Waddell & Reed

Quarterly Fund Commentary

Ivy Managed International Opportunities Fund (prospectus)
June 30, 2015

Michael L. Avery

Market Sector Update

  • U.S. and global equity prices closed a volatile quarter essentially flat.
  • Markets continued to watch the U.S. Federal Reserve (Fed) for any indications about the timing of eventual interest rate hikes. U.S. Treasury yields moved higher and economic data showed steady improvement.
  • The eurozone negotiations on the debt crisis in Greece preoccupied global financial markets, although an agreement reached just after the quarter ended appeared to establish a framework for what needs to be done to secure a roughly 85 billion euro bailout, but will require approval.
  • China’s A-share (onshore) stock market took investors on a roller-coaster ride in the quarter, tumbling nearly 30% from a high in mid-June and then bouncing to the biggest daily gain in six years in early July. The moves raised concerns about the potential impact on China’s economy and market structure.

Portfolio Strategy

  • The Fund had a positive return for the quarter (before the effect of sales charges) that was slightly better than the positive return of its benchmark index.
  • The Fund continued to hold a dominant allocation to the underlying Ivy Emerging Markets Equity Fund, although we rebalanced slightly to 30.7% of net assets at quarter end. We also slightly increased allocations to Ivy Global Growth Fund at 25.2% and Ivy International Core Equity Fund at 25.0%. These three funds had positive returns for the quarter (before the effect of sales charges), led by Ivy Emerging Markets Equity Fund. The remaining fund allocations were to Ivy Global Income Allocation at 9.7% and Ivy European Opportunities at 9.3%.
  • The weightings in the Fund reflect in part our theme focused on the rising prosperity of an expanding global middle class with greater discretionary income and an affinity for global consumer brands.
  • About 76% of the portfolio was invested in foreign equities at the quarter's end, based on the holdings in the underlying funds.


  • U.S. economic trends continue to show improvement and remain positive relative to the rest of the world. We expect continued slow growth in the global economy.
  • We still believe the Fed will be cautious when it ultimately does decide to begin increases in interest rates. We believe inflation is well contained for now and markets continue to have faith in central bank policies.
  • The Fund continues to maintain the highest exposure to equities via its underlying funds, and we think that asset class provides the best opportunity for return in a market supported by global central bank measures.
  • We also still believe the growing number of emerging market consumers coming into the middle class with discretionary income will spend on areas such as financial services, technology, premium brands, etc., and believe these offer opportunities for the Fund.

The opinions expressed in this commentary are those of the Fund’s manager and are current through June 30, 2015. 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 -- changed its investment mandate from international to global, gaining access to investment opportunities in any country or region across the globe, and changed its name to Ivy Global Growth Fund.

Risk factors. 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 f uctuations, political or economic conditions l 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 financial advisor or visit us online at www.ivyfunds.com. Please read the prospectus or summary prospectus carefully before investing.

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