Waddell & Reed

Quarterly Fund Commentary


Ivy Managed International Opportunities Fund (prospectus)
December 31, 2014


Manager(s):
Michael L. Avery

Market Sector Update

  • U.S. equities closed a relatively volatile quarter with gains across the broad market indexes, again reaching record- high levels late in the quarter. Global equities in general also finished the quarter slightly higher.
  • Crude oil prices plunged worldwide during the quarter on forecasts of reduced global demand along with OPEC’s unwillingness to cut production, and reached levels not seen since 2009. The decline pressured stocks and raised concerns that the price tumble, if sustained, could stall economic growth in some regions.
  • Interest rates remained at historically low levels and the U.S. Federal Reserve said it is likely to hold rates near zero at least through the first quarter of 2015, noting it would be “patient” in its approach to raising rates. The European Central Bank indicated it would consider additional monetary stimulus to support the eurozone, but took no action by year end. Central banks in Japan and China also took easing actions in the quarter.
  • U.S. economic indicators continued to show steady growth and the U.S. remained the leader among developed countries. Economic growth forecasts for Europe were revised lower in the quarter.

 

Portfolio Strategy

  • The Fund posted a small negative return for the quarter, although its performance was slightly better than the negative return of its benchmark index (before the effect of sales charges).
  • The Fund continued to hold a dominant allocation to the underlying emerging markets fund and significant allocations to the underlying international equities fund and global growth fund. The emerging markets fund had a positive return for the quarter (before the effect of sales charges), but the other underlying funds had negative returns.
  • We made no changes to the Fund’s underlying fund allocations during the quarter. The weightings reflect our theme focused on the rising prosperity of a growing global middle class with greater discretionary income. We remain optimistic about consumer- and technology-related sectors and industries.
  • Nearly 90% of the portfolio was invested in foreign equities at quarter end, based on the weightings in the underlying funds.

 

Outlook

  • The Fund posted a small negative return for the quarter, although its performance was slightly better than the negative return of its benchmark index (before the effect of sales charges).
  • The Fund continued to hold a dominant allocation to the underlying emerging markets fund and significant allocations to the underlying international equities fund and global growth fund. The emerging markets fund had a positive return for the quarter (before the effect of sales charges), but the other underlying funds had negative returns.
  • We made no changes to the Fund’s underlying fund allocations during the quarter. The weightings reflect our theme focused on the rising prosperity of a growing global middle class with greater discretionary income. We remain optimistic about consumer- and technology-related sectors and industries.
  • Nearly 90% of the portfolio was invested in foreign equities at quarter end, based on the weightings in the underlying funds.

 


The opinions expressed in this commentary are those of the Fund’s manager and are current through Dec. 31, 2014. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Holdings and weightings are subject to change. Past performance is no guarantee of future results.

Effective Jan. 1, 2015, the Ivy International Growth Fund -- one of the underlying funds used in this Fund -- changes its investment mandate from international to global, gaining access to investment opportunities in any country or region across the globe, and changes its name to Ivy Global Growth Fund.

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. 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 a single region involves greater risk and potential reward than investing in a more diversified fund. Fixed-income securities are subject to interest rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. Dividend-paying investments may not experience the same price appreciation as non-dividend paying instruments. Dividend-paying companies may choose to not pay a dividend or the dividend may be less than expected. The performance of the Fund will depend on the success of the allocations among the chosen underlying funds. 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 f nancial advisor or visit us online at www.ivyfunds.com. Please read the prospectus or summary prospectus carefully i before investing.

Financial Advisor Opportunities
Corporate Careers