IVY FUNDS IVY ASSET STRATEGY NEW OPPORTUNITIES FUND · IVY ASSET STRATEGY NEW OPPORTUNITIES FUND...

IVY FUNDSIVY ASSET STRATEGY NEW OPPORTUNITIES FUND

6300 LAMAR AVENUEOVERLAND PARK, KANSAS 66202-4200

Dear Shareholder:

As a shareholder of the Ivy Asset Strategy New Opportunities Fund, you areinvited to vote on a proposal to reorganize your Fund into the Ivy Emerging MarketsEquity Fund (formerly, the Ivy Pacific Opportunities Fund). Your Fund will hold aspecial meeting of shareholders on March 6, 2014, at 4:00 PM, Central Time, toconsider the proposed reorganization. The specific details and reasons for theproposed reorganization are contained in the enclosed combined Prospectus andProxy Statement. Please read it carefully.

After careful consideration, the Board of Trustees of Ivy Fundsunanimously approved the proposed reorganization and recommends thatshareholders vote “FOR” the proposal.

This special meeting will be held at 6300 Lamar Avenue, Overland Park,Kansas 66202-4200. While we hope you can attend this meeting, it is very importantthat you vote your shares at your earliest convenience. To assist with the solicitationof proxies, we have engaged Broadridge Financial Solutions, Inc., a proxysolicitation firm. As the meeting date approaches, if you have not voted your sharesyou may receive a phone call from them urging you to vote your shares.

Your vote is important, regardless of the number of shares you own. It isimportant that we receive your vote no later than the time of the specialmeeting of shareholders on March 6, 2014. If you have more than one accountregistered in your name, you will receive a separate proxy card for each account.Please vote and return each proxy card that you receive, or take advantage ofthe telephonic or electronic voting procedures described in the proxy card(s).Please help your Fund avoid the expense of a follow-up mailing by voting today!

If you have any questions regarding the enclosed combined Prospectus andProxy Statement, please call Broadridge at 1-877-605-2536, Ivy Client Services at1-800-777-6472 or your financial advisor.

We appreciate your participation and prompt response in these matters andthank you for your continued support.

Sincerely,

Henry J. HerrmannPresident

January 30, 2014

IVY ASSET STRATEGY NEW OPPORTUNITIES FUND

NOTICE OF SPECIAL MEETING OF SHAREHOLDERSTO BE HELD MARCH 6, 2014

NOTICE IS HEREBY GIVEN that a Special Meeting of the shareholders of theIvy Asset Strategy New Opportunities Fund will be held at 4:00 PM, Central Time,on March 6, 2014, at 6300 Lamar Avenue, Overland Park, Kansas 66202-4200 forthese purposes:

1. To approve an Agreement and Plan of Reorganization providing for thetransfer of all of the assets of Ivy Asset Strategy New Opportunities Fundto, and the assumption of all of the liabilities of the Ivy Asset StrategyNew Opportunities Fund by, the Ivy Emerging Markets Equity Fund inexchange for shares of the Ivy Emerging Markets Equity Fund and thedistribution of such shares to the shareholders of the Ivy Asset StrategyNew Opportunities Fund in complete liquidation of the Ivy Asset StrategyNew Opportunities Fund.

2. To consider and act upon any other matters that may properly come beforethe meeting and any adjourned session of the meeting.

Shareholders of record at the close of business on January 17, 2014, are entitledto notice of and to vote at the meeting and any adjourned session.

By order of the Board of Trustees of Ivy Funds,

Mara HerringtonSecretary

January 30, 2014

Your vote is important, regardless of the number of shares you own. You can voteeasily and quickly by phone, by mail, by internet or in person. See the

enclosed proxy card for instructions.Please help your Fund avoid the expense of a follow-up mailing by voting today!

Combined Prospectus and Proxy StatementJanuary 30, 2014

Transfer of all of the Assets and Liabilities of theIvy Asset Strategy New Opportunities Fund, a series of

Ivy Funds

By and in Exchange for Shares of and Assumption of Liabilities byIvy Emerging Markets Equity Fund, a series of

Ivy Funds

6300 Lamar AvenueOverland Park, Kansas 66202-4200

TABLE OF CONTENTS

Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Summary of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Information about the Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Voting Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Appendix A – Agreement and Plan of Reorganization . . . . . . . . . . . . . . . . . . . . A-1Appendix B – Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

This Combined Prospectus and Proxy Statement (“Prospectus/Proxy”) containsinformation you should know before voting on the Agreement and Plan ofReorganization (the “Plan”) relating to the proposed reorganization (the“Reorganization”) of the Ivy Asset Strategy New Opportunities Fund (the “AssetStrategy New Opportunities Fund”) into the Ivy Emerging Markets Equity Fund(formerly, the Ivy Pacific Opportunities Fund) (the “Emerging Markets EquityFund,” and together with the Asset Strategy New Opportunities Fund, the “Funds”)at a Special Meeting of Shareholders of the Asset Strategy New Opportunities Fund(the “Meeting”), which will be held at 4:00 PM, Central Time, on March 6, 2014 at6300 Lamar Avenue, Overland Park, Kansas.

The Funds are each a series of Ivy Funds, a registered, open-end managementinvestment company organized as a Delaware statutory trust (the “Trust”). The AssetStrategy New Opportunities Fund’s investment objective is to seek to provide totalreturn. The Emerging Markets Equity Fund’s investment objective is to seek toprovide growth of capital. You should read this Prospectus/Proxy, which containsimportant information you should know, and keep it for future reference.

This Prospectus/Proxy will be mailed to shareholders on or about February 5,2014. Also enclosed is the Prospectus for the Emerging Markets Equity Fund datedJanuary 29, 2014.

1

The Proposal in this Prospectus/Proxy relates to the Reorganization. If theReorganization of the Asset Strategy New Opportunities Fund occurs, you willbecome a shareholder of the Emerging Markets Equity Fund. If the Plan is approvedby the shareholders of the Asset Strategy New Opportunities Fund and theReorganization occurs, the Asset Strategy New Opportunities Fund will transfer allof the assets and liabilities attributable to each class of its shares to the EmergingMarkets Equity Fund in exchange for shares of the same class of shares of theEmerging Markets Equity Fund with the same aggregate net asset value (“NAV”) asthe net value of the assets and liabilities transferred. After that exchange, shares ofeach class received by the Asset Strategy New Opportunities Fund will bedistributed pro rata to the Asset Strategy New Opportunities Fund’s shareholders ofthe corresponding class.

Shareholders of the Asset Strategy New Opportunities Fund are being asked tovote on the Proposal in this Prospectus/Proxy. Please review the Proposal carefully.

Please review the enclosed Prospectus and the unaudited financial statementscontained in the Funds’ semi-annual report, relating to the Funds for the six-monthperiod ended September 30, 2013, each of which contains important informationabout the Funds you should know, and keep them for future reference. Thesedocuments are incorporated into this Prospectus/Proxy by reference. The followingdocuments have been filed with the Securities and Exchange Commission (the“SEC”) and are incorporated into this Prospectus/Proxy by reference:

– The Prospectus for the funds of the Trust dated July 31, 2013, relating tothe Funds (as supplemented October 2, 2013, November 6,2013, November 21, 2013, November 25, 2013 and January 2, 2014) (the“Combined Prospectus”).

– The Statement of Additional Information for the funds of the Trust datedJuly 31, 2013, relating to the Funds (as supplemented October 3,2013, November 21, 2013, November 25, 2013 and January 2, 2014) (the“Combined SAI”).

– The Prospectus for the Emerging Markets Equity Fund dated January 29,2014.

– The Statement of Additional Information for the Emerging Markets EquityFund dated January 29, 2014.

– The audited financial statements included in the Funds’ Annual Report toshareholders, relating to the Funds dated March 31, 2013, and theunaudited financial statements and Fund highlights included in the Funds’Semi-Annual Report to shareholders relating to the Funds datedSeptember 30, 2013.

– The Statement of Additional Information dated January 30, 2014 relatingto the Reorganization.

2

For a free copy of any of the documents listed above, you may call1-800-777-6472, or you may write to the attention of either Fund at:

Ivy Funds6300 Lamar Avenue

P. O. Box 29217Shawnee Mission, Kansas 66201-9217

The Trust is subject to the informational requirements of the SecuritiesExchange Act of 1934, as amended, and the Investment Company Act of 1940, asamended, and in accordance therewith files reports and other information with theSEC. You also may obtain many of these documents by accessing the Internet sitefor Ivy Funds at www.ivyfunds.com. Text-only versions of the Ivy Funds documentscan be viewed online or downloaded from the EDGAR database on the SEC’sInternet site at www.sec.gov. You can review and copy information about the Fundsby visiting the SEC’s Public Reference Room at 100 F Street, N.E., Washington,D.C. 20549 or at the SEC’s Northeast Regional Office (3 World Financial Center,New York, New York 10281) or Midwest Regional Office (175 W. JacksonBoulevard, Suite 900, Chicago, Illinois 60604). You can obtain copies, uponpayment of a duplicating fee, by sending an e-mail request to [email protected] orby writing the SEC Public Reference Branch, Office of Consumer Affairs andInformation Services, Securities and Exchange Commission, Washington, D.C.20549. Information on the operations of the Public Reference Room may be obtainedby calling 1.202.551.8090.

The Securities and Exchange Commission has not approved ordisapproved these securities or determined if this Prospectus/Proxy is truthfulor complete. Any representation to the contrary is a criminal offense.

3

SYNOPSIS

This Prospectus/Proxy provides a brief overview of the key features and othermatters typically of concern to shareholders affected by a reorganization of a mutualfund into another mutual fund. These responses are qualified in their entirety by theremainder of this Prospectus/Proxy, which you should read carefully because itcontains additional information and further details regarding the Reorganization. Thedescription of the Reorganization is qualified by reference to the full text of the Plan,which is attached as Appendix A.

1. WHAT IS BEING PROPOSED?

Both the Asset Strategy New Opportunities Fund and the Emerging Markets EquityFund are series of the Trust. The Board of Trustees of the Trust (the “Board”) isrecommending approval of the Plan. This means that the Emerging Markets EquityFund would receive all of the assets and liabilities of the Asset Strategy NewOpportunities Fund in exchange for shares of the Emerging Markets Equity Fund.Please see the answer to Question 4 below and the “Summary of The Funds” sectionof this Prospectus/Proxy for more information comparing the investment strategiesand policies of the Funds.

If the Plan is approved and the resulting Reorganization is consummated, your sharesof the Asset Strategy New Opportunities Fund will be cancelled and you will receiveshares of the Emerging Markets Equity Fund with an aggregate NAV value equal tothe aggregate NAV of your Asset Strategy New Opportunities Fund shares as of thebusiness day before the closing of the Reorganization. The Reorganization currentlyis scheduled to take place on or around March 17, 2014.

2. WHY IS THE REORGANIZATION BEING PROPOSED?

The Board recommends approval of the Plan and the Reorganization because itoffers shareholders of the Asset Strategy New Opportunities Fund the opportunity toinvest in a larger fund (allowing the potential for more efficient operations byspreading relatively fixed costs, such as audit and legal fees, over a larger assetbase). In reviewing the Reorganization, the Board also considered the followingfactors, among others:

– the Board considered the desirability of continuing to maintain the AssetStrategy New Opportunities Fund given its performance and size. Afterconsidering the proposed Reorganization and other alternatives identifiedby Ivy Investment Management Company (“IICO” or “Adviser”), theBoard concluded that reorganizing the Asset Strategy New OpportunitiesFund into the Emerging Markets Equity Fund, a larger fund with aninvestment strategy focused in equity investments in emerging markets ina growing asset class, would be in the best interests of each Fund;

4

– based on estimated expense ratios calculated using each Fund’s net assetsand numbers of shareholders as of September 30, 2013, shareholders of theAsset Strategy New Opportunities Fund are expected to experience thesame or lower net expenses after expense reimbursements;

– the Emerging Markets Equity Fund has a better performance record for alonger period of time;

– the Funds are both diversified, share the same concentration policy andfundamental investment restrictions; and

– the Reorganization is expected to be tax-free for shareholders of the AssetStrategy New Opportunities Fund who choose to remain shareholders ofthe Emerging Markets Equity Fund, while a liquidation or shareholderredemption would be a realization event for tax purposes.

Please review “Reasons for the Reorganization” in the “Information about theReorganization” section under “Proposal” in this Prospectus/Proxy for moreinformation regarding the factors considered by the Board.

3. WHAT EMERGING MARKETS EQUITY FUND SHARES WILL IRECEIVE IN THE REORGANIZATION?

The shares of the Emerging Markets Equity Fund you receive in exchange for yourAsset Strategy New Opportunities Fund shares will have an aggregate NAV equal tothe aggregate NAV of your respective Asset Strategy New Opportunities Fundshares as of the close of business on the business day before the closing of theReorganization. If you own Class A, Class B, Class C, Class E, Class I, Class R andClass Y shares of the Asset Strategy New Opportunities Fund, you will receiveClass A, Class B, Class C, Class E, Class I, Class R and Class Y shares of theEmerging Markets Equity Fund, respectively. You will have voting rights identicalto those you currently have, but as a shareholder of the Emerging Markets EquityFund. The rights of the shareholders of each Fund are identical since each Fund is aseries of the Trust.

The Emerging Markets Equity Fund distributes net investment income annually inDecember, while the Asset Strategy New Opportunities Fund distributes netinvestment income quarterly. Distributions for the Emerging Markets Equity Fundwill continue to be paid annually in December after the Reorganization. Net realizedcapital gains (and any gains from foreign currency transactions) ordinarily aredistributed by each Fund in December and will continue to be distributed annuallyby the Emerging Markets Equity Fund after the Reorganization. All shareholderfeatures that you have elected will remain available and in effect after theReorganization unless you direct that those elections be changed.

For more information on the characteristics of the Emerging Markets Equity Fundshares you will receive in comparison to the Asset Strategy New Opportunities Fund

5

shares you currently own, please see the section “Shares You Will Receive” in the“Information About the Reorganization” section of this Prospectus/Proxy.

4. HOW DO THE FUNDS’ INVESTMENT OBJECTIVES, STRATEGIESAND RISKS COMPARE?

The following summarizes the primary similarities and differences in the Funds’investment objectives, principal investment strategies and risks. Please see the“Summary of The Funds” section of this Prospectus/Proxy for more informationcomparing the investment strategies and policies of the Funds.

The Asset Strategy New Opportunities Fund’s investment objective is to seek toprovide total return. The Emerging Markets Equity Fund’s investment objective is toseek to provide growth of capital. The Asset Strategy New Opportunities Fund’sinvestment objective is broader than the Emerging Markets Equity Fund’sinvestment objective in that the Asset Strategy New Opportunities Fund may seekincome and growth of capital.

Generally, the Asset Strategy New Opportunities Fund’s investment strategy isbroader than the Emerging Markets Equity Fund’s investment strategy. While theAsset Strategy New Opportunities Fund may invest in the same asset classes andcountries as the Emerging Markets Equity Fund, it also may invest in additionalasset classes and countries. The Asset Strategy New Opportunities Fund seeks toachieve its objective by allocating its assets primarily among stocks, bonds andshort-term instruments of issuers in markets around the globe, as well as investmentsin derivative instruments, precious metals and investments with exposure to variousforeign currencies. The Fund may invest its assets in any market that IICO believescan offer a high probability of return or, alternatively, can provide a high degree ofrelative safety in uncertain times. Depending on its outlook for the U.S. and globaleconomies, IICO identifies growth themes and then focuses its strategy on allocatingthe Fund’s assets among stocks, bonds, cash, precious metals, currency andderivative instruments, including derivatives traded over-the-counter or onexchanges.

The Emerging Markets Equity Fund invests, under normal circumstances, at least80% of its net assets in equity securities, primarily common stock, of companieswhose securities are located within emerging market countries or economicallylinked to emerging market countries. Emerging market countries include, but are notlimited to, those considered to be developing by the International Monetary Fund,the World Bank, the International Financial Corporation or one of the leading globalinvestment banks. Generally, IICO, has broad discretion to identify other countriesthat it considers to qualify as emerging market countries. The majority of thesecountries are likely to be located in Asia, Latin America, the Middle East, Centraland Eastern Europe, and Africa. The Fund may invest in companies of any size andmarket capitalization and in companies of any industry in any such country.

6

The primary difference between the Funds is that the Asset Strategy NewOpportunities Fund may invest in more asset classes and more countries. TheEmerging Markets Equity Fund utilizes an investment strategy focused in equityinvestments in emerging markets. The investment process followed by the Funds’portfolio managers to identify investments and countries are substantively similar.There is overlap between the Funds’ investment portfolios. Each Fund is managedby IICO, but the Funds have different portfolio managers. Frederick Jiang isprimarily responsible for the day-to-day management of the Emerging MarketsEquity Fund. Mr. Jiang has held his Fund responsibilities since February 2004 andwill continue his responsibilities after the Reorganization. Jonas Krumplys isprimarily responsible for the day-to-day management of the Asset Strategy NewOpportunities Fund. Mr. Krumplys has held his Fund responsibilities since May2010. After the reorganization, it is expected that Messrs. Krumplys and Jiang willserve as portfolio managers of the combined Fund.

In addition, both Funds are diversified and have the same fundamental investmentrestrictions.

As of September 30, 2013, the Asset Strategy New Opportunities Fund held52 equity securities in its portfolio with a median market cap of $4.5 billion, whilethe Emerging Markets Equity Fund held 69 equity securities in its portfolio with amedian market cap of $9.6 billion. The Asset Strategy New Opportunities Fund held9 equity securities, representing 12.3% of its assets that were also held in theEmerging Markets Equity Fund, and the Emerging Markets Equity Fund held9 equity securities, representing 12.9% of its assets that were also held in the AssetStrategy New Opportunities Fund.

The Funds are subject to many common risks that include: Company Risk, EmergingMarket Risk, Foreign Currency Risk, Foreign Securities Risk, Growth Stock Risk,Liquidity Risk, Management Risk, Market Risk, Mid Size Company Risk and SmallCompany Risk. The Emerging Markets Equity Fund also is subject to LargeCompany Risk.

5. HOW DO THE FUNDS COMPARE IN SIZE?

As of September 30, 2013, the Emerging Markets Equity Fund’s net assets wereapproximately $573.1 million and Asset Strategy New Opportunities Fund’s netassets were approximately $251.2 million. The asset size of each Fund fluctuates ona daily basis and the asset size of the Emerging Markets Equity Fund after theReorganization may be larger or smaller than the combined assets of the Funds as ofSeptember 30, 2013. More current total net asset information is available atwww.ivyfunds.com.

7

6. WILL THE REORGANIZATION RESULT IN A HIGHERINVESTMENT ADVISORY FEE RATE AND HIGHER FUND EXPENSERATES?

The Reorganization will result in lower advisory fees for each Fund. Asset StrategyNew Opportunities Fund’s net management fee, as a percent of its average net assets,for the fiscal year ended March 31, 2013 was 1.00%. Emerging Markets EquityFund’s net management fee for the same period was 0.96%, and is estimated to havebeen 0.93% if the Reorganization had occurred on April 1, 2012. The Reorganizationwould have resulted in slightly higher Fund expense rates, for Class A and Class Bshareholders of Asset Strategy New Opportunities Fund, but not for any other classesof shares. However, IICO has agreed to limit the operating expenses that will becharged to Class A and Class B shareholders of the Emerging Markets Equity Fundto be equal to the lowest expense ratio of such classes for either the Asset StrategyNew Opportunities Fund or the Emerging Markets Equity Fund for a two yearperiod, if the Reorganization is approved by shareholders.

The table below shows, for each Fund, total average net assets and the total expenseratio, with and without waivers, as of March 31, 2013. The table shows total averagenet assets and the total average expense ratio with and without the expensereimbursement agreement for the Emerging Markets Equity Fund, assuming theReorganization occurred on April 1, 2012.

Total Annual Operating ExpenseRatio (including Interest Expenses)

Fund/Share ClassAverage Net

AssetsExcludingWaivers

IncludingWaivers

Asset Strategy New OpportunitiesFundClass A Shares . . . . . . . . . . . . . . . $179,488,000 1.72% 1.50%1

Class B Shares . . . . . . . . . . . . . . . $ 6,013,000 2.50% 2.50%Class C Shares . . . . . . . . . . . . . . . $ 57,794,000 2.35% 2.35%Class E Shares . . . . . . . . . . . . . . . $ 103,000 1.50% 1.50%Class I Shares . . . . . . . . . . . . . . . . $ 60,590,000 1.29% 1.25%1

Class R Shares . . . . . . . . . . . . . . . $ 561,000 1.87% 1.87%Class Y Shares . . . . . . . . . . . . . . . $ 6,440,000 1.54% 1.50%2

Emerging Markets Equity FundClass A Shares . . . . . . . . . . . . . . . $486,153,000 1.74% 1.74%Class B Shares . . . . . . . . . . . . . . . $ 8,707,000 2.94% 2.94%Class C Shares . . . . . . . . . . . . . . . $ 17,148,000 2.53% 2.53%Class E Shares . . . . . . . . . . . . . . . $ 108,000 1.34% 1.34%Class I Shares . . . . . . . . . . . . . . . . $140,732,000 1.22% 1.22%Class R Shares . . . . . . . . . . . . . . . $ 253,000 1.80% 1.80%Class Y Shares . . . . . . . . . . . . . . . $ 5,673,000 1.47% 1.47%

8

Total Annual Operating ExpenseRatio (including Interest Expenses)

Fund/Share ClassAverage Net

AssetsExcludingWaivers

IncludingWaivers

Emerging Markets Equity Fund(pro forma assumingReorganization)Class A Shares . . . . . . . . . . . . . . . $665,641,000 1.69% 1.50%3

Class B Shares . . . . . . . . . . . . . . . $ 14,720,000 2.71% 2.50%3

Class C Shares . . . . . . . . . . . . . . . $ 74,942,000 2.33% 2.33%Class E Shares . . . . . . . . . . . . . . . $ 211,000 1.37% 1.37%Class I Shares . . . . . . . . . . . . . . . . $201,322,000 1.20% 1.20%Class R Shares . . . . . . . . . . . . . . . $ 814,000 1.79% 1.79%Class Y Shares . . . . . . . . . . . . . . . $ 12,113,000 1.46% 1.46%

1 Through July 31, 2015, IICO, the Fund’s investment manager, Ivy FundsDistributor, Inc. (IFDI), the Fund’s distributor, and/or Waddell & Reed ServicesCompany, doing business as WI Services Company (WISC), the Fund’stransfer agent, have contractually agreed to reimburse sufficient managementfees, 12b-1 fees and/or shareholder servicing fees to cap the total annualordinary fund operating expenses for Class A shares at 1.50% and Class Ishares at 1.25%. Prior to that date, the expense limitation may not be terminatedby IICO, IFDI, WISC or the Board.

2 Through July 31, 2015, to the extent that the total annual ordinary fundoperating expenses of the Class Y shares exceeds the total annual ordinary fundoperating expenses of the Class A shares, Ivy Funds Distributor, Inc. (IFDI), theFund’s distributor, and/or Waddell & Reed Services Company, doing businessas WI Services Company (WISC), the Fund’s transfer agent, have contractuallyagreed to reimburse sufficient 12b-1 and/or shareholder servicing fees to ensurethat the total annual ordinary fund operating expenses of the Class Y shares donot exceed the total annual ordinary fund operating expenses of the Class Ashares, as calculated at the end of each month. Prior to that date, the expenselimitation may not be terminated by IFDI, WISC or the Board.

3 If the Reorganization is approved, through July 30, 2016, IICO, the Fund’sinvestment manager, Ivy Funds Distributor, Inc. (IFDI), the Fund’s distributor,and/or Waddell & Reed Services Company, doing business as WI ServicesCompany (WISC), the Fund’s transfer agent, have contractually agreed toreimburse sufficient management fees, 12b-1 fees and/or shareholder servicingfees to cap the total annual ordinary fund operating expenses for Class A sharesat 1.50% and Class B shares at 2.50%. Prior to that date, the expense limitationmay not be terminated by IICO, IFDI, WISC or the Board.

Additional pro forma fee, expense, and financial information is included in the“Summary of the Funds” section of this Prospectus/Proxy.

9

7. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OFTHE REORGANIZATION?

The Reorganization is expected to be tax-free to you for federal income taxpurposes. This means that neither you nor the Asset Strategy New OpportunitiesFund is expected to recognize a gain or loss as a result of the Reorganization.

Immediately prior to the Reorganization, the Asset Strategy New Opportunities Fundwill declare and pay a distribution of all net investment company taxable income, ifany, and net realized capital gains (after reduction by any available capital losscarry-forwards), if any, to its shareholders. The cost basis and holding period of theAsset Strategy New Opportunities Fund shares are expected to carry over to yournew shares in the Emerging Markets Equity Fund.

8. WILL THE SERVICES PROVIDED BY IICO CHANGE?

No. IICO currently manages both the Asset Strategy New Opportunities Fund andthe Emerging Markets Equity Fund, and will continue to serve as investmentmanager of the Emerging Markets Equity Fund following the Reorganization. In allcases, the Funds have the same service providers. Upon completion of theReorganization, the Emerging Markets Equity Fund will continue to engage itsexisting service providers. In all cases, the types of services provided to the Fundsunder these service arrangements are the same.

9. WILL THERE BE ANY SALES LOAD, COMMISSION OR OTHERTRANSACTION FEE IN CONNECTION WITH THE ACQUISITION?

No. There will be no sales charge, sales load, commission or other transactional feein connection with the Reorganization. The full and fractional value of shares of theAsset Strategy New Opportunities Fund will be exchanged for full and fractionalcorresponding shares of the Emerging Markets Equity Fund having approximatelyequal aggregate value, without any sales charge, sales load, commission or othertransactional fee being imposed.

The shares acquired in the Reorganization may be exchanged for shares of the sameclass of any other fund in the Ivy Family of Funds without the payment of anadditional initial sales charge or contingent deferred sales charge (“CDSC”). Theprocedures for purchasing and redeeming your shares of the Emerging MarketsEquity Fund will be the same after the Reorganization as they are currently for theAsset Strategy New Opportunities Fund.

For Class B and Class C shares, or Class A or Class E shares that you received inconnection with the Reorganization to which a CDSC would otherwise apply, thetime period for the CDSC will continue to age from the date you purchased therespective shares of the Asset Strategy New Opportunities Fund. Class I, Class R andClass Y shares are not subject to a CDSC.

10

10. MAY I STILL ADD TO MY EXISTING ASSET STRATEGY NEWOPPORTUNITIES FUND ACCOUNT UNTIL THE ACQUISITION?

Yes. Asset Strategy New Opportunities Fund shareholders may continue to makeadditional investments until the Closing Date (anticipated to be on or aboutMarch 17, 2014), unless the Board determines to limit future investments to ensure asmooth transition of shareholder accounts or for any other reason. In anticipation ofthe Reorganization, the Asset Strategy New Opportunities Fund is expected to beclosed to new shareholders as of February 25, 2014.

11. WILL I NEED TO OPEN AN ACCOUNT IN THE EMERGINGMARKETS EQUITY FUND PRIOR TO THE ACQUISITION?

No. An account will be set up in your name and your shares of the Asset StrategyNew Opportunities Fund will automatically be converted to corresponding shares ofthe Emerging Markets Equity Fund. You will receive confirmation of thistransaction following the Reorganization.

12. WILL MY COST BASIS CHANGE AS A RESULT OF THEACQUISITION?

Your total cost basis is not expected to change as a result of the Reorganization.However, since the number of shares you hold after the Reorganization may bedifferent than the number of shares you held prior to the Reorganization, youraverage cost basis per share may change. Since the Reorganization is expected to betreated as a tax-free transaction for the Asset Strategy New Opportunities Fund,shareholders should not recognize any capital gain or loss as a direct result of theReorganization.

13. WILL EITHER FUND PAY FEES ASSOCIATED WITH THEACQUISITION?

The costs of the Reorganization will be borne by the Asset Strategy NewOpportunities Fund and IICO in the following percentages (and estimatedcorresponding dollar amounts): Asset Strategy New Opportunities Fund 50%($129,466) and IICO 50% ($129,466). The Emerging Markets Equity Fund will bearthe transfer agency costs related to the Reorganization and the costs of registration ofits shares to be issued to shareholders of the Asset Strategy New Opportunities Fundupon the closing of the Reorganization.

14. WHEN WILL THE ACQUISITION TAKE PLACE?

The Reorganization will occur on or about the Closing Date, which currently isscheduled for March 17, 2014. Shortly after completion of the Reorganization,affected shareholders will receive a confirmation statement reflecting their new Fundaccount number and number of shares owned.

11

15. WHAT IF I WANT TO EXCHANGE MY SHARES INTO ANOTHERFUND IN THE TRUST PRIOR TO THE ACQUISITION?

You may exchange your shares into another fund of the Trust before the ClosingDate (on or about March 17, 2014) in accordance with your pre-existing exchangeprivileges. If you choose to exchange your shares of the Asset Strategy NewOpportunities Fund for another fund in the Ivy Family of Funds, your request will betreated as a normal exchange of shares and will be a taxable transaction unless yourshares are held in a tax-deferred account, such as an individual retirement account(“IRA”). Exchanges may be subject to minimum investment requirements, salesloads, and redemption fees. This is not an offer to sell shares of other funds of theTrust, it is for informational purposes only. Before exchanging into a fund, pleaseread its prospectus carefully.

12

SUMMARY OF THE FUNDS

This section provides a summary of each Fund, including but not limited to, eachFund’s investment objective, primary investment strategies, restrictions, fees, andhistorical performance. Please note that this is only a brief discussion and is qualifiedin its entirety by reference to the information contained herein and incorporated hereinby reference. There is no assurance that a Fund will achieve its stated objective. BothFunds are designed for long-term investors who can tolerate greater risk.

Investment Objectives

The Asset Strategy New Opportunities Fund’s investment objective is to seek toprovide total return. The Emerging Markets Equity Fund’s investment objective is toseek to provide growth of capital.

Comparison of Fees and Expenses

The types of expenses currently paid by each class of shares of the AssetStrategy New Opportunities Fund are the same types of expenses to be paid by thecorresponding share classes of the Emerging Markets Equity Fund. Currently, theFunds have the same investment management agreement and each Fund has thesame investment advisory fee rate schedule. The annual investment advisory fee ratepayable under the advisory agreements for the Asset Strategy New OpportunitiesFund and Emerging Markets Equity Fund were 1.00% and 0.96%, respectively, as apercent of the Fund’s average net assets, for the fiscal year ended March 31, 2013.The difference in the Funds’ advisory fee rate is a result of differences in the Funds’assets under management.

Current and Pro Forma Fees and Expenses

The following tables compare the fees and expenses you may bear directly orindirectly as an investor in the Asset Strategy New Opportunities Fund versus theEmerging Markets Equity Fund, and show the projected (“pro forma”) estimatedfees and expenses of the Emerging Markets Equity Fund, assuming consummationof the Reorganization as of April 1, 2012. Fees and expenses shown for the AssetStrategy New Opportunities Fund and Emerging Markets Equity Fund weredetermined based on each Fund’s average net assets as of the fiscal year endedMarch 31, 2013. The pro forma fees and expenses are estimated in good faith and arehypothetical, and do not reflect any change in expense ratios resulting from a changein assets under management since March 31, 2013 for either Fund. Total net assetsas of these dates are shown in a footnote to the table. Class E shares are not availablefor investment. More current total net asset information is available atwww.ivyfunds.com. If the Reorganization is approved, IICO has agreed to anexpense reimbursement agreement so that all Emerging Markets Equity Fundshareholders will experience the same or lower net expenses that Asset Strategy New

13

Opportunities Fund shareholders experienced as of March 31, 2013 for two yearsfollowing the Reorganization.

Annual Fund Operating Expenses

Annual Fund Operating Expenses are paid out of a Fund’s assets and include fees forportfolio management and administrative services, including recordkeeping, accountingand other shareholder services. You do not pay these fees directly, but as the examples inthe table below show, these costs are borne indirectly by all shareholders.

The Annual Fund Operating Expenses shown in the table below represent annualizedexpenses for the Asset Strategy New Opportunities Fund and Emerging MarketsEquity Fund, as well as those estimated for the Emerging Markets Equity Fund on apro forma basis, assuming consummation of the Reorganization, for the fiscal yearended March 31, 2013. Total Annual Fund Operating Expenses shown in the tablebelow for the combined Emerging Markets Equity Fund include the expensereimbursement agreement so that all Emerging Markets Equity Fund shareholderswill experience the same or lower net expenses that Asset Strategy NewOpportunities Fund shareholders experienced as of March 31, 2013 for two yearsfollowing the Reorganization.

Shareholder Fees(fees paid directly from your investment)

Asset StrategyNew

OpportunitiesFund

EmergingMarkets Equity

Fund


Fund(combinedpro forma)

Maximum sales charge (load) imposed onpurchases (as a % of offering price)

Class A . . . . . . . . . . . . . . . . . . . . . . . . 5.75% 5.75% 5.75%Class B . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass C . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass E . . . . . . . . . . . . . . . . . . . . . . . . 5.75% 5.75% 5.75%Class I . . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass R . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass Y . . . . . . . . . . . . . . . . . . . . . . . . None None NoneMaximum deferred sales charge (load)

on redemptions (as a % of lesser ofamount invested or redemption value)

Class A1 . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00%Class B1 . . . . . . . . . . . . . . . . . . . . . . . . 5.00% 5.00% 5.00%Class C1 . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00%Class E . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass I . . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass R . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass Y . . . . . . . . . . . . . . . . . . . . . . . . None None None

14

Asset StrategyNew

OpportunitiesFund


Fund



Maximum Account FeeClass A . . . . . . . . . . . . . . . . . . . . . . . . $ 202 $ 202 $ 202

Class B . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass C . . . . . . . . . . . . . . . . . . . . . . . . $ 202 $ 202 $ 202

Class E . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass I . . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass R . . . . . . . . . . . . . . . . . . . . . . . . None None NoneClass Y . . . . . . . . . . . . . . . . . . . . . . . . None None None

1 For Class A shares, a 1% contingent deferred sales charge is only imposed onClass A shares that were purchased at net asset value for $1 million or more that aresubsequently redeemed within 12 months of purchase. For Class B shares, theCDSC declines from 5% for redemptions within the first year of purchase, to 4%for redemptions within the second year, to 3% for redemptions within the third andfourth years, to 2% for redemptions within the fifth year, to 1% for redemptionswithin the sixth year and to 0% for redemptions after the sixth year. For Class Cshares, a 1% CDSC applies to redemptions within 12 months of purchase.

2 With limited exceptions, for Class A and Class C shares, if your accountbalance is below $750 at the close of business on September 26, 2014, and onthe Friday prior to the last week of September each year thereafter, the accountwill be assessed an account fee of $20.

Annual Fund Operating Expenses(expenses that you pay each year as a percentage of the value of your investment)

Asset StrategyNew

OpportunitiesFund


Fund



Management FeesClass A . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 0.96% 0.93%Class B . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 0.96% 0.93%Class C . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 0.96% 0.93%Class E . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 0.96% 0.93%Class I . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 0.96% 0.93%Class R . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 0.96% 0.93%Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 0.96% 0.93%Distribution and Service (12b-1) FeesClass A . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25% 0.25% 0.25%Class B . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00%Class C . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00%Class E . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25% 0.25% 0.25%Class I . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00% 0.00% 0.00%Class R . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50% 0.50% 0.50%Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25% 0.25% 0.25%

15

Asset StrategyNew

OpportunitiesFund


Fund



Other ExpensesClass A . . . . . . . . . . . . . . . . . . . . . . . . . . 0.47% 0.53% 0.51%Class B . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50% 0.98% 0.78%Class C . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35% 0.57% 0.40%Class E . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25% 0.13% 0.19%Class I . . . . . . . . . . . . . . . . . . . . . . . . . . 0.29% 0.26% 0.27%Class R . . . . . . . . . . . . . . . . . . . . . . . . . . 0.37% 0.34% 0.36%Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . 0.29% 0.26% 0.28%Total Annual Fund Operating ExpensesClass A . . . . . . . . . . . . . . . . . . . . . . . . . . 1.72% 1.74% 1.69%Class B . . . . . . . . . . . . . . . . . . . . . . . . . . 2.50% 2.94% 2.71%Class C . . . . . . . . . . . . . . . . . . . . . . . . . . 2.35% 2.53% 2.33%Class E . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50% 1.34% 1.37%Class I . . . . . . . . . . . . . . . . . . . . . . . . . . 1.29% 1.22% 1.20%Class R . . . . . . . . . . . . . . . . . . . . . . . . . . 1.87% 1.80% 1.79%Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . 1.54% 1.47% 1.46%Fee Wavier and/or Expense

ReimbursementClass A . . . . . . . . . . . . . . . . . . . . . . . . . . (0.22)%1 0.00% (0.19)%3

Class B . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00% 0.00% (0.21)%3

Class C . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00% 0.00% 0.00%Class E . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00% 0.00% 0.00%Class I . . . . . . . . . . . . . . . . . . . . . . . . . . (0.04)%1 0.00% 0.00%Class R . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00% 0.00% 0.00%Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . (0.04)%2 0.00% 0.00%Total Annual Fund Operating Expenses

After Fee Waiver and/or ExpenseReimbursement

Class A . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50% 1.74% 1.50%Class B . . . . . . . . . . . . . . . . . . . . . . . . . . 2.50% 2.94% 2.50%Class C . . . . . . . . . . . . . . . . . . . . . . . . . . 2.35% 2.53% 2.33%Class E . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50% 1.34% 1.37%Class I . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25% 1.22% 1.20%Class R . . . . . . . . . . . . . . . . . . . . . . . . . . 1.87% 1.80% 1.79%Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50% 1.47% 1.46%

1 Through July 31, 2015, IICO, the Fund’s investment manager, Ivy FundsDistributor, Inc. (IFDI), the Fund’s distributor, and/or Waddell & Reed ServicesCompany, doing business as WI Services Company (WISC), the Fund’stransfer agent, have contractually agreed to reimburse sufficient managementfees, 12b-1 fees and/or shareholder servicing fees to cap the total annual

16

ordinary fund operating expenses for Class A shares at 1.50% and Class Ishares at 1.25%. Prior to that date, the expense limitation may not be terminatedby IICO, IFDI, WISC or the Board.

2 Through July 31, 2015, to the extent that the total annual ordinary fundoperating expenses of the Class Y shares exceeds the total annual ordinary fundoperating expenses of the Class A shares, Ivy Funds Distributor, Inc. (IFDI), theFund’s distributor, and/or Waddell & Reed Services Company, doing businessas WI Services Company (WISC), the Fund’s transfer agent, have contractuallyagreed to reimburse sufficient 12b-1 and/or shareholder servicing fees to ensurethat the total annual ordinary fund operating expenses of the Class Y shares donot exceed the total annual ordinary fund operating expenses of the Class Ashares, as calculated at the end of each month. Prior to that date, the expenselimitation may not be terminated by IFDI, WISC or the Board.

3 If the Reorganization is approved, through July 30, 2016, IICO, the Fund’sinvestment manager, Ivy Funds Distributor, Inc. (IFDI), the Fund’s distributor,and/or Waddell & Reed Services Company, doing business as WI ServicesCompany (WISC), the Fund’s transfer agent, have contractually agreed toreimburse sufficient management fees, 12b-1 fees and/or shareholder servicingfees to cap the total annual ordinary fund operating expenses for Class A sharesat 1.50% and Class B shares at 2.50%. Prior to that date, the expense limitationmay not be terminated by IICO, IFDI, WISC or the Board.

Examples:

These Examples are intended to help you compare the cost of investing in theAsset Strategy New Opportunities Fund, the Emerging Markets Equity Fund and theEmerging Markets Equity Fund, after the Reorganization, with the cost of investingin other mutual funds. The Examples assume that you invest $10,000 in the AssetStrategy New Opportunities Fund, the Emerging Markets Equity Fund and theEmerging Markets Equity Fund after the Reorganization for the time periodsindicated and reinvest all dividends and distributions. The Examples also assumethat your investment has a 5% return each year, that the Funds’ operating expenseswithout waivers remain the same and that expenses were capped for the periodsindicated above. Although your actual costs may be higher or lower, based on theseassumptions your costs would be:

If shares are redeemed:1 Year 3 Years 5 Years 10 Years

Class A SharesIvy Asset Strategy New Opportunities Fund . . . $719 $1,066 $1,435 $2,471Ivy Emerging Markets Equity Fund . . . . . . . . $742 $1,091 $1,464 $2,509Ivy Emerging Markets Equity Fund (pro

forma, assuming consummation of theReorganization) . . . . . . . . . . . . . . . . . . . . . $719 $1,041 $1,406 $2,427

17

1 Year 3 Years 5 Years 10 Years

Class B SharesIvy Asset Strategy New Opportunities Fund . . . $653 $1,079 $1,431 $2,644Ivy Emerging Markets Equity Fund . . . . . . . . $697 $1,210 $1,648 $2,978Ivy Emerging Markets Equity Fund (pro


Class C SharesIvy Asset Strategy New Opportunities Fund . . . $238 $ 733 $1,255 $2,686Ivy Emerging Markets Equity Fund . . . . . . . . $256 $ 788 $1,345 $2,866Ivy Emerging Markets Equity Fund (pro

forma, assuming consummation of theReorganization) . . . . . . . . . . . . . . . . . . . . . $236 $ 727 $1,245 $2,666

Class E SharesIvy Asset Strategy New Opportunities Fund . . . $739 $1,082 $1,446 $2,463Ivy Emerging Markets Equity Fund . . . . . . . . $724 $1,035 $1,367 $2,295Ivy Emerging Markets Equity Fund (pro


Class I SharesIvy Asset Strategy New Opportunities Fund . . . $127 $ 405 $ 704 $1,553Ivy Emerging Markets Equity Fund . . . . . . . . $124 $ 387 $ 670 $1,477Ivy Emerging Markets Equity Fund (pro

forma, assuming consummation of theReorganization) . . . . . . . . . . . . . . . . . . . . . $122 $ 381 $ 660 $1,455

Class R SharesIvy Asset Strategy New Opportunities Fund . . . $190 $ 588 $1,011 $2,190Ivy Emerging Markets Equity Fund . . . . . . . . $183 $ 566 $ 975 $2,116Ivy Emerging Markets Equity Fund (pro


Class Y SharesIvy Asset Strategy New Opportunities Fund . . . $153 $ 483 $ 836 $1,831Ivy Emerging Markets Equity Fund . . . . . . . . $150 $ 465 $ 803 $1,757Ivy Emerging Markets Equity Fund (pro


18

If shares are not redeemed:1 Year 3 Years 5 Years 10 Years

Class A SharesIvy Asset Strategy New Opportunities Fund . . . $719 $1,066 $1,435 $2,471Ivy Emerging Markets Equity Fund . . . . . . . . $742 $1,091 $1,464 $2,509Ivy Emerging Markets Equity Fund (pro


Class B SharesIvy Asset Strategy New Opportunities Fund . . . $253 $ 779 $1,331 $2,644Ivy Emerging Markets Equity Fund . . . . . . . . $297 $ 910 $1,548 $2,978Ivy Emerging Markets Equity Fund (pro


Class C SharesIvy Asset Strategy New Opportunities Fund . . . $238 $ 733 $1,255 $2,686Ivy Emerging Markets Equity Fund . . . . . . . . $256 $ 788 $1,345 $2,866Ivy Emerging Markets Equity Fund (pro


Class E SharesIvy Asset Strategy New Opportunities Fund . . . $739 $1,082 $1,446 $2,463Ivy Emerging Markets Equity Fund . . . . . . . . $724 $1,035 $1,367 $2,295Ivy Emerging Markets Equity Fund (pro


Class I SharesIvy Asset Strategy New Opportunities Fund . . . $127 $ 405 $ 704 $1,553Ivy Emerging Markets Equity Fund . . . . . . . . $124 $ 387 $ 670 $1,477Ivy Emerging Markets Equity Fund (pro


Class R SharesIvy Asset Strategy New Opportunities Fund . . . $190 $ 588 $1,011 $2,190Ivy Emerging Markets Equity Fund . . . . . . . . $183 $ 566 $ 975 $2,116I Ivy Emerging Markets Equity Fund (pro


Class Y SharesIvy Asset Strategy New Opportunities Fund . . . $153 $ 483 $ 836 $1,831Ivy Emerging Markets Equity Fund . . . . . . . . $150 $ 465 $ 803 $1,757Ivy Emerging Markets Equity Fund (pro


19

The Examples do not reflect sales charges (loads) on reinvested dividends andother distributions. If these sales charges (loads) were included, your costs would behigher.

Portfolio Turnover

Each Fund pays transaction costs, such as commissions, when it buys and sellssecurities (or “turns over” its portfolio). A higher portfolio turnover rate mayindicate higher transaction costs and may result in higher taxes when Fund shares areheld in a taxable account. These costs, which are not reflected in annual fundoperating expenses or in the Examples, affect the Funds’ performance. During thesix-month period ended September 30, 2013, the Asset Strategy New OpportunitiesFund’s portfolio turnover rate was 51% of the average value of its portfolio and theEmerging Markets Equity Fund’s portfolio turnover rate was 70% of the averagevalue of its portfolio.

Principal Investment Strategies

The Asset Strategy New Opportunities Fund and the Emerging Markets EquityFund have similar investment objectives, investment strategies and policies, butthere are important differences. The key differences are outlined in the table below.

This table compares the investment objectives and principal investmentstrategies of the Asset Strategy New Opportunities Fund to those of the EmergingMarkets Equity Fund. The primary difference between the Funds is that the AssetStrategy New Opportunities Fund may invest in more asset classes and morecountries. The Emerging Markets Equity Fund utilizes an investment strategyfocused in equity investments in emerging markets. Each Fund is managed by IICOand the investment process followed by the Funds’ portfolio managers to identifyinvestments and countries are substantively similar. There is overlap between theFund’s investment portfolios. Based on its review of the Funds’ respectiveinvestment portfolios, IICO has determined that their respective holdings generallyare compatible and, as a result, believes that all or substantially all of the AssetStrategy New Opportunities Fund’s assets are suitable for transfer to the EmergingMarkets Equity Fund pursuant to the Reorganization.

20

ASSET STRATEGY NEWOPPORTUNITIES FUND

EMERGING MARKETSEQUITY FUND

INVESTMENT OBJECTIVE: To seek toprovide total return.

INVESTMENT OBJECTIVE. To seekto provide growth of capital.

– The Fund seeks to achieve its objectiveby allocating its assets primarilyamong stocks, bonds and short-terminstruments of issuers in marketsaround the globe, as well asinvestments in derivative instruments,precious metals and investments withexposure to various foreign currencies.

– The Fund may invest its assets in anymarket that IICO believes can offer ahigh probability of return or,alternatively, can provide a high degreeof relative safety in uncertain times.Dependent on its outlook for the U.S.and global economies, IICO identifiesgrowth themes and then focuses itsstrategy on allocating the Fund’s assetsamong stocks, bonds, cash, preciousmetals, currency and derivativeinstruments, including derivativestraded over-the-counter or onexchanges. After determining theseallocations, IICO seeks attractiveopportunities within each market byfocusing generally on issuers incountries, sectors and companies withstrong cash flow streams and lowbalance sheet leverage. The Fund,however, may also invest in issuerswith higher balance sheet leverage ifIICO believes that the Fund will beappropriately compensated for theincreased risk.

