.20 | 8.27 | 715 | 1.73 | 0.79 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
24.55 | 0.54 | 695 | 1.76 | 0.02 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
24.53 | 12.68 | 672 | 1.80 | 0.17 | — | — | 94 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
21.77 | 19.42 | 550 | 1.88 | -0.03 | — | — | 96 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
30.69 | 16.59 | 9,880 | 1.68 | 0.19 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
26.33 | 8.34 | 8,321 | 1.70 | 0.83 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
24.67 | 0.56 | 8,416 | 1.71 | 0.06 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
24.66 | 12.76 | 8,851 | 1.74 | 0.24 | — | — | 94 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
21.87 | 19.51 | 7,733 | 1.80 | 0.05 | — | — | 96 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
31.67 | 17.40 | 74 | 1.00 | 0.87 | 1.12 | 0.75 | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
27.10 | 9.07 | 58 | 1.00 | 1.50 | 1.20 | 1.30 | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
25.49 | 1.26 | 50 | 1.00 | 0.77 | 1.23 | 0.55 | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
25.48 | 13.63 | 44 | 1.00 | 0.95 | 1.39 | 0.56 | 94 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
22.47 | 20.45 | 32 | 1.00 | 0.84 | 1.56 | 0.28 | 96 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
31.88 | 17.72 | 13,522 | 0.73 | 1.14 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
27.25 | 9.33 | 9,681 | 0.74 | 1.76 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
25.67 | 1.57 | 8,180 | 0.75 | 1.03 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
25.64 | 13.84 | 6,986 | 0.77 | 1.14 | — | — | 94 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
22.58 | 20.74 | 3,973 | 0.81 | 0.92 | — | — | 96 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
31.45 | 17.03 | 162 | 1.33 | 0.54 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
26.94 | 8.71 | 124 | 1.34 | 1.15 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
25.29 | 0.96 | 102 | 1.33 | 0.45 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
25.28 | 13.24 | 68 | 1.31 | 0.57 | — | — | 94 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
22.35 | 20.12 | 28 | 1.33 | 0.20 | — | — | 96 | ||||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
31.67 | 17.47 | 1,516 | 0.96 | 0.92 | 0.98 | 0.90 | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
27.09 | 9.08 | 1,168 | 0.98 | 1.55 | 0.99 | 1.54 | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
25.49 | 1.35 | 1,167 | 0.97 | 0.80 | 1.00 | 0.77 | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
25.46 | 13.59 | 1,167 | 0.99 | 0.99 | 1.02 | 0.96 | 94 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
22.46 | 20.51 | 1,024 | 1.00 | 0.93 | 1.11 | 0.82 | 96 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 73 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY BALANCED FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 21.60 | $ | 0.15 | $ | 3.25 | $ | 3.40 | $ | (0.10 | ) | $ | (0.52 | ) | $ | (0.62 | ) | |||||||||||
| Year ended 3-31-2013 |
20.03 | 0.19 | 1.70 | 1.89 | (0.17 | ) | (0.15 | ) | (0.32 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
19.08 | 0.17 | 1.05 | 1.22 | (0.18 | ) | (0.09 | ) | (0.27 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
16.73 | 0.18 | 2.34 | 2.52 | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
13.01 | 0.21 | 3.72 | 3.93 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Class B Shares(3) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.45 | (0.03 | ) | 3.23 | 3.20 | — | (0.46 | ) | (0.46 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
19.93 | 0.03 | 1.69 | 1.72 | (0.05 | ) | (0.15 | ) | (0.20 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
18.99 | 0.02 | 1.05 | 1.07 | (0.04 | ) | (0.09 | ) | (0.13 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
16.67 | 0.04 | 2.33 | 2.37 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
12.97 | 0.08 | 3.71 | 3.79 | (0.09 | ) | — | (0.09 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.50 | (0.01 | ) | 3.24 | 3.23 | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
19.98 | 0.05 | 1.68 | 1.73 | (0.06 | ) | (0.15 | ) | (0.21 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
19.03 | 0.04 | 1.06 | 1.10 | (0.06 | ) | (0.09 | ) | (0.15 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
16.69 | 0.07 | 2.34 | 2.41 | (0.07 | ) | — | (0.07 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
12.98 | 0.12 | 3.71 | 3.83 | (0.12 | ) | — | (0.12 | ) | |||||||||||||||||||
| Class E Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.68 | 0.18 | 3.27 | 3.45 | (0.13 | ) | (0.52 | ) | (0.65 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
20.02 | 0.22 | 1.78 | 2.00 | (0.19 | ) | (0.15 | ) | (0.34 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
19.06 | 0.21 | 1.04 | 1.25 | (0.20 | ) | (0.09 | ) | (0.29 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
16.74 | 0.22 | 2.34 | 2.56 | (0.24 | ) | — | (0.24 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
13.02 | 0.25 | 3.72 | 3.97 | (0.25 | ) | — | (0.25 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.58 | 0.21 | 3.26 | 3.47 | (0.16 | ) | (0.53 | ) | (0.69 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
20.01 | 0.24 | 1.69 | 1.93 | (0.21 | ) | (0.15 | ) | (0.36 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
19.04 | 0.22 | 1.06 | 1.28 | (0.22 | ) | (0.09 | ) | (0.31 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
16.74 | 0.21 | 2.37 | 2.58 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
13.01 | 0.20 | 3.80 | 4.00 | (0.27 | ) | — | (0.27 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.59 | 0.07 | 3.26 | 3.33 | (0.03 | ) | (0.52 | ) | (0.55 | ) | ||||||||||||||||||
| Year ended 3-31-2013(5) |
20.16 | 0.00 | 1.43 | 1.43 | — | — | — | |||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.60 | 0.15 | 3.26 | 3.41 | (0.10 | ) | (0.53 | ) | (0.63 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
20.03 | 0.19 | 1.70 | 1.89 | (0.17 | ) | (0.15 | ) | (0.32 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
19.08 | 0.18 | 1.05 | 1.23 | (0.19 | ) | (0.09 | ) | (0.28 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
16.73 | 0.20 | 2.34 | 2.54 | (0.19 | ) | — | (0.19 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
13.01 | 0.24 | 3.71 | 3.95 | (0.23 | ) | — | (0.23 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class share is closed to investment. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 74 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Portfolio Turnover Rate |
|||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 24.38 | 15.90 | % | $ | 863 | 1.15 | % | 0.62 | % | 34 | % | ||||||||||||
| Year ended 3-31-2013 |
21.60 | 9.56 | 399 | 1.17 | 0.93 | 35 | ||||||||||||||||||
| Year ended 3-31-2012 |
20.03 | 6.52 | 205 | 1.23 | 0.90 | 37 | ||||||||||||||||||
| Year ended 3-31-2011 |
19.08 | 15.18 | 114 | 1.30 | 1.03 | 43 | ||||||||||||||||||
| Year ended 3-31-2010 |
16.73 | 30.35 | 81 | 1.37 | 1.38 | 57 | ||||||||||||||||||
| Class B Shares(3) |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.19 | 15.01 | 70 | 1.89 | -0.11 | 34 | ||||||||||||||||||
| Year ended 3-31-2013 |
21.45 | 8.73 | 44 | 1.95 | 0.16 | 35 | ||||||||||||||||||
| Year ended 3-31-2012 |
19.93 | 5.72 | 23 | 2.02 | 0.10 | 37 | ||||||||||||||||||
| Year ended 3-31-2011 |
18.99 | 14.25 | 11 | 2.09 | 0.24 | 43 | ||||||||||||||||||
| Year ended 3-31-2010 |
16.67 | 29.26 | 7 | 2.20 | 0.53 | 57 | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.26 | 15.11 | 524 | 1.84 | -0.06 | 34 | ||||||||||||||||||
| Year ended 3-31-2013 |
21.50 | 8.75 | 246 | 1.88 | 0.23 | 35 | ||||||||||||||||||
| Year ended 3-31-2012 |
19.98 | 5.84 | 128 | 1.92 | 0.21 | 37 | ||||||||||||||||||
| Year ended 3-31-2011 |
19.03 | 14.50 | 69 | 1.89 | 0.43 | 43 | ||||||||||||||||||
| Year ended 3-31-2010 |
16.69 | 29.59 | 42 | 1.99 | 0.78 | 57 | ||||||||||||||||||
| Class E Shares(4) |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.48 | 16.10 | — | * | 1.00 | 0.78 | 34 | |||||||||||||||||
| Year ended 3-31-2013 |
21.68 | 10.15 | — | * | 1.03 | 1.09 | 35 | |||||||||||||||||
| Year ended 3-31-2012 |
20.02 | 6.71 | — | * | 1.05 | 1.11 | 37 | |||||||||||||||||
| Year ended 3-31-2011 |
19.06 | 15.43 | — | * | 1.10 | 1.24 | 43 | |||||||||||||||||
| Year ended 3-31-2010 |
16.74 | 30.66 | — | * | 1.12 | 1.62 | 57 | |||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.36 | 16.21 | 211 | 0.88 | 0.89 | 34 | ||||||||||||||||||
| Year ended 3-31-2013 |
21.58 | 9.82 | 66 | 0.92 | 1.19 | 35 | ||||||||||||||||||
| Year ended 3-31-2012 |
20.01 | 6.88 | 39 | 0.94 | 1.17 | 37 | ||||||||||||||||||
| Year ended 3-31-2011 |
19.04 | 15.58 | 18 | 0.97 | 1.20 | 43 | ||||||||||||||||||
| Year ended 3-31-2010 |
16.74 | 30.93 | 2 | 1.00 | 1.67 | 57 | ||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.37 | 15.51 | 4 | 1.47 | 0.29 | 34 | ||||||||||||||||||
| Year ended 3-31-2013(5) |
21.59 | 7.09 | — | * | 1.48 | (6) | 0.02 | (6) | 35 | (7) | ||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.38 | 15.91 | 152 | 1.13 | 0.64 | 34 | ||||||||||||||||||
| Year ended 3-31-2013 |
21.60 | 9.57 | 89 | 1.16 | 0.96 | 35 | ||||||||||||||||||
| Year ended 3-31-2012 |
20.03 | 6.57 | 70 | 1.19 | 0.96 | 37 | ||||||||||||||||||
| Year ended 3-31-2011 |
19.08 | 15.29 | 48 | 1.22 | 1.10 | 43 | ||||||||||||||||||
| Year ended 3-31-2010 |
16.73 | 30.51 | 40 | 1.24 | 1.52 | 57 | ||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 75 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY ENERGY FUND
| Net Asset Value, Beginning of Period |
Net Investment Loss(1) |
Net Realized |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 13.74 | $ | (0.09 | ) | $ | 2.73 | $ | 2.64 | $ | — | $ | — | $ | — | |||||||||||||
| Year ended 3-31-2013 |
12.68 | (0.07 | ) | 1.13 | 1.06 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
15.11 | (0.09 | ) | (2.34 | ) | (2.43 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
11.11 | (0.07 | ) | 4.07 | 4.00 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.27 | (0.04 | ) | 3.88 | 3.84 | — | — | — | ||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.98 | (0.19 | ) | 2.56 | 2.37 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
12.08 | (0.17 | ) | 1.07 | 0.90 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
14.52 | (0.18 | ) | (2.26 | ) | (2.44 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
10.77 | (0.17 | ) | 3.92 | 3.75 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.12 | (0.14 | ) | 3.79 | 3.65 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.12 | (0.16 | ) | 2.59 | 2.43 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
12.19 | (0.14 | ) | 1.07 | 0.93 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
14.62 | (0.16 | ) | (2.27 | ) | (2.43 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
10.82 | (0.15 | ) | 3.95 | 3.80 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.14 | (0.12 | ) | 3.80 | 3.68 | — | — | — | ||||||||||||||||||||
| Class E Shares(5) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.92 | (0.04 | ) | 2.77 | 2.73 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
12.81 | (0.03 | ) | 1.14 | 1.11 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
15.22 | (0.05 | ) | (2.36 | ) | (2.41 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
11.16 | (0.04 | ) | 4.10 | 4.06 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.29 | (0.02 | ) | 3.89 | 3.87 | — | — | — | ||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.03 | (0.02 | ) | 2.79 | 2.77 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
12.90 | (0.02 | ) | 1.15 | 1.13 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
15.31 | (0.03 | ) | (2.38 | ) | (2.41 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
11.21 | (0.03 | ) | 4.13 | 4.10 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.32 | (0.01 | ) | 3.90 | 3.89 | — | — | — | ||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.74 | (0.11 | ) | 2.72 | 2.61 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013(6) |
12.26 | (0.03 | ) | 1.51 | 1.48 | — | — | — | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.86 | (0.06 | ) | 2.75 | 2.69 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
12.77 | (0.05 | ) | 1.14 | 1.09 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
15.20 | (0.07 | ) | (2.36 | ) | (2.43 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
11.16 | (0.06 | ) | 4.10 | 4.04 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.30 | (0.04 | ) | 3.90 | 3.86 | — | — | — | ||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | Class share is closed to investment. |
| (6) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (7) | Annualized. |
| (8) | For the fiscal year ended March 31, 2013. |
| 76 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Loss to Average Net Assets Including Expense Waiver |
Ratio
of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Loss to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 16.38 | 19.13 | % | $ | 124 | 1.60 | % | -0.59 | % | — | % | — | % | 34 | % | ||||||||||||||||
| Year ended 3-31-2013 |
13.74 | 8.44 | 82 | 1.60 | -0.54 | 1.68 | -0.62 | 30 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.68 | -16.08 | 85 | 1.60 | -0.66 | — | — | 20 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.11 | 36.00 | 101 | 1.60 | -0.59 | 1.66 | -0.65 | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.11 | 52.82 | 63 | 1.60 | -0.42 | 1.79 | -0.61 | 15 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.35 | 18.26 | 5 | 2.38 | -1.37 | — | — | 34 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
12.98 | 7.36 | 4 | 2.49 | -1.43 | — | — | 30 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.08 | -16.74 | 4 | 2.41 | -1.47 | — | — | 20 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
14.52 | 34.82 | 5 | 2.50 | -1.49 | — | — | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.77 | 51.26 | 3 | 2.60 | -1.40 | 2.68 | -1.48 | 15 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.55 | 18.43 | 30 | 2.16 | -1.15 | — | — | 34 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.12 | 7.71 | 19 | 2.26 | -1.20 | — | — | 30 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.19 | -16.62 | 20 | 2.23 | -1.30 | — | — | 20 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
14.62 | 35.12 | 25 | 2.29 | -1.29 | — | — | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.82 | 51.54 | 13 | 2.38 | -1.19 | — | — | 15 | ||||||||||||||||||||||||
| Class E Shares(5) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.65 | 19.53 | — | * | 1.25 | -0.25 | — | — | 34 | |||||||||||||||||||||||
| Year ended 3-31-2013 |
13.92 | 8.74 | — | * | 1.31 | -0.26 | — | — | 30 | |||||||||||||||||||||||
| Year ended 3-31-2012 |
12.81 | -15.83 | — | * | 1.30 | -0.36 | — | — | 20 | |||||||||||||||||||||||
| Year ended 3-31-2011 |
15.22 | 36.38 | — | * | 1.34 | -0.33 | — | — | 22 | |||||||||||||||||||||||
| Year ended 3-31-2010 |
11.16 | 53.09 | — | * | 1.39 | -0.19 | — | — | 15 | |||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.80 | 19.74 | 14 | 1.14 | -0.12 | — | — | 34 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.03 | 8.76 | 6 | 1.21 | -0.14 | — | — | 30 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.90 | -15.74 | 5 | 1.19 | -0.26 | — | — | 20 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.31 | 36.57 | 10 | 1.22 | -0.23 | — | — | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.21 | 53.14 | 2 | 1.24 | -0.13 | — | — | 15 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.35 | 19.00 | 5 | 1.72 | -0.70 | — | — | 34 | ||||||||||||||||||||||||
| Year ended 3-31-2013(6) |
13.74 | 12.07 | — | * | 1.73 | (7) | -0.91 | (7) | — | — | 30 | (8) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.55 | 19.41 | 18 | 1.39 | -0.38 | — | — | 34 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.86 | 8.54 | 8 | 1.45 | -0.39 | — | — | 30 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.77 | -15.99 | 7 | 1.45 | -0.52 | — | — | 20 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.20 | 36.20 | 9 | 1.49 | -0.48 | — | — | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.16 | 52.88 | 5 | 1.52 | -0.36 | — | — | 15 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 77 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY GLOBAL NATURAL RESOURCES FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 17.84 | $ | (0.02 | ) | $ | 1.25 | $ | 1.23 | $ | — | $ | — | $ | — | |||||||||||||
| Year ended 3-31-2013 |
17.76 | (0.03 | ) | 0.14 | 0.11 | (0.03 | ) | — | (0.03 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
24.20 | (0.01 | ) | (6.43 | ) | (6.44 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
18.60 | (0.04 | ) | 5.64 | 5.60 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
11.08 | (0.10 | ) | 7.62 | 7.52 | — | — | — | ||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.73 | (0.15 | ) | 1.09 | 0.94 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
15.76 | (0.14 | ) | 0.11 | (0.03 | ) | — | — | — | |||||||||||||||||||
| Year ended 3-31-2012 |
21.65 | (0.15 | ) | (5.74 | ) | (5.89 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
16.77 | (0.18 | ) | 5.06 | 4.88 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
10.08 | (0.21 | ) | 6.90 | 6.69 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.31 | (0.11 | ) | 1.06 | 0.95 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
15.31 | (0.11 | ) | 0.11 | 0.00 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
21.00 | (0.12 | ) | (5.57 | ) | (5.69 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
16.25 | (0.15 | ) | 4.90 | 4.75 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
9.75 | (0.18 | ) | 6.68 | 6.50 | — | — | — | ||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.06 | 0.04 | 1.26 | 1.30 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2013 |
17.96 | 0.01 | 0.15 | 0.16 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.45 | 0.01 | (6.50 | ) | (6.49 | ) | — | — | — | |||||||||||||||||||
| Year ended 3-31-2011 |
18.76 | (0.02 | ) | 5.71 | 5.69 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
11.16 | (0.07 | ) | 7.67 | 7.60 | — | — | — | ||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.28 | 0.07 | 1.28 | 1.35 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2013 |
18.19 | 0.06 | 0.14 | 0.20 | (0.11 | ) | — | (0.11 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.69 | 0.06 | (6.56 | ) | (6.50 | ) | — | — | — | |||||||||||||||||||
| Year ended 3-31-2011 |
18.90 | 0.02 | 5.77 | 5.79 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
11.22 | (0.04 | ) | 7.72 | 7.68 | — | — | — | ||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.67 | (0.04 | ) | 1.24 | 1.20 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
17.58 | (0.05 | ) | 0.14 | 0.09 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
24.00 | (0.05 | ) | (6.37 | ) | (6.42 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
18.47 | (0.08 | ) | 5.61 | 5.53 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
11.02 | (0.12 | ) | 7.57 | 7.45 | — | — | — | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.10 | 0.02 | 1.27 | 1.29 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2013 |
18.02 | 0.02 | 0.13 | 0.15 | (0.07 | ) | — | (0.07 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.50 | 0.03 | (6.51 | ) | (6.48 | ) | — | — | — | |||||||||||||||||||
| Year ended 3-31-2011 |
18.79 | (0.01 | ) | 5.72 | 5.71 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
11.17 | (0.06 | ) | 7.68 | 7.62 | — | — | — | ||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| 78 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio
of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 19.07 | 6.90 | % | $ | 1,008 | 1.56 | % | -0.09 | % | — | % | — | % | 100 | % | ||||||||||||||||
| Year ended 3-31-2013 |
17.84 | 0.64 | 1,375 | 1.52 | -0.18 | — | — | 83 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
17.76 | -26.61 | 1,770 | 1.41 | -0.07 | — | — | 84 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
24.20 | 30.11 | 3,095 | 1.39 | -0.22 | — | — | 105 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
18.60 | 67.87 | 2,822 | 1.45 | -0.58 | — | — | 112 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.67 | 5.98 | 40 | 2.41 | -0.95 | — | — | 100 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
15.73 | -0.19 | 69 | 2.33 | -0.97 | — | — | 83 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.76 | -27.21 | 112 | 2.20 | -0.86 | — | — | 84 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
21.65 | 29.10 | 198 | 2.21 | -1.05 | — | — | 105 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
16.77 | 66.37 | 186 | 2.28 | -1.39 | — | — | 112 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.26 | 6.21 | 291 | 2.18 | -0.72 | — | — | 100 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
15.31 | 0.00 | * | 410 | 2.13 | -0.78 | — | — | 83 | |||||||||||||||||||||||
| Year ended 3-31-2012 |
15.31 | -27.10 | 603 | 2.07 | -0.73 | — | — | 84 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
21.00 | 29.23 | 1,072 | 2.07 | -0.91 | — | — | 105 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
16.25 | 66.67 | 997 | 2.13 | -1.26 | — | — | 112 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.36 | 7.20 | 7 | 1.27 | 0.20 | 2.12 | -0.64 | 100 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
18.06 | 0.91 | 7 | 1.27 | 0.05 | 2.21 | -0.89 | 83 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
17.96 | -26.54 | 7 | 1.27 | 0.06 | 2.03 | -0.69 | 84 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
24.45 | 30.33 | 9 | 1.27 | -0.12 | 2.18 | -1.03 | 105 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
18.76 | 68.10 | 6 | 1.27 | -0.40 | 2.55 | -1.68 | 112 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.63 | 7.39 | 224 | 1.08 | 0.37 | — | — | 100 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
18.28 | 1.14 | 484 | 1.05 | 0.32 | — | — | 83 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
18.19 | -26.33 | 1,137 | 1.02 | 0.32 | — | — | 84 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
24.69 | 30.64 | 1,756 | 1.02 | 0.12 | — | — | 105 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
18.90 | 68.45 | 1,074 | 1.04 | -0.21 | — | — | 112 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.87 | 6.79 | 43 | 1.67 | -0.20 | — | — | 100 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
17.67 | 0.51 | 50 | 1.63 | -0.30 | — | — | 83 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
17.58 | -26.75 | 66 | 1.60 | -0.26 | — | — | 84 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
24.00 | 29.94 | 90 | 1.56 | -0.41 | — | — | 105 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
18.47 | 67.60 | 56 | 1.57 | -0.71 | — | — | 112 | ||||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.39 | 7.07 | 88 | 1.33 | 0.10 | — | — | 100 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
18.10 | 0.93 | 186 | 1.27 | 0.11 | 1.29 | 0.09 | 83 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
18.02 | -26.45 | 491 | 1.20 | 0.14 | 1.27 | 0.07 | 84 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
24.50 | 30.39 | 799 | 1.20 | -0.04 | 1.27 | -0.11 | 105 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
18.79 | 68.22 | 667 | 1.20 | -0.36 | 1.29 | -0.45 | 112 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 79 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY GLOBAL REAL ESTATE FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Loss on Investments |
Total from Investment Operations |
Distributions |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 10.00 | $ | 0.11 | $ | (0.12 | ) | $ | (0.01 | ) | $ | (0.16 | ) | $ | — | $ | (0.16 | ) | ||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.00 | * | (0.12 | ) | (0.12 | ) | (0.09 | ) | — | (0.09 | ) | ||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.00 | * | (0.11 | ) | (0.11 | ) | (0.09 | ) | — | (0.09 | ) | ||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.09 | (0.11 | ) | (0.02 | ) | (0.16 | ) | — | (0.16 | ) | |||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.04 | (0.11 | ) | (0.07 | ) | (0.12 | ) | — | (0.12 | ) | |||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.11 | (0.05 | ) | 0.06 | (0.17 | ) | — | (0.17 | ) | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Performance total returns are considered less than one year from the date, (4-1-13 commencement of operations of each class), on which shares were first acquired by shareholders. Returns for periods of less than one year are cumulative from the date indicated. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | Ratio of expenses to average net assets excluding offering cost was 2.40%. |
| (6) | Ratio of expenses to average net assets excluding offering cost was 2.39%. |
| (7) | Ratio of expenses to average net assets excluding offering cost was 1.43%. |
| (8) | Ratio of expenses to average net assets excluding offering cost was 1.99%. |
| 80 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 9.83 | 0.02 | % | $ | 22 | 1.51 | % | 1.12 | % | 2.62 | % | 0.01 | % | 36 | % | ||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.79 | -1.16 | — | * | 2.68 | (5) | -0.02 | 3.14 | -0.48 | 36 | ||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.80 | -1.03 | 1 | 2.67 | (6) | 0.00 | 3.12 | -0.45 | 36 | |||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.82 | -0.13 | 2 | 1.71 | (7) | 0.94 | 2.16 | 0.49 | 36 | |||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.81 | -0.67 | — | * | 2.27 | (8) | 0.38 | 2.73 | -0.08 | 36 | ||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.89 | 0.68 | 1 | 1.51 | 1.13 | 2.37 | 0.27 | 36 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 81 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY GLOBAL RISK-MANAGED REAL ESTATE FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Loss on Investments |
Total from Investment Operations |
Distributions |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 10.00 | $ | 0.13 | $ | (0.24 | ) | $ | (0.11 | ) | $ | (0.17 | ) | $ | — | $ | (0.17 | ) | ||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.03 | (0.23 | ) | (0.20 | ) | (0.10 | ) | — | (0.10 | ) | |||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.03 | (0.23 | ) | (0.20 | ) | (0.10 | ) | — | (0.10 | ) | |||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.12 | (0.24 | ) | (0.12 | ) | (0.16 | ) | — | (0.16 | ) | |||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.06 | (0.24 | ) | (0.18 | ) | (0.12 | ) | — | (0.12 | ) | |||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.00 | 0.13 | (0.24 | ) | (0.11 | ) | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Performance total returns are considered less than one year from the date, (4-1-13 commencement of operations of each class), on which shares were first acquired by shareholders. Returns for periods of less than one year are cumulative from the date indicated. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | Ratio of expenses to average net assets excluding offering cost was 2.15%. |
| (6) | Ratio of expenses to average net assets excluding offering cost was 1.27%. |
| (7) | Ratio of expenses to average net assets excluding offering cost was 1.88%. |
| 82 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 9.72 | -1.00 | % | $ | 20 | 1.51 | % | 1.39 | % | 2.08 | % | 0.82 | % | 38 | % | ||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.70 | -1.92 | 1 | 2.53 | (5) | 0.32 | 2.58 | 0.27 | 38 | |||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.70 | -1.91 | 2 | 2.53 | (5) | 0.33 | 2.58 | 0.28 | 38 | |||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.72 | -1.09 | 8 | 1.65 | (6) | 1.20 | 1.70 | 1.15 | 38 | |||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.70 | -1.72 | 2 | 2.26 | (7) | 0.60 | 2.31 | 0.55 | 38 | |||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.72 | -0.98 | 3 | 1.50 | 1.35 | 1.95 | 0.90 | 38 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 83 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY REAL ESTATE SECURITIES FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 23.73 | $ | 0.16 | $ | 0.69 | $ | 0.85 | $ | (0.23 | ) | $ | — | $ | (0.23 | ) | ||||||||||||
| Year ended 3-31-2013 |
21.27 | 0.16 | 2.45 | 2.61 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
19.42 | 0.09 | 1.82 | 1.91 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.95 | 0.03 | 3.62 | 3.65 | (0.18 | ) | — | (0.18 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.31 | 0.19 | 7.64 | 7.83 | (0.19 | ) | — | (0.19 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.17 | (0.06 | ) | 0.66 | 0.60 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
20.85 | (0.06 | ) | 2.38 | 2.32 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
19.20 | (0.12 | ) | 1.77 | 1.65 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
15.82 | (0.17 | ) | 3.57 | 3.40 | (0.02 | ) | — | (0.02 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.24 | 0.03 | 7.56 | 7.59 | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.42 | 0.00 | * | 0.67 | 0.67 | (0.07 | ) | — | (0.07 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
21.00 | 0.01 | 2.42 | 2.43 | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
19.27 | (0.05 | ) | 1.78 | 1.73 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
15.86 | (0.10 | ) | 3.59 | 3.49 | (0.08 | ) | — | (0.08 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.26 | 0.09 | 7.60 | 7.69 | (0.09 | ) | — | (0.09 | ) | |||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.72 | 0.13 | 0.70 | 0.83 | (0.20 | ) | — | (0.20 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
21.27 | 0.14 | 2.46 | 2.60 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
19.43 | 0.10 | 1.81 | 1.91 | (0.07 | ) | — | (0.07 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.96 | 0.03 | 3.63 | 3.66 | (0.19 | ) | — | (0.19 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.32 | 0.19 | 7.70 | 7.89 | (0.25 | ) | — | (0.25 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.85 | 0.28 | 0.69 | 0.97 | (0.32 | ) | — | (0.32 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
21.37 | 0.24 | 2.51 | 2.75 | (0.27 | ) | — | (0.27 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
19.52 | 0.22 | 1.80 | 2.02 | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
16.00 | 0.17 | 3.61 | 3.78 | (0.26 | ) | — | (0.26 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.34 | 0.06 | 7.90 | 7.96 | (0.30 | ) | — | (0.30 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.73 | 0.15 | 0.68 | 0.83 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
21.27 | 0.15 | 2.44 | 2.59 | (0.13 | ) | — | (0.13 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
19.43 | 0.09 | 1.81 | 1.90 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.95 | (0.01 | ) | 3.68 | 3.67 | (0.19 | ) | — | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.31 | 0.15 | 7.73 | 7.88 | (0.24 | ) | — | (0.24 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.75 | 0.24 | 0.68 | 0.92 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
21.28 | 0.23 | 2.45 | 2.68 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
19.44 | 0.16 | 1.81 | 1.97 | (0.13 | ) | — | (0.13 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.95 | 0.10 | 3.62 | 3.72 | (0.23 | ) | — | (0.23 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.31 | 0.26 | 7.66 | 7.92 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| 84 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 24.35 | 3.65 | % | $ | 384 | 1.56 | % | 0.67 | % | 1.66 | % | 0.57 | % | 73 | % | ||||||||||||||||
| Year ended 3-31-2013 |
23.73 | 12.32 | 341 | 1.64 | 0.71 | 1.68 | 0.67 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
21.27 | 9.88 | 276 | 1.73 | 0.45 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.42 | 23.00 | 247 | 1.79 | 0.16 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.95 | 94.78 | 178 | 2.09 | 1.51 | — | — | 72 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.77 | 2.59 | 6 | 2.61 | -0.28 | 2.71 | -0.38 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
23.17 | 11.08 | 7 | 2.75 | -0.29 | 2.79 | -0.33 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
20.85 | 8.65 | 7 | 2.89 | -0.62 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.20 | 21.51 | 8 | 3.01 | -0.99 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.82 | 92.14 | 7 | 3.53 | 0.20 | — | — | 72 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.02 | 2.90 | 14 | 2.27 | 0.02 | 2.37 | -0.08 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
23.42 | 11.50 | 15 | 2.35 | 0.03 | 2.39 | -0.01 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
21.00 | 9.03 | 12 | 2.49 | -0.28 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.27 | 22.07 | 12 | 2.56 | -0.52 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.86 | 93.33 | 9 | 2.88 | 0.72 | — | — | 72 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.35 | 3.58 | 2 | 1.67 | 0.54 | 2.15 | 0.06 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
23.72 | 12.27 | 2 | 1.67 | 0.61 | 2.27 | 0.01 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
21.27 | 9.90 | 1 | 1.67 | 0.50 | 2.36 | -0.19 | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.43 | 23.12 | 1 | 1.67 | 0.16 | 2.52 | -0.69 | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.96 | 95.63 | 1 | 1.67 | 1.57 | 3.45 | -0.21 | 72 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.50 | 4.20 | 9 | 1.02 | 1.18 | 1.12 | 1.08 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
23.85 | 12.95 | 7 | 1.09 | 1.06 | 1.12 | 1.03 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
21.37 | 10.46 | 3 | 1.15 | 1.15 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.52 | 23.84 | 5 | 1.16 | 0.97 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
16.00 | 96.35 | 4 | 1.27 | 0.34 | — | — | 72 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.35 | 3.58 | 1 | 1.66 | 0.62 | 1.76 | 0.52 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
23.73 | 12.23 | 2 | 1.71 | 0.69 | 1.75 | 0.65 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
21.27 | 9.84 | 1 | 1.73 | 0.49 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.43 | 23.17 | 1 | 1.70 | -0.05 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.95 | 95.59 | — | * | 1.73 | 1.27 | — | — | 72 | |||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.39 | 3.97 | 143 | 1.27 | 1.03 | 1.37 | 0.93 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
23.75 | 12.63 | 168 | 1.34 | 1.06 | 1.37 | 1.03 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
21.28 | 10.24 | 149 | 1.39 | 0.82 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.44 | 23.51 | 150 | 1.39 | 0.57 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.95 | 96.18 | 109 | 1.41 | 2.09 | — | — | 72 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 85 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY SCIENCE AND TECHNOLOGY FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 39.79 | $ | (0.30 | ) | $ | 14.54 | $ | 14.24 | $ | — | $ | (1.32 | ) | $ | (1.32 | ) | |||||||||||
| Year ended 3-31-2013 |
33.54 | (0.27 | ) | 6.71 | 6.44 | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
35.09 | (0.32 | ) | 0.93 | 0.61 | — | (2.16 | ) | (2.16 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
29.35 | (0.25 | ) | 6.39 | 6.14 | — | (0.40 | ) | (0.40 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
21.07 | (0.07 | ) | 8.52 | 8.45 | — | (0.17 | ) | (0.17 | ) | ||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
34.92 | (0.59 | ) | 12.72 | 12.13 | — | (1.32 | ) | (1.32 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
29.69 | (0.48 | ) | 5.90 | 5.42 | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
31.58 | (0.53 | ) | 0.77 | 0.24 | — | (2.13 | ) | (2.13 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
26.62 | (0.47 | ) | 5.75 | 5.28 | — | (0.32 | ) | (0.32 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
19.19 | (0.31 | ) | 7.74 | 7.43 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
35.99 | (0.58 | ) | 13.12 | 12.54 | — | (1.32 | ) | (1.32 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
30.57 | (0.47 | ) | 6.08 | 5.61 | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
32.41 | (0.51 | ) | 0.80 | 0.29 | — | (2.13 | ) | (2.13 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
27.29 | (0.44 | ) | 5.91 | 5.47 | — | (0.35 | ) | (0.35 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
19.65 | (0.26 | ) | 7.93 | 7.67 | — | (0.03 | ) | (0.03 | ) | ||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
39.74 | (0.38 | ) | 14.53 | 14.15 | — | (1.32 | ) | (1.32 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
33.48 | (0.29 | ) | 6.74 | 6.45 | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
35.04 | (0.33 | ) | 0.92 | 0.59 | — | (2.15 | ) | (2.15 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
29.33 | (0.26 | ) | 6.38 | 6.12 | — | (0.41 | ) | (0.41 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
21.05 | (0.06 | ) | 8.52 | 8.46 | — | (0.18 | ) | (0.18 | ) | ||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
42.72 | (0.19 | ) | 15.66 | 15.47 | — | (1.32 | ) | (1.32 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
35.88 | (0.17 | ) | 7.20 | 7.03 | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
37.36 | (0.23 | ) | 1.01 | 0.78 | — | (2.26 | ) | (2.26 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
31.16 | (0.16 | ) | 6.80 | 6.64 | — | (0.44 | ) | (0.44 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
22.33 | 0.01 | 9.05 | 9.06 | — | (0.23 | ) | (0.23 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
39.42 | (0.46 | ) | 14.40 | 13.94 | — | (1.32 | ) | (1.32 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
33.32 | (0.36 | ) | 6.65 | 6.29 | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
34.93 | (0.40 | ) | 0.92 | 0.52 | — | (2.13 | ) | (2.13 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
29.27 | (0.32 | ) | 6.37 | 6.05 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
21.02 | (0.13 | ) | 8.52 | 8.39 | — | (0.14 | ) | (0.14 | ) | ||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
41.60 | (0.31 | ) | 15.23 | 14.92 | — | (1.32 | ) | (1.32 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
35.03 | (0.26 | ) | 7.02 | 6.76 | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
36.54 | (0.31 | ) | 0.98 | 0.67 | — | (2.18 | ) | (2.18 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
30.54 | (0.23 | ) | 6.65 | 6.42 | — | (0.42 | ) | (0.42 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
21.90 | (0.04 | ) | 8.87 | 8.83 | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| 86 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Loss to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 52.71 | 35.99 | % | $ | 1,998 | 1.26 | % | -0.63 | % | — | % | — | % | 35 | % | ||||||||||||||||
| Year ended 3-31-2013 |
39.79 | 19.28 | 759 | 1.37 | -0.79 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
33.54 | 3.01 | 549 | 1.39 | -1.02 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
35.09 | 21.09 | 568 | 1.40 | -0.83 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
29.35 | 40.13 | 437 | 1.50 | -0.28 | — | — | 59 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
45.73 | 34.91 | 71 | 2.04 | -1.42 | — | — | 35 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
34.92 | 18.37 | 40 | 2.17 | -1.59 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
29.69 | 2.15 | 32 | 2.24 | -1.86 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
31.58 | 19.98 | 31 | 2.29 | -1.72 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
26.62 | 38.72 | 24 | 2.51 | -1.29 | — | — | 59 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
47.21 | 35.02 | 776 | 1.97 | -1.34 | — | — | 35 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
35.99 | 18.47 | 278 | 2.07 | -1.50 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
30.57 | 2.25 | 219 | 2.13 | -1.76 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
32.41 | 20.17 | 230 | 2.15 | -1.58 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
27.29 | 39.05 | 183 | 2.28 | -1.07 | — | — | 59 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
52.57 | 35.80 | 17 | 1.43 | -0.80 | 1.63 | -1.00 | 35 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
39.74 | 19.31 | 9 | 1.43 | -0.85 | 1.91 | -1.33 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
33.48 | 3.00 | 6 | 1.43 | -1.06 | 2.01 | -1.64 | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
35.04 | 21.03 | 6 | 1.43 | -0.87 | 2.08 | -1.52 | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
29.33 | 40.21 | 4 | 1.43 | -0.24 | 2.56 | -1.37 | 59 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
56.87 | 36.37 | 1,411 | 0.99 | -0.36 | — | — | 35 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
42.72 | 19.70 | 322 | 1.04 | -0.46 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
35.88 | 3.37 | 186 | 1.06 | -0.69 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
37.36 | 21.48 | 182 | 1.07 | -0.50 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
31.16 | 40.65 | 122 | 1.11 | 0.02 | — | — | 59 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
52.04 | 35.56 | 105 | 1.59 | -0.96 | — | — | 35 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
39.42 | 18.96 | 56 | 1.64 | -1.07 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
33.32 | 2.76 | 42 | 1.64 | -1.27 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
34.93 | 20.83 | 35 | 1.61 | -1.06 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
29.27 | 39.95 | 19 | 1.64 | -0.48 | — | — | 59 | ||||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
55.20 | 36.02 | 1,043 | 1.24 | -0.61 | — | — | 35 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
41.60 | 19.40 | 552 | 1.29 | -0.71 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
35.03 | 3.10 | 399 | 1.30 | -0.93 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
36.54 | 21.18 | 445 | 1.31 | -0.74 | — | — | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
30.54 | 40.36 | 352 | 1.35 | -0.13 | — | — | 59 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 87 |
Table of Contents
| Ivy Funds |
MARCH 31, 2014 |
| 1. | ORGANIZATION |
Ivy Funds, a Delaware statutory trust (the “Trust”), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. Ivy Asset Strategy Fund, Ivy Balanced Fund, Ivy Energy Fund, Ivy Global Natural Resources Fund, Ivy Global Real Estate Fund, Ivy Global Risk-Managed Real Estate Fund, Ivy Real Estate Securities Fund and Ivy Science and Technology Fund (each, a “Fund”) are eight series of the Trust and are the only series of the Trust included in these financial statements. The investment objective(s), policies and risk factors of each Fund are described more fully in the Funds’ Prospectus and Statement of Additional Information. Each Fund’s investment manager is Ivy Investment Management Company (“IICO” or the “Manager”).
Each Fund offers Class A, Class B, Class C, Class I, Class Y, and Class R shares. Effective January 1, 2014, the Funds’ Class B shares are not available for purchase by new and existing investors. Class B shares will continue to be available for dividend reinvestment and exchanges from Class B shares of another fund within Ivy Funds. Certain Funds may also offer Class E shares. Class E shares are closed for all investments in the Ivy Balanced Fund and Ivy Energy Fund. Class A and Class E shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B and Class C shares are sold without a front-end sales charge, but may be subject to a contingent deferred sales charge (“CDSC”). Class I, Class R and Class Y shares are sold without either a front-end sales charge or a CDSC. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Net investment income, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer agent and shareholder servicing fees, directly attributable to that class. Class A, B, C, E, R and Y have a distribution and service plan. Class I shares are not included in the plan. Class B shares will automatically convert to Class A shares 96 months after the date of purchase.
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies consistently followed by each Fund.
Security Transactions and Related Investment Income. Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses are calculated on the identified cost basis. Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. All or a portion of the distributions received from a real estate investment trust or publicly traded partnership may be designated as a reduction of cost of the related investment and/or realized gain.
Foreign Currency Translation. Each Fund’s accounting records are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily, using foreign exchange rates obtained from an independent pricing service authorized by the Board of Trustees of the Trust (the “Board”). Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translation arise from changes in currency exchange rates. Each Fund combines fluctuations from currency exchange rates and fluctuations in value when computing net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments. Foreign exchange rates are valued as of the close of the New York Stock Exchange (“NYSE”), normally 4:00 P.M. Eastern time, on each day the NYSE is open for trading.
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.
It is the policy of each Fund to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. In addition, each Fund intends to pay distributions as required to avoid imposition of excise tax. Accordingly, no provision has been made for Federal income taxes. Management of the Trust periodically reviews all tax positions to assess that it is more likely than not that the position would be sustained upon examination by the relevant tax authority based on the technical merits of each position. As of and for the year ended March 31, 2014, management believes that no liability for unrecognized tax positions is required. The Funds are subject to examination by U.S. federal and state authorities for returns filed for tax years after 2009.
Dividends and Distributions to Shareholders. Dividends and distributions to shareholders are recorded by each Fund on the business day following record date. Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America (“U.S. GAAP”). If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital.
Segregation and Collateralization. In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that a Fund either deliver collateral or segregate assets in connection with certain investments (e.g., dollar rolls, financial futures contracts, foreign currency exchange contracts, options written, securities with extended settlement periods and swaps), the Fund will segregate collateral or designate on its books and records cash or other liquid securities having a value at least equal to the amount that is required to be physically segregated for the benefit of the counterparty. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit cash or securities as collateral for certain investments. Certain countries require that cash reserves be held while investing in companies incorporated in that country. These cash reserves and cash collateral that has been pledged to
| 88 | ANNUAL REPORT | 2014 |
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cover obligations of the Funds under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as “Restricted cash.” Securities collateral pledged for the same purpose, if any, is noted on the Schedule of Investments.
Concentration of Market and Credit Risk. In the normal course of business, the Funds invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded on the Funds’ Statement of Assets and Liabilities, less any collateral held by the Funds.
Certain Funds may hold high-yield and/or non-investment-grade bonds, which may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Funds may acquire securities in default and are not obligated to dispose of securities whose issuers subsequently default.
Certain Funds may enter into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected on the Statement of Assets and Liabilities.
If a Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad.
Inflation-Indexed Bonds. Certain Funds may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond will be included as interest income on the Statement of Operations, even though investors do not receive their principal until maturity.
Interest Only Obligations. These securities entitle the owner to receive only the interest portion from a bond, Treasury note or pool of mortgages. These securities are generally created by a third party separating a bond or pool of mortgages into distinct interest-only and principal-only securities. As the principal (par) amount of a bond or pool of mortgages is paid down, the amount of interest income earned by the owner will decline as well.
Payment In-Kind Securities. Certain Funds may invest in payment in-kind securities (“PIKs”). PIKs give the issuer the option at each interest payment date of making interest payments in either cash or additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the accrued interest (referred to as a dirty price) and require a pro-rata adjustment from the unrealized appreciation or depreciation on investments to interest receivable on the Statement of Assets and Liabilities.
Securities on a When-Issued or Delayed Delivery Basis. Certain Funds may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis. “When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by a Fund on a when-issued basis normally take place within six months and possibly as long as two years or more after the trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The purchase of securities on a when-issued basis may increase the volatility of a Fund’s net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. When a Fund engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain or dispose of the security at a price and yield IICO, or the Fund’s investment subadviser, as applicable, consider advantageous. The Fund maintains internally designated assets with a value equal to or greater than the amount of its purchase commitments. The Fund may also sell securities that it purchased on a when-issued or delayed delivery basis prior to settlement of the original purchase.
Loans. Certain Funds may invest in loans, the interest rates of which float or adjust periodically based upon a specified adjustment schedule, benchmark indicator, or prevailing interest rates of domestic or foreign corporations, partnerships and other entities (“Borrower”). Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates generally include prime rates of one or more major U.S. banks, LIBOR rates or certificates of deposit rates. Loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay cannot be predicted with accuracy. As a result, the actual maturity may be substantially less than the stated maturities. Loans are exempt from registration under the Securities Act of 1933, may contain certain
| 2014 | ANNUAL REPORT | 89 |
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restrictions on resale, and cannot be sold publicly. A Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties.
When a Fund purchases assignments, it acquires all the rights and obligations under the loan agreement of the assigning lender. Assignments may, however, be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than those held by the assigning lender. When a Fund purchases a participation of a loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation. A participation interest in loans includes the right to receive payments of principal, interest and any fees to which it is entitled from the lender and only upon receipt by the lender of payments from the Borrower, but not from the Borrower directly. When investing in a participation interest, if a Borrower is unable to meet its obligations under a loan agreement, a Fund generally has no right to enforce compliance with the terms of the loan agreement. As a result, the Fund assumes the credit risk of the Borrower, the selling participant, and any other persons that are interpositioned between the Fund and the Borrower. If the lead lender in a typical lending syndicate becomes insolvent, enters FDIC receivership or, if not FDIC insured, enters into bankruptcy, the Fund may incur certain costs and delays in receiving payment or may suffer a loss of principal and/or interest.
Custodian Fees. “Custodian fees” on the Statement of Operations may include interest expense incurred by a Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. A Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by that Fund. The “Earnings credit” line item, if shown, represents earnings on cash balances maintained by that Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.
Trustees and Chief Compliance Officer Fees. Fees paid to the Trustees can be paid in cash or deferred to a later date, at the election of the Trustee according to the Deferred Fee Agreement entered into between the Trust and the Trustee(s). Each Fund records its portion of the deferred fees as a liability on the Statement of Assets and Liabilities. All fees paid in cash plus any appreciation (depreciation) in the underlying deferred plan are shown on the Statement of Operations. Additionally, fees paid to the office of the Chief Compliance Officer of the Funds are shown on the Statement of Operations.
Indemnifications. The Trust’s organizational documents provide current and former Trustees and Officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Trust. In the normal course of business, the Trust may also enter into contracts that provide general indemnification. The Trust’s maximum exposure under these arrangements is unknown and is dependent on future claims that may be made against the Trust. The risk of material loss from such claims is considered remote.
Estimates. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Subsequent Events. Management has performed a review for subsequent events through the date this report was issued.
| 3. | INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS |
Each Fund’s investments are reported at fair value. Fair value is defined as the price that each Fund would receive upon selling an asset or would pay upon satisfying a liability in an orderly transaction between market participants at the measurement date. Each Fund calculates the Net Asset Value (“NAV”) of its shares as of the close of the NYSE, normally 4:00 P.M. Eastern time, on each day the NYSE is open for trading.
For purposes of calculating the NAV, the portfolio securities and other assets are valued on each business day using pricing and valuation methods as adopted by the Board. Where market quotes are readily available, fair value is generally determined on the basis of last reported sales prices, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers, or pricing services.
Prices for fixed-income securities are typically based on quotes that are obtained from an independent pricing service authorized by the Board. To determine values of fixed-income securities, the independent pricing service utilizes such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Securities that cannot be valued by the independent pricing service may be valued using quotes obtained from dealers that make markets in the securities.
Short-term securities with maturities of 60 days or less are valued on the basis of amortized cost (which approximates value), whereby a portfolio security is valued at its cost initially, and thereafter valued to reflect a constant amortization to maturity of any discount or premium.
Because many foreign markets close before the NYSE, events may occur between the close of the foreign market and the close of the NYSE that could have a material impact on the valuation of foreign securities. Waddell & Reed Services Company (“WRSCO”), pursuant to procedures adopted by the Board, evaluates the impact of these events and may adjust the valuation of foreign securities to reflect the fair value as of the close of the NYSE. In addition, all securities for which values are not readily available or are deemed unreliable are appraised at fair value as determined in good faith under the supervision of the Board.
Where market quotes are not readily available, portfolio securities or assets are valued at fair value, as determined in good faith by the Board or WRSCO pursuant to instructions from the Board.
Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the NYSE close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade do not open for trading for the entire day and no other market prices are available.
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The Board has delegated to WRSCO, the responsibility for monitoring significant events that may materially affect the values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events. WRSCO has established a Valuation Committee to administer and oversee the valuation process, including the use of third party pricing vendors.
The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelines established by the Board, with reference to other securities or indices. In the event that the security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the value of the security or asset will be determined in good faith by the Valuation Committee and appropriate consultation with the Board.
When a Fund uses these fair valuation methods applied by WRSCO that use significant unobservable inputs to determine its NAV, securities will be priced by a method that the Board or persons acting at their direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. The prices used by a Fund may differ from the value that will ultimately be realized at the time the securities were sold.
WRSCO is responsible for monitoring the implementation of the pricing and valuation policies through a series of activities to provide reasonable comfort of the accuracy of prices including: 1) periodic vendor due diligence meetings to review methodologies, new developments, and process at vendors, 2) daily and monthly multi-source pricing comparisons reviewed and submitted to the Valuation Committee, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed by management and the Valuation Committee.
Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the factors that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs which are significant to the overall valuation.
The three-tier hierarchy of inputs is summarized as follows:
| • | Level 1 – Observable input such as quoted prices, available in active markets, for identical assets or liabilities. |
| • | Level 2 – Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. |
| • | Level 3 – Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair value of investments. |
A description of the valuation techniques applied to the Funds’ major classes of assets and liabilities measured at fair value on a recurring basis follows:
Asset-Backed Securities and Mortgage-Backed Securities. The fair value of asset-backed securities and mortgage-backed securities are estimated using recently executed transactions and based on models that consider the estimated cash flows of each debt tranche of the issuer, establish a benchmark yield, and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche including, but not limited to, the prepayment speed assumptions and attributes of the collateral. To the extent the inputs are observable and timely, the values would be categorized in Level 2 of the fair value hierarchy, and otherwise they would be categorized as Level 3.
Loans. Loans are valued using a price or composite price from one or more brokers or dealers as obtained from an independent pricing service. The fair value of loans is estimated using recently executed transactions, market price quotations, credit/market events, and cross-asset pricing. Inputs are generally observable market inputs obtained from independent sources. Loans are generally categorized in Level 2 of the fair value hierarchy, unless key inputs are unobservable in which case they would be categorized as Level 3.
Bullion. The fair value of bullion is at the last settlement price at the end of each day on the board of trade or exchange upon which they are traded and are categorized in Level 1 of the fair value hierarchy.
Corporate Bonds. The fair value of corporate bonds is estimated using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, fundamental data relating to the issuer, and credit default swap spreads adjusted for any basis difference between cash and derivative instruments. While most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3 of the fair value hierarchy.
Derivative Instruments. Forward foreign currency contracts are valued based upon the closing prices of the forward currency rates determined at the close of the NYSE. Swaps are valued by an independent pricing service unless the price is unavailable, in which case they are valued at the price provided by a dealer in that security. Futures contracts traded on an exchange are generally valued at the settlement price. Listed options are ordinarily valued at the mean of the last bid and ask price provided by an independent pricing service unless the price is unavailable, in which case
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they are valued at a quotation obtained from a broker-dealer. Over-the-counter (“OTC”) options are ordinarily valued at the mean of the last bid and ask price provided by an independent pricing service for a comparable listed option unless such a price is unavailable, in which case they are valued at a quotation obtained from a broker-dealer. If no comparable listed option exists from which to obtain a price from an independent pricing service and a quotation cannot be obtained from a broker-dealer, the OTC option will be valued using a model reasonably designed to provide a current market price.
Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. OTC derivative contracts include forward foreign currency contracts, swap agreements, and option contracts related to interest rates, foreign currencies, credit standing of reference entities, equity prices, or commodity prices. Depending on the product and the terms of the transaction, the fair value of the OTC derivative products are modeled taking into account the counterparties’ creditworthiness and using a series of techniques, including simulation models. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgments and the pricing inputs are observed from actively quoted markets, as is the case with interest rate swap and option contracts. A substantial majority of OTC derivative products valued using pricing models fall into this category and are categorized within Level 2 of the fair value hierarchy.
Equity Securities. Equity securities traded on U.S. or foreign securities exchanges or included in a national market system are valued at the official closing price at the close of each business day unless otherwise stated below. OTC equity securities and listed securities for which no price is readily available are valued at the average of the last bid and asked prices.
Mutual funds, including investment funds, typically are valued at the NAV reported as of the valuation date.
Securities that are stated at the last reported sales price or closing price on the day of valuation taken from the primary exchange where the security is principally traded and to the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Foreign securities, for which the primary trading market closes at the same time or after the NYSE, are valued based on quotations from the primary market in which they are traded and categorized in Level 1. Because many foreign securities markets and exchanges close prior to the close of the NYSE, closing prices for foreign securities in those markets or on those exchanges do not reflect the events that occur after that close. Certain foreign securities may be fair valued using a pricing service that considers the correlation of the trading patterns of the foreign security to the intra-day trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, Exchange Traded Funds, and the movement of certain indices of securities based on a statistical analysis of their historical relationship; such valuations generally are categorized in Level 2.
Preferred stock, repurchase agreements, and other equities traded on inactive markets or valued by reference to similar instruments are also generally categorized in Level 2.
Municipal Bonds. Municipal bonds are fair valued based on pricing models that take into account, among other factors, information received from market makers and broker-dealers, current trades, bid-wants lists, offerings, market movements, the callability of the bond, state of issuance, benchmark yield curves, and bond insurance. To the extent that these inputs are observable and timely, the fair values of municipal bonds would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Restricted Securities. Restricted securities that are deemed to be both Rule 144A securities and illiquid, as well as restricted securities held in non-public entities are included in Level 3 of the fair value hierarchy because they trade infrequently, and, therefore, the inputs are unobservable. Restricted securities that are valued at a discount to similar publicly traded securities may be categorized as Level 2 of the fair value hierarchy to the extent that the discount is considered to be insignificant to the fair value measurement in its entirety; otherwise they may be categorized as Level 3.
U.S. Government and Agency Securities. U.S. government and agency securities are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, quoted market prices, and reference data. Accordingly, U.S. government and agency securities are normally categorized in Level 1 or 2 of the fair value hierarchy depending on the liquidity and transparency of the market.
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. Transfers between levels represent the values as of the beginning of the reporting period.
For fair valuations using unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3 category during the period. The beginning of period timing recognition is used for the transfers between Levels of the Funds’ assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for each respective Fund.
Net realized gain (loss) and net unrealized appreciation (depreciation), shown on the reconciliation of Level 3 investments if applicable, are included on the Statement of Operations in net realized gain (loss) on investments in unaffiliated securities and in net change in unrealized appreciation (depreciation) on investments in unaffiliated securities, respectively. Additionally, the net change in unrealized appreciation for all Level 3 investments still held as of March 31, 2014, if applicable, is included on the Statement of Operations in net change in unrealized appreciation (depreciation) on investments in unaffiliated securities.
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The Funds may own different types of assets that are classified as Level 2 or Level 3. Assets classified as Level 2 can have a variety of observable inputs, including, but not limited to, benchmark yields, reported trades, broker quotes, benchmark securities, and bid/offer quotations. These observable inputs are collected and utilized, primarily by an independent pricing service, in different evaluated pricing approaches depending upon the specific asset to determine a value.
| 4. | DERIVATIVE INSTRUMENTS ($ amounts in thousands unless indicated otherwise) |
The following disclosures contain information on why and how the Funds use derivative instruments, the associated risks of investing in derivative instruments, and how derivative instruments affect the Funds’ financial positions and results of operations when presented by primary underlying risk exposure.
Forward Foreign Currency Contracts. Certain Funds may enter into forward foreign currency contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date. Forward contracts are reported on a schedule following the Schedule of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the NYSE as provided by a bank, dealer or independent pricing service. The resulting unrealized appreciation and depreciation is reported on the Statement of Assets and Liabilities as a receivable or payable and on the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) on the Statement of Operations.
Risks to a Fund related to the use of such contracts include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, a Fund’s maximum loss will consist of the aggregate unrealized gain on appreciated contracts that is not collateralized.
Futures Contracts. Certain Funds may engage in buying and selling futures contracts. Upon entering into a futures contract, the Fund is required to deposit, in a segregated account, an amount equal to a varying specified percentage of the contract amount. This amount is known as the initial margin. Subsequent payments (variation margins) are made or received by the Fund each day, dependent on the daily fluctuations in the value of the underlying debt security or index.
Futures contracts are reported on a schedule following the Schedule of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are identified on the Schedule of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted on the Statement of Assets and Liabilities. The net change in unrealized appreciation (depreciation) is reported on the Statement of Operations. Realized gains (losses) are reported on the Statement of Operations at the closing or expiration of futures contracts.
Risks of entering into futures contracts include the possibility of loss of securities or cash held as collateral, that there may be an illiquid market where the Fund is unable to close the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities.
Option Contracts. Options purchased by a Fund are accounted for in the same manner as marketable portfolio securities. The cost of portfolio securities acquired through the exercise of call options is increased by the premium paid to purchase the call. The proceeds from securities sold through the exercise of put options are decreased by the premium paid to purchase the put.
When a Fund writes (sells) an option, an amount equal to the premium received by the Fund is recorded as a liability. The amount of the liability is subsequently adjusted to reflect the current value of the option written. When an option expires on its stipulated expiration date or a Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the call option was sold), and the liability related to such option is extinguished. When a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether a Fund has realized a gain or loss. For each Fund, when a written put is exercised, the cost basis of the securities purchased by a Fund is reduced by the amount of the premium received.
Investments in options, whether purchased or written, involve certain risks. Writing put options and purchasing call options may increase a Fund’s exposure to the underlying security (or basket of securities). With written options, there may be times when a Fund will be required to purchase or sell securities to meet its obligation under the option contract where the required action is not beneficial to the Fund, due to unfavorable movement of the market price of the underlying security (or basket of securities). Additionally, to the extent a Fund enters into OTC option transactions with counterparties, the Fund will be exposed to the risk that counterparties to these OTC transactions will be unable to meet their obligations under the terms of the transaction.
Swap Agreements. Certain Funds may invest in swap agreements.
Total return swaps involve a commitment to pay periodic interest payments in exchange for a market-linked return based on a security or a basket of securities representing a variety of securities or a particular index. To the extent the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.
The creditworthiness of the counterparty with which a Fund enters into a swap agreement is monitored by IICO. If a firm’s creditworthiness declines, the value of the agreement would likely decline, potentially resulting in losses. If a default occurs by the counterparty to such a transaction, the Fund will have contractual remedies pursuant to the agreement related to the transaction. The maximum loss a Fund may incur consists of the aggregate unrealized gain on appreciated contracts that is not collateralized.
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Collateral and rights of offset. A Fund may mitigate credit risk with respect to OTC derivative counterparties through credit support annexes (“CSA”) included with an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement which is the standard contract governing most derivative transactions between the Fund and each of its counterparties. The CSA allows the Fund and its counterparty to offset certain derivative financial instruments’ payables and/or receivables against each other and/or with collateral, which is generally held by the Fund’s custodian. The amount of collateral moved to/from applicable counterparties is based upon minimum transfer amounts specified in the CSA. To the extent amounts due to the Fund from its counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 2 “Segregation and Collateralization” for additional information with respect to collateral practices.
Offsetting of Assets and Liabilities. Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2011-11, Disclosures about Offsetting Assets and Liabilities, requires an entity that has financial instruments that are either (1) offset or (2) subject to an enforceable master netting arrangement or similar agreement to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position.
The following tables present financial instruments subject to master netting agreements as of March 31, 2014:
Assets
| Gross Amounts Not Offset on the Statement of Assets and Liabilities |
||||||||||||||||||||||||||||
| Fund | Gross Amounts of Recognized Assets |
Gross Amounts Offset on the Statement of Assets and Liabilities |
Net Amounts of Assets Presented on the Statement of Assets and Liabilities |
Financial Instruments and Derivatives Available for Offset |
Non-Cash Collateral Received |
Cash Collateral Received |
Net Amount Receivable |
|||||||||||||||||||||
| Asset Strategy Fund |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities at value* |
$ | 64,782 | $ | — | $ | 64,782 | $ | (37,567 | ) | $ | (11,031 | ) | $ | (12,332 | ) | $ | 3,852 | |||||||||||
| Unrealized appreciation on forward foreign currency contracts |
36,232 | — | 36,232 | (1,791 | ) | (5,248 | ) | (9,503 | ) | 19,690 | ||||||||||||||||||
| Total |
$ | 101,014 | $ | — | $ | 101,014 | $ | (39,358 | ) | $ | (16,279 | ) | $ | (21,835 | ) | $ | 23,542 | |||||||||||
| * | Purchased options are reported as investments in unaffiliated securities on the Statement of Assets and Liabilities. |
Liabilities
| Gross Amounts Not Offset on the Statement of Assets and Liabilities |
||||||||||||||||||||||||||||
| Fund | Gross Amounts of Recognized Liabilities |
Gross Amounts Offset on the Statement of Assets and Liabilities |
Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities |
Financial Instruments and Derivatives Available for Offset |
Non-Cash Collateral Pledged |
Cash Collateral Pledged |
Net Amount Payable |
|||||||||||||||||||||
| Asset Strategy Fund |
||||||||||||||||||||||||||||
| Written options at value |
$ | 39,358 | $ | — | $ | 39,358 | $ | (39,358 | ) | $ | — | $ | — | $ | — | |||||||||||||
| Global Natural Resources Fund |
||||||||||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
$ | (1,840 | ) | $ | — | $ | (1,840 | ) | $ | — | $ | — | $ | 1,580 | $ | (260 | ) | |||||||||||
Additional Disclosure Related to Derivative Instruments
Fair values of derivative instruments as of March 31, 2014:
| Assets |
Liabilities |
|||||||||||||||
| Fund | Type of Risk Exposure |
Statement of Assets & Liabilities Location |
Value | Statement of Assets & Liabilities Location |
Value | |||||||||||
| Ivy Asset Strategy Fund | Equity | Investments in unaffiliated securities at value* | $65,508 | Written options at value | $39,637 | |||||||||||
| Foreign currency | Unrealized appreciation on forward foreign currency contracts | 36,232 | — | |||||||||||||
| Ivy Global Natural Resources Fund | Foreign currency | — | Unrealized depreciation on forward foreign currency contracts | 1,840 | ||||||||||||
| * | Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments. |
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Amount of realized gain (loss) on derivatives recognized on the Statement of Operations for the year ended March 31, 2014:
| Net realized gain (loss) on: | ||||||||||||||||||||||||||
| Fund | Type of Risk Exposure |
Investments in unaffiliated securities* |
Swap agreements |
Futures contracts |
Written options |
Forward foreign currency contracts |
Total | |||||||||||||||||||
| Ivy Asset Strategy Fund |
Commodity | $ | (1,066 | ) | $ | — | $ | (211,986 | ) | $ | (850 | ) | $ | — | $ | (213,902 | ) | |||||||||
| Equity | 146,689 | — | (125,657 | ) | 183,551 | — | 204,583 | |||||||||||||||||||
| Foreign currency | — | — | — | — | 136,592 | 136,592 | ||||||||||||||||||||
| Ivy Global Natural Resources Fund |
Commodity | (23,334 | ) | — | — | — | — | (23,334 | ) | |||||||||||||||||
| Equity | 20,970 | — | (32,221 | ) | — | — | (11,251 | ) | ||||||||||||||||||
| Foreign currency | — | — | — | — | 4,499 | 4,499 | ||||||||||||||||||||
| Ivy Real Estate Securities Fund |
Equity | — | — | — | 42 | — | 42 | |||||||||||||||||||
| Ivy Science and Technology Fund |
Equity | 7,195 | — | — | 1,561 | — | 8,756 | |||||||||||||||||||
| Foreign currency | — | — | — | — | 2,983 | 2,983 | ||||||||||||||||||||
| * | Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments. |
Change in unrealized appreciation (depreciation) on derivatives recognized on the Statement of Operations for the year ended March 31, 2014:
| Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||||||||||||
| Fund | Type of Risk Exposure |
Investments in unaffiliated securities* |
Swap agreements |
Futures contracts |
Written options |
Forward foreign currency contracts |
Total | |||||||||||||||||||
| Ivy Asset Strategy Fund |
Equity | $ | (48,310 | ) | $ | — | $ | — | $ | 8,071 | $ | — | $ | (40,239 | ) | |||||||||||
| Foreign currency | — | — | — | — | 36,575 | 36,575 | ||||||||||||||||||||
| Ivy Global Natural Resources Fund |
Commodity | 2,905 | — | — | — | — | 2,905 | |||||||||||||||||||
| Equity | 606 | — | 4,946 | — | — | 5,552 | ||||||||||||||||||||
| Foreign currency | — | — | — | — | (7,226 | ) | (7,226 | ) | ||||||||||||||||||
| Ivy Real Estate Securities Fund |
Equity | — | — | — | (3 | ) | — | (3 | ) | |||||||||||||||||
| Ivy Science and Technology Fund |
Foreign currency | — | — | — | — | (2,238 | ) | (2,238 | ) | |||||||||||||||||
| * | Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments. |
During the year ended March 31, 2014, the average derivative volume was as follows:
| Fund | Long forward contracts(1) |
Short forward contracts(1) |
Long futures contracts(1) |
Short futures contracts(1) |
Swap agreements(2) |
Purchased options(1) |
Written options(1) |
|||||||||||||||||||||
| Ivy Asset Strategy Fund |
$ | 2,747,054 | $ | 2,736,231 | $ | 136,400 | $ | 197,190 | $ | — | $ | 74,873 | $ | 30,238 | ||||||||||||||
| Ivy Global Natural Resources Fund |
233,070 | 232,332 | — | 188,369 | — | 60,374 | — | |||||||||||||||||||||
| Ivy Real Estate Securities Fund |
— | — | — | — | — | — | 4 | |||||||||||||||||||||
| Ivy Science and Technology Fund |
2,558 | 2,175 | — | — | — | 2,681 | 462 | |||||||||||||||||||||
| (1) | Average value outstanding during the period. |
| (2) | Average notional amount outstanding during the period. |
Objectives and Strategies
Ivy Asset Strategy Fund. The Fund’s objectives in using derivatives during the period included hedging market risk on equity securities, increasing exposure to various equity markets, managing exposure to various foreign currencies, and hedging certain event risks on positions held by the Fund. To achieve the objective of hedging market risk and increasing exposure to equity markets, the Fund utilized futures, and option contracts on foreign and domestic equity indices. To manage foreign currency exposure, the Fund utilized forward contracts and option contracts to either increase or decrease exposure to a given currency. To manage event risks, the Fund utilized short futures on commodities, as well as on foreign and domestic equity indices and option contracts, both written and purchased, on individual equity securities owned by the Fund.
Ivy Global Natural Resources Fund. The Fund’s objectives in using derivatives during the period included hedging market risk on equity securities, increasing exposure to specific sectors or companies, and managing the exposure to various foreign currencies. To achieve the objective of hedging market risk and increasing exposure to equity markets, the Fund utilized futures on equity indices and purchased option contracts on individual equity securities. To manage foreign currency exposure, the Fund utilized forward contracts to either increase or decrease exposure to a given currency.
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Ivy Real Estate Securities Fund. The Fund’s objective in using derivatives during the period was to hedge market risk on securities in its portfolio. To achieve this objective, the Fund utilized written options on individual equity securities owned by the Fund.
Ivy Science and Technology Fund. The Fund’s objectives in using derivatives during the period included hedging the exposure to foreign currencies of securities held in the Fund and hedging market risk on securities in its portfolio. To achieve the objective of hedging exposure to foreign currencies, the Fund utilized forward contracts. To hedge market risk, the Fund utilized options, both written and purchased, on individual equity securities owned by the Fund and on domestic equity indices.
| 5. | WRITTEN OPTION ACTIVITY ($ amounts in thousands) |
Transactions in written options were as follows:
| Fund | Outstanding at 3-31-13 |
Options written |
Options closed |
Options exercised |
Options expired |
Outstanding at 3-31-14 |
||||||||||||||||||
| Ivy Asset Strategy Fund |
||||||||||||||||||||||||
| Number of Contracts |
179,579 | 4,814,821 | (451,526 | ) | (3,738,867 | ) | (549,695 | ) | 254,312 | |||||||||||||||
| Premium Received |
$ | 49,783 | $ | 359,460 | $ | (232,435 | ) | $ | (1,079 | ) | $ | (115,483 | ) | $ | 60,246 | |||||||||
| Ivy Real Estate Securities Fund |
||||||||||||||||||||||||
| Number of Contracts |
112 | 615 | — | (67 | ) | (660 | ) | — | ||||||||||||||||
| Premium Received |
$ | 11 | $ | 38 | $ | — | $ | (7 | ) | $ | (42 | ) | $ | — | ||||||||||
| Ivy Science and Technology Fund |
||||||||||||||||||||||||
| Number of Contracts |
— | 48,231 | (41,855 | ) | — | (6,376 | ) | — | ||||||||||||||||
| Premium Received |
$ | — | $ | 5,315 | $ | (4,517 | ) | $ | — | $ | (798 | ) | $ | — | ||||||||||
| 6. | BASIS FOR CONSOLIDATION OF THE IVY ASSET STRATEGY FUND |
Ivy ASF II, Ltd. (the “Subsidiary”), a Cayman Islands exempted company, was incorporated as a wholly owned subsidiary acting as an investment vehicle for the Ivy Asset Strategy Fund (referred to as “the Fund” in this subsection). Ivy ASF III (SBP), LLC and Ivy ASF, LLC (each a “Company”), collectively “the Companies”, Delaware limited liability companies, were incorporated as wholly owned companies acting as investment vehicles for the Fund. Each Subsidiary and Company acts as an investment vehicle for the Fund, in order to effect certain investments for the Fund consistent with the Fund’s investment objectives and policies as specified in its prospectus and statement of additional information.
The Fund’s investment portfolio has been consolidated and includes the portfolio holdings of the Fund, its Subsidiary and the Companies. The consolidated financial statements include the accounts of the Fund and its Subsidiary and the Companies. All inter-company transactions and balances have been eliminated. A subscription agreement was entered into between the Fund and its Subsidiary and each Company comprising the entire issued share capital of the Subsidiary and each Company with the intent that the Fund will remain the sole shareholder and retain all rights. Under the Articles of Association, shares issued by the Subsidiary and each Company confer upon a shareholder the right to receive notice of, to attend and to vote at general meetings of the Subsidiary and each Company and shall confer upon the shareholder rights in a winding-up or repayment of capital and the right to participate in the profits or assets of the Subsidiary and each Company.
See the table below for details regarding the structure, incorporation and relationship as of March 31, 2014 of each Subsidiary and Company to the Fund (amounts in thousands).
| Subsidiary/Company | Date of Incorporation |
Subscription Agreement |
Fund Net Assets |
Subsidiary Net Assets |
Percentage Net Assets |
|||||||||||||||
| Ivy ASF II, Ltd. |
1-31-13 | 4-10-13 | $ | 35,595,812 | $ | 1,941,909 | 5.46 | % | ||||||||||||
| Ivy ASF III (SBP), LLC |
4-9-13 | 4-23-13 | 35,595,812 | 818,619 | 2.30 | |||||||||||||||
| Ivy ASF, LLC |
12-10-12 | 12-18-12 | 35,595,812 | 373,850 | 1.05 | |||||||||||||||
| 7. | INVESTMENT MANAGEMENT AND PAYMENTS TO AFFILIATED PERSONS ($ amounts in thousands unless indicated otherwise) |
Management Fees. IICO, a wholly owned subsidiary of Waddell & Reed Financial, Inc. (“WDR”), serves as each Fund’s investment manager. The management fee is accrued daily by each Fund at the following annual rates as a percentage of average daily net assets:
| Fund (M - Millions) | $0 to $500M |
$500 to $1,000M |
$1,000 to $2,000M |
$2,000 to $3,000M |
Over $3,000M | |||||||||||||||
| Ivy Asset Strategy Fund |
0.700 | % | 0.700 | % | 0.650 | % | 0.600 | % | 0.550 | % | ||||||||||
| Ivy Balanced Fund |
0.700 | 0.700 | 0.650 | 0.600 | 0.550 | |||||||||||||||
| Ivy Energy Fund |
0.850 | 0.850 | 0.830 | 0.800 | 0.760 | |||||||||||||||
| Ivy Global Natural Resources Fund |
1.000 | 0.850 | 0.830 | 0.800 | 0.760 | |||||||||||||||
| Ivy Global Real Estate Fund |
0.950 | 0.950 | 0.920 | 0.870 | 0.840 | |||||||||||||||
| Ivy Global Risk-Managed Real Estate Fund |
0.950 | 0.950 | 0.920 | 0.870 | 0.840 | |||||||||||||||
| Ivy Real Estate Securities Fund |
0.900 | 0.900 | 0.870 | 0.840 | 0.800 | |||||||||||||||
| Ivy Science and Technology Fund |
0.850 | 0.850 | 0.830 | 0.800 | 0.760 | |||||||||||||||
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For Funds managed solely by IICO, IICO has voluntarily agreed to waive a Fund’s management fee on any day that the Fund’s net assets are less than $25 million, subject to IICO’s right to change or modify this waiver. See Expense Reimbursements and/or Waivers below for amounts waived during the year ended March 31, 2014.
IICO has entered into Subadvisory Agreements with the following entities on behalf of certain Funds:
Under an agreement between IICO and Mackenzie Financial Corporation (“Mackenzie”), Mackenzie served as subadviser to Ivy Global Natural Resources Fund through July 1, 2013. As a result of the planned retirement of Frederick Sturm as portfolio manager of the subadvised Ivy Global Natural Resources Fund, IICO internalized the management of the Fund effective July 2, 2013. Under an agreement between IICO and Advantus Capital Management, Inc. (“Advantus”), Advantus serves as subadviser to Ivy Real Estate Securities Fund. Under an agreement between IICO and LaSalle Investment Management Securities, LLC (“LaSalle US”), LaSalle US serves as subadviser to Ivy Global Real Estate Fund and Ivy Global Risk-Managed Real Estate Fund. Each subadviser makes investment decisions in accordance with the Fund’s investment objectives, policies and restrictions under the supervision of IICO and the oversight of the Board. IICO pays all costs applicable of the subadvisers.
Accounting Services Fees. The Trust has an Accounting and Administrative Services Agreement with WRSCO, doing business as WI Services Company (“WISC”), an indirect subsidiary of WDR. Under the agreement, WISC acts as the agent in providing bookkeeping and accounting services and assistance to the Trust, including maintenance of Fund records, pricing of Fund shares and preparation of certain shareholder reports. For these services, each Fund pays WISC a monthly fee of one-twelfth of the annual fee based on the average net asset levels shown in the following table:
| (M - Millions) | $0 to $10M |
$10 to $25M |
$25 to $50M |
$50 to $100M |
$100 to $200M |
$200 to $350M |
$350 to $550M |
$550 to $750M |
$750 to $1,000M |
Over $1,000M | ||||||||||||||||||||||||||||||
| Annual Fee Rate |
$ | 0.00 | $ | 11.50 | $ | 23.10 | $ | 35.50 | $ | 48.40 | $ | 63.20 | $ | 82.50 | $ | 96.30 | $ | 121.60 | $ | 148.50 | ||||||||||||||||||||
In addition, for each class of shares in excess of one, each Fund pays WISC a monthly per-class fee equal to 2.5% of the monthly accounting services base fee.
Administrative Fee. Each Fund also pays WISC a monthly fee at the annual rate of 0.01%, or one basis point, for the first $1 billion of net assets with no fee charged for net assets in excess of $1 billion. This fee is voluntarily waived by WISC until a Fund’s net assets are at least $10 million and is included in “Accounting services fee” on the Statement of Operations.
Shareholder Servicing. General. Under the Shareholder Servicing Agreement between the Trust and WISC, with respect to Class A, Class B, Class C and Class E shares, for each shareholder account that was in existence at any time during the prior month, each Fund pays a monthly fee that ranges from $1.5042 to $1.6958 per account; however, WISC has agreed to reduce that fee if the number of total shareholder accounts within the Complex (Waddell & Reed Advisors Funds, InvestEd Portfolios and Ivy Funds) reaches certain levels. Effective June 6, 2011 for Class R shares, each Fund pays a monthly fee equal to one-twelfth of 0.25 of 1% of the average daily net assets of the class for the preceding month. Prior to June 6, 2011 the fee was 0.20 of 1%. For Class I and Class Y shares, each Fund pays a monthly fee equal to one-twelfth of 0.15 of 1% of the average daily net assets of the class for the preceding month. Each Fund also reimburses WISC for certain out-of-pocket costs for all classes.
Networked accounts. For certain networked accounts (that is, those accounts whose Fund shares are purchased through certain financial intermediaries), WISC has agreed to reduce its per account fees charged to the Funds to $0.50 per month per shareholder account. Additional fees may be paid by the Funds to those intermediaries. If the aggregate annual rate of the WISC transfer agent fee and the costs charged by the financial services companies exceeds $18.00 per account for a Fund, WISC will reimburse the Fund the amount in excess of $18.00.
Broker accounts. Certain broker-dealers that maintain shareholder accounts with each Fund through an omnibus account provide transfer agent and other shareholder-related services that would otherwise be provided by WISC if the individual accounts that comprise the omnibus account were opened by their beneficial owners directly. Each Fund may pay such broker-dealers a per account fee for each open account within the omnibus account, or a fixed rate fee, based on the average daily net asset value of the omnibus account (or a combination thereof).
Distribution and Service Plan. Class A and Class E Shares. Under a Distribution and Service Plan adopted by the Trust pursuant to Rule 12b–1 under the 1940 Act (the “Distribution and Service Plan”), each Fund may pay a distribution and/or service fee to Ivy Funds Distributors, Inc. (“IFDI”) for Class A and Class E shares in an amount not to exceed 0.25% of the Fund’s average annual net assets. The fee is to be paid to compensate IFDI for amounts it expends in connection with the distribution of the Class A and Class E shares and/or provision of personal services to Fund shareholders and/or maintenance of shareholder accounts of that class.
Class B and Class C Shares. Under the Distribution and Service Plan, each Fund may pay IFDI a service fee not to exceed 0.25% and a distribution fee not to exceed 0.75% of the Fund’s average annual net assets for Class B and Class C shares to compensate IFDI for its services in connection with the distribution of shares of that class and/or provision of personal services to Class B or Class C shareholders and/or maintenance of shareholder accounts of that class.
Class R Shares. Under the Distribution and Service Plan, each Fund may pay IFDI a fee of up to 0.50%, on an annual basis, of the average daily net assets of the Fund’s Class R shares to compensate IFDI for, either directly or through third parties, distributing the Class R shares of that Fund, providing personal services to Class R shareholders and/or maintaining Class R shareholder accounts.
Class Y Shares. Under the Distribution and Service Plan, each Fund may pay IFDI a fee of up to 0.25%, on an annual basis, of the average daily net assets of the Fund’s Class Y shares to compensate IFDI for, either directly or through third parties, distributing the Class Y shares of that Fund, providing personal services to Class Y shareholders and/or maintaining Class Y shareholder accounts.
| 2014 | ANNUAL REPORT | 97 |
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Sales Charges. As principal underwriter for the Trust’s shares, IFDI receives sales commissions (which are not an expense of the Trust) for sales of Class A and Class E shares. A CDSC may be assessed against a shareholder’s redemption amount of Class B, Class C or certain Class A and Class E shares and is paid to IFDI. During the year ended March 31, 2014, IFDI received the following amounts in sales commissions and CDSCs:
| Gross Sales |
CDSC | Commissions Paid(1) |
||||||||||||||||||||||
| Class A | Class B | Class C | Class E | |||||||||||||||||||||
| Ivy Asset Strategy Fund |
$ | 4,193 | $ | 56 | $ | 1,049 | $ | 543 | $ | — | $ | 16,529 | ||||||||||||
| Ivy Balanced Fund |
1,223 | 5 | 83 | 63 | — | 3,512 | ||||||||||||||||||
| Ivy Energy Fund |
108 | — | * | 6 | 3 | — | 180 | |||||||||||||||||
| Ivy Global Natural Resources Fund |
678 | 4 | 112 | 18 | — | 733 | ||||||||||||||||||
| Ivy Global Real Estate Fund |
37 | — | * | — | — | * | — | 37 | ||||||||||||||||
| Ivy Global Risk-Managed Real Estate Fund |
20 | — | * | — | — | — | 20 | |||||||||||||||||
| Ivy Real Estate Securities Fund |
429 | 1 | 9 | 2 | — | 434 | ||||||||||||||||||
| Ivy Science and Technology Fund |
1,947 | 13 | 61 | 89 | — | 4,966 | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | IFDI reallowed/paid this portion of the sales charge to financial advisors and selling broker-dealers. |
Expense Reimbursements and/or Waivers. Fund and class expense limitations and related waivers/reimbursements for the year ended March 31, 2014 were as follows:
| Fund Name | Share Class Name |
Type of Expense Limit |
Commencement Date |
End Date | Expense Limit | Amount of Expense Waiver/ Reimbursement |
Expense Reduced | |||||||||
| Ivy Asset Strategy Fund |
Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.00% | $ | 82 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | 361 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Ivy Balanced Fund |
Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | ||||||||
| Ivy Energy Fund |
Class A | Contractual | 8-1-2008 | 7-31-2014 | 1.60% | $ | — | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Global Natural Resources Fund |
Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.27% | $ | 56 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Ivy Global Real Estate Fund |
All Classes | Contractual | 4-1-2013 | 7-31-2014 | N/A | $ | 83 | (1) | Investment Management Fee | |||||||
| Class A | Contractual | 4-1-2013 | 7-31-2014 | 1.51% | $ | 94 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class Y | Contractual | 4-1-2013 | 7-31-2014 | Not to exceed Class A |
$ | 2 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Ivy Global Risk-Managed Real Estate Fund |
All Classes | Contractual | 4-1-2013 | 7-31-2014 | N/A | $ | 16 | (1) | Investment Management Fee | |||||||
| Class A | Contractual | 4-1-2013 | 7-31-2014 | 1.51% | $ | 78 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class Y | Contractual | 4-1-2013 | 7-31-2014 | Not to exceed Class A |
$ | 11 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| 98 | ANNUAL REPORT | 2014 |
Table of Contents
| Fund Name | Share Class Name |
Type of Expense Limit |
Commencement Date |
End Date | Expense Limit | Amount of Expense Waiver/ Reimbursement |
Expense Reduced | |||||||||
| Ivy Real Estate Securities Fund |
All Classes | Contractual | 12-3-2012 | 7-31-2014 | N/A | $ | 546 | (2) | Investment Management Fee | |||||||
| Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.67% | $ | 7 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Science and Technology Fund |
Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.43% | $ | 27 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| (1) | Due to Class A and/or Class Y contractual expense limits, investment management fees were waived for all share classes. |
| (2) | The Fund’s investment management fee is being reduced by 0.10% of average daily net assets until July 31, 2014. |
Any amounts due to the Funds as a reimbursement but not paid as of March 31, 2014 are shown as a receivable from affiliates on the Statement of Assets and Liabilities.
| 8. | AFFILIATED COMPANY TRANSACTIONS (All amounts in thousands) |
A summary of the transactions in affiliated companies during the year ended March 31, 2014 follows:
| 3-31-13 Share Balance |
Purchases at Cost |
Sales at Cost |
Realized Gain/(Loss) |
Distributions Received |
3-31-14 Share Balance |
3-31-14 Value |
||||||||||||||||||||||
| Ivy Asset Strategy Fund |
||||||||||||||||||||||||||||
| Apollo Global Management, LLC(2) |
7,863 | $ | — | $ | 41,606 | $ | 43,425 | $ | — | — | N/A | |||||||||||||||||
| Carlyle Group L.P. (The)(1)(2) |
4,846 | — | 101,176 | 48,795 | — | — | N/A | |||||||||||||||||||||
| Galaxy Entertainment Group |
255,009 | 11,405 | 103,705 | 79,474 | — | 229,601 | $ | 1,996,594 | ||||||||||||||||||||
| Legend Pictures LLC |
190 | — | — | — | — | 190 | 373,844 | |||||||||||||||||||||
| Media Group Holdings LLC |
— | 818,617 | — | — | — | 381 | 818,617 | |||||||||||||||||||||
| Wynn Resorts Ltd. |
9,492 | — | 230,770 | 312,699 | 45,422 | 5,551 | 1,233,141 | |||||||||||||||||||||
| $ | 484,393 | $ | 45,422 | $ | 4,422,196 | |||||||||||||||||||||||
| 3-31-13 Principal Balance |
Interest Received |
3-31-14 Principal Balance |
||||||||||||||||||||||||||
| Legendary Pictures Funding LLC and |
$ | 351,700 | $ | — | $ | — | $ | — | $ | 28,292 | $ | 351,700 | $ | 351,700 | ||||||||||||||
| 3-31-13 Share Balance |
Purchases at Cost |
Sales at Cost |
Realized Gain/(Loss) |
Distributions Received |
3-31-14 Share Balance |
3-31-14 Value |
||||||||||||||||||||||
| Ivy Science and Technology Fund |
||||||||||||||||||||||||||||
| Acxiom Corporation(1) |
3,168 | $ | 41,971 | $ | — | $ | — | $ | — | 4,710 | $ | 161,986 | ||||||||||||||||
| BioAmber, Inc.(1) |
N/A | 1,487 | — | — | — | 1,352 | 15,468 | |||||||||||||||||||||
| Euronet Worldwide, Inc.(1) |
1,810 | 68,889 | — | — | — | 3,387 | 140,845 | |||||||||||||||||||||
| iGATE Corp.(1) |
1,358 | 79,050 | — | — | — | 4,341 | 136,921 | |||||||||||||||||||||
| Nanometrics, Inc.(1) |
673 | 12,984 | — | — | — | 1,438 | 25,849 | |||||||||||||||||||||
| Photronics, Inc.(1) |
1,983 | 10,072 | — | — | — | 3,231 | 27,562 | |||||||||||||||||||||
| Silver Spring Networks, Inc.(1) |
440 | 79,713 | — | — | — | 4,810 | 83,593 | |||||||||||||||||||||
| Volcano Corp.(1) |
1,115 | 43,501 | — | — | — | 3,192 | 62,920 | |||||||||||||||||||||
| WNS (Holdings) Ltd. ADR(1) |
2,114 | 72,663 | — | — | — | 5,625 | 101,251 | |||||||||||||||||||||
| $ | — | $ | — | $ | 756,395 | |||||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | No dividends were paid during the preceding 12 months. |
| (2) | No longer affiliated as March 31, 2014. |
| 2014 | ANNUAL REPORT | 99 |
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| 9. | INVESTMENT SECURITIES TRANSACTIONS ($ amounts in thousands) |
The cost of purchases and the proceeds from maturities and sales of investment securities (excluding short-term securities) for the year ended March 31, 2014, were as follows:
| Purchases | Sales | |||||||||||||||
| U.S. Government | Other Issuers | U.S. Government | Other Issuers | |||||||||||||
| Ivy Asset Strategy Fund |
$ | — | $ | 19,504,129 | $ | 792 | $ | 15,435,977 | ||||||||
| Ivy Balanced Fund |
34,186 | 1,157,665 | 5,718 | 412,949 | ||||||||||||
| Ivy Energy Fund |
— | 97,989 | — | 51,195 | ||||||||||||
| Ivy Global Natural Resources Fund |
— | 1,887,989 | — | 2,731,585 | ||||||||||||
| Ivy Global Real Estate Fund |
— | 31,858 | — | 6,683 | ||||||||||||
| Ivy Global Risk-Managed Real Estate Fund |
— | 47,954 | — | 11,645 | ||||||||||||
| Ivy Real Estate Securities Fund |
— | 404,181 | — | 388,165 | ||||||||||||
| Ivy Science and Technology Fund |
— | 3,349,197 | — | 1,172,941 | ||||||||||||
| 10. | CAPITAL SHARE TRANSACTIONS (All amounts in thousands) |
The Trust has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class of each Fund.
