Waddell & Reed

Quarterly Fund Commentary

Ivy Global Growth Fund (prospectus)
March 31, 2015

Sarah C. Ross, CFA

Market Sector Update

  • Global markets increased in local currency during the quarter, with the majority of developed markets posting positive returns. Both Europe and Japan outperformed the U.S. during the period. The U.S. dollar continued to strengthen against global currencies.
  • During the quarter, health care and consumer discretionary stocks were some of the strongest-performing sectors, while the energy and utilities sectors lagged.
  • Economic growth remains slow with continued uncertainty surrounding expectations for Gross Domestic Product (GDP) growth in a number of major markets including China, Europe and the U.S. In the quarter, we saw a positive inflection in European economic activity as a result of significant fiscal stimulus. This, along with the weaker euro, has translated into an improving corporate earnings outlook in Europe.
  • While off a low base, the positive estimate revisions to corporate earnings in Europe is among the highest. The outlook for the U.S. economy and corporate earnings is modestly tempered from last quarter. While consumer confidence remains high, economic data has been mixed, resulting in the U.S. Federal Reserve to temper expectations for a summer rate hike.

Portfolio Strategy

  • The Fund outperformed the benchmark (before the effects of sales charges) for the quarter, primarily driven by strong stock selection. Additional material contributors to performance included an underweight allocation to the U.S. market, which underperformed the global market, and partial hedging of foreign currency exposure.
  • An overweight to health care and consumer discretionary, which both outperformed the broader market, helped performance. Underweighting the poor-performing energy sector added to performance as well.
  • Stock selection strength came primarily from health care, industrials and financials on exposure to strong performers in biotechnology, aerospace and select European financials. Underperformance during the first quarter came from poor stock selection in Japanese equities and individual stocks including American Express Co., Kansas City Southern and Galaxy Entertainment Group, all of which posted disappointing earnings (1.6%, 1.2% and 1.0% of Fund net assets, respectively).
  • The Fund’s overweight allocation to health care and consumer discretionary stems from the belief that the current slow-growth environment is favoring individual companies benefiting from new product cycles, a relatively stable U.S. consumer and an improving outlook in Europe.


  • While we believe global policy will remain very accommodative, a number of challenges remain that are likely to cause intermittent equity market volatility. This includes political uncertainty in certain regions across the globe, such as in the Middle East, Ukraine and Russia, and the impact of lower energy prices on global GDP rates.
  • Inflation across many markets is below target and we expect central bank policy to become easier rather than tighter, with additional easing from the European Central Bank and likely reluctance on the part of the U.S. Federal Reserve to raise rates too early.
  • We continue to expect an environment of slow economic growth going forward. We believe companies with strong competitive advantages and sustainability of earnings growth are best positioned to outperform in this slow-growth environment.


In November of 2014, the Ivy International Growth Fund expanded its investment strategy to include stocks of U.S. companies. Effective January 1, 2015, the Fund changed its name to the Ivy Global Growth Fund to ref ect its global focus. Performance prior to November 2014 ref ects the Fund’s former international strategy and may have differed if the Fund’s current strategy that includes investing globally had been in place.

Portfolio Manager Sarah Ross took over the management of the Ivy International Growth Fund on August 4, 2014.

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.

Risk factors. As with any fund, the value of the Fund’s shares will change, and you can 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. 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 and other risks are more fully described in the Fund’s prospectus. Not all funds or fund classes may be offered at all broker/dealers.

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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