Annual Report SEPTEMBER 30, 2020 Ticker Class A Class B Class C Class I Class N Class Y IVY FUNDS Ivy Apollo Multi-Asset Income Fund IMAAX IMACX IMAIX IMURX IMAYX Ivy Apollo Strategic Income Fund IAPOX ICPOX IIPOX IRPOX IYPOX Ivy California Municipal High Income Fund IMHAX IMHCX IMHIX IMHYX Ivy Cash Management Fund IAAXX IABXX IACXX Ivy Corporate Bond Fund IBJAX IBJBX IBJCX IBJIX IBJNX IBJYX Ivy Crossover Credit Fund ICKAX ICKIX ICKNX ICKYX Ivy Government Securities Fund IGJAX IGJBX IGJCX IGJIX IGJNX Ivy International Small Cap Fund IVJAX IVJCX IVJIX IVJRX IVJYX Ivy Pictet Emerging Markets Local Currency Debt Fund IECAX IECCX IECIX IMMCX IECYX Ivy Pictet Targeted Return Bond Fund IRBAX IRBCX IRBIX IRBRX IRBYX Ivy PineBridge High Yield Fund IPNAX IPNIX IPNNX Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission (SEC), paper copies of the Funds’ Annual and Semiannual Shareholder Reports no longer will be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Ivy Investments website (www.ivyinvestments.com), and you will be notified by mail each time a report is posted, and provided with a website link to access the report. If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically anytime by contacting your financial intermediary (e.g., a broker-dealer or bank) or, if you are a direct investor, by calling 1-888-923-3355 or by enrolling at www.ivyinvestments.com. You may elect to receive all future reports in paper format free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Funds, you may call 1-888-923-3355 to let the Funds know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper format will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the Fund Complex if you invest directly with the Funds. IVY INVESTMENTS® refers to the financial services offered by Ivy Distributors, Inc., a FINRA member broker dealer and the distributor of IVY FUNDS® mutual funds, and those financial services offered by its affiliates. CONTENTS IVY FUNDS President’s Letter 3 Illustration of Fund Expenses 4 Management Discussion, Portfolio Highlights and Schedule of Investments: Ivy Apollo Multi-Asset Income Fund 7 Ivy Apollo Strategic Income Fund 25 Ivy California Municipal High Income Fund 46 Ivy Cash Management Fund 53 Ivy Corporate Bond Fund 59 Ivy Crossover Credit Fund 71 Ivy Government Securities Fund 79 Ivy International Small Cap Fund 85 Ivy Pictet Emerging Markets Local Currency Debt Fund 92 Ivy Pictet Targeted Return Bond Fund 106 Ivy PineBridge High Yield Fund 119 Statements of Assets and Liabilities 129 Statements of Operations 131 Statements of Changes in Net Assets 133 Financial Highlights 138 Notes to Financial Statements 160 Report of Independent Registered Public Accounting Firm 186 Income Tax Information 188 Board of Trustees and Officers 189 Renewal of Investment Management Agreements 196 Annual Privacy Notice 199 Proxy Voting Information 201 Quarterly Portfolio Schedule Information 201 Householding Notice 201 IRA Disclosure 201 This report is submitted for the general information of the shareholders of Ivy Funds. It is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by a current Ivy Funds prospectus, or summary prospectus, and current performance information. 2 PRESIDENT’S LETTER IVY FUNDS SEPTEMBER 30, 2020 (UNAUDITED) Philip J. Sanders, CFA Dear Shareholder, At the time of this writing, as we near the U.S. presidential election, we believe the odds are low for any substantial Markets thus far in 2020 have been, to use an overused stimulus being approved soon. However, we believe it word, unprecedented. In a matter of months, we have could likely pass in early 2021. If the Democrats sweep the witnessed economic and market moves that typically take White House and Congress, we would expect a sizeable an entire market cycle of many years to unfold. To start the stimulus act. fiscal year through early 2020, financial markets had been As we move forward and examine the investment positive as political conflicts, trade uncertainty and global landscape, we continue to put greater emphasis on the economic growth concerns waned. However, that upward fundamentals and quality of asset classes and sectors. We trajectory suddenly reversed in late February 2020 and believe it is important to stay focused on the merits of markets declined in response to two exogenous shocks: the individual market sectors, industries and company COVID-19 pandemic and the collapse in energy markets. business models when making investment decisions. Those The COVID-19 pandemic