Transactions in shares of beneficial interest were as follows:
| Ivy Asset Strategy Fund | Ivy Balanced Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
77,215 | $ | 2,309,512 | 59,356 | $ | 1,511,047 | 21,491 | $ | 496,715 | 10,750 | $ | 219,142 | ||||||||||||||||||||
| Class B |
2,100 | 58,879 | 2,986 | 72,878 | 1,091 | 24,765 | 1,115 | 22,410 | ||||||||||||||||||||||||
| Class C |
50,077 | 1,458,935 | 37,463 | 927,770 | 11,836 | 272,313 | 6,169 | 124,947 | ||||||||||||||||||||||||
| Class E |
409 | 12,210 | 395 | 10,060 | — | — | 7 | 134 | ||||||||||||||||||||||||
| Class I |
149,067 | 4,492,790 | 115,146 | 2,970,410 | 6,506 | 150,951 | 2,191 | 44,569 | ||||||||||||||||||||||||
| Class R |
1,885 | 55,805 | 1,688 | 42,599 | 179 | 4,271 | 12 | 250 | ||||||||||||||||||||||||
| Class Y |
14,825 | 444,314 | 12,220 | 310,190 | 3,247 | 75,937 | 2,158 | 43,417 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
1,278 | 39,548 | 6,676 | 169,910 | 770 | 18,009 | 204 | 4,088 | ||||||||||||||||||||||||
| Class B |
2 | 59 | 312 | 7,728 | 47 | 1,094 | 15 | 304 | ||||||||||||||||||||||||
| Class C |
62 | 1,862 | 3,445 | 85,567 | 304 | 7,092 | 73 | 1,460 | ||||||||||||||||||||||||
| Class E |
10 | 321 | 52 | 1,329 | — | * | 5 | — | — | |||||||||||||||||||||||
| Class I |
1,508 | 47,035 | 5,979 | 153,252 | 149 | 3,486 | 26 | 529 | ||||||||||||||||||||||||
| Class R |
10 | 302 | 75 | 1,900 | 1 | 31 | — | — | ||||||||||||||||||||||||
| Class Y |
192 | 5,949 | 1,002 | 25,557 | 126 | 2,955 | 58 | 1,154 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(63,367 | ) | (1,857,767 | ) | (90,813 | ) | (2,277,463 | ) | (5,306 | ) | (123,386 | ) | (2,749 | ) | (55,865 | ) | ||||||||||||||||
| Class B |
(3,752 | ) | (107,194 | ) | (4,355 | ) | (105,681 | ) | (308 | ) | (7,104 | ) | (256 | ) | (5,141 | ) | ||||||||||||||||
| Class C |
(44,308 | ) | (1,263,248 | ) | (65,934 | ) | (1,605,676 | ) | (1,995 | ) | (46,197 | ) | (1,227 | ) | (24,685 | ) | ||||||||||||||||
| Class E |
(228 | ) | (6,765 | ) | (262 | ) | (6,593 | ) | — | — | (7 | ) | (131 | ) | ||||||||||||||||||
| Class I |
(81,707 | ) | (2,433,058 | ) | (84,570 | ) | (2,145,764 | ) | (1,059 | ) | (24,795 | ) | (1,082 | ) | (21,804 | ) | ||||||||||||||||
| Class R |
(1,341 | ) | (38,906 | ) | (1,199 | ) | (30,092 | ) | (33 | ) | (751 | ) | — | * | — | * | ||||||||||||||||
| Class Y |
(10,226 | ) | (301,983 | ) | (15,908 | ) | (404,785 | ) | (1,251 | ) | (28,978 | ) | (1,575 | ) | (32,002 | ) | ||||||||||||||||
| Net increase (decrease) |
93,711 | $ | 2,918,600 | (16,246 | ) | $ | (285,857 | ) | 35,795 | $ | 826,413 | 15,882 | $ | 322,776 | ||||||||||||||||||
| * | Not shown due to rounding. |
| 100 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Energy Fund | Ivy Global Natural Resources Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
3,770 | $ | 55,011 | 1,987 | $ | 24,343 | 7,105 | $ | 124,963 | 12,987 | $ | 216,722 | ||||||||||||||||||||
| Class B |
66 | 922 | 66 | 764 | 80 | 1,228 | 239 | 3,520 | ||||||||||||||||||||||||
| Class C |
852 | 11,867 | 316 | 3,749 | 828 | 12,463 | 1,662 | 23,909 | ||||||||||||||||||||||||
| Class E |
— | — | 10 | 123 | 51 | 920 | 64 | 1,089 | ||||||||||||||||||||||||
| Class I |
735 | 11,287 | 339 | 4,284 | 3,074 | 55,588 | 9,794 | 170,918 | ||||||||||||||||||||||||
| Class R |
292 | 4,452 | 41 | 529 | 447 | 7,789 | 724 | 11,953 | ||||||||||||||||||||||||
| Class Y |
1,057 | 16,026 | 412 | 5,112 | 927 | 16,459 | 3,441 | 57,913 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
— | — | — | — | — | — | 146 | 2,402 | ||||||||||||||||||||||||
| Class B |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Class C |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Class E |
— | — | — | — | — | — | 1 | 22 | ||||||||||||||||||||||||
| Class I |
— | — | — | — | — | — | 122 | 2,059 | ||||||||||||||||||||||||
| Class R |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Class Y |
— | — | — | — | — | — | 55 | 913 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(2,047 | ) | (30,275 | ) | (2,762 | ) | (33,587 | ) | (31,349 | ) | (550,725 | ) | (35,684 | ) | (595,908 | ) | ||||||||||||||||
| Class B |
(69 | ) | (967 | ) | (91 | ) | (1,052 | ) | (2,026 | ) | (31,165 | ) | (2,937 | ) | (43,628 | ) | ||||||||||||||||
| Class C |
(398 | ) | (5,501 | ) | (542 | ) | (6,257 | ) | (9,749 | ) | (146,779 | ) | (14,246 | ) | (204,042 | ) | ||||||||||||||||
| Class E |
— | — | (10 | ) | (115 | ) | (67 | ) | (1,205 | ) | (79 | ) | (1,355 | ) | ||||||||||||||||||
| Class I |
(364 | ) | (5,557 | ) | (279 | ) | (3,452 | ) | (18,133 | ) | (321,832 | ) | (45,904 | ) | (786,039 | ) | ||||||||||||||||
| Class R |
(31 | ) | (451 | ) | (20 | ) | (278 | ) | (1,010 | ) | (17,588 | ) | (1,662 | ) | (27,485 | ) | ||||||||||||||||
| Class Y |
(542 | ) | (8,114 | ) | (324 | ) | (4,029 | ) | (6,679 | ) | (120,590 | ) | (20,519 | ) | (347,616 | ) | ||||||||||||||||
| Net increase (decrease) |
3,321 | $ | 48,700 | (857 | ) | $ | (9,866 | ) | (56,501 | ) | $ | (970,474 | ) | (91,796 | ) | $ | (1,514,653 | ) | ||||||||||||||
| 2014 | ANNUAL REPORT | 101 |
Table of Contents
| Ivy Global Real Estate Fund |
Ivy Global Risk-Managed Real Estate Fund |
Ivy Real Estate Securities Fund | ||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-14 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
2,636 | $ | 26,145 | 3,181 | $ | 31,958 | 6,193 | $ | 145,286 | 4,703 | $ | 104,809 | ||||||||||||||||||||
| Class B |
45 | 460 | 201 | 2,066 | 46 | 1,073 | 85 | 1,845 | ||||||||||||||||||||||||
| Class C |
103 | 1,065 | 417 | 4,286 | 151 | 3,531 | 225 | 4,908 | ||||||||||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | 21 | 492 | 26 | 574 | ||||||||||||||||||||||||
| Class I |
393 | 4,047 | 1,716 | 17,642 | 194 | 4,574 | 195 | 4,393 | ||||||||||||||||||||||||
| Class R |
80 | 828 | 400 | 4,111 | 22 | 504 | 52 | 1,159 | ||||||||||||||||||||||||
| Class Y |
121 | 1,250 | 600 | 6,165 | 564 | 13,518 | 1,239 | 27,593 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
31 | 284 | 16 | 145 | 153 | 3,426 | 89 | 1,951 | ||||||||||||||||||||||||
| Class B |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Class C |
— | * | 1 | — | * | 2 | 2 | 42 | — | * | 4 | |||||||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | 1 | 17 | — | * | 9 | |||||||||||||||||||||||
| Class I |
1 | 6 | — | * | 1 | 5 | 101 | 2 | 56 | |||||||||||||||||||||||
| Class R |
— | — | — | — | 1 | 10 | — | * | 8 | |||||||||||||||||||||||
| Class Y |
— | — | — | — | 81 | 1,825 | 68 | 1,497 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(438 | ) | (4,406 | ) | (1,156 | ) | (11,868 | ) | (4,994 | ) | (116,173 | ) | (3,277 | ) | (72,501 | ) | ||||||||||||||||
| Class B |
(22 | ) | (229 | ) | (100 | ) | (1,067 | ) | (104 | ) | (2,362 | ) | (135 | ) | (2,898 | ) | ||||||||||||||||
| Class C |
(49 | ) | (513 | ) | (203 | ) | (2,137 | ) | (209 | ) | (4,763 | ) | (165 | ) | (3,584 | ) | ||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | (12 | ) | (270 | ) | (8 | ) | (176 | ) | ||||||||||||||||||||
| Class I |
(183 | ) | (1,941 | ) | (853 | ) | (9,016 | ) | (138 | ) | (3,220 | ) | (71 | ) | (1,609 | ) | ||||||||||||||||
| Class R |
(40 | ) | (426 | ) | (200 | ) | (2,112 | ) | (40 | ) | (976 | ) | (41 | ) | (916 | ) | ||||||||||||||||
| Class Y |
(60 | ) | (641 | ) | (300 | ) | (3,168 | ) | (1,854 | ) | (43,225 | ) | (1,266 | ) | (27,900 | ) | ||||||||||||||||
| Net increase |
2,618 | $ | 25,930 | 3,719 | $ | 37,008 | 83 | $ | 3,410 | 1,721 | $ | 39,222 | ||||||||||||||||||||
| * | Not shown due to rounding. |
| Ivy Science and Technology Fund | ||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||
| Shares | Value | Shares | Value | |||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||
| Class A |
24,002 | $ | 1,148,654 | 7,564 | $ | 266,910 | ||||||||||
| Class B |
634 | 25,486 | 285 | 8,774 | ||||||||||||
| Class C |
9,859 | 427,653 | 1,852 | 59,917 | ||||||||||||
| Class E |
94 | 4,441 | 66 | 2,289 | ||||||||||||
| Class I |
20,813 | 1,070,132 | 4,241 | 160,625 | ||||||||||||
| Class R |
1,054 | 49,563 | 656 | 22,480 | ||||||||||||
| Class Y |
10,240 | 509,037 | 5,598 | 204,761 | ||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||
| Class A |
747 | 37,078 | 84 | 2,913 | ||||||||||||
| Class B |
40 | 1,712 | 6 | 172 | ||||||||||||
| Class C |
302 | 13,459 | 34 | 1,068 | ||||||||||||
| Class E |
8 | 375 | 1 | 41 | ||||||||||||
| Class I |
356 | 19,038 | 24 | 912 | ||||||||||||
| Class R |
44 | 2,161 | 7 | 227 | ||||||||||||
| Class Y |
406 | 21,086 | 57 | 2,088 | ||||||||||||
| Shares redeemed: |
||||||||||||||||
| Class A |
(5,918 | ) | (282,005 | ) | (4,933 | ) | (168,755 | ) | ||||||||
| Class B |
(262 | ) | (10,866 | ) | (226 | ) | (6,780 | ) | ||||||||
| Class C |
(1,439 | ) | (62,159 | ) | (1,322 | ) | (41,084 | ) | ||||||||
| Class E |
(20 | ) | (934 | ) | (25 | ) | (850 | ) | ||||||||
| Class I |
(3,901 | ) | (204,694 | ) | (1,910 | ) | (69,844 | ) | ||||||||
| Class R |
(497 | ) | (23,558 | ) | (503 | ) | (16,977 | ) | ||||||||
| Class Y |
(5,023 | ) | (255,286 | ) | (3,786 | ) | (134,447 | ) | ||||||||
| Net increase |
51,539 | $ | 2,490,373 | 7,770 | $ | 294,440 | ||||||||||
| 102 | ANNUAL REPORT | 2014 |
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| 11. | FEDERAL INCOME TAX MATTERS ($ amounts in thousands) |
For Federal income tax purposes, cost of investments owned at March 31, 2014 and the related unrealized appreciation (depreciation) were as follows:
| Fund | Cost of Investments |
Gross Appreciation |
Gross Depreciation |
Net Unrealized |
||||||||||||
| Ivy Asset Strategy Fund |
$ | 27,698,737 | $ | 8,324,468 | $ | 518,296 | $ | 7,806,172 | ||||||||
| Ivy Balanced Fund |
1,542,745 | 275,915 | 4,753 | 271,162 | ||||||||||||
| Ivy Energy Fund |
140,352 | 60,336 | 1,255 | 59,081 | ||||||||||||
| Ivy Global Natural Resources Fund |
1,372,360 | 368,048 | 59,088 | 308,960 | ||||||||||||
| Ivy Global Real Estate Fund |
25,699 | 762 | 960 | (198 | ) | |||||||||||
| Ivy Global Risk-Managed Real Estate Fund |
36,244 | 1,130 | 1,760 | (630 | ) | |||||||||||
| Ivy Real Estate Securities Fund |
427,739 | 133,157 | 93 | 133,064 | ||||||||||||
| Ivy Science and Technology Fund |
3,946,332 | 1,525,257 | 46,752 | 1,478,505 | ||||||||||||
For Federal income tax purposes, the Funds’ distributed and undistributed earnings and profit for the year ended March 31, 2014 and the post-October and late-year ordinary activity were as follows:
| Fund | Distributed Ordinary Income |
Undistributed Ordinary Income |
Distributed Long-Term Capital Gains |
Undistributed Long-Term Capital Gains |
Tax Return of Capital |
Post- October Capital Losses Deferred |
Late- Year |
|||||||||||||||||||||
| Ivy Asset Strategy Fund |
$ | 129,692 | $ | 122,652 | $ | — | $ | 752,382 | $ | — | $ | — | $ | — | ||||||||||||||
| Ivy Balanced Fund |
11,595 | 3,405 | 26,052 | 17,523 | — | — | — | |||||||||||||||||||||
| Ivy Energy Fund |
— | — | — | — | — | 375 | 413 | |||||||||||||||||||||
| Ivy Global Natural Resources Fund |
— | — | — | — | — | 15,796 | — | |||||||||||||||||||||
| Ivy Global Real Estate Fund |
367 | 70 | — | 38 | — | — | — | |||||||||||||||||||||
| Ivy Global Risk-Managed Real Estate Fund |
531 | 150 | — | — | — | — | — | |||||||||||||||||||||
| Ivy Real Estate Securities Fund |
5,500 | 384 | — | 1,376 | — | — | — | |||||||||||||||||||||
| Ivy Science and Technology Fund |
— | — | 108,849 | 78,164 | — | — | 10,029 | |||||||||||||||||||||
Internal Revenue Code regulations permit each Fund to elect to defer into its next fiscal year capital losses incurred between each November 1 and the end of its fiscal year. Each Fund is also permitted to defer into its next fiscal year late-year ordinary losses that arise from the netting of activity generated between each November 1 and the end of its fiscal year on certain specified ordinary items.
Accumulated capital losses represent net capital loss carryovers as of March 31, 2014 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. Under the Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”), a Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years which have only an eight year carryforward period. As a result of this ordering rule, pre-enactment capital loss carryovers may expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under the previous law. The Fund’s first fiscal year end subject to the Modernization Act was March 31, 2012. The following table shows the expiration dates for capital loss carryovers from pre-enactment taxable years and the amounts of capital loss carryovers, if any, by each of the applicable Funds electing to be taxed as a RIC during the year ended March 31, 2014:
| Pre-Enactment | Post-Enactment | |||||||||||||||||||||||
| Fund | 2015 | 2016 | 2017 | 2018 | Short-Term Capital Loss Carryover |
Long-Term Capital Loss Carryover |
||||||||||||||||||
| Ivy Asset Strategy Fund |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Ivy Balanced Fund |
— | — | — | — | — | — | ||||||||||||||||||
| Ivy Energy Fund |
— | — | — | 6,022 | — | — | ||||||||||||||||||
| Ivy Global Natural Resources Fund |
— | — | — | 1,529,206 | 242,312 | 309,131 | ||||||||||||||||||
| Ivy Global Real Estate Fund |
— | — | — | — | — | — | ||||||||||||||||||
| Ivy Global Risk-Managed Real Estate Fund |
— | — | — | — | 283 | — | ||||||||||||||||||
| Ivy Real Estate Securities Fund |
— | — | — | — | — | — | ||||||||||||||||||
| Ivy Science and Technology Fund |
— | — | — | — | — | — | ||||||||||||||||||
Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from U.S. GAAP. These differences are due to differing treatments for items such as deferral of wash sales, post-October losses, late-year ordinary losses, foreign currency transactions, net operating losses, income from passive foreign investment companies (PFICs), partnership transactions, and expiring capital loss carryovers.
| 2014 | ANNUAL REPORT | 103 |
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At March 31, 2014, the following reclassifications were made:
| Fund | Undistributed Net Investment Income |
Accumulated Net Realized Gain (Loss) |
Paid-In Capital | |||||||||
| Ivy Asset Strategy Fund |
$ | 1,734 | $ | 212,377 | $ | (214,111 | ) | |||||
| Ivy Balanced Fund |
— | * | 3 | (3 | ) | |||||||
| Ivy Energy Fund |
717 | 300 | (1,017 | ) | ||||||||
| Ivy Global Natural Resources Fund |
11,621 | 79 | (11,700 | ) | ||||||||
| Ivy Global Real Estate Fund |
111 | (9 | ) | (102 | ) | |||||||
| Ivy Global Risk-Managed Real Estate Fund |
93 | 11 | (104 | ) | ||||||||
| Ivy Real Estate Securities Fund |
4 | (4 | ) | — | ||||||||
| Ivy Science and Technology Fund |
19,290 | (10,817 | ) | (8,473 | ) | |||||||
| * | Not shown due to rounding. |
| 104 | ANNUAL REPORT | 2014 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| Ivy Funds |
To the Shareholders and Board of Trustees of Ivy Funds:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Ivy Asset Strategy Fund, Ivy Balanced Fund, Ivy Energy Fund, Ivy Global Natural Resources Fund, Ivy Global Real Estate Fund, Ivy Global Risk-Managed Real Estate Fund, Ivy Real Estate Securities Fund, and Ivy Science and Technology Fund, eight of the thirty-two funds constituting Ivy Funds (the “Funds”), as of March 31, 2014, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended (as to Ivy Global Real Estate Fund and Ivy Global Risk-Managed Real Estate Fund, for the year then ended), and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2014, by correspondence with the custodian, agent banks, and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2014, the results of their operations, the changes in their net assets, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Kansas City, Missouri
May 21, 2014
| 2014 | ANNUAL REPORT | 105 |
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| Ivy Funds AMOUNTS NOT ROUNDED (UNAUDITED) |
The Funds hereby designate the following amounts of dividends paid from net ordinary income as dividends qualifying for the 70% dividends received deduction for corporations or as qualified dividend income for individuals for the tax period ended March 31, 2014:
| Dividends Received Deduction for Corporations |
Qualified Dividend Income
for |
|||||||
| Ivy Asset Strategy Fund |
$ | 129,692,266 | $ | 129,692,266 | ||||
| Ivy Balanced Fund |
11,595,313 | 11,595,313 | ||||||
| Ivy Energy Fund |
— | — | ||||||
| Ivy Global Natural Resources Fund |
— | — | ||||||
| Ivy Global Real Estate Fund |
— | — | ||||||
| Ivy Global Risk-Managed Real Estate Fund |
— | — | ||||||
| Ivy Real Estate Securities Fund |
— | — | ||||||
| Ivy Science and Technology Fund |
— | — | ||||||
The Funds hereby designate the following amounts as distributions of long-term capital gains:
| Ivy Asset Strategy Fund |
$ | — | ||
| Ivy Balanced Fund |
26,051,601 | |||
| Ivy Energy Fund |
— | |||
| Ivy Global Natural Resources Fund |
— | |||
| Ivy Global Real Estate Fund |
— | |||
| Ivy Global Risk-Managed Real Estate Fund |
— | |||
| Ivy Real Estate Securities Fund |
— | |||
| Ivy Science and Technology Fund |
108,849,299 |
Shareholders are advised to consult with their tax advisors concerning the tax treatment of dividends and distributions from all the Funds.
| 106 | ANNUAL REPORT | 2014 |
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BOARD OF TRUSTEES AND OFFICERS
| Ivy Funds |
The Trust is governed by the Board of Trustees (the Board). A majority of the Board members are not “interested persons” as defined in Section 2(a)(19) of the 1940 Act and therefore qualify as Disinterested Trustees. The Board elects the officers who are responsible for administering the Funds’ day-to-day operations. The Waddell & Reed Fund Complex (Fund Complex) is comprised of the Ivy Family of Funds, the Ivy High Income Opportunities Fund (a closed-end fund) (IVH) and the Advisors Fund Complex, which is comprised of each of the funds in the Waddell & Reed Advisors Funds (20 funds), Ivy Funds Variable Insurance Portfolios (29 funds) and InvestEd Portfolios (3 funds). Jarold W. Boettcher, Joseph Harroz, Jr., Henry J. Herrmann and Eleanor B. Schwartz also serve as trustees of each of the funds in the Advisors Fund Complex. Each member of the Board is also a member of the Board of Trustees of IVH.
Joseph Harroz, Jr. serves as Independent Chair of the Trust’s Board and of the Board of Trustees of Ivy Funds.
A Trustee serves until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. The Board appoints officers and delegates to them the management of the day-to-day operations of each of the Funds, based on policies reviewed and approved by the Board, with general oversight by the Board.
The Statement of Additional Information (SAI) for the Trust includes additional information about the Trust’s Trustees. The SAI is available without charge, upon request by calling 1.800.777.6472. It is also available on the Ivy Funds website, www.ivyfunds.com.
Disinterested Trustees
The following table provides information regarding each Disinterested Trustee.
| Name, Address and Year of Birth |
Position Held with the Trust |
Trustee Since | Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen |
Other Directorships Held During Past 5 Years | |||||
| Jarold W. Boettcher, CFA 6300 Lamar Avenue Overland Park, KS 66202 1940 |
Trustee | 2008 | President of Boettcher Enterprises, Inc. (agriculture products and services) (1979 to present), Boettcher Supply, Inc. (electrical and plumbing supplies distributor) (1979 to present), Boettcher Aerial, Inc. (Aerial Ag Applicator) (1979 to present) | 84 | Director of Guaranty State Bank & Trust Co. (financial services) (1981 to present); Director of Guaranty, Inc. (financial services) (1985 to present); Member of Kansas Board of Regents (2007 to 2011); Audit Committee Chairperson, Kansas Bioscience Authority (2009 to present); Member of Kansas Foundation for Medical Care (until 2011); Trustee of Advisors Fund Complex (52 portfolios overseen); Trustee of IVH | |||||
| James D. Gressett 6300 Lamar Avenue Overland Park, KS 66202 1950 |
Trustee | 2008 | Chief Executive Officer (CEO) of CalPac Pizza LLC (2011 to present); CEO of CalPac Pizza II LLC (2012 to present); CEO of PacPizza LLC (Pizza Hut franchise) (2000 to present); Partner, Century Bridge Partners (real estate investments) (2007 to present); Manager, Premium Gold Foods (2006 to present); President, Penn Capital Corp. (1995 to present); Partner, Penn Capital Partners (1999 to present); Member/Secretary, The Metochoi Group LLC (1999 to present) | 32 | Trustee of IVH |
| 2014 | ANNUAL REPORT | 107 |
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| Name, Address and Year of Birth |
Position Held with the Trust |
Trustee Since | Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen |
Other Directorships Held During Past 5 Years | |||||
| Joseph Harroz, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1967 |
Trustee Independent Chairman |
2008 2008 |
Dean of the College of Law, Vice President, University of Oklahoma (2010 to present); President of Graymark HealthCare (a NASDAQ listed company) (2008 to 2010); Adjunct Professor, University of Oklahoma Law School (1997 to 2010); Managing Member, Harroz Investments, LLC, (commercial enterprise investments) (1998 to present) | 84 | Director and Investor, Valliance Bank (2004 to present); Director, Graymark HealthCare (2008 to present); Trustee, the Mewbourne Family Support Organization (2003 to present) (non-profit); Director/Trustee, Oklahoma Foundation for Excellence (non-profit) (2008 to present); Trustee of Advisors Fund Complex (52 portfolios overseen); Trustee of IVH | |||||
| Glendon E. Johnson, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1951 |
Trustee | 2008 | Of Counsel, Lee & Smith, PC (law firm) (1996 to present); Co-owner and Vice President of the Board, Castle Valley Ranches, LLC (ranching) and Castle Valley Outdoors, LLC (hunting, fishing, outdoor recreation, lodging and corporate retreats) (1995 to present); Formerly, Partner, Kelly, Drye & Warren LLP (law firm, emphasis on finance, securities, mergers and acquisitions law) (1989-1996); Partner, Lane & Edson PC (law firm) (1987-1989) | 32 | Director, Thomas Foundation for Cancer Research (2005 to present); Trustee of IVH | |||||
| Eleanor B. Schwartz 6300 Lamar Avenue Overland Park, KS 66202 1937 |
Trustee | 2008 | Professor Emeritus, University of Missouri at Kansas City (2003 to present); Chancellor Emeritus, University of Missouri at Kansas City (1999 to present) | 84 | Trustee of Advisors Fund Complex (52 portfolios overseen); Trustee of IVH | |||||
| Michael G. Smith 6300 Lamar Avenue Overland Park, KS 66202 1944 |
Trustee | 2008 | Retired; formerly, with Merrill Lynch as Managing Director of Global Investor Client Strategy (1996-1998), Head of Regional Institutional Sales (1995-1996) and of U.S. Central Region (1986-1995, 1999). | 32 | Director of Executive Board, Cox Business School, Southern Methodist University (1998 to present); Lead Director of Northwestern Mutual Funds (2003 to present); Director, d-bx Target Date Funds (2007 to present); Chairman, CTMG, Inc. (clinical testing) (2008 to present); Trustee of IVH | |||||
| Edward M. Tighe 6300 Lamar Avenue Overland Park, KS 66202 1942 |
Trustee | 2008 | Retired; formerly, CEO and Director of Asgard Holdings LLC (computer network and security services) (2002 to 2004); President, Citco Technology Management (1995-2000); CEO, Global Mutual Fund Services (1993-2000); Sr. Vice President, Templeton Global Investors (1988-1992) | 32 | Director, The Research Coast Principium Foundation, Inc. (non-profit) (2012 to present); Trustee of IVH |
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Interested Trustees
Mr. Herrmann is “interested” by virtue of his current or former engagement as an officer of Waddell & Reed Financial, Inc. (WDR) or its wholly owned subsidiaries, including each Fund’s investment manager, IICO, each Fund’s principal underwriter, IFDI, and each Fund’s shareholder servicing and accounting services agent, Waddell & Reed Services Company, doing business as WI Services Company (WISC), as well as by virtue of his personal ownership in shares of WDR.
| Name, Address and Year of Birth |
Position(s) Held with the Trust |
Trustee/ Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds In Fund Complex Overseen |
Other Directorships Held | |||||
| Henry J. Herrmann 6300 Lamar Avenue Overland Park, KS 66202 1942 |
President Trustee |
2008 2008 |
Chairman of WDR (January 2010 to present); CEO of WDR (2005 to present); President, CEO and Chairman of IICO (2002 to present); President, CEO and Chairman of Waddell & Reed Investment Management Company (WRIMCO) (1993 to present); President and Trustee of each of the funds in the Fund Complex | 84 | Director of WDR, IICO, WRIMCO, WISC, W&R Capital Management Group, Inc. and Waddell & Reed, Inc.; Director, Blue Cross Blue Shield of Kansas City |
Officers
The Board has appointed officers who are responsible for the day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. In addition to Mr. Herrmann, who is President, the Trust’s principal officers are:
| Name, Address and Year of Birth |
Position(s) Held with the Trust and Fund Complex |
Officer of Trust Since | Officer of Fund Complex Since* |
Principal Occupation(s) During Past 5 Years | ||||
| Mara D. Herrington 6300 Lamar Avenue Overland Park KS 66202 1964 |
Vice President Secretary |
2008 2008 |
2006 2006 |
Vice President and Secretary of each of the funds in the Fund Complex (2006 to present); Vice President of WRIMCO and IICO (2006 to present) | ||||
| Joseph W. Kauten 6300 Lamar Avenue Overland Park KS 66202 1969 |
Vice President Treasurer Principal Accounting Officer Principal Financial Officer |
2008 2008 2008 2008 |
2006 2006 2006 2007 |
Principal Financial Officer of each of the funds in the Fund Complex (2007 to present); Vice President, Treasurer and Principal Accounting Officer of each of the funds in the Fund Complex (2006 to present); Assistant Treasurer of each of the funds in the Fund Complex (2003 to 2006) | ||||
| Scott J. Schneider 6300 Lamar Avenue Overland Park KS 66202 1968 |
Vice President Chief Compliance Officer |
2008 2008 |
2006 2004 |
Chief Compliance Officer (2004 to present) and Vice President (2006 to present) of each of the funds in the Fund Complex | ||||
| Wendy J. Hills 6300 Lamar Avenue Overland Park KS 66202 1970 |
Vice President General Counsel Assistant Secretary |
2014 2014 2014 |
2014 2014 2014 |
Senior Vice President and General Counsel of WDR, Waddell & Reed, WRIMCO and WISC (2014 to present); Senior Vice President and General Counsel of IICO (2014 to present); Vice President, General Counsel and Assistant Secretary for each of the funds in the Fund Complex (2014 to present) | ||||
| Philip A. Shipp 6300 Lamar Avenue Overland Park, KS 66202 1969 |
Assistant Secretary | 2012 | 2012 | Assistant Secretary of each of the funds in the Fund Complex (2012 to present) |
| * | This is the date when the officer first became an officer of one or more of the funds that are the predecessors to current funds within Ivy Funds (each, a predecessor fund) (if applicable). |
| 2014 | ANNUAL REPORT | 109 |
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| Ivy Funds |
The following privacy notice is issued by Ivy Funds (the Funds), Ivy Investment Management Company (IICO) and Ivy Funds Distributor, Inc. (IFDI).
Information Collected
We collect nonpublic personal information about you from your account application and other forms that you may deliver to us, and from your transactions with us and our affiliates. This is information that regulators consider necessary for the proper servicing of your account. In order to effect your transactions and service your account properly, we may disclose all of the information that we collect, as described above, to firms that assist us in servicing your account, such as our transfer agent.
Confidentiality of Information Collected
All records containing your nonpublic personal information are kept at our various service providers. These entities include IICO, IFDI and our transfer agent and administrative services provider. We require these affiliates, and any non-affiliated service providers, to protect the confidentiality of your information and to use the information only for the purposes for which disclosure to them is made. The Funds, IICO, IFDI and other service providers restrict access to nonpublic personal information about you to those employees who need to know that information to provide products and services to you and maintain physical, electronic, and procedural safeguards that comply with federal standards to maintain the security of your nonpublic personal information.
Disclosure of Information in Limited Circumstances
We do not disclose nonpublic personal information about present or former customers to nonaffiliated third parties, except as permitted or required by law. In connection with servicing your account, your nonpublic personal information may be shared among the entities named in this notice, their affiliates, and non-affiliates, including a transfer agent or other service companies. We will adhere to the policies and practices above for both current and former customers.
| 110 | ANNUAL REPORT | 2014 |
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| Ivy Funds |
Proxy Voting Guidelines
A description of the policies and procedures Ivy Funds uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 1.800.777.6472 and (ii) on the Securities and Exchange Commission’s (SEC) website at www.sec.gov.
Proxy Voting Records
Information regarding how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on Form N-PX through the Ivy Funds’ website at www.ivyfunds.com and on the SEC’s website at www.sec.gov.
QUARTERLY PORTFOLIO SCHEDULE INFORMATION
Ivy Funds
Portfolio holdings can be found on the Trust’s website at www.ivyfunds.com. Alternatively, a complete schedule of portfolio holdings of each Fund for the first and third quarters of each fiscal year is filed with the SEC and can be found on the Trust’s Form N-Q. These holdings may be viewed in the following ways:
| • | On the SEC’s website at www.sec.gov. |
| • | For review and copy at the SEC’s Public Reference Room in Washington, DC. Information on the operations of the Public Reference Room may be obtained by calling 1.800.SEC.0330. |
Ivy Funds
If you currently receive one copy of the shareholder reports and prospectus for your household (even if more than one person in your household owns shares of the Trust) and you would prefer to receive separate shareholder reports and prospectuses for each account holder living at your address, you can do either of the following:
Fax your request to 800.532.2749.
Write to us at the address listed on the back cover.
Please list each account for which you would like to receive separate shareholder reports and prospectus mailings. We will resume sending separate documents within 30 days of receiving your request.
TO ALL TRADITIONAL IRA PLANHOLDERS:
Ivy Funds
As required by law, we are hereby providing notice to you that income tax may be withheld automatically from any distribution or withdrawal from a traditional IRA. A Fund is generally required to withhold taxes unless you make a written election not to have taxes withheld. The election may be made on the distribution/withdrawal form provided by Waddell & Reed, Inc. which can be obtained from your Waddell & Reed representative or by submitting Internal Revenue Service Form W–4P. Once made, an election can be revoked by providing written notice to Waddell & Reed, Inc. If you elect not to have tax withheld you may be required to make payments of estimated tax. Penalties may be imposed by the IRS if withholding and estimated tax payments are not adequate.
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| The Ivy Funds Family |
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1.800.777.6472
Visit us online at www.ivyfunds.com
The Ivy Funds are managed by Ivy Investment Management Company and distributed by its subsidiary, Ivy Funds Distributor, Inc.
Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. For a prospectus containing this and other information for the Ivy Funds, call your financial advisor or visit us online at www.ivyfunds.com. Please read the prospectus, or summary prospectus, carefully before investing.
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ANN-IVYSPEC (3-14)
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This report is submitted for the general information of the shareholders of Ivy Funds. It is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by a current Ivy Funds prospectus, or summary prospectus, and current performance information, including current Lipper ranking information.
| 2 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Funds |
MARCH 31, 2014 (UNAUDITED) |
Henry J. Herrmann, CFA
| 2014 | ANNUAL REPORT | 3 |
Table of Contents
| Ivy Funds (UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning 9-30-13 |
Ending 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Bond Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,025.70 | $ | 5.27 | $ | 1,000 | $ | 1,019.75 | $ | 5.25 | 1.04% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,021.00 | $ | 10.00 | $ | 1,000 | $ | 1,015.08 | $ | 9.97 | 1.98% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,021.60 | $ | 9.30 | $ | 1,000 | $ | 1,015.71 | $ | 9.27 | 1.85% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,025.20 | $ | 5.77 | $ | 1,000 | $ | 1,019.24 | $ | 5.75 | 1.14% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,027.30 | $ | 3.65 | $ | 1,000 | $ | 1,021.34 | $ | 3.64 | 0.72% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,024.20 | $ | 6.78 | $ | 1,000 | $ | 1,018.23 | $ | 6.76 | 1.34% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,026.00 | $ | 4.96 | $ | 1,000 | $ | 1,020.01 | $ | 4.95 | 0.99% | |||||||||||||||
| Ivy Core Equity Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,108.90 | $ | 6.01 | $ | 1,000 | $ | 1,019.19 | $ | 5.75 | 1.15% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,103.60 | $ | 11.15 | $ | 1,000 | $ | 1,014.32 | $ | 10.68 | 2.13% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,104.70 | $ | 10.21 | $ | 1,000 | $ | 1,015.28 | $ | 9.77 | 1.94% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,107.80 | $ | 7.06 | $ | 1,000 | $ | 1,018.19 | $ | 6.76 | 1.35% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,111.00 | $ | 4.43 | $ | 1,000 | $ | 1,020.73 | $ | 4.24 | 0.84% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,107.30 | $ | 8.01 | $ | 1,000 | $ | 1,017.36 | $ | 7.67 | 1.52% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,110.50 | $ | 4.43 | $ | 1,000 | $ | 1,020.73 | $ | 4.24 | 0.84% | |||||||||||||||
See footnotes on page 9.
| 4 | ANNUAL REPORT | 2014 |
Table of Contents
ILLUSTRATION OF FUND EXPENSES
| Ivy Funds (UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning 9-30-13 |
Ending 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Cundill Global Value Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,061.50 | $ | 8.14 | $ | 1,000 | $ | 1,017.00 | $ | 7.97 | 1.59% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,055.60 | $ | 13.57 | $ | 1,000 | $ | 1,011.75 | $ | 13.28 | 2.64% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,058.40 | $ | 11.22 | $ | 1,000 | $ | 1,014.01 | $ | 10.98 | 2.19% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,061.30 | $ | 8.25 | $ | 1,000 | $ | 1,016.95 | $ | 8.07 | 1.59% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,063.70 | $ | 5.78 | $ | 1,000 | $ | 1,019.36 | $ | 5.65 | 1.12% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,061.10 | $ | 8.86 | $ | 1,000 | $ | 1,016.38 | $ | 8.67 | 1.72% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,063.10 | $ | 7.01 | $ | 1,000 | $ | 1,018.11 | $ | 6.86 | 1.37% | |||||||||||||||
| Ivy Dividend Opportunities Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,117.80 | $ | 6.67 | $ | 1,000 | $ | 1,018.66 | $ | 6.36 | 1.26% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,113.80 | $ | 10.67 | $ | 1,000 | $ | 1,014.85 | $ | 10.17 | 2.02% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,114.20 | $ | 10.15 | $ | 1,000 | $ | 1,015.38 | $ | 9.67 | 1.92% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,117.00 | $ | 7.20 | $ | 1,000 | $ | 1,018.10 | $ | 6.86 | 1.37% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,119.80 | $ | 4.88 | $ | 1,000 | $ | 1,020.28 | $ | 4.65 | 0.93% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,116.50 | $ | 8.15 | $ | 1,000 | $ | 1,017.27 | $ | 7.77 | 1.54% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,118.00 | $ | 6.25 | $ | 1,000 | $ | 1,019.02 | $ | 5.96 | 1.18% | |||||||||||||||
| Ivy Emerging Markets Equity Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,086.40 | $ | 8.97 | $ | 1,000 | $ | 1,016.34 | $ | 8.67 | 1.72% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,079.30 | $ | 15.49 | $ | 1,000 | $ | 1,010.04 | $ | 14.97 | 2.99% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,082.30 | $ | 12.39 | $ | 1,000 | $ | 1,013.03 | $ | 11.98 | 2.39% | |||||||||||||||
| Class E*** |
$ | 1,000 | $ | 1,088.80 | $ | 7.10 | $ | 1,000 | $ | 1,018.18 | $ | 6.86 | 1.35% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,089.80 | $ | 6.37 | $ | 1,000 | $ | 1,018.79 | $ | 6.16 | 1.23% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,085.90 | $ | 9.60 | $ | 1,000 | $ | 1,015.78 | $ | 9.27 | 1.84% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,088.00 | $ | 7.73 | $ | 1,000 | $ | 1,017.56 | $ | 7.46 | 1.48% | |||||||||||||||
| Ivy European Opportunities Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,111.10 | $ | 9.08 | $ | 1,000 | $ | 1,016.29 | $ | 8.67 | 1.73% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,104.60 | $ | 15.05 | $ | 1,000 | $ | 1,010.65 | $ | 14.38 | 2.86% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,107.40 | $ | 12.22 | $ | 1,000 | $ | 1,013.34 | $ | 11.68 | 2.32% | |||||||||||||||
| Class E*** |
$ | 1,000 | $ | 1,113.00 | $ | 6.97 | $ | 1,000 | $ | 1,018.38 | $ | 6.66 | 1.31% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,113.80 | $ | 6.24 | $ | 1,000 | $ | 1,019.06 | $ | 5.96 | 1.18% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,110.20 | $ | 9.39 | $ | 1,000 | $ | 1,016.03 | $ | 8.97 | 1.78% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,112.00 | $ | 7.60 | $ | 1,000 | $ | 1,017.69 | $ | 7.26 | 1.45% | |||||||||||||||
| Ivy Global Bond Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,025.40 | $ | 4.96 | $ | 1,000 | $ | 1,019.99 | $ | 4.95 | 0.99% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,022.60 | $ | 8.80 | $ | 1,000 | $ | 1,016.26 | $ | 8.77 | 1.74% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,021.50 | $ | 8.79 | $ | 1,000 | $ | 1,016.26 | $ | 8.77 | 1.74% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,026.70 | $ | 3.75 | $ | 1,000 | $ | 1,021.23 | $ | 3.74 | 0.74% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,023.80 | $ | 7.49 | $ | 1,000 | $ | 1,017.54 | $ | 7.46 | 1.48% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,026.40 | $ | 5.07 | $ | 1,000 | $ | 1,019.97 | $ | 5.05 | 0.99% | |||||||||||||||
See footnotes on page 9.
| 2014 | ANNUAL REPORT | 5 |
Table of Contents
ILLUSTRATION OF FUND EXPENSES
| Ivy Funds (UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning 9-30-13 |
Ending 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Global Equity Income Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,081.90 | $ | 6.77 | $ | 1,000 | $ | 1,018.45 | $ | 6.56 | 1.30% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,078.30 | $ | 10.50 | $ | 1,000 | $ | 1,014.86 | $ | 10.18 | 2.02% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,078.00 | $ | 10.29 | $ | 1,000 | $ | 1,015.04 | $ | 9.97 | 1.98% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,083.80 | $ | 4.90 | $ | 1,000 | $ | 1,020.27 | $ | 4.75 | 0.93% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,080.00 | $ | 8.32 | $ | 1,000 | $ | 1,016.92 | $ | 8.07 | 1.61% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,082.50 | $ | 6.14 | $ | 1,000 | $ | 1,019.03 | $ | 5.96 | 1.18% | |||||||||||||||
| Ivy Global Income Allocation Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,068.70 | $ | 7.65 | $ | 1,000 | $ | 1,017.52 | $ | 7.46 | 1.49% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,063.70 | $ | 11.97 | $ | 1,000 | $ | 1,013.34 | $ | 11.68 | 2.32% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,065.50 | $ | 10.74 | $ | 1,000 | $ | 1,014.50 | $ | 10.48 | 2.09% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,068.20 | $ | 7.45 | $ | 1,000 | $ | 1,017.77 | $ | 7.26 | 1.44% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,070.40 | $ | 5.28 | $ | 1,000 | $ | 1,019.83 | $ | 5.15 | 1.02% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,067.10 | $ | 8.37 | $ | 1,000 | $ | 1,016.78 | $ | 8.17 | 1.63% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,069.40 | $ | 6.62 | $ | 1,000 | $ | 1,018.56 | $ | 6.46 | 1.28% | |||||||||||||||
| Ivy High Income Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,062.30 | $ | 4.74 | $ | 1,000 | $ | 1,020.30 | $ | 4.65 | 0.93% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,058.40 | $ | 8.54 | $ | 1,000 | $ | 1,016.62 | $ | 8.37 | 1.67% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,058.60 | $ | 8.34 | $ | 1,000 | $ | 1,016.82 | $ | 8.17 | 1.63% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,060.80 | $ | 6.18 | $ | 1,000 | $ | 1,018.96 | $ | 6.06 | 1.20% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,063.70 | $ | 3.51 | $ | 1,000 | $ | 1,021.53 | $ | 3.44 | 0.68% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,060.60 | $ | 6.59 | $ | 1,000 | $ | 1,018.52 | $ | 6.46 | 1.28% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,062.30 | $ | 4.74 | $ | 1,000 | $ | 1,020.30 | $ | 4.65 | 0.93% | |||||||||||||||
| Ivy International Core Equity Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,088.30 | $ | 7.94 | $ | 1,000 | $ | 1,017.34 | $ | 7.67 | 1.52% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,085.00 | $ | 12.09 | $ | 1,000 | $ | 1,013.37 | $ | 11.68 | 2.32% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,085.30 | $ | 11.36 | $ | 1,000 | $ | 1,014.02 | $ | 10.98 | 2.19% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,088.00 | $ | 8.67 | $ | 1,000 | $ | 1,016.62 | $ | 8.37 | 1.67% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,091.00 | $ | 5.85 | $ | 1,000 | $ | 1,019.29 | $ | 5.65 | 1.13% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,087.40 | $ | 12.00 | $ | 1,000 | $ | 1,013.47 | $ | 11.58 | 2.30% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,089.60 | $ | 7.31 | $ | 1,000 | $ | 1,017.94 | $ | 7.06 | 1.40% | |||||||||||||||
| Ivy International Growth Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,086.60 | $ | 7.72 | $ | 1,000 | $ | 1,017.58 | $ | 7.47 | 1.47% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,081.30 | $ | 12.59 | $ | 1,000 | $ | 1,012.88 | $ | 12.18 | 2.42% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,082.20 | $ | 11.76 | $ | 1,000 | $ | 1,013.65 | $ | 11.38 | 2.26% | |||||||||||||||
| Class E*** |
$ | 1,000 | $ | 1,087.90 | $ | 6.26 | $ | 1,000 | $ | 1,018.95 | $ | 6.06 | 1.20% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,088.60 | $ | 5.74 | $ | 1,000 | $ | 1,019.46 | $ | 5.55 | 1.10% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,085.30 | $ | 8.86 | $ | 1,000 | $ | 1,016.48 | $ | 8.57 | 1.70% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,087.00 | $ | 7.10 | $ | 1,000 | $ | 1,018.14 | $ | 6.86 | 1.36% | |||||||||||||||
See footnotes on page 9.
| 6 | ANNUAL REPORT | 2014 |
Table of Contents
ILLUSTRATION OF FUND EXPENSES
| Ivy Funds (UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning 9-30-13 |
Ending 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Large Cap Growth Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,110.50 | $ | 6.01 | $ | 1,000 | $ | 1,019.19 | $ | 5.75 | 1.15% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,105.90 | $ | 10.53 | $ | 1,000 | $ | 1,014.89 | $ | 10.07 | 2.01% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,106.20 | $ | 9.90 | $ | 1,000 | $ | 1,015.57 | $ | 9.47 | 1.88% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,110.00 | $ | 6.01 | $ | 1,000 | $ | 1,019.19 | $ | 5.75 | 1.15% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,112.20 | $ | 4.65 | $ | 1,000 | $ | 1,020.53 | $ | 4.45 | 0.88% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,108.40 | $ | 7.70 | $ | 1,000 | $ | 1,017.60 | $ | 7.36 | 1.47% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,110.60 | $ | 5.59 | $ | 1,000 | $ | 1,019.64 | $ | 5.35 | 1.06% | |||||||||||||||
| Ivy Limited-Term Bond Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,008.70 | $ | 4.42 | $ | 1,000 | $ | 1,020.49 | $ | 4.45 | 0.89% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,004.30 | $ | 8.92 | $ | 1,000 | $ | 1,016.07 | $ | 8.97 | 1.78% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,005.00 | $ | 8.12 | $ | 1,000 | $ | 1,016.80 | $ | 8.17 | 1.63% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,008.10 | $ | 5.02 | $ | 1,000 | $ | 1,019.94 | $ | 5.05 | 1.00% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,009.90 | $ | 3.22 | $ | 1,000 | $ | 1,021.75 | $ | 3.23 | 0.64% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,007.00 | $ | 6.22 | $ | 1,000 | $ | 1,018.77 | $ | 6.26 | 1.24% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,008.70 | $ | 4.42 | $ | 1,000 | $ | 1,020.49 | $ | 4.45 | 0.89% | |||||||||||||||
| Ivy Managed International Opportunities Fund(3) |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,087.60 | $ | 2.51 | $ | 1,000 | $ | 1,022.56 | $ | 2.43 | 0.48% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,083.80 | $ | 7.19 | $ | 1,000 | $ | 1,018.05 | $ | 6.96 | 1.38% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,084.40 | $ | 6.46 | $ | 1,000 | $ | 1,018.69 | $ | 6.26 | 1.25% | |||||||||||||||
| Class E*** |
$ | 1,000 | $ | 1,088.20 | $ | 2.09 | $ | 1,000 | $ | 1,022.94 | $ | 2.02 | 0.40% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,086.20 | $ | 0.83 | $ | 1,000 | $ | 1,024.16 | $ | 0.81 | 0.15% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,085.50 | $ | 3.23 | $ | 1,000 | $ | 1,021.79 | $ | 3.13 | 0.63% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,088.40 | $ | 2.09 | $ | 1,000 | $ | 1,022.92 | $ | 2.02 | 0.40% | |||||||||||||||
| Ivy Micro Cap Growth Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,164.90 | $ | 8.66 | $ | 1,000 | $ | 1,016.95 | $ | 8.07 | 1.60% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,160.20 | $ | 13.39 | $ | 1,000 | $ | 1,012.53 | $ | 12.48 | 2.49% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,160.90 | $ | 12.43 | $ | 1,000 | $ | 1,013.45 | $ | 11.58 | 2.30% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,167.10 | $ | 6.50 | $ | 1,000 | $ | 1,018.89 | $ | 6.06 | 1.21% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,163.90 | $ | 9.74 | $ | 1,000 | $ | 1,015.93 | $ | 9.07 | 1.80% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,152.70 | $ | 7.96 | $ | 1,000 | $ | 1,017.57 | $ | 7.46 | 1.48% | |||||||||||||||
| Ivy Mid Cap Growth Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,083.10 | $ | 6.67 | $ | 1,000 | $ | 1,018.50 | $ | 6.46 | 1.29% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,078.50 | $ | 10.70 | $ | 1,000 | $ | 1,014.60 | $ | 10.38 | 2.07% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,079.00 | $ | 10.29 | $ | 1,000 | $ | 1,015.07 | $ | 9.97 | 1.98% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,081.30 | $ | 8.33 | $ | 1,000 | $ | 1,016.96 | $ | 8.07 | 1.60% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,084.70 | $ | 5.11 | $ | 1,000 | $ | 1,020.04 | $ | 4.95 | 0.98% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,081.60 | $ | 8.22 | $ | 1,000 | $ | 1,017.04 | $ | 7.97 | 1.58% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,083.60 | $ | 6.35 | $ | 1,000 | $ | 1,018.82 | $ | 6.16 | 1.23% | |||||||||||||||
See footnotes on page 9.
| 2014 | ANNUAL REPORT | 7 |
Table of Contents
ILLUSTRATION OF FUND EXPENSES
| Ivy Funds (UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning 9-30-13 |
Ending 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Money Market Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,000.10 | $ | 0.90 | $ | 1,000 | $ | 1,024.06 | $ | 0.91 | 0.18% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,000.00 | $ | 0.90 | $ | 1,000 | $ | 1,024.08 | $ | 0.91 | 0.17% | |||||||||||||||
| Class C** |
$ | 1,000 | $ | 1,000.00 | $ | 0.90 | $ | 1,000 | $ | 1,024.01 | $ | 0.91 | 0.18% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,000.10 | $ | 0.70 | $ | 1,000 | $ | 1,024.20 | $ | 0.71 | 0.15% | |||||||||||||||
| Ivy Municipal Bond Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,031.10 | $ | 5.18 | $ | 1,000 | $ | 1,019.79 | $ | 5.15 | 1.03% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,027.10 | $ | 9.12 | $ | 1,000 | $ | 1,015.91 | $ | 9.07 | 1.81% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,027.20 | $ | 9.12 | $ | 1,000 | $ | 1,015.98 | $ | 9.07 | 1.80% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,032.20 | $ | 4.17 | $ | 1,000 | $ | 1,020.88 | $ | 4.14 | 0.81% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,031.20 | $ | 5.18 | $ | 1,000 | $ | 1,019.79 | $ | 5.15 | 1.03% | |||||||||||||||
| Ivy Municipal High Income Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,041.00 | $ | 4.39 | $ | 1,000 | $ | 1,020.64 | $ | 4.34 | 0.86% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,037.30 | $ | 8.05 | $ | 1,000 | $ | 1,017.02 | $ | 7.97 | 1.59% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,037.20 | $ | 8.15 | $ | 1,000 | $ | 1,016.92 | $ | 8.07 | 1.61% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,041.90 | $ | 3.57 | $ | 1,000 | $ | 1,021.48 | $ | 3.54 | 0.69% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,041.00 | $ | 4.39 | $ | 1,000 | $ | 1,020.64 | $ | 4.34 | 0.86% | |||||||||||||||
| Ivy Small Cap Growth Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,087.00 | $ | 7.41 | $ | 1,000 | $ | 1,017.86 | $ | 7.16 | 1.42% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,082.40 | $ | 11.97 | $ | 1,000 | $ | 1,013.45 | $ | 11.58 | 2.30% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,083.30 | $ | 10.73 | $ | 1,000 | $ | 1,014.65 | $ | 10.38 | 2.06% | |||||||||||||||
| Class E |
$ | 1,000 | $ | 1,086.40 | $ | 8.14 | $ | 1,000 | $ | 1,017.14 | $ | 7.87 | 1.56% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,089.40 | $ | 5.54 | $ | 1,000 | $ | 1,019.67 | $ | 5.35 | 1.05% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,085.60 | $ | 8.66 | $ | 1,000 | $ | 1,016.68 | $ | 8.37 | 1.66% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,087.70 | $ | 6.79 | $ | 1,000 | $ | 1,018.45 | $ | 6.56 | 1.30% | |||||||||||||||
| Ivy Small Cap Value Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,114.00 | $ | 8.24 | $ | 1,000 | $ | 1,017.15 | $ | 7.87 | 1.56% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,108.70 | $ | 13.39 | $ | 1,000 | $ | 1,012.23 | $ | 12.78 | 2.55% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,110.50 | $ | 11.71 | $ | 1,000 | $ | 1,013.85 | $ | 11.18 | 2.22% | |||||||||||||||
| Class E*** |
$ | 1,000 | $ | 1,116.00 | $ | 6.35 | $ | 1,000 | $ | 1,018.92 | $ | 6.06 | 1.21% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,116.40 | $ | 5.71 | $ | 1,000 | $ | 1,019.49 | $ | 5.45 | 1.09% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,112.90 | $ | 8.98 | $ | 1,000 | $ | 1,016.41 | $ | 8.57 | 1.71% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,114.80 | $ | 7.08 | $ | 1,000 | $ | 1,018.20 | $ | 6.76 | 1.35% | |||||||||||||||
| Ivy Tax-Managed Equity Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,110.20 | $ | 7.17 | $ | 1,000 | $ | 1,018.17 | $ | 6.86 | 1.36% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,106.40 | $ | 10.43 | $ | 1,000 | $ | 1,015.02 | $ | 9.97 | 1.99% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,105.90 | $ | 10.74 | $ | 1,000 | $ | 1,014.74 | $ | 10.28 | 2.04% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,111.60 | $ | 5.70 | $ | 1,000 | $ | 1,019.55 | $ | 5.45 | 1.08% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,110.40 | $ | 6.96 | $ | 1,000 | $ | 1,018.31 | $ | 6.66 | 1.33% | |||||||||||||||
See footnotes on page 9.
| 8 | ANNUAL REPORT | 2014 |
Table of Contents
ILLUSTRATION OF FUND EXPENSES
| Ivy Funds (UNAUDITED) |
| Actual(1) | Hypothetical(2) | |||||||||||||||||||||||||||
| Fund | Beginning Account Value 9-30-13 |
Ending Account Value 3-31-14 |
Expenses Paid During Period* |
Beginning 9-30-13 |
Ending 3-31-14 |
Expenses Paid During Period* |
Annualized Expense Ratio Based on the Six-Month Period |
|||||||||||||||||||||
| Ivy Value Fund |
|
|||||||||||||||||||||||||||
| Class A |
$ | 1,000 | $ | 1,131.90 | $ | 6.93 | $ | 1,000 | $ | 1,018.48 | $ | 6.56 | 1.29% | |||||||||||||||
| Class B** |
$ | 1,000 | $ | 1,127.00 | $ | 11.38 | $ | 1,000 | $ | 1,014.19 | $ | 10.78 | 2.15% | |||||||||||||||
| Class C |
$ | 1,000 | $ | 1,128.10 | $ | 10.64 | $ | 1,000 | $ | 1,014.90 | $ | 10.07 | 2.01% | |||||||||||||||
| Class E*** |
$ | 1,000 | $ | 1,133.20 | $ | 5.76 | $ | 1,000 | $ | 1,019.58 | $ | 5.45 | 1.07% | |||||||||||||||
| Class I |
$ | 1,000 | $ | 1,133.80 | $ | 5.12 | $ | 1,000 | $ | 1,020.12 | $ | 4.85 | 0.97% | |||||||||||||||
| Class R |
$ | 1,000 | $ | 1,130.40 | $ | 8.31 | $ | 1,000 | $ | 1,017.18 | $ | 7.87 | 1.56% | |||||||||||||||
| Class Y |
$ | 1,000 | $ | 1,132.10 | $ | 6.40 | $ | 1,000 | $ | 1,018.96 | $ | 6.06 | 1.20% | |||||||||||||||
| * | Fund expenses for each share class are equal to the Fund’s annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by 182 days in the six-month period ended March 31, 2014, and divided by 365. |
| ** | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| ***Class | share is closed to investment. |
| (1) | This section uses the Fund’s actual total return and actual Fund expenses. It is a guide to the actual expenses paid by the Fund in the period. The “Ending Account Value” shown is computed using the Fund’s actual return and the “Expenses Paid During Period” column shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. A shareholder may use the information here, together with the dollar amount invested, to estimate the expenses that were paid over the period. For every thousand dollars a shareholder has invested, the expenses are listed in the last column of this section. |
| (2) | This section uses a hypothetical five percent annual return and actual Fund expenses. It helps to compare the Fund’s ongoing costs with other mutual funds. A shareholder can compare the Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
| (3) | Annualized Expense Ratio Based on the Six-Month Period does not include expenses of Underlying Ivy Funds in which Ivy Managed International Opportunities Fund invests. |
The above illustrations are based on ongoing costs only and do not include any transactional costs, such as sales loads, redemption fees or exchange fees.
| 2014 | ANNUAL REPORT | 9 |
Table of Contents
| Ivy Bond Fund |
(UNAUDITED) |
The Fund outperformed its index and underperformed its peer group for the 12 months ended March 31, 2014. The Fund’s outperformance versus its index was due to investments in nongovernment bonds, including corporate bonds, commercial mortgage-backed securities (CMBS) and active security selection and trading. Security selection, in particular, added over 100 basis points of excess return for the year relative to the index for the second consecutive year. Specifically, the Fund’s positions in the communications, pipeline, transportation and asset-backed sectors performed well.
The Fund’s underperformance relative to its peer group was due to our more cautious view of the economy and risk assets in the latter half of the year. As credit spreads in the fourth quarter of 2013 tightened to the lowest level of the year, we reduced risk in the portfolio, particularly in high-yield bonds.
Market
For the U.S. economy, 2013 was about inching back to normal, and in other Western economies it was about stabilization. The U.S. economy shook off a fairly slow start. It built momentum throughout the year even in the face of persistent headwinds from rising interest rates and a threat of another government shutdown.
The economy was boosted by rising housing activity and home prices, slow but steady gains in employment, rising business optimism and rising consumer confidence. The markets were boosted by a slow but steady improvement in economic conditions, falling inflation and by very accommodative Federal Reserve (Fed) policy.
The Fed caught investors somewhat by surprise in May when it signaled the possibility of tapering its quantitative easing program. The 10-year Treasury yield rose from 1.6% to 2.5% at the end of June. The Fed didn’t actually reduce its bond purchases until December and the reaction by investors was mild, with the 10-year Treasury yield rising to 3% at year-end.
The rise in Treasury yields resulted in negative 2013 total returns for most bond investors, especially for those invested in government or government-related securities. Returns for corporate bonds and other non-government sectors were stronger in comparison, offsetting some of the negative impact from rising rates. In addition, stock returns were very strong towards the end of 2013.
The economy finished 2013 strongly, but slowed in the first quarter of 2014. Business sentiment waned, and overall housing activity disappointed, although housing prices continued to rise. Retail sales, auto sales and industrial activity all fell below expectations. While the winter of 2013-14, the 34th coldest on record with numerous storms, had an impact, it would be hard to lay all the blame for the economy’s performance on weather.
During the first quarter of 2014, interest rates moved down from highs reached at the end of 2013 and stocks lost their momentum. The 10-year Treasury yield settled safely back to 2.5% to 3%, a range it has maintained over the last nine months. Fixed income sectors did well, as rates fell and spreads on nongovernment bonds tightened further.
| 10 | ANNUAL REPORT | 2014 |
Table of Contents
Positioning
We started the year with relatively high exposure to investment-grade and high-yield credit, particularly in the CMBS, insurance, real estate investment trust (REIT), energy and transportation sectors. Concerned about too much optimism among investors, we reduced positions in high-yield and investment-grade bonds in the Fund in the second quarter. When rates rose, this reduced the Fund’s exposure to falling prices and spreads widened by 25 basis points for investment grade bonds and 100 basis points for high yield bonds. With the proceeds of the sales we purchased agency mortgage-backed securities (MBS).
In the third quarter, we added financial holdings, especially bank and insurance company bonds and sold more industrial positions as the economic outlook became murkier.
During the last quarter of 2013, we continued to take down risk in the portfolio as spreads tightened to the lowest level of the year. We sold insurance company positions that had performed well during the previous quarter and reduced utility exposure.
We continued to take profits on several winners in the corporate bond sector early in the first quarter of 2014, before the sell-off in emerging markets and the resulting effect on spreads in the credit markets. Thereafter, we increased corporate bond holdings in the quarter’s second half. We also reduced Treasuries and agency MBS holdings as we saw continued strong demand in the corporate market in spite of weaker economic data.
Outlook
We expect the economy to pick up somewhat in the second quarter, as weather becomes less of a factor, and anticipate that growth will trend towards 2.5% or higher. However, given the very soft first quarter economic data, we believe it is prudent to temper expectations somewhat for the remainder of the year relative to the robust pace experienced in the second half of 2013.
We do not believe an increase in growth is likely to trigger a significant rise in interest rates. We also do not expect growth to be strong enough or inflation to increase enough to trigger a spike in long-term rates. We expect that the Fed will refrain from raising short-term rates until late 2015 or beyond as inflation remains way below their expectations and job growth is far from satisfactory.
Fixed income spreads should continue to grind tighter, and investor demand for corporate, mortgage, commercial mortgage and asset-backed security bonds should remain strong as inflation remains low. Low inflation tends to be very good for stock prices as well as encouraging narrower spreads for nongovernment bonds.
We believe that stocks are unlikely to be as strong as 2013. Emerging market concerns, slower growth in China and Russia’s territorial aggressiveness are sure to cause the developed market economies and the investment markets more headaches in the coming months.
The Fund’s performance noted above is at net asset value (NAV) and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.
As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Fixed-income securities are subject to interest rate risk and, as such, the Fund’s net asset value may fall as interest rates rise. These and other risks are more fully described in the Fund’s prospectus.
Certain U.S. government securities in which the Fund may invest, such as Treasury securities and securities issued by the Government National Mortgage Association (Ginnie Mae), are backed by the full faith and credit of the U.S. government. However, other U.S. government securities in which the Fund may invest, such as securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB) are not backed by the full faith and credit of the U.S. government, are not insured or guaranteed by the U.S. government and, instead, may be supported only by the right of the issuer to borrow from the U.S. Treasury or by the credit of the issuer.
On Sept. 7, 2008, the Federal Housing Finance Agency (FHFA), an agency of the U.S. government, placed Fannie Mae and Freddie Mac into conservatorship, a statutory process with the objective of returning the entities to normal business operations. FHFA will act as the conservator to operate Fannie Mae and Freddie Mac until they are stabilized. It is unclear what effect this conservatorship will have on the securities issued or guaranteed by Fannie Mae or Freddie Mac.
The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy Bond Fund.
| 2014 | ANNUAL REPORT | 11 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Bond Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
| 12 | ANNUAL REPORT | 2014 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Bond Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
-5.27% | -4.35% | -0.31% | -5.36% | 0.77% | 0.18% | 0.51% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
6.03% | 5.99% | 6.49% | 5.98% | 7.64% | — | 7.36% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
2.96% | 2.41% | 2.67% | — | — | — | 3.56% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 2.82% | 4.16% | 0.89% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 13 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Bond Fund (in thousands) |
MARCH 31, 2014 |
| 14 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Bond Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 15 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Bond Fund (in thousands) |
MARCH 31, 2014 |
| 16 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Bond Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 17 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Bond Fund (in thousands) |
MARCH 31, 2014 |
| 18 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Bond Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| * | Not shown due to rounding. |
| (A) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $104,385 or 17.4% of net assets. |
| (B) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. |
| (C) | Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy. |
| (D) | Interest-only security. Amount shown as principal represents notional amount for computation of interest. |
| (E) | Zero coupon bond. |
| (F) | All or a portion of the security position has been pledged as collateral on open futures contracts. |
| 2014 | ANNUAL REPORT | 19 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Bond Fund (in thousands) |
MARCH 31, 2014 |
| (G) | Rate shown is the yield to maturity at March 31, 2014. |
| (H) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following futures contracts were outstanding at March 31, 2014 (contracts unrounded):
| Description | Type | Expiration Date | Number of Contracts | Market Value | Unrealized Appreciation (Depreciation) |
|||||||||||
| U.S. 10-Year Treasury Note |
Short | 6–30–14 | 160 | $ | (19,760 | ) | $ | 70 | ||||||||
| U.S. Treasury Long Bond |
Short | 6–30–14 | 63 | (8,393 | ) | (119 | ) | |||||||||
|
|
|
|||||||||||||||
| $ | (28,153 | ) | $ | (49 | ) | |||||||||||
|
|
|
|||||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Preferred Stocks |
$ | 6,623 | $ | — | $ | — | ||||||
| Asset-Backed Securities |
— | 56,625 | 5,069 | |||||||||
| Corporate Debt Securities |
— | 253,747 | 3,999 | |||||||||
| Mortgage-Backed Securities |
— | 46,251 | 3,326 | |||||||||
| Municipal Bonds |
— | 9,749 | — | |||||||||
| United States Government Agency Obligations |
— | 147,500 | — | * | ||||||||
| United States Government Obligations |
— | 53,280 | — | |||||||||
| Short-Term Securities |
— | 21,966 | — | |||||||||
| Total |
$ | 6,623 | $ | 589,118 | $ | 12,394 | ||||||
| Futures Contracts |
$ | 70 | $ | — | $ | — | ||||||
| Liabilities |
||||||||||||
| Futures Contracts |
$ | 119 | $ | — | $ | — | ||||||
The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Asset-Backed Securities |
Corporate Debt Securities |
Mortgage-Backed Securities |
United States Government Agency Obligations |
|||||||||||||
| Beginning Balance 4-1-13 |
$ | 28,308 | $ | 3,065 | $ | 2,743 | $ | — | * | |||||||
| Net realized gain (loss) |
43 | — | — | — | ||||||||||||
| Net change in unrealized appreciation (depreciation) |
(68 | ) | (64 | ) | 50 | — | * | |||||||||
| Purchases |
5,207 | — | 2,077 | — | ||||||||||||
| Sales |
(3,061 | ) | — | — | — | |||||||||||
| Amortization/Accretion of premium/discount |
— | (30 | ) | — | * | — | ||||||||||
| Transfers into Level 3 during the period |
— | 4,093 | — | — | ||||||||||||
| Transfers out of Level 3 during the period |
(25,360 | ) | (3,065 | ) | (1,544 | ) | — | |||||||||
| Ending Balance 3-31-14 |
$ | 5,069 | $ | 3,999 | $ | 3,326 | $ | — | * | |||||||
| Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 3-31-14 |
$ | (42 | ) | $ | (64 | ) | $ | 50 | $ | — | * | |||||
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period. There were no transfers between Levels 1 and 2 during the period ended March 31, 2014.
| 20 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Bond Fund (in thousands) |
MARCH 31, 2014 |
Information about Level 3 fair value measurements:
| Fair Value at 3-31-14 |
Valuation Technique(s) | Unobservable Input(s) | ||||||||||
| Assets |
||||||||||||
| Asset-Backed Securities |
$ | 5,069 | Third-party valuation service | Broker quotes | ||||||||
| Corporate Debt Securities |
$ | 3,999 | Third-party valuation service | Broker quotes | ||||||||
| Mortgage-Backed Securities |
$ | 3,326 | Third-party valuation service | Broker quotes | ||||||||
| United State Government Agency Obligations |
$ | — | * | Broker | Broker quotes | |||||||
The following acronyms are used throughout this schedule:
CMO = Collateralized Mortgage Obligation
GTD = Guaranteed
REIT = Real Estate Investment Trust
REMIC = Real Estate Mortgage Investment Conduit
TBA = To Be Announced
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 21 |
Table of Contents
| Ivy Core Equity Fund |
(UNAUDITED) |
The past 12 months have been a robust period for the U.S. equity market with the S&P 500 returning 21.86% for the year ending March 31, 2014. Price-to-earnings (P/E) expansion drove the majority of the market’s return during the year. This expansion in valuation levels can likely be attributable to greater hopes for economic acceleration, a flight from fixed-income investments, a more stable fiscal path in the U.S., and continued accommodative monetary policy domestically and abroad. Three of the four sectors that outperformed the market for the year (consumer discretionary, industrials and financials) were beneficiaries of better optimism on future U.S. and international growth.
Health care also outperformed the market, largely a result of accelerating research and development success within pharmaceuticals and biotechs. As one would predict in a very strong market, more defensive and higher-dividend paying sectors like telecommunications and utilities meaningfully underperformed the market. Sector returns were positive. Investors’ greater tolerance to take risk in 2013 led to outperformance of smaller-cap stocks. Of the major international markets, returns in the U.S. trailed only those of Japan, which meaningfully stepped up efforts to stimulate growth and inflation through tremendous monetary accommodation.
Contributors and detractors
The Ivy Core Equity Fund outperformed its benchmark for the fiscal year ended March 31, 2014. Most of the outperformance was driven by stock selection. Key contributors were Facebook, Inc., Pentair, Inc. and Applied Materials, Inc. The top 10 largest contributors represented a healthy balance between companies benefiting from the Fund as well as companies undergoing positive company-specific change. Sector weighting versus the benchmark also produced positive performance with underweight positions in defensive sectors providing the largest of these contributions. The Fund was tilted toward more economically sensitive stocks and sectors throughout the year given better growth characteristics and reasonable valuations relative to traditional defensive areas.
Outlook and strategy
Our outlook on the U.S. equity market continues to be constructive. Over the past 12 months, the market has plowed ahead despite the backdrop of uncertainty that included a substantial decline in government spending, higher tax rates, significant uncertainty over the pace of Federal Reserve’s (Fed) asset purchases, tensions in the Middle East, the shutdown of the U.S. government, debate over the debt-ceiling in Washington, higher long-term interest rates, and a cancerous political environment. Through all of this, the housing market has continued to heal as home prices are up significantly in the past 12 months. In addition, employment has steadily grown, the U.S. deficit has narrowed, corporate profitability is at a record level, foreign economies (particularly Europe and Japan) appear to be slowly pulling ahead, and confidence among consumers has risen meaningfully.
We believe the economic growth headwind from reduced government spending should be a small fraction of the 1.5% of gross domestic product hit the U.S. economy absorbed in 2013. Foreign economies are better with improving manufacturing and consumer demand data in places like Europe. Anxiety over changing Fed policy should be diminished. Politicians appear set to avoid a repeat of the past two confidence-destroying budget debates. The U.S. appears well on its way to approaching near energy independence over the long-term. That said, equity market valuations are higher than they were a year ago, and recent stock price performance has been driven more by higher P/E multiples than better earnings growth.
We believe that we are still at the early stages of an unwinding of excess optimism in the bond markets. After funneling nearly $1.2 trillion into bond funds between 2008 and the beginning of 2013 (and taking nearly $600 million out of domestic equity funds), we think that investors must grapple with the potential for zero or negative returns in bond funds as interest rates normalize. To us, this means the prospect of significant inflows into equities over the mid- to long-term, and the possibility of higher equity valuations is strong. We hope that the movement out of bonds is a drift rather than a stampede, as a quick rise in interest rates would be an unwelcome event in the equity markets. And as we’ve learned over the past several years, we live in an ever-changing global economy with surprises around every corner.
| 22 | ANNUAL REPORT | 2014 |
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Whether the short-term environment favors growth or value stocks, or one style versus another, the Fund’s multi-year investment strategy remains unchanged. The Fund’s goal is to invest in companies ahead of the market’s rising expectations, and to seek companies we believe offer competitive positioning to be industry leaders.
We look to identify two broad sets of catalysts for the companies the Fund owns. Roughly half of the portfolio is expected to see earnings improvement driven by underappreciated macro themes. For example, we believe the adoption of the mobile internet remains a significant global theme that is reshaping most industries. Even though most consumers in developed economies have mobile devices, usage continues to increase. This is a benefit to holdings such as Facebook and Alliance Data Systems Corp., whose sales growth rates are uniquely tied to more consumers moving more everyday tasks to mobile devices.
The other set of catalysts is based on earnings outperformance driven by company-specific actions. The Fund recently added Delphi Corporation, a company we believe has a dominant position in providing automakers content to the high-growth areas of fuel economy, infotainment and active safety technologies. We think these business initiatives will drive greater than expected revenue growth and margin expansion.
For the past year, there has been a more cyclical tilt in the portfolio. This positioning remains due to our belief that economic data will continue to strengthen while monetary policy will remain accommodative. We continue to find more value in companies whose business is more levered to an improving economy than companies that have a more defensive non-cyclical business. This is likely to remain in place over a multi-year time frame as interest rate levels begin to normalize in the U.S. and the conviction in a self-sustaining recovery cements itself. Thank you for your continued support and we look forward to updating you next year.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investments. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of Ivy Core Equity Fund’s performance.
| 2014 | ANNUAL REPORT | 23 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Core Equity Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| Bank of America Corp. |
Financials |
|||
| Canadian Pacific Railway Ltd. |
Industrials |
|||
| Applied Materials, Inc. |
Information Technology |
|||
| American International Group, Inc. |
Financials |
|||
| Pentair, Inc. |
Industrials |
|||
| MasterCard, Inc., Class A |
Information Technology |
|||
| Citigroup, Inc. |
Financials |
|||
| Anheuser-Busch InBev S.A. ADR |
Consumer Staples |
|||
| Adobe Systems, Inc. |
Information Technology |
|||
| Noble Energy, Inc. |
Energy |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 24 | ANNUAL REPORT | 2014 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Core Equity Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
15.71% | 17.62% | 21.79% | 15.52% | 23.18% | 22.41% | 23.14% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
20.06% | 20.15% | 20.57% | 20.03% | 21.94% | — | 21.71% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
8.51% | 8.10% | 8.32% | — | — | — | 9.35% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 7.28% | 8.85% | 25.09% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 25 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Core Equity Fund (in thousands) |
MARCH 31, 2014 |
| 26 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Core Equity Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Rate shown is the yield to maturity at March 31, 2014. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 208,702 | $ | — | $ | — | ||||||
| Consumer Staples |
75,002 | — | — | |||||||||
| Energy |
57,432 | — | — | |||||||||
| Financials |
91,824 | — | — | |||||||||
| Health Care |
80,463 | — | — | |||||||||
| Industrials |
157,687 | — | — | |||||||||
| Information Technology |
132,150 | — | — | |||||||||
| Materials |
52,442 | — | — | |||||||||
| Total Common Stocks |
$ | 855,702 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 18,914 | — | |||||||||
| Total |
$ | 855,702 | $ | 18,914 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GTD = Guaranteed
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 27 |
Table of Contents
| Ivy Cundill Global Value Fund |
(UNAUDITED) |
Solid performance gains in volatile markets
Equity and fixed-income markets were volatile in the fiscal year ended March 31, 2014. Early in the year, economic growth remained slow in key countries, although it improved somewhat as the year progressed. During the second quarter of 2013, volatility in the markets spiked due to concerns regarding U.S. Federal Reserve (Fed) monetary policy. A sell-off in stocks and bonds rolled across the globe in June after former Fed Chairman Ben Bernanke remarked the central bank may begin to reduce purchases under its $85 billion bond purchase program before year end. As a result, money began to flee various emerging markets where currencies had been strengthening and yields had been high. Bond markets were hit hard and currencies weakened along with equities. Moving into 2014, the U.S. economy slowed, but maintained steady economic growth in the quarter. Despite mixed economic reports, the markets continued to react positively to improvements in consumer spending, productivity and an increase in business investment. In Europe, market data was more or less the same, though the European Central Bank (ECB) continued to voice fear of deflation — largely in an effort to talk down the euro.
For the 12 months ending March 31, 2014, the Fund posted solid positive performance and outperformed its benchmark. Performance was driven primarily by strong stock selection within the consumer discretionary sector, led by holdings in GameStop Corp., a retailer of both new and used video game software and hardware, and Mediaset S.p.A., an Italian-based mass media company. Additionally, exposure to foreign currency benefitted performance, with the exception of the Canadian dollar. Our Japanese yen currency hedge was beneficial as the yen declined relative to the U.S. dollar.
On the other hand, poor stock selection in Asia and emerging markets were detriments to performance for the fiscal year. In addition, the Fund’s relatively high cash allocation, averaging approximately 20%, detracted from performance in a rising market. From a deep value perspective, the easy money policies of the major central banks bolstered capital markets and allowed equity prices to inflate. In our opinion, this has resulted in equity markets that increasingly appear to be overvalued. As a result, when we are unable to identify deep value opportunities with adequate margin of safety, cash tends to rise.
Strategies and techniques
Throughout the year, a number of positions that we had purchased in the previous 18 to 24 months began to mature and we either sold or reduced those positions. As a result, our domestic market exposure has declined and is considerably below the benchmark. Due to our valuation concerns, we have added few replacements to the portfolio.
Over the last couple of years, the South Korean market has been a considerable underperformer. In our view, geopolitical concerns, a lack of governance, and increases in rival Japanese exports boosted by a weak yen relative to the won, has resulted in the South Korean market being relatively inexpensive. While concerns exist, we increased our South Korean exposure by roughly 10%, looking for value opportunities. The Fund added four positions through the year covering both domestic and export industries. The largest addition, POSCO, is the world’s fourth largest iron and steel company that we believe is a low cost, high value-add producer, trading at multi-year lows and at a fraction of book value. We also increased our European exposure, though marginally. While we sold several positions in the region over the course of the year, we invested in a few new companies that we believe are geared to perform well during the long-term recovery in Europe. We continue to search for what we believe are undervalued opportunities in the region, but remain cautious of the economic challenges that remain in the eurozone.
The other area of focus in the last year has been investing in “special situation” companies. As noted, we believe most equity markets are quite expensive. As such, we looked to alternative investments that we feel provided a margin of safety and upside that was not necessarily correlated to broad market gyrations. Recently we purchased a convertible bond in Blackberry Inc. Ltd, a company that lately has undergone a change in senior management. We believe if new management can effectively lead a business recovery (the CEO has a history of doing so) the Fund can participate in
| 28 | ANNUAL REPORT | 2014 |
Table of Contents
the equity performance; however, if management is unsuccessful, the convertible bond leaves us the principal and a 6% coupon. Albeit a small portion of the Fund, we expect investments like this to be relatively stable with potential upside.
Outlook
As always, there are global issues including China’s decelerating gross domestic product (GDP) growth, trouble in emerging markets, deflationary risks in Europe, unemployment in the U.S., and the unknown long-term effects of prolonged quantitative easing. We have seen a long period of market appreciation with less than robust growth in the U.S. In our belief, there are significant pockets of over valuation around the world and seemingly fewer opportunities as money is forced into assets, particularly equities, which create risk. This may continue for some time — we have no way of knowing when it will end — but it will end. We expect to continue searching for disconnects, such as the examples of South Korea and special situations. In addition, we also may witness a small increase in the number of securities in the Fund, accompanied by a decline in market capitalization size, with cash elevated as it is today.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Value stocks are stocks of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor and, in the opinion of the Fund’s manager, undervalued. The value of a security believed by the Fund’s manager to be undervalued may never reach what the manager believes to be its full value, or such security’s value may decrease.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted are unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy Cundill Global Value Fund.
| 2014 | ANNUAL REPORT | 29 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Cundill Global Value Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| American International Group, Inc. |
United States | Financials | Multi-Line Insurance | |||
| Bank of America Corp. |
United States | Financials | Diversified Banks | |||
| Citigroup, Inc. |
United States | Financials | Other Diversified Financial Services | |||
| POSCO |
South Korea | Materials | Steel | |||
| Munchener Ruckversicherungs-Gesellschaft AG, Registered Shares |
Germany | Financials | Reinsurance | |||
| EnCana Corp. |
Canada | Energy | Oil & Gas Exploration & Production | |||
| Vinci |
France | Industrials | Construction & Engineering | |||
| News Corp., Class A |
United States | Consumer Discretionary | Publishing | |||
| Mediaset S.p.A. |
Italy | Consumer Discretionary | Broadcasting | |||
| SANKYO Co. Ltd. |
Japan | Consumer Discretionary | Leisure Products |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 30 | ANNUAL REPORT | 2014 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Cundill Global Value Fund |
(UNAUDITED) |
|
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
15.34% | 17.07% | 21.73% | 15.40% | 22.98% | 22.30% | 22.76% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
14.87% | 14.97% | 15.58% | 15.12% | 16.88% | — | 16.86% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
5.25% | 4.89% | 5.24% | — | — | — | 6.41% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 2.30% | 3.74% | 24.10% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 31 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Cundill Global Value Fund (in thousands) |
MARCH 31, 2014 |
| 32 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Cundill Global Value Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $18,830 or 5.1% of net assets. |
| (C) | Principal amounts are denominated in the indicated foreign currency, where applicable (EUR - Euro). |
| (D) | Zero coupon bond. |
| (E) | Rate shown is the yield to maturity at March 31, 2014. |
| (F) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date the variable rate resets. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
Japanese Yen | Citibank N.A. | 242,750 | 6–4–14 | $ | 5 | $ | — | ||||||||||||
| Sell |
Japanese Yen | Citibank N.A. | 933,600 | 6–25–14 | — | 80 | ||||||||||||||
| Sell |
Japanese Yen | Citibank N.A. | 600,000 | 9–10–14 | — | 1 | ||||||||||||||
| Sell |
Japanese Yen | Morgan Stanley International | 553,000 | 9–10–14 | 27 | — | ||||||||||||||
|
|
|
|||||||||||||||||||
| $ | 32 | $ | 81 | |||||||||||||||||
|
|
|
|||||||||||||||||||
| 2014 | ANNUAL REPORT | 33 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Cundill Global Value Fund (in thousands) |
MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 59,309 | $ | — | $ | — | ||||||
| Consumer Staples |
9,209 | — | — | |||||||||
| Energy |
34,305 | — | — | |||||||||
| Financials |
86,080 | — | — | |||||||||
| Industrials |
54,491 | — | — | |||||||||
| Information Technology |
7,780 | — | — | |||||||||
| Materials |
19,638 | — | — | |||||||||
| Total Common Stocks |
$ | 270,812 | $ | — | $ | — | ||||||
| Preferred Stocks |
— | 11,713 | — | |||||||||
| Corporate Debt Securities |
— | — | 7,117 | |||||||||
| Other Government Securities |
— | 366 | — | |||||||||
| Short-Term Securities |
— | 79,600 | — | |||||||||
| Total |
$ | 270,812 | $ | 91,679 | $ | 7,117 | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 32 | $ | — | ||||||
| Liabilities |
||||||||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 81 | $ | — | ||||||
The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Corporate Debt Securities |
Short-Term Securities |
|||||||
| Beginning Balance 4-1-13 |
$ | — | $ | 3,259 | ||||
| Net realized gain (loss) |
— | — | ||||||
| Net change in unrealized appreciation (depreciation) |
97 | — | ||||||
| Purchases |
7,020 | — | ||||||
| Sales |
— | — | ||||||
| Amortization/Accretion of premium/discount |
— | — | ||||||
| Transfers into Level 3 during the period |
— | — | ||||||
| Transfers out of Level 3 during the period |
— | (3,259 | ) | |||||
| Ending Balance 3-31-14 |
$ | 7,117 | $ | — | ||||
| Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 3-31-14 |
$ | 97 | $ | — | ||||
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period. There were no transfers between Levels 1 and 2 during the period ended March 31, 2014.
Information about Level 3 fair value measurements:
| Fair Value at 3-31-14 |
Valuation Technique(s) | Unobservable Input(s) | ||||||||||
| Assets |
||||||||||||
| Corporate Debt Securities |
$ | 7,117 | Third-party valuation service | Broker quotes | ||||||||
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GTD = Guaranteed
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 34 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Dividend Opportunities Fund |
(UNAUDITED) |
Key drivers
Despite volatility during the fiscal year, U.S. equities posted a positive return in the final quarter, capping off a strong year. The Russell 1000 Index gained during the quarter ending March 31, 2014, bringing the fiscal year 2014 return to 22.41%. Every sector in the Russell 1000 was positive for the year. As the year began, investors bid up some of the most defensive sectors as the quest for yield moved from bonds to stocks. Utilities, consumer staples and health care handily outperformed the more cyclically exposed sectors. Then on May 22, 2013, the Federal Reserve (Fed) raised the possibility of tapering the U.S. central bank security purchases from $85 billion a month to something lower. These comments fueled investor nervousness that the Fed could begin reducing its sizeable bond-buying program sometime in the coming months. This commentary started the big “refocus” of what this would ultimately mean for both equity and fixed-income markets. Investors began to think about the possibility of rising rates, selling those stocks that acted most like bonds. The refocus drove outperformance by mostly cyclical sectors: consumer discretionary, industrials and financials. Largely in line with what we would expect of a primarily cyclical, optimism-driven rally. As the year progressed, many defensive sectors were again the preferred investment. This redirection occurred despite the Fed further tapering the stimulus program and hinting that the first interest rate increase would be coming sooner than previously anticipated.
Industrials, consumer discretionary and technology all posted strong gains in the index. The laggards, which still finished in positive territory, included the typically defensive utilities, consumer staples and telecommunications. The best performing sector for year was health care, led by significant moves in biopharmaceuticals.
Contributors and detractors
Despite strong absolute returns, the Fund underperformed its benchmark during the period. Most of the underperformance occurred during the first fiscal quarter where we were underweight utilities. Stock selection in materials, consumer staples and health care were significant detractors to relative performance for the year. Cisco Systems, Inc. was a notable detractor. In November, Cisco announced earnings and noted that it had experienced a sudden broad-based slowdown across its entire business, resulting in a significant guide down for the coming quarter. While a number of macro issues were cited, the magnitude was particularly surprising given that global gross domestic product growth had been weak, but not disastrous. For now, we have reduced the Fund’s position size and look for price support given a strong capitol return program in the form of dividends and share repurchases. From a longer term standpoint, Cisco appears to be re-focused and well-positioned to capitalize on the major secular technology trends, such as cloud, mobility and virtualization.
The Fund benefitted from positive stock selection in several sectors, including energy, industrials and financials. Standout individual performers came from a variety of sectors and themes. Leading contributors included Wynn Resorts, Ltd., Boeing Company (The) and Union Pacific Corporation.
Wynn Resorts benefited both from a strong Macau gaming market, changes to its customer approach and greater visibility to the opening of its new property. Macau gaming revenues were up 20% in the first quarter of 2014, well above expectations. Wynn Resorts specifically improved its marketing toward the premium mass customer, which accelerated growth during the fourth quarter of 2013, which was reported in January 2014. In addition, as the opening of Wynn Resorts’ new Macau property in 2016 draws closer, investors are more willing to attribute value to the significant earnings ramp that will occur at opening.
Boeing is the world’s largest manufacturer of commercial and military aircraft. The Fund’s initial investment was based on the assumption that global air traffic would recover from the trough of 2008/2009. While this long-term thesis continues to play out, we were encouraged by the company’s recent 50% dividend increase and $10 billion share repurchase increase. These moves appear to signal strong confidence in Boeing’s cash outlook moving forward, and we believe this should be supportive of future stock performance.
| 2014 | ANNUAL REPORT | 35 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Dividend Opportunities Fund |
(UNAUDITED) |
Union Pacific is the largest of the seven Class 1 railroads and controls much of the Midwestern and western U.S. traffic. In the past 10 years, the company has benefitted from the shift form regulated pricing to competitive pricing, resulting in strong earnings and stock performance. Secondarily, in just three short years, the crude-by-rail business model has evolved from one of relative obscurity into what is now regarded as one of the most dynamic business opportunities for North American Class 1 railroads.
While we have made a number of changes to the Fund since I assumed responsibility in July, the dividend growth strategy still remains the focus. We continue to believe this will be a viable strategy long-term as investors seek out investments that pay dividends given the absolute low level of interest rates. This dividend quest seems to have resonated with companies as more have returned excess capital in the form of dividends and buybacks. In 2013, dividend increases surged 11.8%, led by a 36.4% increase in dividends from the technology sector. The capital return theme played an important role in the Fund as a number of holdings rewarded shareholders with rising dividends and healthy share buybacks.
Outlook
As we look forward, we believe profit growth will ultimately be the driver of market performance. Stock prices have been remarkably resilient in the face of innumerable macro events since 2009, primarily as a result of a more than doubling in corporate profits. This outstanding profits recovery has occurred in a modest growth environment as corporations have become lean and mean. A return of confidence will be needed for housing to sustain its recovery and capital expenditures to resume. Otherwise, stock performance may have borrowed from the future as we move through 2014. In addition, there was much discussion about this year’s never-ending winter and how markets will interpret weakness in the headline numbers. While it is difficult to predict, we expect a bounce back in the second quarter, with a lot of noise in the numbers. While there is never any shortage of things to worry about for investors these days, and the fourth quarter 2014 was no exception, we will continue to focus on the long-term potential of investments we make in the Fund’s portfolio.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investments. Dividend-paying instruments may not experience the same price appreciation as non-dividend paying investments. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of Ivy Dividend Opportunities Fund’s performance.
| 36 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Dividend Opportunities Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| JPMorgan Chase & Co. |
Financials |
|||
| Microchip Technology, Inc. |
Information Technology |
|||
| Anheuser-Busch InBev S.A. ADR |
Consumer Staples |
|||
| Union Pacific Corp. |
Industrials |
|||
| Wynn Resorts Ltd. |
Consumer Discretionary |
|||
| Schlumberger Ltd. |
Energy |
|||
| Bristol-Myers Squibb Co. |
Health Care |
|||
| Wells Fargo & Co. |
Financials |
|||
| Home Depot, Inc. (The) |
Consumer Discretionary |
|||
| Pfizer, Inc. |
Health Care |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 37 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Dividend Opportunities Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
13.75% | 15.70% | 19.85% | 13.57% | 21.06% | 20.29% | 20.74% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
15.74% | 15.95% | 16.31% | 15.67% | 17.53% | — | 17.25% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
7.12% | 6.78% | 6.97% | — | — | — | 7.90% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 4.08% | 5.52% | 23.52% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 38 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Dividend Opportunities Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 39 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Dividend Opportunities Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Listed on an exchange outside the United States. |
| (C) | Rate shown is the yield to maturity at March 31, 2014. |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 380,114 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 4,368 | — | |||||||||
| Total |
$ | 380,114 | $ | 4,368 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronym is used throughout this schedule:
ADR = American Depositary Receipts
See Accompanying Notes to Financial Statements.
| 40 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Emerging Markets Equity Fund |
(UNAUDITED) |
Turbulent year, but potential for global growth
Emerging market currencies, fixed income and equities were extremely volatile during the fiscal year, with dramatic underperformance compared to developed markets. Investors focused on the continuing recovery in developed markets and began to accelerate their selling of emerging market assets during the middle of 2013, when former Federal Reserve (Fed) Chairman Ben Bernanke indicated that the Fed would begin to “taper” its bond purchases as soon as September. Emerging markets with high inflation, slowing growth and significant current account deficits were particularly vulnerable to this news. The Fed then backed away from that timetable, but eventually implemented a reduction in its bond purchases from $85 billion to $75 billion per month. Then in early 2014, the Fed dropped its prior link between interest rates and an unemployment rate threshold below 6.5%, saying it instead would consider a range of factors to determine how long to keep rates low. It again reduced the pace of its bond-buying program early this year, taking it to $55 billion per month. That may have changed for emerging markets, as many began to outperform developed markets as the fiscal year ended.
Concerns about China, the world’s second-largest economy, also weighed heavily on investor sentiment. A broad reform package released late in 2013 led to a short-term rally in its markets, but investor hopes for a quick fix for that economy ended quickly. The “Fragile Five” — India, Indonesia, Brazil, South Africa and Turkey — are relatively large emerging market economies with unfavorable economic metrics. These countries have relied heavily on foreign investment flows into local bond, equity and fixed assets. The hint that U.S. policy rates would begin to rise led to a sharp spike in local interest rates and a significant drop in currency exchange rates. In addition, civil unrest in Turkey, Brazil, Thailand, Argentina, Ukraine and Venezuela combined to damage investor sentiment during the year. Geopolitics took center stage in early 2014 after protests in Ukraine led to violence and a change in leadership there. Russia then moved to annex Crimea — home to Russia’s Black Sea naval fleet and key ports – from Ukraine via a referendum vote of the largely Russian population in Crimea. The U.S. and European Union followed with economic sanctions on Russia because of its actions against the Ukrainian territory.
Stock selections, sector allocations in focus
For the period from March 31, 2013, to February 10, 2014 — prior to the Ivy Pacific Opportunities Fund’s change in name and strategy — the Fund outperformed its benchmark index. On February 11, 2014, it was renamed Ivy Emerging Markets Equity Fund and its strategy was changed to reflect a concentration in emerging market equity securities. The Fund’s stock selections in China and allocations to consumer discretionary and internet sectors contributed positively to relative performance during the period from March 31, 2013, to February 10, 2014. The Fund’s growth bias served it well as higher growth sectors performed well against slower growth, value-oriented sectors such as financials, telecommunications and utilities.
| 2014 | ANNUAL REPORT | 41 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Emerging Markets Equity Fund |
(UNAUDITED) |
Individual stock selection in China, Hong Kong, Indonesia and South Korea accounted for the majority of the Fund’s outperformance. In China and Hong Kong, our exposure to high-growth “new economy” industries was an important contributor. Key contributors included Galaxy Entertainment Group Limited, which owns and operates hotels and casinos in Macau and is a key beneficiary of the growth of China’s middle class; Baidu.com, Inc., China’s dominant online search engine; and Just Dial Ltd., which operates a telephone/internet search engine and provides consumers comprehensive information.
We maintained an underweight allocation in the Fund to the financials and materials sectors, which was beneficial for performance. Both sectors in emerging markets experienced rapid expansion as global central banks generated economic stimulus after the 2008 global financial crisis. As a result, China has huge excess capacity and Brazil and India face serious inflation problems, which led to rising non-performing loans in China, rising interest rates in India and Brazil and generally high inventory of raw materials globally. Stock valuations in these sectors recently have declined to a level well below their historical means. We will watch this trend carefully as we consider future allocations.
The Fund’s hedging strategy detracted from performance during the period. We hedged exposure to the South Korean currency (the won) and to China’s equity market index via index options in order to reduce the Fund’s risk profile. We gained on our stock positions but lost on our hedging strategy. Overall, hedging activities were the largest negative contributor to the relative performance of the Fund.
In the final weeks of the fiscal year following the mandate change and merger with Ivy Asset Strategy New Opportunities Fund, the Fund maintained an overweight in Asian securities. The Fund had a small positive return in the period from February 11, 2014, to March 31, 2014, well below the return of the benchmark index. The overweight positions in Indonesia and India contributed to performance. Exposure to new economy shares, such as those related to the internet, gaming and healthcare/biotechnology, detracted from performance.
Some positives in the near term
The unprecedented multi-decade period of double-digit growth in China’s economy, driven by exports, property development and fixed asset investments, appears to have ended. China’s leaders have begun to implement a critical package of reforms as they seek to rebalance the economy from exports to domestic consumption. We view the changes as a positive for the intermediate term.
Mexico’s leadership has focused on significant reforms and begun the process of opening up the energy sector to foreign investment. We still await details, but we think there is potential for the economy to benefit from additional foreign direct investment in oil and gas exploration, refining, petrochemicals, power plants and infrastructure over the balance of the decade.
We also think growth in gross domestic product (GDP), which has been very slow, is likely to accelerate to mid-single digits. As is the case in China, we believe Mexico’s economic reforms will affect its economy in a measured pace.
Elections are taking place in the “Fragile Five” countries. In Indonesia and India, we think new leaders are likely and their key goal will be to reaccelerate economic growth. Both of these countries also have had central banks that tackled short-term current account issues. Brazil has struggled with state intervention in broad sectors of its economy. One of the worst droughts in decades is pressuring inflation and GDP growth on several fronts. Agricultural sector output has been hurt by the lack of rain, and the risk of water and electricity rationing (more than 80% of Brazil’s electricity is typically from hydropower) raises concerns about even slower industrial activity. Brazil’s sovereign debt was downgraded recently to one level above a junk rating.
As the economic fundamentals worsen, we think the stock market in Brazil may gain the benefit of a potentially more market friendly government from the October elections. We do not expect changes in Turkey and South Africa because of planned elections in those countries.
Domestic consumption from increasing emerging market affluence remains a key driver to improving profits and share price performance for the majority of holdings in the Fund. Country allocations have been an important driver of emerging market performance during the past year. We think there is near-term potential in India and much of the member countries in the Association of South East Asian Nations. We have a similar view about certain sectors in China and Mexico, based on our view of fiscal reforms in those countries. Brazil is not as clear, as we think there is potential for restrictive government policies on many domestic industries if the economy does not stabilize.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. The value of the Fund’s investments, as measured in U.S. dollars, may be unfavorably affected by changes in foreign currency exchange rates and exchange control regulations.
Investments in countries with emerging economies or securities markets may carry greater risk than investments in more developed countries. Political and economic structures in many such countries may be undergoing significant evolution and rapid development, and such countries may lack the social, political and economic stability characteristics of more developed countries. Investments in securities issued in these countries may be more volatile and less liquid than securities issued in more developed countries. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The indexes noted are unmanaged, include reinvested dividends and do not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Emerging Markets Equity Fund’s performance.
| 42 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Emerging Markets Equity Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Galaxy Entertainment Group |
Hong Kong |
Consumer Discretionary |
Casinos & Gaming | |||
| Larsen & Toubro Ltd. |
India |
Industrials |
Construction & Engineering | |||
| Chicago Bridge & Iron Co. N.V., NY Shares |
Netherlands |
Industrials |
Construction & Engineering | |||
| HCL Technologies Ltd. |
India |
Information Technology |
IT Consulting & Other Services | |||
| Fosun International Ltd. |
Hong Kong |
Materials |
Steel | |||
| PT Bank Mandiri (Persero) Tbk |
Indonesia |
Financials |
Diversified Banks | |||
| Hana Financial Group, Inc. |
South Korea |
Financials |
Diversified Banks | |||
| Hyundai Motor Co. |
South Korea |
Consumer Discretionary |
Automobile Manufacturers | |||
| Copa Holdings S.A., Class A |
Panama |
Industrials |
Airlines | |||
| Taiwan Semiconductor Manufacturing Co. Ltd. |
Taiwan |
Information Technology |
Semiconductors |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 43 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Emerging Markets Equity Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E(4) | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
2.66% | 3.47% | 8.06% | 3.04% | 9.52% | 8.75% | 9.19% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
11.12% | 11.00% | 11.60% | 11.57% | 13.03% | — | 12.73% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
8.23% | 7.68% | 8.03% | — | — | — | 9.17% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(5) |
— | — | — | 2.90% | 3.93% | 5.65% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class E shares are not currently available for investment. |
| (5) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
As discussed above, effective February 11, 2014, Ivy Pacific Opportunities Fund changed its name to Ivy Emerging Markets Equity Fund and its strategy was changed to reflect a concentration in emerging market equity securities . As a result, the Fund’s benchmark was changed to MSCI Emerging Markets Index. We believe this index is more representative of the securities in which the Fund invests. For comparison purposes, the prior benchmark MSCI AC Asia ex Japan Index is included in this report. Performance prior to February 11, 2014 reflects the Fund’s former strategy.