– The Fund invests, under normalcircumstances, at least 80% of itsnet assets, plus any borrowings forinvestment purposes, in equitysecurities, primarily common stock,of companies from countriesconsidered to be emerging marketcountries or economically linked toemerging market countries.Emerging market countries include,but are not limited to, thoseconsidered to be developing by theInternational Monetary Fund, theWorld Bank, the InternationalFinancial Corporation or one of theleading global investment banks.Generally, IICO, has broaddiscretion to identify other countriesthat it considers to qualify asemerging market countries. Themajority of these countries arelikely to be located in Asia, LatinAmerica, the Middle East, Centraland Eastern Europe, and Africa.The Fund may invest in companiesof any size and marketcapitalization and in companies ofany industry in any such country.

21

– IICO may allocate the Fund’sinvestments among these differenttypes of securities in differentproportions at different times,including up to 100% in stocks ofsmall-to-mid-cap issuers, bonds, orshort-term instruments, respectively.

– IICO may exercise a flexible strategyin the selection of securities, and theFund is not required to allocate itsinvestments among stocks and bondsin any fixed proportion, nor is itlimited by investment style or by theissuer’s location, size, marketcapitalization or industry sector exceptthat its stock holdings will be securitiesof primarily small-to-mid-capcompanies. The Fund may have none,some or all of its assets invested ineach asset class in relative proportionsthat change over time based uponmarket and economic conditions.Subject to diversification limits, theFund also may invest up to 25% of itstotal assets in precious metals.

– The Fund may invest up to 100% ofits total assets in foreign securities.Subject to the 80% policy notedabove, the Fund may also invest incompanies that are not in emergingcountries: (1) if the portfoliomanager believes that theperformance of a company or itsindustry will be influenced byopportunities in the emergingmarkets; (2) to maintain exposure toindustry segments where theportfolio manager believes there arenot satisfactory investmentopportunities in emerging marketcountries; and (3) if the portfoliomanager believes there is thepotential for significant benefit tothe Fund.

– IICO utilizes a top-down approachof worldwide analysis in order toidentify what it believes are the bestemerging market countries andsectors for growth, and balances thetop-down analysis with a bottom-upstock selection process to identifystocks that it believes mayoutperform that market over a oneto three year period and are bestpositioned to maximize theircompetitive advantage. IICO usesan investment approach that focuseson analyzing a company’s financialstatements and taking advantage ofovervalued or undervaluedemerging markets.

22

– The Fund expects to gain exposure tocommodities, including preciousmetals, derivatives and commodity-linked instruments by investing in asubsidiary that would be organized inthe Cayman Islands (the “Subsidiary”).Once organized, the Subsidiary wouldbe wholly owned and controlled by theFund. To the extent the Fund invests inthe Subsidiary, it would be expected toprovide the Fund with exposure toinvestment returns from commodities,derivatives and commodity-linkedinstruments within the limits of theFederal tax requirements applicable toinvestment companies, such as theFund. The Subsidiary would be subjectto the same general investment policiesand restrictions as the Fund, except thatunlike the Fund, the Subsidiary wouldbe able to invest without limitation incommodities, derivatives andcommodity-linked instruments and, tothe extent the Subsidiary invests inderivative instruments, it would be ableto use leveraged investmenttechniques.

– IICO may reduce the Fund’s net equityexposure by selling, among otherinstruments, combined futures andoption positions, and may effect shortsales of individual securities and/orexchange-traded funds (“ETFs”) ortake long positions in inverse ETFs.

– The Fund may invest in companiesof any size and market capitalizationand in companies of any industry inany such country. Market risk forsmall or medium-sized companiesmay be greater than for largecompanies. For example, smallercompanies may have less certaingrowth prospects, limited financialresources, limited product lines,volatile trading and price fluctuationor inexperienced management.

– Although the Fund invests primarilyin companies from countriesconsidered to be emerging marketcountries, the Fund will also invest incompanies that are not in emergingcountries: (1) if the portfolio managerbelieves that the performance of acompany or its industry will beinfluenced by opportunities in theemerging markets; (2) to maintainexposure to industry segments wherethe portfolio manager believes thereare not satisfactory investmentopportunities in emerging marketcountries; and (3) if the portfoliomanager believes there is the potentialfor significant benefit to the Fund.

– Subject to diversification limits, theFund may invest up to 20% of itstotal assets in precious metals.Investments in physicalcommodities, including preciousmetals, may experience severe pricefluctuations over short periods oftime; as well, storage and tradingcosts may exceed the custodial and/or brokerage costs associated withother investments.

23

– IICO may, when consistent with theFund’s investment objective, seek tomanage exposure to certain securities,companies, sectors, markets, foreigncurrencies and/or precious metals andseek to hedge certain event risks onpositions held by the Fund. In an effortto manage exposure to companies,sectors or equity markets, IICO mayutilize various instruments including,but not limited to, the following:futures contracts; both long and shortpositions on foreign and U.S. equityindices; total return swaps; and optionscontracts, both written and purchased,on foreign and U.S. equity indices and/or on individual equity securities. Inseeking to manage foreign currencyexposure, IICO may utilize forwardcontracts and option contracts, bothwritten and purchased, either toincrease or decrease exposure to agiven currency. In seeking to managethe Fund’s exposure to preciousmetals, IICO may utilize futurescontracts, both long and short positionsas well as options contracts, bothwritten and purchased, on preciousmetals.

– Generally, in determining whether tosell a security, IICO considers manyfactors, which may include adeterioration in a company’sfundamentals caused by global-specificfactors such as geo-political landscapechanges, regulatory or currencychanges, or increased competition, aswell as company-specific factors, suchas reduced pricing power, diminishedmarket opportunity, or increasedcompetition.

– The Fund expects to gain exposureto commodities, including preciousmetals, derivatives and commodity-linked instruments by investing in asubsidiary that would be organizedin the Cayman Islands (the“Subsidiary”). Once organized, theSubsidiary would be wholly ownedand controlled by the Fund. To theextent the Fund invests in theSubsidiary, it would be expected toprovide the Fund with exposure toinvestment returns fromcommodities, derivatives andcommodity-linked instrumentswithin the limits of the Federal taxrequirements applicable toinvestment companies, such as theFund. The Subsidiary would besubject to the same generalinvestment policies and restrictionsas the Fund, except that unlike theFund, the Subsidiary would be ableto invest without limitation incommodities, derivatives andcommodity-linked instruments and,to the extent the Subsidiary investsin derivative instruments, it wouldbe able to use leveraged investmenttechniques.

24

– The Fund may use a range ofderivative instruments to gainexposure to certain individualsecurities that are not available fordirect purchase, to hedge variousmarket and event risks (such asinterest rates, currency exchangerates, and broad or specific equityor fixed-income marketmovements), to manage foreigncurrency risk and as a means ofgenerating additional income fromwritten options. Derivativeinstruments that may be usedinclude total return swaps, options,both written and purchased onindividual equity securities, andforward contracts to either increaseor decrease exposure to a givencurrency.

– In determining whether to sell asecurity, IICO generally considerswhether the security has failed tomeet its growth expectations,whether its valuation has exceededits target, or whether it has lostconfidence in management. IICOmay also sell a security to reduce theFund’s holding in that security, totake advantage of what it believesare more attractive investmentopportunities or to raise cash.

25

For more information concerning investment policies and restrictions, see theFunds’ Combined SAI and the SAI for the Emerging Markets Equity Fund.

Principal Investment Risks

All of the principal risks applicable to the Funds are described below. Aspreviously noted, the Funds have different investment objectives and investmentstrategies. An investment in the Emerging Markets Equity Fund involves differentrisks than an investment in the Asset Strategy New Opportunities Fund, as notedbelow. The fact that a particular risk is not identified does not mean that a Fund, aspart of its overall investment strategy, does not invest or is precluded from investingin securities that give rise to that risk.

As with any mutual fund, the value of a Fund’s shares will change, and youcould lose money on your investment. A variety of factors can affect the investmentperformance of a Fund and prevent it from achieving its objective. These include:

Principal RiskFunds Subject to

that Principal RiskDescription of that Principal Riskin the Funds’ Current Prospectus

Commodities Risk Asset Strategy NewOpportunities Fund

Commodity trading, including trading in precious metals, isgenerally considered speculative because of the significantpotential for investment loss. Among the factors that couldaffect the value of a Fund’s investments in commodities arecyclical economic conditions, sudden political events andadverse international monetary policies. Markets forcommodities are likely to be volatile and there may be sharpprice fluctuations even during periods when prices overall arerising. Also, a Fund may pay more to store and accuratelyvalue its commodity holdings than it does with its otherportfolio investments. Moreover, under the Federal tax law, aFund may not derive more than 10% of its annual grossincome from gains resulting from selling commodities (andother non-qualifying income). Accordingly, a Fund may berequired to hold its commodities or sell them at a loss, or tosell portfolio securities at a gain, when, for investmentreasons, it would not otherwise do so.

Company Risk Asset Strategy NewOpportunities Fundand EmergingMarkets EquityFund

An individual company may perform differently than theoverall market. This may be a result of specific factors suchas changes in corporate profitability due to the success orfailure of specific products or management strategies, or itmay be due to changes in investor perceptions regarding acompany.

26



Credit Risk Asset Strategy NewOpportunities Fund

An issuer of a debt security (including a mortgage-backedsecurity) or a real estate investment trust (REIT) may notmake payments on the security when due, or the other partyto a contract may default on its obligation. There is also therisk that an issuer could suffer adverse changes in itsfinancial condition that could lower the credit quality of asecurity. This could lead to greater volatility in the price ofthe security and, therefore, in the NAV of a Fund. Also, achange in the quality rating of a debt security or a REITsecurity can affect the security’s liquidity and make it moredifficult to sell. If a Fund purchases unrated securities andobligations, it will depend on the Investment Manager’sanalysis of credit risk more heavily than usual.

Derivatives Risk Asset Strategy NewOpportunities Fund

A derivative is a financial instrument whose value or return is“derived,” in some manner, from the price of anothersecurity, index, asset, rate or event. Derivatives are tradedeither on an organized exchange or OTC. Futures contracts,options and swaps are common types of derivatives that aFund may occasionally use. A futures contract is anagreement to buy or sell a security or other instrument, index,or commodity at a specific price on a specific date. An optionis the right to buy or sell a security or other instrument,index, or commodity at a specific price on or before aspecific date. A swap is an agreement involving the exchangeby a Fund with another party of their respective commitmentsto pay or receive payments at specified dates on the basis of aspecified amount. Swaps include options on commodities,caps, floors, collars and certain forward contracts. Someswaps currently are, and more in the future will be, centrallysettled (“cleared”).

The use of derivatives presents several risks, including therisk that these instruments may change in value in a mannerthat adversely affects a Fund’s NAV and the risk thatfluctuations in the value of the derivatives may not correlatewith securities markets or the underlying asset upon whichthe derivative’s value is based. Moreover, some derivativesare more sensitive to interest rate changes and market pricefluctuations than others. To the extent the judgment of theInvestment Manager as to certain anticipated pricemovements is incorrect, the risk of loss may be greater than ifthe derivative technique(s) had not been used. Derivativesalso may be subject to counterparty risk, which includes therisk that a Fund may sustain a loss as a result of theinsolvency or bankruptcy of, or other non-compliance by,another party to the transaction. Certain derivatives cancreate leverage, which may amplify or otherwise increase aFund’s investment loss, possibly in an amount that couldexceed the cost of that instrument or, under certaincircumstances, that could be unlimited.

27



Each Fund may enter into credit default swap contracts forhedging or investment purposes. A Fund may either sell orbuy credit protection under these contracts. Swap instrumentsmay shift a Fund’s investment exposure from one type ofinvestment to another. Swap agreements also may have aleverage component, and adverse changes in the value orlevel of the underlying asset, reference rate or index canresult in gains or losses that are substantially greater than theamount invested in the swap itself. Certain swaps have thepotential for unlimited loss, regardless of the size of theinitial investment. The use of swap agreements entails certainrisks that may be different from, or possibly greater than, therisks associated with investing directly in the referencedassets that underlie the swap agreement. Swaps are highlyspecialized instruments that require investment techniquesand risk analyses different from those associated with stocks,bonds, and other traditional investments.

Certain derivatives transactions are not entered into or tradedon exchanges or cleared by clearing organizations. Instead,such derivatives may be entered into directly with thecounterparty and may be traded only through financialinstitutions acting as market makers. OTC derivativestransactions can only be entered into with a willingcounterparty. Where no such counterparty is available for adesired transaction, a Fund will be unable to enter into thetransaction. There also may be greater risk that no liquidsecondary market in the trading of OTC derivatives willexist, in which case a Fund may be required to hold suchinstruments until exercise, expiration or maturity. Certain ofthe protections afforded to exchange participants will not beavailable to participants in OTC derivatives transactions.OTC derivatives transactions are not subject to the guaranteeof an exchange or clearinghouse and, as a result, a Fundwould bear greater risk of default by the counterparties tosuch transactions. When traded on foreign exchanges,derivatives may not be regulated as rigorously as in theUnited States, may not involve a clearing mechanism andrelated guarantees, and will be subject to the risk ofgovernmental actions affecting trading in, or the prices of,foreign securities, currencies and other instruments.

28



The counterparty risk for exchange-traded derivatives isgenerally less than for privately negotiated or OTCderivatives, since generally an exchange or clearinghouse,which is the issuer or counterparty to each exchange-tradedinstrument, provides a guarantee of performance. Forprivately negotiated instruments, there is no similar exchangeor clearinghouse guarantee. In all such transactions, the Fundbears the risk that the counterparty will default, and thiscould result in a loss of the expected benefit of the derivativetransactions and possibly other losses to the Fund. A Fundwill enter into transactions in derivative instruments onlywith counterparties that the Investment Manager reasonablybelieves are capable of performing under the contract. TheInvestment Manager may seek to manage counterparty risk inan OTC derivative transaction by entering into bilateralcollateral documentation, such as a Credit Support Annexand an accompanying Account Control Agreement, where itis market practice to do so for the particular type ofderivative; however, there is no guarantee that suchdocumentation will have the intended effect.

The enactment of the Dodd-Frank Wall Street Reform andConsumer Protection Act (Dodd-Frank Act) resulted inhistoric and comprehensive statutory reform of derivatives,including the manner in which derivatives are designed,negotiated, reported, executed or cleared and regulated.

The Dodd-Frank Act requires the SEC and the CommodityFutures Trading Commission (CFTC) to establish regulationswith respect to security-based swaps (e.g., derivatives basedon an equity) and swaps (e.g., derivatives based on a broad-based index or commodity), respectively, and the markets inwhich these instruments trade. Generally, all futures willcontinue to be regulated by the CFTC, and all swaps andsecurity-based swaps are subject to CFTC and SECjurisdiction, respectively. However, security futures, whichare futures on a single equity security or a narrow-basedsecurities index, and mixed swaps, which have elements ofboth a swap and a security-based swap, are subject to jointCFTC-SEC jurisdiction. In addition, with respect to security-based swap agreements, which include swaps on a broad-based securities index, the SEC asserts anti-fraud, anti-manipulation and insider trading prohibition jurisdiction,even though the CFTC has regulatory jurisdiction overtransactions involving such agreements.

29



Specifically, the SEC and CFTC are required to mandate byregulation under certain circumstances that certainderivatives, previously traded OTC, be executed in aregulated, transparent market and settled by means of acentral clearing house. The Dodd-Frank Act also requires theCFTC or the SEC, in consultation with banking regulators, toestablish capital requirements as well as requirements formargin on uncleared derivatives in certain circumstances thatwill be clarified by rules that the CFTC or SEC willpromulgate in the future. All derivatives are to be reported toa swap repository.

The extent and impact of the new regulations are not yet fullyknown and may not be for some time. Any such changesmay, among various possible effects, increase the cost ofentering into derivatives transactions, require more assets of aFund to be used for collateral in support of those derivativesthan is currently the case, or restrict the ability of a Fund toenter into certain types of derivative transactions, or couldlimit a Fund’s ability to pursue its investment strategies.

Emerging MarketRisk

Asset Strategy NewOpportunities Fundand EmergingMarkets EquityFund

Investments in countries with emerging economies orsecurities markets may carry greater risk than investments inmore developed countries. Political and economic structuresin many such countries may be undergoing significantevolution and rapid development, and such countries maylack the social, political and economic stabilitycharacteristics of more developed countries. Certain of thosecountries may have failed in the past to recognize privateproperty rights and have nationalized or expropriated theassets of private companies. As a result, the risks describedabove, including the risks of nationalization or expropriationof assets, may be heightened. In addition, unanticipatedpolitical or social developments may affect the value of aFund’s investments in those countries and the availability ofadditional investments in those countries. The small size andinexperience of the securities markets in such countries andthe limited volume of trading in securities in those countriesmay make a Fund’s investments in such countries illiquid andmore volatile than investments in more developed countries,and a Fund may be required to establish special custodial orother arrangements before making certain investments inthose countries. The repatriation of capital with regard toinvestments made in certain securities or countries may berestricted during certain times or even indefinitely. Theremay be little financial or accounting information availablewith respect to issuers located in certain countries, and it maybe difficult as a result to assess the value or prospects of aninvestment in such issuers.

30



Foreign CurrencyRisk


Foreign securities may be denominated in foreign currencies.The value of a Fund’s investments, as measured inU.S. dollars, may be unfavorably affected by changes inforeign currency exchange rates and exchange controlregulations.

Foreign ExposureRisk

Asset Strategy NewOpportunities Fund

The securities of many companies may have significantexposure to foreign markets as a result of the company’soperations, products or services in those foreign markets. Asa result, a company’s domicile and/or the markets in whichthe company’s securities trade may not be fully reflective ofits sources of revenue. Such securities would be subject tosome of the same risks as an investment in foreign securities,including the risk that political and economic events uniqueto a country or region will adversely affect those markets inwhich the company’s products or services are sold.

Foreign SecuritiesRisk


Investing in foreign securities involves a number ofeconomic, financial, legal and political considerations thatare not associated with the U.S. markets and that could affecta Fund’s performance unfavorably, depending uponprevailing conditions at any given time. For example, thesecurities markets of many foreign countries may be smaller,less liquid and subject to greater price volatility than those inthe United States. Foreign investing also may involvebrokerage costs and tax considerations that are not usuallypresent in the U.S. markets.

Other factors that can affect the value of a Fund’s foreigninvestments include the comparatively weak supervision andregulation by some foreign governments of securitiesexchanges, brokers and issuers, and the fact that manyforeign companies may not be subject to uniform and/orstringent accounting, auditing and financial reportingstandards. It also may be difficult to obtain reliableinformation about the securities and business operations ofcertain foreign issuers. Settlement of portfolio transactionsalso may be delayed due to local restrictions orcommunication problems, which can cause a Fund to missattractive investment opportunities or impair its ability todispose of securities in a timely fashion (resulting in a loss ifthe value of the securities subsequently declines).

To the extent that a Fund invests in sovereign debtinstruments, the Fund is subject to the risk that a governmentor agency issuing the debt may be unable to pay interest and/or repay principal due to cash flow problems, insufficientforeign currency reserves or political concerns. In suchinstance, a Fund may have limited recourse against theissuing government or agency. Financial markets haverecently experienced, and may continue to experience,increased volatility due to the uncertainty surrounding thesovereign debt of certain European countries.

31



Growth StockRisk


Growth stocks are stocks of companies believed to haveabove-average potential for growth in revenue and earnings.Prices of growth stocks may be more sensitive to changes incurrent or expected earnings than the prices of other stocks.Growth stocks may not perform as well as value stocks or thestock market in general.

Holdings Risk Asset Strategy NewOpportunities Fund

If a Fund typically holds a small number of stocks, or if aFund’s portfolio manager(s) tend to invest a significantportion of a Fund’s total assets in a limited number of stocks,the appreciation or depreciation of any one security held by aFund will have a greater impact on the Fund’s NAV than itwould if a Fund invested in a larger number of securities or ifa Fund’s portfolio manager(s) invested a greater portion ofthe Fund’s total assets in a larger number of stocks. Althoughthat strategy has the potential to generate attractive returnsover time, it also may increase a Fund’s volatility.

Interest Rate Risk Asset Strategy NewOpportunities Fund

The value of a debt security, mortgage-backed security orother fixed-income obligation, as well as of shares ofmortgage REITs, may decline due to changes in marketinterest rates. Generally, when interest rates rise, the value ofsuch a security or obligation decreases. Conversely, wheninterest rates decline, the value of a debt security, mortgage-backed security or other fixed-income obligation, as well asof shares of mortgage REITs, generally increases. Long-termdebt securities, mortgage-backed securities and other fixed-income obligations are generally more sensitive to interestrate changes than short-term debt securities. A Fund mayexperience a decline in its income due to falling interest rates.Interest rates in the U.S. are at, or near, historic lows, whichmay increase a Fund’s exposure to risks associated withrising rates.

In general, a portfolio of debt, mortgage-related and asset-backed securities and other fixed-income obligationsexperiences a decrease in principal value with an increase ininterest rates. The extent of the decrease in principal valuemay be affected by a Fund’s duration of its portfolio of debt,mortgage-related and asset-backed securities and other fixed-income obligations. Duration measures the relative pricesensitivity of a security to changes in interest rates.“Effective” duration takes into consideration the likelihoodthat a security will be called, or prepaid, prior to maturitygiven current market interest rates. Typically, a security witha longer duration is more price sensitive than a security witha shorter duration. In general, a portfolio of debt, mortgage-related and asset-backed securities experiences a percentagedecrease in principal value equal to its effective duration foreach 1% increase in interest rates. For example, if a Fundholds a portfolio of securities with an effective duration offive years and interest rates rise 1%, the principal value ofsuch securities could be expected to decrease byapproximately 5%.

32



InvestmentCompanySecurities Risk


The risks of investment in other investment companiestypically reflect the risks of the types of securities in whichthe investment companies invest. As a shareholder in aninvestment company, a Fund would bear its pro rata share ofthat investment company’s expenses, which could result inthe duplication of certain fees, including management andadministrative fees.

Certain Funds may invest in ETFs as a means of tracking theperformance of a designated stock index while maintainingliquidity or to gain exposure to precious metals and othercommodities without purchasing them directly. Since manyETFs are a type of investment company, a Fund’s purchasesof shares of such ETFs are subject to the Fund’s investmentrestrictions regarding investments in other investmentcompanies.

ETFs have a market price that reflects a specified fraction ofthe value of the designated index or underlying basket ofcommodities or commodities futures and are exchange-traded. As with other equity securities transactions, brokerscharge a commission in connection with the purchase andsale of shares of ETFs and closed-end funds. In addition, anasset management fee is charged in connection with themanagement of the ETF’s or the closed-end fund’s portfolio(which is in addition to the investment management fee paidby a Fund).

Investments in an ETF or a closed-end fund generally presentthe same primary risks as investments in conventional funds,which are not exchange-traded. The price of an ETF or aclosed-end fund can fluctuate, and a Fund could lose moneyinvesting in an ETF. In addition, ETFs are subject to thefollowing risks that do not apply to conventional funds:(i) the market price of an ETF’s or a closed-end fund’s sharesmay trade at a premium or discount to its NAV; (ii) an activetrading market for an ETF’s or a closed-end fund’s sharesmay not develop or be maintained; or (iii) trading of anETF’s or a closed-end fund’s shares may be halted if thelisting exchange officials determine such action to beappropriate, the shares are delisted from the exchange, or theactivation of market-wide “circuit breakers” (which are tiedto large decreases in stock prices) halts stock tradinggenerally.

33



Large CompanyRisk

Emerging MarketsEquity Fund

Large capitalization companies may go in and out of favorbased on market and economic conditions. Largecapitalization companies may be unable to respond quickly tonew competitive challenges, such as changes in technology,and also may not be able to attain the high growth rate ofsuccessful smaller companies, especially during extendedperiods of economic expansion. Although the securities oflarger companies may be less volatile than those ofcompanies with smaller market capitalizations, returns oninvestments in securities of large capitalization companiescould trail the returns on investments in securities of smallercompanies.

Liquidity Risk Asset Strategy NewOpportunities Fundand EmergingMarkets EquityFund

Generally, a security is liquid if a Fund is able to sell thesecurity at a fair price within a reasonable time. Liquidity isgenerally related to the market trading volume for a particularsecurity. Investments in smaller companies, foreigncompanies, companies in emerging markets or certaininstruments such as derivatives are subject to a variety ofrisks, including potential lack of liquidity. Illiquid securitiesmay trade at a discount from comparable, more liquidinvestments, and may be subject to wider fluctuations inmarket value. Less liquid securities are more difficult todispose of at their recorded values and are subject toincreased spreads and volatility. Also, a Fund may not beable to dispose of illiquid securities when that would bebeneficial at a favorable time or price.

Low-RatedSecurities Risk


In general, low-rated debt securities (commonly referred to as“high-yield” or “junk” bonds) offer higher yields due to theincreased risk that the issuer will be unable to meet itsobligations on interest or principal payments at the timecalled for by the debt instrument. For this reason, thesesecurities are considered speculative and could significantlyweaken a Fund’s returns. In adverse economic or othercircumstances, issuers of these low-rated securities andobligations are more likely to have difficulty makingprincipal and interest payments than issuers of higher-ratedsecurities and obligations.

Management Risk Asset Strategy NewOpportunities Fundand EmergingMarkets EquityFund

IICO applies a Fund’s investment strategies and selectssecurities for a Fund in seeking to achieve a Fund’sinvestment objective. Securities selected by a Fund may notperform as well as the securities held by other mutual fundswith investment objectives that are similar to the investmentobjective of a Fund. In general, investment decisions madeby IICO may not produce the anticipated returns, may causea Fund’s shares to lose value or may cause a Fund to performless favorably than other mutual funds with investmentobjectives similar to the investment objective of a Fund.

34



Market Risk Asset Strategy NewOpportunities Fundand EmergingMarkets EquityFund

All securities and other investments may be subject to adversetrends in the markets. Securities are subject to pricemovements due to changes in general economic conditions,the level of prevailing interest rates or investor perceptions ofthe market. The value of assets or income from a Fund’sinvestments may be adversely affected by inflation or changesin the market’s expectations regarding inflation. In addition,prices are affected by the outlook for overall corporateprofitability. In the municipal securities markets, securitiesbacked by current or anticipated revenues from a specificproject or specific asset may be adversely impacted bydeclines in revenue collection from the project or asset.Market prices of equity securities are generally more volatilethan debt securities. This may cause a security to be worth lessthan the price originally paid for it, or less than it was worth atan earlier time. Market risk may affect a single issuer or themarket as a whole. As a result, a portfolio of such securitiesmay underperform the market as a whole. In addition, certainunanticipated events, such as natural disasters, terroristattacks, war, and other geopolitical events, can have adramatic adverse effect on securities held by a Fund.

The financial crisis in the U.S. and global economies over thepast several years, including the European sovereign debt crisis,has resulted, and may continue to result, in an unusually highdegree of volatility in the financial markets, both domestic andforeign. Liquidity in some markets has decreased and credit hasbecome scarcer worldwide. Recent regulatory changes,including the Dodd-Frank Act and the introduction of newinternational capital and liquidity requirements under the BaselIII Accords (“Basel III”), may cause lending activity within thefinancial services sector to be constrained for several years asBasel III rules phase in and rules and regulations arepromulgated and interpreted under the Dodd-Frank Act. Thesemarket conditions may continue or deteriorate further and mayadd significantly to the risk of short-term volatility in a Fund. Inresponse to the crisis, the U.S. and other governments and theFederal Reserve and certain foreign central banks have taken anumber of steps in an attempt to support financial markets.Withdrawal of this support, failure of efforts in response to thecrisis, or investor perception that such efforts are notsucceeding, could adversely impact the value and liquidity ofcertain securities. Because the situation is widespread andlargely unprecedented, it may be unusually difficult to identifyboth risks and opportunities using past models of the interplayof market forces, or to project the duration of these marketconditions. The severity or duration of these conditions may alsobe affected by policy changes made by governments or quasi-governmental organizations. Changes in market conditions willnot have the same impact on all types of securities.

35



In addition, since 2010, the risks of investing in certainforeign government debt have increased dramatically as aresult of the ongoing European debt crisis, which began inGreece and has begun to spread throughout various otherEuropean countries. These debt crises and the ongoing effortsof governments around the world to address these debt criseshave also resulted in increased volatility and uncertainty inthe global securities markets and it is impossible to predictthe effects of these or similar events in the future on a Fund,though it is possible that these or similar events could have asignificant adverse impact on the value and risk profile of aFund.

Mid SizeCompany Risk


Securities of mid capitalization companies may be morevulnerable to adverse developments than those of largecompanies due to such companies’ limited product lines,limited markets and financial resources and dependence upona relatively small management group. Securities of midcapitalization companies may be more volatile and less liquidthan the stocks of larger companies, and may be moreaffected than other types of stocks by the underperformanceof a sector or during market downturns.

Private Placementsand OtherRestrictedSecurities Risk


Restricted securities, which include private placements, aresecurities that are subject to legal or contractual restrictionson resale, and there can be no assurance of a ready market forresale. A Fund could find it difficult to sell privately placedsecurities and other restricted securities when the Adviserbelieves it is desirable to do so, especially under adversemarket or economic conditions or in the event of adversechanges in the financial condition of the issuer, and the pricesrealized could be less than those originally paid or less thanthe fair market value. At times, it also may be difficult todetermine the fair value of such securities for purposes ofcomputing the NAV of a Fund.

Small CompanyRisk


Securities of small capitalization companies are subject togreater price volatility, lower trading volume and lessliquidity due to, among other things, such companies’ smallsize, limited product lines, limited access to financingsources and limited management depth. In addition, thefrequency and volume of trading of such securities may beless than is typical of larger companies, making them subjectto wider price fluctuations, and such securities may be moreaffected than other types of securities by theunderperformance of a sector or during market downturns. Insome cases, there could be difficulties in selling securities ofsmall capitalization companies at the desired time.

36



SubsidiaryInvestmentRisk


By investing in its subsidiary, a Fund would be exposed tothe risks associated with its Subsidiary’s investments. AFund’s Subsidiary would not be registered under the 1940Act, and would not be subject to all of the investorprotections of the 1940 Act. Thus, a Fund, as an investor inits Subsidiary, would not have all of the protections offeredto investors in registered investment companies. However,because a Fund would wholly own and control its Subsidiary,and the Fund and its Subsidiary would be managed by IICO,it is unlikely that a Fund’s Subsidiary would take actioncontrary to the interests of the Fund or the Fund’sshareholders. In addition, changes in the laws of the UnitedStates and/or the Cayman Islands, under which a Fund and itsSubsidiary are, or would be, organized, respectively, couldresult in the inability of a Fund and/or its Subsidiary tooperate as intended and could negatively affect the Fund andits shareholders. Although, under the federal tax law, a Fundmay not earn more than 10% of its annual gross income fromgains resulting from selling commodities (and other non-qualifying income), the Fund expects to receive an opinion ofcounsel, which is not binding on the Internal RevenueService or the courts, that income a Fund receives from itsSubsidiary should constitute qualifying income.

Comparison of Fund Performance

Asset Strategy New Opportunities Fund

The chart and table below provide some indication of the risks of investing inthe Fund. The chart shows how performance has varied from year to year forClass A shares. The table shows the average annual total returns for each Class ofthe Fund and also compares the performance with those of broad-based securitiesmarket indexes and a Lipper peer group (a universe of mutual funds with investmentobjectives similar to that of the Fund). The chart does not reflect any sales chargesand, if those sales charges were included, returns would be less than those shown.

After-tax returns are calculated using the historical highest individual Federalmarginal 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 fromthose shown. After-tax returns are not relevant to investors who hold their Fundshares through tax-deferred arrangements, such as 401(k) plans or individualretirement accounts (IRAs), or to shares held by non-taxable entities. After-taxreturns are shown only for Class A shares. After-tax returns for other Classes mayvary. Return After Taxes on Distributions and Sale of Fund Shares may be betterthan Return Before Taxes due to an assumed tax benefit from losses on a sale of theFund’s shares at the end of the period.

37

Performance results include the effect of expense reduction arrangements forsome or all of the periods shown. If those arrangements had not been in place, theperformance results for those periods would have been lower.

The Fund’s past performance (before and after taxes) does not necessarilyindicate how it will perform in the future. Current performance may be lower orhigher. Please visit www.ivyfunds.com or call 800.777.6472 for the Fund’s updatedperformance.

CHART OF YEAR-BY-YEAR RETURNS (as of December 31, 2013)

20

10

0

-10

-20

-30

’11 ‘13‘12

-23.62%

12.66%

6.67%

In the period shown in the chart, the highest quarterly return was 13.25% (the firstquarter of 2012) and the lowest quarterly return was -24.84 (the third quarter of 2011).

AVERAGE ANNUAL TOTAL RETURNS(as of December 31, 2013)

1 Year (Life of Class)

Class A (began on 05-03-2010)Return Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.53% 2.05%Return After Taxes on Distributions . . . . . . . . . . . . . . . . . 0.53% 2.02%Return After Taxes on Distributions and Sale of Fund

Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.30% 1.59%Class B (began on 05-03-2010)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.66% 1.91%Class C (began on 05-03-2010)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.74% 2.79%Class E (began on 05-03-2010)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.54% 2.02%Class I (began on 05-03-2010)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.93% 3.95%Class R (began on 05-03-2010)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.25% 3.28%Class Y (began on 05-03-2010)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.67% 3.68%

38

1 Year (Life of Class)

IndexesBarclays U.S. Aggregate Bond Index (reflects no

deduction for fees, expenses or taxes) (Life of Classindex comparison begins on May 1, 2010) . . . . . . . . . . -2.02% 3.66%

Barclays U.S. Treasury Bills: 1-3 Month Index (reflectsno deduction for fees, expenses or taxes) (Life of Classindex comparison begins on May 1, 2010) . . . . . . . . . . 0.05% 0.08%

MSCI AC World SMID Index (reflects no deduction forfees, expenses or taxes) (Life of Class indexcomparison begins on May 1, 2010) . . . . . . . . . . . . . . . 26.37% 11.78%

Lipper Global Flexible Portfolio Funds UniverseAverage (net of fees and expenses) (Life of Classindex comparison begins on May 1, 2010) . . . . . . . . . . 8.90% 7.11%

Emerging Markets Equity Fund

The chart and table below provide some indication of the risks of investing inthe Fund. The chart shows how performance has varied from year to year forClass A shares. The table shows the average annual total returns for each Class ofthe Fund and also compares the performance with those of a broad-based securitiesmarket index and a Lipper peer group (a universe of mutual funds with investmentobjectives similar to that of the Fund). The chart does not reflect any sales chargesand, if those sales charges were included, returns would be less than those shown.

After-tax returns are calculated using the historical highest individual Federalmarginal 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 fromthose shown. After-tax returns are not relevant to investors who hold their Fundshares through tax-deferred arrangements, such as 401(k) plans or individualretirement accounts (IRAs), or to shares held by non-taxable entities. After-taxreturns are shown only for Class A shares. After-tax returns for other Classes mayvary. Return After Taxes on Distributions and Sale of Fund Shares may be betterthan Return Before Taxes due to an assumed tax benefit from losses on a sale of theFund’s shares at the end of the period.

Performance results include the effect of expense reduction arrangements forsome or all of the periods shown. If those arrangements had not been in place, theperformance results for those periods would have been lower.

The Fund’s past performance (before and after taxes) does not necessarilyindicate how it will perform in the future. Current performance may be lower orhigher. Please visit www.ivyfunds.com or call 800.777.6472 for the Fund’s updatedperformance.

39

CHART OF YEAR-BY-YEAR RETURNS (as of December 31, 2013)’04 ‘05 ’06 ‘07 ’08 ‘09 ‘10 ‘13‘12‘11

34.48%

-50.75%

16.78% 9.40%

-22.79%

69.32%

12.15%16.79% 23.01%

42.43%

100

75

50

25

0

-25

-50

-75

In the period shown in the chart, the highest quarterly return was 39.62% (thesecond quarter of 2009) and the lowest quarterly return was -26.75% (the thirdquarter of 2011).

AVERAGE ANNUAL TOTAL RETURNS(as of December 31, 2013)

1 Year 5 Years10 Years

(or Life of Class)

Class AReturn Before Taxes . . . . . . . . . . . . . . . . . . . . 3.11% 12.04% 9.12%Return After Taxes on Distributions . . . . . . . . 2.98% 11.84% 8.21%Return After Taxes on Distributions and Sale

of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . 1.92% 9.74% 7.51%Class B

Return Before Taxes . . . . . . . . . . . . . . . . . . . . 3.96% 11.91% 8.58%Class C

Return Before Taxes . . . . . . . . . . . . . . . . . . . . 8.52% 12.53% 8.93%Class E (began on April 2, 2007)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . 3.48% 12.49% 3.52%Class I (began on 04-02-2007)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . 9.96% 13.96% 4.59%Class R (began on 12-19-2012)

Return Before Taxes . . . . . . . . . . . . . . . . . . . . 9.28% N/A 10.69%Class Y

Return Before Taxes . . . . . . . . . . . . . . . . . . . . 9.70% 13.68% 10.07%

40

1 Year 5 Years10 Years

(or Life of Class)

IndexesMSCI AC Asia Ex Japan Index (reflects no

deduction for fees, expenses or other taxes) . . 3.07% 16.51% 10.64%MSCI Emerging Markets Index (reflects no

deduction for fees, expenses or other taxes)(The Fund’s benchmark changed fromMSCI AC Asia Ex Japan Index, effectiveFebruary 2014. IICO believes that theMSCI Emerging Markets Index provides abetter benchmark for the Fund in light ofthe types of securities in which the Fundinvests.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.60% 14.79% 11.17%

Lipper Pacific Ex Japan Funds UniverseAverage (net of fees and expenses) . . . . . . . 2.11% 16.40% 10.55%

Management of the Funds

Investment Adviser: Each Fund is managed by IICO. IICO will remain theinvestment adviser of the Emerging Markets Equity Fund after the Reorganization.

Portfolio Managers: Jonas M. Krumplys is primarily responsible for the day-to-day management of Ivy Asset Strategy New Opportunities Fund, and has held hisFund responsibilities since the inception of the Fund in May 2010. He is VicePresident of IICO and Vice President of the Trust. Mr. Krumplys joined IICO inNovember 2006 as an investment analyst. He has served as Assistant Vice Presidentand assistant portfolio manager for other investment companies managed byWRIMCO since April 2008. He earned a BS in architecture and an MS in chemicalengineering from the University of Illinois, and holds an MBA with an emphasis infinance and marketing from the University of Chicago Graduate School of Business.Mr. Krumplys is a Chartered Financial Analyst.

Frederick Jiang is primarily responsible for the day-to-day management of IvyEmerging Markets Equity Fund. Mr. Jiang has held his Fund responsibilities sinceFebruary 2004, and had been assistant portfolio manager for the Fund since July2003. He is Senior Vice President of IICO and Vice President of the Trust. FromJuly 1999 to July 2003, he served as an investment analyst for IICO. Mr. Jiang holdsa BA degree in Economics from the Central University of Finance and Economics,Beijing, China, and earned an MBA degree in Finance from New York University.Mr. Jiang is a Chartered Financial Analyst.

Mr. Jiang and Mr. Krumplys are expected to serve as portfolio managers of theEmerging Markets Equity Fund after the Reorganization.

41

Purchase and Sale of Fund Shares

Each Fund’s shares are redeemable. You may purchase or redeem shares at aFund’s NAV per share next calculated after your order is received in proper form,subject to any applicable sales charge, on any business day through your dealer orfinancial adviser (all share classes), by writing to WI Services Company,P.O. Box 29217, Shawnee Mission, Kansas 66201-9217 (all share classes), or bytelephone (Class A, B and C: 800.777.6472); fax (Class A, B and C: 800.532.2749;Class I and Y: 800.532.2784), or internet (www.ivyfunds.com) (Class A, B and C) ifyou have completed an Express Transaction Authorization Form. If your individualaccount is not maintained on a Fund’s shareholder servicing system, such as forClass R shares, please contact your selling broker-dealer, plan administrator or third-party record keeper to sell shares of the Fund. Class E shares are not available forpurchase. The Fund’s Class B shares are not available for purchase by new andexisting investors. Class B shares are available for dividend reinvestment andexchanges.

Each Fund’s initial and subsequent investment minimums generally are asfollows, although the Fund and/or IFDI may reduce or waive the minimums in somecases:

For Class A and Class C:To Open an Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 750For accounts opened with Automatic Investment Service (AIS) . . . . $ 150For accounts established through payroll deductions and salary

deferrals Any amount

To Add to an Account Any amountFor AIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50

For Class I, Class R and Class Y:

Please check with your individual selling dealer, plan administrator or thirdparty record keeper for information about minimum investment requirements.

Tax Information

The Fund’s distributions are generally taxable to you as ordinary income,capital gains, or a combination of the two, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

Payments to Broker-Dealers and other Financial Intermediaries

If you purchase the Fund through a broker-dealer or other financialintermediary (such as a bank), the Fund and/or IICO and/or its affiliates may pay theintermediary for the sale of Fund shares and related services. These payments maycreate a conflict of interest by influencing the broker-dealer or other intermediary

42

and your salesperson to recommend the Fund over another investment. Ask yoursalesperson or visit your financial intermediary’s web site for more information.

Additional Information

For additional information about the Asset Strategy New Opportunities Fund,see the Combined Prospectus and Combined SAI. For additional information aboutthe Emerging Markets Equity Fund see the Prospectus dated January 29, 2014 andthe SAI dated January 29, 2014.

INFORMATION ABOUT THE REORGANIZATION

General

Shareholders of the Asset Strategy New Opportunities Fund are being asked toapprove the Plan. A form of the Plan is attached as Appendix A to this Prospectus/Proxy. By approving the Plan, you are also approving the Reorganization.

Shareholders who are concerned about the reorganization of the AssetStrategy New Opportunities Fund into the Emerging Markets Equity Fund mayredeem or exchange their Asset Strategy New Opportunities Fund shares at anytime prior to the consummation of the Reorganization. Exchanges and redemptionsare considered taxable events and may result in capital gains or capital loss for taxpurposes. In anticipation of the Reorganization, the Asset Strategy NewOpportunities Fund is expected to be closed to new shareholders as of February 25,2014. In addition, shareholders should be aware that the Reorganization asproposed is not expected to result in recognition of gain or loss to shareholders forfederal income tax purposes and that, if the Reorganization is consummated,shareholders will be free to redeem their shares of the Emerging Markets EquityFund that they receive in the transaction at the shares’ current NAV, less anyapplicable CDSC.

Shares You Will Receive

If the Reorganization occurs, the shares you receive in exchange for yourAsset Strategy New Opportunities Fund shares will have the characteristicsdescribed below.

The shares of the Emerging Markets Equity Fund you receive will have anaggregate NAV equal to the aggregate NAV of your Asset Strategy NewOpportunities Fund shares as of the close of business on the business day before theclosing of the Reorganization. You will have voting rights identical to those youcurrently have, but as a shareholder of the Emerging Markets Equity Fund. Therights of shareholders of each Fund are identical since each Fund is a series ofthe Trust.

43

The shares acquired in the Reorganization may be exchanged for shares of thesame class of any other fund in the Ivy Family of Funds without the payment of anadditional sales charge or CDSC.

The procedures for purchasing and redeeming your shares of the EmergingMarkets Equity Fund will be the same after the Reorganization as they currently arefor the Asset Strategy New Opportunities Fund.

The Emerging Markets Equity Fund distributes net investment income annuallyin December, while the Asset Strategy New Opportunities Fund distributes netinvestment income quarterly. Distributions for the Emerging Markets Equity Fundwill be paid annually in December after the Reorganization. Net realized capitalgains (and any gains from foreign currency transactions) ordinarily are distributed byeach Fund in December and will continue to be distributed annually by the EmergingMarkets Equity Fund after the Reorganization. All shareholder features that youhave elected will remain available and in effect after the Reorganization unless youdirect that the elections be changed.

Reasons for the Reorganization

Within the scope of its investment management responsibilities, IICO maintainsan ongoing process of considering and comparing product offerings of the IvyFamily of Funds and from time to time may recommend to the Board proposals forenhancing the product offerings within the Ivy Family of Funds. IICO has reviewedthe fund offerings within the Ivy Family of Funds and determined that theReorganization would be in the best interest of each Fund and its shareholders.

At a meeting held on November 12, 2013, the Board, including all Trustees whoare not “interested persons” of the Trust, determined that the Plan, and the resultingReorganization, would be in the best interests of the shareholders of each Fund, andthat the interests of existing shareholders of both Funds would not be diluted as aresult of the Reorganization. The Board has unanimously approved the Plan, and theresulting Reorganization.

In proposing the Reorganization, IICO presented to the Board, at theNovember 12, 2013 meeting, its rationale for the Reorganization and, in particularidentified, the following factors:

– for two years, IICO has agreed to limit the operating expenses that will becharged to shareholders of each class of the Emerging Markets EquityFund so they will be equal to the lowest expense ratio of that class foreither the Asset Strategy New Opportunities Fund or the EmergingMarkets Equity Fund determined as of March 31, 2013;

– the Reorganization is intended to create a larger fund, and this is expectedto permit fixed costs to be spread over a larger asset base, potentiallyresulting in economies of scale over time;

44

– shareholders of the Asset Strategy New Opportunities Fund will becomeshareholders of a fund with a better performance record for a longer periodof time;

– the Reorganization will enable the Asset Strategy New OpportunitiesFund’s shareholders to exchange their investment for an investment in theEmerging Markets Equity Fund without recognizing gain or loss forfederal income tax purposes. By contrast, if an Asset Strategy NewOpportunities Fund shareholder were to redeem his or her shares to investin another fund, such as the Emerging Markets Equity Fund, thetransaction would be a taxable event for such shareholder (unless theshareholder is tax exempt). Similarly, if the Asset Strategy NewOpportunities Fund were liquidated or reorganized in a taxable transaction,the transaction would be a taxable event for the Asset Strategy NewOpportunities Fund’s shareholders (other than tax-exempt shareholders).After the Reorganization, shareholders may redeem any or all of theirEmerging Markets Equity Fund shares at NAV (subject to any applicableCDSC, as with a redemption of their Asset Strategy New OpportunitiesFund shares) at any time, at which point the shareholders (other than thosewho are tax-exempt) would recognize a taxable gain or loss;

– the Reorganization will provide the Asset Strategy New OpportunitiesFund shareholders with the opportunity to invest in a growing asset class;and

– the costs of the Meeting, including the costs of soliciting proxies, and thecosts of the Reorganization that are estimated to be $258,932 will be borneby the Asset Strategy New Opportunities Fund and IICO in the followingpercentages (and corresponding dollar amounts): Asset Strategy NewOpportunities Fund 50% ($129,466) and IICO 50% ($129,466). If theshareholders of the Asset Strategy New Opportunities Fund do not approvethe Plan or the Reorganization does not close for any reason, IICO willbear all the costs of the failed Reorganization.

