Waddell & Reed

Quarterly Fund Commentary

Ivy Managed International Opportunities Fund (prospectus)
March 31, 2015

Michael L. Avery

Market Sector Update

  • Outside the U.S., widespread policy easing by global central banks and weakening currencies resulted in stronger flows into U.S. Treasuries and equities. Bond prices and equities ended the quarter higher.
  • The effects of a stronger U.S. dollar weighed on company earnings and revenue guidance for U.S. multinationals, but were beneficial for European and Japanese companies.
  • The U.S. Federal Reserve (Fed) removed the word “patient” from its March statement, but said interest rates would not rise until inflation is closer to its target. Many now do not expect a rate increase until the second half of 2015.
  • The European Central Bank implemented a quantitative easing (QE) program in the quarter. Europe has negative interest rates in some shorter duration fixed-income instruments. Credit markets responded with the majority of investment grade, eurodenominated corporate bonds yielding less than 1%.

Portfolio Strategy

  • The Fund had a positive return for the quarter and outperformed its benchmark index (before the effect of sales charges).
  • The Fund continued to hold a dominant allocation to the underlying Ivy Emerging Markets Equity Fund at 40.4% of net assets. That was followed by significant allocations to Ivy International Core Equity Fund, at 20.2%, and Ivy Global Growth Fund, at 20.1%. All of the underlying funds posted positive returns for the quarter (before the effect of sales charges).
  • The weightings in the Fund reflect 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 80% of the portfolio was invested in foreign equities at the quarter's end, based on the holdings in the underlying funds.


  • We believe U.S. economic trends remain positive relative to the rest of the world, although payroll data has taken on more significance with a datadependent Fed. Europe’s most recent economic data have shown improvement and China’s slowing economy has resulted in recent additional stimulus measures.
  • Greece’s membership in the Eurozone remains unresolved because of its ongoing debt problems, but we do not think there is real interest in a “Grexit.”
  • We continue to believe equities offer the best alternative for generating returns in this low-growth, low-interest rate environment.
  • In our view, global overcapacity suggests continued downward pressure on inflation and we expect interest rates to remain very low for some time.

The opinions expressed in this commentary are those of the Fund’s manager and are current through March 31, 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. 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 financial advisor or visit us online at www.ivyfunds.com. Please read the prospectus or summary prospectus carefully before investing.

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