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 44 | ANNUAL REPORT | 2014 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Emerging Markets Equity Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 45 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Emerging Markets Equity Fund (in thousands) |
MARCH 31, 2014 |
Notes to Consolidated Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any. |
| (C) | Rate shown is the yield to maturity at March 31, 2014. |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date the variable rate resets. |
The following total return swap agreements were outstanding at March 31, 2014:
| Counterparty | Notional Amount |
Underlying Security | Termination Date |
Financing Fee# | Unrealized Depreciation |
|||||||||||
| UBS AG, London |
$4,719 | Daqin Railway Co. Ltd. | 12–17–14 | USD LIBOR + 0.700 | % | $ | (567 | ) | ||||||||
# The Fund pays the financing fee multiplied by the notional amount each month. On the termination date of the swap contracts, the Fund will pay/receive the return of the underlying security.
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
Japanese Yen | Barclays Capital, Inc. | 1,895,057 | 4–28–14 | $ | 172 | $ | — | ||||||||||||
The following written options were outstanding at March 31, 2014 (contracts and exercise prices unrounded):
| Underlying Security | Counterparty, if OTC | Type | Number of Contracts |
Expiration Month | Exercise Price | Premium Received |
Value | |||||||||||||||||||
| Baidu.com, Inc. ADR |
N/A | Put | 235 | May 2014 | $ | 135.00 | $ | 67 | $ | (81 | ) | |||||||||||||||
| ICICI Bank Ltd. ADR |
N/A | Put | 1,265 | January 2015 | 20.00 | 250 | (30 | ) | ||||||||||||||||||
| N/A | Put | 1,985 | January 2015 | 28.00 | 517 | (150 | ) | |||||||||||||||||||
|
|
|
|||||||||||||||||||||||||
| $ | 834 | $ | (261 | ) | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||
| 46 | ANNUAL REPORT | 2014 |
Table of Contents
CONSOLIDATED SCHEDULE OF INVESTMENTS
| Ivy Emerging Markets Equity Fund (in thousands) |
MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 120,121 | $ | — | $ | — | ||||||
| Consumer Staples |
78,885 | — | — | |||||||||
| Energy |
38,189 | — | — | |||||||||
| Financials |
124,392 | — | — | |||||||||
| Health Care |
25,707 | — | — | |||||||||
| Industrials |
103,214 | — | — | |||||||||
| Information Technology |
153,381 | — | — | |||||||||
| Materials |
44,504 | — | — | |||||||||
| Telecommunication Services |
5,418 | — | — | |||||||||
| Utilities |
11,842 | — | — | |||||||||
| Total Common Stocks |
$ | 705,653 | $ | — | $ | — | ||||||
| Warrants |
205 | — | — | |||||||||
| Purchased Options |
— | 667 | — | |||||||||
| Corporate Debt Securities |
— | 805 | — | |||||||||
| Bullion |
5,136 | — | — | |||||||||
| Short-Term Securities |
— | 22,584 | — | |||||||||
| Total |
$ | 710,994 | $ | 24,056 | $ | — | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 172 | $ | — | ||||||
| Liabilities |
||||||||||||
| Swap Agreements |
$ | — | $ | 567 | $ | — | ||||||
| Written Options |
$ | 80 | $ | 181 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
OTC = Over the Counter
+Includes gold bullion, options, cash and cash equivalents and other assets and liabilities
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 47 |
Table of Contents
| Ivy European Opportunities Fund |
(UNAUDITED) |
European markets posted solid performance
International markets performed well over the fiscal year ending March 31, 2014. The Fund’s benchmark, the MSCI Europe Index, was up more than 20% for the year. Despite having trailed its benchmark, the Fund posted solid performance for the period. Despite gains, international markets remained volatile but much less than the previous two years. During the second quarter of 2013, market volatility spiked due to concerns regarding U.S. Federal Reserve (Fed) monetary policy. A sell-off in stocks and bonds rolled across the globe in June after former Fed Chairman Ben Bernanke remarked the central bank may begin to reduce purchases under its $85 billion bond purchase program before year end. As a result, money began to flee various emerging markets where currencies had been strengthening and yields had been high. Bond markets were hit hard and currencies weakened along with equities. While the gut reaction didn’t last long (Fed governors eventually said the right things to counter the decline), it created an element of market uncertainty. Shortly after, the markets reacted positively to signs that the economic recovery in the U.S. had gained steadiness and to the apparent end of self- inflicted political scares over budget talks.
In Europe, markets were broadly stronger and, similar to the U.S., performance seemed to originate from multiple expansion rather than earnings or cash flow growth. As a result, Europe posted gains; however, general economic growth has been tepid. Currently, the European Central Bank (ECB) remains vigilant for signs of deflation or additional indicators of economic stress, recently mentioning potential “unconventional” easing in efforts to weaken the euro. Monetary policy has remained very loose around the world, which has provided incentive for investors to seek returns in higher yielding bonds and stocks.
Portfolio strategy — hits and misses
The Fund underperformed the benchmark for the year ending March 31, 2014. The Fund’s sector allocation, in particular an underweight allocation to the strong performing financial sector, was the top detractor to performance for the period. Financials were propelled by the aggressive accommodative stance of the ECB. In addition, the Fund’s cash allocation (approximately 4%) hurt performance in a rising market. Stock selection accompanied by an overweight allocation to the strong performing information technology sector aided performance. In addition, good stock selection in utilities and consumer staples was beneficial to Fund performance. Top individual contributors to performance included Wirecard AG, which offers internet and wireless payment and processing services, and Ashtead Group, a growing construction rental firm in the U.S. and the U.K.
The Fund’s country allocation hurt performance despite relative gains stemming from Germany and Ireland. Our relatively large underweight allocation to Spain was a main detractor for the period. Good stock selection in the U.K. and Switzerland made up for poor picks in Italy and Ireland. Additionally, the Fund implemented an approximate 10% currency hedge to the euro over the fiscal year, which slightly detracted from performance. That said, currency effects benefitted performance overall.
Positioning
The Fund remains overweight industrials, consumer discretionary, information technology and healthcare, while underweight energy, financials, consumer staples and telecommunications. We believe our overweight positions provide solid growth prospects, while our underweight allocations tend to have high relative valuations or slowing earnings momentum. In the consumer discretionary sector, we have invested in companies we believe will benefit from the ongoing recovery in the U.K., or secular growth in Europe. For example, we believe online and mobile payment systems offer the prospect of long-term growth. We are maintaining our underweight position in financials as we believe there are still many challenges facing European banks. From a country allocation standpoint, we continue to have a large overweight in French stocks as we feel investor sentiment will improve as the government reforms roll out this summer. We maintain a partial currency hedge in an effort to protect the Fund against a weaker euro relative to the U.S. dollar. In our view, relatively stronger U.S. growth will initiate the rise of interest rates in the U.S. earlier than abroad.
| 48 | ANNUAL REPORT | 2014 |
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Outlook — opportunities exist but issues remain
Economic and political issues continue to simmer in Europe, which could result in market fluctuations. However, we believe the economy and the markets are on better footing than a few years ago. We think global economic growth is picking up and monetary policy is likely to remain aggressive for the foreseeable future, but to a lesser extent in the U.S. and the U.K. We think the Fed reducing/ending tapering and beginning to raise interest rates in late 2014 to 2015 will keep the markets on edge.
We continue to follow policies stemming from the U.K. and the rest of Europe, including stimulation, reforms and regulation measures from foreign governments and the ECB. Another key factor is whether businesses, which are flush with cash, will increase spending, mergers and acquisitions, share repurchases or dividends, as they gain confidence surrounding the economy’s future. All else equal, that should help the markets. Furthermore, we believe China’s multi-year rebalancing to a more consumer-based economy as well as its anticorruption efforts need to be monitored. In our view, these changes will have lasting impacts throughout the global marketplace in shaping gross domestic product (GDP) growth, commodity prices and multinational profits based in Europe. We are concerned that slower GDP growth will slow profit potential for European firms.
We will continue to look for companies that we believe are attractive and demonstrate strong cash generation and healthy balance sheets that appear to be poised to benefit from this growth. In our view, the strongest long-term GDP growth will still occur in emerging markets and the U.S. due to better demographics and a better business climate. In an effort to capture this, we will continue to invest in European multinationals with exposure to the U.S. and/or emerging markets. We remain focused on stocks that we consider are of higher quality or improving, which means they offer growth and are positioned well in their industries.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. The value of the Fund’s investments, as measured in U.S. dollars, may be unfavorably affected by changes in foreign currency exchange rates and exchange control regulations. Focusing on a single geographic region involves increased currency, political, regulatory and other risks. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The portfolio manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy European Opportunities Fund.
| 2014 | ANNUAL REPORT | 49 |
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PORTFOLIO HIGHLIGHTS
| Ivy European Opportunities Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Ashtead Group plc |
United Kingdom |
Industrials |
Trading Companies & Distributors | |||
| Roche Holdings AG, Genusscheine |
Switzerland |
Health Care |
Pharmaceuticals | |||
| Axa S.A. |
France |
Financials |
Multi-Line Insurance | |||
| ARYZTA AG |
Switzerland |
Consumer Staples |
Packaged Foods & Meats | |||
| BNP Paribas |
France |
Financials |
Diversified Banks | |||
| ING Groep N.V., Certicaaten Van Aandelen |
Netherlands |
Financials |
Other Diversified Financial Services | |||
| Bayer AG |
Germany |
Health Care |
Pharmaceuticals | |||
| Ingenico S.A. |
France |
Information Technology |
Electronic Equipment & Instruments | |||
| Renault S.A. |
France |
Consumer Discretionary |
Automobile Manufacturers | |||
| Britvic plc |
United Kingdom |
Consumer Staples |
Soft Drinks |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 50 | ANNUAL REPORT | 2014 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy European Opportunities Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E(4) | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
13.86% | 15.43% | 20.06% | 14.34% | 21.50% | 20.73% | 21.17% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
13.85% | 13.90% | 14.51% | 14.44% | 15.96% | — | 15.65% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
5.46% | 5.13% | 5.40% | — | — | — | 6.41% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(5) |
— | — | — | -0.77% | 0.23% | 17.92% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class E shares are not currently available for investment. |
| (5) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 51 |
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SCHEDULE OF INVESTMENTS
| Ivy European Opportunities Fund (in thousands) |
MARCH 31, 2014 |
| 52 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy European Opportunities Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $3,668 or 1.7% of net assets. |
| (C) | Rate shown is the yield to maturity at March 31, 2014. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
Euro | State Street Global Markets | 15,800 | 4–28–14 | $ | 31 | $ | — | ||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 32,739 | $ | — | $ | — | ||||||
| Consumer Staples |
19,644 | — | — | |||||||||
| Energy |
17,400 | — | — | |||||||||
| Financials |
33,340 | — | — | |||||||||
| Health Care |
29,619 | — | — | |||||||||
| Industrials |
22,285 | — | — | |||||||||
| Information Technology |
12,296 | — | — | |||||||||
| Materials |
17,503 | — | — | |||||||||
| Telecommunication Services |
7,249 | — | — | |||||||||
| Utilities |
9,019 | — | — | |||||||||
| Total Common Stocks |
$ | 201,094 | $ | — | $ | — | ||||||
| Preferred Stocks |
2,142 | — | — | |||||||||
| Rights |
42 | — | — | |||||||||
| Short-Term Securities |
— | 1,993 | — | |||||||||
| Total |
$ | 203,278 | $ | 1,993 | $ | — | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 31 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 53 |
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| Ivy Global Bond Fund |
(UNAUDITED) |
Performance
The Ivy Global Bond Fund outperformed its Lipper Universe Average because of the Fund’s high exposure to the U.S. dollar relative to the universe. At the end of the period, the Fund had 89% of its assets in U.S. dollar-denominated securities. With tightening financial conditions in emerging markets during the summer months that resulted in widening local rates and depreciating currencies most of the outperformance came at the expense of emerging market currencies, like the Turkish Lira, Indonesian Rupiah, and Indian Rupee that had negative returns of 15.4%, 14.3%, and 9.4%, respectively.
The Fund underperformed its benchmark, the Barclays Multiverse Index, primarily as a result of having no exposure to the European peripheral bond markets. For example, Italian, Spanish, and Portuguese spreads tightened 155 to 225 basis points. The performance of these bonds was even more impressive as these bonds are denominated in euros, which appreciated 7.4% against the U.S. dollar over that time period.
Global volatility
Concerns about tapering the Federal Reserve’s (Fed) Quantitative Easing (QE) bond-buying program is what drove the volatility during the summer months in the financial markets and around the world. In May, the Fed indicated that, assuming its economic forecasts were correct, it would start tapering the $85-billion-per-month QE program in the fall. That change in guidance caught the bond market off guard and created a lot of volatility in the rates market, as the 10-year Treasury yield spiked from 1.60% to 3.00% and credit spreads widened. With more clarity in communications from the Fed, the market finally settled down. Unfortunately, the Fed did not start the tapering process until December.
The Fed’s September announcement not to taper was justified by the need for additional data and concerns about the political climate in Washington. The tapering initiative finally began at the Fed’s December meeting when the Fed announced a reduction in its monthly QE purchases by $10 billion to $75 billion. In March 2014, the Fed continued tapering its QE purchases despite recent weak economic data that the Fed indicated it believed to be weather related. We do expect the size of the Fed’s balance sheet to remain constant at the end of its tapering process.
Emerging market (EM) countries that have been running current account and fiscal deficits were hit particularly hard during the summer’s bout of volatility. The discussion of Fed tapering produced a substantial tightening in EM financial conditions as yields spiked and exchange rates and equity markets retraced. The sharp depreciation in EM currencies led to the deterioration in the inflation dynamics in those countries.
In China, the economy’s potential growth rate is slowing significantly. The country has not been able to continue its rapid growth pace without an even faster increase in its debt. We believe that the increasing debt load is problematic for the Chinese banking system, and ultimately, government fiscal policy. It is likely that the new Chinese administration will be forced to deal with the growth in debt, and this will slow real and potential growth in years ahead. With the policy emphasis shifting towards reform, higher tolerance for lower growth will be allowed in the short run.
We believe that the powerful easing measures announced by Gov. Haruhiko Kuroda of the Bank of Japan (BOJ) will help the country exit 15 years of deflation. The BOJ stated it will be buying about 7.4 trillion yen in Japanese government bonds, up from about 4 trillion yen it is currently buying. It will increase the average maturity from three years to seven years. It intends to increase its monetary base from about 200 trillion yen at the end of 2013 to 270 trillion yen by the end of 2014. Investors are questioning the government’s proposed increase of a value-added tax (VAT) from 5% to 8%, as it might threaten to derail the momentum in the economy. The BOJ is poised to engage in more QE if the VAT slows economic growth.
Meanwhile, the European Central Bank (ECB) provided forward guidance on interest rates for the first time, saying rates are to remain accommodative through at least the end of 2014. The ECB had previously given forward guidance on liquidity, but not interest rates. We believe growth momentum is set to stay subdued while inflation teeters on the boarder of deflation. The ECB has reiterated that it stands ready to tackle any deflationary pressures with unconventional tools. The Bank of England’s version of QE has long since capped out. In the face of considerable market skepticism, Gov. Mark Carney insists that rate hikes are not imminent. We believe that the performance of the U.K. economy suggests otherwise.
| 54 | ANNUAL REPORT | 2014 |
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And finally, Russia’s annexation of Crimea has put downward pressure on Russia’s credit and currency. Moscow’s recent action in the Eastern Ukraine has tarnished a lot of the good will that the country has built-up in the capital markets over the past 12 years. International investors are currently reevaluating the new risk premium that needs to be placed on this “invasive” country.
Seeking low volatility
Amid this volatility, we are currently maintaining a low duration in the Fund and have built what we believe to be plenty of liquidity. We believe shorter duration will enable the Fund to focus on higher yielding corporate bonds while greater liquidity will allow us to be more responsive to changing market environments.
We continue to focus on maintaining what we believe to be proper diversification for the Fund. The Fund has the opportunity to invest in different securities, sectors, countries and currencies. This flexibility allows us to seek less volatility with a reasonable yield that we believe will reward investors over the longer term.
Given the extreme volatility and uncertainty in global markets, the Fund’s currency exposure remains overwhelmingly in the U.S. dollar. We believe there will be better opportunities to add foreign currency bonds to the portfolio going forward, especially in EM.
We continue to search for value in the corporate bond space. Some of the best returns have been, and we think will continue to be, from emerging market bonds. With valuations at historically low levels prior to May 2013, we built up our cash and Treasury position to approximately 17% of the portfolio. The volatility in credit spreads we witnessed in June through August allowed us to invest approximately 10% of this liquidity in companies that we either owned or wanted to own at higher rates. In our view, there will be more opportunities to redeploy the remaining liquidity due to the volatility associated with Washington’s politics and the Fed’s tapering program.
Looking ahead
Given our expectation of slow growth globally in calendar 2014, we expect interest rates to remain low overall. The Fed has indicated that it will keep its policy rate low until late 2015. The short end of the Treasury yield curve (five years and in) is expected to be less volatile due to the Fed’s commitment to low policy rates. However, we expect longer term Treasury rates to be more volatile and subject to market emotions regarding fiscal and monetary policies. We feel that other developed markets such as Japan and the United Kingdom are likely to grow a little more in 2014 than they did in 2013.
The Eurozone’s growth outlook looks to be stable at best. We believe the Eurozone crisis is not over; it is merely changing its shape. What was once a banking crisis and sovereign debt crisis now seems to be an economic crisis. The ECB will need to ease policy further; although we think an interest rate cut appears unlikely. We do envision a very long-term refinancing operation if the ECB’s balance sheet continues to shrink.
The BOJ will continue its easing policy throughout 2014. Investors are questioning Governor Kuroda’s proposed increase in the value-add tax from 5% to 8% as it might derail the economy. In China, we think that the government will lower its 2014 growth target to 7%. This is based upon the government’s desire to continue to rebalance the economy from an export led to domestic consumption platform.
The sell-off in emerging markets in the Spring and Summer began with the sharper-than-expected deceleration in growth rates (especially China), signs of an earlier-than-expected Fed exit, the reversal of capital flows into a less liquid market, and the lack of further monetary and liquidity accommodation from the People’s Bank of China. We believe that the U.S. continues to be a safe haven globally and will continue to attract funds from outside the U.S. In this scenario, we believe there will be opportunities to make long-term investments in foreign currencies in certain emerging markets should they weaken versus the dollar.
The Fund’s performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations.
Fixed income securities are subject to interest rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. These and other risks are more fully described in the fund’s prospectus.
Certain U.S. government securities in which the Fund may invest, such as Treasury securities and securities issued by the Government National Mortgage Association (GinnieMae), are backed by the full faith and credit of the U.S. government. However, other U.S. government securities in which the Fund may invest, such as securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB), are not backed by the full faith and credit of the U.S. government, are not insured or guaranteed by the U.S. government and, instead, may be supported only by the right of the issuer to borrow from the U.S. Treasury or by the credit of the issuer.
The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy Global Bond Fund.
| 2014 | ANNUAL REPORT | 55 |
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PORTFOLIO HIGHLIGHTS
| Ivy Global Bond Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
| 56 | ANNUAL REPORT | 2014 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Global Bond Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class I | Class R | Class Y | ||||||||||||||||||
| 1-year period ended 3-31-14 |
-4.23% | -3.03% | 0.90% | 1.91% | 1.14% | 1.65% | ||||||||||||||||||
| 5-year period ended 3-31-14 |
4.03% | 4.33% | 4.50% | 5.53% | — | 5.29% | ||||||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
2.77% | 3.02% | 3.02% | 4.05% | 1.91% | 3.81% | ||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-4-08 for Class A, Class B, Class C, Class I, and Class Y shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 57 |
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SCHEDULE OF INVESTMENTS
| Ivy Global Bond Fund (in thousands) |
MARCH 31, 2014 |
| 58 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Global Bond Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 59 |
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SCHEDULE OF INVESTMENTS
| Ivy Global Bond Fund (in thousands) |
MARCH 31, 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Global Bond Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Listed on an exchange outside the United States. |
| (C) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $105,845 or 36.3% of net assets. |
| (D) | Payment-in-kind bonds. |
| (E) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. |
| (F) | Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy. |
| (G) | Principal amounts are denominated in the indicated foreign currency, where applicable (BRL - Brazilian Real, COP - Columbian Peso and RUB - Russian Ruble). |
| (H) | Interest-only security. Amount shown as principal represents notional amount for computation of interest. |
| (I) | Rate shown is the yield to maturity at March 31, 2014. |
| (J) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
British Pound | Barclays Capital, Inc. | 3,608 | 4–28–14 | $ | — | $ | 63 | ||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 24,771 | $ | — | $ | — | ||||||
| Corporate Debt Securities |
— | 170,180 | — | |||||||||
| Other Government Securities |
— | 11,913 | — | |||||||||
| United States Government Agency Obligations |
— | 329 | — | |||||||||
| United States Government Obligations |
— | 65,594 | — | |||||||||
| Short-Term Securities |
— | 19,988 | — | |||||||||
| Total |
$ | 24,771 | $ | 268,004 | $ | — | ||||||
| Liabilities |
||||||||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 63 | $ | — | ||||||
| 2014 | ANNUAL REPORT | 61 |
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SCHEDULE OF INVESTMENTS
| Ivy Global Bond Fund (in thousands) |
MARCH 31, 2014 |
During the period ended March 31, 2014, securities totaling $1,042 were transferred from Level 3 to Level 2 due to increased availability of observable market data due to increased market activity or information for these securities. There were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
CMO = Collateralized Mortgage Obligation
GTD = Guaranteed
REMIC = Real Estate Mortgage Investment Conduit
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 62 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Global Equity Income Fund |
(UNAUDITED) |
Developed markets posted solid performance
Western developed markets performed well over the fiscal year ending March 31, 2014. The Fund’s benchmark, the MSCI World High Dividend Yield Index, was up more than 15% for the year. The Fund also posted solid performance for the period and outperformed the benchmark by more than 200 basis points (before the effect of sales charges). Despite gains, international markets remained volatile, but much less than the previous two years. During the second quarter of 2013, market volatility spiked due to concerns regarding U.S. Federal Reserve (Fed) monetary policy. A sell-off in stocks and bonds rolled across the globe in June after former Fed Chairman Ben Bernanke remarked the central bank may begin to reduce purchases under its $85 billion bond purchase program before year end. As a result, money began to flee various emerging markets where currencies had been strengthening and yields had been high. Bond markets were hit hard and currencies weakened along with equities. While the gut reaction didn’t last long (Fed governors eventually said the right things to counter the decline), it created an element of market uncertainty. Shortly after, the markets reacted positively to signs that the economic recovery in the U.S. had gained steadiness and to the apparent end of self-inflicted political scares over budget talks. With the assistance of low interest rates, less indebted consumers and corporations with strong balance sheets and high margins (on average), we expect gross domestic product (GDP) growth in the U.S. to stay solid. As a result, we believe this will allow the Fed to begin raising interest rates in 2015.
In Europe, markets were broadly stronger and, similar to the U.S., performance seemed to originate from multiple expansion rather than earnings or cash flow growth. As a result, Europe posted gains; however, general economic growth has been tepid. Currently, the European Central Bank (ECB) remains vigilant for signs of deflation or additional indicators of economic stress, recently mentioning potential “unconventional” easing in efforts to weaken the euro.
In Japan, the market performed relatively poorly as fundamental government reforms were mostly lacking in investor’s minds. Additionally, the lack of stimulus in an effort to offset the upcoming value-added tax increase in April was a detriment to market performance. Prime Minister Abe has stated he wants to cut the corporate tax rate, but this move is controversial given the large budget deficit. Meanwhile, China is running into imbalances and frictions in their country that are hurting GDP growth and the global stock markets. In summary, in our view too much investment in China went into poor-performing projects at both the government and private level. Much of this debt was financed with shorter-duration debt. We believe the current Chinese leadership is capable, and is addressing the overinvestment, along with rampant corruption and pollution. That said, these problems exacerbated over the last ten years, and as a result, will take a long time to rebalance.
Portfolio strategy — hits and misses
The Fund outperformed the benchmark for the year ending March 31, 2014. Strong stock selection, particularly in the industrials and utilities sectors, and the Fund’s overweight allocation to Europe, drove relative performance. In our view, U.S. high-dividend stocks remained relatively more expensive to comparable international names over the course of the year. As such, we purchased European stocks that we believed possessed cheaper valuations, higher dividend yields and could benefit from a recovery/economic growth in the region. As the European market rebounded, we were able to capitalize on the growth. Top individual contributors to relative performance included EDF, a French-based international electric utility company, and Royal Mail, a letters and parcels delivery company in the U.K.
The Fund’s country allocation aided performance with top relative gains stemming from France and Israel. On the other hand, we became less confident of real change materializing in Japan, and we lowered our positions in Japanese financials but kept higher yielding names that we believe should benefit from stronger global growth. We ended the fiscal year slightly overweight Japan, with a portion of the currency exposure hedged. Overall, the Fund’s exposure to Japan slightly detracted from performance for the period. In addition, our exposure to China hurt the Fund’s
| 2014 | ANNUAL REPORT | 63 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Global Equity Income Fund |
(UNAUDITED) |
performance over the period. While we exited those positions as the year progressed, we did not do so fast enough. We ended the fiscal year with an approximate 2% allocation to emerging markets. That said, some of our developed market exposure is indirectly tied to emerging-market economies.
Positioning
As the last quarter in the fiscal year progressed, we positioned the Fund with a more defensive tilt due to poor U.S. macroeconomic forecasts, Chinese wealth management product defaults and Russia’s involvement in Ukraine. We lowered the Fund’s energy allocation and raised our exposure to consumer staples and utilities. The Fund’s largest sector overweights include financials, consumer discretionary, industrials and utilities where we continue to find companies we believe provide good dividend yield and growth prospects. Consumer staples, health care and information technology are our largest underweights due to high relative valuation, low dividend yield and slowing earnings momentum caused by a stronger U.S. dollar relative to emerging-market currencies. The Fund’s average dividend yield is around 4.1% versus the benchmark of 3.8%.
We remain confident in U.S. economic growth and European economic stabilization, though we believe additional European economic reforms are needed. As a result, we are slightly overweight cyclical versus stable sectors, but to a lesser extent than in 2013. As the year progresses, we have intentions to add to holdings that we believe will grow their dividend faster. Due to the Fund’s large overweight position in the Eurozone and the belief the euro will weaken versus the U.S. dollar over time, we are currently hedging a portion of our euro exposure. On a geographic basis, we trimmed our overweight in Japan stemming from concerns regarding the upcoming tax increase, while adding to our overweight in France. We continue to have an overweight allocation to French stocks as we feel investor sentiment will improve as the government reforms roll out this summer.
Outlook — Opportunities exist but issues remain
Economic and political issues continue to simmer in Europe, which could result in market fluctuations. However, we believe the economy and the markets are on better footing than a few years ago. We think global economic growth is picking up and monetary policy is likely to remain aggressive for the foreseeable future, but to a lesser extent in the U.S. and the U.K. However, we think the Fed reducing/ending tapering and beginning to raise interest rates in late 2014 to 2015 will keep the markets on edge.
We continue to follow policies stemming from the U.S., Europe, Asia and Latin America, including monetary, stimulation, reforms and regulation measures from foreign governments. Another key factor is whether businesses, which are flush with cash, will increase spending, mergers and acquisitions, share repurchases or dividends as they gain confidence surrounding the economy’s future. All else equal, that should help the markets. Furthermore, we believe China’s multi-year rebalancing to a more consumer-based economy as well as its anticorruption efforts needs to be monitored. In our view, these changes will have lasting impacts throughout the global marketplace in shaping GDP growth, commodity prices and multinational profits. On the balance, we believe the world is heading in the right direction, but additional reforms are needed.
We believe the U.K. is positioned to grow much faster than Europe as housing incentives and a better banking market offset its government’s austerity measures designed to reign in its structural deficit. However, we also believe there is a significant probability the U.K. economy will experience a real estate pricing bubble in a few years, making it difficult for interest rates to normalize without hurting the economy.
We will continue to look for companies that we believe are attractive and demonstrate strong cash generation and healthy balance sheets that appear to be poised to benefit from this growth. In our view, the strongest long-term GDP growth will still occur in emerging markets and the U.S. due to better demographics and a better business climate. In an effort to capture this, we will continue to invest in foreign multinationals with exposure to the U.S. and/or emerging markets. We remain focused on stocks with solid dividend yields, and continue to look for companies that we consider to be of above-average quality, and that are well positioned in their industries throughout the world.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets.
A company may perform worse than the overall market due to specific factors, such as adverse changes to its business or investor perceptions about the company. In addition, the amount of any dividend paid may fluctuate significantly. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio managers and are current only through the end of the period of the report as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy Global Equity Income Fund.
| 64 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Global Equity Income Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Johnson & Johnson |
United States | Health Care | Pharmaceuticals | |||
| Merck & Co., Inc. |
United States | Health Care | Pharmaceuticals | |||
| Nestle S.A., Registered Shares |
Switzerland | Consumer Staples | Packaged Foods & Meats | |||
| Roche Holdings AG, Genusscheine |
Switzerland | Health Care | Pharmaceuticals | |||
| Axa S.A. |
France | Financials | Multi-Line Insurance | |||
| Sanofi-Aventis |
France | Health Care | Pharmaceuticals | |||
| GlaxoSmithKline plc |
United Kingdom | Health Care | Pharmaceuticals | |||
| Telstra Corp. Ltd. ADR |
Australia | Telecommunication Services | Integrated Telecommunication Services | |||
| Total S.A. |
France | Energy | Integrated Oil & Gas | |||
| Vinci |
France | Industrials | Construction & Engineering |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 65 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Global Equity Income Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class I | Class R | Class Y | ||||||||||||||||||
| 1-year period ended 3-31-14 |
10.71% | 12.68% | 16.75% | 17.97% | 17.11% | 17.68% | ||||||||||||||||||
| 5-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
18.02% | 19.18% | 21.13% | 22.38% | 17.58% | 22.09% | ||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 6-4-12 for Class A, Class B, Class C, Class I, and Class Y shares and 12-19-12 for Class R (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 66 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Global Equity Income Fund (in thousands) |
MARCH 31, 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Global Equity Income Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| * | Not shown due to rounding. |
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $1,865 or 0.9% of net assets. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
Australian Dollar | Barclays Capital, Inc. | 11,500 | 4–28–14 | $ | — | $ | 225 | ||||||||||||
| Sell |
Canadian Dollar | State Street Global Markets | 4,175 | 4–28–14 | — | 55 | ||||||||||||||
| Sell |
Euro | State Street Global Markets | 18,050 | 4–28–14 | 35 | — | ||||||||||||||
| Sell |
Japanese Yen | Barclays Capital, Inc. | 422,000 | 4–28–14 | 38 | — | ||||||||||||||
|
|
|
|||||||||||||||||||
| $ | 73 | $ | 280 | |||||||||||||||||
|
|
|
|||||||||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 22,871 | $ | — | $ | — | ||||||
| Consumer Staples |
19,470 | — | — | |||||||||
| Energy |
23,926 | — | — | |||||||||
| Financials |
29,999 | — | — | |||||||||
| Health Care |
37,865 | — | — | |||||||||
| Industrials |
20,663 | — | — | |||||||||
| Information Technology |
2,618 | — | — | |||||||||
| Materials |
10,918 | — | — | |||||||||
| Telecommunication Services |
17,692 | — | — | |||||||||
| Utilities |
21,407 | — | — | |||||||||
| Total Common Stocks |
$ | 207,429 | $ | — | $ | — | ||||||
| Preferred Stocks |
— | 1,972 | — | |||||||||
| Rights |
39 | — | — | |||||||||
| Total |
$ | 207,468 | $ | 1,972 | $ | — | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 73 | $ | — | ||||||
| Liabilities |
||||||||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 280 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronym is used throughout this schedule:
ADR = American Depositary Receipts
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 68 | ANNUAL REPORT | 2014 |
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| Ivy Global Income Allocation Fund |
(UNAUDITED) |
International markets posted another solid year
The fiscal year proved to be a strong period for equities. Continued easy monetary policy from central banks globally, combined with a gradually improving economic environment provided a supportive backdrop for risky asset prices. The Fund was not positioned aggressively enough for the majority of the year to keep pace with its blended benchmark and slightly underperformed. Given the uncertainty surrounding aggressive monetary policy and the unknown terms of its duration, we positioned the Fund with a defensive tilt through most of the fiscal year. The equity portfolio slightly outperformed, while the fixed-income portfolio slightly underperformed. We spent a large portion of the year hedging currency exposure. This was mainly done to reduce volatility within the Fund, and was effective. That said, given the U.S. dollar’s broad underperformance for most of the year, it ended up producing a drag to overall performance.
The majority of our underperformance in the fixed-income portfolio was due to a late exit from a sizable position in emerging-market, fixed-income securities. During the second quarter of 2013, market volatility spiked due to concerns regarding U.S. Federal Reserve (Fed) monetary policy. A sell-off in stocks and bonds rolled across the globe in June after former Fed Chairman Ben Bernanke remarked the central bank may begin to reduce purchases under its $85 billion bond purchase program before year end. As a result, money began to flee various emerging markets where currencies had been strengthening and yields had been high. The taper talk happened earlier than we had expected (we were watching inflation figures that were still falling), and as a result, we were left liquidating a fixed-income, emerging-market position in a weak market. We spent most of the year making up lost ground, but were unable to recoup all of our early underperformance. The majority of lost ground was made up due to a large overweight allocation to credit markets as the abundant liquidity environment and relatively solid corporate balance sheets provided a supportive backdrop.
The equity portfolio benefited from relative overweights in European markets. Europe finally emerged from recessionary economic conditions during the year, which allowed European equities to re-rate towards peers. On the other hand, our exposure to emerging-market equities, mainly in China, detracted from performance. We remained concerned about the effects of Fed tapering in emerging markets. Emerging markets have attracted large amounts of capital flows over the past couple of years as investors looked for growth opportunities while trying to protect themselves from the uncertainty of aggressive monetary policies in much of the developed world. As the Fed begins to normalize its policy, we worry that money will start flowing back to developed markets — raising interest rates and slowing growth. Longer term, we think the growth prospects in developing countries remain compelling and positive. That said, we expect market volatility, as Fed policy (tapering) could lead to ramifications throughout a number of emerging-market countries, especially ones relying on foreign funding to finance current account deficits. However, if we are still positive longer term on emerging markets, the question becomes at what price do we own assets in that class? When the Fed first started talking about tapering in May and June of last year, in our opinion, emerging-market assets were not priced to appropriately reflect the risks. As emerging-market bond prices corrected during much of the year, and emerging-market equity prices materially underperformed, those risks became more appropriately priced. As a result, we recently purchased small positions in a number of developing assets, mainly on the fixed income side.
Positioning the Fund
While we maintain our belief that the macro environment is an important element of our security selection process, it has become increasingly benign in our analysis. As a result, we have focused our individual stock selection with a bottom-up fundamental approach. Generally speaking, we have
| 2014 | ANNUAL REPORT | 69 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Global Income Allocation Fund |
(UNAUDITED) |
become more focused on company-specific stories rather than making large geographic or industry bets. In particular, we are looking for individual stories where management is refocusing the business towards improving returns and returning capital to shareholders. While economic growth has been recovering, overall global economic activity remains fairly muted, making top-line growth challenging. After impressive returns last year, in our opinion equities no longer have much room to normalize from a valuation perspective. This is why we prefer to invest in companies that we believe can single-handedly help themselves by internally restructuring to improve returns. As an income fund, we are looking for companies that will pay these improved returns to shareholders mainly through increased or special dividends. The fixed-income portfolio has an overall emphasis on security selection as well. As of the fiscal year end, the portfolio was largely credit based, and we expect to maintain this allocation for the foreseeable future. Our security selection process has been geared towards a company’s ability to de-lever themselves given the challenging top-line growth environment mentioned previously. In this environment, we believe there will be fewer opportunities for companies to be able to grow themselves out of a leverage problem. Our asset allocation remains broadly biased towards equities given the absolute low levels of rates globally, and the slowly improving economic environment.
We also are increasingly seeking to take advantage of the Fund’s ability to invest across all aspects of a company’s capital structure. The European bank space is an excellent example of how we utilized this strategy. As the European economy was recovering early in the year and European bank stocks were at depressed multiples, we established a position in European bank equities. Later in the year as the European recovery slowed, valuations became less depressed and it looked like regulation might increase for banks. As a result, we switched most of our positioning from bank equity to subordinated debt within bank capital structures. We felt these instruments, which are the riskiest debt instruments within a bank’s debt funding structure (they are the first debt securities to absorb losses after equity holders) would benefit heavily from increased regulation. Currently, regulators in Europe are increasingly forcing banks to de-leverage, hold more capital and reduce the amount of risky assets they hold on their balance sheets. While we didn’t have great conviction regarding how that would affect the price of the equity, we thought it was a very positive development for the debt of European banks. If the assets you are investing in are less risky and levered, in our view, it makes it safer to fund those assets and less likely debt holders will have to absorb losses. This is how we can use the flexibility of a broadly mandated income fund to seek to take advantage of opportunities we see within markets.
The view ahead
Overall, our broad views do not differ substantially from last year. We are slightly more positive, but still believe central banks will provide a supportive backdrop for the markets through monetary policy. In some cases it will be their gradual exit from aggressive stances, such as the U.S. Fed, and in other cases we will watch to see if other central banks, such as the European Central Bank (ECB) or Bank of Japan (BOJ), increase their current stimulus. We remain concerned that inflation in a number of developed markets with elevated debt levels remains subdued or has declined. This condition is the primary reason we think central banks will have to maintain a certain amount of monetary stimulus to support ongoing economic recoveries. As such, we think the probability is high that both the ECB and the BOJ will have to embark on additional monetary easing at some point during the next year, though not to the extent of previous measures. We believe the additional monetary stimulus should be supportive of asset prices in both economies. Of the two, we think the economic recovery in Europe has the potential to be stronger. As always, we continue to search for income-generating securities across the globe.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets.
Fixed-income securities are subject to interest-rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio managers and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted are unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy Global Income Allocation Fund.
| 70 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Global Income Allocation Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Johnson & Johnson |
United States |
Health Care |
Pharmaceuticals | |||
| Merck & Co., Inc. |
United States |
Health Care |
Pharmaceuticals | |||
| Ares Capital Corp. |
United States |
Financials |
Asset Management & Custody Banks | |||
| Axa S.A. |
France |
Financials |
Multi-Line Insurance | |||
| Nestle S.A., Registered Shares |
Switzerland |
Consumer Staples |
Packaged Foods & Meats | |||
| Roche Holdings AG, Genusscheine |
Switzerland |
Health Care |
Pharmaceuticals | |||
| TDC A/S |
Denmark |
Telecommunication Services |
Integrated Telecommunication Services | |||
| Telstra Corp. Ltd. ADR |
Australia |
Telecommunication Services |
Integrated Telecommunication Services | |||
| Total S.A. |
France |
Energy |
Integrated Oil & Gas | |||
| Vinci |
France |
Industrials |
Construction & Engineering |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 71 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Global Income Allocation Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
Effective June 4, 2012, Ivy International Balanced Fund changed its name to Ivy Global Income Allocation Fund. As a result, the Fund’s benchmark was changed to a blended index composted of 60% MSCI World High Dividend Yield Index and 40% Barclays Multiverse Index. We believe this index is more representative of the types of equity and fixed-income securities in which the Fund invests.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| 72 | ANNUAL REPORT | 2014 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Global Income Allocation Fund |
(UNAUDITED) |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
3.32% | 4.53% | 8.86% | 3.28% | 10.07% | 9.32% | 9.77% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
12.44% | 12.54% | 13.04% | 12.55% | 14.31% | — | 13.99% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
5.79% | 5.35% | 5.65% | — | — | — | 6.57% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 2.34% | 3.73% | 9.97% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 73 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Income Allocation Fund (in thousands) |
MARCH 31, 2014 |
| 74 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Income Allocation Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 75 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Income Allocation Fund (in thousands) |
MARCH 31, 2014 |
| 76 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Income Allocation Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $79,194 or 13.7% of net assets. |
| (C) | Principal amounts are denominated in the indicated foreign currency, where applicable (AUD - Australian Dollar, BRL - Brazilian Real, CAD - Canadian Dollar, COP - Columbian Peso, KRW - South Korean Won, MXN - Mexican Peso, MYR - Malaysian Ringgit, NOK - Norwegian Krone, RUB - Russian Ruble and SGD - Singapore Dollar). |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. |
| (E) | Rate shown is the yield to maturity at March 31, 2014. |
| (F) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date the variable rate resets. |
| (G) | Payment-in-kind bonds. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
British Pound | UBS AG | 14,900 | 4–28–14 | $ | — | $ | 266 | ||||||||||||
| Sell |
Euro | UBS AG | 27,300 | 4–28–14 | 50 | — | ||||||||||||||
| Sell |
Israeli Shekel | UBS AG | 18,300 | 4–28–14 | 11 | — | ||||||||||||||
| Sell |
Japanese Yen | UBS AG | 1,471,150 | 4–28–14 | 142 | — | ||||||||||||||
|
|
|
|||||||||||||||||||
| $ | 203 | $ | 266 | |||||||||||||||||
|
|
|
|||||||||||||||||||
| 2014 | ANNUAL REPORT | 77 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Income Allocation Fund (in thousands) |
MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 40,877 | $ | — | $ | — | ||||||
| Consumer Staples |
32,913 | — | — | |||||||||
| Energy |
40,172 | — | — | |||||||||
| Financials |
61,090 | — | — | |||||||||
| Health Care |
68,510 | — | — | |||||||||
| Industrials |
37,947 | — | — | |||||||||
| Information Technology |
4,879 | — | — | |||||||||
| Materials |
17,707 | — | — | |||||||||
| Telecommunication Services |
34,644 | — | — | |||||||||
| Utilities |
38,026 | — | — | |||||||||
| Total Common Stocks |
$ | 376,765 | $ | — | $ | — | ||||||
| Investment Funds |
9,603 | — | — | |||||||||
| Preferred Stocks |
3,199 | 4,638 | — | |||||||||
| Rights |
75 | — | — | |||||||||
| Corporate Debt Securities |
— | 124,228 | 4,987 | |||||||||
| Municipal Bonds |
— | 1,020 | — | |||||||||
| Other Government Securities |
— | 19,440 | — | |||||||||
| Loans |
— | 4,736 | 9,950 | |||||||||
| Short-Term Securities |
— | 16,217 | — | |||||||||
| Total |
$ | 389,642 | $ | 170,279 | $ | 14,937 | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 203 | $ | — | ||||||
| Liabilities |
||||||||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 266 | $ | — | ||||||
The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Corporate Debt Securities |
Loans | |||||||
| Beginning Balance 4-1-13 |
$ | — | $ | — | ||||
| Net realized gain (loss) |
— | — | ||||||
| Net change in unrealized appreciation (depreciation) |
(13 | ) | 25 | |||||
| Purchases |
5,000 | 9,900 | ||||||
| Sales |
— | — | ||||||
| Amortization/Accretion of premium/discount |
— | — | ||||||
| Transfers into Level 3 during the period |
— | 25 | ||||||
| Transfers out of Level 3 during the period |
— | — | ||||||
| Ending Balance 3-31-14 |
$ | 4,987 | $ | 9,950 | ||||
| Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 3-31-14 |
$ | (13 | ) | $ | 25 | |||
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period. There were no transfers between Levels 1 and 2 during the period ended March 31, 2014.
Information about Level 3 fair value measurements:
| Fair Value at 3-31-14 |
Valuation Technique(s) | Unobservable Input(s) | ||||||||
| Assets |
||||||||||
| Corporate Debt Securities |
$ | 4,987 | Third-party valuation service | Broker quotes | ||||||
| Loans |
$ | 9,950 | Third-party valuation service | Broker quotes | ||||||
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GTD = Guaranteed
| 78 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Global Income Allocation Fund (in thousands) |
MARCH 31, 2014 |
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 79 |
Table of Contents
| Ivy High Income Fund |
(UNAUDITED) |
The Fund outperformed its benchmark and Lipper average for the fiscal year ending March 31, 2014 as a result of credit selection and the portfolio holding higher coupon credits, which are less sensitive to moves in U.S. Treasury rates. Compared against the index, the Fund was overweight B and CCC-rated credits, which outperformed the index. Meanwhile, the Fund was also comparatively underweight on BB-rated credits, which underperformed.
The Fund strategy focuses on identifying individual issuers and situations we believe potentially offer the best risk/reward characteristics for investors. Our overriding theme is finding companies with stable business models that we believe are able to benefit, or at least remain resilient with stable cash flows, during periods of lackluster economic growth.
Volatility
Bonds rallied early in the Fund’s fiscal year. Federal Reserve (Fed) comments about the potential tapering of bond purchases under its quantitative easing (QE) program ushered in a round of volatility starting in May. Treasury yields backed up significantly and, as a result, high-yield credits retraced a good portion of their gains for the year. The yield on the 10-year Treasury ended calendar 2013 above 3% before a rally in bond prices during the Fund’s fiscal fourth quarter sent Treasury yields lower. High yield spreads and yields tightened during the final three months of the Fund’s fiscal year.
The big question still facing fixed income investors at this juncture is where medium to long Treasuries will settle yield-wise. It is our view that Treasury levels will determine absolute levels of return for the high-yield sector. If there is a large increase in Treasuries, we believe that spread levels should make high yield one of the better suited areas to absorb that rate movement.
While we believe the Fund’s fiscal year ended with a pause in major upswings by Treasuries, longer term, we believe we are entering a period of potentially years where rising Treasury yields will confront investors. As a result, we believe that portfolio construction will be increasingly important for investors, with duration taking on an increasing role in determining performance.
The Fund’s performance noted above is at net asset value (NAV), and does not include the affect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Fixed-income securities are subject to interest rate risk and, as such, the Fund’s net asset value may fall as interest rates rise. Investing in high-income securities may carry a greater risk of non-payment of interest or principal than higher-rated bonds. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy High Income Fund.
| 80 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy High Income Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
| 2014 | ANNUAL REPORT | 81 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy High Income Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
2.84% | 4.28% | 8.32% | 2.46% | 9.36% | 8.71% | 9.09% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
15.63% | 16.00% | 16.19% | 15.26% | 17.33% | — | 17.03% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
8.29% | 7.97% | 8.13% | — | — | — | 9.04% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 8.36% | 10.14% | 10.10% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 82 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 83 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
| 84 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 85 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
| 86 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 87 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
| 88 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 89 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
| 90 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| * | Not shown due to rounding. |
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Restricted securities. At March 31, 2014, the Fund owned the following restricted securities: |
| Security | Acquisition Date(s) | Shares | Cost | Market Value | ||||||||||
| Maritime Finance Co. Ltd. |
9–19–13 | 1,750 | $ | 35,000 | $ | 36,470 | ||||||||
| Provo Craft & Novelty, Inc. |
9–15–11 | 3 | 1 | – | ||||||||||
|
|
|
|||||||||||||
| $ | 35,001 | $ | 36,470 | |||||||||||
|
|
|
|||||||||||||
The total value of these securities represented 0.3% of net assets at March 31, 2014.
| (C) | Deemed to be an affiliate due to the Fund owning at least 5% of the voting securities. |
| (D) | Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any. |
| (E) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $5,205,193 or 45.3% of net assets. |
| (F) | Payment-in-kind bonds. |
| (G) | Principal amounts are denominated in the indicated foreign currency, where applicable (CAD - Canadian Dollar, CHF - Swiss Franc, EUR - Euro and GBP - British Pound). |
| (H) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. |
| (I) | Zero coupon bond. |
| (J) | Rate shown is the yield to maturity at March 31, 2014. |
| (K) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
| The | following forward foreign currency contracts were outstanding at March 31, 2014: |
| Type | Currency | Counterparty | Principal Amount of (Denominated in |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
British Pound | Morgan Stanley International | 70,278 | 4–28–14 | $ | — | $ | 1,247 | ||||||||||||
| Sell |
British Pound | State Street Global Markets | 20,848 | 4–28–14 | — | 363 | ||||||||||||||
| Sell |
Euro | Morgan Stanley International | 217,438 | 4–28–14 | — | 105 | ||||||||||||||
| Sell |
Euro | Morgan Stanley International | 720 | 5–15–14 | 19 | — | ||||||||||||||
| Sell |
Euro | Morgan Stanley International | 720 | 11–14–14 | 19 | — | ||||||||||||||
| Sell |
Euro | Morgan Stanley International | 729 | 5–15–15 | — | 48 | ||||||||||||||
| Sell |
Euro | Morgan Stanley International | 729 | 11–16–15 | — | 50 | ||||||||||||||
| Sell |
Swiss Franc | Deutsche Bank AG | 35,800 | 4–28–14 | — | 75 | ||||||||||||||
|
|
|
|||||||||||||||||||
| $ | 38 | $ | 1,888 | |||||||||||||||||
|
|
|
|||||||||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 50,372 | $ | — | $ | 36,986 | ||||||
| Preferred Stocks |
— | 2,536 | — | |||||||||
| Warrants |
— | — | 2,207 | |||||||||
| Corporate Debt Securities |
— | 7,555,641 | 162,118 | |||||||||
| Municipal Bonds |
— | 51,586 | — | |||||||||
| Loans |
— | 2,533,929 | 842,657 | |||||||||
| Short-Term Securities |
— | 343,396 | — | |||||||||
| Total |
$ | 50,372 | $ | 10,487,088 | $ | 1,043,968 | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 38 | $ | — | ||||||
| Liabilities |
||||||||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 1,888 | $ | — | ||||||
| 2014 | ANNUAL REPORT | 91 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy High Income Fund (in thousands) |
MARCH 31, 2014 |
The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Common Stocks | Warrants | Corporate Debt Securities |
Loans | Short-Term Securities |
||||||||||||||||
| Beginning Balance 4-1-13 |
$ | — | $ | 3,143 | $ | 93,646 | $ | 503,760 | $ | 5,475 | ||||||||||
| Net realized gain (loss) |
— | * | — | 244 | 135 | — | ||||||||||||||
| Net change in unrealized appreciation (depreciation) |
1,338 | (2,420 | ) | 4,881 | (1,938 | ) | — | |||||||||||||
| Purchases |
35,648 | — | 58,273 | 689,529 | — | |||||||||||||||
| Sales |
— | — | (9,831 | ) | (201,174 | ) | — | |||||||||||||
| Amortization/Accretion of premium/discount |
— | — | 534 | 896 | — | |||||||||||||||
| Transfers into Level 3 during the period |
— | 1,484 | 108,017 | 56,660 | — | |||||||||||||||
| Transfers out of Level 3 during the period |
— | — | (93,646 | ) | (205,211 | ) | (5,475 | ) | ||||||||||||
| Ending Balance 3-31-14 |
$ | 36,986 | $ | 2,207 | $ | 162,118 | $ | 842,657 | $ | — | ||||||||||
| Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 3-31-14 |
$ | 1,337 | ($ | 2,420 | ) | $ | 4,881 | $ | 1,426 | $ | — | |||||||||
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period. There were no transfers between Levels 1 and 2 during the period ended March 31, 2014.
Information about Level 3 fair value measurements:
| Fair Value at 3-31-14 |
Valuation Technique(s) | Unobservable Input(s) | ||||||||||
| Assets |
||||||||||||
| Common Stocks |
$ | 516 | Broker | Broker quotes | ||||||||
| $ | 36,470 | Third-party vendor pricing service | Broker quotes | |||||||||
| Warrants |
$ | 2,207 | Broker | Broker quotes | ||||||||
| Corporate Debt Securities |
$ | 162,118 | Third-party vendor pricing service | Broker quotes | ||||||||
| Loans |
$ | 842,657 | Third-party vendor pricing service | Broker quotes | ||||||||
The following acronyms are used throughout this schedule:
GTD = Guaranteed
REIT = Real Estate Investment Trust
See Accompanying Notes to Financial Statements.
| 92 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy International Core Equity Fund |
(UNAUDITED) |
International markets posted another solid year
For the fourth year in the last five, international markets delivered solid positive returns and the Fund did the same, outperforming its benchmark index by more than 300 basis points. Throughout the year, stock selection drove the strong performance despite favoring stable over cyclical stocks in an up market. As we have said for more than a year, in the medium term, we seek to be less reactive to gyrations of economic data and focus our stock selection on what we believe to be well-positioned, undervalued or reasonably priced companies with solid opportunities for growth.
From a geographic standpoint, one of the largest detractors to performance was investing approximately 10% of the Fund directly in emerging markets, which underperformed the benchmark for the third year in a row. We still believe this allocation is appropriate, and we will continue to look for opportunities in the emerging-market universe. In our view, emerging-market stocks represent one of the few asset classes that appear to be undervalued. Within developed markets, the U.K., France, Japan and the Netherlands were standout performers and the Fund benefited from good stock selection in those regions.
From a sector standpoint, strong stock selection and overweight allocations to information technology and health care generated positive performance. On the other hand, the Fund’s allocation to financials disappointed.
Another year of aggressive monetary policy
During the year we had the continuation of extremely accommodative monetary policy. Politically speaking, it was a relatively good year in the developed markets, while there was quite a bit of turmoil in emerging markets. In Europe, Italy’s political situation improved dramatically over the course of the year. Newly elected Prime Minister Matteo Renzi has taken over leadership in the country, widely seen as a sign of much-needed generational change. In September, the re-election of German Chancellor Angela Merkel was positive for stocks and for European stability. Confidence in European unity grew through the year as peripheral bond yields came in dramatically. In the U.K., the government reignited its economy through a house lending scheme. In Japan, the Abe administration delivered some inflation mostly through aggressive monetary easing; however, its economic reforms remain unclear.
Turmoil in the Middle East continued, and protests and riots were prevalent in a number of developing countries including Thailand, Turkey and Brazil as people became dissatisfied with inept government. The year ended on a bad note with the Russian annexation of Crimea. In China, the new government continued on their quest to diminish corruption and seek a more market-oriented economy. While we believe Chinese reform should be good for the economy and market over the long term, in the short to medium term, it appears to be creating a lot of uncertainty and poor market performance.
The Federal Reserve’s (Fed) threat to taper or reduce the amount of monthly bond purchases under the Quantitative Easing 3 (QE3) program in late May threw the global, and in particular, emerging markets into a tailspin. From the time of former Chairman Bernanke’s late-May suggestion to taper, until the early summer performance lows, the Fund’s benchmark corrected approximately 10%. Emerging markets were harder hit. For example, Brazil’s market experienced more than a 25% correction in six weeks. Expectations were for tapering to commence in September; however, when tapering did not start, the markets responded positively. That said, markets began to trade-off once it was clear tapering would commence in January. A little more than five years after the global financial crisis, the U.S. is anticipated to start reducing the easy money again. Only time will tell if the economy will let us move to a more normal monetary policy.
Actions in the Fund during the year
Throughout the year, we maintained a very stable outlook and believe we were disciplined in not overreacting to short-term macroeconomic swings. Generally speaking, we managed the Fund with an overweight allocation to defensive sectors relative to cyclical sectors. In addition, we generally maintained 3% to 5% cash during the year. As the market multiple rose, we became more inclined to add reasonably priced growth stocks rather than relative value stocks.
| 2014 | ANNUAL REPORT | 93 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy International Core Equity Fund |
(UNAUDITED) |
As the year progressed, we reduced our sector weighting in industrials based on slower economic growth coupled with rising competition from emerging markets — characteristics that we view as likely to negatively impact stock prices. We also reduced our weighting in telecommunication services where stocks experienced an enormous rerating increase last year and were, we think, inflated relative to fundamentals. Our largest increase was to the financial sector where we found opportunities we believe should benefit from rising equity markets and steepening yield curves. Along the same theme, our largest overweight position is the information technology sector, where we are finding stocks we believe have strong secular growth drivers.
From a geographic standpoint, we added to emerging-market stocks in the summer shortly after the Fed’s taper scare. At fiscal year-end, the Fund had approximately 11% invested directly in emerging-market stocks compared to approximately 6% during the second quarter of 2013. In our view, emerging-market equities currently are out of favor after three years of underperformance, but we believe there is a very appealing mix of both value- and growth-oriented opportunities in developing markets. In Japan, we began the year with a higher-than-normal weighting of approximately 19% and slightly reduced that allocation throughout the year. Generally speaking, we believe the Abe administration will be equity friendly. In Australia, we maintained an underweight position — we do not see much opportunity for growth and, in our view, the relative valuation story is average.
As we ended the year, there was increasing talk of synchronized, accelerated global economic growth. While we agree, we believe it is already reflected in stocks as share prices appreciated much more than earnings grew over the last year. Additionally, we do not expect a major upside surprise in economic growth. All in all, our economic outlook for the coming year is for continued slow-to-moderate growth.
In this environment, we will continue to position the Fund based on our long-term outlook of continued slow growth. We believe it is unlikely that we will get a robust, self-sustaining economic cycle. If that were to occur, we think heavily indebted governments would rapidly tighten the extremely loose monetary policy now in place, which could offset the benefits to equity valuations.
We expect to keep the Fund in a slightly defensive position, and we will continue to seek investments in reasonably priced companies that are less dependent on economic growth. Through the past fiscal year, our key themes did not change. We continue to seek exposure to:
| • | Disproportionate growth of emerging-market consumers, particularly in the Asia-Pacific region; |
| • | Strong growth in infrastructure; |
| • | Strong and believable dividend yields; and |
| • | Stocks that we think will benefit from increased merger and acquisition activity. |
Outlook
We believe global economic growth is fragile, but showing positive momentum with global monetary policy extremely aggressive, though having peaked in the U.S. and the U.K. We think improvement in economic growth will eventually lead to tighter monetary and, to a lesser extent, fiscal policy in the advanced economies. In our opinion, the slower economic growth since 2008 is likely as good as we can expect today, with greater downside than upside risks.
We think relative valuation remains supportive for international equities, while absolute valuations are no longer attractive. Equities are trading at levels above their historic averages (over the last 25 years), while bonds are trading at a significant premium. That said, in most markets 10-year bonds recently traded down while equities appreciated, reducing the relative attractiveness of equities. This year, for the first time since the downturn, we saw money aggressively flow from bonds to equities — driving equity market performance. We think the multiple expansion phase of the market has passed, and fundamentals and earnings growth will be the leading drivers of equity performance going forward.
For the long term, we believe emerging middle-class populations in countries including China, India, Russia and Brazil will continue to work toward higher standards of living. This will require vast infrastructure and increasingly productive economies. We think these trends will drive the stocks of consumer-facing and infrastructure companies that serve those markets. As always, we will continue to buy stocks in companies that demonstrate strong cash generation, less leveraged balance sheets and what we consider solid opportunities for growth.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. Investments in countries with emerging economies or securities markets may carry greater risk than investments in more developed countries. Political and economic structures in many such countries may be undergoing significant evolution and rapid development, and such countries may lack the social, political and economic stability characteristics of more developed countries. Investments in securities issued in these countries may be more volatile and less liquid than securities issued in more developed countries. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted are unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy International Core Equity Fund.
| 94 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy International Core Equity Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Total S.A. |
France |
Energy |
Integrated Oil & Gas | |||
| Shire plc |
United Kingdom |
Health Care |
Pharmaceuticals | |||
| Teva Pharmaceutical Industries Ltd. ADR |
Israel |
Health Care |
Pharmaceuticals | |||
| Nestle S.A., Registered Shares |
Switzerland |
Consumer Staples |
Packaged Foods & Meats | |||
| SABMiller plc |
United Kingdom |
Consumer Staples |
Brewers | |||
| DaimlerChrysler AG, Registered Shares |
Germany |
Consumer Discretionary |
Automobile Manufacturers | |||
| ING Groep N.V., Certicaaten Van Aandelen |
Netherlands |
Financials |
Other Diversified Financial Services | |||
| Royal Dutch Shell plc, Class A |
United Kingdom |
Energy |
Integrated Oil & Gas | |||
| Bayer AG |
Germany |
Health Care |
Pharmaceuticals | |||
| Cheung Kong (Holdings) Ltd. |
Hong Kong |
Financials |
Real Estate Development |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 95 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy International Core Equity Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
14.41% | 16.47% | 20.64% | 14.35% | 21.93% | 21.19% | 21.63% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
15.42% | 15.65% | 16.03% | 15.36% | 17.28% | — | 16.99% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
8.72% | 8.44% | 8.62% | — | — | — | 9.54% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 3.30% | 4.78% | 19.62% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
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SCHEDULE OF INVESTMENTS
| Ivy International Core Equity Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 97 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy International Core Equity Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Rate shown is the yield to maturity at March 31, 2014. |
| (C) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date the variable rate resets. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
Euro | Barclays Capital, Inc. | 116,600 | 4-28-14 | $ | 319 | $ | — | ||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 353,455 | $ | — | $ | — | ||||||
| Consumer Staples |
263,503 | — | — | |||||||||
| Energy |
210,859 | — | — | |||||||||
| Financials |
396,321 | — | — | |||||||||
| Health Care |
260,191 | — | — | |||||||||
| Industrials |
140,943 | — | — | |||||||||
| Information Technology |
185,709 | — | — | |||||||||
| Materials |
64,796 | — | — | |||||||||
| Telecommunication Services |
123,031 | — | — | |||||||||
| Utilities |
27,344 | — | — | |||||||||
| Total Common Stocks |
$ | 2,026,152 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 73,471 | — | |||||||||
| Total |
$ | 2,026,152 | $ | 73,471 | $ | — | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 319 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
GTD = Guaranteed
| 98 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy International Core Equity Fund (in thousands) |
MARCH 31, 2014 |
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 99 |
Table of Contents
| Ivy International Growth Fund |
(UNAUDITED) |
Economic uncertainty dominates markets
Equity and fixed-income markets were volatile in the fiscal year ended March 31, 2014. Early in the year, economic growth remained slow in key countries, although it improved somewhat as the year progressed. In early April, Bank of Japan head Haruhiko Kuroda pledged to double Japan’s monetary base over the next two years through a series of bond purchases. This bold move surprised the market, causing equities to extend their rally and the yen to weaken further. During the second quarter of 2013, volatility in the markets spiked due to concerns regarding U.S. Federal Reserve (Fed) monetary policy. A sell-off in stocks and bonds rolled across the globe in June after former Fed Chairman Ben Bernanke remarked the central bank may begin to reduce purchases under its $85 billion bond purchase program before year end. As a result, money began to flee various emerging markets where currencies had been strengthening and yields had been high. Bond markets were hit hard and currencies weakened along with equities. While the gut reaction didn’t last long (Fed governors eventually said the right things to counter the decline), it created an element of market uncertainty. Moving into 2014, the U.S. economy slowed, but maintained steady economic growth in the quarter. Despite mixed economic reports, the markets continued to react positively to improvements in consumer spending, productivity and an increase in business investment. In March of this year, high-momentum growth stocks (many technology related) began to globally sell off as the realization of someday-higher interest rates hit terminal values.
From an economic standpoint, the developed markets generally performed well, while emerging-market growth was disappointing. Europe exited recession in the second half of the year and growth in the U.S. generally rose. Meanwhile, the British and Japanese economies were strong. In our opinion, the European Central Bank’s (ECB) monetary posturing is the glue stabilizing the European Union markets. In the U.K., the government reignited its economy through a home lending scheme. In China, the new government vowed to diminish corruption, tighten monetary policy and shift away from fixed-asset investment and toward consumption. While we believe Chinese reform should be good for the economy and market over the long term, in the short to medium term it is creating a lot of uncertainty, poor market performance and poses a headwind for commodities.
The fourth quarter of 2013 proved to be notable as, generally speaking, markets posted solid gains. The accommodative stance of the Fed and the “great rotation” (bond investors moving to equities) were key contributors to market success. We believe these two events, coupled with a sluggish yet recovering economy, may very well facilitate the continuation of an equity bull market run. That said, market valuations as gauged by various fundamental measures, such as price/earnings ratios, seem high. One estimate attributes approximately 75% of fiscal year S&P 500 Index performance, which closed the calendar year near record highs, to multiple expansion rather than earnings or fundamental improvement. In Europe, markets were broadly stronger and, similar to the U.S., performance seemed to originate from multiple expansion rather than earnings or cash flow growth. As a result, Europe posted gains; however, general economic growth has been tepid. Currently, the ECB remains vigilant for signs of deflation or additional indicators of economic stress, recently mentioning potential “unconventional” easing in efforts to weaken the euro. These indicators may lead a number of central banks, including the Bank of Japan, to potentially enact further monetary stimulus. Conversely, the Fed began to curtail its current quantitative easing program by decreasing its bond purchases from $85 billion to $55 billion per month.
A rather benign year in geopolitics was interrupted late in the period as Ukraine fragmented once again with Russian and European loyalties continuing to collide. Russia’s “annexation” of Crimea along with its military buildup along Ukraine’s eastern border continue to threaten relative stability. At the very least these actions will impact global natural gas markets as Europe, once again, realizes its sensitive position as a consumer of Russian gas.
Strong performance after a slow start
The Fund outperformed its benchmark for the fiscal period. After an underperforming first quarter of the fiscal year, the Fund rebounded through the year, culminating in a strong first calendar quarter of 2014. Outperformance was driven by strong stock selection, although the Fund’s sector allocation contributed to outperformance as well. Stock selection within the consumer discretionary sector, and the Fund’s relatively large
| 100 | ANNUAL REPORT | 2014 |
Table of Contents
underweight to the poor-performing consumer staples sector, were the largest relative contributors for the period. Top individual contributors included Galaxy Entertainment Group, Vinci and Daimler AG. The Fund’s currency allocations had little effect on performance for the fiscal year.
On the other hand, the Fund’s cash allocation, which averaged approximately 7%, was a top detractor in a rising market. Additionally, the Fund’s stock selection in information technology detracted from performance with allocations to HTC Corp. and Samsung Electronics posting large relative losses. The Fund no longer holds HTC Corp.
Looking ahead
We believe the U.S. economic recovery will carry on, which will likely cause interest rates to continue to rise (hopefully modestly) and the U.S. dollar to strengthen. Therefore, we remain wary of those emerging economies with negative current accounts, often dependent on positive investment flows to buoy their currencies. That said, developing markets with positive trade and current account balances, accompanied with exposure to developed end-markets (like South Korea), should fare better. In China, we expect the composition of growth to continue to affect its trading partners. This especially holds true for China’s neighboring countries and for the country’s commodity providers (especially mining countries like Australia, Indonesia, and to some extent Brazil).
We continue to follow policies stemming from the U.K. and the rest of Europe, including both stimulation and austerity measures from foreign governments and the ECB. Another key factor is whether businesses, which are flush with cash, will increase spending, share repurchases or dividends as they gain confidence in the recovery’s sustainability. All else being equal, we believe increases in those areas should help the markets, and we will see continued improvement with some of the larger hard-hit European economies like Spain and Italy. Even France, perhaps due to its retreat from onerous tax and other regulatory threats, has begun to perform better.
We think relative valuation remains somewhat supportive for international equities, while absolute valuations no longer are attractive. Equities are trading at levels above their historic averages (over the last 25 years), while bonds are trading at a significant premium. That said, in most markets, 10-year bonds traded off through the quarter while equities appreciated, reducing the relative attractiveness of equities. This year, for the first time since the downturn, we saw money flow from bonds to equities — driving equity market performance. We think the multiple expansion phase of the market has passed and fundamentals and earnings growth will be the leading drivers of equity performance going forward. As always, we will continue to search for competitively well-positioned companies we feel have the ability to generate long-term fundamental outperformance.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted are unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy International Growth Fund.
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PORTFOLIO HIGHLIGHTS
| Ivy International Growth Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Country | Sector | Industry | |||
| Vinci |
France |
Industrials |
Construction & Engineering | |||
| Shire plc |
United Kingdom |
Health Care |
Pharmaceuticals | |||
| Safran |
France |
Industrials |
Aerospace & Defense | |||
| Fresenius SE & Co. KGaA |
Germany |
Health Care |
Health Care Services | |||
| DaimlerChrysler AG, Registered Shares |
Germany |
Consumer Discretionary |
Automobile Manufacturers | |||
| Bayer AG |
Germany |
Health Care |
Pharmaceuticals | |||
| Hyundai Motor Co. |
South Korea |
Consumer Discretionary |
Automobile Manufacturers | |||
| CaixaBank S.A. |
Spain |
Financials |
Diversified Banks | |||
| Teva Pharmaceutical Industries Ltd. ADR |
Israel |
Health Care |
Pharmaceuticals | |||
| Continental AG |
Germany |
Consumer Discretionary |
Auto Parts & Equipment |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 102 | ANNUAL REPORT | 2014 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy International Growth Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E(4) | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
10.50% | 12.13% | 16.30% | 10.81% | 17.73% | 17.01% | 17.38% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
15.46% | 15.54% | 15.75% | 15.73% | 17.27% | — | 17.00% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
6.90% | 6.40% | 6.50% | — | — | — | 7.62% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(5) |
— | — | — | 2.80% | 3.95% | 14.86% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class E shares are not currently available for investment. |
| (5) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
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SCHEDULE OF INVESTMENTS
| Ivy International Growth Fund (in thousands) |
MARCH 31, 2014 |
| 104 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy International Growth Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Rate shown is the yield to maturity at March 31, 2014. |
| (C) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date the variable rate resets. |
The following forward foreign currency contracts were outstanding at March 31, 2014:
| Type | Currency | Counterparty | Principal Amount of Contract (Denominated in Indicated Currency) |
Settlement Date | Unrealized Appreciation |
Unrealized Depreciation |
||||||||||||||
| Sell |
Euro | UBS AG | 29,600 | 4–28–14 | $ | 54 | $ | — | ||||||||||||
| Sell |
Japanese Yen | Goldman Sachs International | 2,065,400 | 4–28–14 | 139 | — | ||||||||||||||
|
|
|
|
|
|||||||||||||||||
| $ | 193 | $ | — | |||||||||||||||||
|
|
|
|
|
|||||||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
||||||||||||
| Consumer Discretionary |
$ | 108,910 | $ | — | $ | — | ||||||
| Consumer Staples |
16,232 | — | — | |||||||||
| Energy |
12,422 | — | — | |||||||||
| Financials |
51,996 | — | — | |||||||||
| Health Care |
70,469 | — | — | |||||||||
| Industrials |
69,947 | — | — | |||||||||
| Information Technology |
56,853 | — | — | |||||||||
| Materials |
24,901 | — | — | |||||||||
| Telecommunication Services |
8,374 | — | — | |||||||||
| Total Common Stocks |
$ | 420,104 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 30,865 | — | |||||||||
| Total |
$ | 420,104 | $ | 30,865 | $ | — | ||||||
| Forward Foreign Currency Contracts |
$ | — | $ | 193 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GTD = Guaranteed
| +Includes | cash and cash equivalents and other assets and liabilities |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 105 |
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| Ivy Large Cap Growth Fund |
(UNAUDITED) |
Equity markets finished the fiscal year ended March 31, 2014 strong, capping off one of the stronger 12-month periods for broad market equity returns in recent history. Throughout the period, the equity market benefited from declining risk premiums and growing confidence that the global economy has moved beyond the economic and banking crisis, and is transitioning to a more “normal” economic environment. This “normal” environment is one where fears of systemic risk have been mitigated through a much repaired banking system, resulting in a stabilization of many of the largest economies around the world. In fact, many governments can now borrow at historically low interest rates, as low or lower than that of the pre-crisis era.
This stabilization in the U.S. is characterized by slow, but steady revenue growth, high and sustainable levels of profitability and abundant cash flow for much of corporate America. For many markets, this de-emphasis of macroeconomic concerns simply meant higher valuations across industries, sectors and capitalization ranges, regardless of investment style. It also provided a more favorable environment for active managers as stock correlations declined to more normal levels. This environment proved beneficial to us as performance for the Ivy Large Cap Growth Fund posted favorable performance for the year on both an absolute and risk-adjusted relative basis compared to the Russell 1000 Growth Index benchmark.
Market conditions
After a long period of positive excess returns accruing to more defensive, slower growth, higher dividend-yielding and value-oriented companies, growth stocks have begun to be revalued in recent quarters. We believe this transition can be traced, at least in part, to the change in monetary policy that our country is now undergoing. The steady improvement in the labor market and continuing recovery in housing and auto markets has resulted in the Federal Reserve (Fed) signaling its intention to begin winding down its longstanding quantitative easing program. As monetary policy normalizes over time, we believe interest rates are likely to rise, but at a very measured pace. Given past aggressive actions by most central banks, the global banking industry, and the U.S. in particular, is flush with liquidity and capital. We believe this makes the global economy much more resilient to destabilizing risks and greatly reduces the likelihood of another significant downturn. In our view, the Fed’s vote of confidence in the sustainability of the economic expansion is a meaningful positive for growth stocks, especially given the relatively modest valuation premium the asset class currently possesses.
Strategies employed, sector emphasis
The Fund’s philosophy and investment process has remained consistent and continues to focus on identifying structurally advantaged companies that can generate superior levels of profitability and growth over time.
From a tactical standpoint, Fund performance benefited from its underweighted exposure to the underperforming consumer staples sector. That said, the majority of the relative outperformance resulted from favorable stock selection, especially in the consumer discretionary and health care sectors. Outperformance in the consumer discretionary sector was led by Fund holdings in Las Vegas Sands, Inc. and Wynn Resorts, which are key beneficiaries of burgeoning growth in the Macau gaming market.
Gilead Sciences, Inc. and Biogen Idec Inc. also were strong contributors, both have new drug launches underway, which have driven accelerated earnings growth far in excess of the market. Other notable strong performers during the year included MasterCard Incorporated; a company that we believe is well positioned to benefit from the secular trend toward electronic payments (and away from cash and checks).
Key negative contributors for the fiscal year included Kansas City Southern, which guided to slower than expected growth. Other notable laggards were largely concentrated in the technology sector where competitive pressures remain intense and corporate spending plans are still uneven.
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Outlook
Irrespective of the short-term turbulence in the market and portfolio, in our view, the equity market outlook appears to be positive. While short-term bouts of volatility and shifting investor psychology have become the norm, it doesn’t change our view on the long-term outlook. We further believe corporate profits will grow by at least 5-8% for the year. Interest rates and inflation should remain low. We think gross domestic product growth around the world will continue its slow-grinding rebound, creating a favorable backdrop for growth stock investing. In a slow-growth environment without significant cyclical tailwinds, we believe our portfolio of high-margin, secular growth companies will perform favorably.
Looking outside the U.S., key problematic geographies such as Europe have stabilized and are showing positive surprises to profitability with the potential for continued improvement. While China’s growth rate remains uncertain, we think the absolute rate of growth in the region is high enough that most multinationals can continue to do well there. We believe many leading multinationals will benefit over the next couple of years as former headwinds become tailwinds. In our view, these factors, combined with modest U.S. economic and profit growth, should continue to provide a favorable backdrop for the equity market. However, given the outsized market returns of 2013, much of which was driven by price-to-earnings multiple expansion rather than earnings growth, we expect the upcoming fiscal year to hold more modest return potential. As always, we will continue to emphasize growth companies operating in large or fast-growing markets that we believe possess sustainable competitive advantages and can generate superior margins and high returns on capital. Thank you for your continued confidence and support.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well as value stocks or the stock market in general. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Large Cap Growth Fund’s performance.
| 2014 | ANNUAL REPORT | 107 |
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PORTFOLIO HIGHLIGHTS
| Ivy Large Cap Growth Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| Las Vegas Sands, Inc. |
Consumer Discretionary |
|||
| MasterCard, Inc., Class A |
Information Technology |
|||
| Biogen Idec, Inc. |
Health Care |
|||
| Gilead Sciences, Inc. |
Health Care |
|||
| Wynn Resorts Ltd. |
Consumer Discretionary |
|||
| Visa, Inc., Class A |
Information Technology |
|||
| Applied Materials, Inc. |
Information Technology |
|||
| Google, Inc., Class A |
Information Technology |
|||
| Canadian Pacific Railway Ltd. |
Industrials |
|||
| Facebook, Inc., Class A |
Information Technology |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 108 | ANNUAL REPORT | 2014 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Large Cap Growth Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
17.05% | 19.08% | 23.17% | 17.01% | 24.52% | 23.75% | 24.30% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
16.53% | 16.55% | 16.95% | 16.53% | 18.20% | 17.53% | 18.01% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
7.37% | 6.80% | 7.10% | — | — | — | 8.15% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 6.89% | 8.18% | 6.88% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-29-05 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
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SCHEDULE OF INVESTMENTS
| Ivy Large Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Large Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Rate shown is the yield to maturity at March 31, 2014. |
| (C) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 1,435,478 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 22,408 | — | |||||||||
| Total |
$ | 1,435,478 | $ | 22,408 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GTD = Guaranteed
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 111 |
Table of Contents
| Ivy Limited-Term Bond Fund |
(UNAUDITED) |
Performance
The Fund underperformed its benchmark and its Lipper peer group over the last 12 months. From early May 2013 until late June 2013, the 10-year Treasury bond sold off almost 100 basis points. Going into this period the Fund’s duration was significantly longer than its benchmarks’ duration. Over the first three months of calendar year 2014 the bond market has seen a surprisingly strong rally. The 10-year Treasury has rallied almost 40 basis points since the beginning of the year. The Fund has maintained a significantly shorter duration than its benchmark over the last three months. The Fund underperformed both its’ benchmark and Lipper peer group during both of these major bond market moves. Additionally, volatility in the high-grade fixed income market continued unabated throughout the past 12 months. One of the year’s biggest challenges was positioning the Fund to take advantage of the big market swings that occurred.
Higher tax rates took effect at the beginning of 2013, which we believed would add a headwind to consumer spending going into this first half of 2013. The dysfunction coming out of Washington continued to have negative impacts on the bond markets. Due to the lack of an agreement on a new federal budget, sequestration was put into place in March 2013. This sequestration required mandatory budget cuts across the board for federal expenditures.
At the start of the Fund’s fiscal year, the yield on the 10-year Treasury note topped out at 2.06%. By early May, the yield had dropped to 1.63%. Most economists were talking about the potential for the Federal Reserve (Fed) to grow the amount of bond purchases under quantitative easing (QE) program if the economy continued to show weakness.
However, market sentiment began to change once the April non-farm payroll number was released. While the market expected to see a gain of 66,000 non-farm jobs, the actual number was a gain of nearly 200,000. It was a major surprise to the markets and the yield on the 10-year Treasury sold off 11 basis points that day. It turned out that growth in the second quarter of calendar 2013, which was expected to be meager, ended up at twice what we saw in the first quarter. As a result, from early May until early September the 10-year Treasury sold off nearly 140 basis points — the largest sell-off seen in the Treasury market since 2010.
Fed policy and quantitative easing
In May, then-Fed Chairman Ben Bernanke first brought up the prospect of a reduction in the level of QE purchases by the Fed. Based on Fed comments, the market had priced in a Fed tapering of these purchases to begin in September. However, following the September Fed meeting, the market was surprised by the announcement that the Fed had postponed tapering to a later date. The bond market rallied on this news and the Fed’s efforts to be more transparent only added to market volatility.
At the end of the second quarter of calendar year 2013 we saw corporate credit spreads widen due to the large cash outflows from investment grade mutual funds. The increased market volatility and the push by investors to shed duration within their portfolios led to increased selling of longer duration, high-quality corporate debt.
This spread widening was caused by a liquidity event, not a credit event. Increased selling resulted in a higher yield premium being demanded by those willing to add duration to their portfolios. Once interest rates began to settle into a new, higher trading range, the selling pressure on the investment grade bond markets began to subside. Early in the third quarter of 2013, credit spreads returned to levels seen prior to the June selloff. We maintained our overweight positions in corporate debt during the selloff and benefited from the stronger bid for bonds in the second half of 2013.
While October began to see some renewed strength in the U.S. economy, we saw a surprisingly strong acceleration in November and December. Durable goods orders rose much more than most expected at 3.5% in November. Orders for nondefense capital goods jumped 9.4%. Excluding aircraft, nondefense orders rose 4.5%. The durable goods report suggests real nonresidential investment on equipment and software likely climbed around 5%. Over the last few weeks of 2013, real consumer spending was much stronger than expected and appears on track to advance over 4.0% in the fourth quarter. New home sales for the last six months of 2013 were revised sharply higher.
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On Dec. 18th, the Fed finally announced its intention to begin to reduce the level of the securities purchases associated with its QE policy by $10 billion per month. The Fed had been purchasing $85 billion in securities each month. At that time, Bernanke suggested that the Fed’s intention is to continue to reduce these purchases by an additional $10 billion following each Fed meeting this year. Assuming the economy unfolds as the Fed projects, that would bring an end to the program in the latter half of 2014. The current Fed members seem intent to continue down that path.
Outlook for 2014
We continue to be underweight agency debentures. We remain underweight Treasury bonds, especially at the very short end of the curve, and overweight high-grade spread product. We are committed to seeking stable income at the best available price.
Due to the improved economic conditions in the U.S. over the last few months of 2013, lower rated bonds have outperformed very highly rated debt as investors have an increased willingness to take on more risk in their portfolios. We have been overweight corporates over the last few years and will continue this overweight position into 2014. Over the last three months we witnessed a significant flattening of the Treasury yield curve. The short end of the curve remained fairly stable while the longer end of the curve rallied 30-35 basis points.
The Fed has reiterated its intention to keep the Fed funds rate near zero for an extended period of time. Currently, the market does not anticipate the Fed raising this rate until early to mid-2015. However, this is a very uncertain and data-dependent prediction. With the short end of the yield curve anchored by the low fed funds rate, we expect to see continued volatility in the middle and longer end of the curve. Slight changes in the U.S. economic outlook can have significant short-term effects on longer-duration securities. Assuming continued improvement in the US employment picture, a less volatile fiscal policy environment and steady improvement in housing, we anticipate more sustainable economic growth in 2014, led by both consumer and business spending.
At this time, it appears to us that the Fed is willing to keep rates low for a long time. They have indicated the risk of higher inflation is less of a concern than the threat of renewed economic weakness. External risks to the Treasury bond market include weakness in China and the emerging markets, geopolitical risk emanating from Ukraine, as well as the unknown costs associated with the implementation of the Affordable Care Act. In our view, many of the downside risks to the domestic economy that were present in 2013 have abated over the last few months. While we still face some fiscal tightening, we do not believe we are facing the fiscal cliff from forced sequestration. For the first time in years, we have a multi-year budget deal out of Washington that will remove a major headwind from the economy.
In the past, sustained bond bear markets have not been able to get underway until the Fed tightening cycle is imminent. Still, we have lowered our exposure to duration risk and plan to remain short our benchmark duration going into the second quarter of 2014. We anticipate continued demand for spread product within the high-grade bond market. We are willing to take additional credit risk when we believe there is a potential for higher returns.
The Fund’s performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Fixed-income securities are subject to interest rate risk and, as such, the Fund’s net asset value may fall as interest rates rise. These and other risks are more fully described in the Fund’s prospectus.
Certain U.S. government securities in which the Fund may invest, such as Treasury securities and securities issued by the Government National Mortgage Association (Ginnie Mae), are backed by the full faith and credit of the U.S. government. However, other government securities in which the Fund may invest, such as securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB), are not backed by the full faith and credit of the U.S. government, are not insured or guaranteed by the U.S. government and, instead, may be supported only by the right of the issuer to borrow from the U.S. Treasury or by the credit of the issuer.
On September 7, 2008, the Federal Housing Finance Agency (FHFA), an agency of the U.S. government, placed Fannie Mae and Freddie Mac into conservatorship, a statutory process with the objective of returning the entities to normal business operations. FHFA will act as the conservator to operate Fannie Mae and Freddie Mac until they are stabilized. It is unclear what effect this conservatorship will have on the securities issued or guaranteed by Fannie Mae or Freddie Mac.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy Limited-Term Bond Fund.
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PORTFOLIO HIGHLIGHTS
| Ivy Limited-Term Bond Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Limited-Term Bond Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
-3.25% | -5.49% | -1.47% | -3.35% | -0.50% | -1.08% | -0.74% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
2.19% | 1.67% | 1.97% | 2.11% | 2.98% | — | 2.72% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
2.96% | 2.34% | 2.42% | — | — | — | 3.29% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 3.42% | 4.20% | -0.53% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 2.50%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 115 |
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SCHEDULE OF INVESTMENTS
| Ivy Limited-Term Bond Fund (in thousands) |
MARCH 31, 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Limited-Term Bond Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 117 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Limited-Term Bond Fund (in thousands) |
MARCH 31, 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Limited-Term Bond Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $227,396 or 13.6% of net assets. |
| (B) | All or a portion of the security position has been pledged as collateral on open futures contracts. |
| (C) | Rate shown is the yield to maturity at March 31, 2014. |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following futures contracts were outstanding at March 31, 2014 (contracts unrounded):
| Description | Type | Expiration Date |
Number of Contracts |
Market Value |
Unrealized Depreciation |
|||||||||||||
| U.S. Treasury Long Bond |
Short | 6–30–14 | 1,392 | $ | (185,441 | ) | $ | (1,624 | ) | |||||||||
|
|
|
|||||||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Corporate Debt Securities |
$ | — | $ | 1,243,216 | $ | 28,544 | ||||||
| Municipal Bonds |
— | 8,035 | — | |||||||||
| United States Government Agency Obligations |
— | 225,140 | — | |||||||||
| United States Government Obligations |
— | 97,628 | — | |||||||||
| Short-Term Securities |
— | 55,007 | — | |||||||||
| Total |
$ | — | $ | 1,629,026 | $ | 28,544 | ||||||
| Liabilities |
||||||||||||
| Futures Contracts |
$ | 1,624 | $ | — | $ | — | ||||||
The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Corporate Debt Securities |
||||
| Beginning Balance 4-1-13 |
$ | — | ||
| Net realized gain (loss) |
— | |||
| Net change in unrealized appreciation (depreciation) |
53 | |||
| Purchases |
— | |||
| Sales |
— | |||
| Amortization/Accretion of premium/discount |
(464 | ) | ||
| Transfers into Level 3 during the period |
28,955 | |||
| Transfers out of Level 3 during the period |
— | |||
| Ending Balance 3-31-14 |
$ | 28,544 | ||
| Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 3-31-14 |
$ | 53 | ||
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SCHEDULE OF INVESTMENTS
| Ivy Limited-Term Bond Fund (in thousands) |
MARCH 31, 2014 |
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period. There were no transfers between Levels 1 and 2 during the period ended March 31, 2014.
Information about Level 3 fair value measurements:
| Fair Value at 3-31-14 |
Valuation Technique(s) | Unobservable Input(s) | ||||||||||
| Assets |
||||||||||||
| Corporate Debt Securities |
$ | 28,544 | Third-party vendor pricing service | Broker quotes | ||||||||
The following acronyms are used throughout this schedule:
CMO = Collateralized Mortgage Obligation
GTD = Guaranteed
REMIC = Real Estate Mortgage Investment Conduit
See Accompanying Notes to Financial Statements.
| 120 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Managed International Opportunities Fund |
(UNAUDITED) |
Showing potential for more global growth
The U.S. Federal Reserve (Fed) was the focus of financial markets during the fiscal year ended March 31, 2014. In anticipation of an improving U.S. economy, the Fed’s discussion in May 2013 to “taper” its bond-buying program was the highlight. The remainder of the year brought turmoil in the emerging markets in reaction to the Fed taper, inconclusive economic data and a U.S. government shutdown followed by a budget agreement. Despite these events, the long-term effect on market sentiment appears to have been relatively modest. The Fed ultimately reduced its bond purchases, tapering from $85 billion to $75 billion per month in a small step toward reducing economic stimulus while maintaining its accommodative monetary policy stance. The Fed added it would not raise interest rates until after unemployment falls well below 6.5%, but emphasized that level was not a trigger for rate hikes. Then in early 2014, the Fed dropped its firm quantitative link between interest rates and an unemployment rate threshold, saying it instead would consider a range of factors to determine how long to keep rates low. It again reduced the pace of its bond-buying program, taking it to $55 billion per month.
Global economic growth in general remained slow, but the U.S. and more recently Europe began to improve. Europe’s sovereign debt crisis returned as an issue early in the fiscal year as Greece struggled to address austerity demands and Spain faced difficulties in its banking system. Fears also resurfaced about an economic slowdown in China. In spite of the concerns, recession in the eurozone — which had reported declining gross domestic product (GDP) for six consecutive quarters — ended in the second quarter of the year. In addition, China’s GDP ultimately grew an estimated 7.6% in 2013, but is forecast to be lower in 2014, partly because of ambitious reforms announced in 16 major areas with a target of 2020 for “decisive” results. GDP growth in Japan was better than expected during the year, rising about 1.7% with support from Prime Minister Shinzo Abe’s plan to end deflation and boost economic growth. The effects of the reforms slowed in late 2013 and could generate market concerns if they do not show the intended results of higher inflation and growth.
Geopolitics took center stage in early 2014 after protests in Ukraine led to violence and a change in leadership there. Russia then moved to annex Crimea — home to Russia’s Black Sea naval fleet and key ports — from Ukraine via a referendum vote of the largely Russian population in Crimea. The U.S. and European Union followed with economic sanctions on Russia because of its actions against the Ukrainian territory.
Maintaining focus on overall growth
The Fund ended the fiscal year with a strong positive return and outperformed its benchmark index. This result primarily was related to the solid performance and allocation weightings in three underlying funds: Ivy European Opportunities Fund, Ivy International Growth Fund and Ivy International Core Equity Fund.
We ended the year with the largest percentage of the Fund’s assets allocated to Ivy Emerging Markets Equity Fund — formerly Ivy Pacific Opportunities Fund — at 39.6%, nearly matching the 40.1% allocation to its predecessor fund at the time of our last annual report. We also maintained the allocation to Ivy European Opportunities Fund at 9.9%, the level at the last annual report, reflecting some economic improvement across Europe but recognizing that issues remain in the banking system in the region. We kept a significant allocation to the Ivy International Growth Fund at 20.2%, compared with 19.8% at the last annual report, to maintain wide exposure to international markets overall. The same was true for the allocation to the Ivy International Core Equity Fund, which ended the fiscal year at 20.2%, unchanged from the last annual report. Finally, we did not significantly change the allocation to the Ivy Global Income Allocation Fund, ending the year at 10% from 9.9% at the last annual report.
While global markets showed some volatility during the year, our emphasis in the portfolio remained on overall growth. We are seeing improvements across Europe, but continue to think there are better relative long-term opportunities in Asia, given the change in leadership in China and its
| 2014 | ANNUAL REPORT | 121 |
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MANAGEMENT DISCUSSION
| Ivy Managed International Opportunities Fund |
(UNAUDITED) |
announced plans for fiscal and economic reforms. We also believe global growth will continue to benefit from existing monetary stimulus in the U.S. and potential additional policy accommodation from other central banks, including in Europe, Japan and China.
Improving economies, global outlook
We will remain alert to market developments and their impact as the year progresses. In the face of ongoing monetary stimulus, global stock markets also have continued to re-price risk. We think this is evident in rising valuations, decreasing correlations, decreasing volatility and other metrics. We expect slow but better growth across the globe with continued accommodative monetary actions. As we analyze where growth will come from in the mid to long term, we have maintained our theme related to the growth in domestic consumption in emerging markets. We believe there still are opportunities to participate in the rising prosperity of these individuals, especially across Asia.
Performance shown at NAV does not include the effect of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of Ivy Managed International Opportunities Fund’s performance.
| 122 | ANNUAL REPORT | 2014 |
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PORTFOLIO HIGHLIGHTS
| Ivy Managed International Opportunities Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
| 2014 | ANNUAL REPORT | 123 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Managed International Opportunities Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E(4) | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
7.73% | 9.53% | 13.57% | 7.79% | 14.41% | 14.12% | 14.42% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
12.40% | 12.73% | 12.99% | 12.51% | 14.02% | — | 13.79% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Since inception of Class through 3-31-14(5) |
1.54% | 1.55% | 1.65% | 1.64% | 2.72% | 11.75% | 2.44% | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class E shares are not currently available for investment. |
| (5) | 4-2-07 for Class A, Class B, Class C, Class E, Class I, and Class Y shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
As discussed above, effective February 11, 2014, the name of one of the Fund’s underlying Funds, Ivy Pacific Opportunities Fund, was changed to Ivy Emerging Markets Equity Fund and its strategy was changed to reflect a concentration in emerging market equity securities. On March 17, 2014, the Ivy Managed European/Pacific Fund merged into the Fund. Performance prior to such time in part reflects the Ivy Pacific Opportunities Fund’s former strategy and may have differed if the merger had not taken place.
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 124 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Managed International Opportunities Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Affiliated Mutual Funds |
$ | 266,388 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 221 | — | |||||||||
| Total |
$ | 266,388 | $ | 221 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 125 |
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| Ivy Micro Cap Growth Fund |
(UNAUDITED) |
industrials (transportation and back office support). The materials and telecommunication service groups were a slight drag on performance, but comprised a combined 2.5% of the portfolio.
Market Outlook
America’s economic situation has brightened since the 2008-09 crisis lows. Labor costs have become more competitive. Unemployment rates are trending down. Energy costs are in check. Cyclical areas of the economy have picked up. Consumer confidence, corporate profits, housing activity, auto sales and bank loan activity have all improved. Corporate balance sheets are strong and the biggest U.S. banks have raised capital. Although the Fed is reducing the pace of its Treasury and Mortgage-Backed Asset purchases, it has indicated that it remains committed to making broader financial conditions accommodative and supportive of economic growth. In our view, the building blocks for strong and sustained U.S. economic growth are in place — excess labor, available capital and revolutionary technologies — and so we believe the economy is on its way toward a self-sustained recovery. However, many headwinds persist (fragile investor confidence, subpar U.S. economic growth, global instability, China/Europe economic slowdowns, etc.) and this continues to be a challenging investment climate where stock selection and active risk management can be extremely important.