In addition, the Board considered the relative Fund performance results set forthabove under “Comparison of Fund Performance.” No assurance can be given that theEmerging Markets Equity Fund will achieve any particular level of performanceafter the Reorganization. The Board also considered the Emerging Markets EquityFund’s prior performance was performance for a different investment strategy.

In reviewing the Reorganization, the Board considered the investment strategiesof the Funds. The Board also considered the fact that if the Reorganization occurs,certain of the Asset Strategy New Opportunities Fund’s capital loss carryovers willbe available to the Emerging Markets Equity Fund to offset its capital gains,although the amount of those losses that may be used to offset the Emerging Markets

45

Equity Fund’s capital gains in any given year may be limited. As a result of thislimitation, it is possible that the Emerging Markets Equity Fund may not be able touse these losses as rapidly as the Asset Strategy New Opportunities Fund mighthave, and part or all of these losses may not be usable at all. The ability of the AssetStrategy New Opportunities Fund or the Emerging Markets Equity Fund to absorblosses in the future depends on a variety of factors that cannot be known in advance,including the existence of capital gains against which these losses may be used tooffset. Net capital losses of regulated investment companies for taxable yearsbeginning before December 23, 2010 generally expire at the end of the eighthtaxable year after they arise, if not previously absorbed by that time; therefore, it ispossible that some or all of the Asset Strategy New Opportunities Fund’s losses willexpire unused. In addition, the benefits of any capital loss carryovers currently areavailable only to the shareholders of the Asset Strategy New Opportunities Fund, butafter the Reorganization these benefits will inure to all the shareholders of theEmerging Markets Equity Fund.

Terms of the Agreement and Plan of Reorganization

A form of the Agreement and Plan of Reorganization is attached as Appendix Ato this Prospectus/Proxy for your review. The following is a brief summary of theprincipal terms of the Plan:

– the Asset Strategy New Opportunities Fund will transfer all of its assets inexchange for the Emerging Markets Equity Fund’s assumption of all of theAsset Strategy New Opportunities Fund’s liabilities and obligations andshares of the Emerging Markets Equity Fund with an aggregate NAVequal to the aggregate NAV of the transferred assets and liabilities;

– the Reorganization will occur on the next business day after the time(currently scheduled to be 9:00 AM Central Time on March 17, 2014, orsuch other date and time as the parties may determine) when the assets ofeach Fund are valued for purposes of the Reorganization;

– the shares of each class of the Emerging Markets Equity Fund received bythe Asset Strategy New Opportunities Fund will be distributed to the AssetStrategy New Opportunities Fund’s respective shareholders of thecorresponding class pro rata in accordance with their percentage ownershipof such class of the Asset Strategy New Opportunities Fund in fullliquidation of the Asset Strategy New Opportunities Fund; and

– after the Reorganization, the Asset Strategy New Opportunities Fund willbe terminated, and its affairs will be wound up in an orderly fashion.

The consummation of the Reorganization is subject to a number of conditionsset forth in the Plan. The Plan may be terminated and the Reorganization abandonedat any time prior to the Closing Date, as set forth in the Plan, by the Board if it

46

determines that the Reorganization would be inadvisable for either Fund. Authorizedofficers of the Trust also may amend the Plan at any time in any manner. The Trust’sofficers also may change the Closing Date.

Federal Income Tax Consequences

The Reorganization is intended to be tax-free. As a condition to consummationof the Reorganization, K&L Gates LLP will deliver an opinion (“Tax Opinion”) tothe Trust to the effect that, based on the facts and assumptions stated therein (as wellas certain representations of the Trust) and the existing federal income tax law, andconditioned on the Reorganization’s being completed in accordance with the Plan,for federal income tax purposes:

• the Reorganization will qualify as a “reorganization” (as defined insection 368(a)(1) of the Internal Revenue Code of 1986, as amended(“Code”)), and each Fund will be a “party to a reorganization” (within themeaning of section 368(b) of the Code);

• neither Fund will recognize any gain or loss on the Reorganization;

• the Asset Strategy New Opportunities Fund’s shareholders will notrecognize any gain or loss on the exchange of their Asset Strategy NewOpportunities Fund shares for Emerging Markets Equity Fund shares;

• the holding period for and tax basis in the Emerging Markets Equity Fundshares that a Asset Strategy New Opportunities Fund shareholder receivespursuant to the Reorganization will include the holding period for, and willbe the same as the aggregate tax basis in, the Asset Strategy NewOpportunities Fund shares the shareholder holds immediately before theReorganization (provided the shareholder holds the shares as capital assetsat the time of the closing of the Reorganization); and

• the Emerging Markets Equity Fund’s tax basis in each asset the AssetStrategy New Opportunities Fund transfers to it will be the same as theAsset Strategy New Opportunities Fund’s tax basis therein immediatelybefore the Reorganization, and the Emerging Markets Equity Fund’sholding period for each such asset will include the Asset Strategy NewOpportunities Fund’s holding period therefore (except where the EmergingMarkets Equity Fund’s investment activities have the effect of reducing oreliminating an asset’s holding period).

The Tax Opinion is not binding on the Internal Revenue Service or the courtsand is not a guarantee that the tax consequences of the Reorganization will be asdescribed above.

Prior to the closing of the Reorganization, the Asset Strategy NewOpportunities Fund will distribute to its shareholders all of its investment company

47

taxable income and net realized capital gain (after reduction by any available capitalloss carryforwards), if any, that have not previously been distributed to them. Thatdistribution will be taxable to the shareholders.

The Emerging Markets Equity Fund’s ability to use pre-Reorganization lossesof the Asset Strategy New Opportunities Fund to offset post-Reorganization gains ofthe combined Fund is expected to be limited due to the application of loss limitationrules under federal tax law. The effect of this limitation will depend on the amountof losses in each Fund at the time of the Reorganization, as well as the amount ofpost-Reorganization gains that are recognized. As a result, under certaincircumstances the Asset Strategy New Opportunities Fund’s shareholders couldreceive taxable distributions as shareholders of the Emerging Markets Equity Fundearlier than they would have if the Reorganization had not occurred. A portion of theportfolio assets of the Asset Strategy New Opportunities Fund may be sold inconnection with the Reorganization. The actual tax impact of such sales will dependon the difference between the price at which such portfolio assets are sold and theAsset Strategy New Opportunities Fund’s basis in such assets. Any net capital gainsrecognized in these sales not offset by the Asset Strategy New Opportunities Fund’scapital loss carryforwards will be distributed to the Asset Strategy NewOpportunities Fund’s shareholders as capital gain dividends (to the extent of netrealized long-term capital gains) and/or ordinary dividends (to the extent of netrealized short-term capital gains) during or with respect to the year of sale, and suchdistributions will be taxable to shareholders. Any such sales may also result in higherportfolio turnover for the Asset Strategy New Opportunities Fund and increasedbrokerage costs to be borne by the Asset Strategy New Opportunities Fund thanwould otherwise be the case.

As of September 30, 2013 the Asset Strategy New Opportunities Fund had acapital loss carryforward of $77 million. As of September 30, 2013, the AssetStrategy New Opportunities Fund had additional net unrealized capital gains of$24 million. Capital loss carryforwards are used to reduce the amount of realizedcapital gains that a fund is required to distribute to its shareholders in order to avoidpaying taxes on undistributed capital gain.

If the Reorganization occurs, the tax attributes of the Emerging Markets EquityFund and the Asset Strategy New Opportunities Fund, including any capital losscarryforwards that could have been used by each Fund to offset its future realizedcapital gains, will be shared by the surviving combined Fund.

The foregoing description of the federal income tax consequences of theReorganization applies generally to shareholders who are not tax-exempt investorsand does not take into account your particular facts and circumstances. Consult yourown tax adviser about the effect of state, local, foreign, and other tax laws.

48

Capitalization

The following table shows on an unaudited basis the capitalization of each ofthe Asset Strategy New Opportunities Fund and the Emerging Markets Equity Fundas of September 30, 2013, and on a pro forma combined basis, giving effect to thereorganization of the assets and liabilities of Asset Strategy New Opportunities Fundby the Emerging Markets Equity Fund at NAV as of that date.

ASSETSTRATEGY NEWOPPORTUNITIES

FUND

EMERGINGMARKETS

EQUITYFUND1

PRO FORMAADJUSTMENTS

EMERGINGMARKETS

EQUITY FUNDPRO FORMACOMBINED2,3

Class ANet asset value $159,231,563 $413,871,518 $ (82,046)4 $573,021,035Shares outstanding 14,957,486 29,742,230 (3,534,412) 41,165,304Net asset value per share $ 10.65 $ 13.92 $ 13.92

Class BNet asset value $ 4,771,890 $ 6,020,175 $ (2,459)4 $ 10,789,606Shares outstanding 461,045 513,270 (54,485) 919,830Net asset value per share $ 10.35 $ 11.73 $ 11.73

Class CNet asset value $ 39,780,797 $ 13,022,055 $ (20,498)4 $ 52,782,355Shares outstanding 3,829,050 1,066,720 (572,891) 4,322,879Net asset value per share $ 10.39 $ 12.21 $ 12.21

Class ENet asset value $ 107,179 $ 111,962 $ (55)4 $ 219,086Shares outstanding 10,070 7,941 (2,473) 15,538Net asset value per share $ 10.64 $ 14.10 $ 14.10

Class INet asset value $ 38,714,282 $135,520,481 $ (19,948)4 $174,214,815Shares outstanding 3,619,535 9,476,549 (913,229) 12,182,854Net asset value per share $ 10.70 $ 14.30 $ 14.30

Class RNet asset value $ 598,612 $ 250,389 $ (308)4 $ 848,693Shares outstanding 56,873 18,014 (13,830) 61,057Net asset value per share $ 10.53 $ 13.90 $ 13.90

Class YNet asset value $ 8,018,568 $ 4,302,770 $ (4,132)4 $ 2,317,206Shares outstanding 753,423 303,305 (188,707) 868,020Net asset value per share $ 10.64 $ 14.19 $ 14.19

1 Emerging Markets Equity Fund will be the accounting survivor for financialstatement purposes.

2 Assumes the reorganization was consummated on September 30, 2013, and isfor information purposes only. No assurance can be given as to how manyshares of Emerging Markets Equity Fund will be received by shareholders of

49

Ivy Asset Strategy New Opportunities Fund on the date the Reorganizationtakes place, and the foregoing should not be relied upon to reflect the number ofshares of Emerging Markets Equity Fund that will actually be received on orafter that date.

3 Class A shares, Class B shares, Class C shares, Class E shares, Class I shares,Class R shares and Class Y shares of Asset Strategy New Opportunities Fundwill be exchanged for new Class A shares, Class B shares, Class C shares,Class E shares, Class I shares, Class R shares and Class Y shares, respectively,of Emerging Markets Equity Fund upon consummation of the reorganization.

4 Adjustments reflect estimated one-time proxy, accounting, legal and other costsof approximately $129,446 to be borne by the Asset Strategy NewOpportunities Fund. No expenses will be borne by the Emerging MarketsEquity Fund as a result of the Reorganization.

Shares Outstanding and Entitled to Vote of the Asset Strategy NewOpportunities Fund

Only the shareholders of record of the Asset Strategy New Opportunities Fundat the close of business on January 17, 2014, will be entitled to vote at the Meeting.On that date, the number of shares outstanding of the Asset Strategy NewOpportunities Fund was as follows:

CLASS

Number of SharesOutstanding andEntitled to Vote

Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,592,307.06Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420,086.543Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,348,401.498Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,070.053Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,864,190.68Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,004.904Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747,679.240TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,038,739.978

Ownership of Shares

As of January 17, 2014, the Trust believes that its Trustees and officers, as agroup, owned less than one percent of each class of shares of each Fund and of theTrust as a whole. The tables below show, as of January 17, 2014, the shareholders ofrecord who owned 5% or more of the outstanding shares of the noted class of sharesof the noted Fund and their ownership upon consummation of the Reorganization.

50

The percentages presented below assume that the Reorganization of the AssetStrategy New Opportunities Fund is consummated:Name andAddressof Shareholder

Asset StrategyNew Opportunities

FundEmerging Markets

Equity FundProForma

Combined Fund

First Clearing, LLC Special CustodyAccount for the Exclusive Benefit ofCustomer2801 Market StSt. Louis, MO 63103-2523

Class B84,138.454

20.03%

Class B73,225.1091

7.96%

MLPF&S for the Sole Benefit of ItsCustomersAttn: Fund Administration4800 Deer Lake Dr EJacksonville, FL 32246-6484

Class B38,813.513

9.24%

Class B33,779.0991

3.67%

Morgan Stanley Smith Barney for ExclusiveBenefit of CustomerHarborside Financial CenterPlaza 2; 3rd FloorJersey City, NJ 07311

Class B21,596.323

5.14%

Class B18,795.7941

2.04%

LPL FinancialFBO: Customer AccountsAttn: Mutual Fund OperationsPO Box 509046San Diego, CA 92150-9046

Class C318,604.843

9.52%

Class C264,065.6201

6.11%


Class C574,389.777

17.15%

Class C476,138.9711

11.01%


Class C338,002.104

10.09%

Class C127,170.299

12.68%

Class C405,367.7011

9.38%


Class C353,734.582

10.56%

Class C117,215.489

11.69%

Class C410,452.7811

9.49%

Raymond JamesOmnibus for Mutual FundsHouse Acct Firm 92500015Attn: Courtney Waller880 Carillon PkwySt. Petersburg, FL 33716-1100

Class C300,359.381

8.97%

Class C248,971.0581

5.76%

RBC Capital Markets LLCSpecial Custody Account for ExclusiveBenefit of CustomersAttn: Mutual Fund Ops Manager510 Marquette Ave SMinneapolis, MN 55402-1110

Class C53,508.000

5.34%

Class C53,508.000

1.24%

51

Name andAddressof Shareholder



Equity FundProForma

Combined Fund

Waddell & Reed Inc1999 DCA AcctAttn: Treasury DepartmentPO Box 29217Shawnee Mission, KS 66201-9217

Class E10,070.053

100%

Class E7,597.0531

48.89%

Waddell & Reed Financial IncAttn: Treasury DepartmentPO Box 29217Shawnee Mission, KS 66201-9217

Class E8,005.201

100%

Class E8,005.2010

51.52%


Class I436,451.815

15.24%

Class I297,275.7151

2.44%


Class I463,694.518

16.19%

Class I315,842.7431

2.59%

NFS LLC FEBOMarshall & Ilsley Trust CoFBO Bank 98 Dly RcrdkpgAttn: Mut Funds11270 W Park Pl; Ste 400Milwaukee, WI 53224

Class I185,830.161

6.49%

Class I126,561.5991

1.04%


Class I496,012.712

17.32%

Class I337,841.4491

2.77%

Raymond JamesOmnibus for Mutual FundsHouse Acct Firm 92500015Attn: Courtney Waller880 Carillon PkwySt. Petersburg, FL 33716-1100

Class I311,081.653

10.86%

Class I211,904.9841

1.74%

Bank of New York-Mellon CustIvy Managed International OpportunitiesMaster Accountc/o Carrie Kelly6300 Lamar AveMission, KS 66202-4247

Class I4,902,355.812

55.68%

Class I4,902,355.812

40.24%

Bank of New York-Mellon CustIvy Managed EuroPacific Fund MasterAccountc/o Carrie Kelly6300 Lamar AveMission, KS 66202-4247

Class I3,545,002.165

40.26%

Class I3,545,002.165

29.10%

Waddell & Reed Inc1999 DCA AcctAttn: Treasury DepartmentPO Box 29217Shawnee Mission, KS 66201-9217

Class R37,809.187

67.51%

Class R28,472.5541

46.63%

52

Name andAddressof Shareholder



Equity FundProForma

Combined Fund

FIIOC FBOResource Management Group Inc401K PSP Plan100 Magellan WayCovington, KY 41015-1987

Class R8,761.251

15.64%

Class R6,598.2391

10.81%


Class R1,234.877

6.42%

Class R1,234.877

2.02%

Ivy Funds Distributor IncAttn: Treasury DepartmentPO Box 29217Mission, KS 66201-9217

Class R18,013.699

93.58%

Class R18,013.699

29.50%

LPL FinancialFBO: AXA Customer AccountsAttn: Mutual Fund OperationsPO Box 509046San Diego, CA 92150-9046

Class Y111,219.605

14.88%

Class Y83,140.0031

9.58%

Charles Schwab & Co IncSpecial Custody A/C for the Benefit ofCustomersAttn: Mutual Funds211 Main StSan Francisco, CA 94105-1905

Class Y136,697.900

18.28%

Class Y102,202.2601

11.77%

Nationwide Trust Company FSBc/o IPO Portfolio AccountingPO Box 182029Columbus, OH 43218-2029

Class Y262,565.145

85.71%

Class Y262,565.145

30.25%

1 Adjustments reflect estimated one-time proxy, accounting, legal and other costsof approximately $129,446 to be borne by the Asset Strategy NewOpportunities Fund. No expenses will be borne by the Emerging MarketsEquity Fund as a result of the Reorganization.

VOTING INFORMATION

General

Required Vote for the Proposal

Approval of the Plan will require the affirmative vote of the holders of amajority of the shares of the Asset Strategy New Opportunities entitled to vote at theMeeting. A majority of shareholders is defined as (i) 67% or more of the votingsecurities present at the meeting, if the holders of more than 50% of the outstandingvoting securities are present or represented by proxy, or (ii) more than 50% of theoutstanding voting securities of the Asset Strategy New Opportunities Fund,whichever is less. A vote of the shareholders of the Emerging Markets Equity Fundis not needed to approve the Reorganization.

53

The Board is soliciting proxies from the shareholders of the Asset Strategy NewOpportunities Fund in connection with the Meeting, which has been called to be heldat 4:00 PM, Central Time, on March 6, 2014 at 6300 Lamar Avenue, Overland Park,Kansas. The meeting notice, this Prospectus/Proxy, the Prospectus for the EmergingMarkets Equity Fund and proxy cards are being mailed to shareholders beginning onor about February 5, 2014.

THE BOARD UNANIMOUSLY RECOMMENDS APPROVALOF THE AGREEMENT AND PLAN OF REORGANIZATION.

Information About Proxies and the Conduct of the Meeting

Solicitation of Proxies. Proxies will be solicited primarily by mailing thisProspectus/Proxy and its enclosures, but proxies may also be solicited throughfurther mailings, telephone calls, personal interviews or e-mail by officers of theTrust or by employees or agents of its service contractors.

Voting Process

You can vote in any one of the following ways:

(a) By mail, by filling out and returning the enclosed proxy card;

(b) By phone or Internet (see enclosed proxy card for instructions); or

(c) In person at the Meeting.

Shareholders who owned shares on the record date, January 17, 2014, areentitled to vote at the Meeting. For each dollar of NAV of the Asset Strategy NewOpportunities Fund that you own, you are entitled to one vote, and for eachfractional share you hold, you are entitled to a proportionate fractional vote. If youchoose to vote by mail and you are an individual account owner, please sign exactlyas your name appears on the proxy card. Either owner of a joint account may signthe proxy card, but the signer’s name must exactly match the name that appears onthe card.

Costs. The Emerging Markets Equity Fund will bear the transfer agency costsrelated to the Reorganization and the costs of registration of its shares to be issued toshareholders of the Asset Strategy New Opportunities Fund upon the closing of theReorganization. All other costs of the Meeting that are estimated to be $258,892,including the costs of soliciting proxies, and the costs of the Reorganization will beborne by the Asset Strategy New Opportunities Fund and IICO in the followingpercentages (and corresponding dollar amounts): Asset Strategy New OpportunitiesFund 50% ($129,446) and IICO 50% ($129,446). These amounts, using informationas of September 30, 2013, are estimated to have an impact of less than one-half centper share to the Asset Strategy New Opportunities Fund. In the event that theshareholders of the Asset Strategy New Opportunities Fund do not approve the Plan

54

or the Reorganization does not close for any reason, the Adviser will bear the costsof the failed Reorganization, which would otherwise have been borne by the AssetStrategy New Opportunities Fund and the Emerging Markets Equity Fund.

Voting and Tabulation of Proxies. Shares represented by duly executedproxies will be voted as instructed on the proxy. If no instructions are given, theproxy will be voted in favor of the Proposal. You can revoke your proxy at any timebefore it is exercised by sending a signed, written letter of revocation to theSecretary of the Trust, by properly executing and submitting a later-dated proxy orby attending the Meeting and voting in person.

Votes cast in person or by proxy at the Meeting will be counted by personsappointed by the Asset Strategy New Opportunities Fund as proxies for the Meeting(the “Designees”). A quorum is constituted with respect to the Asset Strategy NewOpportunities Fund by presence in person or by proxy of the holders of more than331⁄3% of the outstanding shares of the Asset Strategy New Opportunities Fundentitled to vote at the Meeting. In determining whether a quorum is present,abstentions and “broker non-votes” will be counted as outstanding shares that areentitled to vote. Since these shares will be counted as present, but not as voting infavor of the Proposal, these shares will have the same effect as if they cast votesagainst the Proposal. “Broker non-votes” are shares held by brokers or nominees asto which (i) the broker or nominee does not have discretionary voting power and(ii) the broker or nominee has not received instructions from the beneficial owner orother person who is entitled to instruct how the shares will be voted.

Adviser and Underwriter. The address of the investment manager to both theAsset Strategy New Opportunities Fund and the Emerging Markets Equity Fund isIvy Investment Management Company, 6300 Lamar Avenue, P.O. Box 29217,Shawnee Mission, Kansas 66201-9217. The Adviser is an indirect, wholly-ownedsubsidiary of Waddell & Reed Financial, Inc. (“Waddell & Reed”), a publicly heldcompany. During the fiscal year ended March 31, 2013, the Asset Strategy NewOpportunities Fund paid the Adviser management fees at an annual rate of 1.00% asa percentage of the Asset Strategy New Opportunities Fund’s net assets. During thefiscal year ended March 31, 2013, the Emerging Markets Equity Fund paid theAdviser management fees at an annual rate of 0.96% as a percentage of theEmerging Markets Equity Fund’s net assets. The Management Fee schedule for eachFund is set forth below.

Ivy Asset Strategy New Opportunities FundNet Assets Fee

Up to $500 million . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% of net assetsOver $500 million and up to $1 billion . . . . . . . . . . 0.85% of net assetsOver $1 billion and up to $2 billion . . . . . . . . . . . . . 0.83% of net assetsOver $2 billion and up to $3 billion . . . . . . . . . . . . . 0.80% of net assetsOver $3 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.76% of net assets

55

Ivy Emerging Markets Equity FundNet Assets Fee

Up to $500 million . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% of net assetsOver $500 million and up to $1 billion . . . . . . . . . . 0.85% of net assetsOver $1 billion and up to $2 billion . . . . . . . . . . . . . 0.83% of net assetsOver $2 billion and up to $3 billion . . . . . . . . . . . . . 0.80% of net assetsOver $3 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.76% of net assets

The address of the Funds’ principal underwriter, Ivy Funds Distributor, Inc., is6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201.

Other Service Providers for the Emerging Markets Equity Fund and theAsset Strategy New Opportunities Fund. The Asset Strategy New OpportunitiesFund and Emerging Markets Equity Fund have the same service providers. Uponcompletion of the Reorganization, the Emerging Markets Equity Fund will continueto engage its existing service providers.

Adjournments; Other Business. In the event that a quorum is not present atthe Meeting with respect to a particular Asset Strategy New Opportunities Fund, orif the Asset Strategy New Opportunities Fund has not received enough votes by thetime of the Meeting to approve the Proposal, the chairman, or his or her substitutes,may propose that such Meeting be adjourned one or more times to permit furthersolicitation of proxies. Any adjournment requires the affirmative vote of a majorityof the total number of shares of the Asset Strategy New Opportunities Fund that arepresent in person or by proxy when the adjournment is being voted on. If a quorumis present, the Designees will vote in favor of any such adjournment all proxies thatthey are entitled to vote in favor of the Proposal and the Designees will vote againstany such adjournment any proxy that directs them to vote against the Proposal. TheDesignees will not vote any proxy that directs them to abstain from voting on theProposal.

The Meeting has been called to transact any business that properly comesbefore it. The only business that management of the Asset Strategy NewOpportunities Fund intends to present or knows that others will present is theProposal. If any other matters properly come before the Meeting, and on all mattersincidental to the conduct of the Meeting, the Designees intend to vote the proxies inaccordance with their judgment, unless the Secretary of the Trust has previouslyreceived written contrary instructions from the shareholder entitled to vote theshares.

Shareholder Proposals at Future Meetings. Neither the Asset Strategy NewOpportunities Fund nor the Emerging Markets Equity Fund holds annual or otherregular meetings of shareholders. Shareholder proposals to be presented at any futuremeeting of shareholders of the Asset Strategy New Opportunities Fund or EmergingMarkets Equity Fund must be received by the relevant Fund or Trust in writing a

56

reasonable time before the Asset Strategy New Opportunities Fund or EmergingMarkets Equity Fund, as the case may be, solicits proxies for that meeting in order tobe considered for inclusion in the proxy materials for that meeting. Shareholderproposals should be sent to the relevant Fund, Attention: Mara Herrington,Secretary, at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas66201-9217.

Shareholder Communications. Shareholder communications to the Boardmust be in writing and addressed to the Board and to the attention of MaraHerrington, Secretary of the respective Fund, at 6300 Lamar Avenue, Overland Park,Kansas 66202. If a specific Trustee is the intended recipient of such communication,the name of that Trustee must be noted therein. The Secretary will forward suchcorrespondence only to the intended recipient if one is noted. Prior to forwarding anycorrespondence, the Secretary will review the communication and will not forwardcommunications deemed by the Secretary, in her discretion, to be frivolous, ofinconsequential commercial value or otherwise inappropriate for Board’sconsideration. Any communication reviewed by the Secretary and not forwarded tothe Board for consideration shall be forwarded to and reviewed by independent legalcounsel to the Independent Trustees. In the event independent legal counsel to theIndependent Trustees disagrees with the determination of the Secretary and deemssuch communication appropriate for Board consideration, such communication shallbe forwarded to the Board or members thereof, as appropriate. Each Fund will retainshareholder communications addressed to the Board in accordance with its recordretention policy.

57

APPENDIX A

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the“Agreement”) dated as of , 2014 by and between (i) Ivy Funds (the“Trust”), a Delaware statutory trust established under an Agreement and Declarationof Trust dated November 13, 2008, and in effect on the date hereof (the “Declarationof Trust”), on behalf of the Ivy Asset Strategy New Opportunities Fund (the“Acquired Fund”), a series of the Trust, (ii) the Trust, on behalf of the Ivy EmergingMarkets Equity Fund (the “Acquiring Fund”), a series of the Trust, and (iii) IvyInvestment Management Company, the investment manager to the Acquired Fundand Acquiring Fund (“IICO”)(for purposes of paragraphs 9.1 and 9.2 of thisAgreement only).

This Agreement is intended to be and is adopted as a plan of reorganizationwithin the meaning of the regulations under Section 368(a) of the United StatesInternal Revenue Code of 1986, as amended (the “Code”). The reorganization willconsist of the transfer of all of the assets of the Acquired Fund in exchange forClass A shares, Class B shares, Class C shares, Class E shares, Class I shares,Class R shares and Class Y shares of beneficial interest of the Acquiring Fund (the“Acquiring Shares”), and the assumption by the Acquiring Fund of all the liabilitiesof the Acquired Fund (other than certain expenses of the reorganizationcontemplated hereby) and the distribution of such shares of the Acquiring Fund tothe shareholders of the Acquired Fund in liquidation of the Acquired Fund, all uponthe terms and conditions set forth in this Agreement.

In consideration of the premises and of the covenants and agreementshereinafter set forth, the parties hereto covenant and agree as follows:

1. TRANSFER OF ASSETS OF ACQUIRED FUND IN EXCHANGE FORASSUMPTION OF LIABILITIES AND ACQUIRING SHARES ANDLIQUIDATION OF ACQUIRED FUND.

1.1 Subject to the terms and conditions herein set forth and on the basis of therepresentations and warranties contained herein,

(a) The Trust, on behalf of the Acquired Fund, will transfer and deliver to theTrust, on behalf of the Acquiring Fund, and the Acquiring Fund willacquire, all the assets of the Acquired Fund as set forth in paragraph 1.2.

(b) The Acquiring Fund will assume all of the Acquired Fund’s liabilities andobligations of any kind whatsoever, whether absolute, accrued, contingentor otherwise in existence on the Closing Date (as defined in paragraph 1.2hereof) (collectively, the “Obligations”), except that expenses ofreorganization contemplated hereby to be paid by the Acquired Fund

A-1

pursuant to paragraph 9 shall not be assumed or paid by the AcquiringFund.

(c) The Acquiring Fund will issue and deliver to the Acquired Fund inexchange for the assets transferred pursuant to paragraph 1.1(a) and theassumption of liabilities pursuant to paragraph 1.1(b) the number of fulland fractional (rounded to the third decimal place) Class A shares, Class Bshares, Class C shares, Class E shares, Class I shares, Class R shares andClass Y shares determined by dividing the net value of the Acquired Fund,computed in the manner and as of the time and date set forth in paragraph2.1, attributable to each such class of shares of the Acquired Fund by thenet asset value (“NAV”) of one Acquiring Share of the same class,computed in the manner and as of the time and date set forth in paragraph2.2. Such transactions shall take place at the closing provided for inparagraph 3.1 (the “Closing”).

1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund shallconsist of all cash, securities, dividends and interest receivable, receivables forshares sold and all other assets which are owned by the Acquired Fund on theclosing date provided in paragraph 3.1 (the “Closing Date”), including anydeferred expenses, other than unamortized organizational expenses, shown asan asset on the books of the Acquired Fund on the Closing Date.

1.3 As provided in paragraph 3.4, as soon after the Closing Date as is convenientlypracticable (the “Liquidation Date”), the Acquired Fund will liquidate anddistribute pro rata to its shareholders of record (the “Acquired FundShareholders”), determined as of the close of business on the Valuation Date (asdefined in paragraph 2.1), the Acquiring Shares received by the Acquired Fundpursuant to paragraph 1.1. Such liquidation and distribution will beaccomplished by the transfer of the Acquiring Shares then credited to theaccount of the Acquired Fund on the books of the Acquiring Fund to openaccounts on the share records of the Acquiring Fund in the names of theAcquired Fund Shareholders and representing the respective pro rata number offull and fractional (rounded to the third decimal place) Acquiring Shares duesuch shareholders, by class (i.e., the account for each Acquired FundShareholder of a class of Acquired Shares will be credited with the respectivepro rata number of shares of the Corresponding Class of Acquiring Shares duethat Shareholder). The Acquiring Fund shall not be obligated to issuecertificates representing Acquiring Shares in connection with such exchange.

1.4 With respect to Acquiring Shares distributable pursuant to paragraph 1.3 to anAcquired Fund Shareholder holding a certificate or certificates for shares of theAcquired Fund, if any, on the Valuation Date, the Trust will not permit suchshareholder to receive Acquiring Share certificates therefor, exchange suchAcquiring Shares for shares of other investment companies, effect an account

A-2

transfer of such Acquiring Shares, or pledge or redeem such Acquiring Sharesuntil such Shareholder has surrendered all his or her outstanding certificates forAcquired Fund shares or, in the event of lost certificates, posted adequate bond.

1.5 As promptly as possible after the Closing Date, the Acquired Fund shall beterminated pursuant to the provisions of the Declaration of Trust and the laws ofthe State of Delaware, and, after the Closing Date, the Acquired Fund shall notconduct any business except in connection with its liquidation.

2. VALUATION.

2.1 For the purpose of paragraph 1, the value of the shares of each class of theAcquired Fund shall be equal to the net asset value of such shares of theAcquired Fund computed as of the close of regular trading on the New YorkStock Exchange on the business day next preceding the Closing (such time anddate being herein called the “Valuation Date”) using the valuation procedures asadopted by the Board of Trustees of the Trust and as set forth in the then-current prospectus or prospectuses or statement or statements of additionalinformation of the Trust (collectively, as amended or supplemented from timeto time, the “Acquiring Fund Prospectus”), after deduction for the expenses ofthe reorganization contemplated hereby to be paid by the Acquired Fundpursuant to paragraph 9.

2.2 For the purpose of paragraph 1, the net asset value per share of each class ofAcquiring Shares shall be the net asset value per share computed as of the closeof regular trading on the New York Stock Exchange on the Valuation Date,using the valuation procedures as adopted by the Board of Trustees of the Trustand as set forth in the Acquiring Fund Prospectus. All computations pursuant toparagraphs 2.1 and 2.2 shall be made by or under the direction of IICO.

3. CLOSING AND CLOSING DATE.

3.1 The Closing Date shall be on March 17, 2014 or on such other date as theparties may agree in writing. The Closing shall be held at 9:00 AM on theClosing Date at the offices of IICO, located at 6300 Lamar Avenue, OverlandPark, Kansas or at such other time and/or place as the parties may agree.

3.2 On the Closing Date, the portfolio securities of the Acquired Fund and all theAcquired Fund’s cash shall be delivered by the Acquired Fund to the account ofthe Acquiring Fund, such portfolio securities to be duly endorsed in proper formfor transfer in such manner and condition as to constitute good delivery thereofin accordance with the custom of brokers or, in the case of portfolio securitiesheld in the U.S. Treasury Department’s book-entry system or by the DepositoryTrust Company, Participants Trust Company or other third party depositories,by transfer in accordance with Rule 17f-4, Rule 17f-5 or Rule 17f-7, as the case

A-3

may be, under the Investment Company Act of 1940, as amended (the “1940Act”) and accompanied by all necessary federal and state stock transfer stampsor a check for the appropriate purchase price of such transfer stamps. The cashdelivered shall be in the form of currency or certified or official bank checks,payable to the order of “Bank of New York Mellon, custodian for Ivy EmergingMarkets Equity Fund, a series of Ivy Funds.”

3.3 In the event that on the Valuation Date (a) the New York Stock Exchange shallbe closed to trading or general trading thereon shall be restricted, or (b) tradingor the reporting of trading on said Exchange or elsewhere shall be disrupted sothat accurate appraisal of the value of the net assets of the Acquired Fund isimpracticable, the Valuation Date shall be postponed until the first business dayafter the day when trading shall have been fully resumed and reporting shallhave been restored; provided that if trading shall not be fully resumed andreporting restored within three business days after the original Valuation Date,this Agreement may be terminated by either Fund upon the giving of writtennotice to the other Fund.

3.4 At the Closing, the Acquired Fund or its transfer agent shall deliver to theAcquiring Fund or its designated agent a list of the names and addresses of theAcquired Fund Shareholders and the number of outstanding shares of beneficialinterest of each class of the Acquired Fund owned by each Acquired FundShareholder, all as of the close of business on the Valuation Date.

3.5 At the Closing, each party shall deliver to the other such bills of sale,instruments of assumption of liabilities, checks, assignments, stock certificates,receipts or other documents as such other party or its counsel may reasonablyrequest in connection with the transfer of assets, assumption of liabilities andliquidation contemplated by paragraph 1.

4. REPRESENTATIONS AND WARRANTIES.

4.1 The Trust, on behalf of the Acquired Fund, represents and warrants thefollowing to the Acquiring Fund as of the date hereof and agrees to confirm thecontinuing accuracy and completeness in all material respects of the followingon the Closing Date:

(a) The Acquired Fund’s current prospectus or prospectuses and statement ofadditional information or statements of additional information(collectively, as amended or supplemented from time to time, the“Acquired Fund Prospectus”) conform in all material respects with theapplicable requirements of the Securities Act of 1933, as amended (the“1933 Act”), and the rules and regulations of the SEC thereunder and doesnot include any untrue statement of a material fact or omit to state anymaterial fact required to be stated therein or necessary to make the

A-4

statements therein, in light of the circumstances under which they weremade, not misleading, and there are no material contracts to which theAcquired Fund is a party that are not referred to in the Acquired FundProspectus or in the registration statement of which it is a part;

(b) The financial statements of the Acquired Fund as of March 31, 2013 andfor the fiscal year then ended have been prepared in accordance withgenerally accepted accounting principles and have been audited byindependent auditors, and such statements fairly reflect the financialcondition of the Acquired Fund as of March 31, 2013, and there are noknown contingent liabilities of the Acquired Fund as of such date that arenot disclosed in such statements;

(c) The financial statements of the Acquired Fund as of September 30, 2013and for the period then ended have been prepared in accordance withgenerally accepted accounting principles, and such statements fairly reflectthe financial condition of the Acquired Fund as of September 30, 2013,and there are no known contingent liabilities of the Acquired Fund as ofsuch date that are not disclosed in such statements;

(d) Since the date of the financial statements referred to in subsection (c)above, there have been no material adverse changes in the AcquiredFund’s financial condition, assets, liabilities, or business (other thanchanges occurring in the ordinary course of business) and there are noknown contingent liabilities of the Acquired Fund arising after such date.For the purposes of this subsection (d), a decline in the net asset value ofthe Acquired Fund shall not constitute a material adverse change;

(e) By the Closing Date, all federal and other tax returns and reports of theAcquired Fund required by law to have been filed by such date (givingeffect to extensions) shall have been filed, and all federal and other taxesshown to be due on said returns and reports shall have been paid so far asdue, or provision shall have been made for the payment thereof, and to thebest of the Acquired Fund’s knowledge no such return is currently underaudit and no assessment has been asserted with respect to any such return;

(f) For all taxable years and all applicable quarters of such years from the dateof its inception, the Acquired Fund has met, and for the taxable yearending on the Closing Date, will meet the requirements of Subchapter Mof the Code for treatment as a “regulated investment company” within themeaning of Section 851 of the Code, and the Acquired Fund has noearnings and profits accumulated in any taxable year in which theprovisions of Subchapter M did not apply to it. Neither the Trust nor theAcquired Fund has at any time since its inception been liable for, nor isnow liable for, any material tax pursuant to Sections 852 or 4982 of the

A-5

Code, except as previously disclosed in writing to and accepted by theAcquiring Fund. The Acquired Fund has duly filed all federal, state, localand foreign tax returns which are required to have been filed, and all taxesof the Acquired Fund which are due and payable have been paid except foramounts that alone or in the aggregate would not reasonably be expectedto have a material adverse effect. The Acquired Fund is in compliance inall material respects with applicable regulations of the Internal RevenueService pertaining to the reporting of dividends and other distributions onand redemptions of its capital stock and to withholding in respect ofdividends and other distributions to shareholders, and is not liable for anymaterial penalties which could be imposed thereunder;

(g) The authorized capital of the Trust consists of an unlimited number ofshares of beneficial interest, $0.001 par value, of such number of differentseries as the Board of Trustees of the Trust may authorize from time totime. The outstanding shares of beneficial interest in the Acquired Fundare, and at the Closing Date will be, divided into Class A shares, Class Bshares, Class C shares, Class E shares, Class I shares, Class R shares andClass Y shares, each having the characteristics described in the AcquiredFund Prospectus. All issued and outstanding shares of the Acquired Fundare, and at the Closing Date will be, duly and validly issued andoutstanding, fully paid and (except as set forth in the Acquired FundProspectus), nonassessable by the Acquired Fund and will have beenissued in compliance with all applicable registration or qualificationrequirements of federal and state securities laws. No options, warrants orother rights to subscribe for or purchase, or securities convertible into, anyshares of beneficial interest of the Acquired Fund are outstanding and nonewill be outstanding on the Closing Date;

(h) The Acquired Fund’s investment operations from inception to the datehereof have been in compliance in all material respects with the investmentpolicies and investment restrictions set forth in its prospectus andstatement of additional information as in effect from time to time, exceptas previously disclosed in writing to and accepted by the Acquiring Fund;

(i) The Acquiring Shares to be issued to the Acquired Fund pursuant toparagraph 1 will not be acquired for the purpose of making anydistribution thereof other than to the Acquired Fund Shareholders asprovided in paragraph 1.3;

(j) No consent, approval, authorization or order of any court or governmentalauthority is required for the consummation by the Acquired Fund of thetransactions contemplated by this Agreement, except such as may berequired under the 1933 Act, the Securities Exchange Act of 1934, asamended (the “1934 Act”), the 1940 Act and state insurance, securities or

A-6

blue sky laws (which term as used in this Agreement shall include the lawsof the District of Columbia and of Puerto Rico);

(k) At the Closing Date, the Trust, on behalf of the Acquired Fund, will havegood and marketable title to its assets to be transferred to the AcquiringFund pursuant to paragraph 1.1 and will have full right, power andauthority to sell, assign, transfer and deliver the Investments (as definedbelow) and any other assets of the Acquired Fund to be transferred to theAcquiring Fund pursuant to this Agreement. At the Closing Date, subjectonly to the delivery of the Investments and any such other assets andpayment therefor as contemplated by this Agreement, the Acquiring Fundwill acquire good and marketable title thereto and will acquire theInvestments and any such other assets subject to no encumbrances, liens orsecurity interests whatsoever and without any restrictions upon the transferthereof, except as previously disclosed to and accepted by the AcquiringFund. As used in this Agreement, the term “Investments” shall mean theAcquired Fund’s investments shown on the schedule of its investments asof September 30, 2013 referred to in Section 4.1(c) hereof, assupplemented with such changes in the portfolio as the Acquired Fundshall make, and changes resulting from stock dividends, stock splits,mergers and similar corporate actions through the Closing Date;

(l) At the Closing Date, the Acquired Fund will have sold such of its assets, ifany, as are necessary to assure that, after giving effect to the acquisition ofthe assets of the Acquired Fund pursuant to this Agreement, the AcquiringFund will remain a “diversified company” within the meaning ofSection 5(b)(1) of the 1940 Act and in compliance with such othermandatory investment restrictions as are set forth in the Acquiring FundProspectus, as amended through the Closing Date; and

(m) No registration of any of the Investments under the Securities Act or underany state securities or blue sky laws would be required if they were, as ofthe time of such transfer, the subject of a public distribution by either ofthe Acquiring Fund or the Acquired Fund, except as previously disclosedby the Acquired Fund to and accepted by the Acquiring Fund.

4.2 The Trust, on behalf of the Acquiring Fund, represents and warrants thefollowing to the Acquired Fund as of the date hereof and agrees to confirm thecontinuing accuracy and completeness in all material respects of the followingon the Closing Date:

(a) The Acquiring Fund Prospectus conforms in all material respects with theapplicable requirements of the 1933 Act and the rules and regulations ofthe SEC thereunder and does not include any untrue statement of amaterial fact or omit to state any material fact required to be stated therein

A-7

or necessary to make the statements therein, in light of the circumstancesunder which they were made, not misleading, and there are no materialcontracts to which the Acquiring Fund is a party that are not referred to inthe Acquiring Fund Prospectus or in the registration statement of which itis a part;

(b) At the Closing Date, the Acquiring Fund will have good and marketabletitle to its assets;

(c) The financial statements of the Acquiring Fund as of March 31, 2013 andfor the fiscal year then ended have been prepared in accordance withgenerally accepted accounting principles and have been audited byindependent auditors, and such statements fairly reflect the financialcondition of the Acquiring Fund as of March 31, 2013, and there are noknown contingent liabilities of the Acquiring Fund as of such date that arenot disclosed in such statements;

(d) The financial statements of the Acquiring Fund as of September 30, 2013and for the period then ended have been prepared in accordance withgenerally accepted accounting principles, and such statements fairly reflectthe financial condition of the Acquiring Fund as of September 30, 2013,and there are no known contingent liabilities of the Acquiring Fund as ofsuch date that are not disclosed in such statements;

(e) Since the date of the financial statements referred to in subsection(d) above, there have been no material adverse changes in the AcquiringFund’s financial condition, assets, liabilities, or business (other thanchanges occurring in the ordinary course of business) and there are noknown contingent liabilities of the Acquiring Fund arising after such date.For the purposes of this subsection (e), a decline in the net asset value ofthe Acquiring Fund shall not constitute a material adverse change.

(f) By the Closing Date, all federal and other tax returns and reports of theAcquiring Fund required by law to have been filed by such date (givingeffect to extensions) shall have been filed, and all federal and other taxesshown to be due on said returns and reports shall have been paid so far asdue, or provision shall have been made for the payment thereof, and to thebest of the Acquiring Fund’s knowledge, no such return is currently underaudit and no assessment has been asserted with respect to such returns;

(g) For all taxable years and all applicable quarters of such years from the dateof its inception, the Acquiring Fund has met, and for the current taxableyear will meet, the requirements of Subchapter M of the Code fortreatment as a “regulated investment company” within the meaning ofSection 851 of the Code. Neither the Trust nor the Acquiring Fund has atany time since its inception been liable for, nor is now liable for, any

A-8

material tax pursuant to Sections 852 or 4982 of the Code, except aspreviously disclosed in writing to and accepted by the Acquired Fund. TheAcquiring Fund has duly filed all federal, state, local and foreign taxreturns which are required to have been filed, and all taxes of theAcquiring Fund which are due and payable have been paid except foramounts that alone or in the aggregate would not reasonably be expectedto have a material adverse effect. The Acquiring Fund is in compliance inall material respects with applicable regulations of the Internal RevenueService pertaining to the reporting of dividends and other distributions onand redemptions of its capital stock and to withholding in respect ofdividends and other distributions to shareholders, and is not liable for anymaterial penalties which could be imposed thereunder;

(h) The authorized capital of the Trust consists of an unlimited number ofshares of beneficial interest, $.001 par value, of such number of differentseries as the Board of Trustees of the Trust may authorize from time totime. The outstanding shares in the Acquiring Fund are, and at the ClosingDate will be, divided into Class A shares, Class B shares, Class C shares,Class E shares, Class I shares, Class R shares and Class Y shares, eachhaving the characteristics described in the Acquiring Fund Prospectus. Allissued and outstanding shares of the Acquiring Fund are, and at theClosing Date will be, duly and validly issued and outstanding, fully paidand (except as set forth in the Acquiring Fund Prospectus) non-assessableby the Trust, and will have been issued in compliance with all applicableregistration or qualification requirements of federal and state securitieslaws. No options, warrants or other rights to subscribe for or purchase, orsecurities convertible into, any shares of common stock in the AcquiringFund of any class are outstanding and none will be outstanding on theClosing Date (except such rights as the Acquiring Fund may have pursuantto this Agreement);

(i) The Acquiring Fund’s investment operations from inception to the datehereof have been in compliance in all material respects with the investmentpolicies and investment restrictions set forth in its prospectus orprospectuses and statement or statements of additional information as ineffect from time to time;

(j) The Acquiring Shares to be issued and delivered to the Acquired Fundpursuant to the terms of this Agreement will at the Closing Date have beenduly authorized and, when so issued and delivered, will be duly andvalidly issued Class A shares, Class B shares, Class C shares, Class Eshares, Class I shares, Class R shares or Class Y shares, as the case maybe, in the Acquiring Fund, and will be fully paid and (except as set forth inthe Acquiring Fund Prospectus) non-assessable by the Trust, and no

A-9

shareholder of the Trust will have any preemptive right of subscription orpurchase in respect thereof;

(k) No consent, approval, authorization or order of any court or governmentalauthority is required for the consummation by the Acquiring Fund of thetransactions contemplated by this Agreement, except such as may berequired under 1933 Act, the 1934 Act, the 1940 Act and state insurance,securities or blue sky laws.

