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    Quarterly Fund Commentary

    Ivy Global Growth Fund (prospectus)
    June 30, 2016

    Sarah C. Ross, CFA

    Market Sector Update

    • Global equity markets were up modestly for the quarter. Investors’ desire for perceived safety continued to reward assets classes and sectors generally viewed as defensive. Uncertainty surrounding global growth, negative rates in Japan, a delay by the U.S. Federal Reserve (Fed) to raise rates, and the June 23 Brexit vote all likely contributed to continued outperformance and premium valuations for perceived safety.
    • During the quarter, long-term U.S. Treasuries as well as gold were some of the best performing asset classes. U.S. equities outperformed most international markets; high dividend yielders generally outperformed; and value outperformed growth.
    • Returns in Europe were weak as investors remained uncertain about the Brexit decision and the resulting implications going forward. Japan equities ended the period in line with the market despite some volatility around returns. In terms of global equity returns, energy was the strongest performing sector by a solid margin, followed by health care, utilities and consumer staples.

    Portfolio Strategy

    • The Fund underperformed the benchmark for the quarter, with the majority of negative performance driven by poor stock selection and a portfolio more heavily focused on growth relative to the benchmark. In general, low growth, defensive companies meaningfully outperformed high growth companies.
    • Stock selection in health care was a significant negative contributor during the period. While our overweight in the sector modestly helped, especially given the sector’s relative outperformance to the overall market, our overweight in biotechnology relative to high-dividendyielding pharmaceuticals in the period was a material driver of the weakness. Weak performance from Allergan Plc, Teva Pharmaceuticals and Gilead Sciences Inc. were top detractors.
    • Industrial stock selection was also a negative contributor, but to a lesser degree, with Rockwell Collins Inc. and JB Hunt negatively contributing. Consumer discretionary holdings JD.com and Carnival Corp also contributed to the decline.
    • A significant underweight in financials, positive stock selection in energy and individual outperformers including Amazon.com and Tencent Holding Ltd were positive contributors for the period.


    • We expect a relatively anemic environment for global growth and corporate earnings growth given the current environment of political and economic uncertainty. The impact from Britain’s decision to exit the EU remains uncertain, both in terms of nearterm economic risk to the region and the long-term overall strength of the EU.
    • We remain underweight to Europe given the risks associated with the exit process and concern around slowing capital spending and economic growth as a result. In addition, the uncertainty surrounding the U.S. presidential election is higher in our view than election cycles in the past given the low predictability of candidates.
    • While we remain overweight the U.S., we believe the environment lends itself towards increased short- term volatility. The outlook in China is still challenging relative to historical growth rates. We continue to favor the middle-income consumer globally with most of our consumer exposure in the U.S. and China.
    • We prefer exposure to consumer areas that have an incremental boost from secular share gains such as the shift to online retailing from bricks and mortar as well as the secular shift in many regions towards travel. We remain underweight consumer staples, viewing current valuation premiums as unsustainable.
    • Despite uncertainties in the market, we believe our portfolio of strong global growers with sustainable competitive advantages and unique products that serve large end-markets can continue to drive shareholder value over time.

    The opinions expressed in this commentary are those of the Fund’s manager and are current through June 30, 2016. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Past performance is not a guarantee of future results.

    Top 10 equity holdings as a percent of net assets as of 6/30/2016: Amazon.com, Inc. 5.1%, Visa, Inc., Class A 4.7%, Alphabet, Inc., Class C 4.0%, Allergan plc 3.6%, JD.com, Inc. ADR 3.4%, Anthem, Inc. 3.3%, Fresenius SE & Co. KGaA 3.1%, Tencent Holdings Ltd. 2.9%, MasterCard, Inc., Class A 2.9% and J.B. Hunt Transport Services, Inc. 2.8%.

    Risk factors. 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 risks are magnified in emerging markets. These and other risks are more fully described in the Fund’s prospectus.

    IVY INVESTMENTSSM 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

    Before investing, investors should consider carefully the investment objectives, risks, charges and expenses of a mutual fund. This and other important information is contained in the prospectus and summary prospectus, which can be obtained from a financial advisor or at www.ivyinvestments.com. Read it carefully before investing.

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