We continue to actively manage Fund exposures (on a sector/industry basis, as well as at the security level) and construct a portfolio with companies experiencing strong forecasted long-term earnings growth rates. While there has been a fierce rotation away from high revenue growth stocks lately, we believe the economic backdrop is stable. So far 2014 has been frustrating for many investors witnessing the opposing forces of reduced stimulus and uninspiring economic growth rates leading to compressed price-to-earnings multiples (especially among stocks with the highest revenue growth rates). In the near term, the “bad weather” related impacts to GDP (gross domestic product) will likely be reversed, as there appears to be significant pent-up demand for autos, housing and many other consumer items. As market leadership rotates, we are looking closely for signs of industry group strength in the quarters ahead.
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Table of Contents
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment. Investing in micro-cap stocks may carry more risk than investing in stocks of larger, more established companies. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well as value stocks or the stock market in general. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted are unmanaged, include reinvested dividends and do not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Micro Cap Growth Fund’s performance.
| 2014 | ANNUAL REPORT | 127 |
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PORTFOLIO HIGHLIGHTS
| Ivy Micro Cap Growth Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| Basic Energy Services, Inc. |
Energy |
|||
| Natural Grocers by Vitamin Cottage, Inc. |
Consumer Staples |
|||
| iShares Russell 2000 Growth Index Fund |
Financials |
|||
| Amerigon, Inc. |
Consumer Discretionary |
|||
| RigNet, Inc. |
Energy |
|||
| Quidel Corp. |
Health Care |
|||
| Enanta Pharmaceuticals, Inc. |
Health Care |
|||
| Callidus Software, Inc. |
Information Technology |
|||
| Rentrak Corp. |
Consumer Discretionary |
|||
| Movado Group, Inc. |
Consumer Discretionary |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 128 | ANNUAL REPORT | 2014 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Micro Cap Growth Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class I | Class R | Class Y | ||||||||||||||||||
| 1-year period ended 3-31-14 |
33.18% | 35.96% | 40.28% | 41.90% | 41.09% | 44.49% | ||||||||||||||||||
| 5-year period ended 3-31-14 |
26.34% | 26.20% | 26.80% | 28.40% | — | 28.48% | ||||||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | — | — | — | ||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
25.12% | 24.95% | 25.53% | 27.10% | 46.06% | 27.17% | ||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 2-17-09 for Class A, Class B, Class C, Class I, and Class Y shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 129 |
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SCHEDULE OF INVESTMENTS
| Ivy Micro Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
| 130 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Micro Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2014, the total value of these securities amounted to $302 or 0.1% of net assets. |
| (C) | Rate shown is the yield to maturity at March 31, 2014. |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
| 2014 | ANNUAL REPORT | 131 |
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SCHEDULE OF INVESTMENTS
| Ivy Micro Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 245,275 | $ | — | $ | — | ||||||
| Investment Funds |
5,021 | — | — | |||||||||
| Short-Term Securities |
— | 21,291 | — | |||||||||
| Total |
$ | 250,296 | $ | 21,291 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
GTD = Guaranteed
REIT = Real Estate Investment Trust
See Accompanying Notes to Financial Statements.
| 132 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Mid Cap Growth Fund |
(UNAUDITED) |
In 2013, mid-cap growth stocks advanced in conjunction with the broader market, setting new all-time highs. The Ivy Mid Cap Growth Fund also posted positive returns, but underperformed the benchmark and its peer group for the year ended March 31, 2014.
Sources of strength, weakness
The primary factors in Fund underperformance were stock selection issues within the industrials and health care sectors. The Fund had many weak names in industrials, a sector that was a neutral performer within the benchmark. Stocks that underperformed represented both non-cyclical and cyclical companies. Some of these stock names were Verisk Analytics, Inc., Stericycle, Inc., Joy Global, Inc., Fastenal Company and Polypore International, Inc.
The more defensive names seemed to struggle as investors migrated to momentum-oriented growth stocks. Fortune Brands Home & Security, Inc. is a name that has performed very well for us in recent years, but it underperformed the index in the past twelve months, as the stock took a breather. Our outlook on this holding is still very favorable, as we expect it to continue to benefit from ongoing improvement in the housing market, and specifically in the repair and remodeling business where the company sells its cabinets and Moen faucets.
Another significant factor in the Fund’s underperformance was stock selection in health care. We had a number of stocks that underperformed in the sector, but we also lacked significant exposure to the strongly performing biotech sub-sector. While we have increased the Fund’s exposure to biotech stocks over time, this is an area where the Fund remains underweight due to the general lack of profitability within the sector. Weak health care names in the portfolio included Hologic, Inc., Intuitive Surgical, Inc., Varian Medical Systems, Inc., DENTSPLY International, Inc., Henry Schein, Inc., and Zimmer Holdings, Inc. Many of these names had strong positive returns in the 12 months ended March 31, 2014; however, they weren’t strong enough to best the biotech sub-sector.
Sector selection decisions had little impact to performance last year, with modest positive and modest negative influence across most groups. The biggest impact came in the Fund’s financials weighting, due to a slight overweight position in a group that underperformed within the benchmark. Stock selection in financials handily made up for the sector selection factor. The Fund’s small and regional bank holdings, Signature Bank, First Republic Bank and UMB Financial Corporation all performed well, with Signature Bank being the standout performer. This bank has been a stellar example of the kind of company in which we strive to invest on a long-term basis. It has a long runway of highly visible and well-executed growth. It has been in the portfolio for more than five years, and has a growth profile that can carry it in the portfolio for some time to come, given the proper balance of valuation with the growth.
The Fund’s cash holdings and equity options were the final significant detractor from performance. Cash was the biggest part of the drag as the Fund’s average cash position of across the year was a deterrent in a very strong positive market. Equity options, used primarily for hedging purposes, or building or exiting positions, was another negative for the Fund’s relative performance.
Other areas of underperformance, primarily due to stock selection, were holdings in the technology and consumer staples sectors. Teradata Corp., Aruba Networks, Inc., Fusion-io Networks, Inc., and ANSYS, Inc., were all weak in technology, as was Coty, Inc. in consumer staples. Mead Johnson Nutrition Company (the infant nutritionals business), which is still a significant holding for the Fund, posted a positive return for the year, but still underperformed the index.
An underweight position in the very strong consumer discretionary sector, in addition to stock selection issues with Skullcandy, Inc., Wyndham Worldwide Corp., Ulta Salon, Cosmetics & Fragrance, Inc., Burberry Group plc, Nordstrom, Inc., PetSmart, Inc., and Under Armour, Inc., was another factor in Fund underperformance for the period. Many of these names have been strong performers in the past, and we expect they will perform well in the future. These companies have struggled under a variety of pressures including macroeconomic concerns mid-year and, in some cases, management transitions. We retain most of these names in the portfolio, but have sold positions in those stocks where the problems are company specific and are significant enough of a long-term concern to us. Skullcandy, Wyndham Worldwide, PetSmart and Under Armour are no longer holdings.
There were a few groups within consumer discretionary that performed well and to which we had low or no exposure in the portfolio. These included media and retailers that cater to a lower-income demographic, specifically auto parts retailers.
Other factors that impacted relative performance were security selection issues in the industrials and energy. Stocks that struggled included those of some of our highest-quality companies and larger positions in the portfolio, such as Fastenal, Expeditors International of Washington, Inc., and Joy Global in industrials; and Southwestern Energy Company, Patterson-UTI Energy, Inc., and Ultra Petroleum in energy.
| 2014 | ANNUAL REPORT | 133 |
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MANAGEMENT DISCUSSION
| Ivy Mid Cap Growth Fund (UNAUDITED) |
From an asset weighting perspective, the Fund’s overweight position in technology hurt performance, as that sector significantly underperformed the benchmark. Better stock selection across much of that sector was generally an offset to the negative asset weighting.
From a positive perspective, strong stock selection in financials, as noted earlier, consumer discretionary and energy made a significant contribution to performance, as many of the Fund’s names in these sectors posted strong returns. In addition to strong financial stocks, gains in Harman International Industries Incorporated, Dunkin’ Brands Group, Inc., Gentex Corporation, VF Corporation (no longer a holding), Continental Resources, Inc., and Dril-Quip , Inc. were notable.
Underexposure to the underperforming the materials sector and a strong stock pick in Scotts Miracle-Gro Company (The) was a small benefit to performance. Finally, the Fund’s lack of exposure to the underperforming telecommunications sector and the outperforming utilities sector was on-balance and a plus for Fund performance.
It was a bumpy ride
We fought three main battles last year. The biggest and most impactful was the risk-on environment that favored lower-quality business models, balance sheets and strong differentiated growth, either real or perceived. Non-earners, low return on equity and high debt-to-total capitalization companies soared in value relative to the rest of the market in 2013. The other battles we fought and lost included the ongoing pressures in technology, a sector in which the Fund remained overweight.
The final battle now seems like a footnote on the past 12 months, given the market’s white hot risk-on trade in the third quarter of the Fund’s fiscal year. The frenzied reach for yield that drove valuations to very high levels in some of the most stable and predictable sectors of the economy, consumer staples and traditional areas of health care left us as onlookers, unwilling to own many of those stocks, unconvinced that we could find a reasonable balance of valuation and growth to deliver a return to our shareholders over the Fund’s three-to-five year time horizon.
While these broad issues of a lower quality strong risk-on market made it difficult for us to deliver market-beating performance, fewer self-inflicted wounds certainly would have made a difference between underperforming and outperforming.
Outlook
While we have been frustrated over the past year by what we consider very risk-facing behavior within segments of the market – behavior we believe has driven valuations and expectations on many stocks to unsustainable highs – we have remained steadfast in the fundamental economic underpinnings supporting corporate earnings/cash flow, and the associated opportunity to discount these at higher stock prices where there is valuation support within the market. We think the economy continues to grow at a moderate pace as jobs growth occurs, albeit at a low level; credit, both personal and commercial and industrial, improves; and innovation across many areas of the economy, including technology, health care, and energy, creates a cycle of more opportunity for innovation and associated jobs.
There are definitely areas of the market we would avoid, including extremely overvalued pay-me-later growth stocks. However, the stocks of many companies that are growing their businesses at solid sustainable rates have often been ignored in the strong market advance of the past six to 12 months, and, as such, present opportunity to thoughtful investors in our view.
We have been slowly adding to the Fund’s biotech exposure and now have four names in the portfolio, Acadia Healthcare Company, Inc., Alkermes plc, Medivation, Inc., and BioMarin Pharmaceuticals, Inc. We continue to research additional biotech names for the portfolio.
We continue to like technology and industrials for their exposure to constructive economic conditions and because both areas are taking advantage of innovation opportunities. We have increased exposure in consumer discretionary as we see valuation opportunities developing across a number of interesting Greenfield growth and distrusted growth names after a disappointing holiday shopping season.
We are generally comfortable with the Fund’s financials and energy industry exposure, but may consider adding to those areas given many good choices among growth companies, and the benefits these more cyclical companies accrue from a growing economy. The Fund is underweight consumer staples, which is often the case, as we tend to find more growth opportunities elsewhere.
We are currently managing the Fund’s cash exposure at a low level. We are using equity options in a small way for hedging purposes as we deem necessary or using those options to add or reduce exposure to individual positions.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Investing in mid-cap stocks may carry more risk than investing in stocks of larger, more-established companies. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well as value stocks or the stock market in general. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Mid Cap Growth Fund’s performance.
| 134 | ANNUAL REPORT | 2014 |
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PORTFOLIO HIGHLIGHTS
| Ivy Mid Cap Growth Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| Northern Trust Corp. |
Financials |
|||
| Microchip Technology, Inc. |
Information Technology |
|||
| Signature Bank |
Financials |
|||
| Varian Medical Systems, Inc. |
Health Care |
|||
| Fastenal Co. |
Industrials |
|||
| First Republic Bank |
Financials |
|||
| LKQ Corp. |
Consumer Discretionary |
|||
| Mead Johnson Nutrition Co. |
Consumer Staples |
|||
| Expeditors International of Washington, Inc. |
Industrials |
|||
| Dunkin’ Brands Group, Inc. |
Consumer Discretionary |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 135 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Mid Cap Growth Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
13.21% | 15.14% | 19.25% | 12.89% | 20.52% | 19.83% | 20.21% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
22.55% | 22.77% | 23.13% | 22.34% | 24.50% | 23.79% | 24.26% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
10.05% | 9.59% | 9.92% | — | — | — | 11.03% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 8.51% | 10.29% | 9.46% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-29-05 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 136 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Mid Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 137 |
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SCHEDULE OF INVESTMENTS
| Ivy Mid Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Listed on an exchange outside the United States. |
| (C) | All or a portion of the security position is held in collateralized accounts for OTC derivatives collateral as governed by International Swaps and Derivatives Association, Inc. Master Agreements. |
| (D) | Rate shown is the yield to maturity at March 31, 2014. |
| (E) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following written options were outstanding at March 31, 2014 (contracts and exercise prices unrounded):
| Underlying Security | Counterparty, if OTC | Type | Number of Contracts |
Expiration Month | Exercise Price | Premium Received |
Value | |||||||||||||||||||
| Alkermes plc |
Barclays Bank plc | Put | 3,765 | April 2014 | $ | 42.00 | $ | 503 | $ | (367 | ) | |||||||||||||||
| Salix Pharmaceuticals Ltd. |
N/A | Put | 351 | May 2014 | 95.00 | 132 | (114 | ) | ||||||||||||||||||
| Barclays Bank plc | Put | 2,357 | May 2014 | 95.00 | 896 | (766 | ) | |||||||||||||||||||
| Barclays Bank plc | Call | 2,357 | May 2014 | 125.00 | 118 | (218 | ) | |||||||||||||||||||
| N/A | Call | 351 | May 2014 | 125.00 | 17 | (33 | ) | |||||||||||||||||||
|
|
|
|||||||||||||||||||||||||
| $ | 1,666 | $ | (1,498 | ) | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||
| 138 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Mid Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 2 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 4,694,257 | $ | — | $ | — | ||||||
| Purchased Options |
— | 1,083 | — | |||||||||
| Short-Term Securities |
— | 112,290 | — | |||||||||
| Total |
$ | 4,694,257 | $ | 113,373 | $ | — | ||||||
| Liabilities |
||||||||||||
| Written Options |
$ | — | $ | 1,498 | $ | — | ||||||
During the period ended March 31, 2014, securities totaling $9,361 were transferred from Level 3 to Level 2 due to the increased availability of observable market data due to increased market activity or information for these securities.
The following acronyms are used throughout this schedule:
GTD = Guaranteed
OTC = Over The Counter
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 139 |
Table of Contents
| Ivy Money Market Fund |
(UNAUDITED) |
The Fund’s fiscal year ended March 31, 2014 with short term rates at the same low levels as they began the year. The Federal Reserve (Fed) continued to maintain a policy that provided liquidity to the economy. During the fiscal year, the credit and money markets continued to be affected by low rates, but remained relatively calm. The economy showed signs of improvement, but continued elevated unemployment, tepid growth, and a low rate of inflation allowed for the continuation of an ultra-low federal funds target rate.
Lower rates, higher-quality bias
The fiscal year started with the federal funds rate at between 0 and 0.25%, where it remains to-date. Although the Fed adjusted its forward policy guidance late in the Fund’s fiscal year, the central bank’s decision to eliminate its unemployment target was seen as having virtually no impact on the timing of any eventual fed funds rate increase. Inflation expectations continue to remain well anchored.
In December, the Fed voted to begin diminishing the amount of liquidity it was providing to the economy by lowering the amount of U.S. Treasury securities it purchased. However, this decision did not imply any change in the level of short term interest rates. In our view, it may be mid-2015 before any change would impact money market rates, and this is dependent upon the Fed’s long-run inflation goal of 2 percent. As a result, we will continue to manage the Fund in a similar fashion based on the continued low interest rate environment.
The drastically low rates of interest during the fiscal year restrained the performance of the Fund and rates on money market investments in general. The Securities and Exchange Commission (SEC) regulation requiring 30% of the Fund mature in five business days or less also affected the Fund return because very short maturities tend to carry the lowest interest rates. Asset growth in the money markets and diminished supply of securities at times also kept investment rates low. Within the confines of the Fund’s liquidity and maturity requirements, we sought to maintain yield by purchasing longer-dated securities when credit spreads were wide. We also invested in floating rate notes based on the three-month London Interbank Offered Rate (LIBOR). These notes carry an attractive rate of investment, while allowing us to maintain a modest “weighted average maturity” (WAM) of the Fund. The LIBOR rate began the fiscal year at 0.2821% and gradually decreased to end the fiscal year at 0.2306%. Credit spreads also narrowed as the fiscal year ended, further compressing yields.
Credit quality remained an important factor in the management and performance of the Fund. We are cautious in our review of the companies and securities in which we invest. We select investments that we believe to be of the highest credit quality, based on our credit risk constraints, although this higher-quality bias can hold down yield.
Staying the course
This past year, we have emphasized investments of the highest credit quality from many industries and sectors, and we intend to continue to do so going forward. Corporate debt was used as an alternative investment, when possible. We anticipate that we will continue to use floating-rate securities in the coming fiscal year, pending future developments in the money markets. We intend to include U.S. Treasury and government agency securities as necessary.
We are managing the Fund to comply with SEC regulations of money market funds, including new regulations that were implemented in 2010. The SEC added these regulations in an effort to provide money market investors with greater protection and more timely information about the fund in which they invest. To this end, we are maintaining daily and weekly liquidity levels according to the regulations, to provide for the liquidity needs of our shareholders and investing for diversification. We will continue to manage the Fund in a prudent manner and in accordance with SEC regulations.
Please remember that an investment in the Fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
The opinions expressed in this report are those of the Fund manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
| 140 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Money Market Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
| 2014 | ANNUAL REPORT | 141 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Money Market Fund (in thousands) |
MARCH 31, 2014 |
| 142 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Money Market Fund (in thousands) |
MARCH 31, 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Money Market Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets or the next demand date. |
| (B) | Rate shown is the yield to maturity at March 31, 2014. |
The following table is a summary of the valua tion of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Corporate Obligations |
$ | — | $ | 131,006 | $ | — | ||||||
| Municipal Obligations |
— | 46,595 | — | |||||||||
| United States Government Agency Obligations |
— | 5,080 | — | |||||||||
| Total |
$ | — | $ | 182,681 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronym is used throughout this schedule:
GTD = Guaranteed
See Accompanying Notes to Financial Statements.
| 144 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Municipal Bond Fund |
(UNAUDITED) |
Sector volatility
Until early May 2013, Treasury yields were being dragged down to historic lows by the Federal Reserve’s unconventional monetary policy activities, all of which were intended to depress interest rates, which in turn were intended to stimulate economic activity and also push investors out into risk assets. Stronger economic data and hints of the Fed reducing its security purchases through a tapering process in late spring triggered a violent sell-off in Treasuries, which municipal bonds mirrored closely. In mid-July, Detroit became the largest city to file for default in municipal bond history, adding another layer of anxiety to a municipal bond market that was already under stress. Shortly thereafter negative headlines pointing out the dire fiscal situation in Puerto Rico exacerbated the selling pressure in the municipal space, which was already reeling.
Amid the headline pressure, redemptions accelerated and created a negative feedback loop as lower fund net asset values (NAV) triggered selling, which depressed fund NAVs further, eventually driving municipal yields to levels that exceeded Treasury yields. This presented an attractive entry point for many cross-over, non-traditional, and individual (non-fund) retail buyers. The market was stabilized by these investors in late-August/early-September and as the market began to recover, fund outflows started to slow.
Buying in the space gained momentum when the Fed surprised the world’s financial markets by announcing in September that it would not begin tapering activities, contrary to what was widely expected. Flight-to-quality buying from nervous investors watching the fiscal chaos on Capitol Hill added an additional layer of buying momentum. In the fourth quarter of calendar 2013, the Fed announced its anticipated tapering timetable, setting off another wave of selling in Treasury and municipal bond markets, once again triggering renewed redemptions in the municipal fund space. The selling intensified and was exacerbated by additional tax-loss selling in the municipal space. Municipal bond fund redemptions for the calendar year were approximately $70 billion. The first quarter of 2014 saw disappointing economic data, a slowing Chinese economy, and geopolitical tensions in Russia/Crimea and the Middle East, resulting in a stabilization of fund flows and positive bond market momentum to start the year.
The Fed has announced its plans to shrink its balance sheet and we believe newly-appointed Fed Chair Janet Yellen will likely need to signal an increase in the fed funds rate sooner than expected due to strength in housing, the banking sector and employment that has already started to take place. We also believe that much of the softer U.S. economic data to date is a result of extreme weather conditions, which will ultimately be reversed. We feel that these recent events will lead to a more normalized level of higher rates.
Positioning
The Fund modestly underperformed its benchmark and Lipper peer group in fiscal 2013 due to an overweighting in BBB-rated paper vs. the index, and exposure to Puerto Rico credits.
The Fund began the fiscal year positioned defensively in anticipation of the eventual start of an increasing interest rate cycle and the end of the 30-year bull market in bonds. Fund sensitivity to interest rates was lowered to approximately 94% of the benchmark. This was achieved by holding a larger than normal cash position, as well as approximately 8% exposure to municipal floating rate notes and municipal auction rate notes. The cash cushion proved to be a very valuable resource when redemptions materialized, as we were not forced to sell into an illiquid market. We believe that the Fund’s shorter duration structure was a critical component in protecting shareholder assets when the market began to sell off aggressively in the May through August period. However, the shorter duration strategy has been a drag on performance thus far in 2014, as the market has recovered some of the losses from 2013. Portfolio turnover remained very low as we felt that the Fund was structured appropriately entering the fiscal year.
Overall, we believe that performance was enhanced by staying disciplined and not reaching for yield into the underperforming high yield municipal bond space. However, selling pressure in the high yield space bled into the BBB-rated category where we held an overweight position relative to the benchmark, which resulted in a drag on performance. Fund performance was also negatively impacted by a slight overweighting vs. our benchmark in a diversified portfolio of Puerto Rico credits, all of which were dragged down by persistent negative headlines on the fiscal condition of Puerto Rico and restructuring speculation.
| 2014 | ANNUAL REPORT | 145 |
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MANAGEMENT DISCUSSION
| Ivy Municipal Bond Fund |
(UNAUDITED) |
We will not compromise our investment principles. We are not willing to take excessive credit and duration risks, or utilize leverage, in an effort to produce out-sized returns that historically have been unsustainable and subject investors to increased risk to the inevitable downside and a higher level of NAV volatility. We will not compromise our management discipline. Preservation of capital is an important consideration in our efforts.
Outlook
We enter fiscal year 2014 facing many of the same challenges that we faced entering fiscal year 2013: headline risk and interest rate risk, but possibly a reduced level of political/tax risk in the near term, as it is a midterm election year.
Despite negative factors in the U.S. and internationally, we remain cautiously optimistic that we are in the early phase of a mild global economic upturn led by the U.S. We are also very encouraged by the U.S. progress toward energy independence, the potential economic boost from a continued manufacturing renaissance, and a steadily improving labor market.
However, we believe that we could be entering a challenging period for fixed income investors and total return expectations should probably be tempered to some degree. It is difficult to fathom the outsize total returns of the last few years continuing into the future, especially given that interest rates are still extremely low by all historical measures. In this low yield environment, the Fund’s yield cushion may not provide much protection from capital losses when measuring total return. However, when rates begin to rise, we believe more attractive reinvestment opportunities will be available, which will boost portfolio income. We believe that the Fund’s laddered exposure inside of five-year maturities will also provide reinvestment opportunities at expected higher prevailing future rates.
We fully expect market volatility to remain elevated as a result of the risk on/risk off trades playing out in the Treasury market. We continue to be very cognizant that the pendulum may at some point in time swing back to renewed investor interest and confidence in the equity market, which would potentially result in less interest (liquidations) in the investment grade municipal bond space. We observed a minor rotation out of fixed income and into equities last summer, but it certainly wasn’t the “great rotation” that some pundits have been warning about. While we believe that the 30+ year bull market in bonds is nearing the end, or has already ended, we do not believe that a bear market is necessarily imminent in the short run. We believe bond yields could stay in a low, narrow range for the remainder of 2014, into 2015, or even longer. In our view, a continuation of severely reduced municipal bond new issue volume could apply additional downward pressure to rates in the short run.
We plan to remain proactive and vigilant in assessing any risk to the portfolio from a change in inflation expectations, as monetary policy continues to be extraordinarily accommodative. We do not believe inflation is on the immediate horizon, but if it materializes it will eventually put upward pressure on long-term interest rates.
The Fund’s performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Fixed-income securities are subject to interest rate risk and, as such, the Fund’s net asset value may fall as interest rates rise. The Fund may include a significant portion of its investments that will pay interest that is taxable under the Alternative Minimum Tax (AMT). These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index (indexes) noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy Municipal Bond Fund.
| 146 | ANNUAL REPORT | 2014 |
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PORTFOLIO HIGHLIGHTS
| Ivy Municipal Bond Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Municipal Bond Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class I | Class Y(4) | |||||||||||||||
| 1-year period ended 3-31-14 |
-5.07% | -5.48% | -1.62% | -0.65% | -0.87% | |||||||||||||||
| 5-year period ended 3-31-14 |
5.10% | 5.03% | 5.21% | — | 6.01% | |||||||||||||||
| 10-year period ended 3-31-14 |
3.55% | 3.19% | 3.19% | — | 3.91% | |||||||||||||||
| Since inception of Class through 3-31-14(5) |
— | — | — | 4.95% | — | |||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 4.25%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | The return shown for Class Y is hypothetical, because there were no shares or assets for the period from September 24, 2008 through October 7, 2009. Class A data has been substituted for Class Y data during that period. |
| (5) | 11-4-09 for Class I shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 148 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal Bond Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 149 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal Bond Fund (in thousands) |
MARCH 31, 2014 |
| 150 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal Bond Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 151 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal Bond Fund (in thousands) |
MARCH 31, 2014 |
| 152 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal Bond Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 153 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal Bond Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. |
| (B) | Zero coupon bond. |
| (C) | Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy. |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
| 154 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal Bond Fund (in thousands) |
MARCH 31, 2014 |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Municipal Bonds |
$ | — | $ | 129,866 | $ | 1,711 | ||||||
| Short-Term Securities |
— | 5,833 | — | |||||||||
| Total |
$ | — | $ | 135,699 | $ | 1,711 | ||||||
The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Municipal Bonds | ||||
| Beginning Balance 4-1-13 |
$ | 4,291 | ||
| Net realized gain (loss) |
108 | |||
| Net change in unrealized appreciation (depreciation) |
(49 | ) | ||
| Purchases |
— | |||
| Sales |
(1,300 | ) | ||
| Amortization/Accretion of premium/discount |
— | |||
| Transfers into Level 3 during the period |
— | |||
| Transfers out of Level 3 during the period |
(1,339 | ) | ||
| Ending Balance 3-31-14 |
$ | 1,711 | ||
| Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 3-31-14 |
$ | (10 | ) | |
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period. There were no transfers between Levels 1 and 2 during the period ended March 31, 2014.
Information about Level 3 fair value measurements:
| Fair Value at 3-31-14 |
Valuation Technique(s) | Unobservable Input(s) | ||||||||||
| Assets |
||||||||||||
| Municipal Bonds |
$ | 1,711 | Broker | Broker quotes | ||||||||
The following acronyms are used throughout this schedule:
AGM = Assured Guaranty Municipal
AMBAC = American Municipal Bond Assurance Corp.
BHAC = Berkshire Hathaway Assurance Corporation
CR = Custodial Receipts
FGIC = Financial Guaranty Insurance Co.
FHA = Federal Housing Administration
FHLMC = Federal Home Loan Mortgage Corp.
FNMA = Federal National Mortgage Association
GNMA = Government National Mortgage Association
GTD = Guaranteed
NPFGC = National Public Finance Guarantee Corp.
VA = Department of Veterans Affairs
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 155 |
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| Ivy Municipal High Income Fund |
(UNAUDITED) |
Redemption pressure
What had been strong inflows into high-yield municipal mutual funds for several years reversed in 2013, leading to the largest redemptions in sector history. According to Lipper, municipal bond funds had net outflows of $62.7 billion, with municipal high yield funds losing more than $10 billion. Outflows during this time caused the Fund to sell while the market was under pressure, hurting performance versus the benchmark.
With higher tax rates moving into 2014, we believe demand for high yield municipals will remain strong; however, we believe there will be headwinds in the months to come. Recent articles on Puerto Rico, bankruptcy issues in Detroit and investors’ fears of higher interest rates have put pressure on municipal bond prices.
Overall, we expect supply in the municipal bond market to continue to remain below norms, with the majority of bond issuance originating as refinancing of current debt and not net new money. We expect to see little appetite for additional issuance as state revenues and economies continue to improve from a very difficult recession. Although we see choppy waters ahead for the next few months, we believe investors with patience have the potential to be rewarded.
Duration and credit management
Longer maturity high-yield municipal bonds underperformed their shorter maturity counter parts within the high-yield index. The five-year and 10-year securities managed slight positive returns, while the 20- and 30-year bonds were off approximately -2.85% and -3.90%, respectively.
While duration management is important for a bond fund, we believe credit selection is paramount when investing in a high-yield municipal bond fund. With the recent sell-off in the municipal bond market, we have begun looking both at the new issue and secondary market. For the first time in a while we have become very constructive on the high yield municipal space and are much more bullish moving forward. We are now seeing some cases where yields on municipal bonds are higher than yields on their taxable equivalents.
Looking ahead
With the significant selloff, which began in the last half of 2013, we are in the process of repositioning the Fund into a less defensive mode. We will continue to lengthen duration versus the high-yield index through aggressively, seeking deeply-discounted bonds that are priced to longer maturities. We will continue purchasing deals in the new issue and secondary market as opportunities present themselves.
In the near term, we believe the market will be volatile as investors review their portfolio mix between fixed income and equities. We believe investors will continue to search for tax-exempt yield due to higher tax rates which should continue to provide demand for municipal debt. Continued headline risk, namely Puerto Rico and Detroit, could cause short-term price volatility. We will continue to hold limited cash as we view current yields as extremely attractive. We will continue to maintain diversification across sectors and geographical regions.
The Fund’s performance noted above is at net asset value (NAV), and does not include the effect of any applicable sales charges. If reflected, the sales charge would reduce the performance noted.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Fixed-income securities are subject to interest-rate risk, so the net asset value of the Fund’s shares may fall as interest rates rise. The Fund may include a significant portion of its investments that will pay interest that is taxable under the Alternative Minimum Tax (AMT). These and other risks are more fully described in the Fund’s prospectus. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. The index (indexes) noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy High Income Fund.
| 156 | ANNUAL REPORT | 2014 |
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PORTFOLIO HIGHLIGHTS
| Ivy Municipal High Income Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
| 2014 | ANNUAL REPORT | 157 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Municipal High Income Fund (UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class I(4) | Class Y(5) | |||||||||||||||
| 1-year period ended 3-31-14 |
-7.39% | -7.75% | -4.04% | -3.16% | -3.32% | |||||||||||||||
| 5-year period ended 3-31-14 |
— | — | — | 9.68% | — | |||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | 5.50% | — | |||||||||||||||
| Since inception of Class through 3-31-14(6) |
7.76% | 7.57% | 7.91% | — | 8.49% | |||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 4.25%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | The Class Y shares of Waddell & Reed Advisors Municipal High Income Fund were reorganized as the Class I shares of Ivy Municipal High Income Fund on May 18, 2009. The performance shown for periods prior to this date is that of the Class Y shares of Waddell & Reed Advisors Municipal High Income Fund. Performance has not been restated to reflect the estimated annual operating expenses of the Ivy Municipal High Income Fund. If those expenses were reflected, performance shown would differ. |
| (5) | The return shown for Class Y is hypothetical, because there were no shares or assets for the period from July 28, 2009 through October 7, 2009. Class A data has been substituted for Class Y data during that period. |
| (6) | 5-18-09 for Class A, Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 158 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 159 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
| 160 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 161 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
| 162 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 163 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
| 164 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 165 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
| 166 | ANNUAL REPORT | 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Municipal High Income Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | Zero coupon bond. |
| (B) | Purchased on a when-issued basis with settlement subsequent to March 31, 2014. |
| (C) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. |
| (D) | Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy. |
| (E) | Rate shown is the yield to maturity at March 31, 2014. |
| (F) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Municipal Bonds |
$ | — | $ | 1,112,784 | $ | 26,775 | ||||||
| Short-Term Securities |
— | 37,661 | — | |||||||||
| Total |
$ | — | $ | 1,150,445 | $ | 26,775 | ||||||
There were no transfers between any levels during the period ended March 31, 2014.
The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| Municipal Bonds | ||||
| Beginning Balance 4-1-13 |
$ | 97,173 | ||
| Net realized gain (loss) |
(3 | ) | ||
| Net change in unrealized appreciation (depreciation) |
(4,002 | ) | ||
| Purchases |
— | |||
| Sales |
(66,393 | ) | ||
| Amortization/Accretion of premium/discount |
— | |||
| Transfers into Level 3 during the period |
— | |||
| Transfers out of Level 3 during the period |
— | |||
| Ending Balance 3-31-14 |
$ | 26,775 | ||
| Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 3-31-14 |
$ | (2,981 | ) | |
Information about Level 3 fair value measurements:
| Fair Value at 3-31-14 |
Valuation Technique(s) | Unobservable Input(s) | ||||||||||
| Assets |
||||||||||||
| Municipal Bonds |
$ | 26,775 | Broker | Broker quotes | ||||||||
The following acronyms are used throughout this schedule:
AMBAC = American Municipal Bond Assurance Corp.
AGM = Assured Guaranty Municipal
GTD = Guaranteed
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 167 |
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| Ivy Small Cap Growth Fund |
(UNAUDITED) |
Small-cap stocks had a banner year. The Russell 2000 Growth Index gained 27.19%, ahead of the broader Russell 2000 Index and the mid-cap and large-cap growth indexes. Small-cap stocks tend to perform well in an environment of improving economic conditions and an accommodative Federal Reserve. These conditions existed for most of the year in spite of the distorted economic data due to unusually harsh weather. The stocks staged a fairly steady progression upward throughout the year, with the first sharp correction in late January 2014, followed by a new high in early March. Another correction ensued through the end of the fiscal year. On a two-year basis, the small-cap growth index had generated over a 50% total return through early March 2014, so a correction is not surprising. Unsustainable gains were also evident in some of the industry groups within the index, particularly the biotech and small-cap pharmaceutical groups. Lastly, the initial public offering (IPO) market was in full swing with some IPOs posting extraordinary one-day gains.
Index returns were led by health care, technology and consumer staples and by a number of industries within industrials. A few industry stand-outs bear mention as they were in the hyper-growth areas of health care and technology. Biotechs and small-cap pharmaceuticals were spectacular winners for the year. The index contains more than 100 companies in the biotech field and the market’s enthusiasm for the group is driven off the enormous market potential that exists with successful drug development. Spurred by the commercial success of some products, acquisitions by the large pharmaceutical companies, and the valuation benefit of low interest rates, the stocks were up for the year as a group, with dozens of stocks more than doubling over the 12-month fiscal period. In technology, a number of groups performed well, particularly the software industry and those companies selling software-as-a-service (SAAS). The penetration of SAAS in the enterprise market continues to spread to most elements of running a business, including sales force automation, enterprise resource planning, human resource management, payroll, marketing and information technology. The economics of the product are attractive to the buyer who doesn’t need to invest in hardware, data centers, security, etc., as all of those items are hosted by the SAAS provider. SAAS stocks were on a tear over the past 12 months with multiple names gaining more than triple digits. Security software stocks were another hot group for the year.
The Fund underperformed the benchmark for the year ended March 31, 2014. This underperformance came from the cash position held by the Fund. In terms of attribution, the Fund outperformed in the financials, energy, consumer discretionary and materials sectors. Underperformance in the hot technology sector also prevented the Fund from exceeding the benchmark for the year. In health care, the other hot sector, the Fund managed to perform in-line with the benchmark with the assistance of gains from our biotech total return swap. Industrials and consumer staples were modest laggards for the fiscal year.
The Fund’s health care sector strategy is unique given the circumstances of all of the biotech stocks mentioned above. The Fund’s individual stock positions are supplemented with a total return swap, which tracks the performance of the biotech/pharmaceutical components of the index in a custom exchange-traded fund (ETF)-like form. The swap allows the Fund to gain exposure to the group of stocks without direct ownership. The Fund’s individual stock winners for the year included Incyte Corp., a biotech company with an FDA-approved drug, as well as a couple of health care technology companies, DexCom, Inc. and Cepheid. In all three cases, we find companies with proprietary products whose market opportunity continues to grow at a significant pace. This characteristic of finding companies that we believe possess strong, defensible market share that are pursuing fast-growing opportunities is a core strategic directive of the Fund.
Financials have been another strategic theme for the Fund over the past fiscal year, with particular focus on faster-growing banks, capital market players and specialty finance companies. Performance from this sector significantly exceeded the benchmark for the year, with the largest contribution coming from banks. The winning strategy for banks that are owned in the Fund was based on our view of a company that could grow via a dominant position in a core competency. With a sufficiently favorable macro backdrop, the following bank stocks performed well last year: SVB Financial Group, Bank of the Ozarks, Inc., and Signature Bank (no longer a holding). SVB Financial specializes in financing emerging growth and middle-market companies in the technology and life sciences industries. Bank of the Ozarks is a commercial real-estate focused lender in the southeast, and Signature Bank is a middle-market lender consistently gaining share in the large northeastern U.S. marketplace. Bank stocks performed well in spite of the margin pressure emanating from historically low interest rates. If interest rates rise over the next year, we believe all of the bank stocks in the
| 168 | ANNUAL REPORT | 2014 |
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portfolio could experience substantial operating leverage, which should provide another boost to their robust earnings growth. The capital markets stocks in the portfolio that outperformed included Affiliated Managers Group, Inc., and Financial Engines, Inc. WisdomTree Investment, Inc. was a laggard mainly due to concern over the correction in emerging markets and its impact on the company’s products.
The Fund’s energy investments significantly outperformed for the year. The strategy of the Fund is primarily focused in two areas. The first is equipment and services companies that are profiting from a surge in capital spending for mid-stream and downstream assets expansion. As U.S. oil production continues to grow rapidly due to the success of shale development, the inevitable bottleneck in transportation and processing the crude is leading to an extended cycle of spending to upgrade and expand these facilities. Fund holdings Matrix Service Company, Primoris Services Corp., Graham Corp., Powell Industries, Inc., and Team, Inc. are all beneficiaries of this trend. Matrix and Primoris were the largest contributors to the Fund from this group over the period.
The second area of focus is the exploration and production group, with particular emphasis on the best-positioned and fastest-growing explorers in the most prolific shale plays. The Fund’s strategy migrated from companies in the Utica, Niobrara and Bakken plays to the Permian Basin. Successful investments in Oasis Petroleum LLC and Bonanza Creek Energy, Inc. (both no longer holdings) were harvested for new investments in Permian companies such as Athlon Energy, Inc., Laredo Petroleum Holdings, Inc., (no longer a holding) and RSP Permian, Inc. Oil exploration and production out of the Permian is growing rapidly and we are particularly attracted to the multiple-target zones available to the companies in this play.
Consumer stock performance was a mixed bag. The Fund outperformed in the larger consumer discretionary sector but lagged slightly in consumer staples. The former was led by continued success with the leading automotive retailers, Lithia Motors, Inc., and Asbury Automotive Group, Inc., as well as Kate Spade & Company (previously known as Fifth & Pacific Co., Inc.) in the retail space and a number of emerging-growth restaurants such as Chuy’s Holdings Inc., Del Frisco’s Restaurant Group and Sonic Corp. On the lagging end, Vail Resorts, Inc. stock came under some pressure late in the fiscal year as earnings growth expectations were dampened by the drought in California/Nevada, which impacted Lake Tahoe results. The company’s resilient model and healthy cash flow, however, led to a doubling of the dividend near the end of the year.
Technology was the principal drag in performance relative to the benchmark and was a reason the Fund underperformed during the fiscal year. The Fund was overweight the sector, but was hurt by poor performance from the communications equipment and semiconductor industries group and a few software stocks. In communications equipment, the spending cycle for optical components and networking equipment did not materialize at the pace expected. While some positions in the Fund, such as Finisar Corp., performed very well, there were too many disappointments led by Aruba Networks, Inc., Ixia (no longer a holding), and JDS Uniphase Corp. Some of these positions have been sold or scaled back. The semiconductor industry was also affected by sluggish telecommunications capital spending and this particularly impacted Semtech Corp (no longer a holding). Semtech had been a core long-term winner in the Fund, but earnings growth disappointed in calendar year 2013 and the stock suffered. In the software industry, Infolox Inc. (no longer a holding), and Qlik Technologies Inc. slightly offset a few spectacular winners in the Fund, which included Demandware, Inc., Tyler Technologies, Inc., and Ultimate Software Group, Inc. (The).
Outlook
The quarter-end correction has helped to peel off some of the excess valuation overlaying small-cap stocks. We believe the direction over the next 12 months will be affected by the magnitude of the domestic economic recovery and its attendant impact on interest rates. We believe the Fund is positioned to benefit from a healthy economy and even rising interest rates. We think also earnings growth should be strongest from technology, industrials, consumer staples and consumer discretionary.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Investing in small-cap stocks may carry more risk than investing in stocks of larger, more well-established companies. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well as value stocks or the stock market in general. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Small Cap Growth Fund’s performance.
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PORTFOLIO HIGHLIGHTS
| Ivy Small Cap Growth Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| SVB Financial Group |
Financials | |||
| Westinghouse Air Brake Technologies Corp. |
Industrials | |||
| Ultimate Software Group, Inc. (The) |
Information Technology | |||
| Matrix Service Co. |
Energy | |||
| Demandware, Inc. |
Information Technology | |||
| Cepheid |
Health Care | |||
| Portfolio Recovery Associates, Inc. |
Industrials | |||
| Bank of the Ozarks, Inc. |
Financials | |||
| Vail Resorts, Inc. |
Consumer Discretionary | |||
| DexCom, Inc. |
Health Care |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Small Cap Growth Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
17.10% | 19.14% | 23.43% | 17.01% | 24.78% | 23.99% | 24.45% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
23.63% | 23.75% | 24.26% | 23.58% | 25.66% | 24.94% | 25.34% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
9.62% | 9.18% | 9.53% | — | — | — | 10.51% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(4) |
— | — | — | 8.91% | 10.73% | 9.44% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | 4-2-07 for Class E and Class I shares and 12-29-05 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
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SCHEDULE OF INVESTMENTS
| Ivy Small Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Small Cap Growth Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Rate shown is the yield to maturity at March 31, 2014. |
| (C) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 1,172,651 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 44,865 | — | |||||||||
| Total |
$ | 1,172,651 | $ | 44,865 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
GTD = Guaranteed
See Accompanying Notes to Financial Statements.
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| Ivy Small Cap Value Fund |
(UNAUDITED) |
The fiscal year ended March 31, 2014 has been a strong 12-month period for equities in general and small-cap equities as well. Over the time period, the Russell 2000 Value Index increased by 22.65%. The macro environment has generally improved and, in our view, this factor was a key driver of strong returns, as growth in corporate earnings did not keep pace with improvements in equity values. In fact, earnings growth was quite sluggish over this time.
The U.S. economy continued to expand at a moderate pace, with some volatility driven in part by weather and the impact of reduced government spending caused by the sequester. The pace of this recovery has clearly been anemic, as demonstrated by the slowest improvement in gross domestic product (GDP) during a recovery since the depression and a sluggish, at best, pick up in hiring during the period. However, in 2013, we would describe the pace of economic growth as good given the drag created by the sequester. The private economy still has more healing to do, but 2013 demonstrated progress in the right direction. In addition, developments over the course of the fiscal year such as the Ryan-Murray budget agreement and a lack of new austerity point to a lower drag from government on GDP, and a lower level of risk and uncertainty around government action. This re-risking of economic growth and resiliency of growth in the face of clear headwinds was, in our view, the key driver of multiple expansion that occurred over the course of the fund’s past fiscal year.
The challenge in next 12 months will be whether or not economic growth and growth in corporate revenues and earnings will be sufficient to justify the increased optimism incorporated into the pricing of stocks in many of the more economically sensitive sectors of the economy. We wouldn’t be surprised if the coming year represented the mirror image of the past year, where stocks underperform growth in earnings and revenues as companies grow to fill out the valuations that have been bestowed upon them. This process is never linear. Thus, while the past fiscal year featured a trend line that was noisy but fairly consistently upward sloping, the upcoming 12 months may feature a fair amount of oscillation with a less pronounced directional slope to changes in stock prices.
Contributors and detractors
From the perspective of absolute performance, the past 12-month period yielded strong results for the Fund. However, on a relative basis the Fund lagged its benchmark and peer group. Given the especially strong absolute performance by the benchmark, peer group and equities in the Fund, the greatest factor influencing performance was the drag created by a higher than optimal level of cash over the course of the year. Excluding this factor, both sector allocation and stock selection were both positive contributors to performance.
The portfolio was overweight consumer discretionary, energy and materials during the year and the largest underweight positions were financials (which was significantly underweight real estate investment trusts-REITs and less so banks), information technology and utilities.
The Fund’s underweight position in financials created the most value from an allocation perspective as this sector underperformed over the fiscal year (primarily due to the weak performance of REITs). An overweight position in consumer discretionary also added value to performance. The Fund’s underweight position in information technology was a drag on performance as this sector outperformed the overall benchmark. The Fund’s overweight position in energy was also a drag on performance as that sector slightly underperformed the index.
Stock selection was generally favorable and added value or was neutral in seven of the 10 sectors. Stock picking in the materials sector was especially favorable behind strong returns in Fund holdings Boise Cascade Company and Owens-Illinois, Inc. during the period. Stock selection in financials was also positive — in large part due to a significant underweight in REITs relative to the benchmark. Industrials were also a source of beneficial stock selection driven by the Fund’s trucking company holding Saia, Inc. Triumph Group, Inc. was a drag on results within industrials. Stock selection in consumer discretionary was also favorable due to strong performance in the Fund’s media and entertainment holdings — Nexstar Broadcasting Group, Inc. and Carmike Cinemas, Inc. in particular — as well as from Visteon Corporation.
Stock selection in energy was a significant drag on relative performance due entirely to McDermott International, Inc. Within the energy sector, Basic Energy Services, Inc. was a strong source of positive returns. The health care sector also featured adverse stock selection as Community Health Systems, Inc. was a detractor. Finally, stock selection in information technology was slight negative in terms of relative results.
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Strategy and sector emphasis
The Fund’s strategy remained consistent over the course of the past 12 months and remains consistent going forward. We look for opportunities both in the form of individuals stocks, industries and sectors where we believe the market is mispricing the underlying value of a business based on its long-term normalized earnings power. We then look for a sufficiently large gap between our estimate of the underlying value of a business and the current stock price such that a large margin of safety exists. This means if we are correct in our estimation of value, we think the returns from the stock will be significant, while if we are incorrect our potential losses would be more limited. The reasons for excessive valuation differentials can range from pessimism created by weak near-term results, misunderstanding of the future prospects of a business due to changes in its operating model or the nature of its earnings stream or simply from a lack of visibility and awareness, which can be especially true in small-cap investing.
Over the past few years we have found opportunities in each of these categories. Visteon is a great example of a company that was not well known (having recently emerged from bankruptcy) and not well understood, given its complex ownership structure, which muddled its accounting making it difficult to determine value on standard metrics. However, the combination of what we viewed was an attractive valuation and a management team that has worked arduously to unlock value has created sizable returns for shareholders.
Basic Energy is an example of a company in a deeply out-of-favor sector that was being priced as though a substantially reduced level of operating activity and operating margins did not represent a cyclical trough but instead was the new norm. As supply rationalized and demand began to pick up, the outlook for this company’s earnings power improved substantially, driving its stock price from a deeply depressed level to something closer to our estimate of fair value.
Over the past few years, it has become increasingly difficult to find opportunities that present truly significant mispricing of the underlying business. Opportunities still exist, though we are finding ourselves digging a bit deeper in certain areas to uncover them. The magnitude of the margin in safety in many cases has been clearly reduced as a result of the broad move upward in stock prices over the past two years. As a result, the opportunities that we are uncovering are far more stock specific and idiosyncratic than has been the case in the past few years when, often times, broad sectors were, in our view, deeply mispriced for one reason or another.
There continues to be possible areas of mispricing in subsectors within technology and industrials, though these are far more limited and less mispriced. In the coming year, we expect that company-specific opportunities will represent the bulk of our new investments barring a noteworthy sell-off in general or in any particular areas of the market.
Outlook
Our outlook for small caps in the near-term is cautious. Broadly speaking, revenue and earnings estimates for small-cap equities are incorporating a notable acceleration over the course of the year, which is generally the case early in any year. This year, the expected acceleration looks more pronounced than normal.
While this is directionally consistent with our view that economic growth should improve a bit over the course of the year, the magnitude of the expected pick up in revenues and earnings looks too high in our opinion. In addition, small-cap equities are trading at a sizable premium to their large cap brethren on most metrics and are at or above long-term absolute averages. We would not be surprised to see estimates for the full year drift down toward the low double-digit range over the next quarter or two.
We believe also fiscal 2014 could be a photo-negative of 2013 — where stocks are up less than the improvement in earnings as many sectors and companies need to grow into current valuations. We are not calling for a correction, as valuation alone typically does not lead to a correction. However, we do believe that sizable positive absolute returns could be tough to achieve until valuations, actual earnings levels and growth are more closely aligned.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is no guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Investing in small-cap stocks may carry more risk than investing in stocks of larger, more established companies. Value stocks are stocks of companies that may have experienced adverse business or industry developments, or may be subject to special risks that have caused the stocks to be out of favor and, in the opinion of the Fund’s manager, undervalued. The value of a security believed by the Fund’s manager to be undervalued may never reach what the manager believes to be its full value, or such security’s value may decrease. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Small Cap Value Fund.
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PORTFOLIO HIGHLIGHTS
| Ivy Small Cap Value Fund ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| Saia, Inc. |
Industrials |
|||
| Dana Holding Corp. |
Consumer Discretionary |
|||
| Teradyne, Inc. |
Information Technology |
|||
| Carmike Cinemas, Inc. |
Consumer Discretionary |
|||
| Armstrong World Industries, Inc. |
Industrials |
|||
| Atlas Pipeline Partners L.P. |
Energy |
|||
| LifePoint Hospitals, Inc. |
Health Care |
|||
| SunCoke Energy Partners L.P. |
Materials |
|||
| Marten Transport Ltd. |
Industrials |
|||
| Visteon Corp. |
Consumer Discretionary |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Small Cap Value Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E(4) | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
14.14% | 15.87% | 20.24% | 14.59% | 21.67% | 20.91% | 21.35% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
18.15% | 18.13% | 18.68% | 18.67% | 20.22% | — | 19.89% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
7.33% | 6.77% | 7.14% | — | — | — | 8.32% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(5) |
— | — | — | 6.32% | 7.42% | 27.68% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class E shares are not currently available for investment. |
| (5) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
The Advantus Venture Fund merged into the Ivy Small Cap Value Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Venture Fund Class A shares, restated to reflect current sales charges applicable to Ivy Small Cap Value Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Small Cap Value Fund. If these expenses were reflected, performance shown would differ.
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SCHEDULE OF INVESTMENTS
| Ivy Small Cap Value Fund (in thousands) |
MARCH 31, 2014 |
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SCHEDULE OF INVESTMENTS
| Ivy Small Cap Value Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Rate shown is the yield to maturity at March 31, 2014. |
| (C) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 278,426 | $ | — | $ | — | ||||||
| Investment Funds |
3,381 | — | — | |||||||||
| Short-Term Securities |
— | 23,014 | — | |||||||||
| Total |
$ | 281,807 | $ | 23,014 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
GTD = Guaranteed
REIT = Real Estate Investment Trust
See Accompanying Notes to Financial Statements.
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| Ivy Tax-Managed Equity Fund |
(UNAUDITED) |
Equity markets finished the year ended March 31, 2014 strong, capping off one of the stronger 12-month periods for broad market equity returns in recent history. Throughout the period, the equity market benefited from declining risk premiums and growing confidence that the global economy has moved beyond the economic and banking crisis and is transitioning to a more “normal” economic environment. This “normal” environment is one where fears of systemic risk have been mitigated through a much repaired banking system, resulting in a stabilization of many of the largest economies around the world. In fact, many governments can now borrow at historically low interest rates, as low or lower than that of the pre-crisis era.
This stabilization in the U.S. is characterized by slow, but steady revenue growth, high and sustainable levels of profitability and abundant cash flow for much of corporate America. For many markets, this de-emphasis of macroeconomic concerns simply meant higher valuations across industries, sectors and capitalization ranges, regardless of investment style. It also provided a more favorable environment for active managers as stock correlations declined to more normal levels. Performance for the Ivy Tax-Managed Equity Fund was strong for the year on an absolute basis but modestly underperformed compared to the Russell 1000 Growth Index benchmark.
Market conditions
After a long period of positive excess returns accruing to more defensive, slower growth, higher dividend yielding and value-oriented companies, growth stocks have begun to be revalued in recent quarters. We believe this transition can be traced, at least in part, to the change in monetary policy that our country is now undergoing. The steady improvement in the labor market and continuing recovery in housing and auto markets has resulted in the Federal Reserve (Fed) signaling its intention to begin winding down its longstanding quantitative easing program. As monetary policy normalizes over time, we believe interest rates are likely to rise, but at a very measured pace. Given past aggressive actions by most central banks, the global banking industry, and the U.S. in particular, is flush with liquidity and capital. We believe this makes the global economy much more resilient to destabilizing risks and greatly reduces the likelihood of another significant downturn. The Fed’s vote of confidence in the sustainability of the economic expansion is a meaningful positive for growth stocks, in our view, especially given the relatively modest valuation premium the asset class currently possesses.
Strategies employed and sector emphasis
The Fund’s philosophy and investment process has remained consistent over time and continues to focus on identifying structurally advantaged companies that can generate superior levels of profitability and growth over time.
While Fund performance benefited from its underweight exposure to the consumer staples sector as well as favorable stock selection in the consumer discretionary and energy sectors, the impact of small levels of cash in a strong market along with a handful of individual detractors pulled performance below the benchmark index.
Outperformance in the consumer discretionary sector was led by Fund holdings in Las Vegas Sands, Inc. and Wynn Resorts, which are key beneficiaries of burgeoning growth in the Macau gaming market. Gilead Sciences, Inc. and Biogen Idec Inc. also were strong contributors, both of which have new drug launches underway that are significantly improving health outcomes for patients and driving accelerated earnings growth far in excess of the market. Other notable strong performers during the year included MasterCard Incorporated; a company is well positioned to benefit from the secular trend toward electronic payments (and away from cash and checks).
Key negative contributors for the fiscal year included Kansas City Southern and lululemon athletica inc., which both guided slower than expected growth. Other notable laggards were largely concentrated in the technology sector where competitive pressures remain intense and corporate spending plans are still uneven.
Outlook
Irrespective of the short-term turbulence in the market and portfolio, our equity market outlook is positive. While short-term bouts of volatility and shifting investor psychology have become the norm, it doesn’t change our view on the long-term outlook. We believe corporate profits will grow by at
| 180 | ANNUAL REPORT | 2014 |
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least 5-8% for the year. Interest rates and inflation should remain low. Gross domestic product growth around the world should continue its slow-grinding rebound, creating a favorable backdrop for growth stock investing. In a slow-growth environment without significant cyclical tailwinds, we expect our portfolio of high-margin, secular growth companies to perform better than the broad market.
Looking outside the U.S., key problematic geographies such as Europe have stabilized and are showing positive surprises to profitability with the potential for continued improvement. While China’s growth rate remains uncertain, the absolute rate of growth in the region is high enough that most multinationals can continue to do well there. We expect many leading multinationals to benefit over the next couple of years as former headwinds become tailwinds. These factors, combined with modest U.S. economic and profit growth, should continue to provide a favorable backdrop for the equity market. However, given the outsized market returns of 2013, much of which was driven by price-to-earnings multiple expansion rather than earnings growth, we expect the upcoming fiscal year to hold more modest return potential.
In addition to our investment objective to seek out companies that provide growth of capital while minimizing taxable gains and income to shareholders, we continue to focus the portfolio around finding firms that can establish competitive advantages in large, growing markets and generate superior levels of profitability and growth over the long term. Thank you for your continued confidence and support.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is not a guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment. Tax-management strategies may alter investment decisions and affect portfolio holdings, when compared to those of non-tax-managed mutual funds. Market conditions may limit the Fund’s ability to generate tax losses or to generate dividend income taxed at favorable Federal income tax rates. These and other risks are more fully described in the Fund’s prospectus.
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Tax-Managed Equity Fund.
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PORTFOLIO HIGHLIGHTS
| Ivy Tax-Managed Equity Fund ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| Gilead Sciences, Inc. |
Health Care |
|||
| Las Vegas Sands, Inc. |
Consumer Discretionary |
|||
| Apple, Inc. |
Information Technology |
|||
| MasterCard, Inc., Class A |
Information Technology |
|||
| Visa, Inc., Class A |
Information Technology |
|||
| CBS Corp., Class B |
Consumer Discretionary |
|||
| Biogen Idec, Inc. |
Health Care |
|||
| Google, Inc., Class A |
Information Technology |
|||
| HCA Holdings, Inc. |
Health Care |
|||
| NIKE, Inc., Class B |
Consumer Discretionary |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 182 | ANNUAL REPORT | 2014 |
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Tax-Managed Equity Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class I(4) | Class Y(5) | |||||||||||||||
| 1-year period ended 3-31-14 |
15.61% | 17.80% | 21.76% | 22.91% | 22.56% | |||||||||||||||
| 5-year period ended 3-31-14 |
— | — | — | 17.21% | — | |||||||||||||||
| 10-year period ended 3-31-14 |
— | — | — | 8.21% | — | |||||||||||||||
| Since inception of Class through 3-31-14(6) |
14.12% | 14.59% | 14.78% | — | 15.57% | |||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available by exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | The Class Y shares of Waddell & Reed Advisors Tax-Managed Equity Fund were reorganized as the Class I shares of Ivy Tax-Managed Equity Fund on May 18, 2009. The performance shown for periods prior to this date is that of the Class Y shares of Waddell & Reed Advisors Tax-Managed Equity Fund. Performance has not been restated to reflect the estimated annual operating expenses of the Ivy Tax-Managed Equity Fund. If those expenses were reflected, performance shown would differ. |
| (5) | The return shown for Class Y is hypothetical, because there were no shares or assets for the period from July 28, 2009 through October 7, 2009. Class A data has been substituted for Class Y data during that period. |
| (6) | 5-18-09 for Class A, Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
| 2014 | ANNUAL REPORT | 183 |
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BEFORE- AND AFTER-TAX RETURNS
| Ivy Tax-Managed Equity Fund |
(UNAUDITED) |
| Before- and After-Tax Returns(1) | 1-year period ended 3-31-14 |
5-year period ended 3-31-14 |
10-year period ended 3-31-14 |
Since inception of Class(2) through 3-31-14 |
||||||||||||
| Class A |
||||||||||||||||
| Before Taxes |
15.61% | — | — | 14.12% | ||||||||||||
| After Taxes on Distributions |
14.83% | — | — | 13.95% | ||||||||||||
| After Taxes on Distributions and Sale of Fund Shares |
9.44% | (3) | — | — | 11.34% | |||||||||||
| Class B(4) |
||||||||||||||||
| Before Taxes |
17.80% | — | — | 14.59% | ||||||||||||
| After Taxes on Distributions |
17.04% | — | — | 14.44% | ||||||||||||
| After Taxes on Distributions and Sale of Fund Shares |
10.67% | (3) | — | — | 11.74% | |||||||||||
| Class C |
||||||||||||||||
| Before Taxes |
21.76% | — | — | 14.78% | ||||||||||||
| After Taxes on Distributions |
21.00% | — | — | 14.63% | ||||||||||||
| After Taxes on Distributions and Sale of Fund Shares |
12.91% | — | — | 11.89% | ||||||||||||
| Class I(5) |
||||||||||||||||
| Before Taxes |
22.91% | 17.21% | 8.21% | — | ||||||||||||
| After Taxes on Distributions |
22.03% | 17.02% | 8.12% | — | ||||||||||||
| After Taxes on Distributions and Sale of Fund Shares |
13.64% | 13.98% | 6.71% | — | ||||||||||||
| Class Y(6) |
||||||||||||||||
| Before Taxes |
22.56% | — | — | 15.57% | ||||||||||||
| After Taxes on Distributions |
21.73% | — | — | 15.39% | ||||||||||||
| After Taxes on Distributions and Sale of Fund Shares |
13.41% | — | — | 12.56% | ||||||||||||
| Russell 1000 Growth Index |
23.22% | 21.68% | 7.86% | 19.36% | ||||||||||||
| (1) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase.) Class I and Class Y shares are not subject to sales charges. |
| (2) | 5-18-09 for Class A, Class B, Class C and Class Y shares (the date on which shares were first acquired by shareholders). |
| (3) | After-tax returns may be better than before-tax returns due to an assumed tax benefit from losses on a sale of the Fund’s shares at the end of the period. |
| (4) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | The Class Y shares of Waddell & Reed Advisors Tax-Managed Equity Fund were reorganized as the Class I shares of Ivy Tax-Managed Equity Fund on May 18, 2009. The performance shown for periods prior to this date is that of the Class Y shares of Waddell & Reed Advisors Tax-Managed Equity Fund. Performance has not been restated to reflect the estimated annual operating expenses of the Ivy Tax-Managed Equity Fund. If those expenses were reflected, performance shown would differ. |
| (6) | The return shown for Class Y is hypothetical because there were no shares or assets for the period from July 28, 2009 through October 7, 2009. Class A data has been substituted for Class Y data during that period. |
The table above shows average annual returns on a before-tax and after-tax basis. Returns Before Taxes shows the actual change in the value of the Fund shares over the periods shown, but does not reflect the impact of taxes on Fund distributions or the sale of Fund shares. The two after-tax returns take into account taxes that may be associated with owning Fund shares. Returns After Taxes on Distributions is the Fund’s actual performance, adjusted by the effect of taxes on distributions made by the Fund during the period shown. Returns After Taxes on Distributions and Sale of Fund Shares is further adjusted to reflect the tax impact on any change in the value of Fund shares as if they had been sold on the last day of the period.
After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts, or to shares held by non-taxable entities.
| 184 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Tax-Managed Equity Fund (in thousands) |
MARCH 31, 2014 |
| 2014 | ANNUAL REPORT | 185 |
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SCHEDULE OF INVESTMENTS
| Ivy Tax-Managed Equity Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| * | Not shown due to rounding. |
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 44,274 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 699 | — | |||||||||
| Total |
$ | 44,274 | $ | 699 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronym is used throughout this schedule:
ADR = American Depositary Receipts
See Accompanying Notes to Financial Statements.
| 186 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Value Fund |
(UNAUDITED) |
The 12 months ended March 31, 2014 was a strong period for equity markets. The Fund returned 22.44%, outperforming its benchmark for the time period, while outpacing its peers. The Fund also outpaced the broader market as measured by the S&P 500 index. During the period, the Fund benefited from strong individual stock selection.
A continued improvement in the domestic economy and supportive fiscal and monetary policy resulted in a strong year for equity returns. Investing in quality companies that are trading inexpensively was a profitable approach for the Fund. We did not make any large sector bets during the period rather we focused on individual companies, which we believe had inexpensive names with improving business fundamentals.
Contributors and detractors
Stock selection drove the Fund’s performance for the period. Our strategy of finding and investing in stocks we believe are trading below their intrinsic value led to some strong investments for the year. Examples included McKesson Corporation, Western Digital Corporation, Dow Chemical Company (The) and Wellpoint, Inc. (no longer a holding). Each of these names returned over 50% during the period. This is a diverse list, with the commonality between the companies being that the cash flows received by each were in excess of what the stock price would suggest. The Fund’s investment process is designed to helps us avoid overpriced names. For example, we did not own any shares of IBM and Coca-Cola, because cash flows for these companies did not support valuation and each of these stocks had a negative return over the past 12-month period.
The Fund’s greatest negative contributor during the period was Atlas Pipeline Partners, L.P., a provider of energy services. A recent acquisition for the company was not integrated as smoothly as planned, and the stock price declined. Analysis shows our cash flow projections are likely accurate, but the timing was not optimal. Thus, we increased our net investment as the stock declined and anticipate being rewarded over time.
The Fund does not overweight or underweight particular sectors as a management strategy. Sector weights emerge from the individual stock-picking process. Areas of overweight are simply because we find the most ideas in those sectors. We found little to no ideas in the real estate, telecommunications and utilities sectors, therefore, the Fund was underweight those areas relative to the benchmark. The Fund’s cash position was the worst drag on performance for the period. While we were overweight energy, and that sector outperformed the index as a whole, the Fund’s stock selection offset the energy sector’s underperformance and that sector was a negative contributor to performance.
Outlook
Going forward, we intend to stick with the process that we believe has served it well in the past. While economic conditions are not spectacular, they are solid and we continue to find what we believe are good quality companies at fair prices. It seems very likely, however, that last year’s exceptional market performance may not be repeated.
Current areas of Fund emphasis include energy, technology and consumer discretionary. Areas where we have little to no exposure include utilities, telecommunication and real estate. We continue to search diligently, one company at a time, for names that we think offer good value investment opportunities. We believe this is the best way to achieve strong, consistent returns over a full market cycle.
Performance shown at NAV does not include the effects of sales charges. If reflected, the performance shown would have been lower. Performance including sales charges reflects the maximum applicable front-end sales load.
Past performance is no guarantee of future results. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment.
Value stocks are stocks of companies that may have experienced adverse business or industry developments, or may be subject to special risks that have caused the stocks to be out of favor and, in the opinion of the Fund’s manager, undervalued. The value of a security believed by the Fund’s manager to be undervalued may never reach what the manager believes to be its full value, or such security’s value may decrease. These and other risks are more fully described in the Fund’s prospectus.
| 2014 | ANNUAL REPORT | 187 |
Table of Contents
MANAGEMENT DISCUSSION
| Ivy Value Fund (UNAUDITED) |
The opinions expressed in this report are those of the Fund’s portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.
The index noted is unmanaged, includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy Value Fund.
| 188 | ANNUAL REPORT | 2014 |
Table of Contents
PORTFOLIO HIGHLIGHTS
| Ivy Value Fund |
ALL DATA IS AS OF MARCH 31, 2014 (UNAUDITED) |
Top 10 Equity Holdings
| Company | Sector | |||
| Western Digital Corp. |
Information Technology | |||
| Citigroup, Inc. |
Financials | |||
| JPMorgan Chase & Co. |
Financials | |||
| Xerox Corp. |
Information Technology | |||
| Time Warner Cable, Inc. |
Consumer Discretionary | |||
| LyondellBasell Industries N.V., Class A |
Materials | |||
| Wells Fargo & Co. |
Financials | |||
| Dow Chemical Co. (The) |
Materials | |||
| Philip Morris International, Inc. |
Consumer Staples | |||
| Atlas Pipeline Partners L.P. |
Energy |
See your advisor or www.ivyfunds.com for more information on the Fund’s most recently published Top 10 Equity Holdings.
| 2014 | ANNUAL REPORT | 189 |
Table of Contents
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
| Ivy Value Fund |
(UNAUDITED) |
Please note that the performance of the Fund’s other share classes will be greater or less than the performance shown above for Class A based on the differences in loads and fees paid by shareholders investing in the different classes.
| (1) | The value of the investment in the Fund is impacted by the sales load at the time of the investment and by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions. |
| Average Annual Total Return(2) | Class A | Class B(3) | Class C | Class E(4) | Class I | Class R | Class Y | |||||||||||||||||||||
| 1-year period ended 3-31-14 |
15.39% | 17.35% | 21.64% | 15.68% | 22.85% | 22.13% | 22.56% | |||||||||||||||||||||
| 5-year period ended 3-31-14 |
19.45% | 19.26% | 19.94% | 19.88% | 21.44% | — | 21.11% | |||||||||||||||||||||
| 10-year period ended 3-31-14 |
6.55% | 5.95% | 6.30% | — | — | — | 7.43% | |||||||||||||||||||||
| Since inception of Class through 3-31-14(5) |
— | — | — | 5.08% | 6.08% | 27.40% | — | |||||||||||||||||||||
| (2) | Data quoted is past performance and is based on deduction of the maximum applicable sales load for each of the periods. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Please visit www.ivyfunds.com for the Fund’s most recent month-end performance. Class A and Class E shares carry a maximum front-end sales load of 5.75%. Class B and Class C shares carry a maximum contingent deferred sales charge (CDSC) of 5% and 1%, respectively (the Class C shares reflect no CDSC since it only applies to Class C shares redeemed within twelve months after purchase). Class I, Class R and Class Y shares are not subject to sales charges. |
| (3) | Class B shares are not currently available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class E shares are not currently available for investment. |
| (5) | 4-2-07 for Class E and Class I shares and 12-19-12 for Class R shares (the date on which shares were first acquired by shareholders). |
Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.
The Advantus Cornerstone Fund merged into the Ivy Value Fund on December 8, 2003. The performance shown for periods prior to this date is that of the Advantus Cornerstone Fund Class A shares, restated to reflect current sales charges applicable to Ivy Value Fund Class A shares. Performance has not been restated to reflect the fees and expenses applicable to the Ivy Value Fund. If these expenses were reflected, performance shown would differ.
| 190 | ANNUAL REPORT | 2014 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Value Fund (in thousands) |
MARCH 31, 2014 |
Notes to Schedule of Investments
| (A) | No dividends were paid during the preceding 12 months. |
| (B) | All or a portion of the security position is held in collateralized accounts to cover potential obligations with respect to outstanding written options. |
| (C) | Rate shown is the yield to maturity at March 31, 2014. |
| (D) | Variable rate security. Interest rate disclosed is that which is in effect at March 31, 2014. Date shown represents the date that the variable rate resets. |
| 2014 | ANNUAL REPORT | 191 |
Table of Contents
SCHEDULE OF INVESTMENTS
| Ivy Value Fund (in thousands) |
MARCH 31, 2014 |
The following written options were outstanding at March 31, 2014 (contracts and exercise prices unrounded):
| Underlying Security | Counterparty, if OTC | Type | Number of Contracts |
Expiration Month | Exercise Price |
Premium Received |
Value | |||||||||||||||||
| Limited Brands, Inc. |
N/A | Put | 152 | May 2014 | $ | 54.00 | $ | 45 | $ | (12 | ) | |||||||||||||
| N/A | Put | 152 | May 2014 | 56.50 | 51 | (25 | ) | |||||||||||||||||
| N/A | Put | 152 | May 2014 | 59.00 | 53 | (47 | ) | |||||||||||||||||
| Macy’s, Inc. |
N/A | Call | 117 | May 2014 | 55.00 | 45 | (59 | ) | ||||||||||||||||
| Marathon Petroleum Corp. |
N/A | Call | 80 | April 2014 | 77.50 | 91 | (83 | ) | ||||||||||||||||
| N/A | Call | 160 | April 2014 | 80.00 | 211 | (124 | ) | |||||||||||||||||
| N/A | Call | 160 | April 2014 | 82.50 | 184 | (84 | ) | |||||||||||||||||
| Philip Morris International, Inc. |
N/A | Put | 91 | June 2014 | 80.00 | 38 | (13 | ) | ||||||||||||||||
| Phillips 66 |
N/A | Call | 165 | May 2014 | 72.50 | 124 | (93 | ) | ||||||||||||||||
| N/A | Call | 165 | May 2014 | 75.00 | 95 | (63 | ) | |||||||||||||||||
| Reinsurance Group of America, Inc. |
N/A | Call | 217 | April 2014 | 80.00 | 8 | (19 | ) | ||||||||||||||||
| Teva Pharmaceutical Industries Ltd. ADR |
N/A | Put | 312 | May 2014 | 45.00 | 16 | (6 | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| $ | 961 | $ | (628 | ) | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of March 31, 2014. See Note 3 to the Financial Statements for further information regarding fair value measurement.
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets |
||||||||||||
| Investments in Securities |
||||||||||||
| Common Stocks |
$ | 259,689 | $ | — | $ | — | ||||||
| Short-Term Securities |
— | 15,975 | — | |||||||||
| Total |
$ | 259,689 | $ | 15,975 | $ | — | ||||||
| Liabilities |
||||||||||||
| Written Options |
$ | 306 | $ | 322 | $ | — | ||||||
As of March 31, 2014, there were no transfers between Level 1 and 2 during the period.
The following acronyms are used throughout this schedule:
ADR = American Depositary Receipts
OTC = Over the Counter
See Accompanying Notes to Financial Statements.
| 192 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF ASSETS AND LIABILITIES
| Ivy Funds |
AS OF MARCH 31, 2014 |
| (In thousands, except per share amounts) | Ivy Bond Fund |
Ivy Core Equity Fund |
Ivy Cundill Global Value Fund |
Ivy Dividend Opportunities Fund |
Ivy Emerging Markets Equity Fund(1)(2) |
Ivy European Opportunities Fund |
Ivy Global Bond Fund |
|||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities at value+ |
$ | 608,135 | $ | 874,616 | $ | 369,608 | $ | 384,482 | $ | 729,914 | $ | 205,271 | $ | 292,775 | ||||||||||||||
| Bullion at value+ |
— | — | — | — | 5,136 | — | — | |||||||||||||||||||||
| Investments at Value |
608,135 | 874,616 | 369,608 | 384,482 | 735,050 | 205,271 | 292,775 | |||||||||||||||||||||
| Cash |
9 | 1 | 534 | — | * | 1,371 | 1 | 106 | ||||||||||||||||||||
| Cash denominated in foreign currencies at value+ |
— | — | — | — | 6,114 | — | — | |||||||||||||||||||||
| Restricted cash |
— | — | — | — | 638 | — | — | |||||||||||||||||||||
| Investment securities sold receivable |
10,987 | 12,895 | 1,272 | — | 6,275 | 5,879 | 39 | |||||||||||||||||||||
| Dividends and interest receivable |
4,350 | 1,044 | 1,300 | 741 | 1,278 | 743 | 3,122 | |||||||||||||||||||||
| Capital shares sold receivable |
1,051 | 3,421 | 754 | 516 | 497 | 285 | 422 | |||||||||||||||||||||
| Receivable from affiliates |
4 | 226 | 2 | 6 | — | — | 329 | |||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
— | — | 32 | — | 172 | 31 | — | |||||||||||||||||||||
| Variation margin receivable |
30 | — | — | — | — | — | — | |||||||||||||||||||||
| Prepaid and other assets |
48 | 46 | 44 | 29 | 45 | 41 | 41 | |||||||||||||||||||||
| Total Assets |
624,614 | 892,249 | 373,546 | 385,774 | 751,440 | 212,251 | 296,834 | |||||||||||||||||||||
| LIABILITIES |
||||||||||||||||||||||||||||
| Investment securities purchased payable |
22,844 | 7,349 | 756 | — | 7,421 | 1,289 | 4,258 | |||||||||||||||||||||
| Capital shares redeemed payable |
990 | 966 | 487 | 801 | 2,386 | 409 | 610 | |||||||||||||||||||||
| Distributions payable |
184 | — | — | — | — | — | — | |||||||||||||||||||||
| Trustees and Chief Compliance Officer fees payable |
74 | 106 | 122 | 28 | 74 | 77 | 8 | |||||||||||||||||||||
| Distribution and service fees payable |
5 | 8 | 3 | 4 | 5 | 2 | 3 | |||||||||||||||||||||
| Shareholder servicing payable |
127 | 172 | 128 | 94 | 305 | 83 | 80 | |||||||||||||||||||||
| Investment management fee payable |
9 | 17 | 9 | 7 | 19 | 5 | 5 | |||||||||||||||||||||
| Accounting services fee payable |
14 | 19 | 11 | 11 | 18 | 8 | 8 | |||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
— | — | 81 | — | — | — | 63 | |||||||||||||||||||||
| Unrealized depreciation on swap agreements |
— | — | — | — | 567 | — | — | |||||||||||||||||||||
| Written options at value+ |
— | — | — | — | 261 | — | — | |||||||||||||||||||||
| Other liabilities |
22 | — | 6 | 2 | 44 | 14 | 55 | |||||||||||||||||||||
| Total Liabilities |
24,269 | 8,637 | 1,603 | 947 | 11,100 | 1,887 | 5,090 | |||||||||||||||||||||
| Total Net Assets |
$ | 600,345 | $ | 883,612 | $ | 371,943 | $ | 384,827 | $ | 740,340 | $ | 210,364 | $ | 291,744 | ||||||||||||||
| NET ASSETS |
||||||||||||||||||||||||||||
| Capital paid in (shares authorized – unlimited) |
$ | 622,868 | $ | 666,229 | $ | 329,349 | $ | 255,546 | $ | 737,760 | $ | 305,752 | $ | 292,682 | ||||||||||||||
| Undistributed (distributions in excess of) net investment income |
— | (104 | ) | (341 | ) | 993 | 2,431 | 1,952 | 474 | |||||||||||||||||||
| Accumulated net realized gain (loss) |
(27,118 | ) | 22,415 | (16,415 | ) | 9,899 | (119,774 | ) | (137,485 | ) | (2,860 | ) | ||||||||||||||||
| Net unrealized appreciation |
4,595 | 195,072 | 59,350 | 118,389 | 119,923 | 40,145 | 1,448 | |||||||||||||||||||||
| Total Net Assets |
$ | 600,345 | $ | 883,612 | $ | 371,943 | $ | 384,827 | $ | 740,340 | $ | 210,364 | $ | 291,744 | ||||||||||||||
| CAPITAL SHARES OUTSTANDING: |
||||||||||||||||||||||||||||
| Class A |
53,681 | 35,581 | 18,427 | 14,355 | 35,616 | 5,504 | 18,571 | |||||||||||||||||||||
| Class B |
646 | 857 | 253 | 627 | 737 | 86 | 578 | |||||||||||||||||||||
| Class C |
2,032 | 11,361 | 1,408 | 2,321 | 3,333 | 377 | 3,311 | |||||||||||||||||||||
| Class E |
341 | 490 | 64 | 220 | 15 | 3 | N/A | |||||||||||||||||||||
| Class I |
411 | 10,037 | 380 | 939 | 9,021 | 1,019 | 5,742 | |||||||||||||||||||||
| Class R |
24 | 120 | 19 | 16 | 54 | 11 | 34 | |||||||||||||||||||||
| Class Y |
244 | 4,539 | 239 | 538 | 719 | 87 | 753 | |||||||||||||||||||||
| NET ASSET VALUE PER SHARE: |
||||||||||||||||||||||||||||
| Class A |
$10.46 | $14.04 | $17.96 | $20.27 | $15.04 | $29.76 | $10.06 | |||||||||||||||||||||
| Class B |
$10.46 | $12.32 | $16.72 | $19.97 | $12.66 | $27.66 | $10.06 | |||||||||||||||||||||
| Class C |
$10.46 | $12.63 | $17.03 | $20.05 | $13.20 | $28.25 | $10.06 | |||||||||||||||||||||
| Class E |
$10.46 | $14.00 | $18.05 | $20.21 | $15.23 | $29.93 | N/A | |||||||||||||||||||||
| Class I |
$10.46 | $15.29 | $18.33 | $20.33 | $15.43 | $29.97 | $10.06 | |||||||||||||||||||||
| Class R |
$10.46 | $14.01 | $17.94 | $20.25 | $15.02 | $29.75 | $10.05 | |||||||||||||||||||||
| Class Y |
$10.46 | $14.94 | $18.20 | $20.30 | $15.33 | $29.95 | $10.07 | |||||||||||||||||||||
| +COST |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities at cost |
$ | 603,491 | $ | 679,544 | $ | 310,193 | $ | 266,093 | $ | 609,992 | $ | 165,176 | $ | 291,265 | ||||||||||||||
| Bullion at cost |
— | — | — | — | 5,558 | — | — | |||||||||||||||||||||
| Cash denominated in foreign currencies at cost |
— | — | — | — | 5,887 | — | — | |||||||||||||||||||||
| Written options premiums received at cost |
— | — | — | — | 834 | — | — | |||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Effective February 11, 2014, the Fund’s name changed from Ivy Pacific Opportunities Fund. |
| (2) | Consolidated Statement of Assets and Liabilities (See Note 6 to Financial Statements). |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 193 |
Table of Contents
STATEMENTS OF ASSETS AND LIABILITIES
| Ivy Funds |
AS OF MARCH 31, 2014 |
| (In thousands, except per share amounts) | Ivy Global |
Ivy Global Income Allocation Fund |
Ivy High Income Fund |
Ivy International Core Equity Fund |
Ivy International Growth Fund |
Ivy Large Cap Growth Fund |
Ivy Limited- Term Bond Fund |
|||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities at value+ |
$ | 209,440 | $ | 574,858 | $ | 11,544,958 | $ | 2,099,623 | $ | 450,969 | $ | 1,457,886 | $ | 1,657,570 | ||||||||||||||
| Investments in affiliated securities at value+ |
— | — | 36,470 | — | — | — | — | |||||||||||||||||||||
| Investments at Value |
209,440 | 574,858 | 11,581,428 | 2,099,623 | 450,969 | 1,457,886 | 1,657,570 | |||||||||||||||||||||
| Cash |
— | 1,970 | 24,703 | 1 | 1 | 1 | 1 | |||||||||||||||||||||
| Cash denominated in foreign currencies at value+ |
216 | — | 165 | 2 | 2,898 | — | — | |||||||||||||||||||||
| Restricted cash |
— | — | 4,400 | — | 54 | — | — | |||||||||||||||||||||
| Investment securities sold receivable |
5,140 | 10,659 | 126,755 | 19,704 | 8,299 | 31,111 | — | |||||||||||||||||||||
| Dividends and interest receivable |
735 | 4,805 | 175,687 | 7,751 | 1,805 | 1,029 | 16,172 | |||||||||||||||||||||
| Capital shares sold receivable |
854 | 1,372 | 51,837 | 9,571 | 962 | 2,513 | 7,245 | |||||||||||||||||||||
| Receivable from affiliates |
114 | 4 | 51 | 6 | — | 185 | 4 | |||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
73 | 203 | 38 | 319 | 193 | — | — | |||||||||||||||||||||
| Variation margin receivable |
— | — | — | — | — | — | 435 | |||||||||||||||||||||
| Prepaid and other assets |
17 | 45 | 287 | 47 | 43 | 40 | 94 | |||||||||||||||||||||
| Total Assets |
216,589 | 593,916 | 11,965,351 | 2,137,024 | 465,224 | 1,492,765 | 1,681,521 | |||||||||||||||||||||
| LIABILITIES |
||||||||||||||||||||||||||||
| Investment securities purchased payable |
3,283 | 15,574 | 452,159 | 12,094 | 14,649 | 22,897 | 3,328 | |||||||||||||||||||||
| Capital shares redeemed payable |
171 | 881 | 21,410 | 2,225 | 472 | 3,371 | 3,399 | |||||||||||||||||||||
| Distributions payable |
— | — | 8,464 | — | — | — | 295 | |||||||||||||||||||||
| Trustees and Chief Compliance Officer fees payable |
1 | 42 | 147 | 66 | 90 | 125 | 68 | |||||||||||||||||||||
| Overdraft due to custodian |
227 | — | — | — | — | — | — | |||||||||||||||||||||
| Distribution and service fees payable |
2 | 4 | 94 | 12 | 3 | 11 | 14 | |||||||||||||||||||||
| Shareholder servicing payable |
54 | 161 | 2,043 | 464 | 122 | 352 | 292 | |||||||||||||||||||||
| Investment management fee payable |
4 | 11 | 160 | 49 | 10 | 27 | 20 | |||||||||||||||||||||
| Accounting services fee payable |
6 | 13 | 22 | 23 | 12 | 23 | 23 | |||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
280 | 266 | 1,888 | — | — | — | — | |||||||||||||||||||||
| Other liabilities |
11 | 76 | 120 | 30 | 5 | 6 | — | |||||||||||||||||||||
| Total Liabilities |
4,039 | 17,028 | 486,507 | 14,963 | 15,363 | 26,812 | 7,439 | |||||||||||||||||||||
| Total Net Assets |
$ | 212,550 | $ | 576,888 | $ | 11,478,844 | $ | 2,122,061 | $ | 449,861 | $ | 1,465,953 | $ | 1,674,082 | ||||||||||||||
| NET ASSETS |
||||||||||||||||||||||||||||
| Capital paid in (shares authorized – unlimited) |
$ | 189,138 | $ | 571,117 | $ | 10,969,622 | $ | 1,744,360 | $ | 387,303 | $ | 1,004,230 | $ | 1,676,347 | ||||||||||||||
| Undistributed (distributions in excess of) net investment income |
1,522 | 3,932 | 1,012 | (7,428 | ) | (2,542 | ) | (783 | ) | (3 | ) | |||||||||||||||||
| Accumulated net realized gain (loss) |
1,872 | (42,625 | ) | 42,616 | 79,190 | (6,221 | ) | (11,772 | ) | (12,582 | ) | |||||||||||||||||
| Net unrealized appreciation |
20,018 | 44,464 | 465,594 | 305,939 | 71,321 | 474,278 | 10,320 | |||||||||||||||||||||
| Total Net Assets |
$ | 212,550 | $ | 576,888 | $ | 11,478,844 | $ | 2,122,061 | $ | 449,861 | $ | 1,465,953 | $ | 1,674,082 | ||||||||||||||
| CAPITAL SHARES OUTSTANDING: |
||||||||||||||||||||||||||||
| Class A |
13,846 | 31,636 | 474,598 | 53,957 | 8,255 | 61,959 | 132,579 | |||||||||||||||||||||
| Class B |
139 | 423 | 18,819 | 754 | 133 | 773 | 1,710 | |||||||||||||||||||||
| Class C |
565 | 1,840 | 219,471 | 6,783 | 759 | 5,009 | 12,050 | |||||||||||||||||||||
| Class E |
N/A | 165 | 1,131 | 228 | 3 | 415 | 292 | |||||||||||||||||||||
| Class I |
1,119 | 2,508 | 465,993 | 41,889 | 1,581 | 6,490 | 4,493 | |||||||||||||||||||||
| Class R |
22 | 18 | 3,438 | 250 | 12 | 1,775 | 25 | |||||||||||||||||||||
| Class Y |
323 | 450 | 129,060 | 8,010 | 273 | 7,308 | 2,377 | |||||||||||||||||||||
| NET ASSET VALUE PER SHARE: |
||||||||||||||||||||||||||||
| Class A |
$13.27 | $15.58 | $8.75 | $19.04 | $41.15 | $17.59 | $10.90 | |||||||||||||||||||||
| Class B |
$13.27 | $15.32 | $8.75 | $17.23 | $36.59 | $14.84 | $10.90 | |||||||||||||||||||||
| Class C |
$13.27 | $15.41 | $8.75 | $17.25 | $36.57 | $15.64 | $10.90 | |||||||||||||||||||||
| Class E |
N/A | $15.58 | $8.75 | $19.14 | $41.19 | $17.57 | $10.90 | |||||||||||||||||||||
| Class I |
$13.28 | $15.70 | $8.75 | $19.15 | $41.57 | $18.15 | $10.90 | |||||||||||||||||||||
| Class R |
$13.28 | $15.57 | $8.75 | $19.03 | $41.11 | $17.25 | $10.90 | |||||||||||||||||||||
| Class Y |
$13.28 | $15.64 | $8.75 | $19.16 | $41.23 | $17.89 | $10.90 | |||||||||||||||||||||
| +COST |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities at cost |
$ | 189,223 | $ | 530,351 | $ | 11,079,033 | $ | 1,794,037 | $ | 379,840 | $ | 983,608 | $ | 1,645,626 | ||||||||||||||
| Investments in affiliated securities at cost |
— | — | 35,000 | — | — | — | — | |||||||||||||||||||||
| Cash denominated in foreign currencies at cost |
216 | — | 165 | 2 | 2,900 | — | — | |||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 194 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF ASSETS AND LIABILITIES
| Ivy Funds |
AS OF MARCH 31, 2014 |
| (In thousands, except per share amounts) | Ivy Managed International Opportunities Fund |
Ivy Micro Growth |
Ivy Mid Cap Growth Fund |
Ivy Money |
Ivy Fund |
Ivy Municipal Income Fund |
Ivy Small Cap Growth Fund |
|||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities at value+ |
$ | 221 | $ | 271,587 | $ | 4,807,630 | $ | 182,681 | $ | 137,409 | $ | 1,177,220 | $ | 1,217,516 | ||||||||||||||
| Investments in affiliated securities at value+ |
266,388 | — | — | — | — | — | — | |||||||||||||||||||||
| Investments at Value |
266,609 | 271,587 | 4,807,630 | 182,681 | 137,409 | 1,177,220 | 1,217,516 | |||||||||||||||||||||
| Cash |
— | * | 476 | 82 | 3 | 1 | — | * | 1 | |||||||||||||||||||
| Investment securities sold receivable |
51 | 2,297 | 11,755 | — | — | — | 1,516 | |||||||||||||||||||||
| Dividends and interest receivable |
— | * | 64 | 2,073 | 235 | 1,735 | 21,879 | 373 | ||||||||||||||||||||
| Capital shares sold receivable |
360 | 2,716 | 15,128 | 783 | 179 | 3,256 | 2,660 | |||||||||||||||||||||
| Receivable from affiliates |
— | — | 2 | 743 | — | * | 8 | 6 | ||||||||||||||||||||
| Prepaid and other assets |
44 | 43 | 69 | 24 | 24 | 33 | 46 | |||||||||||||||||||||
| Total Assets |
267,064 | 277,183 | 4,836,739 | 184,469 | 139,348 | 1,202,396 | 1,222,118 | |||||||||||||||||||||
| LIABILITIES |
||||||||||||||||||||||||||||
| Investment securities purchased payable |
— | 9,314 | 46,909 | — | — | 1,974 | 2,970 | |||||||||||||||||||||
| Capital shares redeemed payable |
421 | 1,245 | 7,494 | 624 | 158 | 1,864 | 5,809 | |||||||||||||||||||||
| Distributions payable |
— | — | — | — | * | 48 | 659 | — | ||||||||||||||||||||
| Trustees and Chief Compliance Officer fees payable |
13 | 2 | 79 | 27 | 13 | 21 | 184 | |||||||||||||||||||||
| Distribution and service fees payable |
2 | 2 | 26 | 1 | 1 | 9 | 12 | |||||||||||||||||||||
| Shareholder servicing payable |
46 | 66 | 1,049 | 52 | 21 | 162 | 270 | |||||||||||||||||||||
| Investment management fee payable |
— | * | 7 | 105 | 2 | 2 | 16 | 28 | ||||||||||||||||||||
| Accounting services fee payable |
5 | 8 | 22 | 6 | 6 | 24 | 24 | |||||||||||||||||||||
| Written options at value+ |
— | — | 1,498 | — | — | — | — | |||||||||||||||||||||
| Other liabilities |
3 | 3 | — | 2 | 1 | 3 | 6 | |||||||||||||||||||||
| Total Liabilities |
490 | 10,647 | 57,182 | 714 | 250 | 4,732 | 9,303 | |||||||||||||||||||||
| Total Net Assets |
$ | 266,574 | $ | 266,536 | $ | 4,779,557 | $ | 183,755 | $ | 139,098 | $ | 1,197,664 | $ | 1,212,815 | ||||||||||||||
| NET ASSETS |
||||||||||||||||||||||||||||
| Capital paid in (shares authorized – unlimited) |
$ | 263,546 | $ | 200,287 | $ | 3,639,855 | $ | 183,791 | $ | 133,665 | $ | 1,228,257 | $ | 798,070 | ||||||||||||||
| Undistributed (distributions in excess of) net investment income |
(210 | ) | (2 | ) | (2,127 | ) | — | 70 | 1,782 | (182 | ) | |||||||||||||||||
| Accumulated net realized gain (loss) |
(66,119 | ) | 11,210 | 313,559 | (36 | ) | (792 | ) | (12,608 | ) | 44,303 | |||||||||||||||||
| Net unrealized appreciation (depreciation) |
69,357 | 55,041 | 828,270 | — | 6,155 | (19,767 | ) | 370,624 | ||||||||||||||||||||
| Total Net Assets |
$ | 266,574 | $ | 266,536 | $ | 4,779,557 | $ | 183,755 | $ | 139,098 | $ | 1,197,664 | $ | 1,212,815 | ||||||||||||||
| CAPITAL SHARES OUTSTANDING: |
||||||||||||||||||||||||||||
| Class A |
24,966 | 7,763 | 66,448 | 137,368 | 9,658 | 72,850 | 21,926 | |||||||||||||||||||||
| Class B |
335 | 128 | 1,272 | 6,922 | 210 | 2,888 | 813 | |||||||||||||||||||||
| Class C |
622 | 524 | 13,871 | 34,091 | 1,764 | 43,078 | 13,784 | |||||||||||||||||||||
| Class E |
43 | N/A | 265 | 5,410 | N/A | N/A | 265 | |||||||||||||||||||||
| Class I |
98 | 1,232 | 85,298 | N/A | 173 | 116,628 | 11,108 | |||||||||||||||||||||
| Class R |
56 | 15 | 4,429 | N/A | N/A | N/A | 2,288 | |||||||||||||||||||||
| Class Y |
156 | 99 | 28,705 | N/A | 46 | 2,893 | 12,864 | |||||||||||||||||||||
| NET ASSET VALUE PER SHARE: |
||||||||||||||||||||||||||||
| Class A |
$10.15 | $27.31 | $23.45 | $1.00 | $11.74 | $5.03 | $18.51 | |||||||||||||||||||||
| Class B |
$9.99 | $26.23 | $20.30 | $1.00 | $11.74 | $5.03 | $15.47 | |||||||||||||||||||||
| Class C |
$10.02 | $26.56 | $21.24 | $1.00 | $11.74 | $5.03 | $16.35 | |||||||||||||||||||||
| Class E |
$10.16 | N/A | $23.02 | $1.00 | N/A | N/A | $18.43 | |||||||||||||||||||||
| Class I |
$10.17 | $27.65 | $24.60 | N/A | $11.74 | $5.03 | $22.19 | |||||||||||||||||||||
| Class R |
$10.13 | $27.27 | $23.18 | N/A | N/A | N/A | $18.41 | |||||||||||||||||||||
| Class Y |
$10.14 | $28.02 | $24.18 | N/A | $11.74 | $5.03 | $21.42 | |||||||||||||||||||||
| +COST |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities at cost |
$ | 221 | $ | 216,546 | $ | 3,979,528 | $ | 182,681 | $ | 131,254 | $ | 1,196,987 | $ | 846,892 | ||||||||||||||
| Investments in affiliated securities at cost |
197,031 | — | — | — | — | — | — | |||||||||||||||||||||
| Written options premiums received at cost |
— | — | 1,666 | — | — | — | — | |||||||||||||||||||||
| *Not | shown due to rounding. |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 195 |
Table of Contents
STATEMENTS OF ASSETS AND LIABILITIES
| Ivy Funds |
AS OF MARCH 31, 2014 |
| (In thousands, except per share amounts) | Ivy Small Cap Value Fund |
Ivy Tax- Managed Equity Fund |
Ivy Value Fund |
|||||||||
| ASSETS |
||||||||||||
| Investments in unaffiliated securities at value+ |
$ | 304,821 | $ | 44,973 | $ | 275,664 | ||||||
| Investments at Value |
304,821 | 44,973 | 275,664 | |||||||||
| Cash |
1 | 1 | — | * | ||||||||
| Investment securities sold receivable |
735 | 870 | — | |||||||||
| Dividends and interest receivable |
222 | 35 | 444 | |||||||||
| Capital shares sold receivable |
431 | 63 | 557 | |||||||||
| Prepaid and other assets |
42 | 22 | 39 | |||||||||
| Total Assets |
306,252 | 45,964 | 276,704 | |||||||||
| LIABILITIES |
||||||||||||
| Investment securities purchased payable |
1,083 | 1,239 | — | |||||||||
| Capital shares redeemed payable |
541 | 47 | 264 | |||||||||
| Trustees and Chief Compliance Officer fees payable |
34 | 1 | 19 | |||||||||
| Distribution and service fees payable |
2 | — | * | 2 | ||||||||
| Shareholder servicing payable |
113 | 8 | 70 | |||||||||
| Investment management fee payable |
7 | 1 | 5 | |||||||||
| Accounting services fee payable |
9 | 2 | 8 | |||||||||
| Written options at value+ |
— | — | 628 | |||||||||
| Other liabilities |
3 | 1 | 3 | |||||||||
| Total Liabilities |
1,792 | 1,299 | 999 | |||||||||
| Total Net Assets |
$ | 304,460 | $ | 44,665 | $ | 275,705 | ||||||
| NET ASSETS |
||||||||||||
| Capital paid in (shares authorized – unlimited) |
$ | 221,518 | $ | 32,924 | $ | 204,195 | ||||||
| Undistributed (distributions in excess of) net investment income |
1,024 | (35 | ) | 2,963 | ||||||||
| Accumulated net realized gain |
11,752 | 240 | 5,299 | |||||||||
| Net unrealized appreciation |
70,166 | 11,536 | 63,248 | |||||||||
| Total Net Assets |
$ | 304,460 | $ | 44,665 | $ | 275,705 | ||||||
| CAPITAL SHARES OUTSTANDING: |
||||||||||||
| Class A |
13,338 | 2,374 | 10,419 | |||||||||
| Class B |
235 | 56 | 248 | |||||||||
| Class C |
1,161 | 105 | 623 | |||||||||
| Class E |
8 | N/A | 6 | |||||||||
| Class I |
1,323 | 83 | 218 | |||||||||
| Class R |
64 | N/A | 14 | |||||||||
| Class Y |
530 | 38 | 77 | |||||||||
| NET ASSET VALUE PER SHARE: |
||||||||||||
| Class A |
$18.32 | $16.84 | $23.82 | |||||||||
| Class B |
$16.10 | $16.45 | $22.53 | |||||||||
| Class C |
$16.76 | $16.42 | $23.18 | |||||||||
| Class E |
$18.76 | N/A | $23.90 | |||||||||
| Class I |
$19.29 | $16.93 | $23.90 | |||||||||
| Class R |
$18.31 | N/A | $23.79 | |||||||||
| Class Y |
$18.94 | $16.86 | $23.86 | |||||||||
| +COST |
||||||||||||
| Investments in unaffiliated securities at cost |
$ | 234,655 | $ | 33,437 | $ | 212,749 | ||||||
| Written options premiums received at cost |
— | — | 961 | |||||||||
| *Not | shown due to rounding. |
See Accompanying Notes to Financial Statements.