5. COVENANTS OF THE ACQUIRED FUND AND THE ACQUIRINGFUND.

The Trust, on behalf of the Acquiring Fund on the one hand and the AcquiredFund on the other hand, hereby covenants and agrees as follows:

5.1 The Acquired Fund will operate its business in the ordinary course between thedate hereof and the Closing Date, it being understood that such ordinary courseof business may include paying regular and customary periodic dividends andother distributions.

5.2 The Acquired Fund will call a meeting of its shareholders to be held prior to theClosing Date to consider and approve this Agreement and take all otherreasonable action necessary to obtain the required shareholder approval of thetransactions contemplated hereby.

5.3 In connection with the Acquired Fund shareholders’ meeting referred to inparagraph 5.2, the Acquired Fund will prepare a Proxy Statement for suchmeeting, to be included in a Registration Statement on Form N-14 (the“Registration Statement”), which the Trust will prepare and file for theregistration under the 1933 Act of the Acquiring Shares to be distributed to theAcquired Fund Shareholders pursuant hereto, all in compliance with theapplicable requirements of the 1933 Act, the 1934 Act, and the 1940 Act.

5.4 The Acquiring Fund will advise the Acquired Fund promptly if at any timeprior to the Closing Date, the Acquiring Fund becomes aware that the assets ofthe Acquired Fund include any securities which the Acquiring Fund is notpermitted to acquire.

5.5 Subject to the provisions of this Agreement, the Acquired Fund and theAcquiring Fund will each take or cause to be taken all actions, and do or causeto be done all things reasonably necessary, proper or advisable to cause theconditions to the other party’s obligations to consummate the transactionscontemplated hereby to be met or fulfilled and otherwise to consummate andmake effective such transactions.

5.6 The Acquiring Fund will use all reasonable efforts to obtain the approvals andauthorizations required by the 1933 Act, the 1940 Act and such of the statesecurities or blue sky laws as it may deem appropriate in order to continue itsoperations after the Closing Date.

A-10

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIREDFUND.

The obligations of the Acquired Fund to consummate the transactions providedfor herein shall be subject, at its election, to the performance by the Acquiring Trust,on behalf of the Acquiring Fund, of all the obligations to be performed by ithereunder on or before the Closing Date.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRINGFUND.

The obligations of the Acquiring Fund to consummate the transactions providedfor herein shall be subject, at its election, to the performance by the Trust, on behalfof the Acquired Fund, of all the obligations to be performed by it hereunder on orbefore the Closing Date and, in addition thereto, to the following further conditions:

7.1 Prior to the Closing Date, the Acquired Fund shall have declared a dividend ordividends which, together with all previous dividends, shall have the effect ofdistributing all of the Acquired Fund’s investment company taxable income forits taxable years ending on or after March 31, 2013 and on or prior to theClosing Date (computed without regard to any deduction for dividends paid),and all of its net capital gains realized in each of its taxable years ending on orafter March 31, 2013 and on or prior to the Closing Date.

7.2 The custodian of the Acquired Fund shall have delivered to the Acquiring Funda certificate identifying all of the assets of the Acquired Fund held by suchcustodian as of the Valuation Date, and the Acquired Fund shall have deliveredto the Acquiring Fund a statement of assets and liabilities of the Acquired Fundas of the Valuation Date, prepared in accordance with generally acceptedaccounting principles consistently applied from the prior audited period,certified by the Treasurer of the Acquired Fund.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACHOF THE ACQUIRING FUND AND THE ACQUIRED FUND.

The obligations of the Trust on behalf of the Acquired Fund on the one handand on behalf of the Acquiring Fund on the other hand hereunder are subject to thefurther conditions that on or before the Closing Date:

8.1 This Agreement and the transactions contemplated herein shall have beenapproved by the vote of the required majority of the holders of the outstandingshares of the Acquired Fund of record on the record date for the meeting of itsshareholders referred to in section 5.2.

8.2 On the Closing Date, no action, suit or other proceeding shall be pending beforeany court or governmental agency in which it is sought to restrain or prohibit, or

A-11

obtain damages or other relief in connection with, this Agreement or thetransactions contemplated hereby;

8.3 All consents of other parties and all other consents, orders and permits offederal, state and local regulatory authorities (including those of the SEC and ofstate blue sky and securities authorities) deemed necessary by the Trust topermit consummation, in all material respects, of the transactions contemplatedhereby shall have been obtained, except where failure to obtain any suchconsent, order or permit would not involve a risk of a material adverse effect onthe assets or properties of the Acquiring Fund or the Acquired Fund;

8.4 The Registration Statement referred to in paragraph 5.3 shall have becomeeffective under the 1933 Act and no stop order suspending the effectivenessthereof shall have been issued and, to the best knowledge of the parties hereto,no investigation or proceeding for that purpose shall have been instituted or bepending, threatened or contemplated under the 1933 Act;

8.5 The Trust on behalf of each of the Acquired Fund and the Acquiring Fund shallhave received a favorable opinion of K&L Gates LLP satisfactory to the Trustsubstantially to the effect that, for federal income tax purposes:

(a) The acquisition by the Acquiring Fund of the assets of the Acquired Fundin exchange for the Acquiring Fund’s assumption of the Obligations of theAcquired Fund and issuance of the Acquiring Shares, followed by thedistribution by the Acquired Fund of such Acquiring Shares to theshareholders of the Acquired Fund in exchange for their shares of theAcquired Fund, all as provided in paragraph 1 hereof, will constitute areorganization within the meaning of Section 368(a) of the Code, and theAcquired Fund and the Acquiring Fund will each be “a party to areorganization” within the meaning of Section 368(b) of the Code;

(b) No gain or loss will be recognized to the Acquired Fund (i) upon thetransfer of its assets to the Acquiring Fund in exchange for the AcquiringShares and the Acquiring Fund’s assumption of the Obligations or(ii) upon the distribution of the Acquiring Shares to the shareholders of theAcquired Fund as contemplated in paragraph 1 hereof;

(c) No gain or loss will be recognized by the Acquiring Fund upon the receiptof the assets of the Acquired Fund in exchange for the assumption of theObligations and issuance of the Acquiring Shares as contemplated inparagraph 1 hereof;

(d) The tax basis of the assets of the Acquired Fund acquired by the AcquiringFund will be the same as the basis of those assets in the hands of theAcquired Fund immediately prior to the transfer, and the holding period ofthe assets of the Acquired Fund in the hands of the Acquiring Fund will

A-12

include the period during which those assets were held by the AcquiredFund;

(e) The Acquired Fund Shareholders will recognize no gain or loss upon theexchange of their shares of the Acquired Fund for the Acquiring Shares;

(f) The tax basis of the Acquiring Shares to be received by each AcquiredFund Shareholder will be the same in the aggregate as the aggregate taxbasis of the shares of the Acquired Fund surrendered in exchange therefor;

(g) The holding period of the Acquiring Shares to be received by eachAcquired Fund Shareholder will include the period during which theshares of the Acquired Fund surrendered in exchange therefor were heldby such shareholder, provided such shares of the Acquired Fund were heldas a capital asset on the date of the exchange; and

(h) The Acquiring Fund will succeed to and take into account the items of theAcquired Fund described in Section 381(c) of the Code, subject to theconditions and limitations specified in Sections 381, 382, 383 and 384 ofthe Code and the regulations thereunder.

8.6 At any time prior to the Closing, any of the foregoing conditions of thisparagraph 8 may be waived by the Board of Trustees of the Trust if, in theirjudgment, such waiver will not have a material adverse effect on the interests ofthe shareholders of the Acquired Fund and the Acquiring Fund.

9. FEES AND EXPENSES.

9.1 All fees paid to governmental authorities for the registration or qualification ofthe Acquiring Shares and all transfer agency costs related to the AcquiringShares shall be allocated to the Trust, on behalf of the Acquiring Fund. All ofthe other expenses of the transactions, including without limitation, fees andexpenses related to printing, mailing, and accounting, legal and custodialexpenses, contemplated by this Agreement shall be allocated to the Trust, onbehalf of the Acquired Fund. The expenses detailed above shall be borne asfollows: Asset Strategy New Opportunities Fund 50% and IICO 50%. NeitherFund will be reimbursed for any expenses incurred by it or on its behalf inconnection with the reorganization contemplated by this Agreement unlessthose expenses are solely and directly related to the reorganizationcontemplated by this Agreement (determined in accordance with the guidelinesset forth in Rev. Rul. 73-54, 1973-1 C.B. 187).

9.2 In the event the transactions contemplated by this Agreement are notconsummated, then IICO agrees that it shall bear all of the costs and expensesincurred by both the Acquiring Fund and the Acquired Fund in connection withsuch transactions.

A-13

9.3 Notwithstanding any other provisions of this Agreement, if for any reason thetransactions contemplated by this Agreement are not consummated, neither theAcquiring Fund nor the Acquired Fund shall be liable to the other for anydamages resulting therefrom, including, without limitation, consequentialdamages.

9.4 Notwithstanding any of the foregoing, costs and expenses will in any event bepaid by the party directly incurring them if and to the extent that the payment byanother party of such costs and expenses would result in the disqualification ofsuch party as a “regulated investment company” within the meaning ofSection 851 of the Code.

10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.

10.1 The Trust on behalf of the Acquired Fund and the Trust on behalf of theAcquiring Fund agree that neither party has made any representation, warrantyor covenant to the other not set forth herein and that this Agreement constitutesthe entire agreement between the parties.

10.2 The representations, warranties and covenants contained in this Agreement or inany document delivered pursuant hereto or in connection herewith shall notsurvive the consummation of the transactions contemplated hereunder, exceptparagraphs 1.1, 1.3, 1.4, 1.5, 3.4, 9, 10, 13 and 14.

11. TERMINATION.

11.1 The Trust may at its option terminate this Agreement at or prior to the ClosingDate.

11.2 If the transactions contemplated by this Agreement have not been substantiallycompleted by August 29, 2014, this Agreement shall automatically terminate onthat date unless a later date is agreed to by the Trust.

12. AMENDMENTS.

This Agreement may be amended, modified or supplemented in such manner asmay be mutually agreed upon in writing by the authorized officers of the Trust onbehalf of the Acquiring Fund and the Trust on behalf of the Acquiring Fund;provided, however, that following the effectiveness of the Registration Statementcalled for in paragraph 5.3, no such amendment may have the effect of changing theprovisions for determining the number of the Acquiring Shares to be issued to theAcquired Fund Shareholders under this Agreement to the detriment of suchshareholders without their further approval.

A-14

13. NOTICES.

Any notice, report, statement or demand required or permitted by anyprovisions of this Agreement shall be in writing and shall be given by prepaidcourier, telecopy or certified mail addressed to: Ivy Funds, 6300 Lamar Avenue,P. O. Box 29217, Shawnee Mission, Kansas 66201-9217, attn: Secretary.

14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;NON-RECOURSE; FINDERS’ FEES.

14.1 The article and paragraph headings contained in this Agreement are forreference purposes only and shall not affect in any way the meaning orinterpretation of this Agreement.

14.2 This Agreement may be executed in any number of counterparts, each of whichshall be deemed an original.

14.3 This Agreement shall be governed by and construed in accordance with thedomestic substantive laws of the State of Delaware, without giving effect to anychoice or conflicts of law rule or provision that would result in the applicationof the domestic substantive laws of any other jurisdiction.

14.4 This Agreement shall bind and inure to the benefit of the parties hereto andtheir respective successors and assigns, but no assignment or transfer hereof orof any rights or obligations hereunder shall be made by any party without thewritten consent of the other party. Nothing herein expressed or implied isintended or shall be construed to confer upon or give any person, firm orcorporation, other than the parties hereto and their respective successors andassigns, any rights or remedies under or by reason of this Agreement.

14.5 A copy of the Declaration of Trust is on file with the Secretary of the State ofDelaware, and notice is hereby given that no trustee, director, officer, agent oremployee of the Trust shall have any personal liability under this Agreement,and that this Agreement is binding only upon the assets and properties of theAcquired Fund and the Acquiring Fund.

14.6 The Trust, on behalf of the Acquired Fund, and the Trust, on behalf of theAcquiring Fund, represents and warrants that there are no brokers or findersentitled to receive any payments in connection with the transactions providedfor herein.

A-15

IN WITNESS WHEREOF, each of the parties hereto has caused thisAgreement to be executed as a sealed instrument by its President or Vice Presidentand its corporate seal to be affixed thereto and attested by its Secretary or AssistantSecretary.

IVY FUNDS,ATTEST: on behalf of Ivy Asset Strategy New

Opportunities Fund

By: By:

Name: Name:

Title: Title:

IVY FUNDS,ATTEST: on behalf of Ivy Emerging Markets

Equity Fund

By: By:

Name: Name:

Title: Title:

Agreed and accepted as to paragraphs9.1 and 9.2 only:

ATTEST: IVY INVESTMENT MANAGEMENTCOMPANY

By: By:

Name: Name:

Title: Title:

A-16

APPENDIX B

FINANCIAL HIGHLIGHTS

The following information is to help you understand the financial performance ofeach of the classes of the Asset Strategy New Opportunities Fund and the EmergingMarkets Equity Fund (formerly Ivy Pacific Opportunities Fund) for the fiscal periodsshown. Certain information reflects financial results for a single Fund share. Totalreturn shows how much your investment would have increased (or decreased) duringeach period, assuming reinvestment of all dividends and other distributions. Exceptfor the six-month period information ended September 30, 2013, this information hasbeen audited by Deloitte & Touche LLP, whose Reports of Independent RegisteredPublic Accounting Firm, along with the Funds’ financial statements and financialhighlights for the fiscal year ended March 31, 2013, are included in the Funds’Annual Report to Shareholders which is incorporated by reference into the SAI. Theannual report contains additional performance information and will be madeavailable upon request and without charge.

B-1

IVY ASSET STRATEGY NEW OPPORTUNITIES FUND

Net AssetValue,

Beginning ofPeriod

NetInvestment

Income(Loss)(1)

Net Realizedand

UnrealizedGain

(Loss) onInvestments

Total fromInvestmentOperations

DistributionsFrom Net

InvestmentIncome

DistributionsFrom NetRealized

Gains

Class A SharesSix-month period ended

9-30-2013 (unaudited) $11.01 $(0.01) $(0.35) $(0.36) $ - $ -Year ended 3-31-2013 10.77 0.01 0.29 0.30 (0.06) -Year ended 3-31-2012 12.63 (0.01) (1.85) (1.86) - -Year ended 3-31-2011(5) 10.00 (0.10) 2.73 2.63 - -Class B SharesSix-month period ended

9-30-2013 (unaudited) 10.76 (0.06) (0.35) (0.41) - -Year ended 3-31-2013 10.57 (0.09) 0.28 0.19 - -Year ended 3-31-2012 12.52 (0.13) (1.82) (1.95) - -Year ended 3-31-2011(5) 10.00 (0.19) 2.71 2.52 - -

Class C SharesSix-month period ended

9-30-2013 (unaudited) 10.80 (0.06) (0.35) (0.41) - -Year ended 3-31-2013 10.59 (0.07) 0.28 0.21 -* -Year ended 3-31-2012 12.53 (0.11) (1.83) (1.94) - -Year ended 3-31-2011(5) 10.00 (0.20) 2.73 2.53 - -

Class E Shares(7)

Six-month period ended9-30-2013 (unaudited) 11.01 (0.01) (0.36) (0.37) - -

Year ended 3-31-2013 10.77 0.00 0.30 0.30 (0.06) -Year ended 3-31-2012 12.63 (0.01) (1.85) (1.86) - -Year ended 3-31-2011(5) 10.00 (0.07) 2.70 2.63 - -

Class I SharesSix-month period ended

9-30-2013 (unaudited) 11.05 0.01 (0.36) (0.35) - -Year ended 3-31-2013 10.80 0.04 0.29 0.33 (0.08) -Year ended 3-31-2012 12.65 0.02 (1.85) (1.83) (0.02) -Year ended 3-31-2011(5) 10.00 (0.08) 2.73 2.65 - -

Class R SharesSix-month period ended

9-30-2013 (unaudited) 10.91 (0.04) (0.34) (0.38) - -Year ended 3-31-2013 10.69 (0.04) 0.29 0.25 (0.03) -Year ended 3-31-2012 12.58 (0.06) (1.83) (1.89) - -Year ended 3-31-2011(5) 10.00 (0.12) 2.70 2.58 - -Class Y SharesSix-month period ended

9-30-2013 (unaudited) 11.01 (0.01) (0.36) (0.37) - -Year ended 3-31-2013 10.77 (0.01) 0.31 0.30 (0.06) -Year ended 3-31-2012 12.63 (0.01) (1.85) (1.86) - -Year ended 3-31-2011(5) 10.00 (0.10) 2.73 2.63 - -

B-2

TotalDistributions

Net AssetValue,End ofPeriod

TotalReturn(2)

Net Assets,End ofPeriod

(in millions)

Ratio ofExpenses

to AverageNet AssetsIncludingExpenseWaiver

Ratio of NetInvestment

Income (Loss)to Average Net

AssetsIncludingExpenseWaiver

Ratio ofExpenses to

AverageNet AssetsExcludingExpenseWaiver(3)


Income (Loss)to AverageNet AssetsExcludingExpenseWaiver(3)

PortfolioTurnover

Rate

$ - $10.65 -3.27% $158 1.50%(4) -0.22%(4) 1.78%(4) -0.50%(4) 51%(0.06) 11.01 2.84 172 1.50 0.12 1.72 -0.10 31

- 10.77 -14.73 214 1.50 -0.11 1.68 -0.29 54- 12.63 26.30 246 1.50(4) -0.97(4) 1.71(4) -1.18(4) 36(6)

- 10.35 -3.81 5 2.53(4) -1.22(4) - - 51- 10.76 1.80 6 2.50 -0.91 - - 31- 10.57 -15.58 7 2.49 -1.16 - - 54- 12.52 25.20 7 2.43(4) -1.84(4) 2.48(4) -1.89(4) 36(6)

- 10.39 -3.80 40 2.41(4) -1.08(4) - - 51-* 10.80 2.01 51 2.35 -0.71 - - 31- 10.59 -15.48 74 2.37 -0.98 - - 54- 12.53 25.30 86 2.34(4) -1.85(4) 2.39(4) -1.90(4) 36(6)

- 10.64 -3.36 -* 1.50(4) -0.23(4) - - 51(0.06) 11.01 2.84 -* 1.50 0.04 - - 31

- 10.77 -14.73 -* 1.50 -0.11 - - 54- 12.63 26.30 -* 1.50(4) -0.72(4) 1.58(4) -0.80(4) 36(6)

- 10.70 -3.17 39 1.25(4) 0.10(4) 1.31(4) 0.04(4) 51(0.08) 11.05 3.10 53 1.25 0.42 1.29 0.38 31(0.02) 10.80 -14.48 81 1.25 0.17 1.31 0.11 54

- 12.65 26.50 109 1.25(4) -0.77(4) 1.40(4) -0.92(4) 36(6)

- 10.53 -3.48 1 1.93(4) -0.66(4) - - 51(0.03) 10.91 2.40 1 1.87 -0.35 - - 31

- 10.69 -15.02 1 1.89 -0.59 - - 54- 12.58 25.80 1 1.92(4) -1.15(4) 1.97(4) -1.20(4) 36(6)

- 10.64 -3.36 8 1.50(4) -0.20(4) 1.57(4) -0.27(4) 51(0.06) 11.01 2.84 9 1.50 -0.08 1.54 -0.12 31

- 10.77 -14.73 7 1.50 -0.09 1.58 -0.16 54- 12.63 26.30 12 1.50(4) -0.94(4) 1.67(4) -1.11(4) 36(6)

* 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.

B-3

(3) Ratios excluding expense waivers are only included for periods in which the class had waived orreimbursed expenses.

(4) Annualized.(5) For the period from May 3, 2010 (commencement of operations of the class) through March 31,

2011.(6) For the fiscal year ended March 31, 2011.(7) Class is closed to investment.

See Accompanying Notes to Financial Statements.

B-4

(This page intentionally left blank.)

IVY EMERGING MARKETS EQUITY FUND

Net AssetValue,

Beginningof Period

NetInvestment

Income(Loss)

Net Realizedand

UnrealizedGain(Loss)

onInvestments


DistributionsFrom Net

InvestmentIncome

DistributionsFrom NetRealized

Gains

Class A SharesSix-month period ended

9-30-2013 (unaudited) $13.88 $ 0.09(1) $(0.05) $ 0.04 $ - $ -Year ended 3-31-2013 13.98 0.03(1) (0.03) 0.00 (0.10) -Year ended 3-31-2012 16.94 0.01(1) (2.39) (2.38) (0.06) (0.52)Year ended 3-31-2011 14.84 (0.01)(1) 2.11 2.10 - -Year ended 3-31-2010 8.86 (0.08)(1) 6.06 5.98 - -Year ended 3-31-2009 17.61 0.05 (6.96) (6.91) - (1.84)

Class B SharesSix-month period ended

9-30-2013 (unaudited) 11.78 0.00(1) (0.05) (0.05) - -Year ended 3-31-2013 11.92 (0.10)(1) (0.04) (0.14) -* -Year ended 3-31-2012 14.64 (0.13)(1) (2.07) (2.20) - (0.52)Year ended 3-31-2011 12.97 (0.15)(1) 1.82 1.67 - -Year ended 3-31-2010 7.83 (0.19)(1) 5.33 5.14 - -Year ended 3-31-2009 16.01 (0.09) (6.30) (6.39) - (1.79)

Class C SharesSix-month period ended

9-30-2013 (unaudited) 12.23 0.03(1) (0.05) (0.02) - -Year ended 3-31-2013 12.36 (0.06)(1) (0.03) (0.09) (0.04) -Year ended 3-31-2012 15.10 (0.08)(1) (2.14) (2.22) - (0.52)Year ended 3-31-2011 13.33 (0.10)(1) 1.87 1.77 - -Year ended 3-31-2010 8.01 (0.17)(1) 5.49 5.32 - -Year ended 3-31-2009 16.27 (0.09) (6.37) (6.46) - (1.80)

Class E Shares(4)

Six-month period ended9-30-2013 (unaudited) 14.04 0.12(1) (0.06) 0.06 - -

Year ended 3-31-2013 14.12 0.09(1) (0.03) 0.06 (0.14) -Year ended 3-31-2012 17.15 0.06(1) (2.41) (2.35) (0.16) (0.52)Year ended 3-31-2011 14.98 0.05(1) 2.12 2.17 - -Year ended 3-31-2010 8.90 (0.01)(1) 6.09 6.08 - -Year ended 3-31-2009 17.62 0.07 (6.93) (6.86) - (1.86)

Class I SharesSix-month period ended

9-30-2013 (unaudited) 14.23 0.13(1) (0.06) 0.07 - -Year ended 3-31-2013 14.30 0.10(1) (0.02) 0.08 (0.15) -Year ended 3-31-2012 17.39 0.08(1) (2.46) (2.38) (0.19) (0.52)Year ended 3-31-2011 15.16 0.05(1) 2.18 2.23 - -Year ended 3-31-2010 9.00 (0.01)(1) 6.17 6.16 - -Year ended 3-31-2009 17.77 0.10(1) (7.00) (6.90) - (1.87)

Class R SharesSix-month period ended

9-30-2013 (unaudited) 13.87 0.08(1) (0.05) 0.03 - -Year ended 3-31-2013(5) 14.07 (0.04)(1) (0.16) (0.20) - -

Class Y SharesSix-month period ended

9-30-2013 (unaudited) 14.13 0.11(1) (0.05) 0.06 - -Year ended 3-31-2013 14.22 0.09(1) (0.05) 0.04 (0.13) -Year ended 3-31-2012 17.25 0.05(1) (2.44) (2.39) (0.12) (0.52)Year ended 3-31-2011 15.08 0.03(1) 2.14 2.17 - -Year ended 3-31-2010 8.98 (0.05)(1) 6.15 6.10 - -Year ended 3-31-2009 17.75 0.08 (6.99) (6.91) - (1.86)

B-6

TotalDistributions

Net AssetValue,End ofPeriod

TotalReturn(2)


(in millions)

Ratio ofExpenses

to AverageNet



Income (Loss)to Average Net


PortfolioTurnover

Rate

$ - $13.92 0.29% $414 1.73%(3) 1.33%(3) 70%(0.10) 13.88 -0.02 491 1.74 0.25 142(0.58) 13.98 -13.71 504 1.75 0.04 97

- 16.94 14.15 600 1.72 -0.07 137- 14.84 67.50 514 1.83 -0.61 81

(1.84) 8.86 -38.76 239 1.92 0.37 112

- 11.73 -0.42 6 3.00(3) 0.07(3) 70-* 11.78 -1.13 8 2.94 -0.88 142

(0.52) 11.92 -14.69 10 2.88 -1.03 97- 14.64 12.88 16 2.81 -1.07 137- 12.97 65.65 17 2.91 -1.64 81

(1.79) 7.83 -39.46 10 3.07 -0.77 112

- 12.21 -0.16 13 2.57(3) 0.47(3) 70(0.04) 12.23 -0.77 16 2.53 -0.48 142(0.52) 12.36 -14.37 20 2.51 -0.63 97

- 15.10 13.28 32 2.46 -0.73 137- 13.33 66.42 35 2.56 -1.38 81

(1.80) 8.01 -39.22 16 2.69 -0.36 112

- 14.10 0.43 -* 1.33(3) 1.69(3) 70(0.14) 14.04 0.40 -* 1.34 0.64 142(0.68) 14.12 -13.32 -* 1.37 0.41 97

- 17.15 14.49 -* 1.36 0.30 137- 14.98 68.32 -* 1.42 -0.11 81

(1.86) 8.90 -38.43 -* 1.44 0.79 112

- 14.30 0.49 136 1.21(3) 1.82(3) 70(0.15) 14.23 0.55 147 1.22 0.69 142(0.71) 14.30 -13.28 138 1.25 0.52 97

- 17.39 14.71 159 1.24 0.28 137- 15.16 68.44 104 1.29 -0.11 81

(1.87) 9.00 -38.34 45 1.31 0.81 112

- 13.90 0.14 -* 1.82(3) 1.21(3) 70- 13.87 -1.35 -* 1.80(3) -1.09(3) 142(6)

- 14.19 0.35 4 1.46(3) 1.57(3) 70(0.13) 14.13 0.31 5 1.47 0.63 142(0.64) 14.22 -13.48 6 1.50 0.30 97

- 17.25 14.39 9 1.50 0.22 137- 15.08 67.93 9 1.55 -0.38 81

(1.86) 8.98 -38.47 4 1.57 0.69 112

B-7

* 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) Annualized.(4) Class is closed to investment.(5) For the period from December 19, 2012 (commencement of operations of the class) through March 31,

2013.(6) For the fiscal year ended March 31, 2013.

See Accompanying Notes to Financial Statements.

B-8

(This page intentionally left blank.)

IVY FUNDS6300 Lamar Avenue, Overland Park, Kansas 66202-9217

(913) 236-2000

STATEMENT OF ADDITIONAL INFORMATION

January 30, 2014

This Statement of Additional Information (the “SAI”) relates to the reorganization (the “Reorganization”) of Ivy AssetStrategy New Opportunities Fund (the “Asset Strategy New Opportunities Fund”) into Ivy Emerging Markets Equity Fund(formerly, the Ivy Pacific Opportunities Fund) (the “Emerging Markets Equity Fund,” and, together with the Asset Strategy NewOpportunities Fund, the “Funds,” each a “Fund”), each a series of Ivy Funds, a Delaware statutory trust (the “Trust”).

This SAI contains information which may be of interest to shareholders but which is not included in the CombinedProspectus and Proxy Statement dated January 30, 2014 (the “Prospectus/Proxy”), which relates to the Reorganization. Asdescribed in the Prospectus/Proxy, if approved by shareholders, the Asset Strategy New Opportunities Fund will transfer all of itsassets to the Emerging Markets Equity Fund in exchange for the Emerging Markets Equity Fund’s assumption of all of the AssetStrategy New Opportunities Fund’s liabilities and shares of the Emerging Markets Equity Fund with an aggregate net asset value(“NAV”) equal to the aggregate NAV of the transferred assets and liabilities.

This SAI is not a prospectus and should be read in conjunction with the Prospectus/Proxy. The Prospectus/Proxy has beenfiled with the Securities and Exchange Commission and is available upon request and without charge by writing to or calling theTrust at the address or telephone number set forth above.

Unless otherwise indicated, capitalized terms used herein and not otherwise defined have the same meanings as are given tothem in the Prospectus/Proxy.

Table of Contents

I. Additional Information about the Emerging Markets Equity Fund

II. Financial Statements

III. Pro Forma Financial Statements

I. Additional Information about the Emerging Markets Equity Fund

Further information about Class A shares, Class B shares, Class C shares, Class E shares, Class I shares, Class R shares andClass Y shares of the Emerging Markets Equity Fund is contained in, and incorporated herein by reference to, the Statement ofAdditional Information for the Emerging Markets Equity Fund dated January 29, 2014 (File No. 811-06569).

II. Financial Statements

The audited financial statements and financial highlights and the related Report of Independent Registered PublicAccounting Firm included in the Annual Report for the Fiscal Year ended March 31, 2013, for the Asset Strategy NewOpportunities Fund and the audited financial statements and financial highlights and the related Report of IndependentRegistered Public Accounting Firm included in the Annual Report for the fiscal year ended March 31, 2013, for the EmergingMarkets Equity Fund are incorporated herein by reference. The unaudited financial statements included in the Semi-AnnualReport for the six months ended September 30, 2013, for the Asset Strategy New Opportunities Fund and the unaudited financialstatements included in the Semi-Annual Report for the six months ended September 30, 2013, for the Emerging Markets EquityFund are incorporated herein by reference.

III. Pro Forma Financial Statements

SAI-1

IVY EMERGING MARKETS EQUITY FUNDPRO FORMA STATEMENT OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 2013

AND THE PRO FORMA STATEMENT OF OPERATIONSFOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2013

(UNAUDITED)

The following unaudited Pro Forma Combined Statement of Assets and Liabilities, including the unaudited Pro FormaCombined Schedule of Investments of Ivy Emerging Markets Equity Fund and Ivy Asset Strategy New Opportunities Fund as ofSeptember 30, 2013, has been derived from the respective unaudited Statements of Assets and Liabilities, including the Schedulesof Investments, of Ivy Emerging Markets Equity Fund and Ivy Asset Strategy New Opportunities Fund as of September 30, 2013and the Statements of Operations for the Funds for the twelve month period ended September 30, 2013.

The unaudited Pro Forma Combined Statement of Assets and Liabilities and Statement of Operations is presented forinformational purposes only, assuming the merger took place at the beginning of the 12 month period presented, and does notpurport to be indicative of the financial condition and operations that would have resulted if the Reorganization had beenconsummated on September 30, 2013. The unaudited Pro Forma Combined Financial Statements should be read in conjunctionwith the respective financial statements and related notes of Ivy Emerging Markets Equity Fund and Ivy Asset Strategy NewOpportunities Fund incorporated by reference in this Statement of Additional Information.

SAI-2

PRO FORMA SCHEDULE OF INVESTMENTSSEPTEMBER 30, 2013

(Unaudited)

SHARES DESCRIPTION VALUE

IvyEmergingMarketEquityFund

IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma


IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma

COMMON STOCKS

Brazil—2.3%— 117 117 Abril Educacao S.A. $ — $ 1,729 $ 1,729— 243 243 Anhanguera Educacional Participacoes S.A. — 1,444 1,444— 213 213 BRF-Brasil Foods S.A. — 5,207 5,207— 80 80 MercadoLibre, Inc. — 10,788 10,788

— 19,168 $ 19,168

China—25.3%103 — 103 Baidu.com, Inc., ADR (A) 15,929 — 15,929755 — 755 Biostime International Holdings Limited 5,709 — 5,709601 — 601 Bona Film Group Limited, ADR (A) 3,155 — 3,155

10,572 — 10,572 BYD Electronic (International) Company Limited 4,730 — 4,730

18,076 — 18,076China Communications Services Corporation Limited,H Shares 10,558 — 10,558

11,712 — 11,712 China Foods Limited 4,213 — 4,2136,085 — 6,085 China Merchants Bank Co., Limited, H Shares 11,062 — 11,062

2,362 — 2,362China Merchants Holdings (International) CompanyLimited 8,588 — 8,588

16,700 — 16,700 China Minsheng Banking Corp., Ltd., H Shares 19,960 — 19,9602,574 — 2,574 China Oilfield Services Limited 6,452 — 6,4526,654 — 6,654 China Unicom Limited 10,381 — 10,3813,348 — 3,348 CNOOC Limited 6,812 — 6,812

625 — 625 Forgame Holdings Limited (A)(B) 4,110 — 4,110

20,881 — 20,881Guodian Technology & Environment GroupCorporation Limited 4,227 — 4,227

9,994 — 9,994 Haitong Securities Co., Ltd., H Shares 14,921 — 14,9214,000 — 4,000 HC International, Inc. (A)(B) 4,704 — 4,7045,408 — 5,408 Huaneng Power International, Inc., H Shares 5,397 — 5,397

19,338 — 19,338Industrial and Commercial Bank of China Limited,H Shares 13,489 — 13,489

1,410 — 1,410Ping An Insurance (Group) Company of China, Ltd.,A Shares 8,219 — 8,219

2,796 — 2,796 Shimao Property Holdings Limited 6,430 — 6,430— 177 177 SINA Corporation (A) — 14,367 14,367403 — 403 Tencent Holdings Limited 21,137 — 21,137152 — 152 Youku.com Inc., ADR (A) 4,153 — 4,153

194,336 14,367 208,703

Denmark—0.6%— 111 111 Chr. Hansen Holding A/S — 3,931 3,931— 19 19 Novozymes A/S, Class B — 712 712

— 4,643 4,643

Hong Kong—7.7%1,976 510 2,486 AAC Technologies Holdings Inc. 8,981 2,316 11,297

22,464 — 22,464 China Modern Dairy Holdings Ltd., H Shares 8,776 — 8,7764,664 — 4,664 China Overseas Land & Investment Limited 13,741 — 13,7413,423 — 3,423 Galaxy Entertainment Group Limited, ADR 24,008 — 24,0084,329 — 4,329 SmarTone Telecommunications Holdings Limited 5,738 — 5,738

61,244 2,316 63,560

India—5.6%— 112 112 Axis Bank Limited — 1,797 1,797186 — 186 Bajaj Auto Ltd. 5,915 — 5,915

SAI-3



IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma


IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma

594 86 680 HCL Technologies Limited (A) 10,307 1,500 11,8072,743 — 2,743 Indiabulls Real Estate Limited 2,366 — 2,366

400 — 400 Just Dial Limited (A)(B) 5,394 — 5,394— 12 12 Kaveri Seed Company Limited — 271 271265 — 265 Lupin Limited 3,628 — 3,628— 30 30 Page Industries Limited — 2,101 2,101423 — 423 Reliance Industries Limited 5,551 — 5,551— 574 574 Tata Steel Limited — 2,490 2,490— 71 71 United Spirits Limited — 2,865 2,865— 379 379 YES BANK Limited — 1,740 1,740

33,161 12,764 45,925

Japan—0.6%— 431 431 Chiyoda Corporation — 5,174 5,174

Malaysia—1.7%— 764 764 Gamuda Berhad — 1,079 1,079

3,233 — 3,233 Tenaga Nasional Berhad 8,958 — 8,958— 5,075 5,075 UEM Land Holdings Berhad — 3,971 3,971

8,958 5,050 14,008

Mexico—1.4%— 1,168 1,168 Alpek, S.A.B. de C.V. — 2,519 2,519— 298 298 BanRegio Grupo Financiero, S.A.B. de C.V. — 1,696 1,696— 548 548 FIBRA Terrafina — 1,089 1,089— 15 15 Macquarie Mexican REIT — 26 26— 574 574 Mexichem, S.A.B. de C.V. — 2,504 2,504— 688 688 OHL Mexico, S.A.B. de C.V. (A) — 1,811 1,811

— 198 198Promotora y Operadora de Infraestructura, S.A.B.de C.V. (A) — 1,912 1,912

— 11,557 11,557

Netherlands—1.7%— 210 210 Chicago Bridge & Iron Company N.V., NY Shares — 14,211 14,211

Panama—1.5%— 92 92 Copa Holdings, S.A., Class A — 12,765 12,765

Peru—0.2%— 78 78 InRetail Peru Corp. (A)(B) — 1,303 1,303

Philippines—2.4%258 251 509 GT Capital Holdings Incorporated 4,504 4,389 8,893

19,186 7,159 26,345 LT Group, Inc. 7,932 2,960 10,892

12,436 7,349 19,785

Singapore—5.5%1,054 — 1,054 DBS Group Holdings Ltd 13,795 — 13,795

13,067 — 13,067 Golden Agri-Resources Ltd. 5,416 — 5,4161,621 — 1,621 Keppel Corporation Limited 13,463 — 13,463

130 — 130 K-REIT Asia 127 — 127— 1,992 1,992 Olam International Limited — 2,429 2,429

3,280 — 3,280 Singapore Telecommunications Limited 9,752 — 9,752

42,553 2,429 44,982

SAI-4



IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma


IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma

South Korea—18.5%113 18 131 Daelim Industrial Co., Ltd. 10,223 1,607 11,830158 — 158 Duksan Hi-Metal Co., LTD. (A) 3,195 — 3,195

34 59 93 GLOVIS Co., Ltd. 6,697 11,625 18,322375 73 448 Hana Financial Group, Inc. 12,871 2,495 15,366

29 — 29 Hyundai Heavy Industries Co., Ltd. 7,070 — 7,07029 — 29 Hyundai Mobis 7,744 — 7,74463 — 63 Hyundai Motor Company 14,724 — 14,724

— 8 8 Hyundai Steel Co — 635 635— 211 211 Kia Motors Corporation — 12,794 12,794— 117 117 Kolao Holdings — 3,552 3,552226 — 226 Korea Electric Power Corporation (A) 6,326 — 6,326

17 5 22 Naver Corporation 8,977 2,695 11,67211 — 11 Samsung Electronics Co., Ltd. 14,438 — 14,43826 — 26 Samsung Fire & Marine Insurance Co., Ltd 5,975 — 5,97555 — 55 Samsung SDI Co., Ltd. 9,603 — 9,603

340 — 340 SK hynix Inc. 9,570 — 9,570

117,413 35,403 152,816

Taiwan—9.4%8,682 — 8,682 Cathay Financial Holding Co., Ltd. 12,362 — 12,3622,616 — 2,616 Cheng Shin Rubber Industry Co., Ltd. 6,849 — 6,849

11,539 — 11,539 Chinatrust Financial Holding Company, Ltd. 7,532 — 7,5321,318 — 1,318 Delta Electronics, Inc. 6,397 — 6,397

924 — 924 MediaTek Incorporation 11,422 — 11,4221,578 — 1,578 Novatek Microelectronics Corp. 6,538 — 6,5381,997 — 1,997 Taiwan Mobile Co., Ltd. 7,092 — 7,0922,222 — 2,222 Taiwan Semiconductor Manufacturing Company Ltd. 7,553 — 7,553

380 137 517 TPK Holding Co., Ltd. 3,451 1,244 4,6952,864 — 2,864 Zhen Ding Technology Holding Limited 6,809 — 6,809

76,005 1,244 77,249

Thailand—1.8%— 216 216 Bangkok Bank Public Company Limited — 1,362 1,362

8,000 — 8,000 BTS Rail Mass Transit Growth Infrastructure Fund 2,481 — 2,481— 2,012 2,012 Charoen Pokphand Foods Public Company Limited — 1,543 1,543— 421 421 Kasikornbank Public Company Limited — 2,374 2,374— 676 676 Major Cineplex Group Public Company Limited — 402 402— 228 228 Siam Commercial Bank Public Company Limited (A) — 1,079 1,079

13,180 — 13,180 Thai Beverage Public Company Limited 5,778 — 5,778

8,259 6,760 15,019

United Kingdom—1.3%— 318 318 Aggreko plc — 8,252 8,252— 629 629 Cairn Energy plc (A) — 2,672 2,672

— 10,924 10,924

United States—4.2%82 — 82 Cognizant Technology Solutions Corporation, Class A (A) 6,754 — 6,754

— 58 58 Harman International Industries, Incorporated — 3,821 3,821— 152 152 Ironwood Pharmaceuticals, Inc., Class A (A) — 1,806 1,806— 458 458 Kosmos Energy Ltd. (A) — 4,705 4,705— 61 61 KYTHERA Biopharmaceuticals, Inc. — 2,805 2,805— 25 25 Pall Corporation — 1,887 1,887

2,667 — 2,667 Samsonite International S.A. 7,445 — 7,445

SAI-5



IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma


IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma

— 45 45 WageWorks, Inc. (A) — 2,290 2,290185 — 185 WisdomTree India Earnings Fund, ETF 2,828 — 2,828

17,027 17,314 34,341

TOTAL COMMON STOCKS—91.7% $571,392 $184,741 $756,133

(Cost: $640,731)

WARRANTS

Singapore—0.0%— 400 400 Olam International Limited, Expires 1-29-18 (C) — 92 92

TOTAL WARRANTS—0.0%

(Cost: $—)

NUMBER OF CONTRACTS (UNROUNDED)PURCHASED OPTIONS(Counterparty, if OTC)

HSCEI Index,

— 240 240

Call HKD10,600.00,Expires 10-30-13,OTC (Ctrpty: Bank of America N.A.) (D) — 210 210iShares FTSE China 25 Index Fund,

1,605 — 1,605 Call $38.00, Expires 11-16-13 122 — 122iShares MSCI Emerging Markets ETF,

— 589 589Call $413.28, Expires 10-19-13,OTC (Ctrpty: Deutsche Bank AG) — 297 297Nikkei 225 Index:

— 150 150

Call JPY14,750.00,Expires 10-11-13, OTC (Ctrpty:JPMorgan Chase Bank N.A.) (D). — 237 237

— 95 95Call JPY15,000.00,Expires 10-11-13, OTC (Ctrpty: UBS AG) (D) — 82 82

— 60 60

Call JPY14,500.00,Expires 10-18-13,OTC (Ctrpty: JPMorgan Chase Bank N.A.) (D) — 159 159S&P/ASX 200 Index,

— 313 313

Call AUD5,250.00,Expires 10-17-13,OTC (Ctrpty: Bank of America N.A.) (D) — 147 147

TOTAL PURCHASED OPTIONS—0.2% $ 122 $ 1,132 $ 1,254

(Cost: $1,863)

TROY OUNCES BULLION—2.3%

— 14 14 Gold — 18,571 18,571

(Cost: $20,045)

PRINCIPAL CORPORATE DEBT SECURITIES

India—0.0%Dr. Reddy’s Laboratories Ltd.,

INR 1,480 — INR 1,480 9.250%, 3-24-14 (D) 122 — 122

Singapore—0.1%Olam International Limited,

$— $773 $ 773 6.750%, 1-29-18 — 740 740

TOTAL CORPORATE DEBT SECURITIES—0.1% $ 122 $ 740 $ 862

(Cost: $739)

SAI-6



IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma


IvyAsset

StrategyNew

OpportunitiesFund

AcquiringFund

Proforma

SHORT-TERM SECURITIES

Certificate Of Deposit—1.2%Toronto-Dominion Bank:

5,000 5,000 10,000 0.110%, 10-17-13 5,000 5,000 10,000

Commercial Paper (E)—4.6%CVS Caremark Corporation,

— 3,000 3,000 0.180%, 10-4-13 — 3,000 3,000Illinois Tool Works Inc.,

— 7,000 7,000 0.050%, 10-9-13 — 7,000 7,000McCormick & Co. Inc.,

— 3,000 3,000 0.160%, 10-1-13 — 3,000 3,000National Oilwell Varco, Inc.,

— 5,000 5,000 0.200%, 10-30-13 — 4,999 4,999Roche Holdings, Inc.,

— 10,000 10,000 0.050%, 10-1-13 — 10,000 10,000Wisconsin Electric Power Co.,

— 2,137 2,137 0.100%, 10-1-13 — 2,137 2,137L Air Liquide S.A.,

4,000 — 4,000 0.200%, 11-22-13 3,999 — 3,999Verizon Communications Inc.,

4,000 — 4,000 0.210%, 10-21-13 3,999 — 3,999

7,998 30,136 38,134

Master Note—0.1%Toyota Motor Credit Corporation:

603 104 707 0.100%, 10-2-13 (F) 603 104 707

TOTAL SHORT-TERM SECURITIES—5.9% $ 13,601 $ 35,240 $ 48,841

(Cost: $48,842)TOTAL INVESTMENT SECURITIES—100.2% $585,237 $240,516 $825,753

(Cost: $712,220)LIABILITIES, NET OF CASH AND OTHERASSETS—(0.2%) (12,138) 10,707 (1,431)

NET ASSETS—100.0% $573,099 $251,223 $824,322

Notes to Proforma 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 September 30, 2013, the total value of these securitiesamounted to $15,511 or 1.9% of net assets.

(C) 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.

(D) Principal amount and exercise prices are denominated in the indicated foreign currency, where applicable (AUD—AustralianDollar, HKD—Hong Kong Dollar, JPY-Japanese Yen and INR—Indian Rupee).

(E) Rate shown is the yield to maturity at September 30, 2013.(F) Variable rate security. Interest rate disclosed is that which is in effect at September 30, 2013. Date shown represents the date

the variable rate resets.(G) No adjustments are shown to the unaudited Pro Forma Combined Schedule of Investments due to the fact that upon

consummation of the merger, securities will not need to be sold in order for the Acquiring Fund to comply with itsprospectus restrictions. The foregoing sentence shall not restrict in any way the ability of the investment adviser of either ofthe Funds from buying or selling securities in the normal course of such Fund’s business and operations.

SAI-7

PRINCIPAL AMOUNT OF CONTRACT(DENOMINATED IN INDICATED

CURRENCY) FORWARD FOREIGN CURRENCY CONTRACTSUNREALIZED

(DEPRECIATION)

— JPY 464,628 JPY 464,628Sell Japanese Yen, Counterparty—Barclays Capital, Inc.,Settlement Date 10-20-13 $ — $(55) $ (55)

NUMBER OF CONTRACTS(UNROUNDED) WRITTEN OPTIONS (Counterparty, if OTC) VALUE

Baidu.com, Inc., ADR

1,026 — 1,026Put $90.00, Expires December 2013,Premium Received ($339) $ (36) $— $ (36)

1,026 — 1,026Call $125.00, Expires December 2013,Premium Received ($495) (3,357) — (3,357)ICICI Bank Limited, ADR

1,265 — 1,265Put $20.00, Expires January 2015,Premium Received ($250) (211) — (211)

835 — 835Put $28.00, Expires January 2015,Premium Received ($236) (382) — (382)iShares FTSE China 25 Index Fund

1,605 — 1,605Put $33.50, Expires November 2013,Premium Received ($104) (41) — (41)

1,605 — 1,605

Call $41.00, Expires November 2013,Premium Received ($40)Nikkei 225 Index (24) — (24)Call JPY15,500.00, Expires October 2013,OTC (Ctrpty: JPMorgan Chase Bank N.A.),

— 150 150 Premium Received ($94) — (27) (27)Tencent Holdings LimitedCall HKD370.00, Expires December 2013, OTC (Ctrpty:Morgan Stanley & Co., Inc.),

4,030 — 4,030 Premium Received ($726) (2,738) — (2,738)

Total Premium Received ($2,284) $(6,789) $(27) $(6,816)

NOTIONAL AMOUNT TOTAL RETURN SWAP AGREEMENTSUNREALIZED

DEPRECIATION

$5,588 $— $5,588 China Vanke Company Ltd.Termination Date 6-17-14, Financing Fee (1)–USD LIBOR + 0.700%,OTC (Ctrpty: UBS AG, London) $(471) $— $(471)

(1) The Fund pays the financing fee multiplied by the notional amount each month. On the termination date of the swapcontracts, the Fund will pay/receive the return of the underlying security.

