Waddell & Reed

Quarterly Fund Commentary

Ivy Global Natural Resources Fund (prospectus)
March 31, 2015

David P. Ginther, CPA

Market Sector Update

  • U.S. equities closed a volatile quarter with a very small gain in the broad market index. Global equities in general also finished the quarter slightly higher. Crude oil prices remained at depressed levels worldwide during the quarter.
  • Mixed results in U.S. economic indicators during the quarter still indicated steady growth. The U.S. dollar continued to show strength against world currencies – a factor for crude oil prices, which are set in dollars.
  • The European Central Bank began its bond-buying program late in the quarter as part of efforts to stimulate Europe’s economy. It also increased its economic growth forecast for the region.

Portfolio Strategy

  • The Fund had a positive return for the quarter (before the effect of sales charges).
  • Solid security selection in the energy sector was the key contributor to performance in the quarter. Energy remained the largest sector in the Fund followed by holdings in materials and industrials. U.S. equities again dominated the Fund’s holdings.
  • The five greatest contributors to performance in the quarter were Halliburton, Baker Hughes, Valero Energy, Marathon Petroleum and LyondellBasell. The greatest detractors were Freeport-McMoRan, Rio Tinto, Caterpillar, Joy Global and FMC Technologies.
  • In general, we focus on companies with what we consider a good growth profile, a low-cost position and a prudent approach to cash flow, as well as a willingness to give it back to shareholders through dividends or repurchases. We mainly find that larger companies fit that profile now. We still have a bias toward energy companies that we believe have long-term potential for the Fund.


  • We continue to think the U.S. will show steady economic growth and low inflation in 2015, remaining the leader among developed countries. We think global economic growth also will continue to show mild improvement.
  • We think global energy demand will continue to grow slowly, spurred by the lower oil prices. With higher-cost projects around the world going offline because of current pricing, we think supply and demand will move closer to equilibrium and believe oil prices are unlikely to be sustainable in the current low range in the long term.
  • The growth rate in U.S. oil and gas production is slowing as higher-cost and lower-productivity projects have been postponed because of the price decline. But core areas of shale continue to produce at a high rate and we think that will continue.
  • We remain think there is heightened geopolitical risks in the Mideast and Russia, and believe these will continue to overhang markets and generate uncertainty.


The opinions expressed in this commentary are those of the Fund’s managers and are current through March 31, 2015. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Past performance is no guarantee of future results.

Top 10 Equity Holdings as a percent of net assets as of 03/31/2015: Schlumberger Ltd., 5.4%; Halliburton Co., 4.9%; Dow Chemical Co., 3.8%; Baker Hughes, Inc., 3.5%; BHP Billiton plc, 3.2%; Rio Tinto plc, 3.1%; LyondellBasell Industries N.V., Class A, 3.0%; Marathon Petroleum Corp., 3.0%; EOG Resources, Inc., 2.8%; Phillips 66, 2.5%

Risk factors. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Investing in companies involved in one specif ed sector may be more risky and i volatile than an investment with greater diversification. International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in natural resources can be riskier than other types of investment activities because of a range of factors, including price fluctuation caused by real and perceived inflationary trends and political developments; and the cost assumed by natural resource companies in complying with environmental and safety regulations. Investing in physical commodities, such as gold, exposes the Fund to other risk considerations such as potentially severe price fluctuations over short periods of time. Not all funds or fund classes may be offered at all broker/dealers. These and other risks are more fully described in the prospectus.

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

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