| 196 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Funds |
FOR THE YEAR ENDED MARCH 31, 2014 |
| (In thousands) | Ivy Bond Fund |
Ivy Core Equity Fund |
Ivy Cundill Global Value Fund |
Ivy Dividend Opportunities Fund |
Ivy Emerging Markets Equity Fund(1)(2) |
Ivy European Opportunities Fund |
Ivy Global Bond Fund |
|||||||||||||||||||||
| INVESTMENT INCOME |
||||||||||||||||||||||||||||
| Dividends from unaffiliated securities |
$ | 386 | $ | 10,940 | $ | 4,529 | $ | 8,187 | $ | 12,662 | $ | 7,024 | $ | 981 | ||||||||||||||
| Foreign dividend withholding tax |
— | (156 | ) | (377 | ) | (47 | ) | (1,387 | ) | (798 | ) | (37 | ) | |||||||||||||||
| Interest and amortization from unaffiliated securities |
19,880 | 21 | 234 | 13 | 154 | 8 | 11,700 | |||||||||||||||||||||
| Foreign interest withholding tax |
— | — | — | — | (6 | ) | — | — | ||||||||||||||||||||
| Total Investment Income |
20,266 | 10,805 | 4,386 | 8,153 | 11,423 | 6,234 | 12,644 | |||||||||||||||||||||
| EXPENSES |
||||||||||||||||||||||||||||
| Investment management fee |
3,110 | 5,056 | 3,101 | 2,478 | 5,904 | 1,907 | 1,785 | |||||||||||||||||||||
| Interest expense for borrowing |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Distribution and service fees: |
||||||||||||||||||||||||||||
| Class A |
1,371 | 1,036 | 664 | 667 | 1,101 | 399 | 444 | |||||||||||||||||||||
| Class B |
85 | 104 | 53 | 122 | 65 | 27 | 63 | |||||||||||||||||||||
| Class C |
285 | 1,322 | 233 | 433 | 150 | 96 | 395 | |||||||||||||||||||||
| Class E |
10 | 14 | 2 | 10 | — | * | — | * | N/A | |||||||||||||||||||
| Class R |
1 | 3 | 1 | 2 | 2 | 1 | 1 | |||||||||||||||||||||
| Class Y |
7 | 126 | 23 | 28 | 12 | 5 | 14 | |||||||||||||||||||||
| Shareholder servicing: |
||||||||||||||||||||||||||||
| Class A |
1,088 | 784 | 1,019 | 606 | 1,757 | 738 | 475 | |||||||||||||||||||||
| Class B |
32 | 37 | 38 | 31 | 58 | 23 | 23 | |||||||||||||||||||||
| Class C |
61 | 243 | 57 | 62 | 59 | 31 | 60 | |||||||||||||||||||||
| Class E |
20 | 27 | 7 | 25 | — | * | — | * | N/A | |||||||||||||||||||
| Class I |
8 | 171 | 10 | 26 | 208 | 56 | 90 | |||||||||||||||||||||
| Class R |
1 | 1 | 1 | 1 | 1 | 1 | 1 | |||||||||||||||||||||
| Class Y |
4 | 78 | 13 | 17 | 7 | 3 | 9 | |||||||||||||||||||||
| Registration fees |
129 | 119 | 106 | 114 | 109 | 100 | 100 | |||||||||||||||||||||
| Custodian fees |
24 | 20 | 27 | 19 | 145 | 23 | 11 | |||||||||||||||||||||
| Trustees and Chief Compliance Officer fees |
32 | 39 | 34 | 15 | 30 | 22 | 9 | |||||||||||||||||||||
| Accounting services fee |
170 | 194 | 111 | 119 | 170 | 94 | 100 | |||||||||||||||||||||
| Professional fees |
32 | 19 | 41 | 15 | 84 | 33 | 30 | |||||||||||||||||||||
| Other |
58 | 56 | 40 | 36 | 110 | 49 | 63 | |||||||||||||||||||||
| Total Expenses |
6,528 | 9,449 | 5,581 | 4,826 | 9,972 | 3,608 | 3,673 | |||||||||||||||||||||
| Less: |
||||||||||||||||||||||||||||
| Expenses in excess of limit |
(9 | ) | (447 | ) | (437 | ) | (12 | ) | — | — | (634 | ) | ||||||||||||||||
| Total Net Expenses |
6,519 | 9,002 | 5,144 | 4,814 | 9,972 | 3,608 | 3,039 | |||||||||||||||||||||
| Net Investment Income (Loss) |
13,747 | 1,803 | (758 | ) | 3,339 | 1,451 | 2,626 | 9,605 | ||||||||||||||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||||||||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities |
(5,051 | ) | 60,979 | 29,989 | 36,827 | 36,335 | 46,567 | (2,651 | ) | |||||||||||||||||||
| Futures contracts |
833 | — | — | — | (1,975 | ) | — | — | ||||||||||||||||||||
| Written options |
— | — | — | — | 1,084 | — | — | |||||||||||||||||||||
| Swap agreements |
— | — | — | — | (1,631 | ) | — | — | ||||||||||||||||||||
| Forward foreign currency contracts |
— | — | 4,567 | — | (2,914 | ) | (752 | ) | (301 | ) | ||||||||||||||||||
| Foreign currency exchange transactions |
— | (1 | ) | (88 | ) | — | * | (1,337 | ) | (101 | ) | (92 | ) | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities |
(8,079 | ) | 83,268 | 25,575 | 26,399 | 18,984 | (8,505 | ) | (2,416 | ) | ||||||||||||||||||
| Futures contracts |
55 | — | — | — | — | — | — | |||||||||||||||||||||
| Written options |
— | — | — | — | 529 | — | — | |||||||||||||||||||||
| Swap agreements |
— | — | — | — | (483 | ) | — | — | ||||||||||||||||||||
| Forward foreign currency contracts |
— | — | (2,492 | ) | — | 171 | 103 | (179 | ) | |||||||||||||||||||
| Foreign currency exchange transactions |
— | 2 | 44 | — | * | 250 | 87 | 2 | ||||||||||||||||||||
| Net Realized and Unrealized Gain (Loss) |
(12,242 | ) | 144,248 | 57,595 | 63,226 | 49,013 | 37,399 | (5,637 | ) | |||||||||||||||||||
| Net Increase in Net Assets Resulting from Operations |
$ | 1,505 | $ | 146,051 | $ | 56,837 | $ | 66,565 | $ | 50,464 | $ | 40,025 | $ | 3,968 | ||||||||||||||
| * | Not shown due to rounding. |
| (1) | Effective February 11, 2014, the Fund’s name changed from Ivy Pacific Opportunities Fund. |
| (2) | Consolidated Statement of Operations (See Note 6 to Financial Statements). |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 197 |
Table of Contents
STATEMENTS OF OPERATIONS
| Ivy Funds |
FOR THE YEAR ENDED MARCH 31, 2014 |
| (In thousands) | Ivy Global Equity Income Fund |
Ivy Global Income Allocation Fund |
Ivy High Income Fund |
Ivy International Core Equity Fund |
Ivy International Growth Fund |
Ivy Large Cap Growth Fund |
Ivy Limited- Term Bond Fund |
|||||||||||||||||||||
| INVESTMENT INCOME |
||||||||||||||||||||||||||||
| Dividends from unaffiliated securities |
$ | 9,470 | $ | 21,015 | $ | 1,008 | $ | 48,103 | $ | 7,899 | $ | 17,426 | $ | — | ||||||||||||||
| Foreign dividend withholding tax |
(695 | ) | (1,499 | ) | — | (4,697 | ) | (783 | ) | (223 | ) | — | ||||||||||||||||
| Interest and amortization from unaffiliated securities |
3 | 8,307 | 715,024 | 83 | 30 | 17 | 35,576 | |||||||||||||||||||||
| Foreign interest withholding tax |
— | (11 | ) | — | — | — | * | — | — | |||||||||||||||||||
| Total Investment Income |
8,778 | 27,812 | 716,032 | 43,489 | 7,146 | 17,220 | 35,576 | |||||||||||||||||||||
| EXPENSES |
||||||||||||||||||||||||||||
| Investment management fee |
1,050 | 3,316 | 48,281 | 15,044 | 3,006 | 9,690 | 7,150 | |||||||||||||||||||||
| Distribution and service fees: |
||||||||||||||||||||||||||||
| Class A |
316 | 1,002 | 8,771 | 2,130 | 617 | 2,595 | 3,266 | |||||||||||||||||||||
| Class B |
16 | 67 | 1,607 | 126 | 46 | 113 | 216 | |||||||||||||||||||||
| Class C |
55 | 271 | 16,596 | 1,047 | 250 | 759 | 1,719 | |||||||||||||||||||||
| Class E |
N/A | 6 | 22 | 10 | — | * | 16 | 9 | ||||||||||||||||||||
| Class R |
2 | 1 | 46 | 7 | 2 | 147 | 1 | |||||||||||||||||||||
| Class Y |
10 | 16 | 2,327 | 346 | 28 | 327 | 92 | |||||||||||||||||||||
| Shareholder servicing: |
||||||||||||||||||||||||||||
| Class A |
412 | 1,237 | 5,120 | 2,233 | 777 | 2,196 | 2,026 | |||||||||||||||||||||
| Class B |
2 | 31 | 225 | 42 | 23 | 37 | 55 | |||||||||||||||||||||
| Class C |
6 | 53 | 1,702 | 186 | 86 | 128 | 243 | |||||||||||||||||||||
| Class E |
N/A | 15 | 43 | 27 | — | * | 31 | 10 | ||||||||||||||||||||
| Class I |
20 | 48 | 4,910 | 1,040 | 73 | 194 | 120 | |||||||||||||||||||||
| Class R |
1 | 1 | 23 | 3 | 1 | 74 | 1 | |||||||||||||||||||||
| Class Y |
6 | 10 | 1,494 | 218 | 18 | 198 | 60 | |||||||||||||||||||||
| Registration fees |
139 | 123 | 488 | 141 | 107 | 122 | 211 | |||||||||||||||||||||
| Custodian fees |
25 | 51 | 95 | 155 | 36 | 27 | 24 | |||||||||||||||||||||
| Trustees and Chief Compliance Officer fees |
4 | 21 | 261 | 60 | 28 | 63 | 58 | |||||||||||||||||||||
| Accounting services fee |
68 | 142 | 271 | 271 | 119 | 271 | 271 | |||||||||||||||||||||
| Professional fees |
63 | 35 | 115 | 37 | 30 | 23 | 22 | |||||||||||||||||||||
| Other |
17 | 78 | 754 | 173 | 70 | 101 | 118 | |||||||||||||||||||||
| Total Expenses |
2,212 | 6,524 | 93,151 | 23,296 | 5,317 | 17,112 | 15,672 | |||||||||||||||||||||
| Less: |
||||||||||||||||||||||||||||
| Expenses in excess of limit |
(250 | ) | (25 | ) | (126 | ) | (12 | ) | — | (516 | ) | (4 | ) | |||||||||||||||
| Total Net Expenses |
1,962 | 6,499 | 93,025 | 23,284 | 5,317 | 16,596 | 15,668 | |||||||||||||||||||||
| Net Investment Income |
6,816 | 21,313 | 623,007 | 20,205 | 1,829 | 624 | 19,908 | |||||||||||||||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||||||||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities |
2,325 | 8,819 | 171,046 | 168,409 | 14,371 | 202,726 | (7,539 | ) | ||||||||||||||||||||
| Futures contracts |
— | — | — | — | — | — | (3,810 | ) | ||||||||||||||||||||
| Written options |
— | — | — | 616 | — | — | — | |||||||||||||||||||||
| Swap agreements capital gains tax |
— | — | — | — | (323 | ) | — | — | ||||||||||||||||||||
| Swap agreements |
— | — | 963 | — | — | — | — | |||||||||||||||||||||
| Forward foreign currency contracts |
(306 | ) | (5,332 | ) | (34,302 | ) | 121 | (2,805 | ) | — | — | |||||||||||||||||
| Foreign currency exchange transactions |
(126 | ) | (289 | ) | 5,038 | 671 | 231 | — | — | |||||||||||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities |
15,532 | 20,863 | 70,609 | 156,813 | 43,370 | 99,887 | (19,283 | ) | ||||||||||||||||||||
| Investments in affiliated securities |
— | — | 1,470 | — | — | — | — | |||||||||||||||||||||
| Futures contracts |
— | — | — | — | — | — | (1,624 | ) | ||||||||||||||||||||
| Forward foreign currency contracts |
(147 | ) | (63 | ) | (9,242 | ) | 318 | 318 | — | — | ||||||||||||||||||
| Foreign currency exchange transactions |
7 | 31 | (129 | ) | 36 | (40 | ) | — | — | |||||||||||||||||||
| Net Realized and Unrealized Gain (Loss) |
17,285 | 24,029 | 205,453 | 326,984 | 55,122 | 302,613 | (32,256 | ) | ||||||||||||||||||||
| Net Increase (Decrease) in Net Assets Resulting from Operations |
$ | 24,101 | $ | 45,342 | $ | 828,460 | $ | 347,189 | $ | 56,951 | $ | 303,237 | $ | (12,348 | ) | |||||||||||||
| *Not | shown due to rounding. |
See Accompanying Notes to Financial Statements.
| 198 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF OPERATIONS
| Ivy Funds |
FOR THE YEAR ENDED MARCH 31, 2014 |
| (In thousands) | Ivy Managed International Opportunities Fund |
Ivy Micro Cap Growth Fund |
Ivy Mid Cap Growth Fund |
Ivy Money Market Fund |
Ivy Municipal Bond Fund |
Ivy Municipal High Income Fund |
Ivy Small Cap Growth Fund |
|||||||||||||||||||||
| INVESTMENT INCOME |
||||||||||||||||||||||||||||
| Dividends from unaffiliated securities |
$ | — | $ | 318 | $ | 28,814 | $ | — | $ | — | $ | — | $ | 3,690 | ||||||||||||||
| Dividends from affiliated securities |
3,222 | — | — | — | — | — | — | |||||||||||||||||||||
| Foreign dividend withholding tax |
— | — | (94 | ) | — | — | — | — | ||||||||||||||||||||
| Interest and amortization from unaffiliated securities |
— | * | 10 | 206 | 439 | 5,930 | 71,882 | 65 | ||||||||||||||||||||
| Total Investment Income |
3,222 | 328 | 28,926 | 439 | 5,930 | 71,882 | 3,755 | |||||||||||||||||||||
| EXPENSES |
||||||||||||||||||||||||||||
| Investment management fee |
98 | 1,565 | 33,092 | 808 | 794 | 6,539 | 9,042 | |||||||||||||||||||||
| Distribution and service fees: |
||||||||||||||||||||||||||||
| Class A |
467 | 351 | 3,454 | — | 305 | 1,067 | 857 | |||||||||||||||||||||
| Class B |
23 | 23 | 240 | 80 | 29 | 161 | 119 | |||||||||||||||||||||
| Class C |
50 | 83 | 2,381 | 400 | 241 | 2,546 | 2,086 | |||||||||||||||||||||
| Class E |
1 | N/A | 13 | — | N/A | N/A | 10 | |||||||||||||||||||||
| Class R |
1 | 2 | 444 | N/A | N/A | N/A | 163 | |||||||||||||||||||||
| Class Y |
2 | 3 | 1,536 | N/A | 1 | 58 | 632 | |||||||||||||||||||||
| Shareholder servicing: |
||||||||||||||||||||||||||||
| Class A |
162 | 429 | 3,537 | 259 | 138 | 329 | 937 | |||||||||||||||||||||
| Class B |
5 | 11 | 65 | 18 | 3 | 17 | 51 | |||||||||||||||||||||
| Class C |
5 | 22 | 438 | 46 | 29 | 166 | 367 | |||||||||||||||||||||
| Class E |
— | * | N/A | 32 | 11 | N/A | N/A | 28 | ||||||||||||||||||||
| Class I |
— | * | 21 | 2,746 | N/A | 3 | 936 | 338 | ||||||||||||||||||||
| Class R |
— | * | 1 | 233 | N/A | N/A | N/A | 85 | ||||||||||||||||||||
| Class Y |
— | * | 2 | 957 | N/A | 1 | 37 | 390 | ||||||||||||||||||||
| Registration fees |
98 | 92 | 153 | 87 | 79 | 146 | 117 | |||||||||||||||||||||
| Custodian fees |
7 | 17 | 55 | 12 | 7 | 35 | 33 | |||||||||||||||||||||
| Trustees and Chief Compliance Officer fees |
7 | 5 | 122 | 11 | 7 | 40 | 64 | |||||||||||||||||||||
| Accounting services fee |
45 | 73 | 271 | 80 | 68 | 260 | 260 | |||||||||||||||||||||
| Professional fees |
12 | 13 | 39 | 12 | 22 | 75 | 25 | |||||||||||||||||||||
| Other |
27 | 31 | 313 | 29 | 22 | 107 | 85 | |||||||||||||||||||||
| Total Expenses |
1,010 | 2,744 | 50,121 | 1,853 | 1,749 | 12,519 | 15,689 | |||||||||||||||||||||
| Less: |
||||||||||||||||||||||||||||
| Expenses in excess of limit |
— | — | (6 | ) | (1,454 | ) | — | * | (220 | ) | (13 | ) | ||||||||||||||||
| Total Net Expenses |
1,010 | 2,744 | 50,115 | 399 | 1,749 | 12,299 | 15,676 | |||||||||||||||||||||
| Net Investment Income (Loss) |
2,212 | (2,416 | ) | (21,189 | ) | 40 | 4,181 | 59,583 | (11,921 | ) | ||||||||||||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||||||||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities |
— | 24,854 | 488,847 | 1 | (424 | ) | (12,537 | ) | 112,582 | |||||||||||||||||||
| Investments in affiliated securities |
4,346 | — | — | — | — | — | — | |||||||||||||||||||||
| Written options |
— | — | (4,600 | ) | — | — | — | — | ||||||||||||||||||||
| Swap agreements |
— | — | — | — | — | — | 9,267 | |||||||||||||||||||||
| Foreign currency exchange transactions |
— | — | 9 | — | — | — | — | |||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||||||||||
| Investments in unaffiliated securities |
— | 31,330 | 289,342 | — | (6,418 | ) | (116,421 | ) | 119,705 | |||||||||||||||||||
| Investments in affiliated securities |
20,520 | — | — | — | — | — | — | |||||||||||||||||||||
| Written options |
— | — | (1,807 | ) | — | — | — | — | ||||||||||||||||||||
| Swap agreements |
— | — | — | — | — | — | (557 | ) | ||||||||||||||||||||
| Foreign currency exchange transactions |
— | — | (3 | ) | — | — | — | — | ||||||||||||||||||||
| Net Realized and Unrealized Gain (Loss) |
24,866 | 56,184 | 771,788 | 1 | (6,842 | ) | (128,958 | ) | 240,997 | |||||||||||||||||||
| Net Increase (Decrease) in Net Assets Resulting from Operations |
$ | 27,078 | $ | 53,768 | $ | 750,599 | $ | 41 | $ | (2,661 | ) | $ | (69,375 | ) | $ | 229,076 | ||||||||||||
| *Not | shown due to rounding. |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 199 |
Table of Contents
STATEMENTS OF OPERATIONS
| Ivy Funds |
FOR THE YEAR ENDED MARCH 31, 2014 |
| (In thousands) | Ivy Small Cap Value Fund |
Ivy Tax- Managed Equity Fund |
Ivy Value Fund |
|||||||||
| INVESTMENT INCOME |
||||||||||||
| Dividends from unaffiliated securities |
$ | 2,715 | $ | 424 | $ | 3,646 | ||||||
| Foreign dividend withholding tax |
— | (4 | ) | (28 | ) | |||||||
| Interest and amortization from unaffiliated securities |
31 | 2 | 12 | |||||||||
| Total Investment Income |
2,746 | 422 | 3,630 | |||||||||
| EXPENSES |
||||||||||||
| Investment management fee |
2,460 | 241 | 1,578 | |||||||||
| Distribution and service fees: |
||||||||||||
| Class A |
589 | 83 | 503 | |||||||||
| Class B |
37 | 8 | 56 | |||||||||
| Class C |
177 | 14 | 123 | |||||||||
| Class E |
— | * | N/A | — | * | |||||||
| Class R |
3 | N/A | 2 | |||||||||
| Class Y |
21 | 2 | 4 | |||||||||
| Shareholder servicing: |
||||||||||||
| Class A |
871 | 59 | 485 | |||||||||
| Class B |
23 | — | * | 19 | ||||||||
| Class C |
53 | 1 | 24 | |||||||||
| Class E |
— | * | N/A | — | * | |||||||
| Class I |
36 | 2 | 7 | |||||||||
| Class R |
1 | N/A | 1 | |||||||||
| Class Y |
11 | 1 | 3 | |||||||||
| Registration fees |
106 | 71 | 108 | |||||||||
| Custodian fees |
11 | 6 | 10 | |||||||||
| Trustees and Chief Compliance Officer fees |
15 | 1 | 10 | |||||||||
| Accounting services fee |
102 | 29 | 91 | |||||||||
| Professional fees |
20 | 12 | 21 | |||||||||
| Other |
36 | 12 | 31 | |||||||||
| Total Expenses |
4,572 | 542 | 3,076 | |||||||||
| Net Investment Income (Loss) |
(1,826 | ) | (120 | ) | 554 | |||||||
| REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) on: |
||||||||||||
| Investments in unaffiliated securities |
40,510 | 1,676 | 19,053 | |||||||||
| Written options |
— | — | (991 | ) | ||||||||
| Net change in unrealized appreciation on: |
||||||||||||
| Investments in unaffiliated securities |
16,893 | 5,924 | 26,711 | |||||||||
| Written options |
— | — | 437 | |||||||||
| Net Realized and Unrealized Gain |
57,403 | 7,600 | 45,210 | |||||||||
| Net Increase in Net Assets Resulting from Operations |
$ | 55,577 | $ | 7,480 | $ | 45,764 | ||||||
| *Not | shown due to rounding. |
See Accompanying Notes to Financial Statements.
| 200 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy Bond Fund | Ivy Core Equity Fund | Ivy Cundill Global Value Fund | ||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income (loss) |
$ | 13,747 | $ | 13,360 | $ | 1,803 | $ | 686 | $ | (758 | ) | $ | 16 | |||||||||||
| Net realized gain (loss) on investments |
(4,218 | ) | 8,392 | 60,978 | 18,411 | 34,468 | (107 | ) | ||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
(8,024 | ) | 11,404 | 83,270 | 31,959 | 23,127 | 16,335 | |||||||||||||||||
| Net Increase in Net Assets Resulting from Operations |
1,505 | 33,156 | 146,051 | 51,056 | 56,837 | 16,244 | ||||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
(15,616 | ) | (14,721 | ) | (1,301 | ) | (899 | ) | (170 | ) | — | |||||||||||||
| Class B |
(165 | ) | (219 | ) | — | — | — | — | ||||||||||||||||
| Class C |
(600 | ) | (934 | ) | — | — | — | — | ||||||||||||||||
| Class E |
(113 | ) | (125 | ) | (10 | ) | (13 | ) | (3 | ) | — | |||||||||||||
| Class I |
(153 | ) | (225 | ) | (643 | ) | (250 | ) | (33 | ) | — | |||||||||||||
| Class R |
(6 | ) | (2 | ) | — | * | — | — | * | — | ||||||||||||||
| Class Y |
(81 | ) | (186 | ) | (279 | ) | (82 | ) | (27 | ) | — | |||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
— | (3,397 | ) | (24,955 | ) | (1,593 | ) | — | — | |||||||||||||||
| Class B |
— | (76 | ) | (642 | ) | (43 | ) | — | — | |||||||||||||||
| Class C |
— | (289 | ) | (8,242 | ) | (792 | ) | — | — | |||||||||||||||
| Class E |
— | (29 | ) | (334 | ) | (26 | ) | — | — | |||||||||||||||
| Class I |
— | (59 | ) | (7,028 | ) | (280 | ) | — | — | |||||||||||||||
| Class R |
— | — | (31 | ) | — | — | — | |||||||||||||||||
| Class Y |
— | (35 | ) | (3,086 | ) | (126 | ) | — | — | |||||||||||||||
| Total Distributions to Shareholders |
(16,734 | ) | (20,297 | ) | (46,551 | ) | (4,104 | ) | (233 | ) | — | |||||||||||||
| Capital Share Transactions |
(4,368 | ) | 104,197 | 247,634 | 140,225 | 83,656 | (39,926 | ) | ||||||||||||||||
| Net Increase (Decrease) in Net Assets |
(19,597 | ) | 117,056 | 347,134 | 187,177 | 140,260 | (23,682 | ) | ||||||||||||||||
| Net Assets, Beginning of Period |
619,942 | 502,886 | 536,478 | 349,301 | 231,683 | 255,365 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 600,345 | $ | 619,942 | $ | 883,612 | $ | 536,478 | $ | 371,943 | $ | 231,683 | ||||||||||||
| Distributions in excess of net investment income |
$ | — | $ | — | $ | (104 | ) | $ | (98 | ) | $ | (341 | ) | $ | (181 | ) | ||||||||
| *Not | shown due to rounding. |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 201 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy Dividend Opportunities Fund |
Ivy Emerging Markets Equity Fund(1)(2) |
Ivy European Opportunities Fund |
||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income |
$ | 3,339 | $ | 4,485 | $ | 1,451 | $ | 2,043 | $ | 2,626 | $ | 953 | ||||||||||||
| Net realized gain (loss) on investments |
36,827 | 20,705 | 29,562 | (35,372 | ) | 45,714 | 6,553 | |||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
26,399 | 9,133 | 19,451 | 34,605 | (8,315 | ) | 9,872 | |||||||||||||||||
| Net Increase in Net Assets Resulting from |
66,565 | 34,323 | 50,464 | 1,276 | 40,025 | 17,378 | ||||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
(2,303 | ) | (3,535 | ) | (2,323 | ) | (3,447 | ) | (443 | ) | (613 | ) | ||||||||||||
| Class B |
(35 | ) | (102 | ) | — | (3 | ) | — | — | |||||||||||||||
| Class C |
(160 | ) | (336 | ) | (16 | ) | (47 | ) | — | — | ||||||||||||||
| Class E |
(32 | ) | (44 | ) | (2 | ) | — | (1 | ) | (1 | ) | |||||||||||||
| Class I |
(198 | ) | (216 | ) | (1,386 | ) | (1,567 | ) | (309 | ) | (353 | ) | ||||||||||||
| Class R |
(2 | ) | — | (1 | ) | — | (1 | ) | — | |||||||||||||||
| Class Y |
(99 | ) | (177 | ) | (35 | ) | (50 | ) | (12 | ) | (14 | ) | ||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
(4,100 | ) | — | — | — | — | — | |||||||||||||||||
| Class B |
(191 | ) | — | — | — | — | — | |||||||||||||||||
| Class C |
(686 | ) | — | — | — | — | — | |||||||||||||||||
| Class E |
(64 | ) | — | — | — | — | — | |||||||||||||||||
| Class I |
(266 | ) | — | — | — | — | — | |||||||||||||||||
| Class R |
(5 | ) | — | — | — | — | — | |||||||||||||||||
| Class Y |
(161 | ) | — | — | — | — | — | |||||||||||||||||
| Total Distributions to Shareholders |
(8,302 | ) | (4,410 | ) | (3,763 | ) | (5,114 | ) | (766 | ) | (981 | ) | ||||||||||||
| Capital Share Transactions |
(353 | ) | (53,633 | ) | 26,177 | (6,971 | ) | (40,958 | ) | (42,521 | ) | |||||||||||||
| Net Increase (Decrease) in Net Assets |
57,910 | (23,720 | ) | 72,878 | (10,809 | ) | (1,699 | ) | (26,124 | ) | ||||||||||||||
| Net Assets, Beginning of Period |
326,917 | 350,637 | 667,462 | 678,271 | 212,063 | 238,187 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 384,827 | $ | 326,917 | $ | 740,340 | $ | 667,462 | $ | 210,364 | $ | 212,063 | ||||||||||||
| Undistributed net investment income |
$ | 993 | $ | 338 | $ | 2,431 | $ | 214 | $ | 1,952 | $ | 80 | ||||||||||||
| (1) | Effective February 11, 2014, the Fund’s name changed from Ivy Pacific Opportunities Fund. |
| (2) | Consolidated Statements of Changes in Net Assets (See Note 6 to Financial Statements). |
See Accompanying Notes to Financial Statements.
| 202 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy Global Bond Fund | Ivy Global Equity Income Fund |
Ivy Global Income Allocation Fund |
||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Period from |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income |
$ | 9,605 | $ | 9,428 | $ | 6,816 | $ | 1,378 | $ | 21,313 | $ | 13,904 | ||||||||||||
| Net realized gain (loss) on investments |
(3,044 | ) | 1,210 | 1,893 | 1,837 | 3,198 | (4,962 | ) | ||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
(2,593 | ) | 1,343 | 15,392 | 4,626 | 20,831 | 13,574 | |||||||||||||||||
| Net Increase in Net Assets Resulting from Operations |
3,968 | 11,981 | 24,101 | 7,841 | 45,342 | 22,516 | ||||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
(5,939 | ) | (6,522 | ) | (4,717 | ) | (697 | ) | (16,006 | ) | (11,802 | ) | ||||||||||||
| Class B |
(164 | ) | (208 | ) | (48 | ) | (24 | ) | (203 | ) | (251 | ) | ||||||||||||
| Class C |
(1,026 | ) | (1,356 | ) | (167 | ) | (75 | ) | (897 | ) | (822 | ) | ||||||||||||
| Class E |
N/A | N/A | N/A | N/A | (93 | ) | (93 | ) | ||||||||||||||||
| Class I |
(2,038 | ) | (1,488 | ) | (537 | ) | (292 | ) | (1,316 | ) | (1,571 | ) | ||||||||||||
| Class R |
(8 | ) | (2 | ) | (9 | ) | — | * | (10 | ) | (1 | ) | ||||||||||||
| Class Y |
(191 | ) | (223 | ) | (149 | ) | (88 | ) | (252 | ) | (269 | ) | ||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
(294 | ) | (502 | ) | (1,205 | ) | (236 | ) | — | — | ||||||||||||||
| Class B |
(10 | ) | (21 | ) | (14 | ) | (10 | ) | — | — | ||||||||||||||
| Class C |
(61 | ) | (131 | ) | (49 | ) | (31 | ) | — | — | ||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | — | — | ||||||||||||||||||
| Class I |
(85 | ) | (122 | ) | (110 | ) | (86 | ) | — | — | ||||||||||||||
| Class R |
— | * | — | (2 | ) | — | — | — | ||||||||||||||||
| Class Y |
(9 | ) | (17 | ) | (32 | ) | (28 | ) | — | — | ||||||||||||||
| Total Distributions to Shareholders |
(9,825 | ) | (10,592 | ) | (7,039 | ) | (1,567 | ) | (18,777 | ) | (14,809 | ) | ||||||||||||
| Capital Share Transactions |
8,339 | 48,348 | 115,423 | 73,791 | 172,881 | 66,372 | ||||||||||||||||||
| Net Increase in Net Assets |
2,482 | 49,737 | 132,485 | 80,065 | 199,446 | 74,079 | ||||||||||||||||||
| Net Assets, Beginning of Period |
289,262 | 239,525 | 80,065 | — | 377,442 | 303,363 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 291,744 | $ | 289,262 | $ | 212,550 | $ | 80,065 | $ | 576,888 | $ | 377,442 | ||||||||||||
| Undistributed net investment income |
$ | 474 | $ | 535 | $ | 1,522 | $ | 446 | $ | 3,932 | $ | 2,277 | ||||||||||||
| *Not | shown due to rounding. |
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 203 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy High Income Fund | Ivy International Core Equity Fund |
Ivy International Growth Fund |
||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income |
$ | 623,007 | $ | 464,167 | $ | 20,205 | $ | 22,517 | $ | 1,829 | $ | 1,693 | ||||||||||||
| Net realized gain (loss) on investments |
142,745 | 137,051 | 169,817 | (38,750 | ) | 11,474 | 9,487 | |||||||||||||||||
| Net change in unrealized appreciation |
62,708 | 270,566 | 157,167 | 105,123 | 43,648 | 5,630 | ||||||||||||||||||
| Net Increase in Net Assets Resulting from Operations |
828,460 | 871,784 | 347,189 | 88,890 | 56,951 | 16,810 | ||||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
(238,598 | ) | (184,587 | ) | (17,519 | ) | (9,435 | ) | (3,444 | ) | (1,339 | ) | ||||||||||||
| Class B |
(9,775 | ) | (8,113 | ) | (172 | ) | (96 | ) | (19 | ) | (3 | ) | ||||||||||||
| Class C |
(101,286 | ) | (79,917 | ) | (1,606 | ) | (932 | ) | (131 | ) | (37 | ) | ||||||||||||
| Class E |
(577 | ) | (444 | ) | (74 | ) | (41 | ) | (2 | ) | (1 | ) | ||||||||||||
| Class I |
(220,782 | ) | (141,954 | ) | (16,246 | ) | (9,862 | ) | (724 | ) | (635 | ) | ||||||||||||
| Class R |
(554 | ) | (5 | ) | (35 | ) | — | (4 | ) | — | ||||||||||||||
| Class Y |
(63,213 | ) | (47,042 | ) | (2,949 | ) | (2,246 | ) | (134 | ) | (149 | ) | ||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
(57,013 | ) | (33,153 | ) | (220 | ) | — | — | — | |||||||||||||||
| Class B |
(2,504 | ) | (1,657 | ) | (3 | ) | — | — | — | |||||||||||||||
| Class C |
(26,402 | ) | (16,254 | ) | (28 | ) | — | — | — | |||||||||||||||
| Class E |
(144 | ) | (85 | ) | (1 | ) | — | — | — | |||||||||||||||
| Class I |
(52,595 | ) | (25,949 | ) | (172 | ) | — | — | — | |||||||||||||||
| Class R |
(230 | ) | — | (1 | ) | — | — | — | ||||||||||||||||
| Class Y |
(15,081 | ) | (8,547 | ) | (35 | ) | — | — | — | |||||||||||||||
| Total Distributions to Shareholders |
(788,754 | ) | (547,707 | ) | (39,061 | ) | (22,612 | ) | (4,458 | ) | (2,164 | ) | ||||||||||||
| Capital Share Transactions |
3,350,166 | 3,254,265 | 286,814 | (56,991 | ) | 110,819 | 57,940 | |||||||||||||||||
| Net Increase in Net Assets |
3,389,872 | 3,578,342 | 594,942 | 9,287 | 163,312 | 72,586 | ||||||||||||||||||
| Net Assets, Beginning of Period |
8,088,972 | 4,510,630 | 1,527,119 | 1,517,832 | 286,549 | 213,963 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 11,478,844 | $ | 8,088,972 | $ | 2,122,061 | $ | 1,527,119 | $ | 449,861 | $ | 286,549 | ||||||||||||
| Undistributed (distributions in excess of) net investment income |
$ | 1,012 | $ | 94 | $ | (7,428 | ) | $ | 6,276 | $ | (2,542 | ) | $ | 11 | ||||||||||
See Accompanying Notes to Financial Statements.
| 204 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy Large Cap Growth Fund | Ivy Limited-Term Bond Fund | Ivy Managed International Opportunities Fund |
||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income |
$ | 624 | $ | 2,839 | $ | 19,908 | $ | 21,808 | $ | 2,212 | $ | 2,422 | ||||||||||||
| Net realized gain (loss) on investments |
202,726 | 130,024 | (11,349 | ) | 16,824 | 4,346 | (6,654 | ) | ||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
99,887 | (68,591 | ) | (20,907 | ) | (5,630 | ) | 20,520 | 12,794 | |||||||||||||||
| Net Increase (Decrease) in Net Assets Resulting from Operations |
303,237 | 64,272 | (12,348 | ) | 33,002 | 27,078 | 8,562 | |||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
— | (1,907 | ) | (18,144 | ) | (18,490 | ) | (2,105 | ) | (2,517 | ) | |||||||||||||
| Class B |
— | — | (111 | ) | (217 | ) | (13 | ) | (19 | ) | ||||||||||||||
| Class C |
— | — | (1,097 | ) | (2,138 | ) | (32 | ) | (42 | ) | ||||||||||||||
| Class E |
— | (10 | ) | (46 | ) | (52 | ) | (3 | ) | (3 | ) | |||||||||||||
| Class I |
(198 | ) | (632 | ) | (1,234 | ) | (2,280 | ) | (8 | ) | (7 | ) | ||||||||||||
| Class R |
— | — | (3 | ) | (1 | ) | (3 | ) | — | |||||||||||||||
| Class Y |
(76 | ) | (304 | ) | (506 | ) | (1,071 | ) | (11 | ) | (10 | ) | ||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
(114,458 | ) | — | (8,050 | ) | (3,078 | ) | — | — | |||||||||||||||
| Class B |
(1,454 | ) | — | (116 | ) | (72 | ) | — | — | |||||||||||||||
| Class C |
(9,257 | ) | — | (876 | ) | (615 | ) | — | — | |||||||||||||||
| Class E |
(729 | ) | — | (20 | ) | (10 | ) | — | — | |||||||||||||||
| Class I |
(12,274 | ) | — | (316 | ) | (350 | ) | — | — | |||||||||||||||
| Class R |
(3,262 | ) | — | (1 | ) | — | — | — | ||||||||||||||||
| Class Y |
(14,050 | ) | — | (169 | ) | (182 | ) | — | — | |||||||||||||||
| Total Distributions to Shareholders |
(155,758 | ) | (2,853 | ) | (30,689 | ) | (28,556 | ) | (2,175 | ) | (2,598 | ) | ||||||||||||
| Capital Share Transactions |
(59,220 | ) | (166,982 | ) | 83,642 | 158,866 | 49,942 | (8,902 | ) | |||||||||||||||
| Net Increase (Decrease) in Net Assets |
88,259 | (105,563 | ) | 40,605 | 163,312 | 74,845 | (2,938 | ) | ||||||||||||||||
| Net Assets, Beginning of Period |
1,377,694 | 1,483,257 | 1,633,477 | 1,470,165 | 191,729 | 194,667 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 1,465,953 | $ | 1,377,694 | $ | 1,674,082 | $ | 1,633,477 | $ | 266,574 | $ | 191,729 | ||||||||||||
| Distributions in excess of net investment income |
$ | (783 | ) | $ | (1,011 | ) | $ | (3 | ) | $ | — | $ | (210 | ) | $ | (148 | ) | |||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 205 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy Micro Cap Growth Fund | Ivy Mid Cap Growth Fund | Ivy Money Market Fund | ||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income (loss) |
$ | (2,416 | ) | $ | (1,086 | ) | $ | (21,189 | ) | $ | (11,750 | ) | $ | 40 | $ | 40 | ||||||||
| Net realized gain on investments |
24,854 | 2,740 | 484,256 | 10,878 | 1 | 2 | ||||||||||||||||||
| Net change in unrealized appreciation |
31,330 | 3,306 | 287,532 | 311,289 | — | — | ||||||||||||||||||
| Net Increase in Net Assets Resulting from Operations |
53,768 | 4,960 | 750,599 | 310,417 | 41 | 42 | ||||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
— | — | — | — | (30 | ) | (30 | ) | ||||||||||||||||
| Class B |
— | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||
| Class C |
— | — | — | — | (8 | ) | (8 | ) | ||||||||||||||||
| Class E |
N/A | N/A | — | — | (1 | ) | (1 | ) | ||||||||||||||||
| Class I |
— | — | — | — | N/A | N/A | ||||||||||||||||||
| Class R |
— | — | — | — | N/A | N/A | ||||||||||||||||||
| Class Y |
— | — | — | — | N/A | N/A | ||||||||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
(8,983 | ) | — | (50,715 | ) | (5,679 | ) | — | — | |||||||||||||||
| Class B |
(145 | ) | — | (893 | ) | (123 | ) | — | — | |||||||||||||||
| Class C |
(526 | ) | — | (8,830 | ) | (968 | ) | — | — | |||||||||||||||
| Class E |
N/A | N/A | (189 | ) | (22 | ) | — | — | ||||||||||||||||
| Class I |
(746 | ) | — | (66,004 | ) | (5,893 | ) | N/A | N/A | |||||||||||||||
| Class R |
(21 | ) | — | (3,160 | ) | (393 | ) | N/A | N/A | |||||||||||||||
| Class Y |
(64 | ) | — | (22,878 | ) | (2,452 | ) | N/A | N/A | |||||||||||||||
| Total Distributions to Shareholders |
(10,485 | ) | — | (152,669 | ) | (15,530 | ) | (40 | ) | (40 | ) | |||||||||||||
| Capital Share Transactions |
131,568 | 5,355 | 899,428 | 919,688 | 7,597 | (47,762 | ) | |||||||||||||||||
| Net Increase (Decrease) in Net Assets |
174,851 | 10,315 | 1,497,358 | 1,214,575 | 7,598 | (47,760 | ) | |||||||||||||||||
| Net Assets, Beginning of Period |
91,685 | 81,370 | 3,282,199 | 2,067,624 | 176,157 | 223,917 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 266,536 | $ | 91,685 | $ | 4,779,557 | $ | 3,282,199 | $ | 183,755 | $ | 176,157 | ||||||||||||
| Distributions in excess of net investment income |
$ | (2 | ) | $ | (371 | ) | $ | (2,127 | ) | $ | (7,070 | ) | $ | — | $ | — | ||||||||
See Accompanying Notes to Financial Statements.
| 206 | ANNUAL REPORT | 2014 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy Municipal Bond Fund | Ivy Municipal High Income Fund | Ivy Small Cap Growth Fund | ||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income (loss) |
$ | 4,181 | $ | 3,991 | $ | 59,583 | $ | 55,223 | $ | (11,921 | ) | $ | (7,819 | ) | ||||||||||
| Net realized gain (loss) on investments |
(424 | ) | 158 | (12,537 | ) | 4,618 | 121,849 | 57,359 | ||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
(6,418 | ) | 3,310 | (116,421 | ) | 52,388 | 119,148 | 69,566 | ||||||||||||||||
| Net Increase (Decrease) in Net Assets Resulting from Operations |
(2,661 | ) | 7,459 | (69,375 | ) | 112,229 | 229,076 | 119,106 | ||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
(3,509 | ) | (3,232 | ) | (19,572 | ) | (19,012 | ) | — | — | ||||||||||||||
| Class B |
(60 | ) | (73 | ) | (616 | ) | (497 | ) | — | — | ||||||||||||||
| Class C |
(508 | ) | (610 | ) | (9,791 | ) | (8,585 | ) | — | — | ||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | — | — | ||||||||||||||||||
| Class I |
(58 | ) | (39 | ) | (28,622 | ) | (24,756 | ) | — | — | ||||||||||||||
| Class R |
N/A | N/A | N/A | N/A | — | — | ||||||||||||||||||
| Class Y |
(17 | ) | (20 | ) | (1,059 | ) | (1,210 | ) | — | — | ||||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
— | — | (1,250 | ) | — | (31,823 | ) | (6,368 | ) | |||||||||||||||
| Class B |
— | — | (50 | ) | — | (1,237 | ) | (293 | ) | |||||||||||||||
| Class C |
— | — | (748 | ) | — | (20,164 | ) | (4,938 | ) | |||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | (372 | ) | (73 | ) | ||||||||||||||||
| Class I |
— | — | (1,808 | ) | — | (17,576 | ) | (3,155 | ) | |||||||||||||||
| Class R |
N/A | N/A | N/A | N/A | (3,187 | ) | (478 | ) | ||||||||||||||||
| Class Y |
— | — | (60 | ) | — | (20,217 | ) | (4,398 | ) | |||||||||||||||
| Total Distributions to Shareholders |
(4,152 | ) | (3,974 | ) | (63,576 | ) | (54,060 | ) | (94,576 | ) | (19,703 | ) | ||||||||||||
| Capital Share Transactions |
(25,009 | ) | 37,100 | (339,561 | ) | 575,845 | 176,336 | 24,546 | ||||||||||||||||
| Net Increase (Decrease) in Net Assets |
(31,822 | ) | 40,585 | (472,512 | ) | 634,014 | 310,836 | 123,949 | ||||||||||||||||
| Net Assets, Beginning of Period |
170,920 | 130,335 | 1,670,176 | 1,036,162 | 901,979 | 778,030 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 139,098 | $ | 170,920 | $ | 1,197,664 | $ | 1,670,176 | $ | 1,212,815 | $ | 901,979 | ||||||||||||
| Undistributed (distributions in excess of) net investment income |
$ | 70 | $ | 41 | $ | 1,782 | $ | 1,862 | $ | (182 | ) | $ | (1,751 | ) | ||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 207 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Ivy Funds
| Ivy Small Cap Value Fund | Ivy Tax-Managed Equity Fund | Ivy Value Fund | ||||||||||||||||||||||
| (In thousands) | Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
||||||||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||||||||||||||||||
| Operations: |
||||||||||||||||||||||||
| Net investment income (loss) |
$ | (1,826 | ) | $ | 316 | $ | (120 | ) | $ | 68 | $ | 554 | $ | 997 | ||||||||||
| Net realized gain on investments |
40,510 | 19,659 | 1,676 | 204 | 18,062 | 4,144 | ||||||||||||||||||
| Net change in unrealized appreciation |
16,893 | 24,707 | 5,924 | 1,814 | 27,148 | 17,345 | ||||||||||||||||||
| Net Increase in Net Assets Resulting from Operations |
55,577 | 44,682 | 7,480 | 2,086 | 45,764 | 22,486 | ||||||||||||||||||
| Distributions to Shareholders From: |
||||||||||||||||||||||||
| Net investment income: |
||||||||||||||||||||||||
| Class A |
(878 | ) | — | — | (81 | ) | (382 | ) | (941 | ) | ||||||||||||||
| Class B |
(5 | ) | — | — | — | * | — | — | ||||||||||||||||
| Class C |
(42 | ) | — | — | — | — | (23 | ) | ||||||||||||||||
| Class E |
— | * | — | N/A | N/A | — | * | (1 | ) | |||||||||||||||
| Class I |
(122 | ) | — | — | (6 | ) | (22 | ) | (29 | ) | ||||||||||||||
| Class R |
(2 | ) | — | N/A | N/A | — | * | — | ||||||||||||||||
| Class Y |
(34 | ) | — | — | (3 | ) | (5 | ) | (16 | ) | ||||||||||||||
| Net realized gains: |
||||||||||||||||||||||||
| Class A |
(28,136 | ) | (7,227 | ) | (1,039 | ) | — | (8,840 | ) | (22 | ) | |||||||||||||
| Class B |
(479 | ) | (120 | ) | (24 | ) | — | (214 | ) | (1 | ) | |||||||||||||
| Class C |
(2,297 | ) | (488 | ) | (40 | ) | — | (508 | ) | (2 | ) | |||||||||||||
| Class E |
(15 | ) | (4 | ) | N/A | N/A | (5 | ) | — | * | ||||||||||||||
| Class I |
(2,928 | ) | (639 | ) | (39 | ) | — | (181 | ) | — | * | |||||||||||||
| Class R |
(71 | ) | — | N/A | N/A | (13 | ) | — | ||||||||||||||||
| Class Y |
(1,011 | ) | (225 | ) | (19 | ) | — | (75 | ) | — | * | |||||||||||||
| Total Distributions to Shareholders |
(36,020 | ) | (8,703 | ) | (1,161 | ) | (90 | ) | (10,245 | ) | (1,035 | ) | ||||||||||||
| Capital Share Transactions |
13,372 | (31,407 | ) | 9,998 | 7,719 | 64,074 | 32,873 | |||||||||||||||||
| Net Increase in Net Assets |
32,929 | 4,572 | 16,317 | 9,715 | 99,593 | 54,324 | ||||||||||||||||||
| Net Assets, Beginning of Period |
271,531 | 266,959 | 28,348 | 18,633 | 176,112 | 121,788 | ||||||||||||||||||
| Net Assets, End of Period |
$ | 304,460 | $ | 271,531 | $ | 44,665 | $ | 28,348 | $ | 275,705 | $ | 176,112 | ||||||||||||
| Undistributed (distributions in excess of) net investment income |
$ | 1,024 | $ | 2,059 | $ | (35 | ) | $ | (30 | ) | $ | 2,963 | $ | 1,024 | ||||||||||
| * | Not shown due to rounding. |
See Accompanying Notes to Financial Statements.
| 208 | ANNUAL REPORT | 2014 |
Table of Contents
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| 2014 | ANNUAL REPORT | 209 |
Table of Contents
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY BOND FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 10.71 | $ | 0.24 | $ | (0.19 | ) | $ | 0.05 | $ | (0.30 | ) | $ | — | $ | (0.30 | ) | |||||||||||
| Year ended 3-31-2013 |
10.44 | 0.26 | 0.39 | 0.65 | (0.31 | ) | (0.07 | ) | (0.38 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.10 | 0.17 | 0.51 | 0.68 | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
9.82 | 0.29 | 0.40 | 0.69 | (0.32 | ) | (0.09 | ) | (0.41 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.76 | 0.33 | 1.07 | 1.40 | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.71 | 0.15 | (0.20 | ) | (0.05 | ) | (0.20 | ) | — | (0.20 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
10.44 | 0.15 | 0.40 | 0.55 | (0.21 | ) | (0.07 | ) | (0.28 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.10 | 0.06 | 0.51 | 0.57 | (0.23 | ) | — | (0.23 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
9.82 | 0.18 | 0.40 | 0.58 | (0.21 | ) | (0.09 | ) | (0.30 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.76 | 0.22 | 1.07 | 1.29 | (0.23 | ) | — | (0.23 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.71 | 0.17 | (0.21 | ) | (0.04 | ) | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
10.44 | 0.18 | 0.40 | 0.58 | (0.24 | ) | (0.07 | ) | (0.31 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.10 | 0.09 | 0.51 | 0.60 | (0.26 | ) | — | (0.26 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
9.82 | 0.21 | 0.40 | 0.61 | (0.24 | ) | (0.09 | ) | (0.33 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.76 | 0.28 | 1.06 | 1.34 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.71 | 0.24 | (0.20 | ) | 0.04 | (0.29 | ) | — | (0.29 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
10.44 | 0.25 | 0.40 | 0.65 | (0.31 | ) | (0.07 | ) | (0.38 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.10 | 0.17 | 0.51 | 0.68 | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
9.82 | 0.28 | 0.40 | 0.68 | (0.31 | ) | (0.09 | ) | (0.40 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.76 | 0.34 | 1.07 | 1.41 | (0.35 | ) | — | (0.35 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.71 | 0.28 | (0.20 | ) | 0.08 | (0.33 | ) | — | (0.33 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
10.44 | 0.29 | 0.40 | 0.69 | (0.35 | ) | (0.07 | ) | (0.42 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.10 | 0.20 | 0.51 | 0.71 | (0.37 | ) | — | (0.37 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
9.82 | 0.32 | 0.40 | 0.72 | (0.35 | ) | (0.09 | ) | (0.44 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.76 | 0.38 | 1.06 | 1.44 | (0.38 | ) | — | (0.38 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.71 | 0.21 | (0.19 | ) | 0.02 | (0.27 | ) | — | (0.27 | ) | ||||||||||||||||||
| Year ended 3-31-2013(5) |
10.69 | 0.02 | 0.08 | 0.10 | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.71 | 0.25 | (0.20 | ) | 0.05 | (0.30 | ) | — | (0.30 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
10.44 | 0.26 | 0.40 | 0.66 | (0.32 | ) | (0.07 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.10 | 0.18 | 0.51 | 0.69 | (0.35 | ) | — | (0.35 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
9.82 | 0.30 | 0.40 | 0.70 | (0.33 | ) | (0.09 | ) | (0.42 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.76 | 0.35 | 1.07 | 1.42 | (0.36 | ) | — | (0.36 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 210 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 10.46 | 0.48 | % | $ | 561 | 1.04 | % | 2.35 | % | — | % | — | % | 202 | % | ||||||||||||||||
| Year ended 3-31-2013 |
10.71 | 6.33 | 554 | 1.06 | 2.42 | — | — | 269 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.44 | 6.83 | 437 | 1.11 | 1.68 | — | — | 309 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.10 | 7.08 | 333 | 1.14 | 2.97 | — | — | 432 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.82 | 16.27 | 168 | 1.21 | 3.58 | — | — | 410 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.46 | -0.45 | 7 | 1.98 | 1.45 | — | — | 202 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.71 | 5.28 | 11 | 2.05 | 1.41 | — | — | 269 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.44 | 5.68 | 10 | 2.19 | 0.61 | — | — | 309 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.10 | 5.94 | 9 | 2.22 | 1.87 | 2.23 | 1.86 | 432 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.82 | 14.84 | 6 | 2.41 | 2.36 | — | — | 410 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.46 | -0.31 | 21 | 1.82 | 1.61 | — | — | 202 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.71 | 5.55 | 39 | 1.79 | 1.67 | — | — | 269 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.44 | 6.03 | 40 | 1.84 | 0.92 | — | — | 309 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.10 | 6.31 | 26 | 1.85 | 2.16 | — | — | 432 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.82 | 15.44 | 19 | 1.95 | 2.87 | — | — | 410 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.46 | 0.38 | 4 | 1.14 | 2.26 | 1.35 | 2.05 | 202 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.71 | 6.25 | 5 | 1.14 | 2.33 | 1.35 | 2.12 | 269 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.44 | 6.79 | 4 | 1.14 | 1.66 | 1.42 | 1.38 | 309 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.10 | 7.01 | 3 | 1.19 | 2.87 | 1.47 | 2.59 | 432 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.82 | 16.30 | 2 | 1.21 | 3.56 | 1.68 | 3.09 | 410 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.46 | 0.77 | 4 | 0.76 | 2.65 | — | — | 202 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.71 | 6.67 | 6 | 0.76 | 2.68 | — | — | 269 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.44 | 7.19 | 4 | 0.77 | 1.96 | — | — | 309 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.10 | 7.43 | 1 | 0.80 | 3.34 | — | — | 432 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.82 | 16.73 | 1 | 0.84 | 3.84 | — | — | 410 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.46 | 0.18 | — | * | 1.35 | 2.04 | — | — | 202 | |||||||||||||||||||||||
| Year ended 3-31-2013(5) |
10.71 | 0.96 | — | * | 1.30 | (6) | 0.82 | (6) | — | — | 269 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.46 | 0.51 | 3 | 1.00 | 2.42 | — | — | 202 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.71 | 6.39 | 5 | 1.00 | 2.49 | — | — | 269 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.44 | 6.91 | 8 | 1.03 | 1.78 | — | — | 309 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.10 | 7.17 | 7 | 1.05 | 3.00 | — | — | 432 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.82 | 16.41 | 6 | 1.09 | 3.58 | — | — | 410 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 211 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY CORE EQUITY FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Distributions From Return of Capital |
Total Distributions |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 12.15 | $ | 0.05 | $ | 2.67 | $ | 2.72 | $ | (0.04 | ) | $ | (0.79 | ) | $ | — | $ | (0.83 | ) | |||||||||||||
| Year ended 3-31-2013 |
10.91 | 0.04 | 1.33 | 1.37 | (0.05 | ) | (0.08 | ) | — | (0.13 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
10.68 | 0.02 | 0.58 | 0.60 | — | (0.37 | ) | — | (0.37 | ) | ||||||||||||||||||||||
| Year ended 3-31-2011 |
8.91 | (0.01 | ) | 1.95 | 1.94 | — | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||||
| Year ended 3-31-2010 |
6.04 | 0.00 | 2.89 | 2.89 | — | — | (0.02 | ) | (0.02 | ) | ||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.78 | (0.07 | ) | 2.36 | 2.29 | — | (0.75 | ) | — | (0.75 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
9.75 | (0.07 | ) | 1.18 | 1.11 | — | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
9.59 | (0.08 | ) | 0.52 | 0.44 | — | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||||
| Year ended 3-31-2011 |
8.10 | (0.10 | ) | 1.76 | 1.66 | — | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||||
| Year ended 3-31-2010 |
5.54 | (0.06 | ) | 2.62 | 2.56 | — | — | — | — | |||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.03 | (0.05 | ) | 2.41 | 2.36 | — | (0.76 | ) | — | (0.76 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
9.95 | (0.04 | ) | 1.20 | 1.16 | — | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
9.77 | (0.06 | ) | 0.55 | 0.49 | — | (0.31 | ) | — | (0.31 | ) | |||||||||||||||||||||
| Year ended 3-31-2011 |
8.23 | (0.07 | ) | 1.78 | 1.71 | — | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||||
| Year ended 3-31-2010 |
5.61 | (0.04 | ) | 2.66 | 2.62 | — | — | — | — | |||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.12 | 0.02 | 2.67 | 2.69 | (0.02 | ) | (0.79 | ) | — | (0.81 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
10.89 | 0.03 | 1.32 | 1.35 | (0.04 | ) | (0.08 | ) | — | (0.12 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
10.67 | 0.01 | 0.59 | 0.60 | — | (0.38 | ) | — | (0.38 | ) | ||||||||||||||||||||||
| Year ended 3-31-2011 |
8.90 | 0.00 | 1.94 | 1.94 | — | (0.17 | ) | — | (0.17 | ) | ||||||||||||||||||||||
| Year ended 3-31-2010 |
6.03 | 0.00 | 2.89 | 2.89 | — | — | (0.02 | ) | (0.02 | ) | ||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.15 | 0.09 | 2.91 | 3.00 | (0.07 | ) | (0.79 | ) | — | (0.86 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
11.78 | 0.08 | 1.44 | 1.52 | (0.07 | ) | (0.08 | ) | — | (0.15 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
11.50 | 0.05 | 0.64 | 0.69 | — | (0.41 | ) | — | (0.41 | ) | ||||||||||||||||||||||
| Year ended 3-31-2011 |
9.55 | 0.03 | 2.09 | 2.12 | — | (0.17 | ) | — | (0.17 | ) | ||||||||||||||||||||||
| Year ended 3-31-2010 |
6.47 | (0.01 | ) | 3.13 | 3.12 | — | — | (0.04 | ) | (0.04 | ) | |||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.13 | 0.01 | 2.67 | 2.68 | (0.01 | ) | (0.79 | ) | — | (0.80 | ) | |||||||||||||||||||||
| Year ended 3-31-2013(5) |
11.15 | 0.00 | 0.98 | 0.98 | — | — | — | — | ||||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.87 | 0.09 | 2.84 | 2.93 | (0.07 | ) | (0.79 | ) | — | (0.86 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
11.54 | 0.06 | 1.40 | 1.46 | (0.05 | ) | (0.08 | ) | — | (0.13 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
11.27 | 0.03 | 0.63 | 0.66 | — | (0.39 | ) | — | (0.39 | ) | ||||||||||||||||||||||
| Year ended 3-31-2011 |
9.39 | 0.01 | 2.04 | 2.05 | — | (0.17 | ) | — | (0.17 | ) | ||||||||||||||||||||||
| Year ended 3-31-2010 |
6.36 | 0.00 | 3.06 | 3.06 | — | — | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 212 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 14.04 | 22.76 | % | $ | 499 | 1.15 | % | 0.35 | % | 1.20 | % | 0.30 | % | 61 | % | ||||||||||||||||
| Year ended 3-31-2013 |
12.15 | 12.66 | 320 | 1.23 | 0.35 | 1.26 | 0.32 | 60 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.91 | 6.16 | 196 | 1.30 | 0.15 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.68 | 21.99 | 139 | 1.40 | -0.10 | — | — | 107 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.91 | 47.83 | 97 | 1.44 | 0.19 | — | — | 101 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.32 | 21.62 | 11 | 2.12 | -0.62 | — | — | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.78 | 11.49 | 10 | 2.24 | -0.68 | — | — | 60 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
9.75 | 5.05 | 5 | 2.36 | -0.89 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
9.59 | 20.73 | 5 | 2.46 | -1.19 | — | — | 107 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.10 | 46.21 | 5 | 2.51 | -0.87 | — | — | 101 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.63 | 21.79 | 144 | 1.94 | -0.44 | — | — | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
11.03 | 11.76 | 115 | 2.02 | -0.43 | — | — | 60 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
9.95 | 5.46 | 99 | 2.08 | -0.61 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
9.77 | 21.01 | 105 | 2.15 | -0.87 | — | — | 107 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.23 | 46.70 | 96 | 2.20 | -0.57 | — | — | 101 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.00 | 22.57 | 7 | 1.35 | 0.15 | 1.51 | -0.01 | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
12.12 | 12.53 | 4 | 1.35 | 0.25 | 1.61 | -0.01 | 60 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.89 | 6.13 | 3 | 1.35 | 0.10 | 1.72 | -0.27 | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.67 | 22.02 | 2 | 1.35 | -0.05 | 1.92 | -0.62 | 107 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.90 | 48.03 | 1 | 1.35 | 0.26 | 2.16 | -0.55 | 101 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.29 | 23.18 | 153 | 0.84 | 0.63 | 0.91 | 0.56 | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.15 | 13.08 | 60 | 0.91 | 0.69 | 0.93 | 0.67 | 60 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.78 | 6.57 | 28 | 0.94 | 0.47 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.50 | 22.41 | 5 | 0.99 | 0.33 | — | — | 107 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.55 | 48.34 | 3 | 0.99 | 0.55 | — | — | 101 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.01 | 22.41 | 2 | 1.50 | 0.04 | — | — | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2013(5) |
12.13 | 8.79 | — | * | 1.50 | (6) | -0.13 | (6) | — | — | 60 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.94 | 23.14 | 68 | 0.84 | 0.64 | 1.16 | 0.32 | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
12.87 | 12.82 | 27 | 1.09 | 0.48 | 1.18 | 0.40 | 60 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.54 | 6.35 | 18 | 1.20 | 0.27 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.27 | 22.04 | 11 | 1.24 | 0.06 | — | — | 107 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.39 | 48.15 | 5 | 1.24 | 0.39 | — | — | 101 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 213 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY CUNDILL GLOBAL VALUE FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Distributions From Return of Capital |
Total Distributions |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 14.68 | $ | (0.03 | ) | $ | 3.32 | $ | 3.29 | $ | (0.01 | ) | $ | — | $ | — | $ | (0.01 | ) | |||||||||||||
| Year ended 3-31-2013 |
13.44 | 0.01 | 1.23 | 1.24 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.00 | 0.02 | (0.57 | ) | (0.55 | ) | (0.01 | ) | — | — | (0.01 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
12.63 | 0.03 | 1.34 | 1.37 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.55 | 0.04 | 4.15 | 4.19 | (0.08 | ) | — | (0.03 | ) | (0.11 | ) | |||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.81 | (0.19 | ) | 3.10 | 2.91 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2013 |
12.78 | (0.11 | ) | 1.14 | 1.03 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2012 |
13.43 | (0.09 | ) | (0.56 | ) | (0.65 | ) | — | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2011 |
12.22 | (0.07 | ) | 1.28 | 1.21 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2010 |
8.31 | (0.04 | ) | 3.99 | 3.95 | (0.03 | ) | — | (0.01 | ) | (0.04 | ) | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.99 | (0.12 | ) | 3.16 | 3.04 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2013 |
12.88 | (0.05 | ) | 1.16 | 1.11 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2012 |
13.48 | (0.05 | ) | (0.55 | ) | (0.60 | ) | — | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2011 |
12.23 | (0.03 | ) | 1.28 | 1.25 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2010 |
8.30 | 0.00 | 3.99 | 3.99 | (0.05 | ) | — | (0.01 | ) | (0.06 | ) | |||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.78 | (0.03 | ) | 3.34 | 3.31 | (0.04 | ) | — | — | (0.04 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
13.49 | 0.04 | 1.25 | 1.29 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.04 | 0.05 | (0.57 | ) | (0.52 | ) | (0.03 | ) | — | — | (0.03 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
12.64 | 0.06 | 1.34 | 1.40 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.55 | 0.06 | 4.16 | 4.22 | (0.10 | ) | — | (0.03 | ) | (0.13 | ) | |||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.98 | 0.05 | 3.39 | 3.44 | (0.09 | ) | — | — | (0.09 | ) | ||||||||||||||||||||||
| Year ended 3-31-2013 |
13.64 | 0.09 | 1.25 | 1.34 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.23 | 0.10 | (0.59 | ) | (0.49 | ) | (0.10 | ) | — | — | (0.10 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
12.76 | 0.11 | 1.36 | 1.47 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.64 | 0.07 | 4.22 | 4.29 | (0.13 | ) | — | (0.04 | ) | (0.17 | ) | |||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.68 | (0.05 | ) | 3.32 | 3.27 | (0.01 | ) | — | — | (0.01 | ) | |||||||||||||||||||||
| Year ended 3-31-2013(5) |
13.62 | (0.01 | ) | 1.07 | 1.06 | — | — | — | — | |||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.86 | (0.01 | ) | 3.39 | 3.38 | (0.04 | ) | — | — | (0.04 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
13.56 | 0.09 | 1.21 | 1.30 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.15 | 0.11 | (0.59 | ) | (0.48 | ) | (0.11 | ) | — | — | (0.11 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
12.69 | 0.11 | 1.35 | 1.46 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.58 | 0.07 | 4.22 | 4.29 | (0.14 | ) | — | (0.04 | ) | (0.18 | ) | |||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 214 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 17.96 | 22.41 | % | $ | 332 | 1.61 | % | -0.20 | % | 1.75 | % | -0.34 | % | 47 | % | ||||||||||||||||
| Year ended 3-31-2013 |
14.68 | 9.23 | 196 | 1.86 | 0.05 | 1.91 | — | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.44 | -3.93 | 200 | 1.86 | 0.16 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
14.00 | 10.85 | 250 | 1.83 | 0.27 | — | — | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.63 | 49.03 | 255 | 1.90 | 0.57 | 1.92 | 0.55 | 35 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.72 | 21.07 | 4 | 2.72 | -1.23 | 2.86 | -1.37 | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.81 | 8.06 | 6 | 2.94 | -0.92 | 2.99 | -0.97 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.78 | -4.84 | 10 | 2.81 | -0.76 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
13.43 | 9.90 | 16 | 2.74 | -0.61 | — | — | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.22 | 47.51 | 20 | 2.81 | -0.29 | — | — | 35 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.03 | 21.73 | 24 | 2.22 | -0.78 | 2.36 | -0.92 | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.99 | 8.62 | 21 | 2.39 | -0.44 | 2.44 | -0.49 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.88 | -4.45 | 26 | 2.42 | -0.39 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
13.48 | 10.22 | 36 | 2.41 | -0.28 | — | — | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.23 | 48.10 | 43 | 2.46 | 0.08 | — | — | 35 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.05 | 22.43 | 1 | 1.59 | -0.17 | 2.08 | -0.65 | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.78 | 9.56 | 1 | 1.59 | 0.28 | 2.35 | -0.48 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.49 | -3.66 | 1 | 1.59 | 0.42 | 2.36 | -0.35 | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
14.04 | 11.08 | 1 | 1.59 | 0.46 | 2.37 | -0.32 | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.64 | 49.41 | — | * | 1.59 | 0.75 | 2.63 | -0.29 | 35 | |||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.33 | 22.98 | 7 | 1.14 | 0.27 | 1.28 | 0.13 | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.98 | 9.82 | 4 | 1.24 | 0.70 | 1.29 | 0.65 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.64 | -3.32 | 5 | 1.27 | 0.75 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
14.23 | 11.52 | 6 | 1.28 | 0.85 | — | — | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.76 | 49.77 | 6 | 1.31 | 0.93 | — | — | 35 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.94 | 22.30 | — | * | 1.72 | -0.28 | 1.86 | -0.42 | 47 | |||||||||||||||||||||||
| Year ended 3-31-2013(5) |
14.68 | 7.78 | — | * | 1.66 | (6) | -0.37 | (6) | 1.71 | (6) | -0.42 | (6) | 26 | (7) | ||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.20 | 22.76 | 4 | 1.35 | -0.04 | 1.49 | -0.18 | 47 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.86 | 9.59 | 4 | 1.47 | 0.74 | 1.63 | 0.58 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.56 | -3.24 | 13 | 1.20 | 0.85 | 1.54 | 0.51 | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
14.15 | 11.51 | 20 | 1.20 | 0.85 | 1.54 | 0.51 | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.69 | 50.14 | 17 | 1.20 | 1.12 | 1.55 | 0.77 | 35 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 215 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY DIVIDEND OPPORTUNITIES FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 17.20 | $ | 0.19 | $ | 3.33 | $ | 3.52 | $ | (0.16 | ) | $ | (0.29 | ) | $ | (0.45 | ) | |||||||||||
| Year ended 3-31-2013 |
15.70 | 0.23 | 1.48 | 1.71 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
16.14 | 0.18 | (0.44 | ) | (0.26 | ) | (0.18 | ) | — | (0.18 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
13.61 | 0.13 | 2.55 | 2.68 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.86 | 0.12 | 3.74 | 3.86 | (0.11 | ) | — | (0.11 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.99 | 0.05 | 3.27 | 3.32 | (0.05 | ) | (0.29 | ) | (0.34 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.54 | 0.09 | 1.48 | 1.57 | (0.12 | ) | — | (0.12 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
15.98 | 0.04 | (0.43 | ) | (0.39 | ) | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
13.49 | 0.00 | 2.52 | 2.52 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.79 | 0.00 | 3.71 | 3.71 | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.05 | 0.07 | 3.29 | 3.36 | (0.07 | ) | (0.29 | ) | (0.36 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.59 | 0.11 | 1.49 | 1.60 | (0.14 | ) | — | (0.14 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
16.03 | 0.07 | (0.43 | ) | (0.36 | ) | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
13.53 | 0.03 | 2.54 | 2.57 | (0.07 | ) | — | (0.07 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.81 | 0.04 | 3.71 | 3.75 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.16 | 0.17 | 3.32 | 3.49 | (0.15 | ) | (0.29 | ) | (0.44 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.66 | 0.21 | 1.49 | 1.70 | (0.20 | ) | — | (0.20 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
16.10 | 0.17 | (0.44 | ) | (0.27 | ) | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
13.58 | 0.13 | 2.54 | 2.67 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.84 | 0.13 | 3.73 | 3.86 | (0.12 | ) | — | (0.12 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.25 | 0.26 | 3.33 | 3.59 | (0.22 | ) | (0.29 | ) | (0.51 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.73 | 0.28 | 1.49 | 1.77 | (0.25 | ) | — | (0.25 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
16.17 | 0.24 | (0.45 | ) | (0.21 | ) | (0.23 | ) | — | (0.23 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
13.63 | 0.18 | 2.56 | 2.74 | (0.20 | ) | — | (0.20 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.88 | 0.17 | 3.75 | 3.92 | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.19 | 0.14 | 3.33 | 3.47 | (0.12 | ) | (0.29 | ) | (0.41 | ) | ||||||||||||||||||
| Year ended 3-31-2013(5) |
15.79 | 0.01 | 1.39 | 1.40 | — | — | — | |||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.23 | 0.21 | 3.33 | 3.54 | (0.18 | ) | (0.29 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.72 | 0.24 | 1.50 | 1.74 | (0.23 | ) | — | (0.23 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
16.16 | 0.19 | (0.44 | ) | (0.25 | ) | (0.19 | ) | — | (0.19 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
13.63 | 0.15 | 2.55 | 2.70 | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.87 | 0.14 | 3.75 | 3.89 | (0.13 | ) | — | (0.13 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 216 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 20.27 | 20.70 | % | $ | 291 | 1.27 | % | 1.03 | % | — | % | — | % | 43 | % | ||||||||||||||||
| Year ended 3-31-2013 |
17.20 | 11.06 | 246 | 1.28 | 1.43 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.70 | -1.54 | 261 | 1.29 | 1.21 | — | — | 37 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
16.14 | 19.85 | 252 | 1.33 | 0.94 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.61 | 39.29 | 182 | 1.40 | 1.02 | — | — | 46 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.97 | 19.70 | 13 | 2.05 | 0.25 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
16.99 | 10.10 | 11 | 2.13 | 0.60 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.54 | -2.35 | 15 | 2.18 | 0.30 | — | — | 37 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.98 | 18.69 | 16 | 2.25 | 0.02 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.49 | 37.88 | 10 | 2.44 | -0.01 | — | — | 46 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.05 | 19.85 | 47 | 1.93 | 0.37 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
17.05 | 10.32 | 39 | 1.97 | 0.73 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.59 | -2.23 | 43 | 2.00 | 0.48 | — | — | 37 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
16.03 | 19.07 | 50 | 2.02 | 0.24 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.53 | 38.30 | 43 | 2.09 | 0.35 | — | — | 46 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.21 | 20.52 | 4 | 1.37 | 0.93 | 1.66 | 0.64 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
17.16 | 11.00 | 4 | 1.36 | 1.31 | 1.80 | 0.87 | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.66 | -1.61 | 3 | 1.37 | 1.14 | 1.92 | 0.59 | 37 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
16.10 | 19.80 | 3 | 1.37 | 0.89 | 2.03 | 0.23 | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.58 | 39.33 | 2 | 1.37 | 1.06 | 2.35 | 0.08 | 46 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.33 | 21.06 | 19 | 0.94 | 1.36 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
17.25 | 11.45 | 15 | 0.93 | 1.74 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.73 | -1.18 | 14 | 0.94 | 1.60 | — | — | 37 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
16.17 | 20.32 | 7 | 0.97 | 1.31 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.63 | 39.80 | 6 | 0.98 | 1.51 | — | — | 46 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.25 | 20.29 | — | * | 1.54 | 0.76 | — | — | 43 | |||||||||||||||||||||||
| Year ended 3-31-2013(5) |
17.19 | 8.93 | — | * | 1.51 | (6) | 0.23 | (6) | — | — | 45 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.30 | 20.74 | 11 | 1.19 | 1.11 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
17.23 | 11.19 | 12 | 1.18 | 1.51 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.72 | -1.43 | 15 | 1.19 | 1.27 | — | — | 37 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
16.16 | 19.99 | 18 | 1.21 | 1.05 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.63 | 39.58 | 16 | 1.23 | 1.19 | — | — | 46 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 217 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY EMERGING MARKETS EQUITY FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 13.88 | $ | 0.02 | $ | 1.22 | $ | 1.24 | $ | (0.08 | ) | $ | — | $ | (0.08 | ) | ||||||||||||
| Year ended 3-31-2013 |
13.98 | 0.03 | (0.03 | ) | 0.00 | (0.10 | ) | — | (0.10 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
16.94 | 0.01 | (2.39 | ) | (2.38 | ) | (0.06 | ) | (0.52 | ) | (0.58 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
14.84 | (0.01 | ) | 2.11 | 2.10 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.86 | (0.08 | ) | 6.06 | 5.98 | — | — | — | ||||||||||||||||||||
| Class B Shares(3) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.78 | (0.12 | ) | 1.00 | 0.88 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2013 |
11.92 | (0.10 | ) | (0.04 | ) | (0.14 | ) | — | * | — | — | * | ||||||||||||||||
| Year ended 3-31-2012 |
14.64 | (0.13 | ) | (2.07 | ) | (2.20 | ) | — | 0.52 | 0.52 | ||||||||||||||||||
| Year ended 3-31-2011 |
12.97 | (0.15 | ) | 1.82 | 1.67 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.83 | (0.19 | ) | 5.33 | 5.14 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.23 | (0.07 | ) | 1.06 | 0.99 | (0.02 | ) | — | (0.02 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
12.36 | (0.06 | ) | (0.03 | ) | (0.09 | ) | (0.04 | ) | — | (0.04 | ) | ||||||||||||||||
| Year ended 3-31-2012 |
15.10 | (0.08 | ) | (2.14 | ) | (2.22 | ) | — | (0.52 | ) | (0.52 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
13.33 | (0.10 | ) | 1.87 | 1.77 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.01 | (0.17 | ) | 5.49 | 5.32 | — | — | — | ||||||||||||||||||||
| Class E Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.04 | 0.06 | 1.25 | 1.31 | (0.12 | ) | — | (0.12 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
14.12 | 0.09 | (0.03 | ) | 0.06 | (0.14 | ) | — | (0.14 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
17.15 | 0.06 | (2.41 | ) | (2.35 | ) | (0.16 | ) | (0.52 | ) | (0.68 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
14.98 | 0.05 | 2.12 | 2.17 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
8.90 | (0.01 | ) | 6.09 | 6.08 | — | — | — | ||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.23 | 0.09 | 1.26 | 1.35 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
14.30 | 0.10 | (0.02 | ) | 0.08 | (0.15 | ) | — | (0.15 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
17.39 | 0.08 | (2.46 | ) | (2.38 | ) | (0.19 | ) | (0.52 | ) | (0.71 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
15.16 | 0.05 | 2.18 | 2.23 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
9.00 | (0.01 | ) | 6.17 | 6.16 | — | — | — | ||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.87 | (0.01 | ) | 1.23 | 1.22 | (0.07 | ) | — | (0.07 | ) | ||||||||||||||||||
| Year ended 3-31-2013(5) |
14.07 | (0.04 | ) | (0.16 | ) | (0.20 | ) | — | — | — | ||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.13 | 0.05 | 1.26 | 1.31 | (0.11 | ) | — | (0.11 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
14.22 | 0.09 | (0.05 | ) | 0.04 | (0.13 | ) | — | (0.13 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
17.25 | 0.05 | (2.44 | ) | (2.39 | ) | (0.12 | ) | (0.52 | ) | (0.64 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
15.08 | 0.03 | 2.14 | 2.17 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
8.98 | (0.05 | ) | 6.15 | 6.10 | — | — | — | ||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized |
| (3) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class share is closed to investment. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 218 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Portfolio Turnover Rate |
|||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 15.04 | 8.95 | % | $ | 536 | 1.73 | % | 0.17 | % | 138 | % | ||||||||||||
| Year ended 3-31-2013 |
13.88 | -0.02 | 491 | 1.74 | 0.25 | 142 | ||||||||||||||||||
| Year ended 3-31-2012 |
13.98 | -13.71 | 504 | 1.75 | 0.04 | 97 | ||||||||||||||||||
| Year ended 3-31-2011 |
16.94 | 14.15 | 600 | 1.72 | -0.07 | 137 | ||||||||||||||||||
| Year ended 3-31-2010 |
14.84 | 67.50 | 514 | 1.83 | -0.61 | 81 | ||||||||||||||||||
| Class B Shares(3) |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.66 | 7.47 | 9 | 3.00 | -1.04 | 138 | ||||||||||||||||||
| Year ended 3-31-2013 |
11.78 | -1.13 | 8 | 2.94 | -0.88 | 142 | ||||||||||||||||||
| Year ended 3-31-2012 |
11.92 | -14.69 | 10 | 2.88 | -1.03 | 97 | ||||||||||||||||||
| Year ended 3-31-2011 |
14.64 | 12.88 | 16 | 2.81 | -1.07 | 137 | ||||||||||||||||||
| Year ended 3-31-2010 |
12.97 | 65.65 | 17 | 2.91 | -1.64 | 81 | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.20 | 8.06 | 44 | 2.47 | -0.59 | 138 | ||||||||||||||||||
| Year ended 3-31-2013 |
12.23 | -0.77 | 16 | 2.53 | -0.48 | 142 | ||||||||||||||||||
| Year ended 3-31-2012 |
12.36 | -14.37 | 20 | 2.51 | -0.63 | 97 | ||||||||||||||||||
| Year ended 3-31-2011 |
15.10 | 13.28 | 32 | 2.46 | -0.73 | 137 | ||||||||||||||||||
| Year ended 3-31-2010 |
13.33 | 66.42 | 35 | 2.56 | -1.38 | 81 | ||||||||||||||||||
| Class E Shares(4) |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.23 | 9.35 | — | * | 1.35 | 0.44 | 138 | |||||||||||||||||
| Year ended 3-31-2013 |
14.04 | 0.40 | — | * | 1.34 | 0.64 | 142 | |||||||||||||||||
| Year ended 3-31-2012 |
14.12 | -13.32 | — | * | 1.37 | 0.41 | 97 | |||||||||||||||||
| Year ended 3-31-2011 |
17.15 | 14.49 | — | * | 1.36 | 0.30 | 137 | |||||||||||||||||
| Year ended 3-31-2010 |
14.98 | 68.32 | — | * | 1.42 | -0.11 | 81 | |||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.43 | 9.52 | 139 | 1.22 | 0.62 | 138 | ||||||||||||||||||
| Year ended 3-31-2013 |
14.23 | 0.55 | 147 | 1.22 | 0.69 | 142 | ||||||||||||||||||
| Year ended 3-31-2012 |
14.30 | -13.28 | 138 | 1.25 | 0.52 | 97 | ||||||||||||||||||
| Year ended 3-31-2011 |
17.39 | 14.71 | 159 | 1.24 | 0.28 | 137 | ||||||||||||||||||
| Year ended 3-31-2010 |
15.16 | 68.44 | 104 | 1.29 | -0.11 | 81 | ||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.02 | 8.75 | 1 | 1.83 | -0.05 | 138 | ||||||||||||||||||
| Year ended 3-31-2013(5) |
13.87 | -1.35 | — | * | 1.80 | (6) | -1.09 | (6) | 142 | (7) | ||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.33 | 9.19 | 11 | 1.47 | 0.34 | 138 | ||||||||||||||||||
| Year ended 3-31-2013 |
14.13 | 0.31 | 5 | 1.47 | 0.63 | 142 | ||||||||||||||||||
| Year ended 3-31-2012 |
14.22 | -13.48 | 6 | 1.50 | 0.30 | 97 | ||||||||||||||||||
| Year ended 3-31-2011 |
17.25 | 14.39 | 9 | 1.50 | 0.22 | 137 | ||||||||||||||||||
| Year ended 3-31-2010 |
15.08 | 67.93 | 9 | 1.55 | -0.38 | 81 | ||||||||||||||||||
.