The following table is a summary of the valuation of the Pro Forma Fund’s investments by the fair value hierarchy levelsas of September 30, 2013. See Note 3 to the Financial Statements for further information regarding fair value measurement.

Assets Level 1 Level 2 Level 3

Investments in Securities

Common StocksConsumer Discretionary $105,799 $ — $—Consumer Staples 53,099 — —Energy 26,192 — —Financials 172,074 — —Health Care 8,951 — —Industrials 115,361 — —Information Technology 198,250 — —Materials 12,079Real Estate 127 — —Telecommunication Services 43,520 — —Utilities 20,681 — —

Total Common Stocks $756,133 $ — $—

SAI-8

Assets Level 1 Level 2 Level 3

Warrants $ 92Purchased Options 122 $ 1,132 $—Bullion 18,571 — —Corporate Debt Securities — 862 —Short-Term Securities — 48,841 —

Total $774,918 $50,835 $—Liabilities

Forward Foreign Currency Contracts $ — $ 55 $—Written Options $ 4,051 $ 2,765 $—Swap Agreements $ — $ 471 $—

As of September 30, 2013, there were no transfers between Level 1 and 2 during the period.

The following acronyms are used throughout this pro forma schedule:ADR = American Depositary ReceiptsOTC = Over the CounterREIT = Real Estate Investment Trusts

Pro Forma Market Sector Diversification(as a % of net assets)

Information Technology 24.0%Financials 20.9%Industrials 14.0%Consumer Discretionary 12.8%Consumer Staples 6.5%Telecommunication Services 5.3%Energy 3.2%Utilities 2.5%Materials 1.5%Health Care 1.1%Real Estate 0.0%Other+ 8.2%

+ Includes gold bullion, options, cash and cash equivalents and other assets and liabilities.

SAI-9

Pro Forma Statement of Assets and Liabilities (Unaudited)(000 omitted, except per share amounts)

September 30, 2013

IvyEmergingMarketsEquityFund

Ivy AssetStrategies

NewOpportunities

Fund+Pro forma

AdjustmentsCombiningPro Forma

ASSETSInvestment in securities at value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $585,237 $221,945 $ 0 $ 807,182Bullion at value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 18,571 0 18,571Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 7,500 0 7,501Cash denominated in foreign currencies at value . . . . . . . . . . . . . . . . . . . . 1,791 4,351 0 6,142Restristed cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,068 6 0 2,074Investment securities sold receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,990 834 0 6,824Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,359 900 0 2,259

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596,446 254,107 0 850,553

LIABILITIESInvestment securities purchased payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,804 1,895 0 15,699Capital shares redeemed payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,858 729 0 2,587Payable to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 148 0 493Unrealized depreciation on swap agreements . . . . . . . . . . . . . . . . . . . . . . . 471 0 0 471Unrealized depreciation on forward foreign currency contracts . . . . . . . . . 0 55 0 55Written options at value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,789 27 0 6,816Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 30 129 (a) 239

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,347 2,884 129 26,360

Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $573,099 $251,223 ($ 129) $ 824,193

Net AssetsCapital paid in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $567,841 $312,308 $ 0 $ 880,149Accumulated net realized loss on investments . . . . . . . . . . . . . . . . . . . . . . (79,033) (85,935) 0 (164,968)Undistributed (distribution in excess of) net investment income (loss) . . 3,582 (3,243) (129) (a) 210Net unrealized appreciation on investments . . . . . . . . . . . . . . . . . . . . . . . . 80,709 28,093 0 108,802

Total Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $573,099 $251,223 ($ 129) $ 824,193

Class ANet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $413,872 $159,231 $ (82) (a) $ 573,021Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,742 14,957 (3,534) (b) 41,165Net asset value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13.92 $ 10.65 $ 13.92

Class BNet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,020 $ 4,772 $ (3) (a) $ 10,789Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 461 (54) (b) 920Net asset value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.73 $ 10.35 $ 11.73

Class CNet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,022 $ 39,781 $ (20) (a) $ 52,783Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067 3,829 (573) (b) 4,323Net asset value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12.21 $ 10.39 $ 12.21

Class ENet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 112 $ 107 — (a) $ 219Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 10 (2) (b) 16Net asset value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14.10 $ 10.64 $ 14.10

Class INet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $135,520 $ 38,714 $ (20) (a) $ 174,214Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,477 3,620 (914) (b) 12,183Net asset value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14.30 $ 10.70 $ 14.30

SAI-10


Ivy AssetStrategies

NewOpportunities

Fund+Pro forma


Class RNet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250 $ 599 $ — (a) $ 849Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 57 (14) (b) 61Net asset value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13.90 $ 10.53 $ 13.90

Class YNet Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,303 $ 8,019 $ (4) (a) $ 12,318Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 753 (188) (b) 868Net asset value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14.19 $ 10.64 $ 14.19

+ Consolidated Statements of Assets and Liabilities (See Note 5 to Pro Forma Financial Statements).(a) Accrued cost of one time proxy, accounting, legal and other costs borne 50% by Ivy Investment Management Company and

50% by the Acquired Fund.(b) Share adjustment—redemption of Acquired Fund’s shares and issuance of Acquiring Fund’s shares for net assets at NAV per

share of each class of Acquiring Fund.

See Accompanying Notes to Pro Forma Financial Statements.

SAI-11

Pro Forma Statement of Operations (Unaudited)(000 omitted)

For the twelve month period ended September 30, 2013


Ivy AssetStrategies

NewOpportunities

Fund+Pro forma


Investment IncomeIncome

Dividends (net of foreign withholding tax) . . . . . . . . . . . . . . . . . . . . . $ 13,176 $ 3,474 $ 0 $16,650Foreign dividend withholding tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . ($ 1,349) ($ 345) 0 (1,694)Interest and amortization (net of foreign withholding tax) . . . . . . . . 55 75 0 130Foreign interest withholding tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (2) 0 (7)

Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,877 3,202 0 15,079

ExpensesInvestment management fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,261 2,802 (415) (a) 8,648Shareholder Servicing (Transfer Agency)

Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,929 605 (199) (b) 2,335Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 21 (2) (b) 86Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 123 (4) (b) 192Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 (b) 0Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 78 0 (b) 295Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 0 (b) 1Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 13 0 (b) 19

Distribution and Service FeeClass A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,186 420 0 1,606Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 55 0 131Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 489 0 644Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 3 0 3Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 20 0 32

Accounting Service Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 101 (44) (c) 233Custodian Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 59 0 182Professional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 53 (20) (d) 63Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253 154 (29) (e) 378

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,564 4,997 (713) 14,848

Expenses reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 (426) (211) (f) (637)

Net Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,564 4,571 (924) 14,211

Net investment income (loss) . . . . . . . . . . . . . . . . . . . . . . . $ 1,313 ($1,369) $ 924 $ 868

SAI-12


Ivy AssetStrategies

NewOpportunities

Fund+Pro forma


Realized and Unrealized Gain (Loss) on InvestmentsNet realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,975 ($ 6,938) $ 0 ($ 3,963)Net realized gain (loss) on written options . . . . . . . . . . . . . . . . . . . . . . . . . . . 534 87 0 621Net realized gain (loss) on foreign currency exchange transactions . . . . . . . . (870) (421) 0 (1,291)Net realized gain (loss) on forward foreign currency contracts . . . . . . . . . . . (2,948) (652) 0 (3,600)Net realized gain (loss) on futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 0 (1,822) 0 (1,822)Net realized gain (loss) on swap agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 867 0 0 867Unrealized appreciation in value of investments during the period . . . . . . . . 25,198 15,926 0 41,124Unrealized appreciation (depreciation) in value of forward foreign currency

contracts during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 (16) 0 (16)Unrealized appreciation (depreciation) in value of foreign currency

exchange transactions during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . (117) 114 0 (3)Unrealized appreciation (depreciation) in value of swap agreements . . . . . . . (422) 0 0 (422)Unrealized appreciation (depreciation) in value of written options during

the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,644) 67 0 (4,577)

Net gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,573 $ 6,345 $ 0 $ 26,918

Net increase in net assets resulting from operations . . . . . . . . . . . . $21,886 $ 4,976 $924 $ 27,786

+ Consolidated Statements of Operations (See Note 5 to Pro Forma Financial Statements).(a) Based on management fee of 0.93% of net assets.(b) Shareholder Servicing adjusted due to combining identical accounts as well as a reduction in out-of-pocket expenses(c) Accounting services fee adjustment due to lower annual fee due to a higher total net assets.(d) Audit fees adjustment due to combination of funds to one entity.(e) Decrease due to economies of scale achieved by merging funds.(f) Decrease due to expense waivers on surviving fund.

See Notes to Pro Forma Financial Statements.

SAI-13


NOTES TO PRO FORMA STATEMENT OF ASSETS AND LIABILITIESAS OF SEPTEMBER 30, 2013

AND THE PRO FORMA STATEMENT OF OPERATIONSFOR THE TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 2013

(In thousands, except where otherwise noted) (Unaudited)

1. ORGANIZATION

Ivy Emerging Markets Equity Fund and Ivy Asset Strategy New Opportunities Fund (each a “Fund”, collectively the“Funds”) are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as diversified, open-endmanagement investment companies. Ivy Emerging Markets Equity Fund’s investment objective is to provide growth of capital byinvesting in equity securities, primarily common stock, of large to mid capitalization companies whose securities are tradedmainly on markets located within the Pacific region, issued by companies organized under the laws of a Pacific region country orissued by any company with more than half of its business in the Pacific region. Ivy Asset Strategy New Opportunities Fund’sinvestment objective is to provide total return by allocating its assets primarily among stocks, bonds, and short-term instrumentsof issuers in markets around the globe, as well as investments in derivative instruments, precious metals and investments withexposure to various foreign currencies. Each Fund’s investment manager is Ivy Investment Management Company (“IICO” or the“Manager”).

Each Fund currently offers Class A, Class C, Class I, Class Y and Class R shares. Class B shares are not available for purchaseby new and existing investors. Class B shares are available for dividend reinvestment and exchanges. Class A shares are sold attheir offering price, which is normally net asset value plus a front-end sales charge. Class C shares are sold without a front-endsales charge and Class B and Class C shares may be subject to a contingent deferred sales charge (“CDSC”). Class I, Class R andClass Y shares are sold without either a front-end sales charge or a CDSC. All classes of shares have identical rights and votingprivileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Net investmentincome, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer agent andshareholder servicing fees, directly attributable to that class. Class A, B, C, E, R and Y have a distribution and service plan. Class Ishares are not included in the plan. Class B shares will automatically convert to Class A shares 96 months after the date ofpurchase.

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 theorder to buy or sell is executed). Realized gains and losses are calculated on the identified cost basis. Interest income is recordedon the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Dividendincome is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date mayhave passed, which are recorded as soon as the Fund is informed of the ex-dividend date. All or a portion of the distributionsreceived from a real estate investment trust or publicly traded partnership may be designated as a reduction of cost of the relatedinvestment and/or realized gain.

Foreign Currency Translation. Each Fund’s accounting records are maintained in U.S. dollars. All assets and liabilitiesdenominated in foreign currencies are translated into U.S. dollars daily, using foreign exchange rates obtained from anindependent pricing service authorized by the Board of Trustees of the Trust (the “Board”). Purchases and sales of investmentsecurities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. Forassets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currencytranslation arise from changes in currency exchange rates. Each Fund combines fluctuations from currency exchange rates andfluctuations in value when computing net realized gain (loss) and net change in unrealized appreciation (depreciation) oninvestments. 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 representedby 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 qualifyas a regulated investment company under Subchapter M of the Internal Revenue Code. After the acquisition, the Acquiring Fund

SAI-14

intends to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders,by complying with the provisions available to certain investment companies, as defined in applicable sections of the InternalRevenue Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, Federal incometaxes. In addition, each Fund intends to pay distributions as required to avoid imposition of excise tax. Accordingly, no provisionhas been made for Federal income taxes. Management of the Trust periodically reviews all tax positions to assess that it is morelikely than not that the position would be sustained upon examination by the relevant tax authority based on the technical meritsof each position. As of and for the twelve month period ended September 30, 2013, management believes that no liability forunrecognized tax positions is required. The Funds are subject to examination by U.S. federal and state authorities for returns filedfor tax years after 2008.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders are recorded by each Fund onthe business day following record date. Net investment income dividends and capital gains distributions are determined inaccordance with income tax regulations which may differ from accounting principles generally accepted in the United States ofAmerica (“U.S. GAAP”). If the total dividends and distributions made in any tax year exceeds net investment income andaccumulated 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 andExchange Commission (“SEC”) require that a Fund either deliver collateral or segregate assets in connection with certaininvestments (e.g., dollar rolls, financial futures contracts, foreign currency exchange contracts, options written, securities withextended settlement periods and swaps), the Fund will segregate collateral or designate on its books and records cash or otherliquid securities having a value at least equal to the amount that is required to be physically segregated for the benefit of thecounterparty. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, eachparty has requirements to deliver/deposit cash or securities as collateral for certain investments. Certain countries require thatcash reserves be held while investing in companies incorporated in that country. These cash reserves and cash collateral that hasbeen pledged to cover obligations of the Funds under derivative contracts, if any, will be reported separately on the Statement ofAssets and Liabilities as “Restricted cash.” Securities collateral pledged for the same purpose, if any, is noted on the Schedule ofInvestments.

Concentration of Market and Credit Risk. In the normal course of business, the Funds invest in securities and enter intotransactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all itsobligations (issuer credit risk). The value of securities held by the Funds may decline in response to certain events, includingthose directly involving the issuers whose securities are owned by the Funds; conditions affecting the general economy; overallmarket changes; local, regional or global political, social or economic instability; and currency and interest rate and pricefluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity withwhich the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds managecounterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources tohonor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentiallyexpose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables duefrom counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to thesefinancial assets is generally approximated by their value recorded on the Funds’ Statement of Assets and Liabilities, less anycollateral 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 creditrisk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Fundsmay 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) thatmay have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particularfinancial 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 infinancial derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline invalue relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline invalue relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods oftime for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreigngovernments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currencycontrols or other political developments in the United States or abroad.

Custodian Fees. “Custodian fees” on the Statement of Operations may include interest expense incurred by a Fund on anycash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in

SAI-15

portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. A Fund pays interest toits 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. Suchinterest 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 theelection of the Trustee according to the Deferred Fee Agreement entered into between the Trust and the Trustee(s). Each Fundrecords its portion of the deferred fees as a liability on the Statement of Assets and Liabilities. All fees paid in cash plus anyappreciation (depreciation) in the underlying deferred plan are shown on the Statement of Operations. Additionally, fees paid tothe 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 limitedindemnification against liabilities arising in connection with the performance of their duties to the Trust. In the normal course ofbusiness, the Trust may also enter into contracts that provide general indemnification. The Trust’s maximum exposure underthese arrangements is unknown and is dependent on future claims that may be made against the Trust. The risk of material lossfrom such claims is considered remote.

Estimates. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimatesand assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ fromthose 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 uponselling an asset or would pay upon satisfying a liability in an orderly transaction between market participants at the measurementdate. Each Fund calculates the Net Asset Value (“NAV”) of its shares as of the close of the NYSE, normally 4:00 P.M. Easterntime, 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 pricingand valuation methods as adopted by the Board. Where market quotes are readily available, fair value is generally determined onthe 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 serviceauthorized by the Board. To determine values of fixed-income securities, the independent pricing service utilizes such factors ascurrent quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and riskfactors it deems relevant in determining valuations. Securities that cannot be valued by the independent pricing service may bevalued 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 approximatesvalue), whereby a portfolio security is valued at its cost initially, and thereafter valued to reflect a constant amortization tomaturity of any discount or premium.

Because many foreign markets close before the NYSE, events may occur between the close of the foreign market and theclose 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 offoreign securities to reflect the fair value as of the close of the NYSE. In addition, all securities for which values are not readilyavailable 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 goodfaith 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, butprior to the NYSE close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considerednot readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade do notopen for trading for the entire day and no other market prices are available.

SAI-16

The Board has delegated to WRSCO, the responsibility for monitoring significant events that may materially affect the valuesof a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluatedin light of such significant events. WRSCO has established a Valuation Committee to administer and oversee the valuationprocess, 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 readilyavailable. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelinesestablished by the Board, with reference to other securities or indices. In the event that the security or asset cannot be valuedpursuant to one of the valuation methods established by the Board, the value of the security or asset will be determined in goodfaith 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 itsNAV, securities will be priced by a method that the Board or persons acting at their direction believe accurately reflects fair valueand are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the valueof a security. The prices used by a Fund may differ from the value that will ultimately be realized at the time the securities weresold.

WRSCO is responsible for monitoring the implementation of the pricing and valuation policies through a series of activitiesto provide reasonable comfort of the accuracy of prices including: 1) periodic vendor due diligence meetings to reviewmethodologies, new developments, and process at vendors, 2) daily and monthly multi-source pricing comparisons reviewed andsubmitted to the Valuation Committee, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed bymanagement and the Valuation Committee.

Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurementsbased upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and referbroadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect theassumptions market participants would use in pricing the asset or liability based on market data obtained from sourcesindependent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the factors thatmarket participants would use in pricing the asset or liability developed based on the best information available in thecircumstances.

An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs which aresignificant 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 notactive, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yieldcurves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroboratedinputs.

Level 3 — Significant unobservable inputs based on the best information available in the circumstances, to the extentobservable inputs are not available, which may include assumptions made by the Board or persons acting at theirdirection 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 valueon a recurring basis follows:

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 uponwhich 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 executedtransactions 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 andderivative instruments. While most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances wherelower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3 ofthe fair value hierarchy.

SAI-17

Derivative Instruments. Forward foreign currency contracts are valued based upon the closing prices of the forwardcurrency rates determined at the close of the NYSE. Swaps are valued by an independent pricing service unless the price isunavailable, in which case they are valued at the price provided by a dealer in that security. Futures contracts traded on anexchange are generally valued at the settlement price. Listed options are ordinarily valued at the mean of the last bid and askprice provided by an independent pricing service unless the price is unavailable, in which case they are valued at a quotationobtained from a broker-dealer. Over-the-counter (“OTC”) options are ordinarily valued at the mean of the last bid and ask priceprovided by an independent pricing service for a comparable listed option unless such a price is unavailable, in which case theyare valued at a quotation obtained from a broker-dealer. If no comparable listed option exists from which to obtain a price froman independent pricing service and a quotation cannot be obtained from a broker-dealer, the OTC option will be valued using amodel 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 1of the fair value hierarchy. OTC derivative contracts include forward foreign currency contracts, swap agreements, and optioncontracts 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 intoaccount the counterparties’ creditworthiness and using a series of techniques, including simulation models. Many pricing modelsdo not entail material subjectivity because the methodologies employed do not necessitate significant judgments and the pricinginputs are observed from actively quoted markets, as is the case with interest rate swap and option contracts. A substantialmajority of OTC derivative products valued using pricing models fall into this category and are categorized within Level 2 of thefair value hierarchy.

Equity Securities. Equity securities traded on U.S. or foreign securities exchanges or included in a national market systemare valued at the official closing price at the close of each business day unless otherwise stated below. OTC equity securities andlisted 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 primaryexchange where the security is principally traded and to the extent these securities are actively traded and valuation adjustmentsare 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 onquotations from the primary market in which they are traded and categorized in Level 1. Because many foreign securities marketsand exchanges close prior to the close of the NYSE, closing prices for foreign securities in those markets or on those exchangesdo not reflect the events that occur after that close. Certain foreign securities may be fair valued using a pricing service thatconsiders the correlation of the trading patterns of the foreign security to the intra-day trading in the U.S. markets forinvestments such as American Depositary Receipts, financial futures, Exchange Traded Funds, and the movement of certainindices of securities based on a statistical analysis of their historical relationship; such valuations generally are categorized inLevel 2.

Preferred stock, repurchase agreements, and other equities traded on inactive markets or valued by reference to similarinstruments are also generally categorized in Level 2.

Transfers from Level 2 to Level 3 occurred generally due to the lack of observable market data due to decreased marketactivity or information for these securities. Transfers from Level 3 to Level 2 occurred generally due to the increased availabilityof observable market data due to increased market activity or information. Transfers between levels represent the values as of thebeginning of the reporting period.

For fair valuations using unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances forreported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, andtransfers in or out of the Level 3 category during the period. The beginning of period timing recognition is used for the transfersbetween Levels of the Funds’ assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy andLevel 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 ifapplicable, are included on the Statement of Operations in net realized gain (loss) on investments in unaffiliated securities and innet change in unrealized appreciation (depreciation) on investments in unaffiliated securities, respectively. Additionally, the netchange in unrealized appreciation for all Level 3 investments still held as of period ended September 30, 2013, if applicable, isincluded on the Statement of Operations in net change in unrealized appreciation (depreciation) on investments in unaffiliatedsecurities.

SAI-18

The Funds may own different types of assets that are classified as Level 2 or Level 3. Assets classified as Level 2 can have avariety of observable inputs, including, but not limited to, benchmark yields, reported trades, broker quotes, benchmarksecurities, and bid/offer quotations. These observable inputs are collected and utilized, primarily by an independent pricingservice, in different evaluated pricing approaches depending upon the specific asset to determine a value.

The following tables are a summary of the valuation of each Fund’s investments by the fair value hierarchy levels as ofSeptember 30, 2013.

Ivy Emerging Markets Equity Fund Level 1 Level 2 Level 3

AssetsInvestments in Securities

Common StocksConsumer Discretionary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,653 $ — $—Consumer Staples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,824 — —Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,815 — —Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,056 — —Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,628 — —Industrials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,748 — —Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,340 — —Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 — —Telecommunication Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,520 — —Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,681 — —

Total Common Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $571,392 $ — $—Purchased Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 — —Corporate Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 122 —Short-Term Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 13,601 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $571,514 $13,723 $—

LiabilitiesWritten Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,051 $ 2,738 $—Swap Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 471 $—

As of September 30, 2013, there were no transfers between Level 1 and 2 during the twelve month period.

Ivy Asset Strategy New Opportunities Fund Level 1 Level 2 Level 3

AssetsInvestments in Securities

Common StocksConsumer Discretionary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,146 $ — $—Consumer Staples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,275 — —Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,377 — —Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,018 — —Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,323 — —Industrials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,613 — —Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,910 — —Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,079 — —

Total Common Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $184,741 $ — $—Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 — —Purchased Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,132 —Corporate Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 740 —Bullion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,571 — —Short-Term Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 35,240 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $203,404 $37,112 $—

LiabilitiesForward Foreign Currency Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 55 $—Written Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 27 $—

As of September 30, 2013, there were no transfers between Level 1 and 2 during the twelve month period.

SAI-19

4. DERIVATIVE INSTRUMENTS

The following disclosures contain information on why and how the Funds use derivative instruments, the associated risks ofinvesting in derivative instruments, and how derivative instruments affect the Funds’ financial positions and results of operationswhen presented by primary underlying risk exposure.

Forward Foreign Currency Contracts. Each Fund 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 schedulefollowing the Schedule of Investments. Forward contracts will be valued daily based upon the closing prices of the forwardcurrency rates determined at the close of the NYSE as provided by a bank, dealer or independent pricing service. The resultingunrealized appreciation and depreciation is reported on the Statement of Assets and Liabilities as a receivable or payable and onthe Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the differencebetween the original cost of the contract and the value at the close date is recorded as a realized gain (loss) on the Statement ofOperations.

Risks to a Fund related to the use of such contracts include both market and credit risk. Market risk is the risk that the valueof the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibilitythat the counterparty will default. If the counterparty defaults, a Fund’s maximum loss will consist of the aggregate unrealizedgain on appreciated contracts that is not collateralized.

Futures Contracts. Each Fund 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 contractamount. This amount is known as the initial margin. Subsequent payments (variation margins) are made or received by the Fundeach 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 collateralizedaccounts to cover initial margin requirements on open futures contracts are identified on the Schedule of Investments. Cash heldby the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily markto 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 atthe 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 maybe an illiquid market where the Fund is unable to close the contract or enter into an offsetting position and, if used for hedgingpurposes, 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 thecall. The proceeds from securities sold through the exercise of put options are decreased by the premium paid to purchase theput.

When a Fund writes (sells) an option, an amount equal to the premium received by the Fund is recorded as a liability. Theamount of the liability is subsequently adjusted to reflect the current value of the option written. When an option expires on itsstipulated expiration date or a Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of aclosing purchase transaction exceeds the premium received when the call option was sold), and the liability related to suchoption is extinguished. When a call option is exercised, the premium is added to the proceeds from the sale of the underlyingsecurity in determining whether a Fund has realized a gain or loss. For each Fund, when a written put is exercised, the cost basisof 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 optionsmay increase a Fund’s exposure to the underlying security (or basket of securities). With written options, there may be timeswhen a Fund will be required to purchase or sell securities to meet its obligation under the option contract where the requiredaction is not beneficial to the Fund, due to unfavorable movement of the market price of the underlying security (or basket ofsecurities). Additionally, to the extent a Fund enters into OTC option transactions with counterparties, the Fund will be exposedto the risk that counterparties to these OTC transactions will be unable to meet their obligations under the terms of thetransaction.

SAI-20

Swap Agreements. Each Fund may invest in swap agreements.

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

The creditworthiness of firms with which a Fund enters into a swap agreement is monitored by IICO. If a firm’screditworthiness declines, the value of the agreement would likely decline, potentially resulting in losses. If a default occurs bythe counterparty to such a transaction, the Fund will have contractual remedies pursuant to the agreement related to thetransaction. The maximum loss a Fund may incur consists of the aggregate unrealized gain on appreciated contracts that is notcollateralized.

Collateral and rights of offset. A Fund may mitigate credit risk with respect to OTC derivative counterparties through creditsupport annexes (“CSA”) included with an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreementwhich is the standard contract governing most derivative transactions between the Fund and each of its counterparties. The CSAallows the Fund and its counterparty to offset certain derivative financial instruments’ payables and/or receivables against eachother and/or with collateral, which is generally held by the Fund’s custodian. The amount of collateral moved to/from applicablecounterparties is based upon minimum transfer amounts specified in the CSA. To the extent amounts due to the Fund from itscounterparties 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 relatedarrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position.

The following tables present the offsetting of assets and liabilities as of September 30, 2013:

AssetsGross Amounts Not Offset on theStatement of Assets and Liabilities

Fund

GrossAmounts ofRecognized

Assets

GrossAmounts

Offset on theStatement ofAssets andLiabilities

Net Amountsof Assets

Presented onthe Statementof Assets and

Liabilities

FinancialInstruments

andDerivativesAvailablefor Offset

Non-CashCollateralReceived

CashCollateralReceived

NetAmount

Ivy Asset Strategy New Opportunities FundInvestments in unaffiliated securities at

value* . . . . . . . . . . . . . . . . . . . . . . . . . $1,132 $— $1,132 $(27) $— $— $1,105

* Purchased options are reported as investments in unaffiliated securities on the Statement of Assets and Liabilities.

LiabilitiesGross Amounts Not Offset on theStatement of Assets and Liabilities

Fund

GrossAmounts ofRecognizedLiabilities

GrossAmounts

Offset on theStatement ofAssets andLiabilities

Net Amountsof LiabilitiesPresented onthe Statementof Assets and

Liabilities

FinancialInstruments

andDerivativesAvailablefor Offset

Non-CashCollateralPledged

CashCollateralPledged

NetAmount

Ivy Emerging Markets Equity FundWritten options at value . . . . . . . . . . . . $2,738 $— $2,738 $— $(2,738) $ — $—Unrealized depreciation on swap

agreements . . . . . . . . . . . . . . . . . . . . . 471 — 471 — — (320) 151

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,209 $— $3,209 $— $(2,738) $(320) $151

Ivy Asset Strategy New Opportunities FundWritten options at value . . . . . . . . . . . . $ 27 $— $ 27 $(27) $ — $ — $—Unrealized depreciation on forward

foreign currency . . . . . . . . . . . . . . . . . 55 — 55 — — — 55

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 82 $— $ 82 $(27) $ — $ — $ 55

SAI-21

Additional Disclosure Related to Derivative Instruments

Fair values of derivative instruments as of the twelve month period ended September 30, 2013:

Assets Liabilities

Fund

Type ofRisk

ExposureStatement of Assets &

Liabilities Location ValueStatement of Assets &

Liabilities Location Value

Ivy Emerging Markets Equity Fund . . . . . . Equity Investments in unaffiliatedsecurities at value* $ 122

Unrealized depreciationon swap agreements $ 471

Equity Written options at value 6,789

Ivy Asset Strategy New OpportunitiesFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equity Investments in unaffiliatedsecurities at value* 1,132

Written options at value27

Foreigncurrency

Unrealized depreciationon forward foreigncurrency contracts 55

* Purchased options are reported as investments in unaffiliated securities and are reflected in the accompanying Schedule ofInvestments.

Amount of realized gain (loss) on derivatives recognized on the Statement of Operations for the twelve month period endedSeptember 30, 2013:

Net realized gain (loss) on:

FundType of Risk

Exposure

Investmentsin

unaffiliatedsecurities*

Swapagreements

Futurescontracts

Writtenoptions

Forwardforeign

currencycontracts Total

Ivy Emerging Markets Equity Fund . . . . . . . Equity $607 $867 $ — $534 $ — $ 2,008Foreign currency — — — — (2,948) (2,948)

Ivy Asset Strategy New OpportunitiesFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commodity — — (1,822) — — (1,822)

Equity 70 — — 87 — 157Foreign currency — — — — (652) (652)

* Purchased options are reported as investments in unaffiliated securities and are reflected in the accompanying Schedule ofInvestments.

Change in unrealized appreciation (depreciation) on derivatives recognized on the Statement of Operations for the twelvemonth period ended September 30, 2013:

Net change in unrealized appreciation (depreciation) on:

FundType of Risk

Exposure

Investmentsin

unaffiliatedsecurities*

Swap

agreements

Futures

contractsWrittenoptions

Forwardforeign

currency

contracts Total

Ivy Emerging Markets Equity Fund . . . . . . . Equity $ (21) $(422) $— $(4,644) $ — $(5,087)

Ivy Asset Strategy New OpportunitiesFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity (588) — — 67 — (521)

Foreign currency — — — — (16) (16)

* Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule ofInvestments.

During the twelve month period ended September 30, 2013, the average derivative volume was as follows:

Fund

Longforward

contracts1

Shortforward

contracts1

Longfutures

contracts1

Shortfutures

contracts1

Swap

agreements2Purchasedoptions1

Written

options1

Ivy Emerging Markets Equity Fund . . . . . . . . . . . . . . . $7,692 $7,870 $— $— $3,435 $224 $1,440

Ivy Asset Strategy New Opportunities Fund . . . . . . . . 9,278 9,298 — — — 381 5

1 Average value outstanding during the period.2 Average notional amount outstanding during the period.

SAI-22

Objectives and Strategies

Ivy Emerging Markets Equity Fund. The Fund’s objectives in using derivatives during the period included managing theexposure to various foreign currencies, hedging certain event risks on positions held by the Fund and gaining exposure to certainindividual securities that are not available for direct purchase. To manage foreign currency exposure, the Fund utilized forwardcontracts to either increase or decrease exposure to a given currency. To hedge event risk, the Fund utilized options, both writtenand purchased, on individual equity securities. To gain exposure to certain individual securities, the Fund utilized total returnswaps.

Ivy Asset Strategy New Opportunities Fund. The Fund’s objectives in using derivatives during the period included hedgingmarket risk on equity securities and managing the exposure to various foreign currencies. To achieve the objective of hedgingmarket risk, the Fund utilized option contracts, both written and purchased, on individual equity securities and foreign equityindices. To manage foreign currency exposure, the Fund utilized forward contracts to either increase or decrease exposure to agiven currency.

5. BASIS FOR CONSOLIDATION

Ivy ASNO II, Ltd. (the “Subsidiary”), a Cayman Islands exempted company, was incorporated as a wholly owned subsidiaryacting as an investment vehicle for the Ivy Asset Strategy New Opportunities Fund (referred to as “the Fund” in this sub-section).The Subsidiary acts as an investment vehicle for a Fund in order to effect certain investments for the Fund consistent with theFund’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. Theconsolidated financial statements include the accounts of the Fund and its Subsidiary. All inter-company transactions andbalances have been eliminated. A subscription agreement was entered into between the Fund and its Subsidiary comprising theentire 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, toattend and to vote at general meetings of the Subsidiary and shall confer upon the shareholder rights in a winding-up orrepayment 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 September 30, 2013 of theSubsidiary to the Fund (amounts in thousands).

SubsidiaryDate of

IncorporationSubscriptionAgreement

Fund NetAssets

SubsidiaryNet Assets

Percentageof Fund

Net Assets

Ivy ASNO II, Ltd. . . . . . . . . . . . . . . . . . . . 1-31-13 4-10-13 $251,223 $26,070 10.38%

6. BASIS OF COMBINATION

The Board of Trustees of the Trust at a meeting held on November 12, 2013 unanimously approved the reorganization, inwhich the Ivy Emerging Markets Equity Fund series of the Trust will acquire all of the assets and assume all of the liabilities ofthe Ivy Asset Strategy New Opportunities Fund in exchange for an equal aggregate NAV of newly issued shares of beneficialinterest of the Ivy Emerging Markets Equity Fund series of the Trust (the Reorganization). As contemplated under theReorganization, the Ivy Asset Strategy New Opportunities Fund will distribute Ivy Emerging Markets Equity Fund shares ofbeneficial interest to its shareholders, after which it will liquidate and cease to be a series of the Trust. Under the Reorganization,shareholders of each class of shares of the Ivy Asset Strategy New Opportunities Fund will receive shares of the same class in theIvy Emerging Markets Equity Fund that they currently own. The aggregate NAV of Ivy Emerging Markets Equity Fund sharesreceived by the Ivy Asset Strategy New Opportunities Fund shareholders in the Reorganization will be equal to the aggregateNAV of the shareholders’ current shares of the Ivy Asset Strategy New Opportunities Fund held on the business day prior toclosing of the Reorganization, less the costs of the Reorganization attributable to their common shares. The Ivy Emerging MarketsEquity Fund will continue to operate after the Reorganization as a separate series of the Trust.

The Reorganization is intended to be accounted for as a tax-free reorganization of investments companies. The unauditedPro Forma Combined Schedule of Investments and Combined Statement of Assets and Liabilities reflect the financial position ofthe Funds at September 30, 2013 and assumes the merger occurred on that date. The unaudited Pro Forma Combined Statementof Operations reflects the results of operations of the Funds for the twelve months ended September 30, 2013 and assumes themerger occurred at the beginning of the period. These statements have been derived from the books and records of the Funds atthe dates indicated above in conformity with U.S. GAAP. As of September 30, 2013, the portfolio of securities held by the IvyAsset Strategy New Opportunities Fund complied with the fundamental investment restrictions of the Ivy Emerging MarketsEquity Fund, and the Funds’ investment objectives were the same. The historical cost basis of investment securities is expected tobe carried forward to the surviving entity. The fiscal year end for the Funds is March 31.

SAI-23

The accompanying pro forma combined financial statements should be read in conjunction with the historical financialstatements of the Funds incorporated by reference in the Reorganization Statement of Additional Information. Such pro formacombined financial statements are presented for information only and may not necessarily be representative of what the actualcombined financial statements would have been had the Reorganization occurred on September 30, 2013. Following theReorganization, the Ivy Emerging Markets Equity Fund will be the accounting survivor.

Certain expenses of the Reorganization, estimated to be $129, will be borne by the Ivy Asset Strategy New OpportunitiesFund.

7. INVESTMENT MANAGEMENT AND PAYMENTS TO AFFILIATED PERSONS

Management Fees. IICO, a wholly owned subsidiary of Waddell & Reed Financial, Inc. (“WDR”), serves as each Fund’sinvestment manager. The management fee is accrued daily by each Fund at the following annual rates as a percentage of averagedaily net assets:

Fund Net Asset Breakpoints Annual Rate

Ivy Emerging Markets Equity Fund $0 to $250 Million 1.00%(pre and post merger) $250 to $500 Million 1.00%

$500 to $1,000 Million 0.85%$1,000 to $1,500 Million 0.83%$1,500 to $2,000 Million 0.83%$2,000 to $3,000 Million 0.80%$3,000 to $5,000 Million 0.76%$5,000 to $6,000 Million 0.76%Over $6,000 Million 0.76%

Ivy Asset Strategy New Opportunities Fund $0 to $500 Million 1.00%$500 to $1,000 Million 0.85%$1,000 to $2,000 Million 0.83%$2,000 to $3,000 Million 0.80%Over $3,000 Million 0.76%

Accounting Services Fees. The Trust has an Accounting Services Agreement with WRSCO, doing business as WI ServicesCompany (“WISC”), an indirect subsidiary of WDR. Under the agreement, WISC acts as the agent in providing bookkeeping andaccounting services and assistance to the Trust, including maintenance of Fund records, pricing of Fund shares and preparationof certain shareholder reports. For these services, each Fund pays WISC a monthly fee of one-twelfth of the annual fee based onthe 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 themonthly 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 aFund’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 toClass A, Class B, Class C and Class E shares, for each shareholder account that was in existence at any time during the priormonth, each Fund pays a monthly fee that ranges from $1.5042 to $1.6958 per account; however, WISC has agreed to reducethat fee if the number of total shareholder accounts within the Complex (Waddell & Reed Advisors Funds, InvestEd Portfoliosand 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 of1%. 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 netassets 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 throughcertain financial intermediaries), WISC has agreed to reduce its per account fees charged to the Funds to $0.50 per month per

SAI-24

shareholder account. Additional fees may be paid by the Funds to those intermediaries. If the aggregate annual rate of the WISCtransfer agent fee and the costs charged by the financial services companies exceeds $18.00 per account for a Fund, WISC willreimburse the Fund the amount in excess of $18.00.

Broker accounts. Certain broker-dealers that maintain shareholder accounts with each Fund through an omnibus accountprovide transfer agent and other shareholder-related services that would otherwise be provided by WISC if the individualaccounts 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 netasset 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 Trustpursuant to Rule 12b–1 under the 1940 Act (the “Distribution and Service Plan”), each Fund, other than Ivy Money MarketFund, may pay a distribution and/or service fee to Ivy Funds Distributors, Inc. (“IFDI”) for Class A and Class E shares in anamount not to exceed 0.25% of the Fund’s average annual net assets. The fee is to be paid to compensate IFDI for amounts itexpends in connection with the distribution of the Class A and Class E shares and/or provision of personal services to Fundshareholders 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 exceed0.25% and a distribution fee not to exceed 0.75% of the Fund’s average annual net assets for Class B and Class C shares tocompensate IFDI for its services in connection with the distribution of shares of that class and/or provision of personal services toClass 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 Rshareholder 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 Yshareholder accounts.

Sales Charges. As principal underwriter for the Trust’s shares, IFDI receives sales commissions (which are not an expense ofthe 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 twelve months ended September 30, 2013, IFDIreceived the following amounts in sales commissions and CDSCs:

Gross SalesCommissions

CDSC CommissionsPaid1Class A Class B Class C Class E

Ivy Emerging Markets Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . $364 $ 1 $ 8 $2 $— $376Ivy Asset Strategy New Opportunities Fund . . . . . . . . . . . . . . . . . . . 146 — * 25 5 — 189

* Not shown due to rounding.1 IFDI reallowed/paid this portion of the sales charge to financial advisors and selling broker-dealers.

SAI-25

Expense Reimbursements and/or Waivers. Fund and class expense limitations and related waivers/reimbursements for thetwelve months ended September 30, 2013 were as follows:

Fund Name

ShareClassName

Type ofExpense

LimitCommencement

Date End Date Expense Limit Expense Reduced

Ivy Emerging Markets Equity Fund Class Y Contractual 8-1-2011 7-31-2015 Not to exceedClass A

N/A

Ivy Asset Strategy New OpportunitiesFund

Class A Contractual 5-3-2010 7-31-2015 1.50% 12b-1 Fees and/orShareholder Servicing

Class I Contractual 5-3-2010 7-31-2015 1.25% Shareholder ServicingClass Y Contractual 8-1-2011 7-31-2015 Not to exceed

Class A12b-1 Fees and/or

Shareholder Servicing

Acquiring Fund ProForma Class A Contractual Effective Dateof Merger

7-31-2016 1.50% 12b-1 Fees and/orShareholder Servicing

Class B Contractual Effective Dateof Merger

7-31-2016 2.50% 12b-1 Fees and/orShareholder Servicing

Class Y Contractual Effective Dateof Merger

7-31-2015 Not to exceedClass A

12b-1 Fees and/orShareholder Servicing

Any amounts due to the Funds as a reimbursement but not paid as of September 30, 2013 are shown as a receivable from affiliateson the Statement of Assets and Liabilities.

8. CAPITAL SHARE TRANSACTIONS

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:

For the twelve months endedSeptember 30, 2013

Ivy Emerging Markets Equity Fund Shares Value

Shares issued from sale of shares:Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,413 $ 116,529Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 1,098Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 2,042Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — *Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 762 10,752Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 513Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 1,313

Shares issued in reinvestment of distributions to shareholders:Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 3,408Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 41Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 1,563Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 49

Shares redeemed:Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,142) (207,618)Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (327) (3,752)Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (525) (6,334)Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,255) (31,851)Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18) (259)Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (219) (3,118)

Net decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,564) $(115,621)

* Not shown due to rounding.

SAI-26

For the twelve months endedSeptember 30, 2013

Ivy Asset Strategy New Opportunities Fund Shares Value

Shares issued from sale of shares:Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,740 $ 61,550Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 546Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482 5,044Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 115Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,021 11,043Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 872Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548 5,766

Shares issued in reinvestment of distributions to shareholders:Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 957Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 11Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 259Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 56

Shares redeemed:Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,072) (86,099)Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (183) (1,908)Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,253) (23,520)Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) (114)Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,118) (33,399)Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (76) (836)Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (248) (2,655)

Net decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,905) $(63,312)

9. CAPITAL SHARES

The pro forma NAV per share assumes the issuance of shares of the Acquiring Fund that would have been issued atSeptember 30, 2013, in connection with proposed reorganization. The number of shares assumed to be issued is equal to theNAV of shares of the Acquired Fund, as of September 30, 2013, divided by the NAV per share of the shares of the Acquiring Fundas of September 30, 2013. The pro forma number of shares outstanding, by class, for the combined fund consists of the followingat September 30, 2013:

Class of Shares

Shares ofAcquiring Fund

Pre-Combination

Additional SharesAssumed Issued in

Reorganization

Total OutstandingShares Post-Combination

Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,742 11,423 41,165Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 407 920Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067 3,256 4,323Class E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8 16Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,477 2,706 12,183Class R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 43 61Class Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 565 868

10. FEDERAL INCOME TAX MATTERS

For Federal income tax purposes, cost of investments owned at September 30, 2013 and the related unrealized appreciation(depreciation) were as follows:

FundCost of

investmentsGross

appreciationGross

depreciationNet unrealizedappreciation

Ivy Emerging Markets Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $503,064 $97,466 $15,293 $82,173Ivy Asset Strategy New Opportunities Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 216,179 36,397 12,060 24,337

SAI-27

The tax cost of investments will remain unchanged for the combined fund.

For Federal income tax purposes, the Funds’ distributed and undistributed earnings and profit for the fiscal year endedMarch 31, 2013 and the post-October and late-year ordinary activity updated with information available through the date of thisreport were as follows:

IvyEmergingMarkets

Equity Fund

Ivy AssetStrategy NewOpportunities

Fund

Distributed Ordinary Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,114 $1,483Undistributed Ordinary Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 —Distributed Long-Term Capital Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Undistributed Long-Term Capital Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Tax Return of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Post-October Capital Losses Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,654Late-Year Ordinary Losses Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,728

Internal Revenue Code regulations permit each Fund to elect to defer into its next fiscal year capital losses incurred betweeneach November 1 and the end of its fiscal year. Each Fund is also permitted to defer into its next fiscal year late-year ordinarylosses that arise from the netting of activity generated between each November 1 and the end of its fiscal year on certain specifiedordinary items.

Accumulated capital losses represent net capital loss carryovers as of September 30, 2013 that may be available to offsetfuture realized capital gains and thereby reduce future capital gains distributions. Under the Regulated Investment CompanyModernization Act of 2010 (the “Modernization Act”), a Fund is permitted to carry forward capital losses incurred in taxableyears beginning after December 22, 2010 for an unlimited period. Any losses incurred during those future taxable years will berequired to be utilized prior to any losses incurred in pre-enactment taxable years which have only an eight year carryforwardperiod. As a result of this ordering rule, pre-enactment capital loss carryovers may expire unused. Additionally, post-enactmentcapital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than beingconsidered all short-term as under the previous law. The Fund’s first fiscal year end subject to the Modernization Act isMarch 31, 2012. The following table shows the expiration dates for capital loss carryovers from pre-enactment taxable years andthe amounts of capital loss carryovers, if any, by each of the applicable Funds electing to be taxed as a RIC during the year endedSeptember 30, 2013:

Pre-Enactment Post-Enactment

Fund 2014 2015 2016 2017 2018 2019

Short-TermCapital LossCarryover

Long-TermCapital LossCarryover

Ivy Emerging Markets Equity Fund . . . . . . . . . . . . . . . . . . . . . . . $— $— $— $— $— $ — $32,189 $22,414Ivy Asset Strategy New Opportunities Fund . . . . . . . . . . . . . . . . . — — — — — 606 48,200 28,017

SAI-28

ProspectusIVY FUNDS

January 29, 2014

Ticker

Class A Class B Class C Class I Class R Class YGLOBAL/INTERNATIONAL FUNDSIvy Emerging Markets Equity Fund IPOAX IPOBX IPOCX IPOIX IYPCX IPOYX

(formerly, Ivy Pacific Opportunities Fund)

Effective February 11, 2014, the name of Ivy Pacific Opportunities Fund is changed to Ivy Emerging Markets Equity Fundand its strategy is changed to reflect a concentration in emerging markets equity securities, as described in this prospectus.Prior to that date, there are no changes to the name or strategy of the Ivy Pacific Opportunities Fund that are contained inits prospectus dated July 31, 2013, as supplemented October 2, 2013, November 6, 2013, November 21, 2013,November 25, 2013 and January 2, 2014.

The Securities and Exchange Commission has not approved ordisapproved these securities, or determined whether this Prospectus isaccurate or adequate. It is a criminal offense to state otherwise.