caused one of the most rapid and fundamentals historically have tended to outweigh external dramatic global economic downturns in history. The U.S. factors. In today’s environment, we believe there are many stock markets dropped approximately 35% from peak in high-quality businesses offering attractive entry points and cyclicals that will likely be key beneficiaries as economies February to trough in late March. Global economic activity continue to recover. Importantly, through this uncertain hit a full stop around the world, as countries and businesses time, we remain focused on the innovation and implemented plans to isolate and protect each other. management skill within individual companies, the Remarkably, within about 30 days, we moved from a ultimate drivers of long-term stock prices. relatively strong domestic economy with financial market indexes hitting record highs, to a global recession. Economic Snapshot Governments and central banks have taken strong steps to 9/30/2020 9/30/2019 mitigate the economic blow of social distancing. Monetary S&P 500 Index 3,363.00 2,976.74 policy response has been broader and more rapid than at any other time in history. Global central banks have MSCI EAFE Index 1,855.32 1,889.36 enacted aggressive stimulus through lower interest rates, 10-Year Treasury Yield 0.69% 1.68% quantitative easing (QE) and liquidity provisions, with U.S. unemployment rate 7.9% 3.5% some developing countries implementing QE for the first time. The U.S. Federal Reserve’s (Fed) response has 30-year fixed mortgage rate 2.90% 3.64% included a broad array of policy measures and an Oil price per barrel $ 40.22 $ 54.07 unprecedented pace of QE. Sources: Bloomberg, U.S. Department of Labor, MBA, CME Third quarter 2020 economic data show the global economy has had a very strong rebound. Since the March 23 All government statistics shown are subject to periodic revision. The S&P 500 Index is an unmanaged index that tracks the stocks of 500 primarily large-cap U.S. companies. trough, the S&P 500 Index has stabilized and experienced a MSCI EAFE Index is an unmanaged index comprised of securities that represent the rapid bounce back. Year-to-date as of Sept. 30, the Index is securities markets in Europe, Australasia and the Far East. It is not possible to invest up 5.57%. Going forward, we believe a natural deceleration directly in any of these indexes. Mortgage rates are from BankRate and reflect the in growth is very likely given the magnitude of the bounce overnight national average rate on a conventional 30-year fixed loan. Oil prices reflect back for the period. In addition, we believe we could see the market price of West Texas intermediate grade crude. more deceleration than consensus in the final three months Respectfully, of the year. Our belief is driven by the impending arrival of cold weather, which will dampen outdoor consumer activity and negatively impact certain industries. With respect to the U.S. consumer, we anticipate a pullback in consumption due to a lack of opportunities to spend. We see evidence of this in the extremely high savings rate in Philip J. Sanders, CFA the U.S. now. Spending data through September show that President spending on durable goods is well above pre-virus levels, The opinions expressed in this letter are those of the while spending on services is still far below pre-pandemic President of the Ivy Funds and are current only through levels. Services like travel, recreation and dining are among the end of the period of the report, as stated on the the areas hardest hit. We think this limitation on spending cover. The President’s views are subject to change at opportunities is going to be a cap on consumption over the any time, based on market and other conditions, and no next few months. forecasts can be guaranteed. 2020 ANNUAL REPORT 3 ILLUSTRATION OF FUND EXPENSES IVY FUNDS (UNAUDITED) Expense Example is below $650 on the Friday prior to the last full week of September of each year, the account will be assessed an As a shareholder of a Fund, you incur two types of costs: account fee of $20. You should consider the additional fees (1) transaction costs, including sales charges (loads) on that were charged to your Fund account over the six-month purchase payments, exchange fees and account fees; and period when you estimate the total ongoing expenses paid (2) ongoing costs, including management fees, distribution over the period and the impact of these fees on your ending and service fees, and other Fund expenses.