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 219 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY EUROPEAN OPPORTUNITIES FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 24.70 | $ | 0.32 | $ | 4.82 | $ | 5.14 | $ | (0.08 | ) | $ | — | $ | (0.08 | ) | ||||||||||||
| Year ended 3-31-2013 |
22.89 | 0.07 | 1.83 | 1.90 | (0.09 | ) | — | (0.09 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.61 | 0.07 | (1.72 | ) | (1.65 | ) | (0.07 | ) | — | (0.07 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
21.44 | (0.01 | ) | 3.24 | 3.23 | (0.06 | ) | — | (0.06 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
15.08 | 0.27 | 6.43 | 6.70 | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||||
| Class B Shares(3) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.16 | 0.01 | 4.49 | 4.50 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2013 |
21.62 | (0.15 | ) | 1.69 | 1.54 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
23.40 | (0.13 | ) | (1.65 | ) | (1.78 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
20.53 | (0.21 | ) | 3.08 | 2.87 | — | * | — | — | * | ||||||||||||||||||
| Year ended 3-31-2010 |
14.50 | 0.10 | 6.14 | 6.24 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.53 | 0.16 | 4.56 | 4.72 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2013 |
21.86 | (0.06 | ) | 1.73 | 1.67 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
23.58 | (0.06 | ) | (1.66 | ) | (1.72 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
20.63 | (0.14 | ) | 3.11 | 2.97 | (0.02 | ) | — | (0.02 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
14.55 | 0.18 | 6.17 | 6.35 | (0.27 | ) | — | (0.27 | ) | |||||||||||||||||||
| Class E Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.84 | 0.44 | 4.85 | 5.29 | (0.20 | ) | — | (0.20 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
23.02 | 0.18 | 1.84 | 2.02 | (0.20 | ) | — | (0.20 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.76 | 0.18 | (1.74 | ) | (1.56 | ) | (0.18 | ) | — | (0.18 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
21.48 | 0.09 | 3.28 | 3.37 | (0.09 | ) | — | (0.09 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
15.08 | 0.39 | 6.44 | 6.83 | (0.43 | ) | — | (0.43 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.87 | 0.48 | 4.85 | 5.33 | (0.23 | ) | — | (0.23 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
23.04 | 0.26 | 1.81 | 2.07 | (0.24 | ) | — | (0.24 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.82 | 0.21 | (1.75 | ) | (1.54 | ) | (0.24 | ) | — | (0.24 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
21.51 | 0.12 | 3.29 | 3.41 | (0.10 | ) | — | (0.10 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
15.09 | 0.44 | 6.43 | 6.87 | (0.45 | ) | — | (0.45 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.70 | 0.31 | 4.82 | 5.13 | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||||
| Year ended 3-31-2013(5) |
24.16 | 0.00 | 0.54 | 0.54 | — | — | — | |||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.86 | 0.44 | 4.81 | 5.25 | (0.16 | ) | — | (0.16 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
23.04 | 0.15 | 1.85 | 2.00 | (0.18 | ) | — | (0.18 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
24.75 | 0.17 | (1.75 | ) | (1.58 | ) | (0.13 | ) | — | (0.13 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
21.50 | 0.09 | 3.24 | 3.33 | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
15.10 | 0.33 | 6.48 | 6.81 | (0.41 | ) | — | (0.41 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class share is closed to investment. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 220 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Portfolio Turnover Rate |
|||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 29.76 | 20.83 | % | $ | 163 | 1.76 | % | 1.17 | % | 116 | % | ||||||||||||
| Year ended 3-31-2013 |
24.70 | 8.31 | 162 | 1.81 | 0.32 | 71 | ||||||||||||||||||
| Year ended 3-31-2012 |
22.89 | -6.67 | 167 | 1.84 | 0.33 | 49 | ||||||||||||||||||
| Year ended 3-31-2011 |
24.61 | 15.07 | 197 | 1.82 | -0.07 | 66 | ||||||||||||||||||
| Year ended 3-31-2010 |
21.44 | 44.42 | 189 | 1.98 | 1.35 | 100 | ||||||||||||||||||
| Class B Shares(3) |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
27.66 | 19.43 | 2 | 2.91 | 0.04 | 116 | ||||||||||||||||||
| Year ended 3-31-2013 |
23.16 | 7.12 | 3 | 2.89 | -0.68 | 71 | ||||||||||||||||||
| Year ended 3-31-2012 |
21.62 | -7.61 | 5 | 2.84 | -0.63 | 49 | ||||||||||||||||||
| Year ended 3-31-2011 |
23.40 | 13.99 | 8 | 2.81 | -1.01 | 66 | ||||||||||||||||||
| Year ended 3-31-2010 |
20.53 | 43.02 | 9 | 2.96 | 0.47 | 100 | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
28.25 | 20.06 | 11 | 2.37 | 0.61 | 116 | ||||||||||||||||||
| Year ended 3-31-2013 |
23.53 | 7.64 | 9 | 2.43 | -0.26 | 71 | ||||||||||||||||||
| Year ended 3-31-2012 |
21.86 | -7.29 | 11 | 2.47 | -0.26 | 49 | ||||||||||||||||||
| Year ended 3-31-2011 |
23.58 | 14.41 | 15 | 2.46 | -0.65 | 66 | ||||||||||||||||||
| Year ended 3-31-2010 |
20.63 | 43.62 | 19 | 2.55 | 0.87 | 100 | ||||||||||||||||||
| Class E Shares(4) |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
29.93 | 21.34 | — | * | 1.33 | 1.62 | 116 | |||||||||||||||||
| Year ended 3-31-2013 |
24.84 | 8.83 | — | * | 1.31 | 0.79 | 71 | |||||||||||||||||
| Year ended 3-31-2012 |
23.02 | -6.18 | — | * | 1.32 | 0.80 | 49 | |||||||||||||||||
| Year ended 3-31-2011 |
24.76 | 15.71 | — | * | 1.32 | 0.40 | 66 | |||||||||||||||||
| Year ended 3-31-2010 |
21.48 | 45.28 | — | * | 1.37 | 1.92 | 100 | |||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
29.97 | 21.50 | 31 | 1.19 | 1.76 | 116 | ||||||||||||||||||
| Year ended 3-31-2013 |
24.87 | 8.96 | 37 | 1.18 | 1.13 | 71 | ||||||||||||||||||
| Year ended 3-31-2012 |
23.04 | -6.06 | 53 | 1.19 | 0.94 | 49 | ||||||||||||||||||
| Year ended 3-31-2011 |
24.82 | 15.87 | 43 | 1.18 | 0.52 | 66 | ||||||||||||||||||
| Year ended 3-31-2010 |
21.51 | 45.52 | 34 | 1.23 | 2.15 | 100 | ||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
29.75 | 20.73 | — | * | 1.79 | 1.15 | 116 | |||||||||||||||||
| Year ended 3-31-2013(5) |
24.70 | 2.28 | — | * | 1.74 | (6) | 0.02 | (6) | 71 | (7) | ||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
29.95 | 21.17 | 3 | 1.46 | 1.57 | 116 | ||||||||||||||||||
| Year ended 3-31-2013 |
24.86 | 8.71 | 1 | 1.42 | 0.66 | 71 | ||||||||||||||||||
| Year ended 3-31-2012 |
23.04 | -6.30 | 2 | 1.45 | 0.75 | 49 | ||||||||||||||||||
| Year ended 3-31-2011 |
24.75 | 15.52 | 2 | 1.45 | 0.38 | 66 | ||||||||||||||||||
| Year ended 3-31-2010 |
21.50 | 45.09 | 3 | 1.51 | 1.74 | 100 | ||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 221 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY GLOBAL BOND FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 10.26 | $ | 0.35 | $ | (0.19 | ) | $ | 0.16 | $ | (0.34 | ) | $ | (0.02 | ) | $ | (0.36 | ) | ||||||||||
| Year ended 3-31-2013 |
10.20 | 0.40 | 0.11 | 0.51 | (0.42 | ) | (0.03 | ) | (0.45 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.35 | 0.39 | (0.11 | ) | 0.28 | (0.39 | ) | (0.04 | ) | (0.43 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
10.30 | 0.36 | 0.08 | 0.44 | (0.33 | ) | (0.06 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
9.39 | 0.37 | 0.82 | 1.19 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.25 | 0.27 | (0.18 | ) | 0.09 | (0.26 | ) | (0.02 | ) | (0.28 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
10.19 | 0.32 | 0.11 | 0.43 | (0.34 | ) | (0.03 | ) | (0.37 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.35 | 0.31 | (0.12 | ) | 0.19 | (0.31 | ) | (0.04 | ) | (0.35 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
10.29 | 0.28 | 0.09 | 0.37 | (0.25 | ) | (0.06 | ) | (0.31 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
9.38 | 0.32 | 0.80 | 1.12 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.25 | 0.27 | (0.18 | ) | 0.09 | (0.26 | ) | (0.02 | ) | (0.28 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
10.19 | 0.32 | 0.11 | 0.43 | (0.34 | ) | (0.03 | ) | (0.37 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.35 | 0.31 | (0.12 | ) | 0.19 | (0.31 | ) | (0.04 | ) | (0.35 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
10.29 | 0.28 | 0.09 | 0.37 | (0.25 | ) | (0.06 | ) | (0.31 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
9.38 | 0.30 | 0.82 | 1.12 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.25 | 0.37 | (0.18 | ) | 0.19 | (0.36 | ) | (0.02 | ) | (0.38 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
10.19 | 0.42 | 0.11 | 0.53 | (0.44 | ) | (0.03 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.35 | 0.41 | (0.11 | ) | 0.30 | (0.42 | ) | (0.04 | ) | (0.46 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
10.30 | 0.39 | 0.08 | 0.47 | (0.36 | ) | (0.06 | ) | (0.42 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
9.39 | 0.40 | 0.82 | 1.22 | (0.31 | ) | — | (0.31 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.24 | 0.29 | (0.18 | ) | 0.11 | (0.28 | ) | (0.02 | ) | (0.30 | ) | |||||||||||||||||
| Year ended 3-31-2013(5) |
10.17 | 0.09 | 0.04 | 0.13 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.26 | 0.34 | (0.18 | ) | 0.16 | (0.33 | ) | (0.02 | ) | (0.35 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
10.20 | 0.40 | 0.11 | 0.51 | (0.42 | ) | (0.03 | ) | (0.45 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
10.36 | 0.39 | (0.12 | ) | 0.27 | (0.39 | ) | (0.04 | ) | (0.43 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
10.30 | 0.36 | 0.09 | 0.45 | (0.33 | ) | (0.06 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
9.39 | 0.37 | 0.82 | 1.19 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 222 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 10.06 | 1.65 | % | $ | 187 | 0.99 | % | 3.43 | % | 1.25 | % | 3.17 | % | 21 | % | ||||||||||||||||
| Year ended 3-31-2013 |
10.26 | 5.12 | 174 | 0.99 | 3.92 | 1.24 | 3.67 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.20 | 2.74 | 158 | 0.99 | 3.81 | 1.25 | 3.55 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.35 | 4.34 | 141 | 0.99 | 3.50 | 1.25 | 3.24 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.30 | 12.84 | 89 | 0.99 | 3.95 | 1.32 | 3.62 | 19 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.06 | 0.90 | 6 | 1.74 | 2.67 | 2.10 | 2.31 | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.25 | 4.34 | 7 | 1.74 | 3.17 | 2.15 | 2.76 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.19 | 1.96 | 6 | 1.74 | 3.05 | 2.26 | 2.53 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.35 | 3.66 | 7 | 1.74 | 2.76 | 2.06 | 2.44 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.29 | 12.01 | 6 | 1.74 | 3.22 | 2.00 | 2.96 | 19 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.06 | 0.90 | 33 | 1.74 | 2.67 | 1.88 | 2.53 | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.25 | 4.34 | 44 | 1.74 | 3.18 | 1.90 | 3.02 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.19 | 1.96 | 41 | 1.74 | 3.06 | 1.93 | 2.87 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.35 | 3.66 | 44 | 1.74 | 2.76 | 1.92 | 2.58 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.29 | 12.01 | 33 | 1.74 | 3.20 | 1.97 | 2.97 | 19 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.06 | 1.91 | 58 | 0.74 | 3.67 | 0.89 | 3.52 | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.25 | 5.39 | 59 | 0.74 | 4.13 | 0.89 | 3.97 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.19 | 3.00 | 28 | 0.74 | 4.07 | 0.91 | 3.90 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.35 | 4.61 | 25 | 0.74 | 3.76 | 0.92 | 3.58 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.30 | 13.13 | 14 | 0.74 | 4.20 | 0.96 | 3.98 | 19 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.05 | 1.14 | — | * | 1.48 | 2.93 | — | — | 21 | |||||||||||||||||||||||
| Year ended 3-31-2013(5) |
10.24 | 1.30 | — | * | 1.45 | (6) | 3.10 | (6) | — | — | 26 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.07 | 1.65 | 8 | 0.99 | 3.42 | 1.13 | 3.28 | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
10.26 | 5.12 | 5 | 0.99 | 3.94 | 1.14 | 3.78 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
10.20 | 2.74 | 7 | 0.99 | 3.78 | 1.16 | 3.61 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.36 | 4.44 | 15 | 0.99 | 3.51 | 1.17 | 3.33 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.30 | 12.84 | 14 | 0.99 | 3.96 | 1.22 | 3.73 | 19 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 223 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY GLOBAL EQUITY INCOME FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 11.82 | $ | 0.57 | $ | 1.44 | $ | 2.01 | $ | (0.46 | ) | $ | (0.10 | ) | $ | (0.56 | ) | |||||||||||
| Year ended 3-31-2013(4) |
10.00 | 0.35 | 1.84 | 2.19 | (0.28 | ) | (0.09 | ) | (0.37 | ) | ||||||||||||||||||
| Class B Shares(6) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.81 | 0.47 | 1.46 | 1.93 | (0.37 | ) | (0.10 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2013(4) |
10.00 | 0.27 | 1.85 | 2.12 | (0.22 | ) | (0.09 | ) | (0.31 | ) | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.81 | 0.50 | 1.44 | 1.94 | (0.38 | ) | (0.10 | ) | (0.48 | ) | ||||||||||||||||||
| Year ended 3-31-2013(4) |
10.00 | 0.27 | 1.85 | 2.12 | (0.22 | ) | (0.09 | ) | (0.31 | ) | ||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.82 | 0.61 | 1.46 | 2.07 | (0.51 | ) | (0.10 | ) | (0.61 | ) | ||||||||||||||||||
| Year ended 3-31-2013(4) |
10.00 | 0.37 | 1.85 | 2.22 | (0.31 | ) | (0.09 | ) | (0.40 | ) | ||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.82 | 0.52 | 1.46 | 1.98 | (0.42 | ) | (0.10 | ) | (0.52 | ) | ||||||||||||||||||
| Year ended 3-31-2013(7) |
11.28 | 0.11 | 0.46 | 0.57 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.82 | 0.58 | 1.46 | 2.04 | (0.48 | ) | (0.10 | ) | (0.58 | ) | ||||||||||||||||||
| Year ended 3-31-2013(4) |
10.00 | 0.34 | 1.86 | 2.20 | (0.29 | ) | (0.09 | ) | (0.38 | ) | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | For the period from June 4, 2012 (commencement of operations of the class) through March 31, 2013. |
| (5) | Annualized. |
| (6) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (7) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| 224 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 13.27 | 17.46 | % | $ | 184 | 1.30 | % | 4.51 | % | 1.48 | % | 4.33 | % | 98 | % | ||||||||||||||||
| Year ended 3-31-2013(4) |
11.82 | 22.15 | 59 | 1.29 | (5) | 3.82 | (5) | 1.68 | (5) | 3.43 | (5) | 73 | ||||||||||||||||||||
| Class B Shares(6) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.27 | 16.68 | 2 | 2.04 | 3.73 | 2.05 | 3.72 | 98 | ||||||||||||||||||||||||
| Year ended 3-31-2013(4) |
11.81 | 22.41 | 1 | 2.01 | (5) | 2.89 | (5) | 2.21 | (5) | 2.69 | (5) | 73 | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.27 | 16.75 | 8 | 1.99 | 3.91 | 2.04 | 3.86 | 98 | ||||||||||||||||||||||||
| Year ended 3-31-2013(4) |
11.81 | 21.46 | 4 | 1.95 | (5) | 2.95 | (5) | 2.15 | (5) | 2.75 | (5) | 73 | ||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.28 | 17.97 | 15 | 0.94 | 4.86 | 1.06 | 4.74 | 98 | ||||||||||||||||||||||||
| Year ended 3-31-2013(4) |
11.82 | 22.47 | 12 | 0.94 | (5) | 3.95 | (5) | 1.29 | (5) | 3.60 | (5) | 73 | ||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.28 | 17.11 | — | * | 1.65 | 4.11 | 1.66 | 4.10 | 98 | |||||||||||||||||||||||
| Year ended 3-31-2013(7) |
11.82 | 5.05 | — | * | 1.67 | (5) | 3.36 | (5) | 1.87 | (5) | 3.16 | (5) | 73 | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.28 | 17.68 | 4 | 1.19 | 4.60 | 1.31 | 4.48 | 98 | ||||||||||||||||||||||||
| Year ended 3-31-2013(4) |
11.82 | 22.25 | 4 | 1.18 | (5) | 3.70 | (5) | 1.54 | (5) | 3.34 | (5) | 73 | ||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 225 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY GLOBAL INCOME ALLOCATION FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 14.79 | $ | 0.68 | $ | 0.70 | $ | 1.38 | $ | (0.59 | ) | $ | — | $ | (0.59 | ) | ||||||||||||
| Year ended 3-31-2013 |
14.52 | 0.62 | 0.33 | 0.95 | (0.68 | ) | — | (0.68 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
15.19 | 0.57 | (0.57 | ) | 0.00 | (0.67 | ) | — | (0.67 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
13.59 | 0.36 | 1.54 | 1.90 | (0.30 | ) | — | (0.30 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.56 | 0.26 | 3.79 | 4.05 | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.55 | 0.52 | 0.70 | 1.22 | (0.45 | ) | — | (0.45 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
14.29 | 0.48 | 0.32 | 0.80 | (0.54 | ) | — | (0.54 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
14.93 | 0.43 | (0.57 | ) | (0.14 | ) | (0.50 | ) | — | (0.50 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
13.40 | 0.23 | 1.51 | 1.74 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.52 | 0.12 | 3.76 | 3.88 | — | * | — | — | * | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.64 | 0.57 | 0.70 | 1.27 | (0.50 | ) | — | (0.50 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
14.38 | 0.52 | 0.32 | 0.84 | (0.58 | ) | — | (0.58 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
15.02 | 0.49 | (0.58 | ) | (0.09 | ) | (0.55 | ) | — | (0.55 | ) | |||||||||||||||||
| Year ended 3-31-2011 |
13.46 | 0.28 | 1.52 | 1.80 | (0.24 | ) | — | (0.24 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.53 | 0.18 | 3.77 | 3.95 | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.79 | 0.68 | 0.70 | 1.38 | (0.59 | ) | — | (0.59 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
14.52 | 0.62 | 0.33 | 0.95 | (0.68 | ) | — | (0.68 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
15.20 | 0.59 | (0.58 | ) | 0.01 | (0.69 | ) | — | (0.69 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
13.59 | 0.38 | 1.54 | 1.92 | (0.31 | ) | — | (0.31 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.54 | 0.27 | 3.80 | 4.07 | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.90 | 0.74 | 0.71 | 1.45 | (0.65 | ) | — | (0.65 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
14.62 | 0.70 | 0.32 | 1.02 | (0.74 | ) | — | (0.74 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
15.31 | 0.64 | (0.58 | ) | 0.06 | (0.75 | ) | — | (0.75 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
13.67 | 0.45 | 1.53 | 1.98 | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.57 | 0.33 | 3.80 | 4.13 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.79 | 0.64 | 0.70 | 1.34 | (0.56 | ) | — | (0.56 | ) | |||||||||||||||||||
| Year ended 3-31-2013(5) |
14.37 | 0.15 | 0.32 | 0.47 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.85 | 0.71 | 0.70 | 1.41 | (0.62 | ) | — | (0.62 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
14.57 | 0.62 | 0.36 | 0.98 | (0.70 | ) | — | (0.70 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
15.25 | 0.59 | (0.57 | ) | 0.02 | (0.70 | ) | — | (0.70 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
13.63 | 0.41 | 1.53 | 1.94 | (0.32 | ) | — | (0.32 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.57 | 0.28 | 3.80 | 4.08 | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 226 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 15.58 | 9.60 | % | $ | 494 | 1.35 | % | 4.52 | % | 1.35 | % | 4.52 | % | 92 | % | ||||||||||||||||
| Year ended 3-31-2013 |
14.79 | 6.84 | 308 | 1.35 | 4.38 | 1.51 | 4.22 | 109 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.52 | 0.23 | 228 | 1.44 | 3.94 | — | — | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.19 | 14.08 | 213 | 1.44 | 2.56 | — | — | 71 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.59 | 42.40 | 183 | 1.51 | 2.05 | — | — | 131 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.32 | 8.53 | 6 | 2.27 | 3.54 | — | — | 92 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.55 | 5.90 | 7 | 2.31 | 3.48 | 2.54 | 3.25 | 109 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.29 | -0.75 | 7 | 2.41 | 3.05 | — | — | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
14.93 | 13.04 | 8 | 2.41 | 1.62 | — | — | 71 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.40 | 40.79 | 8 | 2.56 | 1.04 | — | — | 131 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.41 | 8.86 | 28 | 1.99 | 3.82 | 1.99 | 3.82 | 92 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.64 | 6.13 | 25 | 2.02 | 3.70 | 2.12 | 3.60 | 109 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.38 | -0.41 | 19 | 2.10 | 3.41 | — | — | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.02 | 13.42 | 23 | 2.10 | 1.93 | — | — | 71 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.46 | 41.42 | 24 | 2.15 | 1.44 | — | — | 131 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.58 | 9.56 | 3 | 1.33 | 4.51 | 1.70 | 4.14 | 92 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.79 | 6.94 | 2 | 1.33 | 4.42 | 2.03 | 3.72 | 109 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.52 | 0.30 | 2 | 1.33 | 4.07 | 1.90 | 3.50 | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.20 | 14.25 | 2 | 1.33 | 2.65 | 2.05 | 1.93 | 71 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.59 | 42.72 | 1 | 1.33 | 2.19 | 2.35 | 1.17 | 131 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.70 | 10.07 | 39 | 0.93 | 4.90 | 0.94 | 4.89 | 92 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.90 | 7.33 | 30 | 0.91 | 4.98 | 1.03 | 4.86 | 109 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.62 | 0.67 | 43 | 0.99 | 4.39 | — | — | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.31 | 14.63 | 42 | 0.99 | 3.08 | — | — | 71 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.67 | 43.15 | 45 | 1.00 | 2.63 | — | — | 131 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.57 | 9.32 | — | * | 1.55 | 4.28 | — | — | 92 | |||||||||||||||||||||||
| Year ended 3-31-2013(5) |
14.79 | 3.30 | — | * | 1.52 | (6) | 3.73 | (6) | 1.53 | (6) | 3.72 | (6) | 109 | (7) | ||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.64 | 9.77 | 7 | 1.17 | 4.68 | 1.19 | 4.66 | 92 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.85 | 7.08 | 5 | 1.17 | 4.40 | 1.29 | 4.28 | 109 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.57 | 0.38 | 4 | 1.26 | 4.12 | — | — | 61 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.25 | 14.33 | 6 | 1.25 | 2.80 | — | — | 71 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.63 | 42.69 | 6 | 1.26 | 2.10 | — | — | 131 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 227 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY HIGH INCOME FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 8.72 | $ | 0.58 | $ | 0.18 | $ | 0.76 | $ | (0.60 | ) | $ | (0.13 | ) | $ | (0.73 | ) | |||||||||||
| Year ended 3-31-2013 |
8.30 | 0.63 | 0.52 | 1.15 | (0.63 | ) | (0.10 | ) | (0.73 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
8.46 | 0.64 | 0.02 | 0.66 | (0.65 | ) | (0.17 | ) | (0.82 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
8.32 | 0.69 | 0.50 | 1.19 | (0.69 | ) | (0.36 | ) | (1.05 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
6.58 | 0.64 | 1.93 | 2.57 | (0.66 | ) | (0.17 | ) | (0.83 | ) | ||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.72 | 0.52 | 0.17 | 0.69 | (0.53 | ) | (0.13 | ) | (0.66 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
8.30 | 0.57 | 0.52 | 1.09 | (0.57 | ) | (0.10 | ) | (0.67 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
8.46 | 0.58 | 0.02 | 0.60 | (0.59 | ) | (0.17 | ) | (0.76 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
8.32 | 0.62 | 0.50 | 1.12 | (0.62 | ) | (0.36 | ) | (0.98 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
6.57 | 0.57 | 1.94 | 2.51 | (0.59 | ) | (0.17 | ) | (0.76 | ) | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.72 | 0.52 | 0.18 | 0.70 | (0.54 | ) | (0.13 | ) | (0.67 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
8.30 | 0.57 | 0.52 | 1.09 | (0.57 | ) | (0.10 | ) | (0.67 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
8.46 | 0.58 | 0.03 | 0.61 | (0.60 | ) | (0.17 | ) | (0.77 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
8.32 | 0.63 | 0.50 | 1.13 | (0.63 | ) | (0.36 | ) | (0.99 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
6.58 | 0.60 | 1.92 | 2.52 | (0.61 | ) | (0.17 | ) | (0.78 | ) | ||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.72 | 0.55 | 0.17 | 0.72 | (0.56 | ) | (0.13 | ) | (0.69 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
8.30 | 0.59 | 0.52 | 1.11 | (0.59 | ) | (0.10 | ) | (0.69 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
8.46 | 0.62 | 0.01 | 0.63 | (0.62 | ) | (0.17 | ) | (0.79 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
8.32 | 0.67 | 0.50 | 1.17 | (0.67 | ) | (0.36 | ) | (1.03 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
6.57 | 0.61 | 1.95 | 2.56 | (0.64 | ) | (0.17 | ) | (0.81 | ) | ||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.72 | 0.60 | 0.18 | 0.78 | (0.62 | ) | (0.13 | ) | (0.75 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
8.30 | 0.65 | 0.52 | 1.17 | (0.65 | ) | (0.10 | ) | (0.75 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
8.46 | 0.66 | 0.03 | 0.69 | (0.68 | ) | (0.17 | ) | (0.85 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
8.32 | 0.72 | 0.50 | 1.22 | (0.72 | ) | (0.36 | ) | (1.08 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
6.58 | 0.69 | 1.91 | 2.60 | (0.69 | ) | (0.17 | ) | (0.86 | ) | ||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.72 | 0.52 | 0.21 | 0.73 | (0.57 | ) | (0.13 | ) | (0.70 | ) | ||||||||||||||||||
| Year ended 3-31-2013(5) |
8.54 | 0.16 | 0.17 | 0.33 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.72 | 0.58 | 0.18 | 0.76 | (0.60 | ) | (0.13 | ) | (0.73 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
8.30 | 0.63 | 0.52 | 1.15 | (0.63 | ) | (0.10 | ) | (0.73 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
8.46 | 0.64 | 0.03 | 0.67 | (0.66 | ) | (0.17 | ) | (0.83 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
8.32 | 0.69 | 0.50 | 1.19 | (0.69 | ) | (0.36 | ) | (1.05 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
6.58 | 0.66 | 1.92 | 2.58 | (0.67 | ) | (0.17 | ) | (0.84 | ) | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 228 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 8.75 | 9.09 | % | $ | 4,151 | 0.93 | % | 6.68 | % | — | % | — | % | 75 | % | ||||||||||||||||
| Year ended 3-31-2013 |
8.72 | 14.50 | 3,080 | 0.93 | 7.42 | — | — | 68 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.30 | 8.47 | 1,847 | 1.00 | 7.87 | — | — | 80 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
8.46 | 15.21 | 1,027 | 1.08 | 8.22 | — | — | 89 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.32 | 40.44 | 649 | 1.13 | 8.24 | — | — | 84 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.75 | 8.28 | 165 | 1.68 | 5.96 | — | — | 75 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
8.72 | 13.64 | 152 | 1.69 | 6.65 | — | — | 68 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.30 | 7.63 | 90 | 1.79 | 7.10 | — | — | 80 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
8.46 | 14.31 | 50 | 1.88 | 7.43 | — | — | 89 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.32 | 39.36 | 31 | 2.00 | 7.36 | — | — | 84 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.75 | 8.32 | 1,919 | 1.64 | 5.98 | — | — | 75 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
8.72 | 13.71 | 1,501 | 1.64 | 6.70 | — | — | 68 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.30 | 7.73 | 850 | 1.70 | 7.16 | — | — | 80 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
8.46 | 14.42 | 416 | 1.77 | 7.52 | — | — | 89 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.32 | 39.45 | 249 | 1.83 | 7.50 | — | — | 84 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.75 | 8.69 | 10 | 1.27 | 6.34 | — | — | 75 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
8.72 | 13.96 | 8 | 1.36 | 6.99 | 1.38 | 6.97 | 68 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.30 | 8.08 | 5 | 1.36 | 7.55 | 1.45 | 7.47 | 80 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
8.46 | 14.86 | 4 | 1.36 | 7.95 | 1.59 | 7.72 | 89 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.32 | 40.29 | 2 | 1.36 | 8.02 | 1.83 | 7.55 | 84 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.75 | 9.36 | 4,075 | 0.69 | 6.90 | — | — | 75 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
8.72 | 14.77 | 2,513 | 0.70 | 7.64 | — | — | 68 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.30 | 8.78 | 1,255 | 0.73 | 8.07 | — | — | 80 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
8.46 | 15.56 | 384 | 0.79 | 8.49 | — | — | 89 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.32 | 40.89 | 199 | 0.82 | 8.48 | — | — | 84 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.75 | 8.71 | 30 | 1.28 | 6.00 | — | — | 75 | ||||||||||||||||||||||||
| Year ended 3-31-2013(5) |
8.72 | 3.94 | — | * | 1.27 | (6) | 6.61 | (6) | — | — | 68 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.75 | 9.09 | 1,129 | 0.93 | 6.67 | 0.94 | 6.66 | 75 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
8.72 | 14.50 | 835 | 0.93 | 7.41 | 0.95 | 7.39 | 68 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.30 | 8.51 | 464 | 0.99 | 7.84 | — | — | 80 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
8.46 | 15.25 | 192 | 1.05 | 8.22 | — | — | 89 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.32 | 40.49 | 103 | 1.09 | 8.28 | — | — | 84 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 229 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY INTERNATIONAL CORE EQUITY FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 15.98 | $ | 0.18 | $ | 3.24 | $ | 3.42 | $ | (0.35 | ) | $ | (0.01 | ) | $ | (0.36 | ) | |||||||||||
| Year ended 3-31-2013 |
15.26 | 0.21 | 0.73 | 0.94 | (0.22 | ) | — | (0.22 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
17.14 | 0.27 | (1.66 | ) | (1.39 | ) | (0.27 | ) | (0.22 | ) | (0.49 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
14.84 | 0.18 | 2.27 | 2.45 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.54 | 0.13 | 5.27 | 5.40 | (0.10 | ) | — | (0.10 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.49 | 0.04 | 2.93 | 2.97 | (0.22 | ) | (0.01 | ) | (0.23 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
13.86 | 0.07 | 0.66 | 0.73 | (0.10 | ) | — | (0.10 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
15.64 | 0.14 | (1.53 | ) | (1.39 | ) | (0.17 | ) | (0.22 | ) | (0.39 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
13.59 | 0.05 | 2.06 | 2.11 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.77 | 0.02 | 4.82 | 4.84 | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.51 | 0.07 | 2.93 | 3.00 | (0.25 | ) | (0.01 | ) | (0.26 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
13.88 | 0.11 | 0.65 | 0.76 | (0.13 | ) | — | (0.13 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
15.65 | 0.17 | (1.53 | ) | (1.36 | ) | (0.19 | ) | (0.22 | ) | (0.41 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
13.58 | 0.07 | 2.08 | 2.15 | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.76 | 0.05 | 4.82 | 4.87 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.07 | 0.16 | 3.25 | 3.41 | (0.33 | ) | (0.01 | ) | (0.34 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.33 | 0.20 | 0.75 | 0.95 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
17.21 | 0.27 | (1.67 | ) | (1.40 | ) | (0.26 | ) | (0.22 | ) | (0.48 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
14.90 | 0.17 | 2.29 | 2.46 | (0.15 | ) | — | (0.15 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.59 | 0.16 | 5.27 | 5.43 | (0.12 | ) | — | (0.12 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.07 | 0.25 | 3.25 | 3.50 | (0.41 | ) | (0.01 | ) | (0.42 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.33 | 0.27 | 0.75 | 1.02 | (0.28 | ) | — | (0.28 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
17.22 | 0.32 | (1.66 | ) | (1.34 | ) | (0.33 | ) | (0.22 | ) | (0.55 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
14.90 | 0.23 | 2.30 | 2.53 | (0.21 | ) | — | (0.21 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.58 | 0.20 | 5.30 | 5.50 | (0.18 | ) | — | (0.18 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.98 | 0.11 | 3.26 | 3.37 | (0.31 | ) | (0.01 | ) | (0.32 | ) | ||||||||||||||||||
| Year ended 3-31-2013(5) |
15.40 | 0.04 | 0.54 | 0.58 | — | — | — | |||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.08 | 0.21 | 3.25 | 3.46 | (0.37 | ) | (0.01 | ) | (0.38 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.35 | 0.24 | 0.73 | 0.97 | (0.24 | ) | — | (0.24 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
17.23 | 0.29 | (1.66 | ) | (1.37 | ) | (0.29 | ) | (0.22 | ) | (0.51 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
14.92 | 0.20 | 2.28 | 2.48 | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
9.59 | 0.04 | 5.43 | 5.47 | (0.14 | ) | — | (0.14 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 230 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 19.04 | 21.42 | % | $ | 1,028 | 1.40 | % | 1.01 | % | — | % | — | % | 87 | % | ||||||||||||||||
| Year ended 3-31-2013 |
15.98 | 6.30 | 694 | 1.46 | 1.43 | — | — | 81 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.26 | -7.86 | 717 | 1.49 | 1.75 | — | — | 88 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.14 | 16.60 | 673 | 1.46 | 1.21 | — | — | 101 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
14.84 | 56.68 | 430 | 1.59 | 1.09 | — | — | 94 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.23 | 20.47 | 13 | 2.22 | 0.26 | — | — | 87 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.49 | 5.37 | 12 | 2.35 | 0.56 | — | — | 81 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.86 | -8.68 | 15 | 2.36 | 1.02 | — | — | 88 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.64 | 15.56 | 20 | 2.35 | 0.40 | — | — | 101 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.59 | 55.20 | 17 | 2.54 | 0.19 | — | — | 94 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.25 | 20.64 | 117 | 2.07 | 0.40 | — | — | 87 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.51 | 5.61 | 98 | 2.10 | 0.81 | — | — | 81 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.88 | -8.45 | 113 | 2.13 | 1.18 | — | — | 88 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.65 | 15.88 | 132 | 2.13 | 0.55 | — | — | 101 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.58 | 55.61 | 85 | 2.21 | 0.47 | — | — | 94 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.14 | 21.32 | 4 | 1.53 | 0.90 | 1.85 | 0.58 | 87 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
16.07 | 6.27 | 3 | 1.52 | 1.36 | 2.05 | 0.83 | 81 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.33 | -7.88 | 3 | 1.53 | 1.74 | 2.09 | 1.18 | 88 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.21 | 16.56 | 3 | 1.53 | 1.13 | 2.16 | 0.50 | 101 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
14.90 | 56.68 | 2 | 1.53 | 1.23 | 2.53 | 0.23 | 94 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.15 | 21.93 | 802 | 1.04 | 1.39 | — | — | 87 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
16.07 | 6.75 | 572 | 1.05 | 1.80 | — | — | 81 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.33 | -7.47 | 505 | 1.07 | 2.07 | — | — | 88 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.22 | 17.03 | 307 | 1.08 | 1.51 | — | — | 101 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
14.90 | 57.44 | 93 | 1.12 | 1.55 | — | — | 94 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.03 | 21.19 | 5 | 1.64 | 0.61 | — | — | 87 | ||||||||||||||||||||||||
| Year ended 3-31-2013(5) |
15.98 | 3.77 | — | * | 1.62 | (6) | 0.96 | (6) | — | — | 81 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.16 | 21.63 | 153 | 1.29 | 1.20 | — | — | 87 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
16.08 | 6.42 | 148 | 1.31 | 1.62 | — | — | 81 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.35 | -7.67 | 165 | 1.33 | 1.88 | — | — | 88 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.23 | 16.72 | 120 | 1.34 | 1.36 | — | — | 101 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
14.92 | 57.10 | 88 | 1.36 | 0.82 | — | — | 94 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 231 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY INTERNATIONAL GROWTH FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 35.50 | $ | 0.19 | $ | 5.92 | $ | 6.11 | $ | (0.46 | ) | $ | — | $ | (0.46 | ) | ||||||||||||
| Year ended 3-31-2013 |
33.45 | 0.27 | 2.07 | 2.34 | (0.29 | ) | — | (0.29 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
33.23 | 0.26 | (0.04 | ) | 0.22 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
29.04 | 0.39 | 4.42 | 4.81 | (0.62 | ) | — | (0.62 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
19.83 | 0.27 | 9.18 | 9.45 | (0.24 | ) | — | (0.24 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
31.63 | (0.16 | ) | 5.25 | 5.09 | (0.13 | ) | — | (0.13 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
29.88 | (0.05 | ) | 1.84 | 1.79 | (0.04 | ) | — | (0.04 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
29.99 | (0.04 | ) | (0.07 | ) | (0.11 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
26.32 | 0.08 | 3.99 | 4.07 | (0.40 | ) | — | (0.40 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
18.06 | 0.02 | 8.29 | 8.31 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
31.61 | (0.08 | ) | 5.22 | 5.14 | (0.18 | ) | — | (0.18 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
29.85 | (0.02 | ) | 1.83 | 1.81 | (0.05 | ) | — | (0.05 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
29.93 | (0.02 | ) | (0.06 | ) | (0.08 | ) | — | — | — | ||||||||||||||||||
| Year ended 3-31-2011 |
26.27 | 0.10 | 3.97 | 4.07 | (0.41 | ) | — | (0.41 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
18.02 | 0.01 | 8.30 | 8.31 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| Class E Shares(5) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
35.53 | 0.32 | 5.89 | 6.21 | (0.55 | ) | — | (0.55 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
33.52 | 0.35 | 2.07 | 2.42 | (0.41 | ) | — | (0.41 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
33.22 | 0.33 | (0.03 | ) | 0.30 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
29.04 | 0.45 | 4.42 | 4.87 | (0.69 | ) | — | (0.69 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
19.83 | 0.35 | 9.18 | 9.53 | (0.32 | ) | — | (0.32 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
35.85 | 0.40 | 5.92 | 6.32 | (0.60 | ) | — | (0.60 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
33.84 | 0.33 | 2.16 | 2.49 | (0.48 | ) | — | (0.48 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
33.50 | 0.37 | (0.03 | ) | 0.34 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
29.26 | 0.69 | 4.28 | 4.97 | (0.73 | ) | — | (0.73 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
19.98 | 0.28 | 9.35 | 9.63 | (0.35 | ) | — | (0.35 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
35.48 | 0.13 | 5.88 | 6.01 | (0.38 | ) | — | (0.38 | ) | |||||||||||||||||||
| Year ended 3-31-2013(6) |
34.77 | 0.01 | 0.70 | 0.71 | — | — | — | |||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
35.57 | 0.30 | 5.87 | 6.17 | (0.51 | ) | — | (0.51 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
33.54 | 0.27 | 2.10 | 2.37 | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
33.28 | 0.29 | (0.03 | ) | 0.26 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
29.06 | 0.58 | 4.31 | 4.89 | (0.67 | ) | — | (0.67 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
19.86 | 0.28 | 9.23 | 9.51 | (0.31 | ) | — | (0.31 | ) | |||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | Class share is closed to investment. |
| (6) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (7) | Annualized. |
| (8) | For the fiscal year ended March 31, 2013. |
| 232 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 41.15 | 17.26 | % | $ | 340 | 1.49 | % | 0.50 | % | — | % | — | % | 46 | % | ||||||||||||||||
| Year ended 3-31-2013 |
35.50 | 7.04 | 198 | 1.48 | 0.80 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
33.45 | 0.66 | 151 | 1.52 | 0.81 | — | — | 49 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
33.23 | 16.67 | 142 | 1.62 | 1.28 | — | — | 74 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
29.04 | 47.70 | 120 | 1.61 | 1.04 | — | — | 80 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
36.59 | 16.13 | 5 | 2.47 | -0.46 | — | — | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
31.63 | 5.95 | 4 | 2.47 | -0.16 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
29.88 | -0.34 | 3 | 2.55 | -0.16 | — | — | 49 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
29.99 | 15.53 | 4 | 2.61 | 0.29 | — | — | 74 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
26.32 | 46.03 | 4 | 2.69 | 0.06 | — | — | 80 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
36.57 | 16.30 | 28 | 2.31 | -0.23 | — | — | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
31.61 | 6.03 | 24 | 2.39 | -0.07 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
29.85 | -0.24 | 25 | 2.46 | -0.09 | — | — | 49 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
29.93 | 15.55 | 31 | 2.59 | 0.31 | — | — | 74 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
26.27 | 46.15 | 31 | 2.62 | 0.07 | — | — | 80 | ||||||||||||||||||||||||
| Class E Shares(5) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
41.19 | 17.58 | — | * | 1.22 | 0.84 | — | — | 46 | |||||||||||||||||||||||
| Year ended 3-31-2013 |
35.53 | 7.27 | — | * | 1.25 | 1.04 | — | — | 40 | |||||||||||||||||||||||
| Year ended 3-31-2012 |
33.52 | 0.90 | — | * | 1.29 | 1.04 | — | — | 49 | |||||||||||||||||||||||
| Year ended 3-31-2011 |
33.22 | 16.88 | — | * | 1.40 | 1.49 | — | — | 74 | |||||||||||||||||||||||
| Year ended 3-31-2010 |
29.04 | 48.11 | — | * | 1.32 | 1.31 | — | — | 80 | |||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
41.57 | 17.73 | 66 | 1.11 | 1.02 | — | — | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
35.85 | 7.38 | 48 | 1.13 | 0.96 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
33.84 | 1.05 | 24 | 1.17 | 1.14 | — | — | 49 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
33.50 | 17.09 | 23 | 1.25 | 1.85 | — | — | 74 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
29.26 | 48.28 | 36 | 1.18 | 1.22 | — | — | 80 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
41.11 | 17.01 | — | * | 1.70 | 0.33 | — | — | 46 | |||||||||||||||||||||||
| Year ended 3-31-2013(6) |
35.48 | 2.04 | — | * | 1.70 | (7) | 0.15 | (7) | — | — | 40 | (8) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
41.23 | 17.38 | 11 | 1.38 | 0.79 | — | — | 46 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
35.57 | 7.14 | 13 | 1.39 | 0.81 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
33.54 | 0.78 | 11 | 1.40 | 0.93 | 1.42 | 0.91 | 49 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
33.28 | 16.93 | 9 | 1.42 | 1.62 | 1.58 | 1.46 | 74 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
29.06 | 47.95 | 3 | 1.42 | 1.16 | 1.48 | 1.10 | 80 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 233 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY LARGE CAP GROWTH FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 15.87 | $ | 0.01 | $ | 3.75 | $ | 3.76 | $ | — | $ | (2.04 | ) | $ | (2.04 | ) | ||||||||||||
| Year ended 3-31-2013 |
15.14 | 0.03 | 0.73 | 0.76 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
13.61 | (0.01 | ) | 1.54 | 1.53 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
11.85 | 0.00 | 1.77 | 1.77 | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.71 | 0.04 | 3.15 | 3.19 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.73 | (0.12 | ) | 3.21 | 3.09 | — | (1.98 | ) | (1.98 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
13.20 | (0.10 | ) | 0.63 | 0.53 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
11.99 | (0.13 | ) | 1.34 | 1.21 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
10.55 | (0.13 | ) | 1.57 | 1.44 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.82 | (0.09 | ) | 2.82 | 2.73 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.36 | (0.11 | ) | 3.37 | 3.26 | — | (1.98 | ) | (1.98 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
13.78 | (0.08 | ) | 0.66 | 0.58 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
12.49 | (0.11 | ) | 1.40 | 1.29 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
10.95 | (0.09 | ) | 1.63 | 1.54 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.09 | (0.05 | ) | 2.91 | 2.86 | — | — | — | ||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.86 | 0.01 | 3.74 | 3.75 | — | (2.04 | ) | (2.04 | ) | |||||||||||||||||||
| Year ended 3-31-2013 |
15.13 | 0.03 | 0.73 | 0.76 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
13.60 | (0.01 | ) | 1.54 | 1.53 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
11.84 | (0.01 | ) | 1.78 | 1.77 | (0.01 | ) | — | (0.01 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
8.70 | 0.03 | 3.16 | 3.19 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.31 | 0.06 | 3.85 | 3.91 | (0.03 | ) | (2.04 | ) | (2.07 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.54 | 0.07 | 0.76 | 0.83 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
13.93 | 0.02 | 1.59 | 1.61 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2011 |
12.12 | 0.03 | 1.81 | 1.84 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.91 | 0.06 | 3.22 | 3.28 | (0.07 | ) | — | (0.07 | ) | |||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.62 | (0.04 | ) | 3.67 | 3.63 | — | (2.00 | ) | (2.00 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
14.92 | (0.02 | ) | 0.72 | 0.70 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
13.46 | (0.05 | ) | 1.51 | 1.46 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
11.74 | (0.03 | ) | 1.75 | 1.72 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.63 | 0.00 | 3.12 | 3.12 | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.11 | 0.03 | 3.80 | 3.83 | (0.01 | ) | (2.04 | ) | (2.05 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
15.36 | 0.05 | 0.74 | 0.79 | (0.04 | ) | — | (0.04 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
13.80 | 0.01 | 1.55 | 1.56 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2011 |
12.01 | 0.01 | 1.80 | 1.81 | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
| Year ended 3-31-2010 |
8.83 | 0.05 | 3.19 | 3.24 | (0.06 | ) | — | (0.06 | ) | |||||||||||||||||||
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| 234 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 17.59 | 24.21 | % | $ | 1,090 | 1.15 | % | 0.07 | % | 1.19 | % | 0.03 | % | 50 | % | ||||||||||||||||
| Year ended 3-31-2013 |
15.87 | 5.03 | 994 | 1.15 | 0.22 | 1.22 | 0.15 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.14 | 11.24 | 995 | 1.15 | -0.06 | 1.22 | -0.13 | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
13.61 | 14.98 | 550 | 1.15 | 0.01 | 1.25 | -0.09 | 91 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.85 | 36.63 | 464 | 1.15 | 0.33 | 1.30 | 0.18 | 60 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.84 | 23.08 | 11 | 2.06 | -0.84 | — | — | 50 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.73 | 4.02 | 11 | 2.15 | -0.78 | 2.18 | -0.81 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.20 | 10.09 | 15 | 2.18 | -1.10 | 2.22 | -1.14 | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.99 | 13.65 | 10 | 2.32 | -1.17 | — | — | 91 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.55 | 34.91 | 9 | 2.41 | -0.94 | — | — | 60 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.64 | 23.17 | 78 | 1.90 | -0.68 | — | — | 50 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.36 | 4.28 | 71 | 1.93 | -0.57 | — | — | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.78 | 10.33 | 81 | 1.95 | -0.86 | — | — | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
12.49 | 14.06 | 53 | 1.98 | -0.83 | — | — | 91 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.95 | 35.35 | 50 | 2.02 | -0.54 | — | — | 60 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.57 | 24.16 | 7 | 1.15 | 0.06 | 1.46 | -0.25 | 50 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
15.86 | 5.03 | 6 | 1.15 | 0.21 | 1.59 | -0.24 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.13 | 11.25 | 5 | 1.15 | -0.06 | 1.62 | -0.53 | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
13.60 | 14.99 | 2 | 1.15 | -0.02 | 1.83 | -0.70 | 91 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.84 | 36.67 | 1 | 1.15 | 0.31 | 2.05 | -0.59 | 60 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.15 | 24.52 | 118 | 0.88 | 0.34 | 0.88 | 0.34 | 50 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
16.31 | 5.36 | 142 | 0.88 | 0.45 | 0.89 | 0.45 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.54 | 11.56 | 242 | 0.89 | 0.18 | — | — | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
13.93 | 15.22 | 173 | 0.92 | 0.22 | — | — | 91 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.12 | 36.86 | 270 | 0.92 | 0.56 | — | — | 60 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.25 | 23.75 | 31 | 1.47 | -0.26 | — | — | 50 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
15.62 | 4.69 | 28 | 1.48 | -0.11 | — | — | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.92 | 10.85 | 24 | 1.48 | -0.39 | — | — | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
13.46 | 14.65 | 20 | 1.46 | -0.29 | — | — | 91 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.74 | 36.18 | 13 | 1.46 | 0.00 | — | — | 60 | ||||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.89 | 24.30 | 131 | 1.06 | 0.16 | 1.13 | 0.09 | 50 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
16.11 | 5.09 | 126 | 1.06 | 0.31 | 1.13 | 0.23 | 73 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
15.36 | 11.38 | 121 | 1.06 | 0.04 | 1.14 | -0.04 | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
13.80 | 15.09 | 142 | 1.06 | 0.10 | 1.16 | 0.00 | 91 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.01 | 36.69 | 112 | 1.06 | 0.41 | 1.17 | 0.30 | 60 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 235 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY LIMITED-TERM BOND FUND
| Net Asset Value, Beginning of |
Net Investment Income(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 11.20 | $ | 0.14 | $ | (0.23 | ) | $ | (0.09 | ) | $ | (0.15 | ) | $ | (0.06 | ) | $ | (0.21 | ) | |||||||||
| Year ended 3-31-2013 |
11.16 | 0.17 | 0.08 | 0.25 | (0.18 | ) | (0.03 | ) | (0.21 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
11.04 | 0.20 | 0.20 | 0.40 | (0.23 | ) | (0.05 | ) | (0.28 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
11.06 | 0.25 | 0.02 | 0.27 | (0.27 | ) | (0.02 | ) | (0.29 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.77 | 0.31 | 0.33 | 0.64 | (0.32 | ) | (0.03 | ) | (0.35 | ) | ||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.20 | 0.05 | (0.23 | ) | (0.18 | ) | (0.06 | ) | (0.06 | ) | (0.12 | ) | ||||||||||||||||
| Year ended 3-31-2013 |
11.16 | 0.07 | 0.09 | 0.16 | (0.09 | ) | (0.03 | ) | (0.12 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
11.04 | 0.11 | 0.20 | 0.31 | (0.14 | ) | (0.05 | ) | (0.19 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
11.06 | 0.16 | 0.02 | 0.18 | (0.18 | ) | (0.02 | ) | (0.20 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.77 | 0.22 | 0.33 | 0.55 | (0.23 | ) | (0.03 | ) | (0.26 | ) | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.20 | 0.06 | (0.23 | ) | (0.17 | ) | (0.07 | ) | (0.06 | ) | (0.13 | ) | ||||||||||||||||
| Year ended 3-31-2013 |
11.16 | 0.08 | 0.09 | 0.17 | (0.10 | ) | (0.03 | ) | (0.13 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
11.04 | 0.12 | 0.20 | 0.32 | (0.15 | ) | (0.05 | ) | (0.20 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
11.06 | 0.17 | 0.02 | 0.19 | (0.19 | ) | (0.02 | ) | (0.21 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.77 | 0.24 | 0.33 | 0.57 | (0.25 | ) | (0.03 | ) | (0.28 | ) | ||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.20 | 0.13 | (0.23 | ) | (0.10 | ) | (0.14 | ) | (0.06 | ) | (0.20 | ) | ||||||||||||||||
| Year ended 3-31-2013 |
11.16 | 0.15 | 0.09 | 0.24 | (0.17 | ) | (0.03 | ) | (0.20 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
11.04 | 0.19 | 0.20 | 0.39 | (0.22 | ) | (0.05 | ) | (0.27 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
11.06 | 0.24 | 0.02 | 0.26 | (0.26 | ) | (0.02 | ) | (0.28 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.77 | 0.31 | 0.34 | 0.65 | (0.33 | ) | (0.03 | ) | (0.36 | ) | ||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.20 | 0.17 | (0.23 | ) | (0.06 | ) | (0.18 | ) | (0.06 | ) | (0.24 | ) | ||||||||||||||||
| Year ended 3-31-2013 |
11.16 | 0.19 | 0.09 | 0.28 | (0.21 | ) | (0.03 | ) | (0.24 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
11.04 | 0.23 | 0.20 | 0.43 | (0.26 | ) | (0.05 | ) | (0.31 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
11.06 | 0.28 | 0.02 | 0.30 | (0.30 | ) | (0.02 | ) | (0.32 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.77 | 0.35 | 0.33 | 0.68 | (0.36 | ) | (0.03 | ) | (0.39 | ) | ||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.20 | 0.11 | (0.23 | ) | (0.12 | ) | (0.12 | ) | (0.06 | ) | (0.18 | ) | ||||||||||||||||
| Year ended 3-31-2013(5) |
11.19 | 0.02 | 0.02 | 0.04 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.20 | 0.14 | (0.23 | ) | (0.09 | ) | (0.15 | ) | (0.06 | ) | (0.21 | ) | ||||||||||||||||
| Year ended 3-31-2013 |
11.16 | 0.17 | 0.08 | 0.25 | (0.18 | ) | (0.03 | ) | (0.21 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
11.04 | 0.21 | 0.19 | 0.40 | (0.23 | ) | (0.05 | ) | (0.28 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
11.06 | 0.25 | 0.02 | 0.27 | (0.27 | ) | (0.02 | ) | (0.29 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.77 | 0.32 | 0.33 | 0.65 | (0.33 | ) | (0.03 | ) | (0.36 | ) | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 236 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 10.90 | -0.74 | % | $ | 1,446 | 0.89 | % | 1.31 | % | — | % | — | % | 39 | % | ||||||||||||||||
| Year ended 3-31-2013 |
11.20 | 2.29 | 1,211 | 0.88 | 1.48 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.16 | 3.66 | 1,046 | 0.90 | 1.84 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.04 | 2.45 | 794 | 0.93 | 2.18 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.06 | 6.03 | 570 | 1.00 | 2.84 | — | — | 33 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.90 | -1.59 | 19 | 1.76 | 0.44 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
11.20 | 1.45 | 25 | 1.71 | 0.66 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.16 | 2.80 | 26 | 1.74 | 1.00 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.04 | 1.61 | 24 | 1.75 | 1.36 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.06 | 5.16 | 21 | 1.82 | 2.06 | — | — | 33 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.90 | -1.47 | 131 | 1.63 | 0.56 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
11.20 | 1.54 | 218 | 1.61 | 0.76 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.16 | 2.89 | 242 | 1.65 | 1.10 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.04 | 1.72 | 216 | 1.65 | 1.47 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.06 | 5.27 | 213 | 1.71 | 2.14 | — | — | 33 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.90 | -0.85 | 3 | 1.00 | 1.20 | 1.02 | 1.18 | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
11.20 | 2.17 | 4 | 1.00 | 1.35 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.16 | 3.58 | 3 | 1.00 | 1.72 | 1.09 | 1.63 | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.04 | 2.35 | 1 | 1.00 | 2.08 | 1.19 | 1.89 | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.06 | 6.07 | — | * | 0.98 | 2.78 | — | — | 33 | |||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.90 | -0.50 | 49 | 0.64 | 1.54 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
11.20 | 2.54 | 117 | 0.64 | 1.72 | — | — | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.16 | 3.92 | 102 | 0.66 | 2.07 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.04 | 2.71 | 51 | 0.68 | 2.43 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.06 | 6.35 | 37 | 0.73 | 3.09 | — | — | 33 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.90 | -1.08 | — | * | 1.24 | 0.96 | — | — | 39 | |||||||||||||||||||||||
| Year ended 3-31-2013(5) |
11.20 | 0.41 | — | * | 1.21 | (6) | 0.59 | (6) | — | — | 55 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.90 | -0.74 | 26 | 0.89 | 1.30 | 0.90 | 1.29 | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
11.20 | 2.29 | 58 | 0.88 | 1.48 | 0.89 | 1.47 | 55 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.16 | 3.66 | 51 | 0.90 | 1.85 | 0.92 | 1.84 | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
11.04 | 2.45 | 54 | 0.93 | 2.19 | 0.94 | 2.18 | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.06 | 6.07 | 57 | 0.98 | 2.87 | — | — | 33 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 237 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY MANAGED INTERNATIONAL OPPORTUNITIES FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Distributions From Return of Capital |
Total Distributions |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 8.98 | $ | 0.11 | $ | 1.17 | $ | 1.28 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | ||||||||||||||
| Year ended 3-31-2013 |
8.70 | 0.11 | 0.29 | 0.40 | (0.12 | ) | — | — | (0.12 | ) | ||||||||||||||||||||||
| Year ended 3-31-2012 |
9.56 | 0.14 | (0.86 | ) | (0.72 | ) | (0.14 | ) | — | — | (0.14 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
8.44 | 0.03 | 1.14 | 1.17 | (0.03 | ) | — | (0.02 | ) | (0.05 | ) | |||||||||||||||||||||
| Year ended 3-31-2010 |
5.62 | 0.01 | 2.85 | 2.86 | (0.02 | ) | — | (0.02 | ) | (0.04 | ) | |||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.85 | 0.03 | 1.17 | 1.20 | (0.06 | ) | — | — | (0.06 | ) | ||||||||||||||||||||||
| Year ended 3-31-2013 |
8.59 | 0.04 | 0.29 | 0.33 | (0.07 | ) | — | — | (0.07 | ) | ||||||||||||||||||||||
| Year ended 3-31-2012 |
9.48 | 0.06 | (0.87 | ) | (0.81 | ) | (0.08 | ) | — | — | (0.08 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
8.38 | (0.04 | ) | 1.14 | 1.10 | — | * | — | — | * | — | * | ||||||||||||||||||||
| Year ended 3-31-2010 |
5.59 | (0.04 | ) | 2.83 | 2.79 | — | — | — | — | |||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.87 | 0.04 | 1.17 | 1.21 | (0.06 | ) | — | — | (0.06 | ) | ||||||||||||||||||||||
| Year ended 3-31-2013 |
8.61 | 0.04 | 0.29 | 0.33 | (0.07 | ) | — | — | (0.07 | ) | ||||||||||||||||||||||
| Year ended 3-31-2012 |
9.49 | 0.07 | (0.86 | ) | (0.79 | ) | (0.09 | ) | — | — | (0.09 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
8.40 | (0.03 | ) | 1.13 | 1.10 | (0.01 | ) | — | — | * | (0.01 | ) | ||||||||||||||||||||
| Year ended 3-31-2010 |
5.59 | (0.03 | ) | 2.84 | 2.81 | — | — | — | — | |||||||||||||||||||||||
| Class E Shares(5) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.99 | 0.12 | 1.17 | 1.29 | (0.12 | ) | — | — | (0.12 | ) | ||||||||||||||||||||||
| Year ended 3-31-2013 |
8.70 | 0.12 | 0.30 | 0.42 | (0.13 | ) | — | — | (0.13 | ) | ||||||||||||||||||||||
| Year ended 3-31-2012 |
9.57 | 0.15 | (0.88 | ) | (0.73 | ) | (0.14 | ) | — | — | (0.14 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
8.45 | 0.05 | 1.13 | 1.18 | (0.04 | ) | — | (0.02 | ) | (0.06 | ) | |||||||||||||||||||||
| Year ended 3-31-2010 |
5.62 | 0.01 | 2.86 | 2.87 | (0.02 | ) | — | (0.02 | ) | (0.04 | ) | |||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.01 | 0.14 | 1.15 | 1.29 | (0.13 | ) | — | — | (0.13 | ) | ||||||||||||||||||||||
| Year ended 3-31-2013 |
8.73 | 0.13 | 0.30 | 0.43 | (0.15 | ) | — | — | (0.15 | ) | ||||||||||||||||||||||
| Year ended 3-31-2012 |
9.58 | 0.16 | (0.85 | ) | (0.69 | ) | (0.16 | ) | — | — | (0.16 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
8.46 | 0.05 | 1.14 | 1.19 | (0.04 | ) | — | (0.03 | ) | (0.07 | ) | |||||||||||||||||||||
| Year ended 3-31-2010 |
5.63 | 0.02 | 2.87 | 2.89 | (0.03 | ) | — | (0.03 | ) | (0.06 | ) | |||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.97 | 0.10 | 1.16 | 1.26 | (0.10 | ) | — | — | (0.10 | ) | ||||||||||||||||||||||
| Year ended 3-31-2013(6) |
8.88 | (0.01 | ) | 0.10 | 0.09 | — | — | — | — | |||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
8.97 | 0.13 | 1.16 | 1.29 | (0.12 | ) | — | — | (0.12 | ) | ||||||||||||||||||||||
| Year ended 3-31-2013 |
8.69 | 0.12 | 0.29 | 0.41 | (0.13 | ) | — | — | (0.13 | ) | ||||||||||||||||||||||
| Year ended 3-31-2012 |
9.55 | 0.16 | (0.88 | ) | (0.72 | ) | (0.14 | ) | — | — | (0.14 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
8.43 | 0.03 | 1.14 | 1.17 | (0.03 | ) | — | (0.02 | ) | (0.05 | ) | |||||||||||||||||||||
| Year ended 3-31-2010 |
5.61 | 0.01 | 2.85 | 2.86 | (0.02 | ) | — | (0.02 | ) | (0.04 | ) | |||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | Class share is closed to investment. |
| (6) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (7) | Annualized. |
| (8) | For the fiscal year ended March 31, 2013. |
| (9) | Does not include expenses of the Underlying Ivy Funds in which the Fund invests. |
| 238 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver(9) |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver(9) |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3)(9) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3)(9) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 10.15 | 14.33 | % | $ | 254 | 0.49 | % | 1.16 | % | — | % | — | % | 21 | % | ||||||||||||||||
| Year ended 3-31-2013 |
8.98 | 4.65 | 183 | 0.49 | 1.32 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.70 | -7.42 | 185 | 0.50 | 1.58 | — | — | 8 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
9.56 | 13.88 | 188 | 0.50 | 0.38 | — | — | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.44 | 50.82 | 152 | 0.55 | 0.30 | — | — | 9 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
9.99 | 13.53 | 3 | 1.39 | 0.28 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
8.85 | 3.83 | 2 | 1.40 | 0.44 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.59 | -8.42 | 3 | 1.39 | 0.66 | — | — | 8 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
9.48 | 13.14 | 3 | 1.36 | -0.47 | — | — | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.38 | 49.91 | 4 | 1.43 | -0.58 | — | — | 9 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.02 | 13.57 | 6 | 1.26 | 0.43 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
8.87 | 4.01 | 5 | 1.29 | 0.53 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.61 | -8.25 | 5 | 1.30 | 0.79 | — | — | 8 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
9.49 | 13.05 | 5 | 1.26 | -0.38 | — | — | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.40 | 50.27 | 5 | 1.32 | -0.46 | — | — | 9 | ||||||||||||||||||||||||
| Class E Shares(5) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.16 | 14.38 | — | * | 0.40 | 1.24 | — | — | 21 | |||||||||||||||||||||||
| Year ended 3-31-2013 |
8.99 | 4.86 | — | * | 0.39 | 1.44 | — | — | 21 | |||||||||||||||||||||||
| Year ended 3-31-2012 |
8.70 | -7.45 | — | * | 0.40 | 1.66 | — | — | 8 | |||||||||||||||||||||||
| Year ended 3-31-2011 |
9.57 | 13.94 | — | * | 0.41 | 0.48 | — | — | 22 | |||||||||||||||||||||||
| Year ended 3-31-2010 |
8.45 | 51.16 | — | * | 0.42 | 0.41 | — | — | 9 | |||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.17 | 14.41 | 1 | 0.16 | 1.47 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
9.01 | 4.97 | 1 | 0.16 | 1.46 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.73 | -7.04 | 1 | 0.15 | 1.89 | — | — | 8 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
9.58 | 14.09 | — | * | 0.16 | 0.54 | — | — | 22 | |||||||||||||||||||||||
| Year ended 3-31-2010 |
8.46 | 51.31 | — | * | 0.16 | 0.66 | — | — | 9 | |||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.13 | 14.12 | 1 | 0.63 | 1.01 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013(6) |
8.97 | 1.01 | — | * | 0.72 | (7) | -0.55 | (7) | — | — | 21 | (8) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
10.14 | 14.42 | 2 | 0.40 | 1.33 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
8.97 | 4.77 | 1 | 0.38 | 1.42 | — | — | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
8.69 | -7.42 | 1 | 0.46 | 1.85 | — | — | 8 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
9.55 | 13.90 | 1 | 0.50 | 0.40 | 0.52 | 0.38 | 22 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
8.43 | 50.91 | — | * | 0.55 | 0.28 | 0.58 | 0.25 | 9 | |||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 239 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY MICRO CAP GROWTH FUND
| Net Asset Value, Beginning of Period |
Net Investment Loss(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 20.45 | $ | (0.36 | ) | $ | 8.65 | $ | 8.29 | $ | — | $ | (1.43 | ) | $ | (1.43 | ) | |||||||||||
| Year ended 3-31-2013 |
19.27 | (0.25 | ) | 1.43 | 1.18 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
19.63 | (0.29 | ) | 1.27 | 0.98 | — | (1.34 | ) | (1.34 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
15.78 | (0.30 | ) | 4.80 | 4.50 | (0.05 | ) | (0.60 | ) | (0.65 | ) | |||||||||||||||||
| Year ended 3-31-2010 |
9.77 | (0.29 | ) | 6.69 | 6.40 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.86 | (0.57 | ) | 8.36 | 7.79 | — | (1.42 | ) | (1.42 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
18.93 | (0.44 | ) | 1.37 | 0.93 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
19.27 | (0.49 | ) | 1.26 | 0.77 | — | (1.11 | ) | (1.11 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
15.63 | (0.52 | ) | 4.71 | 4.19 | — | (0.55 | ) | (0.55 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
9.76 | (0.51 | ) | 6.66 | 6.15 | — | (0.28 | ) | (0.28 | ) | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.05 | (0.52 | ) | 8.45 | 7.93 | — | (1.42 | ) | (1.42 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
19.04 | (0.38 | ) | 1.39 | 1.01 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
19.42 | (0.43 | ) | 1.25 | 0.82 | — | (1.20 | ) | (1.20 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
15.69 | (0.43 | ) | 4.75 | 4.32 | — | (0.59 | ) | (0.59 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
9.76 | (0.44 | ) | 6.68 | 6.24 | — | (0.31 | ) | (0.31 | ) | ||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.65 | (0.26 | ) | 8.75 | 8.49 | — | (1.49 | ) | (1.49 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
19.37 | (0.17 | ) | 1.45 | 1.28 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
19.73 | (0.21 | ) | 1.26 | 1.05 | — | (1.41 | ) | (1.41 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
15.79 | (0.22 | ) | 4.82 | 4.60 | (0.06 | ) | (0.60 | ) | (0.66 | ) | |||||||||||||||||
| Year ended 3-31-2010 |
9.77 | (0.24 | ) | 6.68 | 6.44 | — | (0.42 | ) | (0.42 | ) | ||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.45 | (0.40 | ) | 8.64 | 8.24 | — | (1.42 | ) | (1.42 | ) | ||||||||||||||||||
| Year ended 3-31-2013(5) |
17.77 | (0.10 | ) | 2.78 | 2.68 | — | — | — | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.51 | (0.33 | ) | 9.29 | 8.96 | — | (1.45 | ) | (1.45 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
19.29 | (0.22 | ) | 1.44 | 1.22 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
19.64 | (0.26 | ) | 1.28 | 1.02 | — | (1.37 | ) | (1.37 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
15.70 | (0.26 | ) | 4.78 | 4.52 | — | (0.58 | ) | (0.58 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
9.77 | (0.31 | ) | 6.63 | 6.32 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 240 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Loss to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Loss to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 27.31 | 41.32 | % | $ | 213 | 1.64 | % | -1.45 | % | — | % | — | % | 67 | % | ||||||||||||||||
| Year ended 3-31-2013 |
20.45 | 6.12 | 80 | 1.78 | -1.36 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
19.27 | 6.56 | 72 | 1.78 | -1.63 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.63 | 28.73 | 78 | 1.88 | -1.69 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.78 | 66.16 | 28 | 2.17 | -2.08 | 2.79 | -2.70 | 94 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
26.23 | 39.96 | 3 | 2.59 | -2.40 | — | — | 67 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
19.86 | 4.97 | 2 | 2.90 | -2.48 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
18.93 | 5.28 | 1 | 2.99 | -2.84 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.27 | 27.00 | 1 | 3.20 | -3.02 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.63 | 63.49 | — | * | 3.91 | -3.82 | 4.13 | -4.04 | 94 | |||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
26.56 | 40.28 | 14 | 2.35 | -2.15 | — | — | 67 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
20.05 | 5.36 | 5 | 2.55 | -2.14 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
19.04 | 5.65 | 4 | 2.62 | -2.47 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.42 | 27.72 | 4 | 2.66 | -2.48 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.69 | 64.45 | 1 | 3.29 | -3.19 | 3.51 | -3.41 | 94 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
27.65 | 41.90 | 34 | 1.23 | -1.01 | — | — | 67 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
20.65 | 6.66 | 4 | 1.31 | -0.93 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
19.37 | 7.00 | 3 | 1.34 | -1.19 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.73 | 29.36 | 3 | 1.41 | -1.24 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.79 | 66.68 | — | * | 1.89 | -1.79 | 2.23 | -2.13 | 94 | |||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
27.27 | 41.09 | — | * | 1.84 | -1.66 | — | — | 67 | |||||||||||||||||||||||
| Year ended 3-31-2013(5) |
20.45 | 15.08 | — | * | 1.89 | (6) | -1.84 | (6) | — | — | 51 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
28.02 | 44.49 | 3 | 1.50 | -1.30 | — | — | 67 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
20.51 | 6.32 | 1 | 1.60 | -1.21 | — | — | 51 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
19.29 | 6.79 | 1 | 1.59 | -1.45 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.64 | 29.00 | 1 | 1.67 | -1.45 | — | — | 78 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.70 | 65.38 | — | * | 2.35 | -2.27 | 2.57 | -2.49 | 94 | |||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 241 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY MID CAP GROWTH FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 20.22 | $ | (0.14 | ) | $ | 4.17 | $ | 4.03 | $ | — | $ | (0.80 | ) | $ | (0.80 | ) | |||||||||||
| Year ended 3-31-2013 |
18.62 | (0.09 | ) | 1.80 | 1.71 | — | (0.11 | ) | (0.11 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
18.36 | (0.12 | ) | 0.85 | 0.73 | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
13.95 | (0.05 | ) | 4.46 | 4.41 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.57 | (0.06 | ) | 5.44 | 5.38 | — | — | — | ||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.66 | (0.27 | ) | 3.61 | 3.34 | — | (0.70 | ) | (0.70 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
16.42 | (0.23 | ) | 1.58 | 1.35 | — | (0.11 | ) | (0.11 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
16.40 | (0.25 | ) | 0.74 | 0.49 | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
12.58 | (0.18 | ) | 4.00 | 3.82 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.81 | (0.16 | ) | 4.93 | 4.77 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.44 | (0.26 | ) | 3.77 | 3.51 | — | (0.71 | ) | (0.71 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
17.11 | (0.21 | ) | 1.65 | 1.44 | — | (0.11 | ) | (0.11 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
17.04 | (0.23 | ) | 0.77 | 0.54 | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
13.04 | (0.15 | ) | 4.15 | 4.00 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.06 | (0.14 | ) | 5.12 | 4.98 | — | — | — | ||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.90 | (0.20 | ) | 4.09 | 3.89 | — | (0.77 | ) | (0.77 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
18.37 | (0.14 | ) | 1.78 | 1.64 | — | (0.11 | ) | (0.11 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
18.17 | (0.15 | ) | 0.82 | 0.67 | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
13.81 | (0.07 | ) | 4.43 | 4.36 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.48 | (0.05 | ) | 5.38 | 5.33 | — | — | — | ||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.17 | (0.07 | ) | 4.36 | 4.29 | — | (0.86 | ) | (0.86 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
19.43 | (0.04 | ) | 1.89 | 1.85 | — | (0.11 | ) | (0.11 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
19.07 | (0.07 | ) | 0.90 | 0.83 | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
14.42 | 0.01 | 4.64 | 4.65 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
8.81 | 0.00 | 5.61 | 5.61 | — | — | — | |||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.02 | (0.19 | ) | 4.12 | 3.93 | — | (0.77 | ) | (0.77 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
18.49 | (0.15 | ) | 1.79 | 1.64 | — | (0.11 | ) | (0.11 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
18.27 | (0.16 | ) | 0.85 | 0.69 | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
13.90 | (0.08 | ) | 4.45 | 4.37 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.54 | (0.07 | ) | 5.43 | 5.36 | — | — | — | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.83 | (0.12 | ) | 4.30 | 4.18 | — | (0.83 | ) | (0.83 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
19.17 | (0.09 | ) | 1.86 | 1.77 | — | (0.11 | ) | (0.11 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
18.86 | (0.10 | ) | 0.88 | 0.78 | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
14.29 | (0.02 | ) | 4.59 | 4.57 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.74 | (0.01 | ) | 5.56 | 5.55 | — | — | — | ||||||||||||||||||||
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| 242 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Loss to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Loss to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 23.45 | 20.09 | % | $ | 1,558 | 1.34 | % | -0.63 | % | — | % | — | % | 43 | % | ||||||||||||||||
| Year ended 3-31-2013 |
20.22 | 9.28 | 1,160 | 1.31 | -0.52 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
18.62 | 4.29 | 636 | 1.40 | -0.69 | — | — | 29 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
18.36 | 31.61 | 369 | 1.49 | -0.34 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.95 | 62.78 | 162 | 1.65 | -0.51 | 1.67 | -0.53 | 40 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.30 | 19.14 | 26 | 2.10 | -1.39 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
17.66 | 8.27 | 21 | 2.21 | -1.42 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
16.42 | 3.33 | 17 | 2.35 | -1.63 | — | — | 29 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
16.40 | 30.37 | 12 | 2.47 | -1.32 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.58 | 61.08 | 7 | 2.68 | -1.53 | — | — | 40 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.24 | 19.25 | 295 | 2.01 | -1.31 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
18.44 | 8.46 | 183 | 2.07 | -1.28 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
17.11 | 3.50 | 135 | 2.14 | -1.44 | — | — | 29 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.04 | 30.68 | 69 | 2.16 | -1.02 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.04 | 61.79 | 17 | 2.35 | -1.21 | 2.38 | -1.24 | 40 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.02 | 19.75 | 6 | 1.60 | -0.90 | 1.71 | -1.01 | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
19.90 | 8.97 | 4 | 1.60 | -0.81 | 1.90 | -1.11 | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
18.37 | 4.00 | 3 | 1.60 | -0.88 | 1.97 | -1.25 | 29 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
18.17 | 31.57 | 3 | 1.60 | -0.44 | 2.09 | -0.93 | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.81 | 62.85 | 1 | 1.60 | -0.46 | 2.60 | -1.46 | 40 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.60 | 20.52 | 2,098 | 0.99 | -0.28 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
21.17 | 9.57 | 1,316 | 1.02 | -0.24 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
19.43 | 4.65 | 788 | 1.05 | -0.38 | — | — | 29 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
19.07 | 32.25 | 116 | 1.08 | 0.04 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
14.42 | 63.68 | 6 | 1.14 | -0.03 | — | — | 40 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.18 | 19.83 | 103 | 1.59 | -0.89 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
20.02 | 8.92 | 77 | 1.62 | -0.82 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
18.49 | 4.09 | 50 | 1.63 | -0.93 | — | — | 29 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
18.27 | 31.44 | 21 | 1.63 | -0.48 | — | — | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.90 | 62.76 | 4 | 1.67 | -0.57 | — | — | 40 | ||||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
24.18 | 20.21 | 694 | 1.23 | -0.53 | — | — | 43 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
20.83 | 9.33 | 521 | 1.27 | -0.48 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
19.17 | 4.44 | 439 | 1.25 | -0.55 | 1.30 | -0.60 | 29 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
18.86 | 31.98 | 207 | 1.25 | -0.10 | 1.34 | -0.19 | 39 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
14.29 | 63.50 | 54 | 1.25 | -0.11 | 1.38 | -0.24 | 40 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 243 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY MONEY MARKET FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 1.00 | $ | 0.00 | $ | 0.00 | 0.00 | $ | — | * | $ | — | $ | — | * | |||||||||||||
| Year ended 3-31-2013 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2012 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2011 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | * | — | * | ||||||||||||||||||
| Year ended 3-31-2010 |
1.00 | 0.01 | 0.00 | 0.01 | (0.01 | ) | — | * | (0.01 | ) | ||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2013 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2012 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2011 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | * | — | * | ||||||||||||||||||
| Year ended 3-31-2010 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | * | — | * | ||||||||||||||||||
| Class C Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2013 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2012 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2011 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | * | — | * | ||||||||||||||||||
| Year ended 3-31-2010 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | * | — | * | ||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2013 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2012 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | — | * | |||||||||||||||||||
| Year ended 3-31-2011 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | * | — | * | ||||||||||||||||||
| Year ended 3-31-2010 |
1.00 | 0.00 | 0.00 | 0.00 | — | * | — | * | — | * | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| 244 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver(3) |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 1.00 | 0.02 | % | $ | 137 | 0.20 | % | 0.02 | % | 0.69 | % | -0.47 | % | ||||||||||||||
| Year ended 3-31-2013 |
1.00 | 0.02 | 128 | 0.31 | 0.02 | 0.67 | -0.34 | |||||||||||||||||||||
| Year ended 3-31-2012 |
1.00 | 0.02 | 171 | 0.28 | 0.02 | 0.66 | -0.36 | |||||||||||||||||||||
| Year ended 3-31-2011 |
1.00 | 0.04 | 159 | 0.43 | 0.02 | 0.69 | -0.24 | |||||||||||||||||||||
| Year ended 3-31-2010 |
1.00 | 0.53 | 195 | 0.65 | 0.50 | 0.65 | 0.50 | |||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
1.00 | 0.02 | 7 | 0.20 | 0.02 | 1.74 | -1.52 | |||||||||||||||||||||
| Year ended 3-31-2013 |
1.00 | 0.02 | 8 | 0.31 | 0.02 | 1.70 | -1.37 | |||||||||||||||||||||
| Year ended 3-31-2012 |
1.00 | 0.02 | 8 | 0.28 | 0.02 | 1.73 | -1.43 | |||||||||||||||||||||
| Year ended 3-31-2011 |
1.00 | 0.04 | 7 | 0.43 | 0.02 | 1.80 | -1.35 | |||||||||||||||||||||
| Year ended 3-31-2010 |
1.00 | 0.16 | 9 | 1.07 | 0.16 | 1.75 | -0.52 | |||||||||||||||||||||
| Class C Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
1.00 | 0.02 | 34 | 0.20 | 0.02 | 1.63 | -1.41 | |||||||||||||||||||||
| Year ended 3-31-2013 |
1.00 | 0.02 | 35 | 0.31 | 0.02 | 1.65 | -1.32 | |||||||||||||||||||||
| Year ended 3-31-2012 |
1.00 | 0.02 | 41 | 0.28 | 0.02 | 1.64 | -1.34 | |||||||||||||||||||||
| Year ended 3-31-2011 |
1.00 | 0.04 | 32 | 0.43 | 0.02 | 1.67 | -1.22 | |||||||||||||||||||||
| Year ended 3-31-2010 |
1.00 | 0.16 | 39 | 1.08 | 0.16 | 1.67 | -0.43 | |||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
1.00 | 0.02 | 6 | 0.20 | 0.02 | 0.73 | -0.51 | |||||||||||||||||||||
| Year ended 3-31-2013 |
1.00 | 0.02 | 5 | 0.31 | 0.02 | 0.75 | -0.42 | |||||||||||||||||||||
| Year ended 3-31-2012 |
1.00 | 0.02 | 4 | 0.28 | 0.02 | 0.78 | -0.48 | |||||||||||||||||||||
| Year ended 3-31-2011 |
1.00 | 0.04 | 3 | 0.43 | 0.02 | 0.79 | -0.34 | |||||||||||||||||||||
| Year ended 3-31-2010 |
1.00 | 0.49 | 4 | 0.69 | 0.49 | 0.70 | 0.48 | |||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 245 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY MUNICIPAL BOND FUND
| Net Asset Value, Beginning of Period |
Net Investment Income(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 12.19 | $ | 0.34 | $ | (0.45 | ) | $ | (0.11 | ) | $ | (0.34 | ) | $ | — | $ | (0.34 | ) | ||||||||||
| Year ended 3-31-2013 |
11.88 | 0.34 | 0.31 | 0.65 | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
10.95 | 0.42 | 0.93 | 1.35 | (0.42 | ) | — | (0.42 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
11.16 | 0.43 | (0.21 | ) | 0.22 | (0.43 | ) | — | (0.43 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.41 | 0.45 | 0.75 | 1.20 | (0.45 | ) | — | (0.45 | ) | |||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.19 | 0.25 | (0.45 | ) | (0.20 | ) | (0.25 | ) | — | (0.25 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
11.88 | 0.25 | 0.31 | 0.56 | (0.25 | ) | — | (0.25 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
10.95 | 0.33 | 0.93 | 1.26 | (0.33 | ) | — | (0.33 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
11.16 | 0.34 | (0.21 | ) | 0.13 | (0.34 | ) | — | (0.34 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.41 | 0.36 | 0.75 | 1.11 | (0.36 | ) | — | (0.36 | ) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.19 | 0.25 | (0.45 | ) | (0.20 | ) | (0.25 | ) | — | (0.25 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
11.88 | 0.25 | 0.31 | 0.56 | (0.25 | ) | — | (0.25 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
10.95 | 0.33 | 0.93 | 1.26 | (0.33 | ) | — | (0.33 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
11.16 | 0.34 | (0.21 | ) | 0.13 | (0.34 | ) | — | (0.34 | ) | ||||||||||||||||||
| Year ended 3-31-2010 |
10.41 | 0.37 | 0.75 | 1.12 | (0.37 | ) | — | (0.37 | ) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.19 | 0.36 | (0.45 | ) | (0.09 | ) | (0.36 | ) | — | (0.36 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
11.88 | 0.36 | 0.31 | 0.67 | (0.36 | ) | — | (0.36 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
10.95 | 0.44 | 0.93 | 1.37 | (0.44 | ) | — | (0.44 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
11.16 | 0.45 | (0.21 | ) | 0.24 | (0.45 | ) | — | (0.45 | ) | ||||||||||||||||||
| Year ended 3-31-2010(5) |
11.10 | 0.19 | 0.06 | 0.25 | (0.19 | ) | — | (0.19 | ) | |||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
12.19 | 0.34 | (0.45 | ) | (0.11 | ) | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
11.88 | 0.34 | 0.31 | 0.65 | (0.34 | ) | — | (0.34 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
10.95 | 0.42 | 0.93 | 1.35 | (0.42 | ) | — | (0.42 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
11.16 | 0.43 | (0.21 | ) | 0.22 | (0.43 | ) | — | (0.43 | ) | ||||||||||||||||||
| Year ended 3-31-2010(8) |
11.30 | 0.22 | (0.14 | ) | 0.08 | (0.22 | ) | — | (0.22 | ) | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | For the period from November 4, 2009 (commencement of operations of the class) through March 31, 2010. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2010. |
| (8) | For the period from October 8, 2009 (recommencement of operations) through March 31, 2010. |
| 246 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 11.74 | -0.86 | % | $ | 113 | 1.02 | % | 2.90 | % | — | % | — | % | 7 | % | ||||||||||||||||
| Year ended 3-31-2013 |
12.19 | 5.50 | 133 | 1.01 | 2.77 | — | — | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.88 | 12.49 | 97 | 1.06 | 3.60 | — | — | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.95 | 1.89 | 64 | 1.10 | 3.79 | — | — | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.16 | 11.66 | 46 | 1.15 | 4.09 | — | — | 18 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.74 | -1.63 | 2 | 1.79 | 2.12 | — | — | 7 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
12.19 | 4.72 | 4 | 1.75 | 2.04 | — | — | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.88 | 11.67 | 3 | 1.81 | 2.83 | — | — | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.95 | 1.10 | 2 | 1.88 | 3.00 | — | — | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.16 | 10.75 | 2 | 1.92 | 3.33 | — | — | 18 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.74 | -1.62 | 21 | 1.78 | 2.12 | — | — | 7 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
12.19 | 4.71 | 31 | 1.76 | 2.03 | — | — | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.88 | 11.65 | 28 | 1.82 | 2.85 | — | — | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.95 | 1.12 | 20 | 1.86 | 3.02 | — | — | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.16 | 10.84 | 23 | 1.90 | 3.34 | — | — | 18 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.74 | -0.65 | 2 | 0.81 | 3.11 | — | — | 7 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
12.19 | 5.72 | 2 | 0.80 | 2.94 | — | — | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.88 | 12.75 | 1 | 0.85 | 3.79 | — | — | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.95 | 2.10 | 1 | 0.88 | 4.02 | — | — | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2010(5) |
11.16 | 2.27 | — | * | 0.91 | (6) | 4.32 | (6) | — | — | 18 | (7) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
11.74 | -0.87 | 1 | 1.02 | 2.89 | 1.06 | 2.85 | 7 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
12.19 | 5.49 | 1 | 1.01 | 2.78 | 1.06 | 2.73 | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
11.88 | 12.51 | 1 | 1.06 | 3.63 | 1.11 | 3.58 | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
10.95 | 1.90 | 1 | 1.10 | 3.78 | 1.13 | 3.75 | 6 | ||||||||||||||||||||||||
| Year ended 3-31-2010(8) |
11.16 | 0.68 | — | * | 1.15 | (6) | 4.10 | (6) | 1.17 | (6) | 4.08 | (6) | 18 | (7) | ||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 247 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY MUNICIPAL HIGH INCOME FUND
| Net Asset Value, Beginning of Period |
Net Investment Income |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 5.47 | $ | 0.24 | (3) | $ | (0.42 | ) | $ | (0.18 | ) | $ | (0.24 | ) | $ | (0.02 | ) | $ | (0.26 | ) | ||||||||
| Year ended 3-31-2013 |
5.23 | 0.21 | (3) | 0.24 | 0.45 | (0.21 | ) | — | (0.21 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
4.75 | 0.25 | (3) | 0.48 | 0.73 | (0.25 | ) | — | (0.25 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
4.84 | 0.22 | (3) | (0.09 | ) | 0.13 | (0.22 | ) | — | * | (0.22 | ) | ||||||||||||||||
| Year ended 3-31-2010(4) |
4.21 | 0.22 | (3) | 0.63 | 0.85 | (0.21 | ) | (0.01 | ) | (0.22 | ) | |||||||||||||||||
| Class B Shares(5) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
5.47 | 0.20 | (3) | (0.42 | ) | (0.22 | ) | (0.20 | ) | (0.02 | ) | (0.22 | ) | |||||||||||||||
| Year ended 3-31-2013 |
5.23 | 0.17 | (3) | 0.24 | 0.41 | (0.17 | ) | — | (0.17 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
4.75 | 0.20 | (3) | 0.49 | 0.69 | (0.21 | ) | — | (0.21 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
4.84 | 0.18 | (3) | (0.09 | ) | 0.09 | (0.18 | ) | — | * | (0.18 | ) | ||||||||||||||||
| Year ended 3-31-2010(4) |
4.21 | 0.17 | (3) | 0.64 | 0.81 | (0.17 | ) | (0.01 | ) | (0.18 | ) | |||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
5.47 | 0.20 | (3) | (0.42 | ) | (0.22 | ) | (0.20 | ) | (0.02 | ) | (0.22 | ) | |||||||||||||||
| Year ended 3-31-2013 |
5.23 | 0.17 | (3) | 0.24 | 0.41 | (0.17 | ) | — | (0.17 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
4.75 | 0.21 | (3) | 0.48 | 0.69 | (0.21 | ) | — | (0.21 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
4.84 | 0.19 | (3) | (0.09 | ) | 0.10 | (0.19 | ) | — | * | (0.19 | ) | ||||||||||||||||
| Year ended 3-31-2010(4) |
4.21 | 0.18 | (3) | 0.63 | 0.81 | (0.17 | ) | (0.01 | ) | (0.18 | ) | |||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
5.47 | 0.24 | (3) | (0.42 | ) | (0.18 | ) | (0.24 | ) | (0.02 | ) | (0.26 | ) | |||||||||||||||
| Year ended 3-31-2013 |
5.23 | 0.22 | (3) | 0.24 | 0.46 | (0.22 | ) | — | (0.22 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
4.75 | 0.25 | (3) | 0.48 | 0.73 | (0.25 | ) | — | (0.25 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
4.84 | 0.24 | (3) | (0.09 | ) | 0.15 | (0.24 | ) | — | * | (0.24 | ) | ||||||||||||||||
| Year ended 3-31-2010(7) |
4.21 | 0.23 | (3) | 0.63 | 0.86 | (0.22 | ) | (0.01 | ) | (0.23 | ) | |||||||||||||||||
| Period ended 5-17-2009(8) |
4.48 | 0.16 | (3) | (0.27 | ) | (0.11 | ) | (0.16 | ) | — | (0.16 | ) | ||||||||||||||||
| Year ended 9-30-2008(8) |
5.00 | 0.24 | (0.51 | ) | (0.27 | ) | (0.25 | ) | — | (0.25 | ) | |||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
5.47 | 0.24 | (3) | (0.42 | ) | (0.18 | ) | (0.24 | ) | (0.02 | ) | (0.26 | ) | |||||||||||||||
| Year ended 3-31-2013 |
5.23 | 0.21 | (3) | 0.24 | 0.45 | (0.21 | ) | — | (0.21 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
4.75 | 0.24 | (3) | 0.49 | 0.73 | (0.25 | ) | — | (0.25 | ) | ||||||||||||||||||
| Year ended 3-31-2011 |
4.84 | 0.22 | (3) | (0.09 | ) | 0.13 | (0.22 | ) | — | * | (0.22 | ) | ||||||||||||||||
| Year ended 3-31-2010(4) |
4.21 | 0.15 | (3) | 0.64 | 0.79 | (0.15 | ) | (0.01 | ) | (0.16 | ) | |||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (2) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (3) | Based on average weekly shares outstanding. |
| (4) | For the period from May 18, 2009 (commencement of operations of the class) through March 31, 2010. |
| (5) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (6) | Annualized. |
| (7) | The Ivy Municipal High Income Fund commenced operations on May 18, 2009 after the reorganization of the Class Y shares of Waddell & Reed Advisors Municipal High Income Fund into Class I shares of the Fund. The information shown is for a share outstanding during the fiscal period from May 18, 2009 through March 31, 2010 for Ivy Municipal High Income Fund. |
| (8) | The information shown is for a share outstanding during the fiscal year or period ended for Class Y of the Waddell & Reed Advisors Municipal High Income Fund prior to the reorganization. |
| (9) | The return shown for Class Y is hypothetical because there were no shares or assets for the period from July 28, 2009 through October 7, 2009. Class A data has been substituted for Class Y data during that period. |
| 248 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(1) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(2) |
Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver(2) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 5.03 | -3.32 | % | $ | 366 | 0.86 | % | 4.58 | % | 0.87 | % | 4.57 | % | 21 | % | ||||||||||||||||
| Year ended 3-31-2013 |
5.47 | 8.71 | 545 | 0.84 | 3.91 | 0.85 | 3.90 | 9 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
5.23 | 15.62 | 384 | 0.87 | 4.88 | 0.90 | 4.85 | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
4.75 | 2.71 | 146 | 0.94 | 4.63 | 0.98 | 4.59 | 13 | ||||||||||||||||||||||||
| Year ended 3-31-2010(4) |
4.84 | 20.45 | 25 | 0.95 | (6) | 5.41 | (6) | 1.68 | (6) | 4.68 | (6) | 14 | (6) | |||||||||||||||||||
| Class B Shares(5) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
5.03 | -4.07 | 15 | 1.64 | 3.82 | 1.65 | 3.81 | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
5.47 | 7.86 | 19 | 1.62 | 3.12 | 1.63 | 3.11 | 9 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
5.23 | 14.70 | 12 | 1.67 | 4.07 | 1.70 | 4.04 | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
4.75 | 1.87 | 4 | 1.72 | 3.82 | 1.76 | 3.78 | 13 | ||||||||||||||||||||||||
| Year ended 3-31-2010(4) |
4.84 | 19.59 | 2 | 1.72 | (6) | 4.52 | (6) | 2.38 | (6) | 3.86 | (6) | 14 | (6) | |||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
5.03 | -4.04 | 216 | 1.60 | 3.84 | 1.61 | 3.83 | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
5.47 | 7.92 | 323 | 1.57 | 3.17 | 1.59 | 3.15 | 9 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
5.23 | 14.77 | 198 | 1.62 | 4.12 | 1.65 | 4.09 | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
4.75 | 1.91 | 65 | 1.67 | 3.89 | 1.71 | 3.85 | 13 | ||||||||||||||||||||||||
| Year ended 3-31-2010(4) |
4.84 | 19.55 | 8 | 1.76 | (6) | 4.54 | (6) | 2.42 | (6) | 3.88 | (6) | 14 | (6) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
5.03 | -3.16 | 586 | 0.69 | 4.76 | 0.70 | 4.75 | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
5.47 | 8.88 | 749 | 0.68 | 4.06 | 0.69 | 4.05 | 9 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
5.23 | 15.82 | 416 | 0.70 | 5.04 | 0.74 | 5.00 | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
4.75 | 2.98 | 131 | 0.70 | 4.90 | 0.79 | 4.81 | 13 | ||||||||||||||||||||||||
| Year ended 3-31-2010(7) |
4.84 | 20.68 | 8 | 0.70 | (6) | 5.77 | (6) | 1.53 | (6) | 4.94 | (6) | 14 | (6) | |||||||||||||||||||
| Period ended 5-17-2009(8) |
4.21 | -4.72 | — | * | 0.87 | (6) | 6.35 | (6) | 0.91 | (6) | 6.31 | (6) | 28 | (6) | ||||||||||||||||||
| Year ended 9-30-2008(8) |
4.48 | -5.67 | — | * | 0.70 | 5.03 | 0.74 | 4.99 | 26 | |||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
5.03 | -3.32 | 15 | 0.85 | 4.52 | 0.95 | 4.42 | 21 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
5.47 | 8.71 | 34 | 0.84 | 3.92 | 0.94 | 3.82 | 9 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
5.23 | 15.65 | 26 | 0.87 | 4.83 | 0.99 | 4.71 | 4 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
4.75 | 2.73 | 6 | 0.94 | 4.76 | 1.05 | 4.65 | 13 | ||||||||||||||||||||||||
| Year ended 3-31-2010(4) |
4.84 | 19.02 | (9) | 1 | 1.10 | (6) | 5.10 | (6) | 1.76 | (6) | 4.44 | (6) | 14 | (6) | ||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 249 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY SMALL CAP GROWTH FUND
| Net Asset Value, Beginning of Period |
Net Investment Loss(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 16.33 | $ | (0.19 | ) | $ | 4.04 | $ | 3.85 | $ | — | $ | (1.67 | ) | $ | (1.67 | ) | |||||||||||
| Year ended 3-31-2013 |
14.51 | (0.14 | ) | 2.35 | 2.21 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
15.39 | (0.17 | ) | (0.21 | ) | (0.38 | ) | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
11.40 | (0.13 | ) | 4.12 | 3.99 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.08 | (0.12 | ) | 4.44 | 4.32 | — | — | — | ||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.95 | (0.30 | ) | 3.42 | 3.12 | — | (1.60 | ) | (1.60 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
12.57 | (0.25 | ) | 2.02 | 1.77 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
13.56 | (0.28 | ) | (0.21 | ) | (0.49 | ) | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
10.15 | (0.23 | ) | 3.64 | 3.41 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
6.37 | (0.20 | ) | 3.98 | 3.78 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.63 | (0.28 | ) | 3.60 | 3.32 | — | (1.60 | ) | (1.60 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
13.12 | (0.21 | ) | 2.11 | 1.90 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
14.07 | (0.24 | ) | (0.21 | ) | (0.45 | ) | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
10.49 | (0.20 | ) | 3.78 | 3.58 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
6.56 | (0.16 | ) | 4.09 | 3.93 | — | — | — | ||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.27 | (0.22 | ) | 4.03 | 3.81 | — | (1.65 | ) | (1.65 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
14.47 | (0.15 | ) | 2.34 | 2.19 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
15.36 | (0.18 | ) | (0.21 | ) | (0.39 | ) | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
11.38 | (0.14 | ) | 4.12 | 3.98 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.06 | (0.11 | ) | 4.43 | 4.32 | — | — | — | ||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.26 | (0.15 | ) | 4.80 | 4.65 | — | (1.72 | ) | (1.72 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
16.98 | (0.09 | ) | 2.76 | 2.67 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
17.83 | (0.13 | ) | (0.22 | ) | (0.35 | ) | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
13.14 | (0.09 | ) | 4.78 | 4.69 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
8.12 | (0.07 | ) | 5.09 | 5.02 | — | — | — | ||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.26 | (0.23 | ) | 4.02 | 3.79 | — | (1.64 | ) | (1.64 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
14.48 | (0.17 | ) | 2.34 | 2.17 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
15.38 | (0.19 | ) | (0.21 | ) | (0.40 | ) | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
11.40 | (0.15 | ) | 4.13 | 3.98 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.08 | (0.12 | ) | 4.44 | 4.32 | — | — | — | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.66 | (0.20 | ) | 4.64 | 4.44 | — | (1.68 | ) | (1.68 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
16.50 | (0.13 | ) | 2.68 | 2.55 | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
17.38 | (0.16 | ) | (0.22 | ) | (0.38 | ) | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
12.85 | (0.12 | ) | 4.65 | 4.53 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
7.96 | (0.10 | ) | 4.99 | 4.89 | — | — | — | ||||||||||||||||||||
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| 250 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Loss to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Loss to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 18.51 | 24.27 | % | $ | 406 | 1.43 | % | -1.07 | % | — | % | — | % | 45 | % | ||||||||||||||||
| Year ended 3-31-2013 |
16.33 | 15.70 | 281 | 1.49 | -0.97 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.51 | -1.98 | 241 | 1.50 | -1.21 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.39 | 35.00 | 240 | 1.51 | -1.05 | — | — | 53 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.40 | 61.02 | 132 | 1.66 | -1.24 | — | — | 72 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.47 | 23.14 | 13 | 2.34 | -1.99 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.95 | 14.61 | 11 | 2.49 | -1.96 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.57 | -3.07 | 10 | 2.57 | -2.27 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
13.56 | 33.60 | 11 | 2.54 | -2.08 | — | — | 53 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.15 | 59.34 | 8 | 2.77 | -2.34 | — | — | 72 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.35 | 23.43 | 225 | 2.08 | -1.73 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.63 | 15.00 | 189 | 2.13 | -1.61 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.12 | -2.67 | 181 | 2.17 | -1.87 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
14.07 | 34.13 | 207 | 2.18 | -1.71 | — | — | 53 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
10.49 | 59.91 | 154 | 2.29 | -1.86 | — | — | 72 | ||||||||||||||||||||||||
| Class E Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.43 | 24.13 | 5 | 1.56 | -1.21 | 1.87 | -1.52 | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
16.27 | 15.61 | 3 | 1.56 | -1.03 | 2.06 | -1.53 | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.47 | -2.05 | 3 | 1.56 | -1.27 | 2.08 | -1.79 | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.36 | 34.97 | 3 | 1.56 | -1.08 | 2.17 | -1.69 | 53 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.38 | 61.19 | 1 | 1.56 | -1.14 | 2.69 | -2.27 | 72 | ||||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
22.19 | 24.78 | 246 | 1.06 | -0.71 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
19.26 | 16.13 | 176 | 1.07 | -0.54 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
16.98 | -1.54 | 119 | 1.07 | -0.79 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.83 | 35.69 | 84 | 1.07 | -0.61 | — | — | 53 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
13.14 | 61.82 | 8 | 1.10 | -0.68 | — | — | 72 | ||||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.41 | 23.99 | 42 | 1.66 | -1.30 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
16.26 | 15.45 | 22 | 1.67 | -1.15 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
14.48 | -2.11 | 17 | 1.66 | -1.37 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
15.38 | 34.91 | 15 | 1.62 | -1.16 | — | — | 53 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
11.40 | 61.02 | 4 | 1.64 | -1.24 | — | — | 72 | ||||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
21.42 | 24.45 | 276 | 1.30 | -0.95 | — | — | 45 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
18.66 | 15.87 | 220 | 1.31 | -0.79 | — | — | 38 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
16.50 | -1.75 | 207 | 1.32 | -1.03 | — | — | 65 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.38 | 35.25 | 222 | 1.33 | -0.86 | — | — | 53 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
12.85 | 61.43 | 124 | 1.35 | -0.92 | — | — | 72 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 251 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY SMALL CAP VALUE FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 17.23 | $ | (0.11 | ) | $ | 3.55 | $ | 3.44 | $ | (0.07 | ) | $ | (2.28 | ) | $ | (2.35 | ) | ||||||||||
| Year ended 3-31-2013 |
14.96 | 0.02 | 2.82 | 2.84 | — | (0.57 | ) | (0.57 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
18.12 | 0.00 | (1.69 | ) | (1.69 | ) | (0.01 | ) | (1.46 | ) | (1.47 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
14.99 | 0.03 | 3.10 | 3.13 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
9.87 | (0.07 | ) | 5.19 | 5.12 | — | — | — | ||||||||||||||||||||
| Class B Shares(3) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.39 | (0.25 | ) | 3.14 | 2.89 | (0.02 | ) | (2.16 | ) | (2.18 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
13.48 | (0.13 | ) | 2.50 | 2.37 | — | (0.46 | ) | (0.46 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
16.66 | (0.15 | ) | (1.57 | ) | (1.72 | ) | — | (1.46 | ) | (1.46 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
13.95 | (0.15 | ) | 2.86 | 2.71 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
9.29 | (0.21 | ) | 4.87 | 4.66 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
15.94 | (0.21 | ) | 3.26 | 3.05 | (0.04 | ) | (2.19 | ) | (2.23 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
13.92 | (0.08 | ) | 2.60 | 2.52 | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
17.09 | (0.10 | ) | (1.61 | ) | (1.71 | ) | — | (1.46 | ) | (1.46 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
14.25 | (0.08 | ) | 2.92 | 2.84 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010 |
9.45 | (0.16 | ) | 4.96 | 4.80 | — | — | — | ||||||||||||||||||||
| Class E Shares(4) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.59 | (0.04 | ) | 3.63 | 3.59 | (0.09 | ) | (2.33 | ) | (2.42 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
15.25 | 0.10 | 2.85 | 2.95 | — | (0.61 | ) | (0.61 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
18.43 | 0.07 | (1.71 | ) | (1.64 | ) | (0.08 | ) | (1.46 | ) | (1.54 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
15.19 | 0.10 | 3.14 | 3.24 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
9.94 | (0.01 | ) | 5.26 | 5.25 | — | — | — | ||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.03 | (0.02 | ) | 3.72 | 3.70 | (0.10 | ) | (2.34 | ) | (2.44 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
15.61 | 0.11 | 2.94 | 3.05 | — | (0.63 | ) | (0.63 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
18.83 | 0.07 | (1.73 | ) | (1.66 | ) | (0.10 | ) | (1.46 | ) | (1.56 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
15.49 | 0.13 | 3.21 | 3.34 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
10.13 | 0.00 | 5.36 | 5.36 | — | — | — | |||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.23 | (0.13 | ) | 3.54 | 3.41 | (0.07 | ) | (2.26 | ) | (2.33 | ) | |||||||||||||||||
| Year ended 3-31-2013(5) |
15.24 | (0.02 | ) | 2.01 | 1.99 | — | — | — | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
17.74 | (0.07 | ) | 3.66 | 3.59 | (0.08 | ) | (2.31 | ) | (2.39 | ) | |||||||||||||||||
| Year ended 3-31-2013 |
15.38 | 0.01 | 2.95 | 2.96 | — | (0.60 | ) | (0.60 | ) | |||||||||||||||||||
| Year ended 3-31-2012 |
18.58 | 0.04 | (1.72 | ) | (1.68 | ) | (0.06 | ) | (1.46 | ) | (1.52 | ) | ||||||||||||||||
| Year ended 3-31-2011 |
15.33 | 0.08 | 3.17 | 3.25 | — | — | — | |||||||||||||||||||||
| Year ended 3-31-2010 |
10.05 | (0.02 | ) | 5.30 | 5.28 | — | — | — | ||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (4) | Class share is closed to investment. |
| (5) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (6) | Annualized. |
| (7) | For the fiscal year ended March 31, 2013. |
| 252 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Portfolio Turnover Rate |
|||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 18.32 | 21.10 | % | $ | 244 | 1.57 | % | -0.62 | % | 61 | % | ||||||||||||
| Year ended 3-31-2013 |
17.23 | 19.49 | 226 | 1.66 | 0.15 | 52 | ||||||||||||||||||
| Year ended 3-31-2012 |
14.96 | -8.06 | 209 | 1.67 | 0.00 | 50 | ||||||||||||||||||
| Year ended 3-31-2011 |
18.12 | 20.88 | 254 | 1.65 | 0.19 | 73 | ||||||||||||||||||
| Year ended 3-31-2010 |
14.99 | 51.87 | 202 | 1.77 | -0.55 | 100 | ||||||||||||||||||
| Class B Shares(3) |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.10 | 19.87 | 4 | 2.58 | -1.63 | 61 | ||||||||||||||||||
| Year ended 3-31-2013 |
15.39 | 18.22 | 4 | 2.78 | -0.97 | 52 | ||||||||||||||||||
| Year ended 3-31-2012 |
13.48 | -9.09 | 4 | 2.78 | -1.09 | 50 | ||||||||||||||||||
| Year ended 3-31-2011 |
16.66 | 19.43 | 6 | 2.85 | -1.07 | 73 | ||||||||||||||||||
| Year ended 3-31-2010 |
13.95 | 50.16 | 7 | 2.99 | -1.77 | 100 | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.76 | 20.24 | 19 | 2.25 | -1.30 | 61 | ||||||||||||||||||
| Year ended 3-31-2013 |
15.94 | 18.74 | 16 | 2.35 | -0.54 | 52 | ||||||||||||||||||
| Year ended 3-31-2012 |
13.92 | -8.80 | 16 | 2.40 | -0.72 | 50 | ||||||||||||||||||
| Year ended 3-31-2011 |
17.09 | 19.93 | 19 | 2.42 | -0.57 | 73 | ||||||||||||||||||
| Year ended 3-31-2010 |
14.25 | 50.79 | 14 | 2.55 | -1.33 | 100 | ||||||||||||||||||
| Class E Shares(4) |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.76 | 21.56 | — | * | 1.21 | -0.26 | 61 | |||||||||||||||||
| Year ended 3-31-2013 |
17.59 | 20.03 | — | * | 1.22 | 0.61 | 52 | |||||||||||||||||
| Year ended 3-31-2012 |
15.25 | -7.68 | — | * | 1.23 | 0.44 | 50 | |||||||||||||||||
| Year ended 3-31-2011 |
18.43 | 21.33 | — | * | 1.24 | 0.61 | 73 | |||||||||||||||||
| Year ended 3-31-2010 |
15.19 | 52.82 | — | * | 1.27 | -0.05 | 100 | |||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.29 | 21.67 | 26 | 1.10 | -0.15 | 61 | ||||||||||||||||||
| Year ended 3-31-2013 |
18.03 | 20.17 | 19 | 1.11 | 0.72 | 52 | ||||||||||||||||||
| Year ended 3-31-2012 |
15.61 | -7.59 | 16 | 1.11 | 0.48 | 50 | ||||||||||||||||||
| Year ended 3-31-2011 |
18.83 | 21.56 | 4 | 1.12 | 0.78 | 73 | ||||||||||||||||||
| Year ended 3-31-2010 |
15.49 | 52.91 | 2 | 1.18 | 0.04 | 100 | ||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.31 | 20.91 | 1 | 1.70 | -0.78 | 61 | ||||||||||||||||||
| Year ended 3-31-2013(5) |
17.23 | 13.06 | — | * | 1.68 | (6) | -0.44 | (6) | 52 | (7) | ||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||
| Year ended 3-31-2014 |
18.94 | 21.35 | 10 | 1.33 | -0.39 | 61 | ||||||||||||||||||
| Year ended 3-31-2013 |
17.74 | 19.85 | 7 | 1.41 | 0.05 | 52 | ||||||||||||||||||
| Year ended 3-31-2012 |
15.38 | -7.87 | 22 | 1.39 | 0.28 | 50 | ||||||||||||||||||
| Year ended 3-31-2011 |
18.58 | 21.20 | 26 | 1.39 | 0.47 | 73 | ||||||||||||||||||
| Year ended 3-31-2010 |
15.33 | 52.54 | 19 | 1.40 | -0.17 | 100 | ||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 253 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY TAX-MANAGED EQUITY FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Total Distributions |
||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 14.13 | $ | (0.05 | )(3) | $ | 3.23 | $ | 3.18 | $ | — | $ | (0.47 | ) | $ | (0.47 | ) | |||||||||||
| Year ended 3-31-2013 |
13.15 | 0.05 | (3) | 0.99 | 1.04 | (0.06 | ) | — | (0.06 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
12.15 | (0.03 | )(3) | 1.03 | 1.00 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
10.78 | (0.10 | )(3) | 1.47 | 1.37 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010(4) |
8.62 | (0.11 | )(3) | 2.27 | 2.16 | — | — | — | ||||||||||||||||||||
| Class B Shares(5) |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.87 | (0.14 | )(3) | 3.15 | 3.01 | — | (0.43 | ) | (0.43 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
12.92 | (0.03 | )(3) | 0.99 | 0.96 | (0.01 | ) | — | (0.01 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
12.01 | (0.10 | )(3) | 1.01 | 0.91 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
10.72 | (0.17 | )(3) | 1.46 | 1.29 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010(4) |
8.62 | (0.15 | )(3) | 2.25 | 2.10 | — | — | — | ||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
13.85 | (0.15 | )(3) | 3.15 | 3.00 | — | (0.43 | ) | (0.43 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
12.91 | (0.03 | )(3) | 0.97 | 0.94 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2012 |
12.01 | (0.11 | )(3) | 1.01 | 0.90 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
10.72 | (0.17 | )(3) | 1.46 | 1.29 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010(4) |
8.62 | (0.15 | )(3) | 2.25 | 2.10 | — | — | — | ||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.20 | 0.00 | (3) | 3.23 | 3.23 | — | (0.50 | ) | (0.50 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
13.27 | 0.09 | (3) | 0.92 | 1.01 | (0.08 | ) | — | (0.08 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
12.22 | 0.00 | (3) | 1.05 | 1.05 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
10.81 | (0.08 | )(3) | 1.49 | 1.41 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010(7) |
8.62 | (0.07 | )(3) | 2.26 | 2.19 | — | — | — | ||||||||||||||||||||
| Period ended 5-17-2009(8) |
11.51 | (0.07 | )(3) | (2.82 | ) | (2.89 | ) | — | — | — | ||||||||||||||||||
| Year ended 6-30-2008(8) |
11.00 | (0.12 | ) | 0.63 | 0.51 | — | — | — | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
14.15 | (0.04 | )(3) | 3.23 | 3.19 | — | (0.48 | ) | (0.48 | ) | ||||||||||||||||||
| Year ended 3-31-2013 |
13.16 | 0.05 | (3) | 1.00 | 1.05 | (0.06 | ) | — | (0.06 | ) | ||||||||||||||||||
| Year ended 3-31-2012 |
12.15 | (0.02 | )(3) | 1.03 | 1.01 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2011 |
10.78 | (0.10 | )(3) | 1.47 | 1.37 | — | — | — | ||||||||||||||||||||
| Year ended 3-31-2010(4) |
8.62 | (0.07 | )(3) | 2.23 | 2.16 | — | — | — | ||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (2) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (3) | Based on average weekly shares outstanding. |
| (4) | For the period from May 18, 2009 (commencement of operations of the class) through March 31, 2010. |
| (5) | These class shares are available for direct investment. Hovever, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (6) | Annualized. |
| (7) | The Ivy Tax-Managed Equity Fund commenced operations on May 18, 2009 after the reorganization of the Class Y shares of Waddell & Reed Advisors Tax-Managed Equity Fund into Class I shares of the Fund. The information shown is for a share outstanding during the fiscal period from May 18, 2009 through March 31, 2010 for Ivy Tax-Managed Equity Fund. |
| (8) | The information shown is for a share outstanding during the fiscal year or period ended for Class Y of the Waddell & Reed Advisors Tax-Managed Equity Fund prior to the reorganization. |
| (9) | The return shown for Class Y is hypothetical because there were no shares or assets for the period from July 28, 2009 through October 7, 2009. Class A data has been substituted for Class Y data during that period. |
| 254 | ANNUAL REPORT | 2014 |
Table of Contents
| Net Asset Value, End of Period |
Total Return(1) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(2) |
Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver(2) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 16.84 | 22.65 | % | $ | 40 | 1.43 | % | -0.30 | % | — | % | — | % | 32 | % | ||||||||||||||||
| Year ended 3-31-2013 |
14.13 | 7.91 | 24 | 1.14 | 0.34 | 1.63 | -0.15 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.15 | 8.23 | 15 | 1.32 | -0.27 | 1.97 | -0.92 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
12.15 | 12.71 | 9 | 2.10 | -0.93 | 2.75 | -1.58 | 41 | ||||||||||||||||||||||||
| Year ended 3-31-2010(4) |
10.78 | 25.06 | 3 | 2.57 | (6) | -1.26 | (6) | 4.33 | (6) | -3.02 | (6) | 19 | (6) | |||||||||||||||||||
| Class B Shares(5) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.45 | 21.80 | 1 | 2.06 | -0.92 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.87 | 7.41 | 1 | 1.69 | -0.22 | 2.19 | -0.72 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.92 | 7.58 | 1 | 1.90 | -0.85 | 2.55 | -1.50 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
12.01 | 12.03 | 1 | 2.74 | -1.56 | 3.39 | -2.21 | 41 | ||||||||||||||||||||||||
| Year ended 3-31-2010(4) |
10.72 | 24.36 | — | * | 3.12 | (6) | -1.81 | (6) | 4.88 | (6) | -3.57 | (6) | 19 | (6) | ||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.42 | 21.76 | 2 | 2.09 | -0.96 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
13.85 | 7.28 | 1 | 1.76 | -0.24 | 2.26 | -0.74 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
12.91 | 7.49 | 1 | 1.97 | -0.92 | 2.62 | -1.57 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
12.01 | 12.03 | 1 | 2.75 | -1.57 | 3.40 | -2.22 | 41 | ||||||||||||||||||||||||
| Year ended 3-31-2010(4) |
10.72 | 24.36 | 1 | 3.13 | (6) | -1.82 | (6) | 4.89 | (6) | -3.58 | (6) | 19 | (6) | |||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.93 | 22.91 | 1 | 1.15 | -0.02 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.20 | 7.70 | 1 | 0.80 | 0.68 | 1.30 | 0.18 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.27 | 8.59 | 1 | 1.02 | 0.03 | 1.67 | -0.62 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
12.22 | 13.04 | 1 | 1.87 | -0.70 | 2.52 | -1.35 | 41 | ||||||||||||||||||||||||
| Year ended 3-31-2010(7) |
10.81 | 25.41 | 1 | 2.11 | (6) | -0.82 | (6) | 4.03 | (6) | -2.74 | (6) | 19 | (6) | |||||||||||||||||||
| Period ended 5-17-2009(8) |
8.62 | -25.11 | — | * | 2.42 | (6) | -1.05 | (6) | — | — | 40 | |||||||||||||||||||||
| Year ended 6-30-2008(8) |
11.51 | 4.64 | — | * | 2.11 | -0.97 | — | — | 27 | |||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
16.86 | 22.56 | 1 | 1.41 | -0.27 | — | — | 32 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
14.15 | 8.12 | 1 | 1.02 | 0.39 | 1.51 | -0.10 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
13.16 | 8.31 | 1 | 1.25 | -0.17 | 1.90 | -0.82 | 26 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
12.15 | 12.71 | 1 | 2.09 | -0.91 | 2.74 | -1.56 | 41 | ||||||||||||||||||||||||
| Year ended 3-31-2010(4) |
10.78 | 25.06 | (9) | — | * | 2.52 | (6) | -1.11 | (6) | 4.28 | (6) | -2.87 | (6) | 19 | (6) | |||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 255 |
Table of Contents
FINANCIAL HIGHLIGHTS
| Ivy Funds |
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
IVY VALUE FUND
| Net Asset Value, Beginning of Period |
Net Investment Income (Loss)(1) |
Net Realized and Unrealized Gain (Loss) on Investments |
Total from Investment Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Gains |
Distributions From Return of Capital |
Total Distributions |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 20.30 | $ | 0.07 | $ | 4.42 | $ | 4.49 | $ | (0.04 | ) | $ | (0.93 | ) | $ | — | $ | (0.97 | ) | |||||||||||||
| Year ended 3-31-2013 |
17.57 | 0.15 | 2.73 | 2.88 | (0.15 | ) | — | * | — | (0.15 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
17.93 | 0.13 | (0.19 | ) | (0.06 | ) | (0.12 | ) | (0.18 | ) | — | (0.30 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.56 | (0.02 | ) | 2.39 | 2.37 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2010 |
9.94 | 0.02 | 5.65 | 5.67 | (0.03 | ) | — | (0.02 | ) | (0.05 | ) | |||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.28 | (0.12 | ) | 4.19 | 4.07 | — | (0.82 | ) | — | (0.82 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
16.72 | (0.03 | ) | 2.59 | 2.56 | — | — | * | — | — | * | |||||||||||||||||||||
| Year ended 3-31-2012 |
17.15 | (0.07 | ) | (0.18 | ) | (0.25 | ) | — | (0.18 | ) | — | (0.18 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.12 | (0.25 | ) | 2.28 | 2.03 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2010 |
9.78 | (0.17 | ) | 5.51 | 5.34 | — | — | — | — | |||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
19.80 | (0.09 | ) | 4.31 | 4.22 | — | (0.84 | ) | — | (0.84 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
17.16 | 0.02 | 2.67 | 2.69 | (0.05 | ) | — | * | — | (0.05 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
17.53 | 0.00 | (0.17 | ) | (0.17 | ) | (0.02 | ) | (0.18 | ) | — | (0.20 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.34 | (0.14 | ) | 2.33 | 2.19 | — | — | — | — | |||||||||||||||||||||||
| Year ended 3-31-2010 |
9.86 | (0.08 | ) | 5.56 | 5.48 | — | — | — | — | |||||||||||||||||||||||
| Class E Shares(5) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.36 | 0.11 | 4.44 | 4.55 | (0.09 | ) | (0.92 | ) | — | (1.01 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
17.61 | 0.20 | 2.74 | 2.94 | (0.19 | ) | — | * | — | (0.19 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
18.03 | 0.18 | (0.19 | ) | (0.01 | ) | (0.23 | ) | (0.18 | ) | — | (0.41 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.60 | 0.04 | 2.39 | 2.43 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.95 | 0.06 | 5.70 | 5.76 | (0.06 | ) | — | (0.05 | ) | (0.11 | ) | |||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.36 | 0.14 | 4.44 | 4.58 | (0.11 | ) | (0.93 | ) | — | (1.04 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
17.61 | 0.22 | 2.74 | 2.96 | (0.21 | ) | — | * | — | (0.21 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
18.05 | 0.21 | (0.20 | ) | 0.01 | (0.27 | ) | (0.18 | ) | — | (0.45 | ) | ||||||||||||||||||||
| Year ended 3-31-2011 |
15.60 | 0.08 | 2.37 | 2.45 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.95 | 0.06 | 5.71 | 5.77 | (0.06 | ) | — | (0.06 | ) | (0.12 | ) | |||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.28 | 0.01 | 4.41 | 4.42 | (0.01 | ) | (0.90 | ) | — | (0.91 | ) | |||||||||||||||||||||
| Year ended 3-31-2013(6) |
18.17 | 0.04 | 2.07 | 2.11 | — | — | — | — | ||||||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
20.33 | 0.09 | 4.43 | 4.52 | (0.06 | ) | (0.93 | ) | — | (0.99 | ) | |||||||||||||||||||||
| Year ended 3-31-2013 |
17.59 | 0.17 | 2.75 | 2.92 | (0.18 | ) | — | * | — | (0.18 | ) | |||||||||||||||||||||
| Year ended 3-31-2012 |
17.99 | 0.14 | (0.17 | ) | (0.03 | ) | (0.19 | ) | (0.18 | ) | — | (0.37 | ) | |||||||||||||||||||
| Year ended 3-31-2011 |
15.58 | 0.02 | 2.39 | 2.41 | — | — | — | — | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
9.95 | 0.04 | 5.67 | 5.71 | (0.04 | ) | — | (0.04 | ) | (0.08 | ) | |||||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | Based on average weekly shares outstanding. |
| (2) | Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized. |
| (3) | Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses. |
| (4) | These class shares are not available for direct investment. However, they are available for dividend reinvestment and exchange of the same class shares of another Ivy Fund or Waddell & Reed Advisors Fund. |
| (5) | Class share is closed to investment. |
| (6) | For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013. |
| (7) | Annualized. |
| (8) | For the fiscal year ended March 31, 2013. |
| 256 | ANNUAL REPORT | 2014 |
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| Net Asset Value, End of Period |
Total Return(2) |
Net Assets, End of Period (in millions) |
Ratio of Expenses to Average Net Assets Including Expense Waiver |
Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver |
Ratio of Expenses to Average Net Assets Excluding Expense Waiver(3) |
Ratio of Net Investment Loss to Average Net Assets Excluding Expense Waiver(3) |
Portfolio Turnover Rate |
|||||||||||||||||||||||||
| Class A Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
$ | 23.82 | 22.44 | % | $ | 248 | 1.31 | % | 0.30 | % | — | % | — | % | 58 | % | ||||||||||||||||
| Year ended 3-31-2013 |
20.30 | 16.59 | 156 | 1.43 | 0.82 | — | — | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
17.57 | -0.13 | 106 | 1.53 | 0.77 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.93 | 15.23 | 87 | 1.59 | -0.12 | 1.66 | -0.19 | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.56 | 57.09 | 56 | 1.85 | 0.26 | — | — | 77 | ||||||||||||||||||||||||
| Class B Shares(4) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
22.53 | 21.35 | 6 | 2.17 | -0.57 | — | — | 58 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
19.28 | 15.40 | 5 | 2.43 | -0.16 | — | — | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
16.72 | -1.34 | 3 | 2.78 | -0.47 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.15 | 13.43 | 3 | 3.12 | -1.66 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.12 | 54.60 | 3 | 3.40 | -1.28 | — | — | 77 | ||||||||||||||||||||||||
| Class C Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.18 | 21.64 | 14 | 2.01 | -0.41 | — | — | 58 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
19.80 | 15.77 | 9 | 2.13 | 0.12 | — | — | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
17.16 | -0.85 | 8 | 2.25 | 0.02 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.53 | 14.28 | 8 | 2.40 | -0.92 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.34 | 55.58 | 5 | 2.70 | -0.63 | — | — | 77 | ||||||||||||||||||||||||
| Class E Shares(5) |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.90 | 22.73 | — | * | 1.09 | 0.51 | — | — | 58 | |||||||||||||||||||||||
| Year ended 3-31-2013 |
20.36 | 16.93 | — | * | 1.14 | 1.11 | — | — | 57 | |||||||||||||||||||||||
| Year ended 3-31-2012 |
17.61 | 0.26 | — | * | 1.18 | 1.08 | — | — | 54 | |||||||||||||||||||||||
| Year ended 3-31-2011 |
18.03 | 15.58 | — | * | 1.24 | 0.22 | — | — | 40 | |||||||||||||||||||||||
| Year ended 3-31-2010 |
15.60 | 58.05 | — | * | 1.29 | 0.82 | — | — | 77 | |||||||||||||||||||||||
| Class I Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.90 | 22.85 | 5 | 0.99 | 0.63 | — | — | 58 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
20.36 | 17.03 | 4 | 1.02 | 1.21 | — | — | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
17.61 | 0.38 | 3 | 1.06 | 1.25 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
18.05 | 15.71 | 2 | 1.12 | 0.47 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.60 | 58.20 | — | * | 1.15 | 0.87 | — | — | 77 | |||||||||||||||||||||||
| Class R Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.79 | 22.13 | 1 | 1.57 | 0.03 | — | — | 58 | ||||||||||||||||||||||||
| Year ended 3-31-2013(6) |
20.28 | 11.61 | — | * | 1.55 | (7) | 0.73 | (7) | — | — | 57 | (8) | ||||||||||||||||||||
| Class Y Shares |
||||||||||||||||||||||||||||||||
| Year ended 3-31-2014 |
23.86 | 22.56 | 2 | 1.22 | 0.40 | — | — | 58 | ||||||||||||||||||||||||
| Year ended 3-31-2013 |
20.33 | 16.78 | 2 | 1.27 | 0.97 | — | — | 57 | ||||||||||||||||||||||||
| Year ended 3-31-2012 |
17.59 | 0.09 | 2 | 1.31 | 0.86 | — | — | 54 | ||||||||||||||||||||||||
| Year ended 3-31-2011 |
17.99 | 15.47 | 2 | 1.37 | 0.11 | — | — | 40 | ||||||||||||||||||||||||
| Year ended 3-31-2010 |
15.58 | 57.52 | 1 | 1.54 | 0.57 | — | — | 77 | ||||||||||||||||||||||||
See Accompanying Notes to Financial Statements.