CONTENTS

SUMMARY — GLOBAL/INTERNATIONAL FUNDS3 Ivy Emerging Markets Equity Fund

8 Additional Information about Principal Investment Strategies,Other Investments and Risks

14 The Management of the Fund14 Investment Adviser14 Management Fee14 Portfolio Management14 Your Account14 Choosing a Share Class22 Ways to Set Up Your Account24 Pricing of Fund Shares25 Buying Shares27 Selling Shares29 Exchange Privileges32 Distributions and Taxes35 Financial Highlights

2 Prospectus

Ivy Emerging Markets Equity Fund(formerly, Ivy Pacific Opportunities Fund)Objective

To seek to provide growth of capital.

Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts ifyou and your family invest, or agree to invest in the future, at least $100,000 in funds within Ivy Funds, InvestEd Portfolios and/or Waddell &Reed Advisors Funds. More information about these and other discounts is available from your financial professional and in the “Sales ChargeReductions” section on page 16 of the Fund’s prospectus and in the “Purchase, Redemption and Pricing of Shares” section on page 62 of theFund’s statement of additional information (SAI). The Fund’s Class B shares are not available for purchase by new or existing investors. Class Bshares are available for dividend reinvestment and exchanges.

Shareholder Fees

(fees paid directly from your investment) Class A Class B Class C Class I Class R Class Y

Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) 5.75% None None None None None

Maximum Deferred Sales Charge (Load) (as a % of lesser of amount invested orredemption value) 1.00%1 5.00%1 1.00%1 None None None

Maximum Account Fee None2 None None2 None None None

Annual Fund Operating Expenses

(expenses that you pay each year as a % of the value of your investment) Class A Class B Class C Class I Class R Class Y

Management Fees 0.96% 0.96% 0.96% 0.96% 0.96% 0.96%

Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00% 0.00% 0.50% 0.25%

Other Expenses 0.53% 0.98% 0.57% 0.26% 0.34% 0.26%

Total Annual Fund Operating Expenses 1.74% 2.94% 2.53% 1.22% 1.80% 1.47%

Fee Waiver and/or Expense Reimbursement3 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Total Annual Fund Operating Expenses After Fee Waiver and/or ExpenseReimbursement 1.74% 2.94% 2.53% 1.22% 1.80% 1.47%

1 For Class A shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million ormore that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year ofpurchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1%for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months ofpurchase.

2 With limited exceptions, for Class A and Class C shares, if your Fund account balance is below $750 at the close of business on September 26, 2014, and on theFriday prior to the last week of September each year thereafter, the account will be assessed an account fee of $20.

3 Through July 31, 2015, to the extent that the total annual ordinary fund operating expenses of the Class Y shares exceeds the total annual ordinary fund operatingexpenses of the Class A shares, Ivy Funds Distributor, Inc. (IFDI), the Fund’s distributor, and/or Waddell & Reed Services Company, doing business as WI ServicesCompany (WISC), the Fund’s transfer agent, have contractually agreed to reimburse sufficient 12b-1 and/or shareholder servicing fees to ensure that the totalannual ordinary fund operating expenses of the Class Y shares do not exceed the total annual ordinary fund operating expenses of the Class A shares, as calculatedat the end of each month. Prior to that date, the expense limitation may not be terminated by IFDI, WISC or the Board of Trustees.

Example

This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at theend of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same.Although your actual costs may be higher or lower, based on these assumptions, your costs would be:


Class A Shares $742 $1,091 $1,464 $2,509

Class B Shares 697 1,210 1,648 2,978

Class C Shares 256 788 1,345 2,866

Class I Shares 124 387 670 1,477

Class R Shares 183 566 975 2,116

Class Y Shares 150 465 803 1,757

Global/International Funds Prospectus 3

You would pay the following expenses if you did not redeem your shares:


Class A Shares $742 $1,091 $1,464 $2,509

Class B Shares 297 910 1,548 2,978

Class C Shares 256 788 1,345 2,866

Class I Shares 124 387 670 1,477

Class R Shares 183 566 975 2,116

Class Y Shares 150 465 803 1,757

Portfolio Turnover

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnoverrate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which arenot reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’sportfolio turnover rate was 142% of the average value of its portfolio.

Principal Investment Strategies

Ivy Emerging Markets Equity Fund invests, under normal circumstances, at least 80% of its net assets, plus any borrowings for investmentpurposes, in equity securities, primarily common stock, of companies (i) from countries considered to be emerging market countries or (ii) thatare economically linked to emerging market countries. Emerging market countries include, but are not limited to, those considered to bedeveloping by the International Monetary Fund, the World Bank, the International Finance Corporation or one of the leading global investmentbanks. Ivy Investment Management Company (IICO), the Fund’s investment manager, has broad discretion to identify other countries that itconsiders to qualify as emerging market countries. The majority of these countries are likely to be located in Asia, Latin America, the Middle East,Central and Eastern Europe, and Africa. The Fund may invest in companies of any size and market capitalization and in companies in anyindustry. The issuer of a security or other investment is generally deemed to be economically linked to a particular country if: (a) the security orother investment is issued or guaranteed by the government of that country or any of its agencies, authorities or instrumentalities; (b) the issuer isorganized under the laws of, and maintains a principal office in, that country; (c) the issuer has its principal securities trading market in thatcountry; (d) the issuer derives 50% or more of its total revenues from goods sold or services performed in that country; (e) the issuer has 50% ormore of its assets in that country; or (f) the issuer is included in an index which is representative of that country.

The Fund may invest up to 100% of its total assets in foreign securities. Subject to the 80% policy noted above, the Fund may also invest incompanies that are not located in, or economically linked to, emerging market countries: (1) if the Fund’s portfolio manager believes that theperformance of a company or its industry will be influenced by opportunities in the emerging markets; (2) to maintain exposure to industrysegments where the portfolio manager believes there are not satisfactory investment opportunities in emerging market countries; and/or (3) if theportfolio manager believes there is the potential for significant benefit to the Fund.

IICO utilizes a top-down approach of worldwide analysis in an effort to identify what it believes are the best emerging market countries andsectors for growth, and balances the top-down analysis with a bottom-up stock selection process in an effort to identify stocks that it believes mayoutperform that market over a one to three year time period and are best positioned to maximize their competitive advantage. IICO uses aninvestment approach that focuses on analyzing a company’s financial statements and taking advantage of what it believes are overvalued orundervalued emerging markets.

In determining whether to sell a security, IICO generally considers whether the security has failed to meet its growth expectations, whether itsvaluation has exceeded its target, or whether it has lost confidence in management. IICO may also sell a security to reduce the Fund’s holding inthat security, to take advantage of what it believes are more attractive investment opportunities or to raise cash.

Principal Investment Risks

As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment. The Fund is not intended asa complete investment program. A variety of factors can affect the investment performance of the Fund and prevent it from achieving its objective.These include:

� Company Risk. A company may perform worse than the overall market due to specific factors, such as adverse changes to its business orinvestor perceptions about the company.

� Emerging Market Risk. Investments in countries with emerging economies or securities markets may carry greater risk than investments inmore developed countries. Political and economic structures in many such countries may be undergoing significant evolution and rapiddevelopment, 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.

� Foreign Currency Risk. Foreign securities may be denominated in foreign currencies. The value of the Fund’s investments, as measured inU.S. dollars, may be unfavorably affected by changes in foreign currency exchange rates and exchange control regulations.

4 Prospectus Global/International Funds

� Foreign Securities Risk. Investing in foreign securities involves a number of economic, financial, legal, and political considerations thatmay not be associated with the U.S. markets and that could affect the Fund’s performance unfavorably, depending upon the prevailingconditions at any given time. Among these potential risks are: greater price volatility; comparatively weak supervision and regulation ofsecurities exchanges, brokers and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversioncosts; adverse foreign tax consequences; different and/or less stringent financial reporting standards; custody; and settlement delays. Inaddition, key information about the issuer, the markets or the local government or economy may be unavailable, incomplete or inaccurate.

� Growth Stock Risk. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of otherstocks. Growth stocks may not perform as well as value stocks or the stock market in general.

� Large Company Risk. Large capitalization companies may go in and out of favor based on market and economic conditions. Largecapitalization companies may be unable to respond quickly to new competitive challenges, such as changes in technology, and also may notbe able to attain the high growth rate of successful smaller companies, especially during extended periods of economic expansion. Althoughthe securities of larger companies may be less volatile than those of companies with smaller market capitalizations, returns on investments insecurities of large capitalization companies could trail the returns on investments in securities of smaller companies.

� Liquidity Risk. Generally, a security is liquid if the Fund is able to sell the security at a fair price within a reasonable time. Liquidity isgenerally related to the market trading volume for a particular security. Illiquid securities may trade at a discount from comparable, moreliquid investments, and may be subject to wider fluctuations in market value. Less liquid securities are more difficult to dispose of at theirrecorded values and are subject to increased spreads and volatility. Also, the Fund may not be able to dispose of illiquid securities when thatwould be beneficial at a favorable time or price.

� Management Risk. Fund performance is primarily dependent on IICO’s skill in evaluating and managing the Fund’s portfolio and theFund may not perform as well as other similar mutual funds.

� Market Risk. Adverse market conditions, sometimes in response to general economic or industry news, may cause the prices of the Fund’sholdings to fall as part of a broad market decline. The financial crisis in the U.S. and foreign economies over the past several years, includingthe European sovereign debt crisis, has resulted, and may continue to result, in an unusually high degree of volatility in the financialmarkets, both U.S. and foreign, and in the NAVs of many mutual funds, including to some extent the Fund. Global economies and financialmarkets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region may adverselyaffect issuers in another country or region, which in turn may adversely affect securities held by the Fund. These circumstances have alsodecreased liquidity in some markets and may continue to do so. In addition, certain unanticipated events, such as natural disasters, terroristattacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund.

� Mid Size Company Risk. Securities of mid capitalization companies may be more vulnerable to adverse developments than those of largecompanies due to such companies’ limited product lines, limited markets and financial resources and dependence upon a relatively smallmanagement group. Securities of mid capitalization companies may be more volatile and less liquid than the stocks of larger companies, andmay be more affected than other types of stocks by the underperformance of a sector or during market downturns.

� Small Company Risk. Securities of small capitalization companies are subject to greater price volatility, lower trading volume and lessliquidity due to, among other things, such companies’ small size, limited product lines, limited access to financing sources and limitedmanagement depth. In addition, the frequency and volume of trading of such securities may be less than is typical of larger companies,making them subject to wider price fluctuations and such securities may be affected to a greater extent than other types of securities by theunderperformance of a sector during market downturns. In some cases, there could be difficulties in selling securities of small capitalizationcompanies at the desired time.

Performance

The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from yearto year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance withthose of broad-based securities market indices and Lipper peer groups (a universe of mutual funds with investment objectives similar to that ofthe Fund). The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown.

After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state andlocal taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns are not relevant toinvestors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or toshares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary.

Performance results include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had notbeen in place, the performance results for those periods would have been lower.

Effective February 11, 2014, the name of the Fund was changed from Ivy Pacific Opportunities Fund to Ivy Emerging Markets Equity Fund andits strategy was changed to reflect a concentration in emerging markets equity securities. Performance prior to such time reflects the Fund’s formerstrategy to invest in Pacific region equity securities, and the performance may have differed if the current strategy had been in place.


The Fund’s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Current performance may belower or higher. Please visit www.ivyfunds.com or call 800.777.6472 for the Fund’s updated performance.

Chart of Year-by-Year Returns

as of December 31 each year

-75

0

25

-25

50

75

-50

100

’04 ’05 ‘06 ’07 ‘08 ’09 ‘10 ‘11 ‘13‘12

34.48%

-50.75%

16.78% 9.40%

-22.79%

69.32%

12.15%16.79% 23.01%

42.43%

In the period shown in the chart, thehighest quarterly return was 39.62%(the second quarter of 2009) and thelowest quarterly return was -26.75%(the third quarter of 2011).

Average Annual Total Returns

as of December 31, 2013 1 Year 5 Years

10 Years(or Life of

Class)

Class A

Return Before Taxes 3.11% 12.04% 9.12%

Return After Taxes on Distributions 2.98% 11.84% 8.21%

Return After Taxes on Distributions and Sale of Fund Shares 1.92% 9.74% 7.51%

Class B


Class C


Class I (began on 04-02-2007)


Class R (began on 12-19-2012)

Return Before Taxes 9.28% N/A 10.69%

Class Y


Indexes 1 Year 5 Years 10 Years

MSCI AC Asia Ex Japan Index (reflects no deduction for fees, expenses or other taxes) 3.07% 16.51% 10.64%

MSCI Emerging Markets Index (reflects no deduction for fees, expenses or other taxes) (The Fund’s benchmarkchanged from MSCI AC Asia Ex Japan Index, effective February 2014. IICO believes that the MSCI EmergingMarkets Index provides a better benchmark for the Fund in light of the types of securities in which the Fundinvests.) -2.60% 14.79% 11.17%

Lipper Pacific Ex Japan Funds Universe Average (net of fees and expenses) 2.11% 16.40% 10.55%

Lipper Emerging Markets Funds Universe Average (net of fees and expenses) (It is anticipated that the Fund’s Lippercategory will change to the Lipper Emerging Markets Funds Universe Average, effective February 2014, due to thechange in the Fund’s name and strategy.) -0.14% 14.21% 10.34%

Investment Adviser

The Fund is managed by Ivy Investment Management Company (IICO).

Portfolio Manager

Frederick Jiang, Senior Vice President of IICO, has managed the Fund since February 2004.

Purchase and Sale of Fund Shares

The Fund’s shares are redeemable. You may purchase or redeem shares at the Fund’s NAV per share next calculated after your order is received inproper form, subject to any applicable sales charge, on any business day through your dealer or financial adviser (all share classes), by writing toWI Services Company, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217 (all share classes), or by telephone (Class A, B andC: 800.777.6472); fax (Class A, B and C: 800.532.2749; Class I and Y: 800.532.2784), or internet (www.ivyfunds.com) (Class A, B and C) if you

6 Prospectus Global/International Funds

have completed an Express Transaction Authorization Form. If your individual account is not maintained on the Fund’s shareholder servicingsystem, such as for Class R shares, please contact your selling broker-dealer, plan administrator or third-party record keeper to sell shares ofthe Fund. The Fund’s Class B shares are not available for purchase by new or existing investors. Class B shares are available for dividendreinvestment and exchanges.

The Fund’s initial and subsequent investment minimums generally are as follows, although the Fund and/or IFDI may reduce or waive theminimums in some cases:

For Class A and Class C:

To Open an Account $750

For accounts opened with Automatic Investment Service (AIS) $150

For accounts established through payroll deductions and salary deferrals Any amount

To Add to an Account Any amount

For AIS $50


Please check with your selling broker-dealer, plan administrator or third-party record keeper for information about minimum investment requirements.

Tax Information

The Fund’s distributions are generally taxable to you as ordinary income, long-term capital gain, or a combination of the two, unless you areinvesting through a tax-deferred arrangement, such as a 401(k) plan or an IRA.

Payments to Broker-Dealers and other Financial Intermediaries

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or IICO and/or its affiliates maypay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financialintermediary’s web site for more information.


Additional Information about Principal Investment Strategies, Other Investments and Risks

Ivy Emerging Markets Equity Fund: The Fund seeks to achieve its objective to provide growth of capital by investing, under normalcircumstances, at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities, primarily common stock, ofcompanies (i) from countries considered to be emerging market countries or (ii) that are economically linked to emerging market countries.Emerging market companies include, but are not limited to, those considered to be developing by the International Monetary Fund, the WorldBank, the International Finance Corporation or one of the leading global investment banks. IICO has broad discretion to identify other countriesthat it considers to qualify as emerging market countries. The majority of these countries are likely to be located in Asia, Latin America, the MiddleEast, Central and Eastern Europe, and Africa. Many companies have diverse operations, with products or services in foreign markets. Therefore,the Fund may have an indirect exposure to additional foreign markets through investments in these companies. There is no guarantee, however,that the Fund will achieve its objective.

Strong fundamental equity analysis is the basis of the investment process, with important input regarding economic, financial and political issuesfor each country and region, specifically focusing on issuers which may benefit from the rising consumption in emerging markets due to theexpanding middle class and/or the updating and expansion of infrastructure. Stock selection focuses on what IICO feels are companies withimpressive corporate management in sectors that IICO believes are best positioned for the current market environment. Key factors considered byIICO include whether the company possesses attractive long-term earnings growth potential, a strong debt/equity ratio, positive catalysts forchange, strong management, superior products and/or good corporate governance.

The Fund is not limited by market capitalization and may invest in large-, mid- and small-cap sized companies, which may include companiesthat are offered in initial public offerings (IPOs). The Fund may invest up to 20% of its net assets in equity securities of companies whosesecurities are located within the United States or other developed markets. The Fund may invest up to 20% of its net assets in debt securities. Attimes, the Fund may focus its investments in a single geographic region.

Subject to diversification limits, the Fund may invest up to 20% of its total assets in precious metals. Investments in physical commodities,including precious metals, may experience severe price fluctuations over short periods of time; as well, storage and trading costs may exceed thecustodial and/or brokerage costs associated with other investments.

The Fund expects to gain exposure to commodities, including precious metals, derivatives and commodity-linked instruments by investing in asubsidiary that would be organized in the Cayman Islands (the “Subsidiary”). Once organized, the Subsidiary would be wholly owned andcontrolled by the Fund. To the extent the Fund invests in the Subsidiary, it would be expected to provide the Fund with exposure to investmentreturns from commodities, derivatives and commodity-linked instruments within the limits of the Federal tax requirements applicable toinvestment companies, such as the Fund. The Subsidiary would be subject to the same general investment policies and restrictions as the Fund,except that unlike the Fund, the Subsidiary would be able to invest without limitation in commodities, derivatives and commodity-linkedinstruments and, to the extent the Subsidiary invests in derivative instruments, it would be able to use leveraged investment techniques.

The Fund may use a range of derivative instruments to gain exposure to certain individual securities that are not available for direct purchase, tohedge various market and event risks (such as interest rates, currency exchange rates, and broad or specific equity or fixed-income marketmovements), to manage foreign currency risk and as a means of generating additional income from written options. Derivative instruments thatmay be used include total return swaps, options, both written and purchased on individual equity securities, and forward contracts to eitherincrease or decrease exposure to a given currency.

The Fund may purchase shares of another investment company subject to the restrictions and limitations of the 1940 Act. The Fund may alsoperiodically invest in shares of ETFs to gain exposure to desired sectors or securities. The Fund may invest in private placements, non-publiccompanies and other restricted securities.

The Fund may from time to time take a temporary defensive position, and invest without limit in U.S. government securities, investment-gradedebt securities, and cash and cash equivalents such as commercial paper, short-term notes and other money market securities. However, by takinga temporary defensive position, the Fund may not achieve its investment objective.

Principal Risks. An investment in Ivy Emerging Markets Equity Fund is subject to various risks, including the following:

� Company Risk� Emerging Market Risk� Foreign Currency Risk� Foreign Securities Risk� Growth Stock Risk� Large Company Risk

� Liquidity Risk� Management Risk� Market Risk� Mid Size Company Risk� Small Company Risk

8 Prospectus

Non-Principal Risks. In addition to the Principal Risks identified above, an investment in Ivy Emerging Markets Equity Fund may be subject toother, non-principal risks, including the following:

� Commodities Risk� Derivatives Risk� Foreign Currency Exchange Transactions and Forward Foreign

Currency Contracts Risk� Foreign Exposure Risk

� Initial Public Offering Risk� Investment Company Securities Risk� Private Placements and Other Restricted Securities Risk� Regional Focus Risk� Subsidiary Investment Risk

A description of these risks is set forth in “Defining Risks” below. Additional risk information, as well as additional information on securities andother instruments in which the Fund may invest, is provided in the Statement of Additional Information (SAI).

Additional Information

The objective and investment policies of the Fund may be changed by the Board of Trustees (Board) without a vote of the Fund’s shareholders,unless a policy or restriction is otherwise described as a fundamental policy in the SAI. Shareholders, however, would be given prior writtennotice, typically at least 60 days in advance, of any material change in the Fund’s objective.

Because the Fund owns different types of investments, its performance will be affected by a variety of factors. The value of the Fund’s investmentsand the income it generates will vary from day to day, generally reflecting changes in interest rates, market conditions, and other company andeconomic news. Performance also will depend on the skill of IICO in selecting investments. As with any mutual fund, you could lose money onyour investment.

The Fund may invest in and use certain other types of securities and instruments in seeking to achieve its objective. Certain types of the Fund’sauthorized investments and strategies, such as derivative instruments, foreign securities, junk bonds and commodities, including precious metals,involve special risks. Depending on how much the Fund invests or uses these strategies, these special risks may become significant.

The Fund may actively trade securities in seeking to achieve its objective. Factors that can lead to active trading include market volatility, asignificant positive or negative development concerning a security, an attempt to maintain the Fund’s market capitalization target of the securitiesin the Fund’s portfolio, and the need to sell a security to meet redemption activity. Actively trading securities may increase transaction costs(which may reduce performance) and increase realized gains that the Fund must distribute, the distribution of which would increase your taxableincome.

The Fund generally seeks to be fully invested, except to the extent that it takes a temporary defensive position. In addition, at times, IICO mayinvest a portion of the Fund’s assets in cash or cash equivalents if IICO is unable to identify and acquire a sufficient number of securities that meetIICO’s selection criteria for implementing the Fund’s investment objective, strategies and policies.

You will find more information in the SAI about the Fund’s permitted investments and strategies, as well as the restrictions that apply to them.

A description of the Fund’s policies and procedures with respect to the disclosure of its securities holdings is available in the SAI.

Portfolio holdings can be found at www.ivyfunds.com. Alternatively, a complete schedule of portfolio holdings for the Fund for the first and thirdquarters of each fiscal year is filed with the Securities and Exchange Commission (SEC) on the Trust’s (as defined herein) Form N-Q. Theseholdings may be viewed in the following ways:

� On the SEC’s website at http://www.sec.gov.

� For review and copy at the SEC’s Public Reference Room in Washington, DC. Information on the operations of the Public Reference Roommay be obtained by calling 202.551.8090.

Defining Risks� Commodities Risk — Commodity trading, including trading in precious metals, is generally considered speculative because of the

significant potential for investment loss. Among the factors that could affect the value of the Fund’s investments in commodities are cyclicaleconomic conditions, sudden political events and adverse international monetary policies. Markets for commodities are likely to be volatileand there may be sharp price fluctuations even during periods when prices overall are rising. Also, the Fund may pay more to store andaccurately value its commodity holdings than it does with its other portfolio investments. Moreover, under the Federal tax law, the Fundmay not derive more than 10% of its annual gross income from gains resulting from selling commodities (and other non-qualifying income).Accordingly, the Fund may be required to hold its commodities or sell them at a loss, or to sell portfolio securities at a gain, when, forinvestment reasons, it would not otherwise do so.

� Company Risk — An individual company may perform differently than the overall market. This may be a result of specific factors such aschanges in corporate profitability due to the success or failure of specific products or management strategies, or it may be due to changes ininvestor perceptions regarding a company.

� Derivatives Risk — A derivative is a financial instrument whose value or return is “derived,” in some manner, from the price of anothersecurity, index, asset, rate or event. Derivatives are traded either on an organized exchange or over the counter (OTC). Futures contracts,

Prospectus 9

options and swaps are common types of derivatives that the Fund may occasionally use. A futures contract is an agreement to buy or sell asecurity or other instrument, index, or commodity at a specific price on a specific date. An option is the right to buy or sell a security orother instrument, index, or commodity at a specific price on or before a specific date. A swap is an agreement involving the exchange by theFund with another party of their respective commitments to pay or receive payments at specified dates on the basis of a specified amount.Swaps include options on commodities, caps, floors, collars and certain forward contracts. Some swaps currently are, and more in the futurewill be, centrally settled (“cleared”).

The use of derivatives presents several risks, including the risk that these instruments may change in value in a manner that adversely affects theFund’s NAV and the risk that fluctuations in the value of the derivatives may not correlate with securities markets or the underlying asset uponwhich the derivative’s value is based. Moreover, some derivatives are more sensitive to interest rate changes and market price fluctuations thanothers. To the extent the judgment of IICO as to certain anticipated price movements is incorrect, the risk of loss may be greater than if thederivative technique(s) had not been used. Derivatives also may be subject to counterparty risk, which includes the risk that the Fund may sustaina loss as a result of the insolvency or bankruptcy of, or other non-compliance by, another party to the transaction. Certain derivatives can createleverage, which may amplify or otherwise increase the Fund’s investment loss, possibly in an amount that could exceed the cost of that instrumentor, under certain circumstances, that could be unlimited.

The Fund may enter into credit default swap contracts for hedging or investment purposes. The Fund may either sell or buy credit protectionunder these contracts. Swap instruments may shift the Fund’s investment exposure from one type of investment to another. Swap agreements alsomay have a leverage component, and adverse changes in the value or level of the underlying asset, reference rate or index can result in gains orlosses that are substantially greater than the amount invested in the swap itself. Certain swaps have the potential for unlimited loss, regardless ofthe size of the initial investment. The use of swap agreements entails certain risks that may be different from, or possibly greater than, the risksassociated with investing directly in the referenced assets that underlie the swap agreement. Swaps are highly specialized instruments that requireinvestment techniques and risk analyses different from those associated with stocks, bonds, and other traditional investments.

Certain derivatives transactions are not entered into or traded on exchanges or cleared by clearing organizations. Instead, such derivatives may beentered into directly with the counterparty and may be traded only through financial institutions acting as market makers. OTC derivativestransactions can only be entered into with a willing counterparty. Where no such counterparty is available for a desired transaction, the Fund willbe unable to enter into the transaction. There also may be greater risk that no liquid secondary market in the trading of OTC derivatives will exist,in which case the Fund may be required to hold such instruments until exercise, expiration or maturity. Certain of the protections afforded toexchange participants will not be available to participants in OTC derivatives transactions. OTC derivatives transactions are not subject to theguarantee of an exchange or clearinghouse and, as a result, the Fund would bear greater risk of default by the counterparties to such transactions.When traded on foreign exchanges, derivatives may not be regulated as rigorously as in the United States, may not involve a clearing mechanismand related guarantees, and will be subject to the risk of governmental actions affecting trading in, or the prices of, foreign securities, currenciesand other instruments.

The counterparty risk for exchange-traded derivatives is generally less than for privately negotiated or OTC derivatives, since generally anexchange or clearinghouse, which is the issuer or counterparty to each exchange-traded instrument, provides a guarantee of performance. Forprivately negotiated instruments, there is no similar exchange or clearinghouse guarantee. In all such transactions, the Fund bears the risk that thecounterparty will default, and this could result in a loss of the expected benefit of the derivative transactions and possibly other losses to the Fund.The Fund will enter into transactions in derivative instruments only with counterparties that IICO reasonably believes are capable of performingunder the contract. IICO may seek to manage counterparty risk in an OTC derivative transaction by entering into bilateral collateraldocumentation, such as a Credit Support Annex and an accompanying Account Control Agreement, where it is market practice to do so for theparticular type of derivative; however, there is no guarantee that such documentation will have the intended effect.

The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) resulted in historic and comprehensivestatutory reform of derivatives, including the manner in which derivatives are designed, negotiated, reported, executed or cleared and regulated.

The Dodd-Frank Act requires the SEC and the Commodity Futures Trading Commission (CFTC) to establish regulations with respect to security-based swaps (e.g., derivatives based on an equity security) and swaps (e.g., derivatives based on a broad-based index, currency or commodity),respectively, and the markets in which these instruments trade. Generally, all futures will continue to be regulated by the CFTC, and all swapsand security-based swaps are subject to CFTC and SEC jurisdiction, respectively. However, security futures, which are futures on a single equitysecurity or a narrow-based securities index, and mixed swaps, which have elements of both a swap and a security-based swap, are subject to jointCFTC-SEC jurisdiction. In addition, with respect to security-based swap agreements, which include swaps on a broad-based securities index, theSEC asserts anti-fraud, anti-manipulation and insider trading prohibition jurisdiction, even though the CFTC has regulatory jurisdiction overtransactions involving such agreements.

Specifically, the SEC and CFTC are required to mandate by regulation under certain circumstances that certain derivatives, previously tradedOTC, be executed in a regulated, transparent market and settled by means of a central clearing house. The Dodd-Frank Act also requires theCFTC or the SEC, in consultation with banking regulators, to establish capital requirements as well as requirements for margin on unclearedderivatives in certain circumstances that will be clarified by rules that the CFTC or SEC will promulgate in the future. All derivatives are to bereported to a swap repository.

10 Prospectus

The extent and impact of the new regulations are not yet fully known and may not be for some time. Any such changes may, among variouspossible effects, increase the cost of entering into derivatives transactions, require more assets of the Fund to be used for collateral in support ofthose derivatives than is currently the case, or restrict the ability of the Fund to enter into certain types of derivative transactions, or could limit theFund’s ability to pursue its investment strategies.

Emerging Market Risk — Investments in countries with emerging economies or securities markets may carry greater risk than investments inmore developed countries. Political and economic structures in many such countries may be undergoing significant evolution and rapiddevelopment, and such countries may lack the social, political and economic stability characteristics of more developed countries. Certain of thosecountries may have failed in the past to recognize private property rights and have nationalized or expropriated the assets of private companies. Asa result, the risks described above, including the risks of nationalization or expropriation of assets, may be heightened. In addition, unanticipatedpolitical or social developments may affect the value of the Fund’s investments in those countries and the availability of additional investments inthose countries. The small size and inexperience of the securities markets in such countries and the limited volume of trading in securities in thosecountries may make the Fund’s investments in such countries illiquid and more volatile than investments in more developed countries, and theFund may be required to establish special custodial or other arrangements before making certain investments in those countries. The repatriationof capital with regard to investments made in certain securities or countries may be restricted during certain times or even indefinitely. There maybe little financial or accounting information available with respect to issuers located in certain countries, and it may be difficult as a result to assessthe value or prospects of an investment in such issuers.

Foreign Currency Risk — Foreign securities may be denominated in foreign currencies. The value of the Fund’s investments, as measured inU.S. dollars, may be unfavorably affected by changes in foreign currency exchange rates and exchange control regulations.

Foreign Currency Exchange Transactions and Forward Foreign Currency Contracts Risk — The Fund may use foreign currency exchangetransactions and forward foreign currency contracts to hedge certain market risks (such as interest rates, currency exchange rates and broad orspecific market movement). These investment techniques involve a number of risks, including the possibility of default by the counterparty to thetransaction and, to the extent IICO’s judgment as to certain market movements is incorrect, the risk of losses that are greater than if theinvestment technique had not been used. For example, there may be an imperfect correlation between the Fund’s portfolio holdings of securitiesdenominated in a particular currency and the forward contracts entered into by the Fund. An imperfect correlation of this type may prevent theFund from achieving the intended hedge or expose the Fund to the risk of currency exchange loss. These investment techniques also tend to limitany potential gain that might result from an increase in the value of the hedged position.

Foreign Exposure Risk — The securities of many companies may have significant exposure to foreign markets as a result of the company’soperations, products or services in those foreign markets. As a result, a company’s domicile and/or the markets in which the company’s securitiestrade may not be fully reflective of its sources of revenue. Such securities would be subject to some of the same risks as an investment in foreignsecurities, including the risk that political and economic events unique to a country or region will adversely affect those markets in which thecompany’s products or services are sold.

Foreign Securities Risk — Investing in foreign securities involves a number of economic, financial, legal and political considerations that are notassociated with the U.S. markets and that could affect the Fund’s performance unfavorably, depending upon prevailing conditions at any giventime. For example, the securities markets of many foreign countries may be smaller, less liquid and subject to greater price volatility than those inthe United States. Foreign investing also may involve brokerage costs and tax considerations that are not usually present in the U.S. markets.

Other factors that can affect the value of the Fund’s foreign investments include the comparatively weak supervision and regulation by someforeign governments of securities exchanges, brokers and issuers, and the fact that many foreign companies may not be subject to uniform and/orstringent accounting, auditing and financial reporting standards. It also may be difficult to obtain reliable information about the securities andbusiness operations of certain foreign issuers. Settlement of portfolio transactions also may be delayed due to local restrictions or communicationproblems, which can cause the Fund to miss attractive investment opportunities or impair its ability to dispose of securities in a timely fashion(resulting in a loss if the value of the securities subsequently declines).

To the extent that the Fund invests in sovereign debt instruments, the Fund is subject to the risk that a government or agency issuing the debtmay be unable to pay interest and/or repay principal due to cash flow problems, insufficient foreign currency reserves or political concerns. Insuch instance, the Fund may have limited recourse against the issuing government or agency. Financial markets have recently experienced, andmay continue to experience, increased volatility due to the uncertainty surrounding the sovereign debt of certain European countries.

Growth Stock Risk — Growth stocks are stocks of companies believed to have above-average potential for growth in revenue and earnings. Pricesof growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may notperform as well as value stocks or the stock market in general.

Initial Public Offering Risk — Investments in IPOs can have a significant positive impact on the Fund’s performance; however, the positive effectof investments in IPOs may not be sustainable because of a number of factors. For example, the Fund may not be able to buy shares in someIPOs, or may be able to buy only a small number of shares. Also, the Fund may not be able to buy the shares at the commencement of theoffering, and the general availability and performance of IPOs are dependent on market psychology and economic conditions. To the extent thatIPOs have a significant impact on the Fund’s performance, this may not be able to be replicated in the future. The relative performance impact ofIPOs on the Fund is also likely to decline as the Fund grows.

Prospectus 11

Investment Company Security Risk — The risks of investment in other investment companies typically reflect the risks of the types of securitiesin which the investment companies invest. As a shareholder in an investment company, the Fund would bear its pro rata share of that investmentcompany’s expenses, which could result in the duplication of certain fees, including management and administrative fees.

The Fund may invest in ETFs as a means of tracking the performance of a designated stock index while maintaining liquidity or to gain exposureto precious metals and other commodities without purchasing them directly. Since many ETFs are a type of investment company, the Fund’spurchases of shares of such ETFs are subject to the Fund’s investment restrictions regarding investments in other investment companies.

ETFs have a market price that reflects a specified fraction of the value of the designated index or underlying basket of commodities orcommodities futures and are exchange-traded. As with other equity securities transactions, brokers charge a commission in connection with thepurchase and sale of shares of ETFs and closed-end funds. In addition, an asset management fee is charged in connection with the management ofthe ETF’s or the closed-end fund’s portfolio (which is in addition to the investment management fee paid by the Fund).

Investments in an ETF or a closed-end fund generally present the same primary risks as investments in conventional funds, which are notexchange-traded. The price of an ETF or a closed-end fund can fluctuate, and the Fund could lose money investing in an ETF. In addition, ETFsare subject to the following risks that do not apply to conventional funds: (i) the market price of an ETF’s or a closed-end fund’s shares may tradeat a premium or discount to its NAV; (ii) an active trading market for an ETF’s or a closed-end fund’s shares may not develop or be maintained; or(iii) trading of an ETF’s or a closed-end fund’s shares may be halted if the listing exchange officials determine such action to be appropriate, theshares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) haltsstock trading generally.

Large Company Risk — Large capitalization companies may go in and out of favor based on market and economic conditions. Largecapitalization companies may be unable to respond quickly to new competitive challenges, such as changes in technology, and also may not beable to attain the high growth rate of successful smaller companies, especially during extended periods of economic expansion. Although thesecurities of larger companies may be less volatile than those of companies with smaller market capitalizations, returns on investments insecurities of large capitalization companies could trail the returns on investments in securities of smaller companies.

Liquidity Risk — Generally, a security is liquid if the Fund is able to sell the security at a fair price within a reasonable time. Liquidity is generallyrelated to the market trading volume for a particular security. Investments in smaller companies, foreign companies, companies in emergingmarkets or certain instruments such as derivatives are subject to a variety of risks, including potential lack of liquidity. Illiquid securities may tradeat a discount from comparable, more liquid investments, and may be subject to wider fluctuations in market value. Less liquid securities are moredifficult to dispose of at their recorded values and are subject to increased spreads and volatility. Also, the Fund may not be able to dispose ofilliquid securities when that would be beneficial at a favorable time or price.

Management Risk — IICO applies the Fund’s investment strategies and selects securities for the Fund in seeking to achieve the Fund’sinvestment objective. Securities selected by the Fund may not perform as well as the securities held by other mutual funds with investmentobjectives that are similar to the investment objective of the Fund. In general, investment decisions made by IICO may not produce theanticipated returns, may cause the Fund’s shares to lose value or may cause the Fund to perform less favorably than other mutual funds withinvestment objectives similar to the investment objective of the Fund.

Market Risk — All securities and other investments may be subject to adverse trends in the markets. Securities are subject to price movementsdue to changes in general economic conditions, the level of prevailing interest rates or investor perceptions of the market. The value of assets orincome from the Fund’s investments may be adversely affected by inflation or changes in the market’s expectations regarding inflation. Inaddition, prices are affected by the outlook for overall corporate profitability. In the municipal securities markets, securities backed by current oranticipated revenues from a specific project or specific asset may be adversely impacted by declines in revenue collection from the project or asset.Market prices of equity securities are generally more volatile than debt securities. This may cause a security to be worth less than the priceoriginally paid for it, or less than it was worth at an earlier time. Market risk may affect a single issuer or the market as a whole. As a result, aportfolio of such securities may underperform the market as a whole. In addition, certain unanticipated events, such as natural disasters, terroristattacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund.

The financial crisis in the U.S. and global economies over the past several years, including the European sovereign debt crisis, has resulted, andmay continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign. Liquidity in some marketshas decreased and credit has become scarcer worldwide. Recent regulatory changes, including the Dodd-Frank Act and the introduction of newinternational capital and liquidity requirements under the Basel III Accords (“Basel III”), may cause lending activity within the financial servicessector to be constrained for several years as Basel III rules phase in and rules and regulations are promulgated and interpreted under the Dodd-Frank Act. These market conditions may continue or deteriorate further and may add significantly to the risk of short-term volatility in the Fund.In response to the crisis, the U.S. and other governments and the Federal Reserve and certain foreign central banks have taken a number of stepsin an attempt to support financial markets. Withdrawal of this support, failure of efforts in response to the crisis, or investor perception that suchefforts are not succeeding, could adversely impact the value and liquidity of certain securities. Because the situation is widespread and largelyunprecedented, it may be unusually difficult to identify both risks and opportunities using past models of the interplay of market forces, or toproject the duration of these market conditions. The severity or duration of these conditions may also be affected by policy changes made bygovernments or quasi-governmental organizations. Changes in market conditions will not have the same impact on all types of securities.

12 Prospectus

In addition, since 2010, the risks of investing in certain foreign government debt have increased dramatically as a result of the ongoing Europeandebt crisis, which began in Greece and spread throughout various other European countries. These debt crises and the ongoing efforts ofgovernments around the world to address these debt crises have also resulted in increased volatility and uncertainty in the global securitiesmarkets and it is impossible to predict the effects of these or similar events in the future on the Fund, though it is possible that these or similarevents could have a significant adverse impact on the value and risk profile of the Fund.

Currently, the amount of fixed income securities held across all mutual funds is near historic highs, while the ability or willingness of broker-dealer firms and other institutional investors to absorb all of the fixed income securities held by funds is unclear. If investors move out of fixedincome securities on a large scale, this combination of factors may result in heightened volatility and reduced liquidity.

Mid Size Company Risk — Securities of mid capitalization companies may be more vulnerable to adverse developments than those of largecompanies due to such companies’ limited product lines, limited markets and financial resources and dependence upon a relatively smallmanagement group. Securities of mid capitalization companies may be more volatile and less liquid than the stocks of larger companies, and maybe more affected than other types of stocks by the underperformance of a sector or during market downturns.

Private Placements and Other Restricted Securities Risk — Restricted securities, which include private placements, are securities that aresubject to legal or contractual restrictions on resale, and there can be no assurance of a ready market for resale. The Fund could find it difficult tosell privately placed securities and other restricted securities when IICO believes it is desirable to do so, especially under adverse market oreconomic conditions or in the event of adverse changes in the financial condition of the issuer, and the prices realized could be less than thoseoriginally paid or less than the fair market value. At times, it also may be difficult to determine the fair value of such securities for purposes ofcomputing the NAV of the Fund.

Regional Focus Risk — Focusing on a single geographic region involves increased currency, political, regulatory and other risks. To the extentthe Fund concentrates its investments in a particular region, market swings in that region will have a greater effect on Fund performance than theywould in a more geographically diversified equity fund.

Small Company Risk — Securities of small capitalization companies are subject to greater price volatility, lower trading volume and less liquiditydue to, among other things, such companies’ small size, limited product lines, limited access to financing sources and limited management depth.In addition, the frequency and volume of trading of such securities may be less than is typical of larger companies, making them subject to widerprice fluctuations, and such securities may be more affected than other types of securities by the underperformance of a sector or during marketdownturns. In some cases, there could be difficulties in selling securities of small capitalization companies at the desired time.

Subsidiary Investment Risk — By investing in its Subsidiary, the Fund would be exposed to the risks associated with its Subsidiary’s investments.The Fund’s Subsidiary would not be registered under the 1940 Act, and would not be subject to all of the investor protections of the 1940 Act.Thus, the Fund, as an investor in its Subsidiary, would not have all of the protections offered to investors in registered investment companies.However, because the Fund would wholly own and control its Subsidiary, and the Fund and its Subsidiary would be managed by IICO, it isunlikely that the Fund’s Subsidiary would take action contrary to the interests of the Fund or the Fund’s shareholders. In addition, changes in thelaws of the United States and/or the Cayman Islands, under which the Fund and its Subsidiary are, or would be, organized, respectively, couldresult in the inability of the Fund and/or its Subsidiary to operate as intended and could negatively affect the Fund and its shareholders. Althoughunder the federal tax law, the Fund may not earn more than 10% of its annual gross income from gains resulting from selling commodities (andother non-qualifying income), the Fund expects to receive an opinion of counsel, which is not binding on the Internal Revenue Service or thecourts, that income the Fund receives from its Subsidiary should constitute qualifying income.

Prospectus 13

The Management of the Fund

INVESTMENT ADVISERThe Fund is managed by Ivy Investment Management Company (IICO), subject to the authority of the Board of Trustees (Board) of Ivy Funds.IICO is a wholly-owned subsidiary of Waddell & Reed Financial, Inc., a publicly held company located at 6300 Lamar Avenue, P.O. Box 29217,Shawnee Mission, Kansas 66201-9217. IICO is an SEC-registered investment adviser with approximately $77.4 billion in assets undermanagement as of December 31, 2013 and serves as the investment manager and as such provides investment advice to and supervises theinvestments for each of the funds within Ivy Funds, which, prior to April 1, 2010, was comprised of funds from both Ivy Funds, Inc. (a Marylandcorporation) and Ivy Funds (a Massachusetts business trust) that IICO managed dating back to December 2002. On April 1, 2010, Ivy Funds, aDelaware statutory trust (Trust), succeeded to both of those entities. IICO is located at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission,Kansas 66201-9217.

MANAGEMENT FEELike all mutual funds, the Fund pays fees related to its daily operations. Expenses paid out of the Fund’s assets are reflected in its share price ordividends; they are neither billed directly to shareholders nor deducted from shareholder accounts.

The Fund pays a management fee to IICO for providing investment advice and supervising its investments. The Fund also pays other expenses,which are explained in the SAI.

The management fee, accrued daily, is payable by the Fund at the annual rates of:

� Ivy Emerging Markets Equity Fund: 1.00% of net assets up to $500 million, 0.85% of net assets over $500 million and up to $1 billion,0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assetsover $3 billion.

The Fund’s net management fee as a percent of the Fund’s average net assets for the fiscal year ended March 31, 2013 was 0.96%.

A discussion regarding the basis of approval by the Board of the advisory contract of Ivy Emerging Markets Equity Fund is available in the Fund’sSemiannual Report to Shareholders dated September 30, 2013.

PORTFOLIO MANAGEMENTIvy Emerging Markets Equity Fund: Frederick Jiang is primarily responsible for the day-to-day management of Ivy Emerging Markets EquityFund. Mr. Jiang has held his Fund responsibilities since February 2004, and had been assistant portfolio manager for the Fund since July 2003.He is Senior Vice President of IICO and Vice President of the Trust. From July 1999 to July 2003, he served as an investment analyst for IICO.Mr. Jiang holds a BA degree in Economics from the Central University of Finance and Economics, Beijing, China, and earned an MBA degree inFinance from New York University. Mr. Jiang is a Chartered Financial Analyst.

Additional information regarding the portfolio manager, including information about the portfolio manager’s compensation, other accountsmanaged by the portfolio manager and the portfolio manager’s ownership of Fund securities, is included in the SAI.

Other members of IICO’s investment management department provide input on market outlook, economic conditions, investment research andother considerations relating to the Fund’s investments.

Your AccountCHOOSING A SHARE CLASSEach class of shares offered in this Prospectus has its own sales charge, if any, and expense structure. The decision as to which class of shares ofthe Fund is best suited to your needs depends on a number of factors that you should discuss with your financial advisor. Some factors toconsider are how much you plan to invest and how long you plan to hold your investment. If you are investing a substantial amount and plan tohold your shares for a long time, Class A shares may be the most appropriate for you. If you are investing a lesser amount over a shorter term, youmay want to consider Class C shares (if investing for less than five years). Class C shares are not available for investments of $1 million or more.Class I shares, Class R shares and Class Y shares are described below. Class B shares are not available for purchase by new or existing investors.Class B shares are available for dividend reinvestment and exchanges.

Since your objectives may change over time, you may want to consider another class when you buy additional Fund shares. All of your futureinvestments in the Fund will be made in the class you select when you open your account, unless you inform the Fund otherwise, in writing,when you make a future investment.

14 Prospectus

General Comparison of Class A, Class B and Class C Shares

Class A Class B2 Class C

Initial sales charge N/A No initial sales charge

1.00% deferred sales charge1 Deferred sales charge on shares you sell within sixyears after purchase

A 1% deferred sales charge on shares you sellwithin 12 months after purchase

Maximum distribution and service (12b-1)fees of 0.25%



Converts to Class A shares eight years from themonth in which the shares were purchased, thusreducing future annual expenses

Does not convert to Class A shares, so annualexpenses do not decrease

For an investment of $1 million or more, onlyClass A shares are available

N/A Shareholders investing $1 million or more may notpurchase Class C shares. Such requests topurchase Class C shares will automatically betreated as a request to purchase Class A shares

1 A 1% CDSC is only imposed on Class A shares purchased at NAV for $1 million or more that are subsequently redeemed within 12 months of purchase.2 The Fund’s Class B shares are not available for purchase by new or existing investors. Class B shares are available for dividend reinvestment and exchanges.

