Waddell & Reed

Quarterly Fund Commentary

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

Michael L. Avery

Market Sector Update

  • U.S. and global equity markets closed a volatile quarter with negative returns.
  • China surprised markets in August by devaluing its currency in an attempt to be more “market based” and as a step toward internationalization of the yuan, although it remains tied to the dollar. The move added to concerns about the magnitude of the economic slowdown in China and the implications for the rest of the globe.
  • The U.S. Federal Reserve in September decided to leave interest rates unchanged at near zero, citing market volatility and global economic uncertainty. Markets continued to focus on any indicators about the timing of an eventual rate hike.
  • Late in the quarter, India surprised markets by cutting its key interest rate by 0.50 percentage point to 6.75%, seeking to boost growth as inflation there eases. Higher real interest rates in the country suggest the central bank has room for further cuts.

Portfolio Strategy

  • The Fund had a negative return for the quarter, in line with the negative return of its benchmark index.
  • The Fund at quarter end held the largest allocation to the underlying Ivy International Core Equity Fund, at 29.5%, and maintained its allocation to Ivy Global Growth Fund at 25.1%. We increased the allocations to the Ivy European Opportunities Fund, ending at 20.3%, and the Ivy Global Income Allocation Fund, ending at 15.3%. We reduced the allocation to the Ivy Emerging Markets Equity Fund to 9.7%. Emerging market equity returns in general during the quarter were the weakest since third-quarter 2011. All of the underlying funds had negative returns for the quarter.
  • About 71% of the portfolio was invested in foreign equities at quarter end, based on the holdings in the underlying funds.


  • We believe the U.S. remains the relative bright spot in the global economy and continues to show improvement in key indicators. We expect continued slow growth elsewhere in the global economy.
  • Overall, we expect economic growth rates, interest rates and inflation to stay low for the foreseeable future. We believe that should translate to a market environment that favors careful security selection.
  • We think equities continue to provide the best relative opportunity for return among asset classes in a market supported by global central banks. We also still believe that the increase in emerging market middle-class consumers means they will spend more on financial services, technology, premium brands and other areas, offering opportunities for investment..

The opinions expressed in this commentary are those of the Fund’s manager and are current through Sept. 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.

Financial Advisor Opportunities
Corporate Careers