| 2014 | ANNUAL REPORT | 257 |
Table of Contents
| Ivy Funds MARCH 31, 2014 |
| 1. | ORGANIZATION |
Ivy Funds, a Delaware statutory trust (the “Trust”), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. Ivy Bond Fund, Ivy Core Equity Fund, Ivy Cundill Global Value Fund, Ivy Dividend Opportunities Fund, Ivy Emerging Markets Equity Fund (formerly known as Ivy Pacific Opportunities Fund), Ivy European Opportunities Fund, Ivy Global Bond Fund, Ivy Global Equity Income Fund, Ivy Global Income Allocation Fund, Ivy High Income Fund, Ivy International Core Equity Fund, Ivy International Growth Fund, Ivy Large Cap Growth Fund, Ivy Limited-Term Bond Fund, Ivy Managed International Opportunities Fund, Ivy Micro Cap Growth Fund, Ivy Mid Cap Growth Fund, Ivy Money Market Fund, Ivy Municipal Bond Fund, Ivy Municipal High Income Fund, Ivy Small Cap Growth Fund, Ivy Small Cap Value Fund, Ivy Tax-Managed Equity Fund and Ivy Value Fund (each, a “Fund”) are 24 series of the Trust and are the only series of the Trust included in these financial statements. The investment objective(s), policies and risk factors of each Fund are described more fully in the Funds’ Prospectus and Statement of Additional Information. Each Fund’s investment manager is Ivy Investment Management Company (“IICO” or the “Manager”).
Each Fund offers Class A, Class B and Class C shares. Effective January 1, 2014, the Funds’ Class B shares are not available for purchase by new and existing investors. Class B shares will continue to be available for dividend reinvestment and exchanges from Class B shares of another fund within Ivy Funds. Class C shares are not available for direct investment in the Ivy Money Market Fund. Certain Funds may also offer Class E, Class I, Class R and/or Class Y shares. Class E shares are closed for all investments in the Ivy Emerging Markets Equity Fund, Ivy European Opportunities Fund, Ivy International Growth Fund, Ivy Managed International Opportunities Fund, Ivy Small Cap Value Fund and Ivy Value Fund. Class A and Class E shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B and Class C shares are sold without a front-end sales charge, but may be subject to a contingent deferred sales charge (“CDSC”). Class I, Class R and Class Y shares are sold without either a front-end sales charge or a CDSC. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Net investment income, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer agent and shareholder servicing fees, directly attributable to that class. Class A, B, C, E, R and Y have a distribution and service plan. Class I shares are not included in the plan. Class B shares will automatically convert to Class A shares 96 months after the date of purchase.
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies consistently followed by each Fund.
Security Transactions and Related Investment Income. Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses are calculated on the identified cost basis. Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. All or a portion of the distributions received from a real estate investment trust or publicly traded partnership may be designated as a reduction of cost of the related investment and/or realized gain.
Foreign Currency Translation. Each Fund’s accounting records are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily, using foreign exchange rates obtained from an independent pricing service authorized by the Board of Trustees of the Trust (the “Board”). Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translation arise from changes in currency exchange rates. Each Fund combines fluctuations from currency exchange rates and fluctuations in value when computing net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments. Foreign exchange rates are valued as of the close of the New York Stock Exchange (“NYSE”), normally 4:00 P.M. Eastern time, on each day the NYSE is open for trading.
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.
It is the policy of each Fund to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. In addition, each Fund intends to pay distributions as required to avoid imposition of excise tax. Accordingly, no provision has been made for Federal income taxes. Management of the Trust periodically reviews all tax positions to assess that it is more likely than not that the position would be sustained upon examination by the relevant tax authority based on the technical merits of each position. As of and for the year ended March 31, 2014, management believes that no liability for unrecognized tax positions is required. The Funds are subject to examination by U.S. federal and state authorities for returns filed for tax years after 2009.
Dividends and Distributions to Shareholders. Dividends and distributions to shareholders are recorded by each Fund on the business day following record date. Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America (“U.S. GAAP”). If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital.
| 258 | ANNUAL REPORT | 2014 |
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Segregation and Collateralization. In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that a Fund either deliver collateral or segregate assets in connection with certain investments (e.g., dollar rolls, financial futures contracts, foreign currency exchange contracts, options written, securities with extended settlement periods and swaps), the Fund will segregate collateral or designate on its books and records cash or other liquid securities having a value at least equal to the amount that is required to be physically segregated for the benefit of the counterparty. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit cash or securities as collateral for certain investments. Certain countries require that cash reserves be held while investing in companies incorporated in that country. These cash reserves and cash collateral that has been pledged to cover obligations of the Funds under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as “Restricted cash.” Securities collateral pledged for the same purpose, if any, is noted on the Schedule of Investments.
Concentration of Market and Credit Risk. In the normal course of business, the Funds invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded on the Funds’ Statement of Assets and Liabilities, less any collateral held by the Funds.
Certain Funds may hold high-yield and/or non-investment-grade bonds, which may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Funds may acquire securities in default and are not obligated to dispose of securities whose issuers subsequently default.
Certain Funds may enter into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected on the Statement of Assets and Liabilities.
If a Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad.
Inflation-Indexed Bonds. Certain Funds may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond will be included as interest income on the Statement of Operations, even though investors do not receive their principal until maturity.
Interest Only Obligations. These securities entitle the owner to receive only the interest portion from a bond, Treasury note or pool of mortgages. These securities are generally created by a third party separating a bond or pool of mortgages into distinct interest-only and principal-only securities. As the principal (par) amount of a bond or pool of mortgages is paid down, the amount of interest income earned by the owner will decline as well.
Payment In-Kind Securities. Certain Funds may invest in payment in-kind securities (“PIKs”). PIKs give the issuer the option at each interest payment date of making interest payments in either cash or additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the accrued interest (referred to as a dirty price) and require a pro-rata adjustment from the unrealized appreciation or depreciation on investments to interest receivable on the Statement of Assets and Liabilities.
Securities on a When-Issued or Delayed Delivery Basis. Certain Funds may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis. “When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by a Fund on a when-issued basis normally take place within six months and possibly as long as two years or more after the trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The purchase of securities on a when-issued basis may increase the volatility of a Fund’s net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. When a Fund engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain or dispose of the security at a price and yield IICO, or the Fund’s investment subadviser, as applicable, consider advantageous. The Fund maintains internally designated assets with a value equal to or greater than the amount of its purchase commitments. The Fund may also sell securities that it purchased on a when-issued or delayed delivery basis prior to settlement of the original purchase.
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Loans. Certain Funds may invest in loans, the interest rates of which float or adjust periodically based upon a specified adjustment schedule, benchmark indicator, or prevailing interest rates of domestic or foreign corporations, partnerships and other entities (“Borrower”). Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates generally include prime rates of one or more major U.S. banks, LIBOR rates or certificates of deposit rates. Loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay cannot be predicted with accuracy. As a result, the actual maturity may be substantially less than the stated maturities. Loans are exempt from registration under the Securities Act of 1933, may contain certain restrictions on resale, and cannot be sold publicly. A Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties.
When a Fund purchases assignments, it acquires all the rights and obligations under the loan agreement of the assigning lender. Assignments may, however, be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than those held by the assigning lender. When a Fund purchases a participation of a loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation. A participation interest in loans includes the right to receive payments of principal, interest and any fees to which it is entitled from the lender and only upon receipt by the lender of payments from the Borrower, but not from the Borrower directly. When investing in a participation interest, if a Borrower is unable to meet its obligations under a loan agreement, a Fund generally has no right to enforce compliance with the terms of the loan agreement. As a result, the Fund assumes the credit risk of the Borrower, the selling participant, and any other persons that are interpositioned between the Fund and the Borrower. If the lead lender in a typical lending syndicate becomes insolvent, enters FDIC receivership or, if not FDIC insured, enters into bankruptcy, the Fund may incur certain costs and delays in receiving payment or may suffer a loss of principal and/or interest.
Custodian Fees. “Custodian fees” on the Statement of Operations may include interest expense incurred by a Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. A Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by that Fund. The “Earnings credit” line item, if shown, represents earnings on cash balances maintained by that Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.
Trustees and Chief Compliance Officer Fees. Fees paid to the Trustees can be paid in cash or deferred to a later date, at the election of the Trustee according to the Deferred Fee Agreement entered into between the Trust and the Trustee(s). Each Fund records its portion of the deferred fees as a liability on the Statement of Assets and Liabilities. All fees paid in cash plus any appreciation (depreciation) in the underlying deferred plan are shown on the Statement of Operations. Additionally, fees paid to the office of the Chief Compliance Officer of the Funds are shown on the Statement of Operations.
Indemnifications. The Trust’s organizational documents provide current and former Trustees and Officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Trust. In the normal course of business, the Trust may also enter into contracts that provide general indemnification. The Trust’s maximum exposure under these arrangements is unknown and is dependent on future claims that may be made against the Trust. The risk of material loss from such claims is considered remote.
Estimates. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Subsequent Events. Management has performed a review for subsequent events through the date this report was issued.
| 3. | INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS |
Each Fund’s investments are reported at fair value. Fair value is defined as the price that each Fund would receive upon selling an asset or would pay upon satisfying a liability in an orderly transaction between market participants at the measurement date. Each Fund calculates the Net Asset Value (“NAV”) of its shares as of the close of the NYSE, normally 4:00 P.M. Eastern time, on each day the NYSE is open for trading.
For purposes of calculating the NAV, the portfolio securities and other assets are valued on each business day using pricing and valuation methods as adopted by the Board. Where market quotes are readily available, fair value is generally determined on the basis of last reported sales prices, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers, or pricing services.
Prices for fixed-income securities are typically based on quotes that are obtained from an independent pricing service authorized by the Board. To determine values of fixed-income securities, the independent pricing service utilizes such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Securities that cannot be valued by the independent pricing service may be valued using quotes obtained from dealers that make markets in the securities.
Investments in Ivy Money Market Fund and short-term securities with maturities of 60 days or less are valued on the basis of amortized cost (which approximates value), whereby a portfolio security is valued at its cost initially, and thereafter valued to reflect a constant amortization to maturity of any discount or premium.
Because many foreign markets close before the NYSE, events may occur between the close of the foreign market and the close of the NYSE that could have a material impact on the valuation of foreign securities. Waddell & Reed Services Company (“WRSCO”), pursuant to procedures adopted by the Board, evaluates the impact of these events and may adjust the valuation of foreign securities to reflect the fair value as of the close of the NYSE. In addition, all securities for which values are not readily available or are deemed unreliable are appraised at fair value as determined in good faith under the supervision of the Board.
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Where market quotes are not readily available, portfolio securities or assets are valued at fair value, as determined in good faith by the Board or WRSCO pursuant to instructions from the Board.
Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the NYSE close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade do not open for trading for the entire day and no other market prices are available.
The Board has delegated to WRSCO, the responsibility for monitoring significant events that may materially affect the values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events. WRSCO has established a Valuation Committee to administer and oversee the valuation process, including the use of third party pricing vendors.
The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelines established by the Board, with reference to other securities or indices. In the event that the security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the value of the security or asset will be determined in good faith by the Valuation Committee and appropriate consultation with the Board.
When a Fund uses these fair valuation methods applied by WRSCO that use significant unobservable inputs to determine its NAV, securities will be priced by a method that the Board or persons acting at their direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. The prices used by a Fund may differ from the value that will ultimately be realized at the time the securities were sold.
WRSCO is responsible for monitoring the implementation of the pricing and valuation policies through a series of activities to provide reasonable comfort of the accuracy of prices including: 1) periodic vendor due diligence meetings to review methodologies, new developments, and process at vendors, 2) daily and monthly multi-source pricing comparisons reviewed and submitted to the Valuation Committee, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed by management and the Valuation Committee.
Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the factors that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs which are significant to the overall valuation.
The three-tier hierarchy of inputs is summarized as follows:
Level 1 – Observable input such as quoted prices, available in active markets, for identical assets or liabilities.
Level 2 – Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.
Level 3 – Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair value of investments.
A description of the valuation techniques applied to the Funds’ major classes of assets and liabilities measured at fair value on a recurring basis follows:
Asset-Backed Securities and Mortgage-Backed Securities. The fair value of asset-backed securities and mortgage-backed securities are estimated using recently executed transactions and based on models that consider the estimated cash flows of each debt tranche of the issuer, establish a benchmark yield, and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche including, but not limited to, the prepayment speed assumptions and attributes of the collateral. To the extent the inputs are observable and timely, the values would be categorized in Level 2 of the fair value hierarchy, and otherwise they would be categorized as Level 3.
Loans. Loans are valued using a price or composite price from one or more brokers or dealers as obtained from an independent pricing service. The fair value of loans is estimated using recently executed transactions, market price quotations, credit/market events, and cross-asset pricing. Inputs are generally observable market inputs obtained from independent sources. Loans are generally categorized in Level 2 of the fair value hierarchy, unless key inputs are unobservable in which case they would be categorized as Level 3.
Bullion. The fair value of bullion is at the last settlement price at the end of each day on the board of trade or exchange upon which they are traded and are categorized in Level 1 of the fair value hierarchy.
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Corporate Bonds. The fair value of corporate bonds is estimated using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, fundamental data relating to the issuer, and credit default swap spreads adjusted for any basis difference between cash and derivative instruments. While most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3 of the fair value hierarchy.
Derivative Instruments. Forward foreign currency contracts are valued based upon the closing prices of the forward currency rates determined at the close of the NYSE. Swaps are valued by an independent pricing service unless the price is unavailable, in which case they are valued at the price provided by a dealer in that security. Futures contracts traded on an exchange are generally valued at the settlement price. Listed options are ordinarily valued at the mean of the last bid and ask price provided by an independent pricing service unless the price is unavailable, in which case they are valued at a quotation obtained from a broker-dealer. Over-the-counter (“OTC”) options are ordinarily valued at the mean of the last bid and ask price provided by an independent pricing service for a comparable listed option unless such a price is unavailable, in which case they are valued at a quotation obtained from a broker-dealer. If no comparable listed option exists from which to obtain a price from an independent pricing service and a quotation cannot be obtained from a broker-dealer, the OTC option will be valued using a model reasonably designed to provide a current market price.
Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. OTC derivative contracts include forward foreign currency contracts, swap agreements, and option contracts related to interest rates, foreign currencies, credit standing of reference entities, equity prices, or commodity prices. Depending on the product and the terms of the transaction, the fair value of the OTC derivative products are modeled taking into account the counterparties’ creditworthiness and using a series of techniques, including simulation models. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgments and the pricing inputs are observed from actively quoted markets, as is the case with interest rate swap and option contracts. A substantial majority of OTC derivative products valued using pricing models fall into this category and are categorized within Level 2 of the fair value hierarchy.
Equity Securities. Equity securities traded on U.S. or foreign securities exchanges or included in a national market system are valued at the official closing price at the close of each business day unless otherwise stated below. OTC equity securities and listed securities for which no price is readily available are valued at the average of the last bid and asked prices.
Mutual funds, including investment funds, typically are valued at the NAV reported as of the valuation date.
Securities that are stated at the last reported sales price or closing price on the day of valuation taken from the primary exchange where the security is principally traded and to the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Foreign securities, for which the primary trading market closes at the same time or after the NYSE, are valued based on quotations from the primary market in which they are traded and categorized in Level 1. Because many foreign securities markets and exchanges close prior to the close of the NYSE, closing prices for foreign securities in those markets or on those exchanges do not reflect the events that occur after that close. Certain foreign securities may be fair valued using a pricing service that considers the correlation of the trading patterns of the foreign security to the intra-day trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, Exchange Traded Funds, and the movement of certain indices of securities based on a statistical analysis of their historical relationship; such valuations generally are categorized in Level 2.
Preferred stock, repurchase agreements, and other equities traded on inactive markets or valued by reference to similar instruments are also generally categorized in Level 2.
Municipal Bonds. Municipal bonds are fair valued based on pricing models that take into account, among other factors, information received from market makers and broker-dealers, current trades, bid-wants lists, offerings, market movements, the callability of the bond, state of issuance, benchmark yield curves, and bond insurance. To the extent that these inputs are observable and timely, the fair values of municipal bonds would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Restricted Securities. Restricted securities that are deemed to be both Rule 144A securities and illiquid, as well as restricted securities held in non-public entities are included in Level 3 of the fair value hierarchy because they trade infrequently, and, therefore, the inputs are unobservable. Restricted securities that are valued at a discount to similar publicly traded securities may be categorized as Level 2 of the fair value hierarchy to the extent that the discount is considered to be insignificant to the fair value measurement in its entirety; otherwise they may be categorized as Level 3.
U.S. Government and Agency Securities. U.S. government and agency securities are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, quoted market prices, and reference data. Accordingly, U.S. government and agency securities are normally categorized in Level 1 or 2 of the fair value hierarchy depending on the liquidity and transparency of the market.
Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. Transfers between levels represent the values as of the beginning of the reporting period.
For fair valuations using unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3 category during
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the period. The beginning of period timing recognition is used for the transfers between Levels of the Funds’ assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for each respective Fund.
Net realized gain (loss) and net unrealized appreciation (depreciation), shown on the reconciliation of Level 3 investments if applicable, are included on the Statement of Operations in net realized gain (loss) on investments in unaffiliated securities and in net change in unrealized appreciation (depreciation) on investments in unaffiliated securities, respectively. Additionally, the net change in unrealized appreciation for all Level 3 investments still held as of year ended March 31, 2014, if applicable, is included on the Statement of Operations in net change in unrealized appreciation (depreciation) on investments in unaffiliated securities.
The Funds may own different types of assets that are classified as Level 2 or Level 3. Assets classified as Level 2 can have a variety of observable inputs, including, but not limited to, benchmark yields, reported trades, broker quotes, benchmark securities, and bid/offer quotations. These observable inputs are collected and utilized, primarily by an independent pricing service, in different evaluated pricing approaches depending upon the specific asset to determine a value.
| 4. | DERIVATIVE INSTRUMENTS ($ amounts in thousands unless indicated otherwise) |
The following disclosures contain information on why and how the Funds use derivative instruments, the associated risks of investing in derivative instruments, and how derivative instruments affect the Funds’ financial positions and results of operations when presented by primary underlying risk exposure.
Forward Foreign Currency Contracts. Certain Funds may enter into forward foreign currency contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date. Forward contracts are reported on a schedule following the Schedule of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the NYSE as provided by a bank, dealer or independent pricing service. The resulting unrealized appreciation and depreciation is reported on the Statement of Assets and Liabilities as a receivable or payable and on the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) on the Statement of Operations.
Risks to a Fund related to the use of such contracts include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, a Fund’s maximum loss will consist of the aggregate unrealized gain on appreciated contracts that is not collateralized.
Futures Contracts. Certain Funds may engage in buying and selling futures contracts. Upon entering into a futures contract, the Fund is required to deposit, in a segregated account, an amount equal to a varying specified percentage of the contract amount. This amount is known as the initial margin. Subsequent payments (variation margins) are made or received by the Fund each day, dependent on the daily fluctuations in the value of the underlying debt security or index.
Futures contracts are reported on a schedule following the Schedule of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are identified on the Schedule of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted on the Statement of Assets and Liabilities. The net change in unrealized appreciation (depreciation) is reported on the Statement of Operations. Realized gains (losses) are reported on the Statement of Operations at the closing or expiration of futures contracts.
Risks of entering into futures contracts include the possibility of loss of securities or cash held as collateral, that there may be an illiquid market where the Fund is unable to close the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities.
Option Contracts. Options purchased by a Fund are accounted for in the same manner as marketable portfolio securities. The cost of portfolio securities acquired through the exercise of call options is increased by the premium paid to purchase the call. The proceeds from securities sold through the exercise of put options are decreased by the premium paid to purchase the put.
When a Fund writes (sells) an option, an amount equal to the premium received by the Fund is recorded as a liability. The amount of the liability is subsequently adjusted to reflect the current value of the option written. When an option expires on its stipulated expiration date or a Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the call option was sold), and the liability related to such option is extinguished. When a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether a Fund has realized a gain or loss. For each Fund, when a written put is exercised, the cost basis of the securities purchased by a Fund is reduced by the amount of the premium received.
Investments in options, whether purchased or written, involve certain risks. Writing put options and purchasing call options may increase a Fund’s exposure to the underlying security (or basket of securities). With written options, there may be times when a Fund will be required to purchase or sell securities to meet its obligation under the option contract where the required action is not beneficial to the Fund, due to unfavorable movement of the market price of the underlying security (or basket of securities). Additionally, to the extent a Fund enters into OTC option transactions with counterparties, the Fund will be exposed to the risk that counterparties to these OTC transactions will be unable to meet their obligations under the terms of the transaction.
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Swap Agreements. Certain Funds may invest in swap agreements.
Total return swaps involve a commitment to pay periodic interest payments in exchange for a market-linked return based on a security or a basket of securities representing a variety of securities or a particular index. To the extent the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.
The creditworthiness of the counterparty with which a Fund enters into a swap agreement is monitored by IICO. If a firm’s creditworthiness declines, the value of the agreement would likely decline, potentially resulting in losses. If a default occurs by the counterparty to such a transaction, the Fund will have contractual remedies pursuant to the agreement related to the transaction. The maximum loss a Fund may incur consists of the aggregate unrealized gain on appreciated contracts that is not collateralized.
Collateral and rights of offset. A Fund may mitigate credit risk with respect to OTC derivative counterparties through credit support annexes (“CSA”) included with an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement which is the standard contract governing most derivative transactions between the Fund and each of its counterparties. The CSA allows the Fund and its counterparty to offset certain derivative financial instruments’ payables and/or receivables against each other and/or with collateral, which is generally held by the Fund’s custodian. The amount of collateral moved to/from applicable counterparties is based upon minimum transfer amounts specified in the CSA. To the extent amounts due to the Fund from its counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 2 “Segregation and Collateralization” for additional information with respect to collateral practices.
Offsetting of Assets and Liabilities. Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2011-11, Disclosures about Offsetting Assets and Liabilities, requires an entity that has financial instruments that are either (1) offset or (2) subject to an enforceable master netting arrangement or similar agreement to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position.
The following tables present financial instruments subject to master netting agreements as of March 31, 2014:
Assets
| Gross Amounts Not Offset on the Statement of Assets and Liabilities |
||||||||||||||||||||||||||||
| Fund | Gross Amounts of Recognized Assets |
Gross Amounts Offset on the Statement of Assets and Liabilities |
Net Amounts of Assets Presented on the Statement of Assets and Liabilities |
Financial Instruments and Derivatives Available for Offset |
Non-Cash Collateral Received |
Cash Collateral Received |
Net Amount Receivable |
|||||||||||||||||||||
| Ivy Cundill Global Value Fund | ||||||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
$ | 32 | $ | — | $ | 32 | $ | (5 | ) | $ | — | $ | — | $ | 27 | |||||||||||||
| Ivy Emerging Markets Equity Fund | ||||||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
$ | 172 | $ | — | $ | 172 | $ | — | $ | — | $ | — | $ | 172 | ||||||||||||||
| Ivy European Opportunities Fund | ||||||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
$ | 31 | $ | — | $ | 31 | $ | — | $ | — | $ | — | $ | 31 | ||||||||||||||
| Ivy Global Equity Income Fund | ||||||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
$ | 73 | $ | — | $ | 73 | $ | (73 | ) | $ | — | $ | — | $ | — | |||||||||||||
| Ivy Global Income Allocation Fund | ||||||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
$ | 203 | $ | — | $ | 203 | $ | (203 | ) | $ | — | $ | — | $ | — | |||||||||||||
| Ivy High Income Fund | ||||||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency |
$ | 2,253 | $ | — | $ | 2,253 | $ | (1,419 | ) | $ | — | $ | (610 | ) | $ | 224 | ||||||||||||
| (1) | Amounts represent forward currency contracts that have an offset to an open and close contract, but have not settled. |
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| Gross Amounts Not Offset on the Statement of Assets and Liabilities |
||||||||||||||||||||||||||||
| Fund | Gross Amounts of Recognized Assets |
Gross Amounts Offset on the Statement of Assets and Liabilities |
Net Amounts of Assets Presented on the Statement of Assets and Liabilities |
Financial Instruments and Derivatives Available for Offset |
Non-Cash Collateral Received |
Cash Collateral Received |
Net Amount Receivable |
|||||||||||||||||||||
| Ivy International Core Equity Fund | ||||||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
$ | 319 | $ | — | $ | 319 | $ | — | $ | (319 | ) | $ | — | $ | — | |||||||||||||
| Ivy International Growth Fund | ||||||||||||||||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
$ | 193 | $ | — | $ | 193 | $ | — | $ | — | $ | — | $ | 193 | ||||||||||||||
| Ivy Mid Cap Growth Fund | ||||||||||||||||||||||||||||
| Investments in unaffiliated securities at value* |
$ | 943 | $ | — | $ | 943 | $ | (943 | ) | $ | — | $ | — | $ | — | |||||||||||||
| * | Purchased options are reported as investments in unaffiliated securities on the Statement of Assets and Liabilities. |
Liabilities
| Gross Amounts Not Offset on the Statement of Assets and Liabilities |
||||||||||||||||||||||||||||
| Fund | Gross Amounts of Recognized Liabilities |
Gross Amounts Offset on the Statement of Assets and Liabilities |
Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities |
Financial Instruments and Derivatives Available for Offset |
Non-Cash Collateral Pledged |
Cash Collateral Pledged |
Net Amount Payable |
|||||||||||||||||||||
| Ivy Cundill Global Value Fund | ||||||||||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
$ | 81 | $ | — | $ | 81 | $ | (5 | ) | $ | — | $ | — | $ | 76 | |||||||||||||
| Ivy Emerging Markets Equity Fund | ||||||||||||||||||||||||||||
| Unrealized depreciation on Swap Agreements |
$ | 567 | $ | — | $ | 567 | $ | — | $ | — | $ | (567 | ) | $ | — | |||||||||||||
| Ivy Global Bond Fund | ||||||||||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
$ | 63 | $ | — | $ | 63 | $ | — | $ | — | $ | — | $ | 63 | ||||||||||||||
| Ivy Global Equity Income Fund | ||||||||||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
$ | 280 | $ | — | $ | 280 | $ | (73 | ) | $ | 207 | $ | — | $ | — | |||||||||||||
| Ivy Global Income Allocation Fund | ||||||||||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
$ | 266 | $ | — | $ | 266 | $ | (203 | ) | $ | — | $ | — | $ | 63 | |||||||||||||
| Ivy High Income Fund | ||||||||||||||||||||||||||||
| Unrealized depreciation on forward foreign currency contracts(1) |
$ | 6,714 | $ | — | $ | 6,714 | $ | (1,419 | ) | $ | — | $ | (4,400 | ) | $ | 895 | ||||||||||||
| Ivy Mid Cap Growth Fund | ||||||||||||||||||||||||||||
| Written Options at Value |
$ | 1,351 | $ | — | $ | 1,351 | $ | (943 | ) | $ | (408 | ) | $ | — | $ | — | ||||||||||||
| (1) | Amounts represent forward currency contracts that have an offset to an open and close contract, but have not settled. |
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Additional Disclosure Related to Derivative Instruments
Fair values of derivative instruments as of year ended March 31, 2014:
| Assets |
Liabilities |
|||||||||||||||
| Fund | Type of Risk Exposure |
Statement of Assets & Liabilities Location |
Value | Statement of Assets & Liabilities Location |
Value | |||||||||||
| Ivy Bond Fund | Interest rate | Unrealized appreciation on futures contracts* | $70 | Unrealized depreciation on futures contracts* | $119 | |||||||||||
| Ivy Cundill Global Value Fund | Foreign currency | Unrealized appreciation on forward foreign currency contracts | 32 | Unrealized depreciation on forward foreign currency contracts | 81 | |||||||||||
| Ivy Emerging Markets Equity Fund | Equity | Investments in unaffiliated securities at value** | 667 | Unrealized depreciation on swap agreements | 567 | |||||||||||
| Equity | — | Written options at value | 261 | |||||||||||||
| Foreign currency | Unrealized appreciation on forward foreign currency contracts | 172 | — | |||||||||||||
| Ivy European Opportunities Fund | Foreign currency | Unrealized appreciation on forward foreign currency contracts | 31 | — | ||||||||||||
| Ivy Global Bond Fund | Foreign currency | — | Unrealized depreciation on forward foreign currency contracts | 63 | ||||||||||||
| Ivy Global Equity Income Fund | Foreign currency | Unrealized appreciation on forward foreign currency contracts | 73 | Unrealized depreciation on forward foreign currency contracts | 280 | |||||||||||
| Ivy Global Income Allocation Fund | Foreign currency | Unrealized appreciation on forward foreign currency contracts | 203 | Unrealized depreciation on forward foreign currency contracts | 266 | |||||||||||
| Ivy High Income Fund | Foreign currency | Unrealized appreciation on forward foreign currency contracts | 38 | Unrealized depreciation on forward foreign currency contracts | 1,888 | |||||||||||
| Ivy International Core Equity Fund | Foreign currency | Unrealized appreciation on forward foreign currency contracts | 319 | — | ||||||||||||
| Ivy International Growth Fund | Foreign currency | Unrealized appreciation on forward foreign currency contracts | 193 | — | ||||||||||||
| Ivy Limited-Term Bond Fund | Interest rate | — | Unrealized depreciation on futures contracts* | 1,624 | ||||||||||||
| Ivy Mid Cap Growth Fund | Equity | Investments in unaffiliated securities at value** | 1,083 | Written options at value | 1,498 | |||||||||||
| Ivy Value Fund | Equity | — | Written options at value | 628 | ||||||||||||
| * | The value presented includes cumulative gain (loss) on open futures contracts; however, the value reflected on the accompanying Statement of Assets and Liabilities is only the unsettled variation margin receivable (payable) as of year ended March 31, 2014. |
| ** | Purchased options are reported as investments in unaffiliated securities and are reflected in the accompanying Schedule of Investments. |
Amount of realized gain (loss) on derivatives recognized on the Statement of Operations for the year ended March 31, 2014:
| Net realized gain (loss) on: | ||||||||||||||||||||||||||
| Fund | Type of Risk Exposure |
Investments in unaffiliated securities* |
Swap agreements |
Futures contracts |
Written options |
Forward foreign currency contracts |
Total | |||||||||||||||||||
| Ivy Bond Fund |
Interest rate | $ | — | $ | — | $ | 833 | $ | — | $ | — | $ | 833 | |||||||||||||
| Ivy Cundill Global Value Fund |
Foreign currency | — | — | — | — | 4,567 | 4,567 | |||||||||||||||||||
| Ivy Emerging Markets Equity Fund |
Commodity | — | — | (1,975 | ) | — | — | (1,975 | ) | |||||||||||||||||
| Equity | (3,547 | ) | (1,631 | ) | — | 1,084 | — | (4,094 | ) | |||||||||||||||||
| Foreign currency | — | — | — | — | (2,914 | ) | (2,914 | ) | ||||||||||||||||||
| Ivy European Opportunities Fund |
Equity | (902 | ) | — | — | — | — | (902 | ) | |||||||||||||||||
| Foreign currency | — | — | — | — | (752 | ) | (752 | ) | ||||||||||||||||||
| Ivy Global Bond Fund |
Foreign currency | — | — | — | — | (301 | ) | (301 | ) | |||||||||||||||||
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| Net realized gain (loss) on: | ||||||||||||||||||||||||||
| Fund | Type of Risk Exposure |
Investments in unaffiliated securities* |
Swap agreements |
Futures contracts |
Written options |
Forward foreign currency contracts |
Total | |||||||||||||||||||
| Ivy Global Equity Income Fund |
Foreign currency | $ | — | $ | — | $ | — | $ | — | $ | (306 | ) | $ | (306 | ) | |||||||||||
| Ivy Global Income Allocation Fund |
Foreign currency | — | — | — | — | (5,332 | ) | (5,332 | ) | |||||||||||||||||
| Ivy High Income Fund |
Credit | — | 7 | — | — | — | 7 | |||||||||||||||||||
| Equity | — | 956 | — | — | — | 956 | ||||||||||||||||||||
| Foreign currency | — | — | — | — | (34,302 | ) | (34,302 | ) | ||||||||||||||||||
| Ivy International Core Equity Fund |
Equity | — | — | — | 616 | — | 616 | |||||||||||||||||||
| Foreign currency | — | — | — | — | 121 | 121 | ||||||||||||||||||||
| Ivy International Growth Fund |
Foreign currency | — | — | — | — | (2,805 | ) | (2,805 | ) | |||||||||||||||||
| Ivy Limited-Term Bond Fund |
Interest rate | — | — | (3,810 | ) | — | — | (3,810 | ) | |||||||||||||||||
| Ivy Mid Cap Growth Fund |
Equity | (14,820 | ) | — | — | (4,600 | ) | — | (19,420 | ) | ||||||||||||||||
| Ivy Small Cap Growth Fund |
Equity | — | 9,267 | — | — | — | 9,267 | |||||||||||||||||||
| Ivy Value Fund |
Equity | — | — | — | (991 | ) | — | (991 | ) | |||||||||||||||||
* Purchased options are reported as investments in unaffiliated securities and are reflected in the accompanying Schedule of Investments.
Change in unrealized appreciation (depreciation) on derivatives recognized on the Statement of Operations for the year ended March 31, 2014:
| Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||||||||||||
| Fund | Type of Risk Exposure |
Investments in unaffiliated securities* |
Swap agreements |
Futures contracts |
Written options |
Forward foreign currency contracts |
Total | |||||||||||||||||||
| Ivy Bond Fund |
Interest rate | $ | — | $ | — | $ | 55 | $ | — | $ | — | $ | 55 | |||||||||||||
| Ivy Cundill Global Value Fund |
Foreign currency | — | — | — | — | (2,492 | ) | (2,492 | ) | |||||||||||||||||
| Ivy Emerging Markets Equity Fund |
Equity | 364 | (483 | ) | — | 529 | — | 410 | ||||||||||||||||||
| Foreign currency | — | — | — | — | 171 | 171 | ||||||||||||||||||||
| Ivy European Opportunities Fund |
Foreign currency | — | — | — | — | 103 | 103 | |||||||||||||||||||
| Ivy Global Bond Fund |
Foreign currency | — | — | — | — | (179 | ) | (179 | ) | |||||||||||||||||
| Ivy Global Equity Income Fund |
Foreign currency | — | — | — | — | (147 | ) | (147 | ) | |||||||||||||||||
| Ivy Global Income Allocation Fund |
Foreign currency | — | — | — | — | (63 | ) | (63 | ) | |||||||||||||||||
| Ivy High Income Fund |
Foreign currency | — | — | — | — | (9,242 | ) | (9,242 | ) | |||||||||||||||||
| Ivy International Core Equity Fund |
Foreign currency | — | — | — | — | 318 | 318 | |||||||||||||||||||
| Ivy International Growth Fund |
Foreign currency | — | — | — | — | 318 | 318 | |||||||||||||||||||
| Ivy Limited-Term Bond Fund |
Interest rate | — | — | (1,624 | ) | — | — | (1,624 | ) | |||||||||||||||||
| Ivy Mid Cap Growth Fund |
Equity | 3,168 | — | — | (1,807 | ) | — | 1,361 | ||||||||||||||||||
| Ivy Small Cap Growth Fund |
Equity | — | (557 | ) | — | — | — | (557 | ) | |||||||||||||||||
| Ivy Value Fund |
Equity | — | — | — | 437 | — | 437 | |||||||||||||||||||
| * | Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments. |
During the year ended March 31, 2014, the average derivative volume was as follows:
| Fund | Long
forward contracts(1) |
Short
forward contracts(1) |
Long
futures contracts(1) |
Short
futures contracts(1) |
Swap agreements(2) |
Purchased options(1) |
Written options(1) |
|||||||||||||||||||||
| Ivy Bond Fund |
$ | — | $ | — | $ | 8,956 | $ | 29,850 | $ | — | $ | — | $ | — | ||||||||||||||
| Ivy Cundill Global Value Fund |
25,383 | 24,798 | — | — | — | — | — | |||||||||||||||||||||
| Ivy Emerging Markets Equity Fund |
9,118 | 9,283 | — | — | 3,569 | 1,099 | 2,546 | |||||||||||||||||||||
| Ivy European Opportunities Fund |
9,439 | 9,472 | — | — | — | 43 | — | |||||||||||||||||||||
| Ivy Global Bond Fund |
5,092 | 5,067 | — | — | — | — | — | |||||||||||||||||||||
| Ivy Global Equity Income Fund. |
30,449 | 30,371 | — | — | — | — | — | |||||||||||||||||||||
| Ivy Global Income Allocation Fund |
82,467 | 82,347 | — | — | — | — | — | |||||||||||||||||||||
| Ivy High Income Fund |
532,555 | 533,310 | — | — | 40,385 | — | — | |||||||||||||||||||||
| Ivy International Core Equity Fund |
143,463 | 142,966 | — | — | — | — | 48 | |||||||||||||||||||||
| Ivy International Growth Fund |
61,148 | 61,098 | — | — | — | — | — | |||||||||||||||||||||
| Ivy Limited-Term Bond Fund |
— | — | — | 74,691 | — | — | — | |||||||||||||||||||||
| Ivy Mid Cap Growth Fund |
— | — | — | — | — | 1,138 | 2,600 | |||||||||||||||||||||
| Ivy Small Cap Growth Fund |
— | — | — | — | 58 | — | — | |||||||||||||||||||||
| Ivy Value Fund |
— | — | — | — | — | — | 490 | |||||||||||||||||||||
| (1) | Average value outstanding during the period. |
| (2) | Average notional amount outstanding during the period. |
| 2014 | ANNUAL REPORT | 267 |
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Objectives and Strategies
Ivy Bond Fund. The Fund’s objective in using derivatives during the period was to adjust the overall duration of the portfolio. To achieve this objective, the Fund primarily utilized Treasury futures contracts of varying lengths to either shorten or lengthen the duration of the Fund, as determined by the Fund’s subadvisor.
Ivy Cundill Global Value Fund. The Fund’s objective in using derivatives during the period was to hedge the exposure to foreign currencies of securities held in the Fund. To achieve this objective, the Fund utilized forward contracts.
Ivy Emerging Markets Equity Fund. The Fund’s objectives in using derivatives during the period included managing the exposure to various foreign currencies, hedging certain event risks on positions held by the Fund and gaining exposure to certain individual securities that are not available for direct purchase. To manage foreign currency exposure, the Fund utilized forward contracts to either increase or decrease exposure to a given currency. To hedge event risk, the Fund utilized options, both written and purchased, on individual equity securities. To gain exposure to certain individual securities, the Fund utilized total return swaps.
Ivy European Opportunities Fund. The Fund’s objectives in using derivatives during the period included hedging market risk on equity securities and managing the exposure to various foreign currencies. To achieve the objective of hedging market risk, the Fund utilized purchased option contracts on individual equity securities and foreign equity indices. To manage foreign currency exposure, the Fund utilized forward contracts to either increase or decrease exposure to a given currency.
Ivy Global Bond Fund. The Fund’s objective in using derivatives during the period was to manage the exposure to various foreign currencies. To achieve this objective, the Fund utilized forward contracts to either hedge a position held by the Fund, to gain exposure to a currency where a foreign bond is not available, or to take a fundamental position long or short in a particular currency.
Ivy Global Equity Income Fund. The Fund’s objective in using derivatives during the period was to manage the exposure to various foreign currencies. To achieve this objective, the Fund utilized forward contracts to either increase or decrease exposure to a given currency.
Ivy Global Income Allocation Fund. The Fund’s objective in using derivatives during the period was to manage the exposure to various foreign currencies. To achieve this objective, the Fund utilized forward contracts to either increase or decrease exposure to a given currency.
Ivy High Income Fund. The Fund’s objectives in using derivatives during the period were to hedge the exposure to foreign currencies of securities held in the Fund and gaining exposure to certain individual securities that are not available for direct purchase. To hedge foreign currency exposure, the Fund utilized forward contracts. To gain exposure to certain individual securities, the Fund utilized total return swaps.
Ivy International Core Equity Fund. The Fund’s objective in using derivatives during the period was to manage the exposure to various foreign currencies, to generate additional income from written option premiums, and to facilitate trading in certain securities. To achieve this objective, the Fund utilized forward contracts to either increase or decrease exposure to a given currency and utilized written options on individual equity securities.
Ivy International Growth Fund. The Fund’s objective in using derivatives during the period was to manage the exposure to various foreign currencies. To achieve this objective, the Fund utilized forward contracts to either increase or decrease exposure to a given currency.
Ivy Limited Term-Bond Fund. The Fund’s objective in using derivatives during the period was to adjust the overall duration of the portfolio. To achieve this objective, the Fund primarily utilized Treasury futures contracts of varying lengths to either shorten or lengthen the duration of the Fund.
Ivy Mid Cap Growth Fund. The Fund’s objectives in using derivatives during the period included gaining exposure to certain sectors, hedging certain event risks on positions held by the Fund and hedging market risk on equity securities. To achieve these objectives, the Fund utilized futures on domestic indices and options, both written and purchased, on either an index or on individual or baskets of equity securities.
Ivy Small Cap Growth Fund. The Fund’s objectives in using derivatives during the period included hedging market risk on equity securities and increasing exposure to various equity sectors and markets. To achieve these objectives, the Fund utilized total return swaps on individual equity securities owned by the Fund.
Ivy Value Fund. The Fund’s objectives in using derivatives during the period included generating additional income from written option premiums and gaining exposure to, or facilitate trading in, certain securities. To achieve these objectives, the Fund utilized written options on individual equity securities.
| 268 | ANNUAL REPORT | 2014 |
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| 5. | WRITTEN OPTION ACTIVITY ($ amounts in thousands) |
Transactions in written options were as follows:
| Fund | Outstanding at 3-31-13 |
Options written |
Options closed |
Options exercised |
Options expired |
Outstanding at 3-31-14 |
||||||||||||||||||
| Ivy Emerging Markets Equity Fund |
||||||||||||||||||||||||
| Number of Contracts |
7,375 | 817,410 | (26,675 | ) | (4,030 | ) | (790,595 | ) | 3,485 | |||||||||||||||
| Premium Received |
$ | 776 | $ | 8,786 | $ | (2,769 | ) | $ | (725 | ) | $ | (5,234 | ) | $ | 834 | |||||||||
| Ivy International Core Equity Fund |
||||||||||||||||||||||||
| Number of Contracts |
N/A | 1,769,863 | (16,757 | ) | (228,415 | ) | (1,524,691 | ) | N/A | |||||||||||||||
| Premium Received |
N/A | $ | 806 | $ | (6 | ) | $ | (188 | ) | $ | (612 | ) | N/A | |||||||||||
| Ivy Mid Cap Growth Fund |
||||||||||||||||||||||||
| Number of Contracts |
23,883 | 106,005 | (21,087 | ) | (40,953 | ) | (58,667 | ) | 9,181 | |||||||||||||||
| Premium Received |
$ | 4,359 | $ | 11,728 | $ | (4,486 | ) | $ | (4,606 | ) | $ | (5,329 | ) | $ | 1,666 | |||||||||
| Ivy Value Fund |
||||||||||||||||||||||||
| Number of Contracts |
765 | 13,571 | (3,599 | ) | (2,782 | ) | (6,032 | ) | 1,923 | |||||||||||||||
| Premium Received |
$ | 495 | $ | 2,095 | $ | (931 | ) | $ | (293 | ) | $ | (405 | ) | $ | 961 | |||||||||
| 6. | BASIS FOR CONSOLIDATION OF THE IVY EMERGING MARKETS EQUITY FUND |
Ivy EME, Ltd., formerly known as Ivy ASNO II, Ltd. (the “Subsidiary”), a Cayman Islands exempted company, was incorporated as a wholly owned subsidiary acting as an investment vehicle for the Ivy Emerging Markets Equity Fund (referred to as “the Fund” in this subsection). The Subsidiary acts as an investment vehicle for the Fund, in order to effect certain investments for the Fund consistent with the Fund’s investment objectives and policies as specified in its prospectus and statement of additional information. The Fund’s investment portfolio has been consolidated and includes the portfolio holdings of the Fund and its Subsidiary. The consolidated financial statements include the accounts of the Fund and its Subsidiary. All inter-company transactions and balances have been eliminated. A subscription agreement was entered into between the Fund and its Subsidiary comprising the entire issued share capital of the Subsidiary with the intent that the Fund will remain the sole shareholder and retain all rights. Under the Articles of Association, shares issued by the Subsidiary confer upon a shareholder the right to receive notice of, to attend and to vote at general meetings of the Subsidiary and shall confer upon the shareholder rights in a winding-up or repayment of capital and the right to participate in the profits or assets of the Subsidiary.
See the table below for details regarding the structure, incorporation and relationship as of March 31, 2014 of the Subsidiary to the Fund (amounts in thousands).
| Subsidiary | Date of Incorporation |
Subscription Agreement |
Fund Net Assets |
Subsidiary Net Assets |
Percentage of Fund Net Assets |
|||||||||||||||
| Ivy EME, Ltd. |
1-31-13 | 4-10-13 | $ | 740,340 | $ | 6,076 | 0.82 | % | ||||||||||||
| 7. | INVESTMENT MANAGEMENT AND PAYMENTS TO AFFILIATED PERSONS ($ amounts in thousands unless indicated otherwise) |
Management Fees. IICO, a wholly owned subsidiary of Waddell & Reed Financial, Inc. (“WDR”), serves as each Fund’s investment manager. The management fee is accrued daily by each Fund at the following annual rates as a percentage of average daily net assets:
| Fund (M -Millions) | $0 to $250M |
$250 to $500M |
$500 to $1,000M |
$1,000 to $1,500M |
$1,500 to $2,000M |
$2,000 to $3,000M |
$3,000 to $5,000M |
$5,000 to $6,000M |
Over $6,000M | |||||||||||||||||||||||||
| Ivy Bond Fund |
0.525% | 0.525 | % | 0.500 | % | 0.450 | % | 0.400 | % | 0.400 | % | 0.400 | % | 0.400 | % | 0.400 | % | |||||||||||||||||
| Ivy Core Equity Fund |
0.700 | 0.700 | 0.700 | 0.650 | 0.650 | 0.600 | 0.550 | 0.525 | 0.500 | |||||||||||||||||||||||||
| Ivy Cundill Global Value Fund |
1.000 | 1.000 | 0.850 | 0.830 | 0.830 | 0.800 | 0.760 | 0.760 | 0.760 | |||||||||||||||||||||||||
| Ivy Dividend Opportunities Fund |
0.700 | 0.700 | 0.700 | 0.650 | 0.650 | 0.600 | 0.550 | 0.550 | 0.550 | |||||||||||||||||||||||||
| Ivy Emerging Markets Equity Fund |
1.000 | 1.000 | 0.850 | 0.830 | 0.830 | 0.800 | 0.760 | 0.760 | 0.760 | |||||||||||||||||||||||||
| Ivy European Opportunities Fund |
0.900 | 0.850 | 0.750 | 0.750 | 0.750 | 0.750 | 0.750 | 0.750 | 0.750 | |||||||||||||||||||||||||
| Ivy Global Bond Fund |
0.625 | 0.625 | 0.600 | 0.550 | 0.500 | 0.500 | 0.500 | 0.500 | 0.500 | |||||||||||||||||||||||||
| Ivy Global Equity Income Fund |
0.700 | 0.700 | 0.700 | 0.650 | 0.650 | 0.600 | 0.550 | 0.550 | 0.550 | |||||||||||||||||||||||||
| Ivy Global Income Allocation Fund |
0.700 | 0.700 | 0.700 | 0.650 | 0.650 | 0.600 | 0.550 | 0.550 | 0.550 | |||||||||||||||||||||||||
| Ivy High Income Fund |
0.625 | 0.625 | 0.600 | 0.550 | 0.500 | 0.500 | 0.500 | 0.500 | 0.500 | |||||||||||||||||||||||||
| Ivy International Core Equity Fund |
0.850 | 0.850 | 0.850 | 0.830 | 0.830 | 0.800 | 0.700 | 0.700 | 0.700 | |||||||||||||||||||||||||
| Ivy International Growth Fund |
0.850 | 0.850 | 0.850 | 0.830 | 0.830 | 0.800 | 0.700 | 0.700 | 0.700 | |||||||||||||||||||||||||
| Ivy Large Cap Growth Fund |
0.700 | 0.700 | 0.700 | 0.650 | 0.650 | 0.600 | 0.550 | 0.550 | 0.550 | |||||||||||||||||||||||||
| Ivy Limited-Term Bond Fund |
0.500 | 0.500 | 0.450 | 0.400 | 0.350 | 0.350 | 0.350 | 0.350 | 0.350 | |||||||||||||||||||||||||
| Ivy Managed International Opportunities Fund |
0.050 | 0.050 | 0.050 | 0.050 | 0.050 | 0.050 | 0.050 | 0.050 | 0.050 | |||||||||||||||||||||||||
| Ivy Micro Cap Growth Fund |
0.950 | 0.950 | 0.950 | 0.930 | 0.930 | 0.900 | 0.860 | 0.860 | 0.860 | |||||||||||||||||||||||||
| Ivy Mid Cap Growth Fund |
0.850 | 0.850 | 0.850 | 0.830 | 0.830 | 0.800 | 0.760 | 0.760 | 0.760 | |||||||||||||||||||||||||
| Ivy Money Market Fund |
0.400 | 0.400 | 0.400 | 0.400 | 0.400 | 0.400 | 0.400 | 0.400 | 0.400 | |||||||||||||||||||||||||
| Ivy Municipal Bond Fund |
0.525 | 0.525 | 0.500 | 0.450 | 0.400 | 0.400 | 0.400 | 0.400 | 0.400 | |||||||||||||||||||||||||
| Ivy Municipal High Income Fund |
0.525 | 0.525 | 0.500 | 0.450 | 0.400 | 0.400 | 0.400 | 0.400 | 0.400 | |||||||||||||||||||||||||
| Ivy Small Cap Growth Fund |
0.850 | 0.850 | 0.850 | 0.830 | 0.830 | 0.800 | 0.760 | 0.760 | 0.760 | |||||||||||||||||||||||||
| Ivy Small Cap Value Fund |
0.850 | 0.850 | 0.850 | 0.830 | 0.830 | 0.800 | 0.760 | 0.760 | 0.760 | |||||||||||||||||||||||||
| Ivy Tax-Managed Equity Fund |
0.650 | 0.650 | 0.650 | 0.600 | 0.600 | 0.550 | 0.500 | 0.500 | 0.500 | |||||||||||||||||||||||||
| Ivy Value Fund |
0.700 | 0.700 | 0.700 | 0.650 | 0.650 | 0.600 | 0.550 | 0.550 | 0.550 | |||||||||||||||||||||||||
| 2014 | ANNUAL REPORT | 269 |
Table of Contents
For the period from May 18, 2009 to September 30, 2016, IICO voluntarily agreed to reduce the management fee paid to 0.485%, on an annual basis, of net assets for any day that Ivy Municipal High Income Fund’s net assets are below $500 million.
For Funds managed solely by IICO, IICO has voluntarily agreed to waive a Fund’s management fee on any day that the Fund’s net assets are less than $25 million, subject to IICO’s right to change or modify this waiver. See Expense Reimbursements and/or Waivers below for amounts waived during the year ended March 31, 2014.
IICO has entered into Subadvisory Agreements with the following entities on behalf of certain Funds:
Under an agreement between IICO and Mackenzie Financial Corporation (“Mackenzie”), Mackenzie serves as subadviser to Ivy Cundill Global Value Fund. Under an agreement between IICO and Wall Street Associates, Wall Street Associates serves as subadviser to Ivy Micro Cap Growth Fund. Under an agreement between IICO and Advantus Capital Management, Inc. (“Advantus”), Advantus serves as subadviser to Ivy Bond Fund. Each subadviser makes investment decisions in accordance with the Fund’s investment objectives, policies and restrictions under the supervision of IICO and the oversight of the Board. IICO pays all costs applicable of the subadvisers.
Accounting Services Fees. The Trust has an Accounting and Administrative Services Agreement with WRSCO, doing business as WI Services Company (“WISC”), an indirect subsidiary of WDR. Under the agreement, WISC acts as the agent in providing bookkeeping and accounting services and assistance to the Trust, including maintenance of Fund records, pricing of Fund shares and preparation of certain shareholder reports. For these services, each Fund, other than Ivy Managed International Opportunities Fund, pays WISC a monthly fee of one-twelfth of the annual fee based on the average net asset levels shown in the following table:
| (M - Millions) | $0 to $10M |
$10 to $25M |
$25 to $50M |
$50 to $100M |
$100 to $200M |
$200 to $350M |
$350 to $550M |
$550 to $750M |
$750 to $1,000M |
Over $1,000M |
||||||||||||||||||||||||||||||
| Annual Fee Rate |
$ | 0.00 | $ | 11.50 | $ | 23.10 | $ | 35.50 | $ | 48.40 | $ | 63.20 | $ | 82.50 | $ | 96.30 | $ | 121.60 | $ | 148.50 | ||||||||||||||||||||
In addition, for each class of shares in excess of one, each Fund pays WISC a monthly per-class fee equal to 2.5% of the monthly accounting services base fee.
Under the Accounting and Administrative Services Agreement for the Ivy Managed International Opportunities Fund, the Fund pays WISC a monthly fee of one-twelfth of the annual fee shown in the following table:
| (M - Millions) | $0 to $10M |
$10 to $25M |
$25 to $50M |
$50 to $100M |
$100 to $200M |
$200 to $350M |
$350 to $550M |
$550 to $750M |
$750 to $1,000M |
Over $1,000M |
||||||||||||||||||||||||||||||
| Annual Fee Rate |
$ | 0.000 | $ | 5.748 | $ | 11.550 | $ | 17.748 | $ | 24.198 | $ | 31.602 | $ | 41.250 | $ | 48.150 | $ | 60.798 | $ | 74.250 | ||||||||||||||||||||
In addition, for each class of shares in excess of one, the Ivy Managed International Opportunities Fund pays WISC a monthly per-class fee equal to 1.25% of the monthly accounting services base fee.
Administrative Fee. Each Fund also pays WISC a monthly fee at the annual rate of 0.01%, or one basis point, for the first $1 billion of net assets with no fee charged for net assets in excess of $1 billion. This fee is voluntarily waived by WISC until a Fund’s net assets are at least $10 million and is included in “Accounting services fee” on the Statement of Operations.
Shareholder Servicing. General. Under the Shareholder Servicing Agreement between the Trust and WISC, with respect to Class A, Class B, Class C and Class E shares, for each shareholder account that was in existence at any time during the prior month, each Fund pays a monthly fee that ranges from $1.5042 to $1.6958 per account; however, WISC has agreed to reduce that fee if the number of total shareholder accounts within the Complex (Waddell & Reed Advisors Funds, InvestEd Portfolios and Ivy Funds) reaches certain levels. Ivy Money Market Fund pays a monthly fee of $1.75 for each shareholder account that was in existence at any time during the prior month plus, for Class A shareholder accounts, $0.75 for each shareholder check processed in the prior month. Ivy Limited-Term Bond Fund Class A, which also has check writing privileges, pays $0.75 for each shareholder check processed in the prior month. Effective June 6, 2011 for Class R shares, each Fund pays a monthly fee equal to one-twelfth of 0.25 of 1% of the average daily net assets of the class for the preceding month. Prior to June 6, 2011 the fee was 0.20 of 1%. For Class I and Class Y shares, each Fund pays a monthly fee equal to one-twelfth of 0.15 of 1% of the average daily net assets of the class for the preceding month. Each Fund also reimburses WISC for certain out-of-pocket costs for all classes.
Networked accounts. For certain networked accounts (that is, those accounts whose Fund shares are purchased through certain financial intermediaries), WISC has agreed to reduce its per account fees charged to the Funds to $0.50 per month per shareholder account. Additional fees may be paid by the Funds to those intermediaries. If the aggregate annual rate of the WISC transfer agent fee and the costs charged by the financial services companies exceeds $18.00 per account for a Fund, WISC will reimburse the Fund the amount in excess of $18.00.
Broker accounts. Certain broker-dealers that maintain shareholder accounts with each Fund through an omnibus account provide transfer agent and other shareholder-related services that would otherwise be provided by WISC if the individual accounts that comprise the omnibus account were opened by their beneficial owners directly. Each Fund may pay such broker-dealers a per account fee for each open account within the omnibus account, or a fixed rate fee, based on the average daily net asset value of the omnibus account (or a combination thereof).
Distribution and Service Plan. Class A and Class E Shares. Under a Distribution and Service Plan adopted by the Trust pursuant to Rule 12b–1 under the 1940 Act (the “Distribution and Service Plan”), each Fund, other than Ivy Money Market Fund, may pay a distribution and/or service fee to Ivy Funds Distributors, Inc. (“IFDI”) for Class A and Class E shares in an amount not to exceed 0.25% of the Fund’s average annual net assets. The fee is to be paid to compensate IFDI for amounts it expends in connection with the distribution of the Class A and Class E shares and/or provision of personal services to Fund shareholders and/or maintenance of shareholder accounts of that class.
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Class B and Class C Shares. Under the Distribution and Service Plan, each Fund may pay IFDI a service fee not to exceed 0.25% and a distribution fee not to exceed 0.75% of the Fund’s average annual net assets for Class B and Class C shares to compensate IFDI for its services in connection with the distribution of shares of that class and/or provision of personal services to Class B or Class C shareholders and/or maintenance of shareholder accounts of that class.
Class R Shares. Under the Distribution and Service Plan, each Fund may pay IFDI a fee of up to 0.50%, on an annual basis, of the average daily net assets of the Fund’s Class R shares to compensate IFDI for, either directly or through third parties, distributing the Class R shares of that Fund, providing personal services to Class R shareholders and/or maintaining Class R shareholder accounts.
Class Y Shares. Under the Distribution and Service Plan, each Fund may pay IFDI a fee of up to 0.25%, on an annual basis, of the average daily net assets of the Fund’s Class Y shares to compensate IFDI for, either directly or through third parties, distributing the Class Y shares of that Fund, providing personal services to Class Y shareholders and/or maintaining Class Y shareholder accounts.