The Trust has adopted a Distribution and Service Plan (Plan) pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended(the “1940 Act”), for each of its Class A, Class B, Class C, Class E, Class R and Class Y shares. The Plan permits the Fund to pay marketing andother fees to support the sale and distribution of each Class of shares as well as the services provided to shareholders by their financial advisors orfinancial intermediaries. Under the Plan, the Fund may pay IFDI a fee of up to 0.25%, on an annual basis, of the average daily net assets of theClass A shares. This fee is to compensate IFDI for, either directly or through third parties, distributing the Fund’s Class A shares, providingpersonal service to Class A shareholders and/or maintaining Class A shareholder accounts. Under the Plan, the Fund may pay IFDI, on an annualbasis, a maximum service fee of 0.25% of the average daily net assets of Class B and Class C shares to compensate IFDI for, either directly orthrough third parties, providing personal service to shareholders of those classes and/or maintaining shareholder accounts for those classes and amaximum distribution fee of up to 0.75% of the average daily net assets of Class B and Class C shares to compensate IFDI for, either directly orthrough third parties, distributing shares of those classes. No payment of the distribution fee will be made, and no deferred sales charge will bepaid, to IFDI by the Fund if, and to the extent that, the aggregate distribution fees paid by the Fund and the deferred sales charges received byIFDI with respect to the Fund’s Class B or Class C shares would exceed the maximum amount of such charges that IFDI is permitted to receiveunder the rules of the Financial Industry Regulatory Authority, Inc. (FINRA) as then in effect. Under the Plan, a Fund may pay IFDI a fee of0.25%, on an annual basis, of the average daily net assets of the Class E shares. This fee is to compensate IFDI for, either directly or through thirdparties, distributing the Fund’s Class E shares, providing personal service to Class E shareholders and/or maintaining Class E shareholderaccounts. The amounts shall be payable to IFDI daily or at such other intervals as the Board may determine. Under the Plan, the Fund isauthorized to pay IFDI an amount not to exceed 0.50%, on an annual basis, of the average daily net assets of the Fund’s Class R shares tocompensate IFDI for, either directly or through third parties, distributing the Class R shares of the Fund, providing personal service to Class Rshareholders and/or encouraging and fostering the maintenance of shareholder accounts of the Class R shares of the Fund. The amounts shall bepayable to IFDI daily or at such other intervals as the Board may determine. Under the Plan, the Fund may pay IFDI a fee of up to 0.25%, on anannual 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 the Fund, providing service to Class Y shareholders and/or maintaining Class Y shareholder accounts. Class Ishares are not covered under the Plan. Class E shares are not currently offered.

Since these fees are paid out of the Fund’s assets or income on an ongoing basis, over time they will increase the cost and reduce the return of aninvestment. The higher fees for Class B and Class C shares may result in a lower NAV than Class A shares and may cost you more over time thanpaying the initial sales charge for Class A shares. All or a portion of these fees may be paid to your financial advisor.

Class A SharesClass A shares are subject to an initial sales charge when you buy them, based on the amount of your investment, according to the table below.As noted, Class A shares under the Plan pay an annual 12b-1 fee of up to 0.25% of average Class A net assets. The ongoing expenses of Class Ashares are lower than those for Class B or Class C shares and typically higher than those for Class Y shares or Class I shares.

Prospectus 15

Calculation of Sales Charges on Class A SharesIvy Emerging Markets Equity Fund

Size of Purchase

Sales Chargeas Percent of

Offering Price1

Sales Chargeas Approx.Percent ofAmountInvested

Reallowanceto Dealersas Percentof Offering

Price

under $100,000 5.75% 6.10% 5.00%

$100,000 to less than $200,000 4.75 4.99 4.00

$200,000 to less than $300,000 3.50 3.63 2.80

$300,000 to less than $500,000 2.50 2.56 2.00

$500,000 to less than $1,000,000 1.50 1.52 1.20

$1,000,000 and over2 0.00 0.00 see below

1 Due to the rounding of the NAV and the offering price of the Fund to two decimal places, the actual sales charge percentage calculated on a particular purchasemay be higher or lower than the percentage stated above.

2 No sales charge is payable at the time of purchase on investments of $1 million or more, although for such investments the Fund will impose a CDSC of 1.00% oncertain redemptions made within 12 months of the purchase. The CDSC is assessed on an amount equal to the lesser of the then current market value or the costof the shares being redeemed. Accordingly, no sales charge is imposed on increases in NAV above the initial purchase price.

IFDI may pay broker-dealers up to 1.00% on investments made in Class A shares with no initial sales charge.

IFDI or its affiliates may pay additional compensation from its own resources to broker-dealers based upon the value of shares of the Fund ownedby the broker-dealer for its own account or for its customers, including compensation for shares of the Fund purchased by customers of suchbroker-dealers without payment of a sales charge. Please see “Additional Compensation to Intermediaries” for more information.

Sales Charge Reductions

Lower sales charges on the purchase of Class A shares are available by:� Rights of Accumulation: combining the value of additional purchases of shares of any of the funds in Ivy Funds, InvestEd Portfolios and/or

Waddell & Reed Advisors Funds with the NAV of Class A, Class B, Class C or Class E shares already held in your account or in an accounteligible for grouping with your account (see “Account Grouping” below). To be entitled to Rights of Accumulation, you must inform WISCthat you are entitled to a reduced sales charge and provide WISC with the name and number of the existing account(s) with which yourpurchase may be combined. The reduced sales charge is applicable only to the new purchase. It is not retroactive to shares already held inyour account or in an account eligible for grouping with your account. Your accumulated holdings will be calculated as the higher of (a) thecurrent value of your existing holdings or (b) the amount you invested (including reinvested dividends and capital gain distributions, butexcluding capital appreciation) less any withdrawals.

� Letter of Intent: grouping all purchases of the funds referenced above, made during a thirteen-month period pursuant to a Letter of Intent(LOI). By signing an LOI, which is available from WISC, you indicate an intention to invest, over a thirteen-month period, a dollar amountsufficient to qualify for a reduced sales charge. In determining the amount which you must invest in order to qualify for a reduced salescharge under the LOI, your Class A, Class B, Class C or Class E shares already held in the same account in which the purchase is beingmade or in any account eligible for grouping with that account, as described in “Account Grouping” below, will be included. For purposesof fulfilling the dollar amount required to be invested pursuant to your LOI, all such investments must be initiated prior to the expiration ofthe thirteen-month period, and will qualify under your LOI, even if the assets are received after the expiration of the thirteen-month period(such as a rollover or transfer from another institution). You must notify WISC if a rollover or transfer from another institution is pendingupon the termination of the thirteen-month LOI period. In any event, such assets must be received by WISC no later than ninety days afterthe initiation date of the rollover or transfer. You may need to provide appropriate documentation to WISC to evidence the initiation date ofthe rollover or transfer. Purchases made during the thirty (30) calendar days prior to receipt by WISC of a properly completed LOI will beconsidered for purposes of determining whether a shareholder has satisfied the LOI. If IFDI reimburses the sales charge for purchases priorto receipt by WISC of an LOI, the thirteen-month LOI period will be deemed to have commenced on the date of the earliest purchase withinthe 30 calendar days prior to receipt by WISC of the LOI.

When an LOI is established, shares valued at five percent (5%) of the intended investment are held in escrow. Escrowed shares will bereleased from escrow once the terms of the LOI are satisfied. If the amount invested during the thirteen-month LOI period is less thanthe amount specified by the LOI, the LOI will terminate and the applicable sales charge specified in this Prospectus will be charged as ifthe LOI had not been executed, and such sales charge will be collected by the redemption of escrowed shares equal in value to suchsales charge. Any redemption you request during the thirteen-month LOI period will be taken first from non-escrowed shares. Anyrequest you make that will require redemption of escrowed shares will result in termination of the LOI, and the applicable sales chargespecified in this Prospectus will be collected by the redemption of escrowed shares. Any escrowed shares not needed to pay theapplicable sales charge will be available for redemption by you.

16 Prospectus

Purchases of shares of any of the funds within Ivy Funds, InvestEd Portfolios and/or Waddell & Reed Advisors Funds will be consideredfor purposes of meeting the terms of an LOI, except as set forth herein. Investments in mutual funds other than those described in thepreceding sentence and in insurance products offered by Waddell & Reed will not be considered for purposes of meeting the terms of anLOI.

� Account Grouping: grouping purchases by certain related persons. For the purpose of taking advantage of the lower sales charges availablefor large purchases, a purchase of Class A shares in any account that you own may be grouped with the current account value of purchasedClass A, Class B, Class C and/or Class E shares in any other account that you may own, or in accounts of household members of yourimmediate family (spouse and children under 21). Please note that grouping is allowed only for a) accounts of the owner that have the sameaddress or Social Security or other taxpayer identification number, and b) accounts of immediate family members living (or maintaining apermanent address) in the same household as the owner. Please review the SAI for additional information regarding Account Grouping. Forpurposes of account grouping, an individual’s legally-recognized domestic partner who has the same address may be treated as his or herspouse.

With respect to purchases under retirement plans:

1. All purchases of Class A shares made under an employee benefit plan described in Section 401 of the Internal Revenue Code of 1986, asamended (the Code) (Qualified Plan), that is maintained by an employer and all plans of any one employer or affiliated employers will alsobe grouped. All Qualified Plans of an employer who is a franchisor and those of its franchisee(s) may also be grouped.

2. All purchases of Class A shares made under a simplified employee pension plan (SEP IRA), Savings Incentive Match Plan for Employees(SIMPLE IRA Plan), or similar arrangement adopted by an employer or affiliated employers may be grouped, if grouping is elected by theemployer when the plan is established. Alternatively, the employer may elect that purchases made by individual employees under such planalso be grouped with other accounts of the individual employees. If evidence of either election is not received by IFDI, purchases will begrouped at the plan level.

3. All purchases of Class A shares made by you or your spouse for your or your spouse’s IRAs, salary reduction plan accounts underSection 457 of the Code, or Code Section 403(b) tax-sheltered accounts may be grouped, as well as your or your spouse’s Keogh planaccounts, provided that you and your spouse are the only participants in the Keogh plan.

In order for an eligible purchase to be grouped, you must advise IFDI at the time the purchase is made that it is eligible for grouping and identifythe accounts with which it may be grouped.

Shares of Ivy Money Market Fund or Waddell & Reed Advisors Cash Management are not eligible for either Rights of Accumulation or Letter ofIntent privileges, unless such shares have been acquired by exchange for Class A shares on which a sales charge was paid, or as a dividend orother distribution on such acquired shares.

If you are investing $1 million or more, either as a lump sum or through one of the sales charge reduction features described above, you may beeligible to buy Class A shares without a sales charge. However, you may be charged a CDSC of 1.00% on any shares purchased without a salescharge that you sell within the first 12 months of owning them. The CDSC is assessed on an amount equal to the lesser of the then current marketvalue or the cost of the shares being redeemed. Accordingly, no sales charge is imposed on increases in NAV above the initial purchase price. ThisCDSC may be waived under certain circumstances, as noted in this Prospectus. Your financial advisor or a Client Services representative cananswer your questions and help you determine if you are eligible.

Sales Charge Waivers for Certain Investors

Class A shares may be purchased at NAV by:� Shareholders investing through certain investment advisers and broker-dealers in brokerage or advisory accounts, wrap accounts and asset

allocation programs that charge asset-based fees

� Current or retired Trustees of the Trust (or retired directors or trustees of any entity to which the Trust or one of the Ivy Funds is thesuccessor), directors of affiliated companies of the Trust, or of any affiliated entity of IFDI, current and certain retired employees of IFDI andits affiliates, current and certain retired financial advisors of Waddell & Reed and its affiliates and the spouse, children, parents, children’sspouses and spouse’s parents of each (including purchases into certain retirement plans and certain trusts for these individuals), and theemployees of financial advisors of Waddell & Reed

� Trustees, officers, directors or employees of Minnesota Life or any affiliated entity of Minnesota Life, Securian/CRI Financial Advisors, theirrespective spouses, children, parents, children’s spouses and spouse’s parents of each, including purchases into certain retirement plans andcertain trusts for these individuals

� Employees, and their immediate family members (spouse, children, parents, children’s spouses and spouse’s parents), associated withunaffiliated registered investment advisers with which IICO has entered into sub-advisory agreements

� Participants in a 401(k) plan or a 457 plan having 100 or more eligible employees, and the shares are held in individual plan participantaccounts on the Fund’s records

Prospectus 17

� Shareholders/participants (other than those shareholders/participants whose shares are held in an omnibus account) reinvesting into anyaccount the proceeds of redemptions of eligible retirement accounts invested in Class I or Y shares

� Participants in a 401(a) plan having 100 or more eligible employees, and the shares are held in individual plan participant accounts on theFund’s records and are segregated from any other retirement plan assets

� Participants in a 401(a) plan or 457 plan that invest in Ivy Funds through a third party platform or agreement

� Shareholders (other than those shareholders whose shares are held in an omnibus account) reinvesting into any other account they own, theproceeds from mandatory redemptions of shares made to satisfy required minimum distributions after age 70 1/2 from a Qualified Plan, anIRA, a Keogh plan or a trust or custodial account under Section 457(b) or 403(b)(7) of the Code

� Shareholders/participants reinvesting into any other account they own, the proceeds from mandatory redemptions of shares made to satisfyrequired minimum distributions after age 70 1/2 from a retirement plan where Fiduciary Trust Company of New Hampshire is custodian,provided such reinvestment is made within 60 calendar days of receipt of the required minimum distribution

� Shareholders investing through direct transfers from the Waddell & Reed Advisors Retirement Plan, offered and distributed by NationwideInvestment Services Corporation through Nationwide Trust Company, FSB, or from the Waddell & Reed Advisors Express Plan, Select Plan,and Advantage Plan offered and distributed by Securian Retirement Services, a business unit of Minnesota Life Insurance Company

� Sales representatives, and their immediate family members (spouse, children, parents, children’s spouses and spouse’s parents), associatedwith unaffiliated third party broker-dealers with which IFDI has entered into selling agreements

� Sales representatives and employees, and their immediate family members (spouse, children, parents, children’s spouses and spouse’sparents) associated with Legend Group Holdings LLC and its subsidiaries

� Clients investing via a Managed Allocation Portfolio (MAP) or Strategic Portfolio Allocation (SPA) program available through Waddell &Reed

� Shareholders (other than shareholders whose shares are held in an omnibus account) purchasing into accounts that owned shares of anyFund within the Ivy Funds prior to December 16, 2002, and who were eligible to purchase Class A shares at NAV as of such date.

For purposes of determining eligibility for sales at NAV, an individual’s legally-recognized domestic partner who has the same address may betreated as his or her spouse. The Fund reserves the right to modify the policies above at any time.

Sales Charge Waivers for Certain Transactions

Class A shares may be purchased at NAV through:� Exchange of Class A shares of any fund within Ivy Funds or shares of any fund within InvestEd Portfolios and, for clients of Waddell &

Reed or Legend Equities Corporation (Legend), Class A shares of any fund within Waddell & Reed Advisors Funds if (i) a sales charge waspreviously paid on those shares, (ii) the shares were received in exchange for shares on which a sales charge was paid or (iii) the shares wereacquired from reinvestment of dividends and other distributions paid on such shares

� Reinvestment once each calendar year of all or part of the proceeds of redemptions of your Class A shares into the same Fund and accountfrom which the shares were redeemed, if the reinvestment is equal to or greater than $200 and is made within 60 calendar days of theFund’s receipt of your redemption request. Purchases made pursuant to the Automatic Investment Service (AIS), payroll deduction orregularly scheduled contributions made by employers on behalf of their employees are not eligible for purchases at NAV under this policy.Purchases within the investment advisory products offered by Waddell & Reed are not eligible for purchases at NAV under this policy.

� Payments of Principal and Interest on Loans made pursuant to a 401(a) plan, (i) if such loans are permitted by the plan and the planinvests in shares of the same Fund and (ii) a sales charge was previously paid on those shares.

Information about the purchase of Fund shares, applicable sales charges and sales charge reductions and waivers is also available, free of charge, atwww.ivyfunds.com, including hyperlinks to facilitate access to this information. You will also find more information in the SAI about sales chargereductions and waivers.

Contingent Deferred Sales ChargeA CDSC may be assessed against your redemption amount of Class B, Class C or certain Class A shares and paid to IFDI, as further describedbelow. The purpose of the CDSC is to compensate IFDI for the costs incurred by it in connection with the sale of the Fund’s Class B or Class Cshares or certain Class A shares. IFDI paid 4.00% of the amount invested to third-party broker-dealers who sold Class B shares and pays 1.00% ofthe amount invested to third-party broker-dealers who sell Class C shares. For certain clients of non-affiliated third party broker-dealers andunder certain circumstances, IFDI will pay the full Class C distribution and service fee to such broker-dealers beginning immediately afterpurchase in lieu of paying the up-front compensation described above of 1.00% of the amount invested.

The CDSC will not be imposed on shares representing payment of dividends or other distributions and will be assessed on an amount equal tothe lesser of the then current market value or the cost of the shares being redeemed. Accordingly, no CDSC will be imposed on increases in NAVabove the initial purchase price. In order to determine the applicable CDSC, if any, all purchases are totaled and considered to have been made onthe first day of the month in which the purchase was made.

18 Prospectus

To keep your CDSC as low as possible, each time you place a request to redeem shares, the Fund assumes that a redemption is made first ofshares not subject to a CDSC (including shares that represent reinvested dividends and other distributions), and then of shares that represent thelowest sales charge.

Unless instructed otherwise, when requested to redeem a specific dollar amount, the Fund will redeem additional shares of the applicable classthat are equal in value to the CDSC. For example, should you request a $1,000 redemption and the applicable CDSC is $27, the Fund willredeem shares having an aggregate NAV of $1,027, absent different instructions. The shares redeemed for payment of the CDSC are not subject toa CDSC.

Class B SharesThe Fund’s Class B shares are not available for purchase by new or existing investors. Class B shares are available for dividend reinvestment andexchanges.

Class B shares were not subject to an initial sales charge when you bought them. However, you may pay a CDSC if you sell your Class B shareswithin six years of their purchase, based on the table below. As noted earlier, Class B shares pay a maximum annual 12b-1 service fee of 0.25% ofaverage net assets and a maximum annual distribution fee of 0.75% of average net assets. Over time, these fees will increase the cost of yourinvestment and may cost you more than if you had purchased Class A shares. Class B shares, and any reinvested dividends and other distributionspaid on such shares, automatically convert to Class A shares, on a monthly basis, eight years after the end of the month in which the shares werepurchased. Such conversion will be on the basis of the relative NAVs per share, without the imposition of any sales load, fee or other charge. Theconversion from Class B shares to Class A shares is not considered a taxable event for Federal income tax purposes.

The Fund will redeem your Class B shares at their NAV next calculated after receipt of a written request for redemption in good order, subject tothe CDSC identified below.

CDSC on Shares Sold Within Year As % of Amount Subject to Charge

1 5.0%

2 4.0%

3 3.0%

4 3.0%

5 2.0%

6 1.0%

7+ 0.0%

In the table, a year is a 12-month period. In order to determine the applicable CDSC, if any, all purchases are totaled and considered to have beenmade on the first day of the month in which the purchase was made. For example, if a shareholder opened an account on August 17, 2013, thenredeems all Class B shares on August 15, 2014, the shareholder will pay a CDSC of 4.00%, the rate applicable to redemptions made within thesecond year of purchase.

Class C SharesClass C shares are not subject to an initial sales charge when you buy them, but if you sell your Class C shares within 12 months after purchase,you may pay a 1.00% CDSC, which will be applied to the lesser of amount invested or redemption value of the shares redeemed. As noted above,Class C shares pay a maximum annual 12b-1 service fee of 0.25% of average net assets and a maximum annual distribution fee of 0.75% ofaverage net assets. Over time, those fees will increase the cost of your investment and may cost you more than if you had purchased Class Ashares. Class C shares do not convert to any other class; therefore, if you anticipate holding the shares for five years or longer, Class C shares maynot be appropriate.

Shareholders who are investing $1 million through a sales charge reduction feature, including a shareholder eligible to purchase Class A shares atno sales charge due to the breakpoints available on a purchase of $1 million or more of Class A shares, or through Rights of Accumulation, aLetter of Intent or grouping purchases by certain related persons may not purchase Class C shares. In such case, requests to purchase Class Cshares will automatically be treated as a request to purchase Class A shares. The Fund will not apply the limitation to Class C share purchasesmade by shareholders whose shares are held in an omnibus account on any of the Fund’s records, and it will be the selling broker-dealer’sresponsibility to apply the limitation for such purchases.

The CDSC for Class B or Class C shares and for Class A shares that are subject to a CDSC will not apply in the followingcircumstances:� redemptions that result from the death of all registered account owners or, for an account in an employer-sponsored plan, the death of a

participant. The death must have occurred after the account was established with IFDI

� redemptions that result from the disability of the account owner. The disability must have occurred after the account was established withIFDI

Prospectus 19

� redemptions of shares made to satisfy required minimum distributions after age 70 1/2 from a Qualified Plan, an IRA, a Keogh plan or a trustor custodial account under Section 457(b) or 403(b)(7) of the Code, as tax-free returns of excess contributions, or that otherwise result fromthe death or disability of the employee, as well as in connection with redemptions by any tax-exempt employee benefit plan for which, as aresult of subsequent law or legislation, the continuation of its investment would be improper

� redemptions of shares purchased by current or retired Trustees of the Trust (or retired directors or trustees of any entity to which the Trustor one of the Ivy Funds is the successor), directors of affiliated companies of the Trust, or of any affiliated entity of IFDI, current and certainretired employees of IFDI and its affiliates, current and certain retired financial advisors of Waddell & Reed and its affiliates, and the spouse,children, parents, children’s spouses and spouse’s parents (including redemptions from certain retirement plans and certain trusts for theseindividuals), and the employees of financial advisors of Waddell & Reed

� redemptions of shares made pursuant to a shareholder’s participation in the systematic withdrawal service offered by the Fund, subject tothe limitations on the service as further disclosed in the SAI (the service and this exclusion from the CDSC do not apply to a one-timewithdrawal)

� redemptions the proceeds of which are reinvested within 60 calendar days in shares of the same class of the Fund as that redeemed

� for Class C shares, redemptions made by shareholders that have purchased shares of the Fund through certain group plans that have sellingagreements with IFDI and that are administered by a third party and/or for which brokers not affiliated with IFDI provide administrative orrecordkeeping services

� for clients of non-affiliated third party broker-dealers, redemptions of Class C shares for which the selling broker-dealer was not paid an up-front commission by IFDI

� for clients of non-affiliated third party broker-dealers, redemptions of Class A shares for which the selling broker-dealer was not paid an up-front commission by IFDI

� redemptions, the proceeds of which are sent directly by the Fund to an insurance company or its agent for investment in any of the fundswithin Waddell & Reed Advisors Funds and/or Ivy Funds, as directed by the redeeming shareholder, through retirement plan accounts heldin the Waddell & Reed Advisors Retirement Plan, offered and distributed by Nationwide Investment Services Corporation throughNationwide Trust Company, FSB, or from the Waddell & Reed Advisors Express Plan, Select Plan and Advantage Plan offered anddistributed by Securian Retirement Services, a business unit of Minnesota Life Insurance Company

� the exercise of certain exchange privileges

� redemptions effected pursuant to the Fund’s right to liquidate a shareholder’s account if the aggregate NAV of the shares is less than $750

� redemptions effected by another registered investment company by virtue of a merger or other reorganization with the Fund

These exceptions may be modified or eliminated by the Fund at any time without prior notice to shareholders, except with respect to redemptionseffected pursuant to the Fund’s right to liquidate a shareholder’s shares, which may require certain notice.

Class I SharesClass I shares are sold without any front-end sales load or contingent deferred sales charges. Class I shares do not pay an annual 12b-1distribution and/or service fee. Class I shares are only available for purchase by:

� fund of funds

� participants of employee benefit plans established under Section 403(b) or Section 457 of the Code, or qualified under Section 401, of theCode, including 401(k) plans, when the shares are held in an omnibus account on the Fund’s records, and an unaffiliated third partyprovides administrative and/or other support services to the plan

� certain financial intermediaries that charge their customers transaction fees with respect to their customers’ investments in the Fund

� endowments, foundations, corporations and high net worth individuals using a trust or custodial platform

� investors participating in ‘wrap fee’ or asset allocation programs or other fee-based arrangements sponsored by nonaffiliated broker-dealersand other financial institutions that have entered into agreements with IFDI

� participants of the Waddell & Reed Financial, Inc. Retirement Plans

The Fund reserves the right to modify or waive eligibility requirements at any time.

Plan sponsors, plan fiduciaries and other financial intermediaries may choose to impose qualification requirements for plans that differ from theFund’s share class eligibility standards. In certain cases this could result in the selection of a share class with higher service and distribution-relatedfees than those of another class available under the Fund’s share class eligibility criteria. The Fund and IFDI are not responsible for, and have nocontrol over, the decision of any plan sponsor, plan fiduciary or financial intermediary to impose such differing requirements. Please consult withyour plan sponsor, plan fiduciary or financial intermediary for more information about available share classes as not all share classes may be madeavailable.

20 Prospectus

Class R SharesClass R shares are sold without any front-end sales load or contingent deferred sales charges.

Class R shares are generally only available to employee benefit plans, including, but not limited to 401(k) plans, 457 plans, employer sponsored403(b) plans, profit sharing and money purchase pension plans, defined benefit plans and non-qualified deferred compensation plans. Class Rshares are also generally sold through, and held by, unaffiliated third parties whose platforms provide administrative, distributive and/or othersupport services to the plan investing in the Class R shares. Class R shares are generally available where plan level or omnibus accounts (and notindividual participant accounts) are shown on the books of the Fund. Class R shares are generally not available to retail non-retirement accounts,traditional and Roth IRAs, Coverdell Education Savings accounts, owner-only 401(k)s, SEP IRAs, SARSEPs, SIMPLE IRAs, individual 403(b)plans and 529 accounts.

Plan sponsors, plan fiduciaries and other financial intermediaries may choose to impose qualification requirements for plans that differ from theFund’s share class eligibility standards. In certain cases this could result in the selection of a share class with higher service and distribution-relatedfees than otherwise would have been charged. The Fund and IFDI are not responsible for, and have no control over, the decision of any plansponsor, plan fiduciary or financial intermediary to impose such differing requirements. Please consult with your plan sponsor, plan fiduciary orfinancial intermediary for more information about available share classes as not all share classes may be made available.

Class Y SharesClass Y shares are not subject to a sales charge. Class Y shares do however pay an annual 12b-1 distribution and/or service fee of up to 0.25% ofaverage net assets. Class Y shares are only available for purchase by:

� participants of employee benefit plans established under Section 403(b) or Section 457 of the Code, or qualified under Section 401 of theCode, including 401(k) plans for which an unaffiliated third party provides administrative, distribution and/or other support services to theplan

� shareholders investing in fee-based brokerage or advisory accounts, wrap accounts and asset allocation programs that charge asset-basedfees, through certain investment advisers and broker-dealers, including banks, trust institutions, investment fund administrators and otherthird parties investing for their own accounts or for the accounts of their customers, and for which entity an unaffiliated third party providesadministrative, distribution and/or other support services

� government entities or authorities and corporations whose investment within the first 12 months after initial investment is $10 million ormore and to which entity an unaffiliated third party provides certain administrative, distribution and/or other support services

The Fund reserves the right to modify or waive eligibility requirements at any time.

Plan sponsors, plan fiduciaries and other financial intermediaries may choose to impose qualification requirements for plans that differ from theFund’s share class eligibility standards. In certain cases this could result in the selection of a share class with higher service and distribution-relatedfees than those of another class available under the Fund’s share class eligibility criteria. The Fund and IFDI are not responsible for, and have nocontrol over, the decision of any plan sponsor, plan fiduciary or financial intermediary to impose such differing requirements or to select aparticular class. Please consult with your plan sponsor, plan fiduciary or financial intermediary for more information about available share classesas not all share classes may be made available under your plan.

Additional Compensation to IntermediariesYour financial advisor and the financial intermediary with which your advisor is affiliated typically will receive compensation when you buy and/or hold Fund shares. The source of that compensation may include the sales load, if any, that you pay as an investor; and/or the 12b-1 fee, ifapplicable, paid by the class of shares of the Fund. As well, IFDI may have agreements with financial intermediaries which provide for one ormore of the following: fees paid by IFDI to such intermediaries based on a percentage of assets, sales and/or a fixed amount per shareholderaccount; networking and/or sub-accounting fees paid by the Fund; and/or other payments by IFDI and/or its affiliates, from their own resources.

The amount and type of compensation that your financial advisor or intermediary receives will vary based upon the share class you buy, the valueof those shares and the compensation practices of the intermediary. Compensation to the intermediary generally is based on the value of shares ofthe Fund owned by the intermediary for its own account or for its clients and may also be based on the gross and/or net sales of the Fund sharesattributable to the intermediary. That compensation recognizes the distribution, administrative, promotional and/or other services provided by theintermediary, and may be required by the intermediary in order for funds within Ivy Funds to be available for sale by the intermediary. The rate ofcompensation depends upon various factors, including but not limited to the intermediary’s established policies and prevailing practices indifferent segments of the financial services industry. In addition, an intermediary may maintain omnibus accounts or similar arrangements withthe Fund for consolidated holdings of Fund shares by its clients, and may receive payments from IFDI or its affiliates, or the Fund, for providingrelated recordkeeping and other services.

IFDI may also compensate an intermediary and/or financial advisor for IFDI’s participation in various activities sponsored and/or arranged by theintermediary, including but not limited to programs that facilitate educating financial advisors and/or their clients about various topics, includingthe Fund. IFDI may also pay, or reimburse, an intermediary for certain other costs relating to the marketing of the Fund. The rate ofcompensation depends upon various factors, including but not limited to the nature of the activity and the intermediary’s established policies.

Prospectus 21

Compensation arrangements such as those described above are undertaken, among other reasons, to help secure and maintain appropriateavailability, visibility and competitiveness for the Fund, such that it may be widely available and have the capacity to grow and potentially gaineconomies of scale for Fund shareholders. Please consult the SAI for additional information regarding compensation arrangements withintermediaries.

Potential Conflicts of InterestThe Distributor of the Fund, IFDI, is a corporate affiliate of Waddell & Reed. Waddell & Reed offers shares of the Fund through a distributionagreement with IFDI. The following paragraphs disclose certain potential conflicts of interest in connection with the offering of the Fund byWaddell & Reed.

Waddell & Reed is a retail broker-dealer and is the principal underwriter and distributor of the funds within Waddell & Reed Advisors Funds andcertain other mutual funds. Waddell & Reed financial advisors sell primarily shares of the funds within Ivy Funds and Waddell & Reed AdvisorsFunds (Fund Families). IICO and WRIMCO (Managers) manage the assets of the respective Fund Families. Companies affiliated with Waddell &Reed (“Service Affiliates”) also serve as shareholder servicing agent and accounting services agent for the Fund Families and as custodian forcertain retirement plan accounts available through Waddell & Reed and other third parties. Waddell & Reed, the Managers and the ServiceAffiliates are subsidiaries of Waddell & Reed Financial, Inc.

Waddell & Reed financial advisors are not required to sell only shares of funds in the Fund Families, have no sales quotas with respect to theFund and receive the same percentage rate of compensation for all shares of mutual funds they sell, including shares of the funds in the FundFamilies. It is possible, however, for Waddell & Reed and its affiliated companies to receive more total revenue from the sale of shares of the fundsin the Fund Families than from the sale of shares of other mutual funds that are not affiliated with Waddell & Reed (Externally Managed Funds).This is because the Managers earn investment advisory fees for providing investment management services to the funds in the Fund Families.These fees are assessed daily on the net assets held by the funds in the Fund Families and are paid to the Managers out of fund assets. In addition,the Service Affiliates receive fees for the services they provide to the funds and/or shareholders in the Fund Families.

Increased sales of shares of the Fund Families generally result in greater revenues, and greater profits, to Waddell & Reed, the Managers and theService Affiliates, since payments to Waddell & Reed, the Managers and the Service Affiliates, increase as more assets are invested in the FundFamilies and/or more fund accounts are established. Waddell & Reed employee compensation (including management and certain sales forceleader compensation), financial advisor compensation and operating goals at all levels are tied to Waddell & Reed’s overall profitability. Therefore,Waddell & Reed management, sales leaders and employees generally spend more time and resources promoting the sale of shares of the funds inthe Fund Families rather than Externally Managed Funds. This results in more training and product support for Waddell & Reed financialadvisors to assist them with sales of shares of the funds in the Fund Families. Ultimately, this will typically influence the financial advisor’sdecision to recommend the Fund Families even though they may have access to Externally Managed Funds that may have superior performanceto and/or lower fund expenses than the funds in the Fund Families.

Waddell & Reed also offers financial planning services as a registered investment adviser. Waddell & Reed financial advisors typically encouragenew clients to purchase a financial plan for a fee. If the client elects to implement the recommendations produced as part of the financial plan, it islikely that the financial advisor will recommend the purchase of shares of funds in the Fund Families, though the client is not obligated topurchase such shares through Waddell & Reed. For more detailed information on the financial planning services offered by Waddell & Reedfinancial advisors, including fees and investment alternatives, clients should obtain from their financial advisor or Waddell & Reed, and read, acopy of Waddell & Reed’s Form ADV Disclosure Brochure.

PortabilityThe Fund’s shares may be purchased and serviced only through broker-dealers and other financial intermediaries (Financial Intermediaries) thathave entered into selling agreements with IFDI. Waddell & Reed, an affiliate of IFDI, is one such Financial Intermediary that is authorized to sellthe Fund and service Fund accounts. If you elect to work with a Waddell & Reed financial advisor it is likely that the financial advisor willrecommend the purchase of shares of the Ivy Funds. If you decide to terminate your relationship with your Waddell & Reed financial advisor (orany other financial advisor you may work with) or if they decide to transfer their license to another Financial Intermediary, you should considerthat you will only be able to transfer your Fund shares to another Financial Intermediary if that Financial Intermediary has a selling agreementwith IFDI. Not all Financial Intermediaries have such selling agreements and the selling agreements may typically be terminated without notice toyou. If you select a Financial Intermediary that has no selling agreement with IFDI or whose selling agreement is terminated after you transferyour shares, you will either have to hold your shares directly with the Ivy Funds or sell your shares and transfer the proceeds to another FinancialIntermediary, which may cause you to experience adverse tax consequences.

WAYS TO SET UP YOUR ACCOUNT (FOR CLASS A, CLASS B, AND CLASS C SHARES)The different ways to set up (register) your account are listed below.

Individual or Joint TenantsFor your general investment needs

Individual accounts are owned by one person. Joint accounts have two or more owners (tenants).

22 Prospectus

Business or OrganizationFor investment needs of corporations, associations, partnerships, institutions or other groups

Retirement and other Tax-Advantaged Savings PlansTo shelter your savings from income taxes

Retirement and other tax-advantaged savings plans allow individuals to shelter investment income and capital gains from current income taxes. Inaddition, contributions to these accounts (other than Roth IRAs and Coverdell education savings accounts) may be tax-deductible. A majority ofthese types of savings plans carry up to an $18 annual fee (which fee may be increased at the discretion of IFDI), subject to certain waivers. Pleasecontact your tax advisor for further information.

� Individual Retirement Accounts (IRAs) allow eligible individuals under age 70 1/2, with earned income, to invest up to the maximumpermitted contribution for that year (Annual Dollar Limit). For taxable years beginning in 2014, the Annual Dollar Limit is $5,500, whichamount may be indexed for inflation in $500 increments thereafter. For individuals who have attained age 50 by the last day of the taxableyear for which a contribution is made, the Annual Dollar Limit is increased to include a “catch-up” contribution. The maximum annualcatch-up contribution is $1,000. The maximum annual contribution for an individual and his or her spouse is the sum of their separateAnnual Dollar Limits or, if less, the couple’s combined earned income for the taxable year. An individual’s maximum IRA contribution for ataxable year is reduced by the amount of any contributions that individual makes to a Roth IRA for that year.

� IRA Rollovers allow assets deposited from eligible employer-sponsored retirement plans to remain tax-sheltered, and any earnings grow tax-deferred until distributed in cash.

� Roth IRAs allow eligible individuals to make nondeductible contributions up to the Annual Dollar Limit per year. The maximum annualcontribution for an individual and his or her spouse is the sum of their separate Annual Dollar Limits or, if less, the couple’s combinedearned income for the taxable year. A Roth IRA contribution of a working individual and his or her spouse is also subject to an annualadjusted gross income (AGI) limitation. An individual’s maximum Roth IRA contribution for a taxable year is reduced by the amount of anycontributions that individual makes to a traditional IRA for that year. Withdrawals of earnings may be tax-free if the account is at least fiveyears old and certain other requirements are met.

In addition, certain distributions from traditional IRAs, SEP IRAs, SIMPLE IRAs (if more than two years old) and eligible employer-sponsored retirement plans may be rolled over to a Roth IRA, and any of the IRA plan types may be converted to a Roth IRA; theearnings, deductible and pre-tax contribution portions of the rollover distributions and conversions are, however, subject to Federalincome tax.

� Simplified Employee Pension Plans (SEP IRAs) provide small business owners or those with self-employed income (and their eligibleemployees) with many of the same advantages and contribution limits as a profit-sharing plan but with fewer administrative requirements.

� Savings Incentive Match Plans for Employees IRA (SIMPLE IRA Plans) can be established by employers with 100 or fewer employees tocontribute to, and allow their employees to contribute a portion of their wages on a pre-tax basis to, retirement accounts. This plan-typegenerally involves fewer administrative requirements than 401(k) or other Qualified Plans.

� Owner-only Keogh Plans allow self-employed individuals and their spouses, or partners of general partnerships and their spouses, to maketax-deductible contributions for themselves of up to 100% of their adjusted annual earned income, with a maximum of $52,000 for abusiness’s taxable year that begins in 2014.

� Exclusive(k)® Plans allow self-employed individuals and their spouses (who work for and receive wages from the business), or partners ofgeneral partnerships and their spouses (who work for and receive wages from the business), to make tax-deductible contributions forthemselves, including deferrals, of up to 100% of their adjusted annual earned income, with a maximum of $52,000 for a business’s taxableyear that begins in 2014. A Roth 401(k) contribution option also may be available within a qualified 401(k) Plan. Individuals who haveattained age 50 by the last day of the taxable year for which a contribution is made also may make a “catch-up” contribution up to $5,500.

� Multi-participant 401(k) Plans allow employees of eligible employers to set aside tax-deferred income for retirement purposes, and in somecases, employers will match their contribution dollar-for-dollar up to certain limits. A Roth 401(k) contribution option also may be availablewithin a qualified 401(k) Plan.

� Other Pension and Profit-Sharing Plans allow corporations, labor unions, governments, or other organizations of all sizes to make tax-deductible contributions to employees.

� 403(b) Custodial Accounts are available to certain employees of educational institutions, churches and Code Section 501(c)(3) (that is, tax-exempt) organizations. For certain grandfathered accounts, a Roth 403(b) contribution option also may be available.

� 457(b) Plans allow employees of state and local governments and certain tax-exempt organizations to contribute a portion of theircompensation on a tax-deferred basis.

� Coverdell Education Savings Accounts are established for the benefit of a minor, with nondeductible contributions up to $2,000 pertaxable year, and permit tax-free withdrawals to pay for certain qualified education expenses of the beneficiary. Special rules apply where thebeneficiary is a special needs person.

Prospectus 23

Gifts or Transfers to a MinorTo invest for a child’s education or other future needs

These custodial accounts provide a way to give money to a child and obtain tax benefits. An individual can give up to $14,000 in 2014 per childfree of Federal transfer tax consequences. Depending on state laws, you can set up a custodial account under the Uniform Transfers to Minors Act(UTMA) or the Uniform Gifts to Minors Act (UGMA).

TrustFor money being invested by a trust

The trust must be established before an account can be opened.

Pricing of Fund SharesThe price to buy a share of the Fund, called the offering price, is calculated every business day. The Fund is open for business every day the NewYork Stock Exchange (NYSE) is open. The Fund normally calculates its NAV as of the close of business of the NYSE, normally 4 p.m. Easterntime, except that an option or futures contract held by the Fund may be priced at the close of the regular session of any other securities exchangeon which that instrument is traded. As noted in this Prospectus, the Fund may invest in securities listed on foreign exchanges, or otherwise tradedin a foreign market, which may trade on Saturdays or on U.S. national business holidays when the NYSE is closed. Consequently, the NAV of theFund’s shares may be significantly affected on days when the Fund does not price its shares and when you are not able to purchase or redeem theFund’s shares. The offering price of a share (the price to buy one share of a particular class) is the next NAV calculated per share of that class plusthe applicable sales charge (for Class A shares).

In the calculation of the Fund’s NAV:

� The securities in the Fund’s portfolio that are traded on an exchange are ordinarily valued at the last sale price on each day prior to the timeof valuation as reported by the principal securities exchange on which the securities are traded or, if no sale is recorded, the average of thelast bid and asked prices.

� Stocks that are traded over-the-counter are valued using the NASDAQ Official Closing Price (NOCP), as determined by NASDAQ, or,lacking an NOCP, the last current reported sales price as of the time of valuation on NASDAQ or, lacking any current reported sales onNASDAQ, at the time of valuation at the average of the last bid and asked prices.

� Bonds (including foreign bonds), convertible bonds, municipal bonds, U.S. government securities, mortgage-backed securities and swapagreements are ordinarily valued according to prices quoted by an independent pricing service.

� Short-term debt securities are valued at amortized cost, which approximates market value.

� Precious metals are valued at the last traded spot price for the appropriate metal immediately prior to the time of valuation.

� Other investment assets for which market prices are unavailable or are not reflective of current market value are valued at their fair value byor at the direction of the Board, as discussed below.

When the Fund believes a reported market price for a security does not reflect the amount the Fund would receive on a current sale of thatsecurity, the Fund may substitute for the market price a fair-value determination made according to procedures approved by the Board. The Fundalso may use these procedures to value certain types of illiquid securities. In addition, fair value pricing generally will be used by the Fund if theexchange on which a portfolio security is traded closes early or if trading in a particular security is halted during the day and does not resumeprior to the time the Fund’s NAV is calculated.

The Fund also may use these methods to value securities that trade in a foreign market if a significant event that appears likely to materially affectthe value of foreign investments or foreign currency exchange rates occurs between the time that foreign market closes and the time the NYSEcloses. Since the Fund may invest a significant portion of its assets in foreign securities (and derivatives related to foreign securities), it also may besusceptible to a time zone arbitrage strategy in which shareholders attempt to take advantage of fund share prices that may not reflectdevelopments in foreign securities or derivatives markets that occurred after the close of such market but prior to the pricing of Fund shares. Inthat case, such securities investments may be valued at their fair values as determined according to the procedures approved by the Board.Significant events include, but are not limited to, (1) events impacting a single issuer, (2) governmental actions that affect securities in one sector,country or region, (3) natural disasters or armed conflicts affecting a country or region, and (4) significant U.S. or foreign market fluctuations.

The Fund has retained a third-party pricing service (the Service) to assist in fair valuing foreign securities and foreign derivatives (collectively,Foreign Securities), if any, held in the Fund’s portfolios. The Service conducts a screening process to indicate the degree of confidence, based onhistorical data, that the closing price in the principal market where a Foreign Security trades is not the current market value as of the close of theNYSE. For Foreign Securities where WISC, in accordance with guidelines adopted by the Board, believes, at the approved degree of confidence,that the price is not reflective of current market price, WISC may use the indication of fair value from the Service to determine the fair value of theForeign Securities. The Service, the methodology or the degree of certainty may change from time to time. The Board regularly reviews, and WISCregularly monitors and reports to the Board, the Service’s pricing of the Fund’s Foreign Securities, as applicable.

24 Prospectus

Fair valuation has the effect of updating security prices to reflect market value based on, among other things, the recognition of a significant event —thus potentially alleviating arbitrage opportunities with respect to Fund shares. Another effect of fair valuation is that the Fund’s NAV will be subject,in part, to the judgment of the Board or its designee instead of being determined directly by market prices. When fair value pricing is applied, theprices of securities used by the Fund to calculate its NAV may differ from quoted or published prices for the same securities, and therefore, ashareholder purchasing or redeeming shares on a particular day might pay or receive more or less than would be the case if a security were valueddifferently. The use of fair value pricing may also affect all shareholders in that if redemption proceeds or other payments based on the valuation ofFund assets were paid out differently due to fair value pricing, all shareholders will be impacted incrementally. There is no assurance, however, thatfair value pricing will more accurately reflect the value of a security on a particular day than the market price of such security on that day or that it willprevent or alleviate the impact of market timing activities. For a description of market timing activities, please see “Market Timing Policy.”

BUYING SHARESYou may buy shares of the Fund through third parties that have entered into selling arrangements with IFDI. Contact any authorized investmentdealer for more information. To open your account you must complete and sign an application. Your financial advisor can help you with anyquestions you might have. The transfer agent for the Fund will not accept account applications unless submitted by an entity with which IFDImaintains a current selling agreement.

IFDI generally will not accept new account applications to establish an account with a non-U.S. address (APO/FPO addresses are acceptable).

If your individual account is not maintained on the Fund’s shareholder servicing system, please contact your selling broker-dealer, planadministrator or third party record keeper to purchase shares of the Fund.

Broker-dealers that perform account transactions for their clients by participating through the National Securities Clearing Corporation (NSCC)are responsible for obtaining their clients’ permission to perform those transactions, and are responsible to their clients for whose account sharesof the Fund are purchased if the broker-dealer performs any transaction erroneously or improperly.

When you sign your account application, you will be asked to certify that your Social Security or other taxpayer identification number is correctand whether you are subject to backup withholding for failing to report income to the IRS.

To add to your account by mail: Make your check payable to Ivy Funds Distributor, Inc. Mail the check to WISC at the address below, alongwith the detachable form that accompanies the confirmation of a prior purchase or your quarterly statement or with a letter stating your accountnumber, the account registration, the Fund and the class of shares that you wish to purchase. Mail to:

WI Services CompanyP.O. Box 29217

Shawnee Mission, Kansas66201-9217

To add to your account by wire purchase: Instruct your bank to wire the amount you wish to invest, along with the account number andregistration, to UMB Bank, n.a., ABA Number 101000695, DDA Number 98-0000-797-8.

By telephone or internet: To purchase Class A or Class C shares of the Fund by Automated Clearing House (ACH) via telephone or internetaccess, you must have an existing account number and you must have previously established the telephone or internet method to purchasethrough a completed Express Transaction Authorization Form (separately or within your new account application). Please call 800.777.6472 toreport your purchase, or fax the information to 800.532.2749. For internet transactions, you may not execute trades greater than $25,000 perFund per day. If you need to establish an account for Class I or Class Y shares, you may call 800.532.2783 to obtain an account application. Youmay then mail a completed application to WISC at the above address, or fax it to 800.532.2784.

By Automatic Investment Service: You can authorize having funds electronically drawn each month from your bank account through ElectronicFunds Transfer (EFT) and invested as a purchase of shares into your Fund account. Complete the appropriate sections of the Account Applicationto establish the Automatic Investment Service (AIS).

When you place an order to buy shares, your order, if accepted, will be processed at the next offering price calculated after your order is receivedin proper form by the Fund or its authorized agent. Note the following:

� All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. Neither cash nor post-dated checks will beaccepted.

� If you buy shares by check or ACH, and then sell those shares by any method other than by exchange to another fund within Ivy Funds,InvestEd Portfolios and/or Waddell & Reed Advisors Funds, the payment may be delayed for up to ten days from the date of purchase toensure that your previous investment has cleared.

� You may purchase shares of the Fund indirectly through certain broker-dealers, banks and other third parties, some of which may chargeyou a fee. These firms may have additional requirements regarding the purchase of Fund shares. If you purchase shares of the Fund fromcertain broker-dealers, banks or other authorized third parties that perform account transactions for their clients through the NSCC, theFund will be deemed to have received your purchase order when that third party (or its designee) has received your order in proper form.Your order will receive the offering price next calculated after the order has been received in proper form by the authorized third party (or

Prospectus 25

its designee). Therefore, if your order is received in proper form by that firm before 4:00 p.m. Eastern time on a day in which the NYSE isopen, you should generally receive that day’s offering price. If your order is received in proper form by that firm after 4:00 p.m. Easterntime, you should generally receive the offering price next calculated on the following business day. If the firm does not perform accounttransactions systematically through the NSCC and has not entered into an agreement permitting it to aggregate orders it receives prior to4:00 p.m. Eastern time and transmit such orders to the Fund on or before the following business day, you will receive the offering price nextcalculated after the order has been received in proper form by the Fund. You should consult that firm to determine the time by which itmust receive your order for you to purchase shares of the Fund at that day’s price.

� Broker-dealers that perform account transactions for their clients through the NSCC are responsible for obtaining their clients’ permission toperform those transactions, and are responsible to their clients who are shareholders of the Fund if the broker-dealer performs anytransaction erroneously or improperly. Such broker-dealers have independent agreements with IFDI, and are compensated for performingaccount transactions for their clients.

When you sign your account application, you will be asked to certify that your Social Security number or other taxpayer identification number iscorrect and whether you are subject to backup withholding for failing to report income to the Internal Revenue Service. See “Your Account —Distributions and Taxes — Taxes.”

The transfer agent for the Fund reserves the right to reject any purchase orders, including purchases by exchange, and it and the Fund reserve theright to discontinue offering Fund shares for purchase.

Minimum InvestmentsThe Fund’s initial and subsequent investment minimums generally are as follows, although the Fund and/or IFDI may reduce or waive theminimums in some cases.

For Class A and Class C:

To Open an Account $750

For certain exchanges See below1

For accounts opened with AIS $150*

For accounts established through payroll deductions and salary deferrals Any amount

To Add to an Account Any amount

For certain exchanges $50

For AIS $50


Please check with your selling broker-dealer, plan administrator or third-party record keeper for information about minimum investmentrequirements.

* An account may be opened with no initial investment and AIS set up on the account if the account is pending a Transfer of Assets from another investmentcompany/retirement account custodian.

1 Minimum investment for an exchange is either (i) a single $750 exchange, or (ii) the combination of a $150 exchange in combination with either (a) a$50 per month AIS or (b) a $50 per month systematic exchange from another fund.

For clients of Morgan Stanley Smith Barney (MSSB) who purchase their shares through certain fee-based advisory accounts sponsored by MSSB,the minimum initial and subsequent investment requirements for Class A shares are waived.

For Class A and Class C shares, if your account balance falls below $750 at the close of business on September 26, 2014, and on the Friday priorto the last week of September each year thereafter, your account will be assessed an account fee of $20. For Class A and Class C shares, any Fundaccount with a balance below $750 will not be assessed the $20 fee if the Fund account meets one of the following exceptions: (i) the Fundaccount has an active AIS and the Fund account was opened less than 12 months prior to the date of the assessment; (ii) the Fund account isadministered under a Profit Sharing, Money Purchase, Defined Benefit Plan, or a payroll deduction plan (IRA, Roth IRA, SEP IRA, SIMPLE IRA,401(k), 403(b), and 457 plans) and the Fund account was opened less than 12 months prior to the date of the assessment; or (iii) the Fundaccount is held on a third-party platform. For purposes of the fee assessment, your Fund account balance will be calculated as the higher of (a) thecurrent value of your existing holdings or (b) the amount you invested (including reinvested dividends and capital gain distributions, butexcluding capital appreciation) less any withdrawals.

The Fund’s Class B shares are not available for purchase by new or existing investors. Class B shares are available for dividend reinvestment andexchanges.

Adding to Your AccountSubject to the minimums described above, you, or anyone, can make additional investments of any amount at any time.

If you purchase shares of the Fund from certain broker-dealers, banks or other authorized third parties, additional purchases may be madethrough those firms.

26 Prospectus

SELLING SHARESYou can arrange to take money out of your Fund account at any time by selling (redeeming) some or all of your shares.

The redemption price (price to sell one share of a particular class of the Fund) is the next calculated NAV per share of that Fund class, subject toany applicable CDSC.

If your individual account is not maintained on the Fund’s shareholder servicing system, please contact your selling broker-dealer, planadministrator or third party record keeper to sell shares of the Fund.

By telephone or internet: If you have completed an Express Transaction Authorization Form (separately or within your new account application)you may redeem your shares by telephone or internet as set forth below. You may request to receive payment of your redemption proceeds viadirect ACH or via wire. A fee of $10 per transaction will be charged for wire redemptions on all classes except Class I and Y. To redeem yourClass A, Class B, or Class C shares, call 800.777.6472, fax your request to 800.532.2749, or place your redemption order at www.ivyfunds.com,and give your instructions to redeem your shares via ACH or via wire, as applicable. To redeem your Class I and Y shares, submit a writtenrequest or fax your request to 800.532.2784, and give your instructions to redeem your shares via ACH or via wire, as applicable. You may alsorequest a redemption by check to the address on the account (provided the address has not been changed within the last 30 days). For yourprotection, banking information generally must be established on your account for a minimum of 10 days before either a wire redemption orACH redemption will be processed. Requests by telephone or internet can only be accepted for amounts up to $50,000 per Fund per day.

By mail: Complete an Account Service Request or Retirement Plan Distribution/Withdrawal form, available from your financial advisor, or write aletter of instruction with:

� the name on the account registration

� the Fund’s name

� the account number

� the dollar amount or number, and the class, of shares to be redeemed

� any other applicable special requirements listed in the table below

Deliver the form or your letter to your financial advisor, or mail it to:

WI Services CompanyP. O. Box 29217

Shawnee Mission, Kansas66201-9217

Unless otherwise instructed, a check will be sent to the address on the account. For your protection, the address of record must not have beenchanged within 30 days prior to your redemption request.

When you place an order to sell shares, your shares will be sold at the NAV next calculated, subject to any applicable CDSC, after receipt of arequest for redemption in good order by WISC or other authorized Fund agent as described above. Note the following:

� If more than one person owns the shares and it is requested that the redemption check be made payable to the order of all owners andmailed to the address of record for the account, the authorization of only one joint owner is required. Otherwise, each owner must sign theredemption request.

� If you recently purchased the shares by check or ACH, the Fund may delay payment of redemption proceeds. You may arrange for the bankupon which the purchase check was drawn to provide telephone or written assurance, satisfactory to the Fund, that the check has clearedand been honored. If you do not, payment of the redemption proceeds on these shares will be delayed until the earlier of ten days from thedate of purchase or the date the Fund can verify that your purchase check has cleared and been honored.

� Redemptions may be suspended or payment dates postponed on days when the NYSE is closed (other than weekends or holidays), whentrading on the NYSE is restricted or as permitted by the SEC.

� Payment is normally made in cash, although under extraordinary conditions redemptions may be made in portfolio securities when theBoard determines that conditions exist making cash payments undesirable. The Fund is obligated to redeem shares solely in cash up to thelesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder.

� If you purchased shares of the Fund from certain broker-dealers, banks or other authorized third parties, you may sell those shares throughthose firms, some of which may charge you a fee and may have additional requirements to sell Fund shares. For firms that perform accounttransactions systematically through the NSCC, the Fund will be deemed to have received your order to sell shares when that firm (or itsdesignee) has received your order in proper form. Your order will receive the NAV of the redeemed class, subject to any applicable CDSC,next calculated after the order has been received in proper form by the authorized firm (or its designee). Therefore, if your order is receivedin proper form by that firm before 4:00 p.m. Eastern time on a day on which the NYSE is open, you should generally receive that day’soffering price. If your order is received in proper form by that firm after 4:00 p.m. Eastern time, you should generally receive the offeringprice next calculated on the following business day. If the firm does not perform account transactions systematically through the NSCC andhas not entered into an agreement permitting it to aggregate orders it receives prior to 4:00 p.m. Eastern time and transmit such orders to

Prospectus 27

the Fund on or before the following business day, you will receive the NAV next calculated after the order has been received in proper formby the Fund. You should consult that firm to determine the time by which it must receive your order for you to sell shares at that day’sprice.

� Broker-dealers that perform account transactions for their clients through the NSCC are responsible for obtaining their clients’ permission toperform those transactions, and are responsible to their clients who are shareholders of the Fund if the broker-dealer performs anytransaction erroneously or improperly.

Special Requirements for Selling Shares

Account Type Special Requirements

Individual The written instructions must be signed exactly as the name appears on the account.

Joint Tenant If more than one person owns the shares and it is requested that the redemption check be madepayable to the order of all owners and mailed to the address of record for the account, the writteninstructions may be signed by only one joint owner. Otherwise, the written instructions must besigned by each owner, exactly as their names appear on the account.

Sole Proprietorship The written instructions must be signed by the individual owner of the business.

UGMA, UTMA The custodian must sign the written instructions indicating capacity as custodian.

Retirement Account The written instructions must be signed by a properly authorized person (for example, employer,plan administrator, or trustee).

Trust The trustee must sign the written instructions indicating capacity as trustee. If the trustee’sname is not in the account registration, provide a currently certified copy of the trust document.

Business or Organization At least one person authorized by corporate resolution to act on the account must sign thewritten instructions.

Conservator, Guardian or Other Fiduciary The written instructions must be signed by the person properly authorized by court order to act inthe particular fiduciary capacity.

The Fund may require a signature guarantee in certain situations such as:

� a redemption request made by a corporation, partnership or fiduciary

� a redemption request made by someone other than the owner of record

� the check is made payable to someone other than the owner of record

� a check redemption request if the address on the account has been changed within the last 30 calendar days

This requirement is to protect you and the Fund from fraud. You can obtain a signature guarantee from most banks and securities dealers, but notfrom a notary public.

The Fund reserves the right to redeem at NAV all of your Fund shares in your account if the account balance of those shares is less than $750.The Fund will give you notice and 60 calendar days to purchase a sufficient number of additional shares to bring the account balance of yourshares in the Fund to $750. These redemptions will not be subject to a CDSC. The Fund will not apply its redemption right to retirementaccounts that have a balance of less than $750 due to changes in the market.

You may reinvest, without a sales charge, all or part of the amount of Class A shares of the Fund you redeemed by sending to the applicable Fundthe amount you want to reinvest. The reinvested amounts must be equal to or greater than $200, and received by the Fund within 60 calendardays after the date of your redemption, and the reinvestment must be made into the same Fund, account, and class of shares from which it wasredeemed. You may do this only once each calendar year with Class A shares of the Fund. This privilege may be eliminated or modified at anytime without prior notice to shareholders. Purchases made pursuant to the AIS, payroll deduction or regularly scheduled contributions made byan employer on behalf of its employees are not eligible for purchases at NAV under this policy. Purchases within investment advisory productsoffered by Waddell & Reed are not eligible for purchases at NAV under this policy.

The CDSC, if applicable, will not apply to the proceeds of Class A (as applicable), Class B, or Class C shares of the Fund which are redeemed ifequal to or greater than $10 and then reinvested in shares of the same class of the Fund within 60 calendar days after such redemption. IFDI will,with your reinvestment, instruct WISC, the Fund’s transfer agent, to cancel the CDSC attributable to the amount reinvested. For purposes ofdetermining a future CDSC, the reinvestment will be treated as a new investment. You may do this only once each calendar year as to Class Ashares of the Fund, once each calendar year as to Class B shares of the Fund, and once each calendar year as to Class C shares of the Fund. Subjectto the following paragraph, the reinvestment must be made into the same Fund, account, and class of shares from which it had been redeemed.This privilege may be eliminated or modified at any time without prior notice to shareholders. Purchases made pursuant to the AIS, payrolldeduction or regularly scheduled contributions made by an employer on behalf of its employees are not eligible for purchases at NAV under thispolicy. Purchases within investment advisory products offered by Waddell & Reed are not eligible for purchases at NAV under this policy.

Proceeds from a Class B share redemption for which a CDSC was paid will be reinvested in Class A shares without any initial sales charge. If youredeem Class B shares without paying a CDSC, you may reinvest the proceeds in Class B shares. For purposes of determining future CDSC, theaging of such reinvested Class B shares shall revert to the date the redeemed shares were originally purchased.

28 Prospectus

Telephone TransactionsThe Fund and its agents will not be liable for following instructions communicated by telephone that they reasonably believe to be genuine.WISC, the Fund’s transfer agent, will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. IfWISC fails to do so, WISC may be liable for losses due to unauthorized or fraudulent instructions. Current procedures relating to instructionscommunicated by telephone include tape recording instructions, requiring personal identification and providing written confirmations oftransactions effected pursuant to such instructions.

Shareholder ServicesIf you are investing through certain third-party broker dealers, please contact your plan administrator or other record keeper for informationabout your account.

If you have established an account that is maintained on the Fund’s shareholder servicing system, IFDI and WISC provide a variety of services tohelp you manage your account.

Personal ServiceYour local financial advisor is available to provide personal service. Additionally, a toll-free call, 800.777.6472, connects you to a Client ServicesRepresentative or our automated customer telephone service. During normal business hours, the Client Services staff is available to answer yourquestions or update your account records. The Client Services Representative can help you:

� obtain information about your accounts

� obtain price information about other funds within Ivy Funds

� obtain the Fund’s current prospectus, SAI, annual report, or other information about any of the Ivy Funds

� request duplicate statements

� transact certain account activity, including exchange privileges and redemption of shares

At almost any time of the day or night, you may access your account information from a touch-tone phone through our automated customertelephone service, provided your account is maintained on the Fund’s shareholder servicing system; otherwise, you should contact the broker-dealer through which you purchased your Fund shares.

Internet ServiceThe Ivy Funds web site, www.ivyfunds.com, is also available. If you do not currently have an account established that is maintained on the Fund’sshareholder servicing system, you may use the web site to obtain information about the Fund, including accessing the Fund’s current prospectus,SAI, annual report or other information. If you have an account set up that is maintained on the Fund’s shareholder servicing system, you mayalso use the web site to obtain information about your account, and to transact certain account activity, including exchange privileges andredemption of shares for certain share classes, if you have established Express Transactions for your account.

ReportsStatements and reports sent to you include the following:

� confirmation statements (after every purchase (other than those purchases made through Automatic Investment Service), after everyexchange (other than rebalance-related exchange transactions for SPA and MAP products) and after every transfer or redemption)

� quarter-to-date statements (quarterly)

� year-to-date statements (after the end of the fourth calendar quarter)

� annual and semiannual reports to shareholders (every six months)

To avoid sending duplicate copies of materials to households and thereby reduce expenses, only one copy of the Fund’s most recent prospectusand/or summary prospectus and annual and semiannual reports to shareholders may be mailed to shareholders having the same last name andaddress in the Fund’s records. The consolidation of these mailings, called householding, benefits the Fund through reduced mailing expense. Youmay call the telephone number listed for Client Services if you need additional copies of the documents. You may also visit www.ivyfunds.com toview and/or download these documents, as well as other information about the Fund.

You may elect to receive your quarterly statements and/or prospectus and shareholder reports electronically. In order to do so, go to the“Individual Investor Accounts — Access Your Account Online” feature available via www.ivyfunds.com.

EXCHANGE PRIVILEGESExcept as otherwise noted, you may sell (redeem) your shares and buy shares of the same class of another fund within Ivy Funds without thepayment of an additional sales charge if you exchange Class A shares or without payment of a CDSC when you exchange Class B or Class C sharesor certain Class A shares. For Class B and Class C shares, or Class A shares to which the CDSC would otherwise apply, the time period for theCDSC will continue to run. However, exchanges of Class A shares from Ivy Money Market Fund are subject to any sales charge applicable to thefund being exchanged into, unless the Ivy Money Market shares were previously acquired by an exchange from Class A shares of another fundwithin Ivy Funds for which a sales charge was paid (or represent reinvestment of dividends and other distributions paid on such shares). You may

Prospectus 29

sell your Class I or Class Y shares of any of the funds within Ivy Funds and buy Class I or Class Y shares, respectively, of another fund within IvyFunds or Class A shares of Ivy Money Market Fund. Class A shares of any of the funds within Ivy Funds may also be exchanged for shares ofInvestEd Portfolios.

For clients of Waddell & Reed or Legend, these same exchange privileges for Class A, Class B, and Class C shares also apply to the correspondingclasses of shares of funds within Waddell & Reed Advisors Funds. Shareholders of Class I shares may exchange their shares for Class Y shares offunds within Waddell & Reed Advisors Funds. Shareholders of Ivy Class Y shares may not exchange those shares for shares of any class of fundswithin Waddell & Reed Advisors Funds.

Except as otherwise noted, you may sell your Class R shares of the Fund and buy Class R shares of another fund within Ivy Funds that offersClass R shares. Contact your plan administrator or record keeper for information about exchanging your shares.

You may exchange only into funds that are legally permitted for sale in your state of residence. Currently, each fund within Ivy Funds, InvestEdPortfolios and Waddell & Reed Advisors Funds may only be sold within the United States, the Commonwealth of Puerto Rico and the U. S.Virgin Islands. In addition, each fund within Ivy Funds may also be sold in Guam. Note that exchanges out of a fund may have tax consequencesfor you. Before exchanging into a fund, read its prospectus.

Important Exchange Information� Except as otherwise noted, you must exchange into the same share class you currently own (except that you may exchange Class Y and

Class I shares of any of the funds within Ivy Funds for Class A shares of Ivy Money Market Fund, and in certain situations you mayexchange Class A shares of Ivy Money Market Fund for Class C shares of any of the other funds within Ivy Funds).

� Exchanges are considered taxable events and may result in a capital gain or a capital loss for tax purposes.

How to ExchangeIf you are investing through certain third-party broker dealers, contact your plan administrator or other record keeper for information about howto exchange.

If you have an account set up that is maintained on the Fund’s shareholder servicing system, the following applies:

By mail: Send your written exchange request to WISC at the address listed under “Selling Shares.”

By telephone: Call WISC at 800.777.6472 to authorize an exchange transaction. To process your exchange order by telephone, you must havetelephone exchange privileges on your account. For the protection of Fund shareholders, the transfer agent for the Fund employs reasonableprocedures that require personal identification prior to acting on exchange instructions communicated by telephone to confirm that suchinstructions are genuine.

By internet: You will be allowed to exchange by internet if (1) you have established the internet trading option; and (2) you can provide properidentification information.

If your individual account is not maintained on the Fund’s shareholder servicing system, please contact your selling broker-dealer, planadministrator or third party record keeper to exchange shares of the Fund.

Converting SharesSelf-Directed Conversions: If you hold Class A, Class C or Class Y shares and are eligible to purchase Class I shares, as described above in thesection entitled “Class I shares,” you may be eligible to convert your Class A, Class C or Class Y shares to Class I shares of the Fund, subject to thediscretion of IFDI to permit or reject such a conversion. Please contact WISC directly to request a conversion.

A conversion between share classes of the Fund is a non-taxable event.

If you convert from one class of shares to another, the transaction will be based on the respective NAV per share of the two classes on the tradedate for the conversion. Consequently, a conversion may provide you with fewer shares or more shares than you originally owned, depending onthat day’s NAVs per share. At the time of conversion, the total dollar value of your “old” shares will equal the total dollar value of your “new”shares. However, subsequent share price fluctuations may decrease or increase the total dollar value of your “new” shares compared with that ofyour “old” shares.

Market Timing PolicyThe Fund is intended for long-term investment purposes. The Fund will take steps to seek to deter frequent purchases and /or redemptions inFund shares (market timing activities). Market timing activities, especially those involving large dollar amounts, may disrupt portfolio investmentmanagement and may increase expenses and negatively impact investment returns for all Fund shareholders, including long-term shareholders.Market timing activities may also increase the expenses of WISC and/or IFDI, thereby indirectly affecting the Fund’s shareholders.

Certain funds may be more attractive to investors seeking to engage in market timing activities. For example, to the extent that the Fund invests asignificant portion of its assets in foreign securities, the Fund may be susceptible to a time zone arbitrage strategy in which investors seek to takeadvantage of Fund share prices that may not reflect developments in foreign securities markets that occurred after the close of such market but

30 Prospectus

prior to the pricing of Fund shares. The Fund is susceptible to the risk that the current market price for thinly traded securities may not accuratelyreflect current market values. An investor may seek to engage in short-term trading to take advantage of these pricing differences (commonlyreferred to as price arbitrage). Price arbitrage is more likely to occur in a fund that invests a significant portion of its assets in small cap companies,municipal obligations, or that invests a significant portion of its assets in high-yield fixed income securities.

To discourage market timing activities by investors, the Board has adopted a market timing policy and has approved the procedures of the Fund’stransfer agent, WISC, for implementing this policy. WISC’s procedures reflect the criteria that it has developed for purposes of identifying tradingactivity in Fund shares that may be indicative of market timing activities and outline how WISC will monitor transactions in Fund shares. In itsmonitoring of trading activity in Fund shares, on a periodic basis, WISC typically reviews Fund share transactions that exceed certain monetarythresholds and/or numerical transaction limits within a particular time period.

WISC will follow, monitor, and enforce excessive trading policies and procedures. Please see an example detailed below of trading activity thatwould be considered excessive and in violation of the Fund’s market timing policy:

WISC will monitor the number of roundtrip transactions in Fund shares. Any shareholder that has more than two transactions that are considereda change in direction relative to the Fund within a time period determined by WISC may be restricted from making additional purchases of Fundshares. A change in direction is defined as any exchange or sale out of the Fund and a second change in direction is an exchange or purchase backinto that Fund. Shareholders who reach this limit may be blocked from making additional purchases for 60 days. A second violation can result ina permanent block.

This example is not all inclusive of the trading activity that may be deemed to violate the Fund’s market timing policy and any trade that isdetermined as disruptive can lead to a temporary or permanent suspension of trading privileges, in WISC’s sole discretion.

In its attempt to identify market timing activities, WISC considers many factors, including (but not limited to) the example detailed above, andthe frequency, size and/or timing of the investor’s transactions in Fund shares.

As an additional step, WISC reviews Fund redemption activity in relation to average assets and purchases within the period. If WISC identifieswhat it believes are market timing activities in an account held directly on the Fund’s records that has not previously exceeded WISC’s thresholds,WISC will suspend exchange privileges by refusing to accept additional purchases in the account for a pre-determined period of time. If ashareholder exceeds WISC’s thresholds a second time within a twelve (12) month period, exchange privileges will be suspended indefinitely forall accounts owned by the shareholder whose account exceeded the pre-determined thresholds. For trading in Fund shares held in omnibusaccounts, WISC will, if possible, place a trading block at a taxpayer identification number level or, if that cannot be accomplished, will contact theassociated financial intermediary and request that the intermediary implement trading restrictions. In exercising any of the foregoing rights, WISCwill consider the trading history of accounts under common ownership or control within any of the funds within Ivy Funds, InvestEd Portfoliosand/or Waddell & Reed Advisors Funds. For this purpose, transactions placed through the same financial intermediary on an omnibus basis maybe deemed a single investor and may be rejected in whole or in part. Transactions placed in violation of the Fund’s market timing policy are notdeemed accepted by the Fund and may be cancelled or revoked by the Fund on the next business day following receipt by the Fund.

In addition, IFDI and/or its affiliate, Waddell & Reed (collectively, “W&R”), have entered into agreements with third-party financialintermediaries that purchase and hold Fund shares on behalf of shareholders through omnibus accounts. In general, these agreements obligate thefinancial intermediary: (1) upon request by W&R, to provide information regarding the shareholders for whom the intermediary holds shares andthese shareholders’ Fund share transactions; and (2) to restrict or prohibit further purchases of Fund shares through the financial intermediary’saccount by any shareholder identified by W&R as having engaged in Fund share transactions that violate the Fund’s market timing policy. W&R’sprocedures seek to monitor transactions in omnibus accounts so that W&R may make such further inquiries and take such other actions itdetermines appropriate or necessary to enforce the Fund’s market timing policy with respect to shareholders trading through omnibus accountsheld by third-party intermediaries.

The Fund seeks to apply its market timing policy uniformly to all shareholders and prospective investors. Although the Fund, IFDI and WISCmake efforts to monitor for market timing activities and will seek the assistance of financial intermediaries through which Fund shares arepurchased or held, the Fund cannot always identify or detect excessive trading that may be facilitated by financial intermediaries because theintermediary maintains the underlying shareholder account. In an attempt to detect and deter excessive trading in omnibus accounts, the Fund,IFDI or WISC may require intermediaries to impose restrictions on the trading activity of accounts traded through those intermediaries (includingprohibiting further transactions by such accounts), may require the intermediaries to provide certain information to the Fund regardingshareholders who hold shares through such accounts or may close the omnibus account. The Fund’s ability to impose restrictions for accountstraded through particular intermediaries may vary depending upon systems capabilities, applicable contractual restrictions, and cooperation ofthose intermediaries. There can be no assurance that the Fund will be able to identify or eliminate all market timing activities, and the Fund maynot be able to completely eliminate the possibility of excessive trading in certain omnibus accounts and other accounts traded throughintermediaries.

A financial intermediary through which an investor may purchase shares of the Fund may also independently attempt to identify trading itconsiders inappropriate, which may include frequent or short-term trading, and take steps to deter such activity. In some cases, the intermediarymay require the Fund’s consent or direction to undertake those efforts. In other cases, the Fund may elect to allow the intermediary to apply itsown policies with respect to frequent trading in lieu of seeking to apply the Fund’s policies to shareholders investing in the Fund through such

Prospectus 31

intermediary, based upon the Fund’s conclusion that the intermediary’s policies sufficiently protect shareholders of the Fund. In either case, theFund may have little or no ability to modify the parameters or limits on trading activity set by the intermediary. As a result, an intermediary maylimit or permit trading activity of its customers who invest in Fund shares using standards different from the standards used by the Fund anddiscussed in this Prospectus. If an investor purchases the Fund’s shares through a financial intermediary, that investor should contact theintermediary for more information about whether and how restrictions or limitations on trading activity will be applied to that account.

Due to the complexity and subjectivity involved in identifying market timing activities and the volume of shareholder transactions that WISCprocesses, there can be no assurance that the Fund’s and WISC’s policies and procedures will identify all trades or trading practices that may beconsidered market timing activity. WISC may modify its procedures for implementing the Fund’s market timing policy and/or its monitoringcriteria at any time without prior notice. The Fund, WISC and/or IFDI shall not be liable for any loss resulting from rejected purchase orders orexchanges.

The Fund’s market timing policy, in conjunction with the use of fair value pricing, is intended to reduce a shareholder’s ability to engage inmarket timing activities, although there can be no assurance that the Fund will eliminate market timing activities.

Automatic Transactions for Class A and Class C ShareholdersRegular Investment Plans allow you to transfer money into your Fund account, or between Fund accounts, automatically. While RegularInvestment Plans do not guarantee a profit and will not protect you against loss in a declining market, they can be an excellent way to invest forretirement, a home, educational expenses and other long-term financial goals.

Systematic Withdrawal Plans let you set up ongoing monthly, quarterly, semiannual or annual redemptions from your account. Please see the SAIfor additional information.

Certain restrictions and fees imposed by the plan custodian may also apply for retirement accounts. Speak with your financial advisor for moreinformation.

Regular Investment Plans

Automatic Investment Service

To move money from your bank account to an existing Fund account

Minimum Amount Frequency

$50 (per Fund) Monthly

Systematic Exchange Service

To systematically exchange from one fund account to another existing fund account

Minimum Amount Frequency

$50 (per Fund) Monthly

DISTRIBUTIONS AND TAXES

DistributionsThe Fund distributes substantially all of its net investment income and net realized capital gains to its shareholders each year.

Ivy Emerging Markets Equity Fund declares and pays dividends annually in December.

Net realized capital gains (and any net gains from foreign currency transactions) ordinarily are distributed by the Fund in December.

Dividends that are declared for a particular day are paid to shareholders of record on the preceding business day. However, dividends that aredeclared for a Saturday or Sunday (or for a Monday that is a Federal holiday) are paid to shareholders of record on the preceding Thursday (or thepreceding business day if that Thursday is a Federal holiday).

Ordinarily, shares are eligible to earn dividends starting on the day after they are issued and through the day they are redeemed.

Distribution Options. When you open an account, you may specify on your application how you want to receive your distributions. The Fundoffers two options:

1. Share Payment Option. Your dividends, capital gain and other distributions with respect to a class of the Fund will be automatically paid inadditional shares of that class. If you do not indicate a choice on your application, you will be assigned this option.

2. Cash Option. You will be sent a check for your dividends, capital gain and other distributions if the total distribution is at least five dollars. Ifthe distribution is less than five dollars, it will be automatically paid in additional shares of the distributing class.

For retirement accounts and accounts participating in MAP or SPA, all distributions are automatically paid in additional shares of the distributingclass.

32 Prospectus

TaxesAs with any investment, you should consider how your investment in the Fund will be taxed. If your account is not a retirement account or othertax-advantaged savings plan (or you are not otherwise exempt from income tax), you should be aware of the following tax implications:

Taxes on distributions. You will be subject to tax to the extent the Fund makes actual or deemed distributions of net income and realized netgains to you. Dividends from the Fund’s investment company taxable income (which includes net investment income, the excess of net short-term capital gain over net long-term capital loss and net gains and losses from certain foreign currency transactions), if any, generally are taxableto you as ordinary income whether received in cash or paid in additional Fund shares, except that the part of those dividends attributable to“qualified dividend income” (i.e., dividends received on stock of most U.S. and certain foreign corporations with respect to which the Fundsatisfies certain holding period and other restrictions) the Fund earned is taxed to individual and certain other non-corporate shareholders (each,an individual shareholder) who satisfy those restrictions the same as long-term capital gains. A portion of the Fund’s dividends also may beeligible for the dividends-received deduction allowed to corporations (DRD) — the eligible portion may not exceed the aggregate dividends theFund receives from domestic corporations subject to Federal income tax (excluding REITs) and excludes dividends from foreign corporations —subject to similar restrictions. However, dividends a corporate shareholder deducts pursuant to the DRD are subject indirectly to the Federalalternative minimum tax.

Distributions of the Fund’s net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss) are taxable to you aslong-term capital gains, whether received in cash or paid in additional Fund shares and regardless of the length of time you have owned yourshares. For Federal income tax purposes, long-term capital gain an individual shareholder realizes generally is taxed at a maximum rate of 15% formarried shareholders filing jointly with taxable income not exceeding $457,600 ($406,750 for single shareholders) and 20% for individualshareholders with taxable income exceeding those respective amounts (which will be adjusted annually for inflation).

For individual taxable shareholders, the Fund notifies you after each calendar year-end as to the amounts of its dividends and other distributionspaid (or deemed paid) to you for that year.

Taxes on transactions. Your redemption of Fund shares will result in a taxable gain or loss to you, depending on whether the redemptionproceeds are more or less than what you paid for the redeemed shares (which normally includes any sales charge paid).

An exchange of Fund shares for shares of any other fund within Ivy Funds, Waddell & Reed Advisors Funds, or InvestEd Portfolios generally willhave similar tax consequences. However, special rules apply when you dispose of the Fund’s Class A shares through a redemption or exchangewithin 90 calendar days after your purchase of those shares and then reacquire Class A shares of that Fund or acquire Class A shares of anotherfund within Ivy Funds, Waddell & Reed Advisors Funds, or InvestEd Portfolios by January 31 of the calendar year following the redemption orexchange without paying a sales charge due to the 60-day reinvestment privilege or exchange privilege. See “Your Account — Selling Shares.” Inthese cases, any gain on the disposition of the original Class A Fund shares will be increased, or loss decreased, by the amount of the sales chargeyou paid when you acquired those shares, and that amount will increase the adjusted basis in the shares you subsequently acquire. In addition, ifyou purchase shares of the Fund within 30 calendar days before or after redeeming other shares of the Fund (regardless of class) at a loss, part orall of that loss will not be deductible and will increase the basis in the newly purchased shares.

Other. In addition to the requirement to report the gross proceeds from the redemption of shares, the Fund (or its administrative agent) mustreport to the IRS and furnish to its shareholders the basis information for shares they acquire after December 31, 2011 (“Covered Shares”) andindicate whether they had a short-term (one year or less) or long-term (more than one year) holding period. A Fund shareholder may elect anyIRS-accepted method for determining basis for Covered Shares; however, he or she must make any elections in writing (which may be electronic).If a shareholder of the Fund fails to affirmatively elect a basis determination method, then basis determination will be made in accordance with theFund’s default method, which is the average basis method. The basis determination method the Fund shareholder elects (or the default method)may not be changed with respect to a redemption of Covered Shares after the settlement date of the redemption. Fund shareholders shouldconsult with their tax advisors to determine the best IRS-accepted basis determination method for their tax situation and to obtain moreinformation about how the basis reporting law applies to them.

An individual is subject to a 3.8% Federal tax on the lesser of (1) the individual’s “net investment income” (which generally includes dividends,interest, and net gains from the disposition of investment property) (including dividends and capital gain distributions the Fund pays and netgains realized on the redemption or exchange of Fund shares) or (2) the excess of his or her “modified adjusted gross income” over $250,000 formarried shareholders filing jointly and $200,000 for single shareholders. This tax is in addition to any other taxes due on that income. A similartax applies to estates and trusts. Shareholders should consult their own tax advisors regarding the effect, if any, this provision may have on theirinvestment in Fund shares.

Withholding. The Fund must withhold 28% of all taxable dividends, capital gain distributions and redemption proceeds (regardless of the extentto which gain or loss may be realized) otherwise payable to individual shareholders who do not furnish the Fund with a correct taxpayeridentification number. Withholding at that rate is also required from dividends and capital gain distributions otherwise payable to suchshareholders who are subject to backup withholding for any other reason.

The income dividends the Fund pays to a non-resident alien individual, foreign corporation or partnership, or foreign trust or estate (each, aforeign shareholder) generally are subject to a 30% (or lower treaty rate) Federal withholding tax, even if those dividends are attributable to a non-U.S. source earned by the Fund. However, Fund distributions that are (1) made to a beneficial owner of its shares that certifies that it is a foreign

Prospectus 33

shareholder, with certain exceptions, (2) attributable to the Fund’s “qualified net interest income” and/or “qualified short-term gain,” and (3) onlywith respect to Fund taxable years beginning before January 1, 2014 (unless the period for the exemption’s applicability is extended by legislation,which has occurred frequently), are exempt from that withholding tax. Foreign shareholders are urged to consult their own tax advisersconcerning the applicability of that withholding tax.

State and local income taxes. You should consult your tax advisor to determine the taxability in your state and locality of dividends and otherdistributions paid by the Fund.

The foregoing is only a summary of some of the important income tax considerations generally affecting the Fund and its shareholders; you willfind more information in the SAI. There may be other Federal, state or local tax considerations applicable to a particular investor. You are urged toconsult your own tax advisor.

34 Prospectus

Financial Highlights

The following information is to help you understand the financial performance of each of the classes of the Fund for the fiscal periods shown.Certain information reflects financial results for a single Fund share. Total return shows how much your investment would have increased (ordecreased) during each period, assuming reinvestment of all dividends and other distributions. Except for the six-month period informationended September 30, 2013, this information has been audited by Deloitte & Touche LLP, whose Report of Independent Registered PublicAccounting Firm, along with the Fund’s financial statements and financial highlights for the fiscal year ended March 31, 2013, are included in theFund’s Annual Report to Shareholders which is incorporated by reference into the SAI. The Fund’s financial statements and financial highlights forthe six-month period ended September 30, 2013 are included in the Fund’s Semiannual Report to Shareholders, and are incorporated byreference into the SAI. The Annual Report and Semiannual Report contain additional performance information and will be made available uponrequest and without charge.

Prospectus 35


Net AssetValue,

Beginningof Period

NetInvestment

Income (Loss)

Net Realizedand

UnrealizedGain (Loss)

onInvestments


Distributionsfrom Net

InvestmentIncome

Distributionsfrom NetRealizedGains

TotalDistributions

Class A SharesSix month period ended 9-30-2013 (unaudited) $13.88 $ 0.09(1) $(0.05) $ 0.04 $ — $ — $ —Year ended 3-31-2013 13.98 0.03(1) (0.03) 0.00 (0.10) — (0.10)Year ended 3-31-2012 16.94 0.01(1) (2.39) (2.38) (0.06) (0.52) (0.58)Year ended 3-31-2011 14.84 (0.01)(1) 2.11 2.10 — — —Year ended 3-31-2010 8.86 (0.08)(1) 6.06 5.98 — — —Year ended 3-31-2009 17.61 0.05 (6.96) (6.91) — (1.84) (1.84)Class B SharesSix month period ended 9-30-2013 (unaudited) 11.78 0.00(1) (0.05) (0.05) — — —Year ended 3-31-2013 11.92 (0.10)(1) (0.04) (0.14) —* — —*Year ended 3-31-2012 14.64 (0.13)(1) (2.07) (2.20) — (0.52) (0.52)Year ended 3-31-2011 12.97 (0.15)(1) 1.82 1.67 — — —Year ended 3-31-2010 7.83 (0.19)(1) 5.33 5.14 — — —Year ended 3-31-2009 16.01 (0.09) (6.30) (6.39) — (1.79) (1.79)Class C SharesSix month period ended 9-30-2013 (unaudited) 12.23 0.03(1) (0.05) (0.02) — — —Year ended 3-31-2013 12.36 (0.06)(1) (0.03) (0.09) (0.04) — (0.04)Year ended 3-31-2012 15.10 (0.08)(1) (2.14) (2.22) — (0.52) (0.52)Year ended 3-31-2011 13.33 (0.10)(1) 1.87 1.77 — — —Year ended 3-31-2010 8.01 (0.17)(1) 5.49 5.32 — — —Year ended 3-31-2009 16.27 (0.09) (6.37) (6.46) — (1.80) (1.80)Class E Shares(4)

Six month period ended 9-30-2013 (unaudited) 14.04 0.12(1) (0.06) 0.06 — — —Year ended 3-31-2013 14.12 0.09(1) (0.03) 0.06 (0.14) — (0.14)Year ended 3-31-2012 17.15 0.06(1) (2.41) (2.35) (0.16) (0.52) (0.68)Year ended 3-31-2011 14.98 0.05(1) 2.12 2.17 — — —Year ended 3-31-2010 8.90 (0.01)(1) 6.09 6.08 — — —Year ended 3-31-2009 17.62 0.07 (6.93) (6.86) — (1.86) (1.86)Class I SharesSix month period ended 9-30-2013 (unaudited) 14.23 0.13(1) (0.06) 0.07 — — —Year ended 3-31-2013 14.30 0.10(1) (0.02) 0.08 (0.15) — (0.15)Year ended 3-31-2012 17.39 0.08(1) (2.46) (2.38) (0.19) (0.52) (0.71)Year ended 3-31-2011 15.16 0.05(1) 2.18 2.23 — — —Year ended 3-31-2010 9.00 (0.01)(1) 6.17 6.16 — — —Year ended 3-31-2009 17.77 0.10(1) (7.00) (6.90) — (1.87) (1.87)Class R SharesSix month period ended 9-30-2013 (unaudited) 13.87 0.08(1) (0.05) 0.03 — — —Year ended 3-31-2013(5) 14.07 (0.04)(1) (0.16) (0.20) — — —Class Y SharesSix month period ended 9-30-2013 (unaudited) 14.13 0.11(1) (0.05) 0.06 — — —Year ended 3-31-2013 14.22 0.09(1) (0.05) 0.04 (0.13) — (0.13)Year ended 3-31-2012 17.25 0.05(1) (2.44) (2.39) (0.12) (0.52) (0.64)Year ended 3-31-2011 15.08 0.03(1) 2.14 2.17 — — —Year ended 3-31-2010 8.98 (0.05)(1) 6.15 6.10 — — —Year ended 3-31-2009 17.75 0.08 (6.99) (6.91) — (1.86) (1.86)

* 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) Annualized.(4) Class is closed to investment.(5) For the period from December 19, 2012 (commencement of operations of the class) through March 31, 2013.(6) For the fiscal year ended March 31, 2013.

36 Prospectus

Net AssetValue, Endof Period

TotalReturn(2)


(in millions)

Ratio ofExpenses

to AverageNet AssetsIncludingExpenseWaiver


Income (Loss)to AverageNet AssetsIncludingExpenseWaiver

PortfolioTurnover

RateClass A SharesSix month period ended 9-30-2013 (unaudited) $13.92 0.29% $414 1.73%(3) 1.33%(3) 70%Year ended 3-31-2013 13.88 -0.02 491 1.74 0.25 142Year ended 3-31-2012 13.98 -13.71 504 1.75 0.04 97Year ended 3-31-2011 16.94 14.15 600 1.72 -0.07 137Year ended 3-31-2010 14.84 67.50 514 1.83 -0.61 81Year ended 3-31-2009 8.86 -38.76 239 1.92 0.37 112Class B SharesSix month period ended 9-30-2013 (unaudited) 11.73 -0.42 6 3.00(3) 0.07(3) 70Year ended 3-31-2013 11.78 -1.13 8 2.94 -0.88 142Year ended 3-31-2012 11.92 -14.69 10 2.88 -1.03 97Year ended 3-31-2011 14.64 12.88 16 2.81 -1.07 137Year ended 3-31-2010 12.97 65.65 17 2.91 -1.64 81Year ended 3-31-2009 7.83 -39.46 10 3.07 -0.77 112Class C SharesSix month period ended 9-30-2013 (unaudited) 12.21 -0.16 13 2.57(3) 0.47(3) 70Year ended 3-31-2013 12.23 -0.77 16 2.53 -0.48 142Year ended 3-31-2012 12.36 -14.37 20 2.51 -0.63 97Year ended 3-31-2011 15.10 13.28 32 2.46 -0.73 137Year ended 3-31-2010 13.33 66.42 35 2.56 -1.38 81Year ended 3-31-2009 8.01 -39.22 16 2.69 -0.36 112Class E Shares(4)

Six month period ended 9-30-2013 (unaudited) 14.10 0.43 —* 1.33(3) 1.69(3) 70Year ended 3-31-2013 14.04 0.40 —* 1.34 0.64 142Year ended 3-31-2012 14.12 -13.32 —* 1.37 0.41 97Year ended 3-31-2011 17.15 14.49 —* 1.36 0.30 137Year ended 3-31-2010 14.98 68.32 —* 1.42 -0.11 81Year ended 3-31-2009 8.90 -38.43 —* 1.44 0.79 112Class I SharesSix month period ended 9-30-2013 (unaudited) 14.30 0.49 136 1.21(3) 1.82(3) 70Year ended 3-31-2013 14.23 0.55 147 1.22 0.69 142Year ended 3-31-2012 14.30 -13.28 138 1.25 0.52 97Year ended 3-31-2011 17.39 14.71 159 1.24 0.28 137Year ended 3-31-2010 15.16 68.44 104 1.29 -0.11 81Year ended 3-31-2009 9.00 -38.34 45 1.31 0.81 112Class R SharesSix month period ended 9-30-2013 (unaudited) 13.90 0.14 —* 1.82(3) 1.21(3) 70Year ended 3-31-2013(5) 13.87 -1.35 —* 1.80(3) -1.09(3) 142(6)

Class Y SharesSix month period ended 9-30-2013 (unaudited) 14.19 0.35 4 1.46(3) 1.57(3) 70Year ended 3-31-2013 14.13 0.31 5 1.47 0.63 142Year ended 3-31-2012 14.22 -13.48 6 1.50 0.30 97Year ended 3-31-2011 17.25 14.39 9 1.50 0.22 137Year ended 3-31-2010 15.08 67.93 9 1.55 -0.38 81Year ended 3-31-2009 8.98 -38.47 4 1.57 0.69 112

Prospectus 37

IVY FUNDS

CustodianThe Bank of New York MellonOne Wall StreetNew York, New York 10286

Legal CounselK&L Gates LLPThree First National Plaza70 West Madison StreetSuite 3100Chicago, Illinois 60602-4207

Independent RegisteredPublic Accounting FirmDeloitte & Touche LLP1100 Walnut Street, Suite 3300Kansas City, Missouri 64106

Investment ManagerIvy InvestmentManagement Company6300 Lamar AvenueP. O. Box 29217Shawnee Mission, Kansas66201-9217913.236.2000800.777.6472

DistributorIvy Funds Distributor, Inc.6300 Lamar AvenueP. O. Box 29217Shawnee Mission, Kansas66201-9217913.236.2000800.777.6472

Transfer AgentWI Services Company6300 Lamar AvenueP. O. Box 29217Shawnee Mission, Kansas66201-9217913.236.2000800.777.6472

Accounting Services AgentWI Services Company6300 Lamar AvenueP. O. Box 29217Shawnee Mission, Kansas66201-9217913.236.2000800.777.6472

38 Prospectus

IVY FUNDSYou can get more information about the Fund in the —

� Statement of Additional Information (SAI), which contains detailed information about the Fund, particularly the investment policies andpractices. You may not be aware of important information about the Fund unless you read both the Prospectus and the SAI. The current SAIis on file with the Securities and Exchange Commission (SEC) and it is incorporated into this Prospectus by reference (that is, the SAI islegally part of the Prospectus).

� Annual and Semiannual Reports to Shareholders, which detail the Fund’s actual investments and include financial statements as of theclose of the particular annual or semiannual period. The annual report also contains a discussion of the market conditions and investmentstrategies that significantly affected the Fund’s performance during the year covered by the report.

To request a copy of the Fund’s current SAI or copies of its most recent Annual and Semiannual reports, without charge, or for other inquiries,contact the Fund or Ivy Funds Distributor, Inc. at the address and telephone number below. Copies of the SAI, Annual and/or Semiannual reportsmay also be requested via e-mail at [email protected] and are available at www.ivyfunds.com.

Information about the Fund (including the current SAI and most recent Annual and Semiannual Reports) is available from the SEC’s web site athttp://www.sec.gov and may also be obtained, after paying a duplicating fee, by electronic request at [email protected] or from the SEC’s PublicReference Room, Room 1580, 100 F Street NE, Washington, D.C. 20549-1520. You can find out about the operation of the Public ReferenceRoom and applicable copying charges by calling 202.551.8090.

IVY FUNDS DISTRIBUTOR, INC.6300 Lamar AvenueP. O. Box 29217Shawnee Mission, Kansas 66201-9217913.236.2000800.777.6472

IVYPRO-EME (01-14)

Investment Company Act File Number: 811-06569

Prospectus 39

IVY FUNDS IVY ASSET STRATEGY NEW OPPORTUNITIES FUND · IVY ASSET STRATEGY NEW OPPORTUNITIES FUND...

Documents

Transcript of IVY FUNDS IVY ASSET STRATEGY NEW OPPORTUNITIES FUND · IVY ASSET STRATEGY NEW OPPORTUNITIES FUND...