Sales Charges. As principal underwriter for the Trust’s shares, IFDI receives sales commissions (which are not an expense of the Trust) for sales of Class A and Class E shares. A CDSC may be assessed against a shareholder’s redemption amount of Class B, Class C or certain Class A and Class E shares and is paid to IFDI. During the year ended March 31, 2014, IFDI received the following amounts in sales commissions and CDSCs:
| Gross Sales Commissions |
CDSC | Commissions Paid(1) |
||||||||||||||||||||||
| Class A | Class B | Class C | Class E | |||||||||||||||||||||
| Ivy Bond Fund |
$ | 225 | $ | 5 | $ | 19 | $ | 3 | $ | — | $ | 220 | ||||||||||||
| Ivy Core Equity Fund |
468 | 1 | 12 | 9 | — | 561 | ||||||||||||||||||
| Ivy Cundill Global Value Fund |
196 | 1 | 5 | — | * | — | 212 | |||||||||||||||||
| Ivy Dividend Opportunities Fund |
214 | 2 | 16 | 2 | — | 205 | ||||||||||||||||||
| Ivy Emerging Markets Equity Fund |
292 | 1 | 9 | 2 | — | 298 | ||||||||||||||||||
| Ivy European Opportunities Fund |
87 | — | * | 2 | — | * | — | 84 | ||||||||||||||||
| Ivy Global Bond Fund |
120 | 2 | 14 | 8 | — | 174 | ||||||||||||||||||
| Ivy Global Equity Income Fund |
174 | — | * | — | * | — | * | — | 176 | |||||||||||||||
| Ivy Global Income Allocation Fund |
402 | 2 | 8 | 4 | — | 365 | ||||||||||||||||||
| Ivy High Income Fund |
2,700 | 99 | 300 | 315 | — | 8,077 | ||||||||||||||||||
| Ivy International Core Equity Fund |
571 | 6 | 20 | 5 | — | 647 | ||||||||||||||||||
| Ivy International Growth Fund |
137 | — | * | 4 | 1 | — | 146 | |||||||||||||||||
| Ivy Large Cap Growth Fund |
401 | 6 | 9 | 4 | — | 420 | ||||||||||||||||||
| Ivy Limited-Term Bond Fund |
1,307 | 71 | 71 | 32 | — | 1,346 | ||||||||||||||||||
| Ivy Managed International Opportunities Fund |
113 | 1 | 2 | — | * | — | 98 | |||||||||||||||||
| Ivy Micro Cap Growth Fund |
289 | — | * | 3 | 2 | — | 311 | |||||||||||||||||
| Ivy Mid Cap Growth Fund |
666 | 18 | 42 | 27 | — | 1,325 | ||||||||||||||||||
| Ivy Money Market Fund |
— | 17 | 25 | 10 | — | — | ||||||||||||||||||
| Ivy Municipal Bond Fund |
60 | 2 | 18 | 5 | — | 77 | ||||||||||||||||||
| Ivy Municipal High Income Fund |
160 | 33 | 57 | 94 | — | 471 | ||||||||||||||||||
| Ivy Small Cap Growth Fund |
335 | 2 | 10 | 5 | — | 494 | ||||||||||||||||||
| Ivy Small Cap Value Fund |
155 | 1 | 3 | 2 | — | 169 | ||||||||||||||||||
| Ivy Tax-Managed Equity Fund |
34 | — | * | — | * | — | * | — | 34 | |||||||||||||||
| Ivy Value Fund |
110 | 1 | 4 | 2 | — | 129 | ||||||||||||||||||
| * | Not shown due to rounding. |
| (1) | IFDI reallowed/paid this portion of the sales charge to financial advisors and selling broker-dealers. |
Expense Reimbursements and/or Waivers. Fund and class expense limitations and related waivers/reimbursements for the year ended March 31, 2014 were as follows:
| Fund Name | Share Class Name |
Type of Expense Limit |
Commencement Date |
End Date | Expense Limit | Amount of Expense Waiver/ Reimbursement |
Expense Reduced | |||||||||
| Ivy Bond Fund |
Class E | Contractual | 1-31-2011 | 7-31-2014 | 1.14% | $ | 9 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class I | Contractual | 1-31-2011 | 7-31-2013 | 0.84% | $ | — | Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| 2014 | ANNUAL REPORT | 271 |
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| Fund Name | Share Class Name |
Type of Expense Limit |
Commencement Date |
End Date | Expense Limit | Amount of Expense Waiver/ Reimbursement |
Expense Reduced | |||||||||
| Ivy Core Equity Fund |
Class A | Contractual | 1-11-2013 | 7-31-2014 | 1.15% | $ | 202 | 12b-1 Fees and/ or Shareholder Servicing | ||||||||
| Class B | Contractual | 1-11-2013 | 7-31-2014 | 2.40% | $ | — | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class C | Contractual | 1-11-2013 | 7-31-2014 | 2.13% | $ | — | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.35% | $ | 9 | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class I | Contractual | 1-11-2013 | 7-31-2014 | 0.84% | $ | 76 | Shareholder Servicing | |||||||||
| Class Y | Contractual | 1-11-2013 | 7-31-2014 | 0.84% | $ | 160 | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Cundill Global Value Fund |
All Classes | Contractual |
12-3-2012 | 7-31-2014 | N/A | $ | 434 | (3) | Investment Management Fee | |||||||
| Class A | Contractual | 8-1-2012 | 7-31-2013 | 1.90% | $ | — | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.59% | $ | 3 | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Dividend Opportunities Fund |
Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.37% | $ | 12 | 12b-1 Fees and/ or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Emerging Markets Equity Fund |
Class A | Contractual | 3-17-2014 | 7-30-2016 | 1.50% | $ | — | 12b-1 Fees and/ or Shareholder Servicing | ||||||||
| Class B | Contractual | 3-17-2014 | 7-30-2016 | 2.50% | $ | — | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2015 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy European Opportunities Fund |
Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | ||||||||
| Ivy Global Bond Fund |
Class A | Contractual | 6-2-2008 | 7-31-2014 | 0.99% | $ | 464 | 12b-1 Fees and/ or Shareholder Servicing | ||||||||
| Class B | Contractual | 6-2-2008 | 7-31-2014 | 1.74% | $ | 23 | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class C | Contractual | 6-2-2008 | 7-31-2014 | 1.74% | $ | 56 | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class I | Contractual | 6-2-2008 | 7-31-2014 | 0.74% | $ | 83 | Shareholder Servicing | |||||||||
| Class Y | Contractual | 6-2-2008 | 7-31-2014 | 0.99% | $ | 8 | 12b-1 Fees and/ or Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| 272 | ANNUAL REPORT | 2014 |
Table of Contents
| Fund Name | Share Class Name |
Type of Expense Limit |
Commencement Date |
End Date | Expense Limit | Amount of Expense Waiver/ Reimbursement |
Expense Reduced | |||||||||
| Ivy Global Equity Income Fund |
All Classes | Contractual |
6-4-2012 | 7-31-2013 | N/A | $ | 16 | (1) | Investment Management Fee | |||||||
| Class A | Contractual | 6-4-2012 | 7-31-2014 | 1.30% | $ | 214 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class B | Contractual | 6-4-2012 | 7-31-2013 | 2.17% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class C | Contractual | 6-4-2012 | 7-31-2013 | 1.96% | $ | 2 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class I | Contractual | 6-4-2012 | 7-31-2014 | 0.94% | $ | 14 | Shareholder Servicing | |||||||||
| Class Y | Contractual | 6-4-2012 | 7-31-2014 | 1.19% | $ | 4 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class Y | Contractual | 6-4-2012 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Global Income Allocation Fund |
Class A | Contractual | 6-4-2012 | 7-31-2013 | 1.35% | $ | 12 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class B | Contractual | 6-4-2012 | 7-31-2013 | 2.30% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class C | Contractual | 6-4-2012 | 7-31-2013 | 2.02% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class E | Contractual | 6-4-2012 | 7-31-2014 | 1.33% | $ | 8 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class I | Contractual | 6-4-2012 | 7-31-2013 | 0.91% | $ | 4 | Shareholder Servicing | |||||||||
| Class Y | Contractual | 6-4-2012 | 7-31-2014 | 1.17% | $ | 1 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy High Income Fund |
Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.36% | $ | — | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | 126 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Ivy International Core Equity Fund |
Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.53% | $ | 12 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy International Growth Fund |
Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | ||||||||
| 2014 | ANNUAL REPORT | 273 |
Table of Contents
| Fund Name | Share Class Name |
Type of Expense Limit |
Commencement Date |
End Date | Expense Limit | Amount of Expense Waiver/ Reimbursement |
Expense Reduced | |||||||||
| Ivy Large Cap Growth Fund |
Class A | Contractual | 6-1-2006 | 7-31-2014 | 1.15% | $ | 406 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class B | Contractual | 6-13-2011 | 7-31-2014 | 2.15% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class C | Contractual | 6-13-2011 | 7-31-2014 | 1.95% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.15% | $ | 21 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class I | Contractual | 6-13-2011 | 7-31-2014 | 0.88% | $ | 4 | Shareholder Servicing | |||||||||
| Class Y | Contractual | 6-1-2006 | 7-31-2014 | 1.06% | $ | 85 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Limited-Term Bond Fund |
Class E | Contractual | 8-1-2010 | 7-31-2014 | 1.00% | $ | 1 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | 3 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Ivy Managed International Opportunities Fund |
Class A | Contractual | 3-17-2014 | 7-31-2016 | 0.49% | $ | — | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class B | Contractual | 3-17-2014 | 7-31-2016 | 1.40% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class C | Contractual | 3-17-2014 | 7-31-2016 | 1.29% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class E | Contractual | 3-17-2014 | 7-31-2016 | 0.39% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class I | Contractual | 3-17-2014 | 7-31-2016 | 0.16% | $ | — | Shareholder Servicing | |||||||||
| Class R | Contractual | 3-17-2014 | 7-31-2016 | 0.72% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class Y | Contractual | 3-17-2014 | 7-31-2016 | 0.38% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2015 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Micro Cap Growth Fund |
Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | ||||||||
| Ivy Mid Cap Growth Fund |
Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.60% | $ | 6 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| 274 | ANNUAL REPORT | 2014 |
Table of Contents
| Fund Name | Share Class Name |
Type of Expense Limit |
Commencement Date |
End Date | Expense Limit | Amount of Expense Waiver/ Reimbursement |
Expense Reduced | |||||||||
| Ivy Money Market Fund |
Class A | Voluntary | N/A | N/A | To maintain minimum yield(2) |
$ | 732 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class B | Voluntary | N/A | N/A | To maintain minimum yield(2) |
$ | 123 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class C | Voluntary | N/A | N/A | To maintain minimum yield(2) |
$ | 572 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class E | Voluntary | N/A | N/A | To maintain minimum yield(2) |
$ | 27 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Ivy Municipal Bond Fund |
Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | * | 12b-1 Fees and/or Shareholder Servicing | |||||||
| Ivy Municipal High Income Fund |
All Classes | Voluntary | N/A | N/A | Reduction of Investment Management Fee |
$ | 200 | Investment Management Fee | ||||||||
| Class A | Contractual | 5-18-2009 | 7-31-2013 | 0.95% | $ | — | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Class I | Contractual | 5-18-2009 | 7-31-2013 | 0.70% | $ | — | Shareholder Servicing | |||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | 20 | 12b-1 Fees and/or Shareholder Servicing | |||||||||
| Ivy Small Cap Growth Fund |
Class E | Contractual | 8-1-2008 | 7-31-2014 | 1.56% | $ | 13 | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| Ivy Small Cap Value Fund |
Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | ||||||||
| Ivy Tax-Managed Equity Fund |
Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | ||||||||
| Ivy Value Fund |
Class A | Contractual | 8-1-2010 | 7-31-2013 | 1.55% | $ | — | 12b-1 Fees and/or Shareholder Servicing | ||||||||
| Class Y | Contractual | 8-1-2011 | 7-31-2014 | Not to exceed Class A |
$ | — | N/A | |||||||||
| *Not | shown due to rounding. |
| (1) | Due to Class A, Class B, Class C, Class I and/or Class Y contractual expense limits, investment management fees were waived for all share classes. |
| (2) | Minimum yield was 0.02% throughout the period of this report. |
| (3) | The Fund’s management fee is being reduced by 0.14% of average daily net assets. |
Any amounts due to the Funds as a reimbursement but not paid as of March 31, 2014 are shown as a receivable from affiliates on the Statement of Assets and Liabilities.
| 8. | AFFILIATED COMPANY TRANSACTIONS (All amounts in thousands) |
A summary of the transactions in affiliated companies during the year ended March 31, 2014 follows:
| 3-31-13 Share Balance |
Purchases at Cost |
Sales at Cost |
Realized Gain/(Loss) |
Distributions Received |
3-31-14 Share Balance |
3-31-14 Value |
||||||||||||||||||||||
| Ivy High Income Fund |
||||||||||||||||||||||||||||
| Maritime Finance Company Ltd. |
— | $ | 35,000 | $ | — | $ | — | $ | — | 1,750 | $ | 36,470 | ||||||||||||||||
| 2014 | ANNUAL REPORT | 275 |
Table of Contents
| 3-31-13 Share Balance |
Purchases at Cost |
Sales at Cost |
Realized Gain/(Loss)(1) |
Distributions Received |
3-31-14 Share Balance |
3-31-14 Value |
||||||||||||||||||||||
| Ivy Managed International Opportunities Fund |
||||||||||||||||||||||||||||
| Ivy Emerging Markets Equity Fund, Class I |
5,411 | $ | 3,707 | $ | 33,372 | $ | 700 | $ | 761 | 6,838 | $ | 105,517 | ||||||||||||||||
| Ivy European Opportunities Fund, Class I |
764 | 844 | 8,775 | 2,937 | 162 | 884 | 26,500 | |||||||||||||||||||||
| Ivy Global Income Allocation Fund, Class I |
1,270 | 9,447 | 2,513 | 165 | 791 | 1,704 | 26,757 | |||||||||||||||||||||
| Ivy International Core Equity Fund, Class I |
2,404 | 13,279 | 5,260 | 96 | 925 | 2,814 | 53,880 | |||||||||||||||||||||
| Ivy International Growth Fund, Class I |
1,060 | 15,111 | 4,907 | 448 | 583 | 1,293 | 53,734 | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 4,346 | $ | 3,222 | $ | 266,388 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| (1) | Included in Realized Gain/Loss, if applicable, are distributions from capital gains from the underlying securities. |
| 9. | INVESTMENT SECURITIES TRANSACTIONS ($ amounts in thousands) |
The cost of purchases and the proceeds from maturities and sales of investment securities (excluding short-term securities) for the year ended March 31, 2014, were as follows:
| Purchases | Sales | |||||||||||||||
| U.S. Government | Other Issuers | U.S. Government | Other Issuers | |||||||||||||
| Ivy Bond Fund |
$ | 837,730 | $ | 337,504 | $ | 824,037 | $ | 348,929 | ||||||||
| Ivy Core Equity Fund |
— | 620,011 | — | 427,354 | ||||||||||||
| Ivy Cundill Global Value Fund |
— | 152,344 | — | 114,930 | ||||||||||||
| Ivy Dividend Opportunities Fund |
— | 148,649 | — | 149,378 | ||||||||||||
| Ivy Emerging Markets Equity Fund |
— | 809,575 | — | 1,018,122 | ||||||||||||
| Ivy European Opportunities Fund |
— | 234,983 | — | 279,042 | ||||||||||||
| Ivy Global Bond Fund |
2,786 | 70,558 | 2,997 | 51,709 | ||||||||||||
| Ivy Global Equity Income Fund |
— | 259,079 | — | 145,114 | ||||||||||||
| Ivy Global Income Allocation Fund |
— | 578,831 | 4,978 | 413,104 | ||||||||||||
| Ivy High Income Fund |
— | 9,857,362 | — | 6,743,310 | ||||||||||||
| Ivy International Core Equity Fund |
— | 1,756,498 | — | 1,500,441 | ||||||||||||
| Ivy International Growth Fund |
— | 253,147 | — | 148,859 | ||||||||||||
| Ivy Large Cap Growth Fund |
— | 697,314 | — | 913,793 | ||||||||||||
| Ivy Limited-Term Bond Fund |
71,761 | 604,362 | 176,434 | 408,962 | ||||||||||||
| Ivy Managed International Opportunities Fund |
— | 41,898 | — | 59,172 | ||||||||||||
| Ivy Micro Cap Growth Fund |
— | 213,952 | — | 106,293 | ||||||||||||
| Ivy Mid Cap Growth Fund |
— | 2,434,589 | — | 1,671,176 | ||||||||||||
| Ivy Money Market Fund |
— | — | — | — | ||||||||||||
| Ivy Municipal Bond Fund |
— | 9,798 | — | 15,636 | ||||||||||||
| Ivy Municipal High Income Fund |
— | 276,031 | — | 549,434 | ||||||||||||
| Ivy Small Cap Growth Fund |
— | 518,649 | — | 451,347 | ||||||||||||
| Ivy Small Cap Value Fund |
— | 159,776 | — | 187,132 | ||||||||||||
| Ivy Tax-Managed Equity Fund |
— | 21,296 | — | 11,585 | ||||||||||||
| Ivy Value Fund |
— | 173,421 | — | 123,883 | ||||||||||||
| 10. | CAPITAL SHARE TRANSACTIONS (All amounts in thousands) |
The Trust has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class of each Fund. Transactions in shares of beneficial interest were as follows:
| Ivy Bond Fund | Ivy Core Equity Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
25,007 | $ | 261,119 | 21,415 | $ | 228,807 | 16,060 | $ | 213,280 | 13,608 | $ | 154,168 | ||||||||||||||||||||
| Class B |
146 | 1,521 | 414 | 4,419 | 241 | 2,779 | 524 | 5,305 | ||||||||||||||||||||||||
| Class C |
486 | 5,084 | 1,695 | 18,116 | 2,256 | 26,789 | 2,328 | 23,853 | ||||||||||||||||||||||||
| Class E |
45 | 469 | 97 | 1,040 | 142 | 1,876 | 135 | 1,501 | ||||||||||||||||||||||||
| Class I |
305 | 3,180 | 740 | 7,877 | 12,308 | 178,464 | 7,104 | 88,478 | ||||||||||||||||||||||||
| Class R |
24 | 257 | 23 | 250 | 121 | 1,623 | 22 | 250 | ||||||||||||||||||||||||
| Class Y |
210 | 2,190 | 149 | 1,595 | 2,898 | 40,258 | 1,117 | 13,453 | ||||||||||||||||||||||||
| 276 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Bond Fund | Ivy Core Equity Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
1,361 | $ | 14,205 | 1,533 | $ | 16,393 | 1,903 | $ | 25,267 | 218 | $ | 2,405 | ||||||||||||||||||||
| Class B |
14 | 146 | 24 | 258 | 51 | 602 | 4 | 40 | ||||||||||||||||||||||||
| Class C |
47 | 488 | 90 | 957 | 602 | 7,213 | 71 | 710 | ||||||||||||||||||||||||
| Class E |
11 | 113 | 14 | 146 | 26 | 344 | 3 | 37 | ||||||||||||||||||||||||
| Class I |
10 | 109 | 21 | 229 | 368 | 5,322 | 18 | 215 | ||||||||||||||||||||||||
| Class R |
— | — | — | — | 1 | 13 | — | — | ||||||||||||||||||||||||
| Class Y |
7 | 77 | 20 | 209 | 168 | 2,376 | 9 | 106 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(24,512 | ) | (254,990 | ) | (12,972 | ) | (138,540 | ) | (8,719 | ) | (116,113 | ) | (5,529 | ) | (61,400 | ) | ||||||||||||||||
| Class B |
(534 | ) | (5,538 | ) | (390 | ) | (4,163 | ) | (324 | ) | (3,768 | ) | (168 | ) | (1,646 | ) | ||||||||||||||||
| Class C |
(2,135 | ) | (22,232 | ) | (1,944 | ) | (20,770 | ) | (1,902 | ) | (22,976 | ) | (1,931 | ) | (19,343 | ) | ||||||||||||||||
| Class E |
(145 | ) | (1,503 | ) | (73 | ) | (785 | ) | (29 | ) | (385 | ) | (31 | ) | (358 | ) | ||||||||||||||||
| Class I |
(432 | ) | (4,489 | ) | (583 | ) | (6,229 | ) | (7,227 | ) | (105,739 | ) | (4,924 | ) | (61,371 | ) | ||||||||||||||||
| Class R |
(23 | ) | (252 | ) | — | — | (24 | ) | (306 | ) | — | * | — | * | ||||||||||||||||||
| Class Y |
(410 | ) | (4,322 | ) | (526 | ) | (5,612 | ) | (657 | ) | (9,285 | ) | (530 | ) | (6,178 | ) | ||||||||||||||||
| Net increase (decrease) |
(518 | ) | $ | (4,368 | ) | 9,747 | $ | 104,197 | 18,263 | $ | 247,634 | 12,048 | $ | 140,225 | ||||||||||||||||||
| Ivy Cundill Global Value Fund | Ivy Dividend Opportunities Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
8,797 | $ | 149,096 | 2,467 | $ | 32,043 | 4,902 | $ | 91,270 | 3,949 | $ | 62,525 | ||||||||||||||||||||
| Class B |
58 | 915 | 22 | 264 | 111 | 1,994 | 143 | 2,234 | ||||||||||||||||||||||||
| Class C |
202 | 3,297 | 62 | 768 | 432 | 7,886 | 295 | 4,616 | ||||||||||||||||||||||||
| Class E |
16 | 273 | 9 | 124 | 27 | 492 | 37 | 578 | ||||||||||||||||||||||||
| Class I |
163 | 2,843 | 64 | 835 | 2,574 | 48,752 | 1,079 | 18,196 | ||||||||||||||||||||||||
| Class R |
19 | 297 | 18 | 250 | 16 | 287 | 16 | 250 | ||||||||||||||||||||||||
| Class Y |
493 | 8,174 | 122 | 1,533 | 114 | 2,104 | 106 | 1,670 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
9 | 166 | — | — | 328 | 6,206 | 220 | 3,443 | ||||||||||||||||||||||||
| Class B |
— | * | — | * | — | — | 10 | 183 | 5 | 83 | ||||||||||||||||||||||
| Class C |
— | — | — | — | 37 | 692 | 18 | 279 | ||||||||||||||||||||||||
| Class E |
— | * | 3 | — | — | 5 | 96 | 3 | 43 | |||||||||||||||||||||||
| Class I |
2 | 27 | — | — | 10 | 181 | 5 | 77 | ||||||||||||||||||||||||
| Class R |
— | * | — | * | — | — | — | — | — | — | ||||||||||||||||||||||
| Class Y |
1 | 11 | — | — | 13 | 249 | 10 | 159 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(3,723 | ) | (62,583 | ) | (4,091 | ) | (52,258 | ) | (5,166 | ) | (96,206 | ) | (6,545 | ) | (104,572 | ) | ||||||||||||||||
| Class B |
(238 | ) | (3,719 | ) | (379 | ) | (4,481 | ) | (158 | ) | (2,921 | ) | (418 | ) | (6,597 | ) | ||||||||||||||||
| Class C |
(285 | ) | (4,600 | ) | (544 | ) | (6,475 | ) | (428 | ) | (7,940 | ) | (779 | ) | (12,262 | ) | ||||||||||||||||
| Class E |
(4 | ) | (71 | ) | (8 | ) | (101 | ) | (27 | ) | (508 | ) | (38 | ) | (611 | ) | ||||||||||||||||
| Class I |
(80 | ) | (1,403 | ) | (119 | ) | (1,484 | ) | (2,489 | ) | (47,169 | ) | (1,103 | ) | (18,561 | ) | ||||||||||||||||
| Class R |
(18 | ) | (293 | ) | — | — | (16 | ) | (283 | ) | — | — | ||||||||||||||||||||
| Class Y |
(494 | ) | (8,777 | ) | (855 | ) | (10,944 | ) | (309 | ) | (5,718 | ) | (330 | ) | (5,183 | ) | ||||||||||||||||
| Net increase (decrease) |
4,918 | $ | 83,656 | (3,232 | ) | $ | (39,926 | ) | (14 | ) | $ | (353 | ) | (3,327 | ) | $ | (53,633 | ) | ||||||||||||||
| * | Not shown due to rounding. |
| 2014 | ANNUAL REPORT | 277 |
Table of Contents
| Ivy Emerging Markets Equity Fund | Ivy European Opportunities Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
6,390 | $ | 90,567 | 8,905 | $ | 120,857 | 1,477 | $ | 40,365 | 1,210 | $ | 27,852 | ||||||||||||||||||||
| Class B |
38 | 447 | 98 | 1,154 | 10 | 251 | 7 | 157 | ||||||||||||||||||||||||
| Class C |
116 | 1,454 | 156 | 1,916 | 67 | 1,769 | 26 | 579 | ||||||||||||||||||||||||
| Class E |
— | * | 1 | — | — | — | — | — | — | * | ||||||||||||||||||||||
| Class I |
934 | 13,846 | 2,198 | 29,513 | 113 | 3,178 | 85 | 1,972 | ||||||||||||||||||||||||
| Class R |
19 | 283 | 18 | 250 | 11 | 275 | 10 | 250 | ||||||||||||||||||||||||
| Class Y |
133 | 1,925 | 118 | 1,573 | 96 | 2,794 | 23 | 537 | ||||||||||||||||||||||||
| Shares issued in connection with merger of |
||||||||||||||||||||||||||||||||
| Class A |
9,872 | 147,434 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class B |
339 | 4,265 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class C |
2,518 | 33,024 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class E |
7 | 109 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class I |
1,810 | 27,713 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class R |
41 | 609 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class Y |
429 | 6,524 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
152 | 2,284 | 244 | 3,410 | 16 | 434 | 25 | 599 | ||||||||||||||||||||||||
| Class B |
— | * | — | * | — | * | 3 | — | — | — | — | |||||||||||||||||||||
| Class C |
1 | 14 | 3 | 41 | — | — | — | — | ||||||||||||||||||||||||
| Class E |
— | * | 1 | — | — | — | * | 1 | — | — | ||||||||||||||||||||||
| Class I |
89 | 1,380 | 109 | 1,563 | 11 | 302 | 15 | 350 | ||||||||||||||||||||||||
| Class R |
— | — | — | — | — | * | — | * | — | — | ||||||||||||||||||||||
| Class Y |
2 | 34 | 3 | 49 | — | * | 13 | 1 | 14 | |||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(16,193 | ) | (229,145 | ) | (9,777 | ) | (132,826 | ) | (2,522 | ) | (67,978 | ) | (2,022 | ) | (47,050 | ) | ||||||||||||||||
| Class B |
(317 | ) | (3,723 | ) | (294 | ) | (3,361 | ) | (66 | ) | (1,639 | ) | (103 | ) | (2,237 | ) | ||||||||||||||||
| Class C |
(598 | ) | (7,504 | ) | (489 | ) | (5,809 | ) | (73 | ) | (1,864 | ) | (129 | ) | (2,815 | ) | ||||||||||||||||
| Class E |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Class I |
(4,165 | ) | (62,531 | ) | (1,579 | ) | (21,904 | ) | (576 | ) | (16,600 | ) | (935 | ) | (21,884 | ) | ||||||||||||||||
| Class R |
(24 | ) | (357 | ) | — | — | (10 | ) | (267 | ) | — | — | ||||||||||||||||||||
| Class Y |
(169 | ) | (2,477 | ) | (247 | ) | (3,400 | ) | (70 | ) | (1,992 | ) | (35 | ) | (845 | ) | ||||||||||||||||
| Net increase (decrease) |
1,424 | $ | 26,177 | (534 | ) | $ | (6,971 | ) | (1,516 | ) | $ | (40,958 | ) | (1,822 | ) | $ | (42,521 | ) | ||||||||||||||
| * | Not shown due to rounding. |
| 278 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Global Bond Fund | Ivy Global Equity Income Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Period from 6-4-12 to 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
9,348 | $ | 93,944 | 6,509 | $ | 66,576 | 11,870 | $ | 149,251 | 7,010 | $ | 78,790 | ||||||||||||||||||||
| Class B |
186 | 1,880 | 192 | 1,962 | 235 | 2,950 | 319 | 3,508 | ||||||||||||||||||||||||
| Class C |
882 | 8,922 | 1,122 | 11,487 | 1,457 | 18,759 | 1,264 | 14,164 | ||||||||||||||||||||||||
| Class I |
3,945 | 39,715 | 3,869 | 39,644 | 3,828 | 49,428 | 3,717 | 41,695 | ||||||||||||||||||||||||
| Class R |
34 | 348 | 25 | 250 | 22 | 279 | 22 | 250 | ||||||||||||||||||||||||
| Class Y |
511 | 5,135 | 231 | 2,371 | 1,247 | 16,104 | 1,211 | 13,572 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
564 | 5,653 | 619 | 6,297 | 447 | 5,595 | 67 | 755 | ||||||||||||||||||||||||
| Class B |
14 | 137 | 17 | 176 | 1 | 13 | — | * | 2 | |||||||||||||||||||||||
| Class C |
90 | 906 | 120 | 1,221 | 5 | 61 | 1 | 9 | ||||||||||||||||||||||||
| Class I |
162 | 1,627 | 133 | 1,350 | 6 | 82 | 1 | 14 | ||||||||||||||||||||||||
| Class R |
— | * | 1 | — | — | — | — | — | — | |||||||||||||||||||||||
| Class Y |
17 | 172 | 20 | 207 | — | * | 1 | — | * | — | * | |||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(8,360 | ) | (83,852 | ) | (5,527 | ) | (56,504 | ) | (3,457 | ) | (44,273 | ) | (2,092 | ) | (23,888 | ) | ||||||||||||||||
| Class B |
(269 | ) | (2,687 | ) | (133 | ) | (1,356 | ) | (213 | ) | (2,682 | ) | (203 | ) | (2,322 | ) | ||||||||||||||||
| Class C |
(1,909 | ) | (19,145 | ) | (1,012 | ) | (10,334 | ) | (1,250 | ) | (16,116 | ) | (911 | ) | (10,568 | ) | ||||||||||||||||
| Class I |
(4,105 | ) | (41,108 | ) | (1,046 | ) | (10,675 | ) | (3,708 | ) | (47,897 | ) | (2,725 | ) | (31,660 | ) | ||||||||||||||||
| Class R |
(25 | ) | (257 | ) | — | — | (22 | ) | (275 | ) | — | — | ||||||||||||||||||||
| Class Y |
(304 | ) | (3,052 | ) | (424 | ) | (4,324 | ) | (1,228 | ) | (15,857 | ) | (907 | ) | (10,530 | ) | ||||||||||||||||
| Net increase |
781 | $ | 8,339 | 4,715 | $ | 48,348 | 9,240 | $ | 115,423 | 6,774 | $ | 73,791 | ||||||||||||||||||||
| Ivy Global Income Allocation Fund | ||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||
| Shares | Value | Shares | Value | |||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||
| Class A |
16,886 | $ | 253,566 | 8,790 | $ | 125,896 | ||||||||||
| Class B |
73 | 1,077 | 100 | 1,411 | ||||||||||||
| Class C |
621 | 9,166 | 754 | 10,681 | ||||||||||||
| Class E |
24 | 367 | 33 | 472 | ||||||||||||
| Class I |
1,067 | 16,325 | 821 | 11,862 | ||||||||||||
| Class R |
18 | 271 | 17 | 250 | ||||||||||||
| Class Y |
136 | 2,049 | 431 | 5,918 | ||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||
| Class A |
1,051 | 15,582 | 817 | 11,475 | ||||||||||||
| Class B |
12 | 175 | 16 | 219 | ||||||||||||
| Class C |
54 | 794 | 54 | 748 | ||||||||||||
| Class E |
6 | 93 | 6 | 89 | ||||||||||||
| Class I |
80 | 1,196 | 107 | 1,505 | ||||||||||||
| Class R |
— | — | — | — | ||||||||||||
| Class Y |
16 | 233 | 17 | 240 | ||||||||||||
| Shares redeemed: |
||||||||||||||||
| Class A |
(7,070 | ) | (106,163 | ) | (4,557 | ) | (64,768 | ) | ||||||||
| Class B |
(132 | ) | (1,960 | ) | (146 | ) | (2,026 | ) | ||||||||
| Class C |
(546 | ) | (8,107 | ) | (417 | ) | (5,854 | ) | ||||||||
| Class E |
(15 | ) | (229 | ) | (24 | ) | (336 | ) | ||||||||
| Class I |
(684 | ) | (10,279 | ) | (1,809 | ) | (26,111 | ) | ||||||||
| Class R |
(17 | ) | (267 | ) | — | — | ||||||||||
| Class Y |
(67 | ) | (1,008 | ) | (376 | ) | (5,299 | ) | ||||||||
| Net increase |
11,513 | $ | 172,881 | 4,634 | $ | 66,372 | ||||||||||
| * | Not shown due to rounding. |
| 2014 | ANNUAL REPORT | 279 |
Table of Contents
| Ivy High Income Fund | Ivy International Core Equity Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
233,788 | $ | 2,032,610 | 232,510 | $ | 1,970,312 | 22,847 | $ | 403,209 | 16,599 | $ | 245,740 | ||||||||||||||||||||
| Class B |
3,488 | 30,336 | 8,104 | 68,577 | 91 | 1,456 | 69 | 920 | ||||||||||||||||||||||||
| Class C |
80,935 | 703,799 | 84,595 | 716,217 | 1,411 | 22,922 | 927 | 12,506 | ||||||||||||||||||||||||
| Class E |
348 | 3,026 | 341 | 2,896 | 38 | 681 | 34 | 511 | ||||||||||||||||||||||||
| Class I |
307,838 | 2,673,616 | 202,178 | 1,718,346 | 13,145 | 236,118 | 13,045 | 192,126 | ||||||||||||||||||||||||
| Class R |
3,402 | 29,609 | 29 | 250 | 249 | 4,568 | 16 | 250 | ||||||||||||||||||||||||
| Class Y |
90,452 | 785,950 | 73,780 | 625,284 | 2,124 | 38,191 | 3,788 | 56,429 | ||||||||||||||||||||||||
| Shares issued in reinvestment |
||||||||||||||||||||||||||||||||
| Class A |
30,064 | 260,999 | 21,440 | 182,485 | 934 | 16,834 | 581 | 8,830 | ||||||||||||||||||||||||
| Class B |
1,075 | 9,329 | 827 | 7,043 | 9 | 154 | 6 | 83 | ||||||||||||||||||||||||
| Class C |
11,489 | 99,724 | 8,492 | 72,288 | 81 | 1,323 | 55 | 759 | ||||||||||||||||||||||||
| Class E |
83 | 717 | 61 | 514 | 4 | 75 | 3 | 39 | ||||||||||||||||||||||||
| Class I |
22,197 | 192,720 | 13,886 | 118,254 | 766 | 13,882 | 574 | 8,749 | ||||||||||||||||||||||||
| Class R |
84 | 728 | — | — | 2 | 30 | — | — | ||||||||||||||||||||||||
| Class Y |
7,456 | 64,736 | 5,594 | 47,602 | 151 | 2,743 | 135 | 2,062 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(142,396 | ) | (1,235,658 | ) | (123,260 | ) | (1,046,777 | ) | (13,179 | ) | (232,015 | ) | (20,754 | ) | (306,977 | ) | ||||||||||||||||
| Class B |
(3,176 | ) | (27,550 | ) | (2,246 | ) | (19,106 | ) | (191 | ) | (3,029 | ) | (326 | ) | (4,432 | ) | ||||||||||||||||
| Class C |
(45,002 | ) | (390,707 | ) | (23,403 | ) | (199,271 | ) | (1,424 | ) | (22,536 | ) | (2,408 | ) | (32,381 | ) | ||||||||||||||||
| Class E |
(199 | ) | (1,728 | ) | (122 | ) | (1,039 | ) | (20 | ) | (359 | ) | (29 | ) | (432 | ) | ||||||||||||||||
| Class I |
(152,154 | ) | (1,321,278 | ) | (79,144 | ) | (675,476 | ) | (7,663 | ) | (136,958 | ) | (10,941 | ) | (161,681 | ) | ||||||||||||||||
| Class R |
(78 | ) | (680 | ) | — | * | — | * | (17 | ) | (288 | ) | — | — | ||||||||||||||||||
| Class Y |
(64,624 | ) | (560,132 | ) | (39,531 | ) | (334,134 | ) | (3,484 | ) | (60,187 | ) | (5,457 | ) | (80,092 | ) | ||||||||||||||||
| Net increase (decrease) |
385,070 | $ | 3,350,166 | 384,131 | $ | 3,254,265 | 15,874 | $ | 286,814 | (4,083 | ) | $ | (56,991 | ) | ||||||||||||||||||
| Ivy International Growth Fund | Ivy Large Cap Growth Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
4,165 | $ | 159,327 | 1,959 | $ | 67,374 | 15,807 | $ | 273,530 | 14,784 | $ | 216,679 | ||||||||||||||||||||
| Class B |
42 | 1,369 | 57 | 1,767 | 117 | 1,753 | 117 | 1,473 | ||||||||||||||||||||||||
| Class C |
113 | 3,940 | 78 | 2,388 | 675 | 10,432 | 759 | 10,082 | ||||||||||||||||||||||||
| Class E |
— | — | * | — | — | * | 57 | 980 | 73 | 1,071 | ||||||||||||||||||||||
| Class I |
549 | 22,161 | 748 | 25,457 | 1,736 | 30,510 | 2,248 | 33,811 | ||||||||||||||||||||||||
| Class R |
12 | 471 | 7 | 250 | 311 | 5,252 | 850 | 12,171 | ||||||||||||||||||||||||
| Class Y |
39 | 1,528 | 234 | 7,917 | 850 | 14,846 | 1,948 | 28,807 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
84 | 3,286 | 36 | 1,227 | 6,486 | 109,684 | 125 | 1,815 | ||||||||||||||||||||||||
| Class B |
1 | 18 | — | * | 3 | 83 | 1,184 | — | — | |||||||||||||||||||||||
| Class C |
3 | 117 | 1 | 33 | 469 | 7,061 | — | — | ||||||||||||||||||||||||
| Class E |
— | * | 2 | — | — | 43 | 729 | 1 | 10 | |||||||||||||||||||||||
| Class I |
18 | 709 | 18 | 630 | 608 | 10,600 | 26 | 38 | ||||||||||||||||||||||||
| Class R |
— | * | 1 | — | — | 185 | 3,073 | — | — | |||||||||||||||||||||||
| Class Y |
3 | 132 | 4 | 137 | 781 | 13,433 | 20 | 287 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(1,550 | ) | (59,317 | ) | (948 | ) | (32,094 | ) | (22,957 | ) | (395,542 | ) | (18,026 | ) | (266,421 | ) | ||||||||||||||||
| Class B |
(37 | ) | (1,274 | ) | (32 | ) | (957 | ) | (211 | ) | (3,126 | ) | (436 | ) | (5,594 | ) | ||||||||||||||||
| Class C |
(112 | ) | (3,798 | ) | (152 | ) | (4,500 | ) | (1,111 | ) | (17,194 | ) | (1,645 | ) | (21,880 | ) | ||||||||||||||||
| Class E |
— | — | — | — | (41 | ) | (717 | ) | (67 | ) | (968 | ) | ||||||||||||||||||||
| Class I |
(318 | ) | (12,211 | ) | (149 | ) | (5,057 | ) | (4,559 | ) | (79,360 | ) | (9,147 | ) | (139,117 | ) | ||||||||||||||||
| Class R |
(7 | ) | (275 | ) | — | — | (507 | ) | (8,611 | ) | (674 | ) | (9,625 | ) | ||||||||||||||||||
| Class Y |
(143 | ) | (5,367 | ) | (193 | ) | (6,635 | ) | (2,148 | ) | (37,737 | ) | (2,025 | ) | (29,971 | ) | ||||||||||||||||
| Net increase (decrease) |
2,862 | $ | 110,819 | 1,668 | $ | 57,940 | (3,326 | ) | $ | (59,220 | ) | (11,069 | ) | $ | (166,982 | ) | ||||||||||||||||
| * | Not shown due to rounding. |
| 280 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Limited-Term Bond Fund | Ivy Managed International Opportunities Fund |
|||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
82,065 | $ | 901,644 | 60,148 | $ | 674,058 | 5,707 | $ | 54,288 | 4,714 | $ | 40,470 | ||||||||||||||||||||
| Class B |
412 | 4,520 | 715 | 8,013 | 17 | 158 | 25 | 205 | ||||||||||||||||||||||||
| Class C |
3,956 | 43,684 | 6,412 | 71,861 | 43 | 406 | 97 | 820 | ||||||||||||||||||||||||
| Class E |
120 | 1,316 | 171 | 1,918 | — | * | — | * | — | — | ||||||||||||||||||||||
| Class I |
4,475 | 49,521 | 8,306 | 93,114 | 14 | 134 | 30 | 271 | ||||||||||||||||||||||||
| Class R |
24 | 276 | 22 | 250 | 28 | 268 | 28 | 250 | ||||||||||||||||||||||||
| Class Y |
857 | 9,458 | 6,002 | 67,268 | 31 | 279 | 22 | 194 | ||||||||||||||||||||||||
| Shares issued in connection with merger of |
||||||||||||||||||||||||||||||||
| Class A |
N/A | N/A | N/A | N/A | 6,302 | 62,846 | N/A | N/A | ||||||||||||||||||||||||
| Class B |
N/A | N/A | N/A | N/A | 113 | 1,111 | N/A | N/A | ||||||||||||||||||||||||
| Class C |
N/A | N/A | N/A | N/A | 124 | 1,224 | N/A | N/A | ||||||||||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | 21 | 206 | N/A | N/A | ||||||||||||||||||||||||
| Class I |
N/A | N/A | N/A | N/A | 39 | 388 | N/A | N/A | ||||||||||||||||||||||||
| Class R |
N/A | N/A | N/A | N/A | 28 | 275 | N/A | N/A | ||||||||||||||||||||||||
| Class Y |
N/A | N/A | N/A | N/A | 70 | 697 | N/A | N/A | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
2,301 | 25,236 | 1,806 | 20,239 | 212 | 2,086 | 281 | 2,496 | ||||||||||||||||||||||||
| Class B |
18 | 194 | 21 | 234 | 1 | 11 | 2 | 17 | ||||||||||||||||||||||||
| Class C |
152 | 1,664 | 194 | 2,178 | 3 | 30 | 5 | 39 | ||||||||||||||||||||||||
| Class E |
6 | 66 | 5 | 61 | — | * | 3 | — | — | |||||||||||||||||||||||
| Class I |
89 | 977 | 144 | 1,614 | — | * | 4 | — | * | 4 | ||||||||||||||||||||||
| Class R |
— | * | — | * | — | — | — | — | — | — | ||||||||||||||||||||||
| Class Y |
52 | 569 | 92 | 1,025 | 1 | 9 | 1 | 7 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(59,860 | ) | (658,323 | ) | (47,647 | ) | (533,902 | ) | (7,583 | ) | (72,143 | ) | (5,964 | ) | (51,349 | ) | ||||||||||||||||
| Class B |
(971 | ) | (10,672 | ) | (852 | ) | (9,542 | ) | (60 | ) | (561 | ) | (69 | ) | (578 | ) | ||||||||||||||||
| Class C |
(11,461 | ) | (125,903 | ) | (8,838 | ) | (99,028 | ) | (103 | ) | (968 | ) | (158 | ) | (1,325 | ) | ||||||||||||||||
| Class E |
(201 | ) | (2,209 | ) | (44 | ) | (492 | ) | — | — | — | — | ||||||||||||||||||||
| Class I |
(10,570 | ) | (116,234 | ) | (7,051 | ) | (79,011 | ) | (28 | ) | (261 | ) | (18 | ) | (144 | ) | ||||||||||||||||
| Class R |
(23 | ) | (251 | ) | — | — | (28 | ) | (265 | ) | — | — | ||||||||||||||||||||
| Class Y |
(3,799 | ) | (41,891 | ) | (5,446 | ) | (60,992 | ) | (30 | ) | (283 | ) | (33 | ) | (279 | ) | ||||||||||||||||
| Net increase (decrease) |
7,642 | $ | 83,642 | 14,160 | $ | 158,866 | 4,922 | $ | 49,942 | (1,037 | ) | $ | (8,902 | ) | ||||||||||||||||||
| * | Not shown due to rounding. |
| 2014 | ANNUAL REPORT | 281 |
Table of Contents
| Ivy Micro Cap Growth Fund | Ivy Mid Cap Growth Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
4,862 | $ | 119,826 | 1,337 | $ | 24,706 | 22,970 | $ | 505,292 | 35,683 | $ | 638,824 | ||||||||||||||||||||
| Class B |
57 | 1,371 | 28 | 510 | 247 | 4,649 | 401 | 6,336 | ||||||||||||||||||||||||
| Class C |
346 | 8,531 | 76 | 1,383 | 5,683 | 114,333 | 4,059 | 67,787 | ||||||||||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | 58 | 1,262 | 54 | 971 | ||||||||||||||||||||||||
| Class I |
1,344 | 35,094 | 109 | 1,966 | 40,711 | 934,760 | 34,973 | 664,913 | ||||||||||||||||||||||||
| Class R |
30 | 670 | 28 | 536 | 1,996 | 43,369 | 2,349 | 42,082 | ||||||||||||||||||||||||
| Class Y |
130 | 3,472 | 10 | 194 | 11,376 | 259,587 | 13,593 | 254,864 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
362 | 8,860 | — | — | 2,227 | 49,407 | 304 | 5,527 | ||||||||||||||||||||||||
| Class B |
6 | 142 | — | — | 44 | 845 | 7 | 115 | ||||||||||||||||||||||||
| Class C |
21 | 507 | — | — | 353 | 7,123 | 46 | 767 | ||||||||||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | 9 | 189 | 1 | 22 | ||||||||||||||||||||||||
| Class I |
29 | 731 | — | — | 2,470 | 57,454 | 259 | 4,916 | ||||||||||||||||||||||||
| Class R |
— | * | — | * | — | — | 117 | 2,573 | 17 | 312 | ||||||||||||||||||||||
| Class Y |
2 | 63 | — | — | 836 | 19,119 | 107 | 1,991 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(1,407 | ) | (34,666 | ) | (1,062 | ) | (19,216 | ) | (16,142 | ) | (358,196 | ) | (12,727 | ) | (233,215 | ) | ||||||||||||||||
| Class B |
(20 | ) | (443 | ) | (20 | ) | (367 | ) | (208 | ) | (3,966 | ) | (270 | ) | (4,267 | ) | ||||||||||||||||
| Class C |
(80 | ) | (1,960 | ) | (57 | ) | (1,004 | ) | (2,104 | ) | (42,414 | ) | (2,060 | ) | (34,107 | ) | ||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | (17 | ) | (379 | ) | (23 | ) | (403 | ) | ||||||||||||||||||||
| Class I |
(320 | ) | (8,412 | ) | (131 | ) | (2,342 | ) | (20,030 | ) | (468,432 | ) | (13,612 | ) | (260,712 | ) | ||||||||||||||||
| Class R |
(29 | ) | (648 | ) | (14 | ) | (282 | ) | (1,507 | ) | (32,445 | ) | (1,259 | ) | (22,833 | ) | ||||||||||||||||
| Class Y |
(60 | ) | (1,570 | ) | (41 | ) | (729 | ) | (8,515 | ) | (194,702 | ) | (11,581 | ) | (214,202 | ) | ||||||||||||||||
| Net increase |
5,273 | $ | 131,568 | 263 | $ | 5,355 | 40,574 | $ | 899,428 | 50,321 | $ | 919,688 | ||||||||||||||||||||
| Ivy Money Market Fund | Ivy Municipal Bond Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
213,404 | $ | 213,404 | 160,828 | $ | 160,828 | 4,023 | $ | 47,420 | 5,124 | $ | 62,430 | ||||||||||||||||||||
| Class B |
4,830 | 4,830 | 6,108 | 6,108 | 34 | 398 | 88 | 1,076 | ||||||||||||||||||||||||
| Class C |
61,484 | 61,484 | 37,852 | 37,852 | 339 | 3,976 | 742 | 9,040 | ||||||||||||||||||||||||
| Class E |
3,445 | 3,445 | 2,747 | 2,747 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class I |
N/A | N/A | N/A | N/A | 120 | 1,395 | 136 | 1,661 | ||||||||||||||||||||||||
| Class Y |
N/A | N/A | N/A | N/A | 2 | 19 | 50 | 606 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
28 | 28 | 27 | 27 | 272 | 3,188 | 239 | 2,906 | ||||||||||||||||||||||||
| Class B |
1 | 1 | 2 | 2 | 3 | 42 | 4 | 48 | ||||||||||||||||||||||||
| Class C |
7 | 7 | 7 | 7 | 34 | 395 | 34 | 420 | ||||||||||||||||||||||||
| Class E |
1 | 1 | 1 | 1 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class I |
N/A | N/A | N/A | N/A | 3 | 34 | 2 | 22 | ||||||||||||||||||||||||
| Class Y |
N/A | N/A | N/A | N/A | — | * | 5 | 1 | 8 | |||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(204,766 | ) | (204,766 | ) | (202,199 | ) | (202,199 | ) | (5,623 | ) | (65,756 | ) | (2,559 | ) | (31,204 | ) | ||||||||||||||||
| Class B |
(5,998 | ) | (5,998 | ) | (6,516 | ) | (6,516 | ) | (118 | ) | (1,390 | ) | (87 | ) | (1,061 | ) | ||||||||||||||||
| Class C |
(61,957 | ) | (61,957 | ) | (44,742 | ) | (44,742 | ) | (1,123 | ) | (13,163 | ) | (627 | ) | (7,637 | ) | ||||||||||||||||
| Class E |
(2,882 | ) | (2,882 | ) | (1,877 | ) | (1,877 | ) | N/A | N/A | N/A | N/A | ||||||||||||||||||||
| Class I |
N/A | N/A | N/A | N/A | (119 | ) | (1,387 | ) | (53 | ) | (640 | ) | ||||||||||||||||||||
| Class Y |
N/A | N/A | N/A | N/A | (16 | ) | (185 | ) | (47 | ) | (575 | ) | ||||||||||||||||||||
| Net increase (decrease) |
7,597 | $ | 7,597 | (47,762 | ) | $ | (47,762 | ) | (2,169 | ) | $ | (25,009 | ) | 3,047 | $ | 37,100 | ||||||||||||||||
| * | Not shown due to rounding. |
| 282 | ANNUAL REPORT | 2014 |
Table of Contents
| Ivy Municipal High Income Fund | Ivy Small Cap Growth Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
25,901 | $ | 131,877 | 52,256 | $ | 281,954 | 8,269 | $ | 147,571 | 4,987 | $ | 72,934 | ||||||||||||||||||||
| Class B |
272 | 1,410 | 1,626 | 8,752 | 162 | 2,414 | 153 | 1,924 | ||||||||||||||||||||||||
| Class C |
9,358 | 47,679 | 27,917 | 150,467 | 1,667 | 26,456 | 1,407 | 18,583 | ||||||||||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | 71 | 1,269 | 42 | 609 | ||||||||||||||||||||||||
| Class I |
73,080 | 369,430 | 96,022 | 518,337 | 3,707 | 78,702 | 4,210 | 72,781 | ||||||||||||||||||||||||
| Class R |
N/A | N/A | N/A | N/A | 1,345 | 23,825 | 708 | 10,321 | ||||||||||||||||||||||||
| Class Y |
1,605 | 8,199 | 4,177 | 22,605 | 3,516 | 72,265 | 2,603 | 43,403 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
3,525 | 17,844 | 2,778 | 15,041 | 1,797 | 31,046 | 449 | 6,202 | ||||||||||||||||||||||||
| Class B |
72 | 365 | 47 | 254 | 82 | 1,183 | 23 | 275 | ||||||||||||||||||||||||
| Class C |
1,442 | 7,292 | 1,027 | 5,560 | 1,217 | 18,622 | 371 | 4,603 | ||||||||||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | 22 | 372 | 5 | 69 | ||||||||||||||||||||||||
| Class I |
4,137 | 20,948 | 3,095 | 16,766 | 708 | 14,660 | 161 | 2,628 | ||||||||||||||||||||||||
| Class R |
N/A | N/A | N/A | N/A | 146 | 2,517 | 23 | 311 | ||||||||||||||||||||||||
| Class Y |
210 | 1,068 | 218 | 1,178 | 964 | 19,269 | 266 | 4,201 | ||||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(56,121 | ) | (285,021 | ) | (28,697 | ) | (155,931 | ) | (5,417 | ) | (96,732 | ) | (4,859 | ) | (70,255 | ) | ||||||||||||||||
| Class B |
(914 | ) | (4,634 | ) | (430 | ) | (2,334 | ) | (188 | ) | (2,820 | ) | (203 | ) | (2,522 | ) | ||||||||||||||||
| Class C |
(26,738 | ) | (135,246 | ) | (7,914 | ) | (43,012 | ) | (2,015 | ) | (32,023 | ) | (2,666 | ) | (34,783 | ) | ||||||||||||||||
| Class E |
N/A | N/A | N/A | N/A | (21 | ) | (381 | ) | (34 | ) | (504 | ) | ||||||||||||||||||||
| Class I |
(97,523 | ) | (494,583 | ) | (41,787 | ) | (226,983 | ) | (2,454 | ) | (52,437 | ) | (2,207 | ) | (38,184 | ) | ||||||||||||||||
| Class R |
N/A | N/A | N/A | N/A | (538 | ) | (9,600 | ) | (572 | ) | (8,321 | ) | ||||||||||||||||||||
| Class Y |
(5,190 | ) | (26,189 | ) | (3,095 | ) | (16,809 | ) | (3,373 | ) | (69,842 | ) | (3,633 | ) | (59,729 | ) | ||||||||||||||||
| Net increase (decrease) |
(66,884 | ) | $ | (339,561 | ) | 107,240 | $ | 575,845 | 9,667 | $ | 176,336 | 1,234 | $ | 24,546 | ||||||||||||||||||
| Ivy Small Cap Value Fund | Ivy Tax-Managed Equity Fund | |||||||||||||||||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||||||||||||||||||
| Class A |
3,457 | $ | 61,992 | 2,703 | $ | 41,730 | 1,285 | $ | 19,995 | 942 | $ | 12,345 | ||||||||||||||||||||
| Class B |
27 | 434 | 23 | 319 | 94 | 1,520 | 96 | 1,251 | ||||||||||||||||||||||||
| Class C |
296 | 4,873 | 165 | 2,371 | 72 | 1,163 | 101 | 1,314 | ||||||||||||||||||||||||
| Class E |
— | — | — | — | * | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
| Class I |
603 | 11,485 | 239 | 3,827 | 127 | 2,103 | 126 | 1,675 | ||||||||||||||||||||||||
| Class R |
64 | 1,156 | 33 | 531 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class Y |
259 | 4,789 | 243 | 3,728 | 22 | 381 | 26 | 335 | ||||||||||||||||||||||||
| Shares issued in reinvestment of |
||||||||||||||||||||||||||||||||
| Class A |
1,685 | 28,472 | 480 | 7,119 | 63 | 1,025 | 6 | 80 | ||||||||||||||||||||||||
| Class B |
31 | 467 | 9 | 114 | — | * | 3 | — | * | — | * | |||||||||||||||||||||
| Class C |
127 | 1,974 | 29 | 398 | 2 | 25 | — | — | ||||||||||||||||||||||||
| Class E |
1 | 16 | — | — | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class I |
143 | 2,533 | 33 | 514 | 1 | 9 | — | * | 1 | |||||||||||||||||||||||
| Class R |
2 | 34 | — | — | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class Y |
42 | 728 | 10 | 158 | — | * | 9 | — | * | 2 | ||||||||||||||||||||||
| Shares redeemed: |
||||||||||||||||||||||||||||||||
| Class A |
(4,878 | ) | (87,509 | ) | (4,046 | ) | (61,765 | ) | (739 | ) | (11,619 | ) | (374 | ) | (4,906 | ) | ||||||||||||||||
| Class B |
(63 | ) | (1,003 | ) | (120 | ) | (1,608 | ) | (93 | ) | (1,496 | ) | (91 | ) | (1,191 | ) | ||||||||||||||||
| Class C |
(249 | ) | (4,086 | ) | (335 | ) | (4,674 | ) | (40 | ) | (675 | ) | (80 | ) | (1,043 | ) | ||||||||||||||||
| Class E |
— | — | — | — | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
| Class I |
(504 | ) | (9,638 | ) | (215 | ) | (3,376 | ) | (119 | ) | (1,975 | ) | (118 | ) | (1,568 | ) | ||||||||||||||||
| Class R |
(19 | ) | (344 | ) | (16 | ) | (279 | ) | N/A | N/A | N/A | N/A | ||||||||||||||||||||
| Class Y |
(162 | ) | (3,001 | ) | (1,306 | ) | (20,514 | ) | (27 | ) | (470 | ) | (45 | ) | (576 | ) | ||||||||||||||||
| Net increase (decrease) |
862 | $ | 13,372 | (2,071 | ) | $ | (31,407 | ) | 648 | $ | 9,998 | 589 | $ | 7,719 | ||||||||||||||||||
| * | Not shown due to rounding. |
| 2014 | ANNUAL REPORT | 283 |
Table of Contents
| Ivy Value Fund | ||||||||||||||||
| Year ended 3-31-14 |
Year ended 3-31-13 |
|||||||||||||||
| Shares | Value | Shares | Value | |||||||||||||
| Shares issued from sale of shares: |
||||||||||||||||
| Class A |
5,127 | $ | 113,237 | 3,404 | $ | 62,633 | ||||||||||
| Class B |
54 | 1,123 | 133 | 2,359 | ||||||||||||
| Class C |
233 | 4,956 | 149 | 2,659 | ||||||||||||
| Class E |
— | — | — | — | ||||||||||||
| Class I |
104 | 2,318 | 118 | 2,138 | ||||||||||||
| Class R |
15 | 310 | 28 | 528 | ||||||||||||
| Class Y |
28 | 626 | 33 | 611 | ||||||||||||
| Shares issued in reinvestment |
||||||||||||||||
| Class A |
408 | 9,054 | 54 | 931 | ||||||||||||
| Class B |
10 | 203 | — | 1 | ||||||||||||
| Class C |
22 | 471 | 1 | 15 | ||||||||||||
| Class E |
— | * | 6 | — | — | |||||||||||
| Class I |
7 | 162 | 1 | 21 | ||||||||||||
| Class R |
— | — | — | — | ||||||||||||
| Class Y |
1 | 17 | — | * | 3 | |||||||||||
| Shares redeemed: |
||||||||||||||||
| Class A |
(2,756 | ) | (60,845 | ) | (1,827 | ) | (33,052 | ) | ||||||||
| Class B |
(99 | ) | (2,077 | ) | (51 | ) | (882 | ) | ||||||||
| Class C |
(112 | ) | (2,394 | ) | (135 | ) | (2,325 | ) | ||||||||
| Class E |
— | — | — | — | ||||||||||||
| Class I |
(81 | ) | (1,807 | ) | (113 | ) | (1,931 | ) | ||||||||
| Class R |
(14 | ) | (292 | ) | (14 | ) | (278 | ) | ||||||||
| Class Y |
(45 | ) | (994 | ) | (30 | ) | (558 | ) | ||||||||
| Net increase |
2,902 | $ | 64,074 | 1,751 | $ | 32,873 | ||||||||||
| * | Not shown due to rounding. |
| 11. | COMMITMENTS ($ amounts in thousands) |
Bridge loan commitments may obligate a Fund to furnish temporary financing to a borrower until permanent financing can be arranged. At year ended March 31, 2014, Ivy Global Income Allocation Fund and Ivy High Income Fund had outstanding bridge loan commitments of $2,600 and $225,730, respectively. In connection with these commitments, the Fund earns a commitment fee, typically set as a percentage of the commitment amount. Such fee income is included in interest income on the Statement of Operations.
| 12. | PURCHASE COMMITMENTS ($ amounts in thousands) |
The Ivy High Income Fund entered into a subscription agreement to acquire limited partnership interests in Maritime Finance Company Ltd. The remaining commitment amount at March 31, 2014 was $7,845. Cash and cash equivalents of $7,845 held by the Ivy High Income Fund have been segregated to meet these purchase commitments.
| 13. | BUSINESS COMBINATIONS (All amounts in thousands) |
On March 17, 2014, Ivy Emerging Markets Equity Fund acquired all assets and liabilities of Ivy Asset Strategy New Opportunities Fund pursuant to a plan of reorganization approved by the Board of Trustees of Ivy Funds on November 12, 2013. The purpose of the transaction was to combine two portfolios with comparable investment objectives and strategies. The acquisition was accomplished by a tax-free exchange of shares of Ivy Asset Strategy New Opportunities Fund, valued at $219,848 in total, for shares of the Ivy Emerging Markets Equity Fund as follows:
Shares Exchanged
| Ivy Asset Strategy New Opportunities Fund |
Ivy Emerging Markets Equity Fund |
|||||||
| Class A |
13,634 | 9,872 | ||||||
| Class B |
404 | 339 | ||||||
| Class C |
3,118 | 2,518 | ||||||
| Class E |
10 | 7 | ||||||
| Class I |
2,560 | 1,810 | ||||||
| Class R |
57 | 41 | ||||||
| Class Y |
603 | 429 | ||||||
| 284 | ANNUAL REPORT | 2014 |
Table of Contents
The investment portfolio of Ivy Asset Strategy New Opportunities Fund, with a fair value of $210,900 and identified cost of $174,624 at March 17, 2014, was the principal asset acquired by Ivy Emerging Markets Equity Fund. For financial reporting purposes, assets received and shares issued by Ivy Emerging Markets Equity Fund were recorded at fair value; however, the cost basis of the investments received from Ivy Asset Strategy New Opportunities Fund was carried forward to align ongoing reporting of Ivy Emerging Markets Equity Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. Ivy Asset Strategy New Opportunities Fund had net assets of $219,848, including $36,276 of net unrealized appreciation in value of investments and $89,089 of accumulated net realized losses on investments, which were combined with those of Ivy Emerging Markets Equity Fund. The aggregate net assets of Ivy Emerging Markets Equity Fund and Ivy Asset Strategy New Opportunities Fund immediately before the acquisition were $553,745 and $219,848, respectively. The aggregate net assets of Ivy Emerging Markets Equity Fund and Ivy Asset Strategy New Opportunities Fund immediately following the acquisition were $773,593 and $0, respectively.
Assuming the reorganization had been completed on April 1, 2013, the beginning of the annual reporting period of Ivy Emerging Markets Equity Fund, the pro forma results of operations for the year ended March 31, 2014, were as follows:
| Net Investment income (loss) |
$ | 36 | ||
| Net realized gain (loss) |
27,464 | |||
| Net change in unrealized appreciation (depreciation) |
24,324 | |||
|
|
|
|||
| Net increase (decrease) in net Assets resulting from operations |
51,824 | |||
|
|
|
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Ivy Asset Strategy New Opportunities Fund that have been included in Ivy Emerging Markets Equity Fund’s Statement of Operations since March 17, 2014.
On March 17, 2014, Ivy Managed International Opportunites Fund acquired all assets and liabilities of Ivy Managed European/Pacific Fund pursuant to a plan of reorganization approved by the Board of Trustees of Ivy Funds on November 12, 2013. The purpose of the transaction was to combine two portfolios with comparable investment objectives and strategies. The acquisition was accomplished by a tax-free exchange of shares of Ivy Managed European/Pacific, valued at $66,763 in total, for shares of the Ivy Managed International Opportunites Fund as follows:
Shares Exchanged
| Ivy Managed European/Pacific Fund |
Ivy Managed International Opportunities Fund |
|||||||
| Class A |
7,264 | 6,302 | ||||||
| Class B |
132 | 113 | ||||||
| Class C |
145 | 124 | ||||||
| Class E |
24 | 21 | ||||||
| Class I |
44 | 39 | ||||||
| Class R |
32 | 28 | ||||||
| Class Y |
80 | 70 | ||||||
The investment portfolio of Ivy Managed European/Pacific Fund, with a fair value of $67,232 and identified cost of $46,433 at March 17, 2014, was the principal asset acquired by Ivy Managed International Opportunites Fund. For financial reporting purposes, assets received and shares issued by Ivy Managed International Opportunites Fund were recorded at fair value; however, the cost basis of the investments received from Ivy Managed European/Pacific Fund was carried forward to align ongoing reporting of Ivy Managed International Opportunites Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. Ivy Managed European/Pacific Fund had net assets of $66,763, including $20,799 of net unrealized appreciation in value of investments and $30,130 of accumulated net realized losses on investments, which were combined with those of Ivy Managed International Opportunites Fund. The aggregate net assets of Ivy Managed International Opportunites Fund and Ivy Managed European/Pacific Fund immediately before the acquisition were $196,346 and $66,763, respectively. The aggregate net assets of Ivy Managed International Opportunites Fund and Ivy Managed European/Pacific Fund immediately following the acquisition were $263,109 and $0, respectively.
Assuming the reorganization had been completed on April 1, 2013, the beginning of the annual reporting period of Ivy Managed International Opportunites Fund, the pro forma results of operations for the year ended March 31, 2014, were as follows:
| Net Investment income (loss) |
$ | 2,374 | ||
| Net realized gain (loss) |
4,787 | |||
| Net change in unrealized appreciation (depreciation) |
26,789 | |||
|
|
|
|||
| Net increase (decrease) in net Assets resulting from operations |
33,950 | |||
|
|
|
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Ivy Managed European/Pacific Fund that have been included in Ivy Managed International Opportunites Fund’s Statement of Operations since March 17, 2014.
| 2014 | ANNUAL REPORT | 285 |
Table of Contents
| 14. | FEDERAL INCOME TAX MATTERS ($ amounts in thousands) |
For Federal income tax purposes, cost of investments owned at March 31, 2014 and the related unrealized appreciation (depreciation) were as follows:
| Fund | Cost of Investments |
Gross Appreciation |
Gross Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| Ivy Bond Fund |
$ | 603,745 | $ | 15,630 | $ | 11,240 | $ | 4,390 | ||||||||
| Ivy Core Equity Fund |
680,274 | 195,806 | 1,464 | 194,342 | ||||||||||||
| Ivy Cundill Global Value Fund |
312,995 | 63,611 | 6,998 | 56,613 | ||||||||||||
| Ivy Dividend Opportunities Fund |
266,211 | 118,551 | 280 | 118,271 | ||||||||||||
| Ivy Emerging Markets Equity Fund |
619,095 | 137,628 | 21,673 | 115,955 | ||||||||||||
| Ivy European Opportunities Fund |
166,048 | 41,107 | 1,884 | 39,223 | ||||||||||||
| Ivy Global Bond Fund |
291,266 | 9,183 | 7,674 | 1,509 | ||||||||||||
| Ivy Global Equity Income Fund |
189,452 | 22,806 | 2,818 | 19,988 | ||||||||||||
| Ivy Global Income Allocation Fund |
530,649 | 55,670 | 11,461 | 44,209 | ||||||||||||
| Ivy High Income Fund |
11,116,105 | 487,828 | 22,505 | 465,323 | ||||||||||||
| Ivy International Core Equity Fund |
1,820,269 | 310,769 | 31,415 | 279,354 | ||||||||||||
| Ivy International Growth Fund |
381,404 | 73,865 | 4,300 | 69,565 | ||||||||||||
| Ivy Large Cap Growth Fund |
989,160 | 477,907 | 9,181 | 468,726 | ||||||||||||
| Ivy Limited-Term Bond Fund |
1,646,136 | 18,963 | 7,529 | 11,434 | ||||||||||||
| Ivy Managed International Opportunities Fund |
218,881 | 47,728 | — | 47,728 | ||||||||||||
| Ivy Micro Cap Growth Fund |
216,836 | 60,385 | 5,634 | 54,751 | ||||||||||||
| Ivy Mid Cap Growth Fund |
3,991,859 | 903,555 | 87,784 | 815,771 | ||||||||||||
| Ivy Money Market Fund |
182,681 | — | — | — | ||||||||||||
| Ivy Municipal Bond Fund |
131,184 | 8,919 | 2,694 | 6,225 | ||||||||||||
| Ivy Municipal High Income Fund |
1,195,408 | 39,454 | 57,642 | (18,188 | ) | |||||||||||
| Ivy Small Cap Growth Fund |
847,518 | 377,318 | 7,320 | 369,998 | ||||||||||||
| Ivy Small Cap Value Fund |
235,483 | 70,790 | 1,452 | 69,338 | ||||||||||||
| Ivy Tax-Managed Equity Fund |
33,437 | 11,738 | 202 | 11,536 | ||||||||||||
| Ivy Value Fund |
213,021 | 64,902 | 2,259 | 62,643 | ||||||||||||
For Federal income tax purposes, the Funds’ distributed and undistributed earnings and profit for the year ended March 31, 2014 and the post-October and late-year ordinary activity were as follows:
| Fund | Distributed Ordinary Income |
Undistributed Ordinary Income |
Distributed Long-Term Capital Gains |
Undistributed Long-Term Capital Gains |
Tax Return of Capital |
Post- October Capital Losses Deferred |
Late- Year Ordinary Losses Deferred |
|||||||||||||||||||||
| Ivy Bond Fund |
$ | 16,766 | $ | 257 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Ivy Core Equity Fund |
13,627 | — | 32,924 | 23,477 | — | 331 | — | |||||||||||||||||||||
| Ivy Cundill Global Value Fund |
233 | — | — | — | — | — | 219 | |||||||||||||||||||||
| Ivy Dividend Opportunities Fund |
2,829 | 695 | 5,473 | 10,343 | — | — | — | |||||||||||||||||||||
| Ivy Emerging Markets Equity Fund |
3,763 | 1,937 | — | — | — | — | — | |||||||||||||||||||||
| Ivy European Opportunities Fund |
766 | 2,029 | — | — | — | — | — | |||||||||||||||||||||
| Ivy Global Bond Fund |
9,394 | 484 | 431 | — | — | 726 | — | |||||||||||||||||||||
| Ivy Global Equity Income Fund |
6,771 | 1,783 | 268 | 1,637 | — | — | — | |||||||||||||||||||||
| Ivy Global Income Allocation Fund |
18,777 | 4,101 | — | — | — | — | — | |||||||||||||||||||||
| Ivy High Income Fund |
699,870 | 30,765 | 87,464 | 21,686 | — | — | — | |||||||||||||||||||||
| Ivy International Core Equity Fund |
39,061 | 42,485 | — | 55,893 | — | — | — | |||||||||||||||||||||
| Ivy International Growth Fund |
4,458 | — | — | — | — | — | 961 | |||||||||||||||||||||
| Ivy Large Cap Growth Fund |
396 | — | 155,363 | 56,924 | — | — | 658 | |||||||||||||||||||||
| Ivy Limited-Term Bond Fund |
21,175 | 358 | 9,541 | — | — | 3,889 | — | |||||||||||||||||||||
| Ivy Managed International Opportunities Fund |
2,175 | — | — | — | — | — | 197 | |||||||||||||||||||||
| Ivy Micro Cap Growth Fund |
76 | 3,852 | 10,409 | 7,648 | — | — | — | |||||||||||||||||||||
| Ivy Mid Cap Growth Fund |
59,552 | 43,832 | 93,116 | 280,006 | — | — | — | |||||||||||||||||||||
| Ivy Money Market Fund |
42 | 27 | — | — | — | — | — | |||||||||||||||||||||
| Ivy Municipal Bond Fund |
4,149 | 61 | — | — | — | 254 | — | |||||||||||||||||||||
| Ivy Municipal High Income Fund |
62,511 | 675 | 1,122 | — | — | 2,802 | — | |||||||||||||||||||||
| Ivy Small Cap Growth Fund |
3,618 | — | 90,958 | 48,139 | — | 3,209 | — | |||||||||||||||||||||
| Ivy Small Cap Value Fund |
9,794 | 3,350 | 26,226 | 10,288 | — | — | — | |||||||||||||||||||||
| Ivy Tax-Managed Equity Fund |
106 | — | 1,056 | 316 | — | 77 | 35 | |||||||||||||||||||||
| Ivy Value Fund |
2,593 | 2,540 | 7,652 | 6,011 | — | — | — | |||||||||||||||||||||
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Internal Revenue Code regulations permit each Fund to elect to defer into its next fiscal year capital losses incurred between each November 1 and the end of its fiscal year. Each Fund is also permitted to defer into its next fiscal year late-year ordinary losses that arise from the netting of activity generated between each November 1 and the end of its fiscal year on certain specified ordinary items.
Accumulated capital losses represent net capital loss carryovers as of March 31, 2014 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. Under the Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”), a Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years which have only an eight year carryforward period. As a result of this ordering rule, pre-enactment capital loss carryovers may expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under the previous law. The Fund’s first fiscal year end subject to the Modernization Act was March 31, 2012. The following table shows the expiration dates for capital loss carryovers from pre-enactment taxable years and the amounts of capital loss carryovers, if any, by each of the applicable Funds electing to be taxed as a RIC during the year ended March 31, 2014:
| Pre-Enactment | Post-Enactment | |||||||||||||||||||||||||||
| Fund | 2015 | 2016 | 2017 | 2018 | 2019 | Short- Term Capital Loss Carryover |
Long- Term Capital Loss Carryover |
|||||||||||||||||||||
| Ivy Bond Fund |
$ | 902 | $ | 6,969 | $ | 11,636 | $ | — | $ | — | $ | 3,886 | $ | 3,519 | ||||||||||||||
| Ivy Core Equity Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy Cundill Global Value Fund |
— | — | — | 13,664 | — | — | — | |||||||||||||||||||||
| Ivy Dividend Opportunities Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy Emerging Markets Equity Fund |
— | — | — | 606 | — | 92,425 | 23,028 | |||||||||||||||||||||
| Ivy European Opportunities Fund |
— | — | 4,481 | 132,101 | — | — | — | |||||||||||||||||||||
| Ivy Global Bond Fund |
— | — | — | — | — | 77 | 2,120 | |||||||||||||||||||||
| Ivy Global Equity Income Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy Global Income Allocation Fund |
— | — | — | 34,018 | — | 5,903 | 2,599 | |||||||||||||||||||||
| Ivy High Income Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy International Core Equity Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy International Growth Fund |
— | — | — | 5,957 | — | — | — | |||||||||||||||||||||
| Ivy Large Cap Growth Fund |
— | — | 63,146 | — | — | — | — | |||||||||||||||||||||
| Ivy Limited-Term Bond Fund |
— | — | — | — | — | 9,472 | 335 | |||||||||||||||||||||
| Ivy Managed International Opportunities Fund |
— | — | 15,270 | 9,587 | 10,440 | — | 9,193 | |||||||||||||||||||||
| Ivy Micro Cap Growth Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy Mid Cap Growth Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy Money Market Fund |
— | — | — | — | 36 | — | — | |||||||||||||||||||||
| Ivy Municipal Bond Fund |
— | 34 | 101 | 84 | 146 | 174 | — | |||||||||||||||||||||
| Ivy Municipal High Income Fund |
— | — | — | — | — | 6,971 | 2,833 | |||||||||||||||||||||
| Ivy Small Cap Growth Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy Small Cap Value Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy Tax-Managed Equity Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Ivy Value Fund |
— | — | — | — | — | — | — | |||||||||||||||||||||
Ivy Mortgage Securities Fund was merged into Ivy Bond Fund as of January 24, 2011. At the time of the merger, Ivy Mortgage Securities Fund had capital loss carryovers available to offset future gains of the Ivy Bond Fund. These carryovers are limited to $6,611 for the period ending March 31, 2015 and $4,298 for each period ending from March 31, 2016 through 2018 plus any unused limitations from prior years.
Ivy Capital Appreciation Fund was merged into Ivy Large Cap Growth Fund as of June 13, 2011. At the time of the merger, Ivy Capital Appreciation Fund had capital loss carryovers available to offset future gains of the Ivy Large Cap Growth Fund. These carryovers are limited to $18,066 for each period ending from March 31, 2015 through 2017 plus any unused limitations from prior years.
Ivy Asset Strategy New Opportunities Fund was merged into Ivy Emerging Markets Equity Fund as of March 17, 2014 (See Note 13). At the time of the merger, Ivy Asset Strategy New Opportunities Fund had capital loss carryovers available to offset future gains of the Ivy Emerging Markets Equity Fund. These carryovers are annually limited to $7,827 plus any unused limitations from prior years.
Ivy Managed European/Pacific Fund was merged into Ivy Managed International Opportunities Fund as of March 17, 2014 (See Note 13). At the time of the merger, Ivy Managed European/Pacific Fund had capital loss carryovers available to offset future gains of the Ivy Managed International Opportunities Fund. These carryovers are annually limited to $2,377 plus any unused limitations from prior years.
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Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from U.S. GAAP. These differences are due to differing treatments for items such as deferral of wash sales, post-October losses, late-year ordinary losses, foreign currency transactions, net operating losses, income from passive foreign investment companies (PFICs), partnership transactions, and expiring capital loss carryovers. At March 31, 2014, the following reclassifications were made:
| Fund |
Undistributed Net Investment Income |
Accumulated Net Realized Gain (Loss) |
Paid -In Capital |
|||||||||
| Ivy Bond Fund |
$ | 2,987 | $ | (1,002 | ) | $ | (1,985 | ) | ||||
| Ivy Core Equity Fund |
424 | (424 | ) | — | ||||||||
| Ivy Cundill Global Value Fund |
831 | 88 | (919 | ) | ||||||||
| Ivy Dividend Opportunities Fund |
146 | (142 | ) | (4 | ) | |||||||
| Ivy Emerging Markets Equity Fund |
4,536 | (111 | ) | (4,425 | ) | |||||||
| Ivy European Opportunities Fund |
12 | (12 | ) | — | ||||||||
| Ivy Global Bond Fund |
(300 | ) | 300 | — | ||||||||
| Ivy Global Equity Income Fund |
(113 | ) | 126 | (13 | ) | |||||||
| Ivy Global Income Allocation Fund |
(881 | ) | 881 | — | ||||||||
| Ivy High Income Fund |
12,696 | (12,696 | ) | — | ||||||||
| Ivy International Core Equity Fund |
4,691 | (4,691 | ) | — | ||||||||
| Ivy International Growth Fund |
76 | 92 | (168 | ) | ||||||||
| Ivy Large Cap Growth Fund |
(122 | ) | 122 | — | ||||||||
| Ivy Limited-Term Bond Fund |
1,230 | (1,230 | ) | — | ||||||||
| Ivy Managed International Opportunities Fund |
26 | — | (26 | ) | ||||||||
| Ivy Micro Cap Growth Fund |
2,785 | (2,785 | ) | — | ||||||||
| Ivy Mid Cap Growth Fund |
26,133 | (26,082 | ) | (51 | ) | |||||||
| Ivy Money Market Fund |
— | — | — | |||||||||
| Ivy Municipal Bond Fund |
— | — | — | |||||||||
| Ivy Municipal High Income Fund |
(3 | ) | (67 | ) | 70 | |||||||
| Ivy Small Cap Growth Fund |
13,490 | (13,490 | ) | — | ||||||||
| Ivy Small Cap Value Fund |
1,874 | (1,873 | ) | (1 | ) | |||||||
| Ivy Tax-Managed Equity Fund |
115 | (115 | ) | — | * | |||||||
| Ivy Value Fund |
1,794 | (1,790 | ) | (4 | ) | |||||||
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| Ivy Funds |
To the Shareholders and Board of Trustees of Ivy Funds:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Ivy Bond Fund, Ivy Core Equity Fund, Ivy Cundill Global Value Fund, Ivy Dividend Opportunities Fund, Ivy European Opportunities Fund, Ivy Global Bond Fund, Ivy Global Income Allocation Fund, Ivy High Income Fund, Ivy International Core Equity Fund, Ivy International Growth Fund, Ivy Large Cap Growth Fund, Ivy Limited-Term Bond Fund, Ivy Managed International Opportunities Fund, Ivy Micro Cap Growth Fund, Ivy Mid Cap Growth Fund, Ivy Money Market Fund, Ivy Municipal Bond Fund, Ivy Municipal High Income Fund, Ivy Emerging Markets Equity Fund (formerly, the Ivy Pacific Opportunities Fund), Ivy Small Cap Growth Fund, Ivy Small Cap Value Fund, Ivy Tax-Managed Equity Fund, Ivy Value Fund, and Ivy Global Equity Income Fund, twenty-four of the thirty-two funds constituting Ivy Funds (the “Funds”), as of March 31, 2014, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended (as to the Ivy Global Equity Income Fund, for the year then ended and for the period from June 4, 2012 (commencement of operations) through March 31, 2013), and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2014, by correspondence with the custodian, transfer agent, agent banks, and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2014, the results of their operations, the changes in their net assets, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Kansas City, Missouri
May 21, 2014
| 2014 | ANNUAL REPORT | 289 |
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| Ivy Funds |
AMOUNTS NOT ROUNDED (UNAUDITED) |
The Funds hereby designate the following amounts of dividends paid from net ordinary income as dividends qualifying for the 70% dividends received deduction for corporations or as qualified dividend income for individuals for the tax period ended March 31, 2014:
| Dividends Received Deduction for Corporations |
Qualified Dividend Income for Individuals |
|||||||
| Ivy Asset Strategy New Opportunities Fund |
$ | — | $ | 2,845,509 | ||||
| Ivy Bond Fund |
— | — | ||||||
| Ivy Core Equity Fund |
7,164,364 | 8,458,712 | ||||||
| Ivy Cundill Global Value Fund |
233,055 | 233,055 | ||||||
| Ivy Dividend Opportunities Fund |
2,829,412 | 2,829,412 | ||||||
| Ivy Emerging Markets Equity Fund |
— | 4,864,151 | ||||||
| Ivy European Opportunities Fund |
15,718 | 1,284,657 | ||||||
| Ivy Global Bond Fund |
304,055 | 767,630 | ||||||
| Ivy Global Equity Income Fund |
951,462 | 6,044,848 | ||||||
| Ivy Global Income Allocation Fund |
3,100,852 | 16,956,156 | ||||||
| Ivy High Income Fund |
— | — | ||||||
| Ivy International Core Equity Fund |
— | 42,134,888 | ||||||
| Ivy International Growth Fund |
145,089 | 4,823,072 | ||||||
| Ivy Large Cap Growth Fund |
396,169 | 396,169 | ||||||
| Ivy Limited-Term Bond Fund |
— | — | ||||||
| Ivy Managed European/Pacific Fund |
— | 320,078 | ||||||
| Ivy Managed International Opportunities Fund |
141,049 | 2,505,556 | ||||||
| Ivy Micro Cap Growth Fund |
75,553 | 75,553 | ||||||
| Ivy Mid Cap Growth Fund |
22,935,289 | 23,967,695 | ||||||
| Ivy Money Market Fund |
— | — | ||||||
| Ivy Municipal Bond Fund |
— | — | ||||||
| Ivy Municipal High Income Fund |
— | — | ||||||
| Ivy Small Cap Growth Fund |
2,402,417 | 2,402,417 | ||||||
| Ivy Small Cap Value Fund |
3,874,757 | 4,154,652 | ||||||
| Ivy Tax-Managed Equity Fund |
105,696 | 105,696 | ||||||
| Ivy Value Fund |
2,300,618 | 2,592,117 | ||||||
Ivy Municipal Bond Fund and Ivy Municipal High Income Fund hereby designate $4,146,254 and $59,563,054, respectively, of the dividends declared from net investment income as exempt from federal income tax for the tax period ending March 31, 2014.
The Funds hereby designate the following amounts as distributions of long-term capital gains:
| Ivy Bond Fund |
$ | — | ||
| Ivy Core Equity Fund |
32,923,524 | |||
| Ivy Cundill Global Value Fund |
— | |||
| Ivy Dividend Opportunities Fund |
5,472,679 | |||
| Ivy Emerging Markets Equity Fund |
— | |||
| Ivy European Opportunities Fund |
— | |||
| Ivy Global Bond Fund |
430,731 | |||
| Ivy Global Equity Income Fund |
268,158 | |||
| Ivy Global Income Allocation Fund |
— | |||
| Ivy High Income Fund |
87,463,990 | |||
| Ivy International Core Equity Fund |
— | |||
| Ivy International Growth Fund |
— | |||
| Ivy Large Cap Growth Fund |
155,362,540 | |||
| Ivy Limited-Term Bond Fund |
9,541,173 | |||
| Ivy Managed International Opportunities Fund |
— | |||
| Ivy Micro Cap Growth Fund |
10,409,401 | |||
| Ivy Mid Cap Growth Fund |
93,116,455 | |||
| Ivy Money Market Fund |
— | |||
| Ivy Municipal Bond Fund |
— | |||
| Ivy Municipal High Income Fund |
1,122,131 | |||
| Ivy Small Cap Growth Fund |
90,958,034 | |||
| Ivy Small Cap Value Fund |
26,226,031 | |||
| Ivy Tax-Managed Equity Fund |
1,055,834 | |||
| Ivy Value Fund |
7,651,903 |
Income from Ivy Municipal Bond Fund and Ivy Municipal High Income Fund may be subject to the alternative minimum tax. Shareholders are advised to consult with their tax advisors concerning the tax treatment of dividends and distributions from all the Funds.
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Internal Revenue Code regulations permit each qualifying Fund to elect to pass through a foreign tax credit to shareholders with respect to foreign taxes paid by the Fund. As of March 31, 2014, the Funds hereby designate the following as a foreign tax credit from the taxes paid on income derived from sources within foreign countries or possession of the United States:
| Foreign Tax Credit |
Foreign Derived Income |
|||||||
| Ivy Asset Strategy New Opportunities Fund |
$ | 286,979 | $ | 2,841,674 | ||||
| Ivy Emerging Markets Equity Fund |
1,352,228 | 12,683,681 | ||||||
| Ivy European Opportunities Fund |
522,521 | 6,748,475 | ||||||
| Ivy Global Equity income Fund |
497,411 | 7,948,518 | ||||||
| Ivy Global Income Allocation Fund |
1,107,819 | 24,653,512 | ||||||
| Ivy International Core Equity Fund |
3,753,028 | 47,166,277 | ||||||
| Ivy International Growth Fund |
670,085 | 7,654,271 | ||||||
| Ivy Managed European/Pacific Fund |
138,062 | 818,848 | ||||||
| Ivy Managed International Opportunities Fund |
333,797 | 3,226,053 | ||||||
The tax status of dividends paid and the pass-through of foreign taxes paid will be reported to you on Form 1099-DIV after the close of the applicable calendar year.
| 2014 | ANNUAL REPORT | 291 |
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BOARD OF TRUSTEES AND OFFICERS
| Ivy Funds |
The Trust is governed by the Board of Trustees (the Board). A majority of the Board members are not “interested persons” as defined in Section 2(a)(19) of the 1940 Act and therefore qualify as Disinterested Trustees. The Board elects the officers who are responsible for administering the Funds’ day-to-day operations. The Waddell & Reed Fund Complex (Fund Complex) is comprised of the Ivy Family of Funds, the Ivy High Income Opportunities Fund (a closed-end fund) (IVH) and the Advisors Fund Complex, which is comprised of each of the funds in the Waddell & Reed Advisors Funds (20 funds), Ivy Funds Variable Insurance Portfolios (29 funds) and InvestEd Portfolios (3 funds). Jarold W. Boettcher, Joseph Harroz, Jr., Henry J. Herrmann and Eleanor B. Schwartz also serve as trustees of each of the funds in the Advisors Fund Complex. Each member of the Board is also a member of the Board of Trustees of IVH.
Joseph Harroz, Jr. serves as Independent Chair of the Trust’s Board and of the Board of Trustees of Ivy Funds.
A Trustee serves until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. The Board appoints officers and delegates to them the management of the day-to-day operations of each of the Funds, based on policies reviewed and approved by the Board, with general oversight by the Board.
The Statement of Additional Information (SAI) for the Trust includes additional information about the Trust’s Trustees. The SAI is available without charge, upon request by calling 1.800.777.6472. It is also available on the Ivy Funds website, www.ivyfunds.com.
Disinterested Trustees
The following table provides information regarding each Disinterested Trustee.
| Name, Address and Year of Birth |
Position Held with the Trust |
Trustee Since | Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen |
Other Directorships Held During Past 5 Years | |||||
| Jarold W. Boettcher, CFA 6300 Lamar Avenue Overland Park, KS 66202 1940 |
Trustee | 2008 | President of Boettcher Enterprises, Inc. (agriculture products and services) (1979 to present), Boettcher Supply, Inc. (electrical and plumbing supplies distributor) (1979 to present), Boettcher Aerial, Inc. (Aerial Ag Applicator) (1979 to present) | 84 | Director of Guaranty State Bank & Trust Co. (financial services) (1981 to present); Director of Guaranty, Inc. (financial services) (1985 to present); Member of Kansas Board of Regents (2007 to 2011); Audit Committee Chairperson, Kansas Bioscience Authority (2009 to present); Member of Kansas Foundation for Medical Care (until 2011); Trustee of Advisors Fund Complex (52 portfolios overseen); Trustee of IVH | |||||
| James D. Gressett 6300 Lamar Avenue Overland Park, KS 66202 1950 |
Trustee | 2008 | Chief Executive Officer (CEO) of CalPac Pizza LLC (2011 to present); CEO of CalPac Pizza II LLC (2012 to present); CEO of PacPizza LLC (Pizza Hut franchise) (2000 to present); Partner, Century Bridge Partners (real estate investments) (2007 to present); Manager, Premium Gold Foods (2006 to present); President, Penn Capital Corp. (1995 to present); Partner, Penn Capital Partners (1999 to present); Member/Secretary, The Metochoi Group LLC (1999 to present) | 32 | Trustee of IVH | |||||
| Joseph Harroz, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1967 |
Trustee Independent Chairman |
2008 2008 |
Dean of the College of Law, Vice President, University of Oklahoma (2010 to present); President of Graymark HealthCare (a NASDAQ listed company) (2008 to 2010); Adjunct Professor, University of Oklahoma Law School (1997 to 2010); Managing Member, Harroz Investments, LLC, (commercial enterprise investments) (1998 to present) | 84 | Director and Investor, Valliance Bank (2004 to present); Director, Graymark HealthCare (2008 to present); Trustee, the Mewbourne Family Support Organization (2003 to present) (non-profit); Director/Trustee, Oklahoma Foundation for Excellence (non-profit) (2008 to present); Trustee of Advisors Fund Complex (52 portfolios overseen); Trustee of IVH |
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Table of Contents
| Name, Address and Year of Birth |
Position Held with the Trust |
Trustee Since | Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen |
Other Directorships Held During Past 5 Years | |||||
| Glendon E. Johnson, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1951 |
Trustee | 2008 | Of Counsel, Lee & Smith, PC (law firm) (1996 to present); Co-owner and Vice President of the Board, Castle Valley Ranches, LLC (ranching) and Castle Valley Outdoors, LLC (hunting, fishing, outdoor recreation, lodging and corporate retreats) (1995 to present); Formerly, Partner, Kelly, Drye & Warren LLP (law firm, emphasis on finance, securities, mergers and acquisitions law) (1989-1996); Partner, Lane & Edson PC (law firm) (1987-1989) | 32 | Director, Thomas Foundation for Cancer Research (2005 to present); Trustee of IVH | |||||
| Eleanor B. Schwartz 6300 Lamar Avenue Overland Park, KS 66202 1937 |
Trustee | 2008 | Professor Emeritus, University of Missouri at Kansas City (2003 to present); Chancellor Emeritus, University of Missouri at Kansas City (1999 to present) | 84 | Trustee of Advisors Fund Complex (52 portfolios overseen); Trustee of IVH | |||||
| Michael G. Smith 6300 Lamar Avenue Overland Park, KS 66202 1944 |
Trustee | 2008 | Retired; formerly, with Merrill Lynch as Managing Director of Global Investor Client Strategy (1996-1998), Head of Regional Institutional Sales (1995-1996) and of U.S. Central Region (1986-1995, 1999). | 32 | Director of Executive Board, Cox Business School, Southern Methodist University (1998 to present); Lead Director of Northwestern Mutual Funds (2003 to present); Director, d-bx Target Date Funds (2007 to present); Chairman, CTMG, Inc. (clinical testing) (2008 to present); Trustee of IVH | |||||
| Edward M. Tighe 6300 Lamar Avenue Overland Park, KS 66202 1942 |
Trustee | 2008 | Retired; formerly, CEO and Director of Asgard Holdings LLC (computer network and security services) (2002 to 2004); President, Citco Technology Management (1995-2000); CEO, Global Mutual Fund Services (1993-2000); Sr. Vice President, Templeton Global Investors (1988-1992) | 32 | Director, The Research Coast Principium Foundation, Inc. (non-profit) (2012 to present); Trustee of IVH |
Interested Trustees
Mr. Herrmann is “interested” by virtue of his current or former engagement as an officer of Waddell & Reed Financial, Inc. (WDR) or its wholly owned subsidiaries, including each Fund’s investment manager, IICO, each Fund’s principal underwriter, IFDI, and each Fund’s shareholder servicing and accounting services agent, Waddell & Reed Services Company, doing business as WI Services Company (WISC), as well as by virtue of his personal ownership in shares of WDR.
| Name, Address and Year of Birth |
Position(s) Held with the Trust |
Trustee/ Officer Since | Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen |
Other Directorships Held | |||||
| Henry J. Herrmann 6300 Lamar Avenue Overland Park, KS 66202 1942 |
President Trustee |
2008 2008 |
Chairman of WDR (January 2010 to present); CEO of WDR (2005 to present); President, CEO and Chairman of IICO (2002 to present); President, CEO and Chairman of Waddell & Reed Investment Management Company (WRIMCO) (1993 to present); President and Trustee of each of the funds in the Fund Complex | 84 | Director of WDR, IICO, WRIMCO, WISC, W&R Capital Management Group, Inc. and Waddell & Reed, Inc.; Director, Blue Cross Blue Shield of Kansas City |
| 2014 | ANNUAL REPORT | 293 |
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Officers
The Board has appointed officers who are responsible for the day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. In addition to Mr. Herrmann, who is President, the Trust’s principal officers are:
| Name, Address and Year of Birth |
Position(s) Held with the Trust and Fund Complex |
Officer of Trust Since | Officer of Fund Complex Since* | Principal Occupation(s) During Past 5 Years | ||||
| Mara D. Herrington 6300 Lamar Avenue Overland Park KS 66202 1964 |
Vice President Secretary |
2008 2008 |
2006 2006 |
Vice President and Secretary of each of the funds in the Fund Complex (2006 to present); Vice President of WRIMCO and IICO (2006 to present) | ||||
| Joseph W. Kauten 6300 Lamar Avenue Overland Park KS 66202 1969 |
Vice President Treasurer Principal Accounting Officer Principal Financial Officer |
2008 2008 2008 2008 |
2006 2006 2006 2007 |
Principal Financial Officer of each of the funds in the Fund Complex (2007 to present); Vice President, Treasurer and Principal Accounting Officer of each of the funds in the Fund Complex (2006 to present); Assistant Treasurer of each of the funds in the Fund Complex (2003 to 2006) | ||||
| Scott J. Schneider 6300 Lamar Avenue Overland Park KS 66202 1968 |
Vice President Chief Compliance Officer |
2008 2008 |
2006 2004 |
Chief Compliance Officer (2004 to present) and Vice President (2006 to present) of each of the funds in the Fund Complex | ||||
| Wendy J. Hills 6300 Lamar Avenue Overland Park KS 66202 1970 |
Vice President General Counsel Assistant Secretary |
2014 2014 2014 |
2014 2014 2014 |
Senior Vice President and General Counsel of WDR, Waddell & Reed, WRIMCO and WISC (2014 to present); Senior Vice President and General Counsel of IICO (2014 to present); Vice President, General Counsel and Assistant Secretary for each of the funds in the Fund Complex (2014 to present) | ||||
| Philip A. Shipp 6300 Lamar Avenue Overland Park, KS 66202 1969 |
Assistant Secretary | 2012 | 2012 | Assistant Secretary of each of the funds in the Fund Complex (2012 to present) |
| * | This is the date when the officer first became an officer of one or more of the funds that are the predecessors to current funds within Ivy Funds (each, a predecessor fund) (if applicable). |
| 294 | ANNUAL REPORT | 2014 |
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| Ivy Funds |
The following privacy notice is issued by Ivy Funds (the Funds), Ivy Investment Management Company (IICO) and Ivy Funds Distributor, Inc. (IFDI).
Information Collected
We collect nonpublic personal information about you from your account application and other forms that you may deliver to us, and from your transactions with us and our affiliates. This is information that regulators consider necessary for the proper servicing of your account. In order to effect your transactions and service your account properly, we may disclose all of the information that we collect, as described above, to firms that assist us in servicing your account, such as our transfer agent.
Confidentiality of Information Collected
All records containing your nonpublic personal information are kept at our various service providers. These entities include IICO, IFDI and our transfer agent and administrative services provider. We require these affiliates, and any non-affiliated service providers, to protect the confidentiality of your information and to use the information only for the purposes for which disclosure to them is made. The Funds, IICO, IFDI and other service providers restrict access to nonpublic personal information about you to those employees who need to know that information to provide products and services to you and maintain physical, electronic, and procedural safeguards that comply with federal standards to maintain the security of your nonpublic personal information.
Disclosure of Information in Limited Circumstances
We do not disclose nonpublic personal information about present or former customers to nonaffiliated third parties, except as permitted or required by law. In connection with servicing your account, your nonpublic personal information may be shared among the entities named in this notice, their affiliates, and non-affiliates, including a transfer agent or other service companies. We will adhere to the policies and practices above for both current and former customers.
Ivy Funds
On November 12, 2013, a special shareholder meeting (“Meeting”) for Ivy Funds Asset Strategy New Opportunities was held at the offices of Waddell & Reed Financial, Inc., 6300 Lamar Avenue, Overland Park, Kansas, 66202. The Meeting was held for the following purpose and with the following results.
Proposals: To approve a Plan of Reorganization and Termination providing for the transfer of all assets of Ivy Asset Strategy New Opportunities Fund to, and assumption of all liabilities of Ivy Asset Strategy New Opportunities Fund by, Ivy Emerging Markets Equity Fund in exchange for shares of Ivy Emerging Markets Equity Fund and the distribution of such shares to the shareholders of Ivy Asset Strategy New Opportunities Fund in complete liquidation of Ivy Asset Strategy New Opportunities Fund.
| FUND NAME | FOR | AGAINST | ABSTAIN | TOTAL | ||||||||||||
| Ivy Asset Strategy New Opportunities Fund |
10,475,201 | 235,660 | 431,221 | 11,142,082 | ||||||||||||
On February 21, 2014, a Meeting for Ivy Cundill Global Value Fund was held at the offices of Waddell & Reed Financial, Inc., 6300 Lamar Avenue, Overland Park, Kansas, 66202. The Meeting was held for the following purpose and with the following results.
Proposals. (a) To approve a new sub-advisory agreement between Mackenzie Financial Corporation, the Ivy Cundill Global Value Fund’s sub-adviser, and IICO, the Ivy Cundill Global Value Fund’s adviser; (b) To approve the use of a “manager of managers” structure, whereby IICO will be able to hire and replace sub-advisers for the Ivy Cundill Global Value Fund without shareholder approval.
| FOR | AGAINST | ABSTAIN | TOTAL | |||||||||||
| (a) 10,935,427 | 560,686 | 831,164 | 12,327,277 | |||||||||||
| (b) 10,223,409 | 1,338,657 | 765,211 | 12,327,277 | |||||||||||
| 2014 | ANNUAL REPORT | 295 |
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| Ivy Funds |
Proxy Voting Guidelines
A description of the policies and procedures Ivy Funds uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 1.800.777.6472 and (ii) on the Securities and Exchange Commission’s (SEC) website at www.sec.gov.
Proxy Voting Records
Information regarding how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on Form N-PX through the Ivy Funds’ website at www.ivyfunds.com and on the SEC’s website at www.sec.gov.
QUARTERLY PORTFOLIO SCHEDULE INFORMATION
Ivy Funds
Portfolio holdings can be found on the Trust’s website at www.ivyfunds.com. Alternatively, a complete schedule of portfolio holdings of each Fund for the first and third quarters of each fiscal year is filed with the SEC and can be found on the Trust’s Form N-Q. These holdings may be viewed in the following ways:
| • | On the SEC’s website at www.sec.gov. |
| • | For review and copy at the SEC’s Public Reference Room in Washington, DC. Information on the operations of the Public Reference Room may be obtained by calling 1.800.SEC.0330. |
TO ALL TRADITIONAL IRA PLANHOLDERS:
Ivy Funds
As required by law, we are hereby providing notice to you that income tax may be withheld automatically from any distribution or withdrawal from a traditional IRA. A Fund is generally required to withhold taxes unless you make a written election not to have taxes withheld. The election may be made on the distribution/withdrawal form provided by Waddell & Reed, Inc. which can be obtained from your Waddell & Reed representative or by submitting Internal Revenue Service Form W–4P. Once made, an election can be revoked by providing written notice to Waddell & Reed, Inc. If you elect not to have tax withheld you may be required to make payments of estimated tax. Penalties may be imposed by the IRS if withholding and estimated tax payments are not adequate.
Ivy Funds
If you currently receive one copy of the shareholder reports and prospectus for your household (even if more than one person in your household owns shares of the Trust) and you would prefer to receive separate shareholder reports and prospectuses for each account holder living at your address, you can do either of the following:
Fax your request to 800.532.2749.
Write to us at the address listed on the back cover.
Please list each account for which you would like to receive separate shareholder reports and prospectus mailings. We will resume sending separate documents within 30 days of receiving your request.
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| THE IVY FUNDS FAMILY |
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ANN-IVYFUNDS (3-14)
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ITEM 2. CODE OF ETHICS
| (a) | As of March 31, 2014, the Registrant has adopted a code of ethics (the “Code”), as defined in Item 2 of Form N-CSR, that applies to the Principal Executive Officer and Principal Financial Officer or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. |
| (b) | There have been no amendments, during the period covered by this report, to a provision of the Code that applies to the registrant’s Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the Code. |
| (c) | During the period covered by this report, the registrant did not grant any waivers, including an implicit waiver, from a provision of the Code that applies to the registrant’s Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, or persons performing similar functions, regardless of whether those individuals were employed by the registrant or a third party, that related to one or more of the items set forth in paragraph (b) of this item’s instructions. |
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Registrant has determined that each of Jarold W. Boettcher, James D. Gressett, and Edward M. Tighe is an audit committee financial expert, as defined in Item 3 of Form N-CSR, serving on its audit committee. Each of Mr. Boettcher, Mr. Gressett and Mr. Tighe is independent for purposes of Item 3 of Form N-CSR. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liability that are greater than the duties, obligations, and liability imposed on such person as a member of the audit committee and board of trustees in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of trustees.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
| (a) | Audit Fees |
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| The aggregate fees billed for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for each of the last two fiscal years are as follows: |
| 2013 |
$489,000 | |||
| 2014 |
528,500 |
| (b) | Audit-Related Fees |
| The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s annual financial statements and are not reported under paragraph (a) of this Item are as follows: |
| 2013 |
$0 | |||
| 2014 |
3,500 |
| These fees are related to the review of Form N-1A. |
| (c) | Tax Fees |
| The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning are as follows: |
| 2013 |
$159,673 | |||
| 2014 |
159,373 |
| These fees are related to the review of the registrant’s tax returns. |
| (d) | All Other Fees |
| The aggregate fees billed for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this item are as follows: |
| 2013 |
$21,535 | |||
| 2014 |
38,101 |
| These fees are related to the review of internal control. |
| (e) (1) | Registrant’s audit committee considers with the principal accountants all audit services to be provided by the principal accountants and pre-approves all such audit services. |
The audit committee shall pre-approve all non-audit services to be provided by the principal accountants to the registrant; provided that the pre-approval requirement does not apply to non-audit services that (i) were not identified as such at the time of the pre-approval and (ii) do not aggregate more than 5%
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of total fees paid to the principal accountants by the registrant during the fiscal year in which the services are provided, if the audit committee approves the provision of such non-audit services prior to the completion of the audit.
The audit committee shall pre-approve all non-audit services to be provided by the principal accountants to the investment adviser (not including any subadvisor whose role is primarily portfolio management and is subcontracted and overseen by the investment advisor) or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant if the engagement relates directly to the operations or financial reporting of the registrant; provided that the pre-approval requirement does not apply to non-audit services that (i) were not identified as such at the time of the pre-approval and (ii) do not aggregate more than 5% of total fees paid to the principal accountants by the registrant for all services and by the registrant’s investment adviser for non-audit services if the engagement relates directly to the operations or financial reporting of the registrant during the fiscal year in which those services are provided, if the audit committee approves the provision of such non-audit services prior to the completion of the audit.
| (e) (2) | None of the services described in each of paragraphs (b) through (d) of this Item were approved by the audit committee pursuant to the waiver provisions of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
| (f) | Not applicable |
| (g) | $181,208 and $200,974 are the aggregate non-audit fees billed in each of the last two fiscal years for services rendered by the principal accountant to the registrant. $184,851 and $171,850 are the aggregate non-audit fees billed in each of the last two fiscal years for services rendered by the principal accountant to the investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. |
| (h) | Not Applicable. |
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
| (a) | See Item 1 Shareholder Report. |
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| (b) | Not Applicable. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
| (a) | The Registrant’s Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, based on their evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective and adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits is accumulated and communicated to the Registrant’s management, including the Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. |
| (b) | There were no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
ITEM 12. EXHIBITS.
| (a) (1) | The Code described in Item 2 of this Form N-CSR. |
Attached hereto as Exhibit 99.CODE.
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(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)).
Attached hereto as Exhibit 99.CERT.
(b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)).
Attached hereto as Exhibit 99.906CERT.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Ivy Funds | ||
| (Registrant) | ||
| By | /s/Mara D. Herrington | |
| Mara D. Herrington, Vice President and Secretary | ||
Date: June 6, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By | /s/ Henry J. Herrmann | |
| Henry J. Herrmann, President and Principal Executive Officer |
Date: June 6, 2014
| By | /s/ Joseph W. Kauten | |
| Joseph W. Kauten, Vice President and Principal Financial Officer |
Date: June 6, 2014