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    Quarterly Fund Commentary

    Ivy Global Income Allocation Fund (prospectus)
    March 31, 2016

    W. Jeffery Surles, CFA

    Market Sector Update

    • Both the Bank of Japan and European Currency Board embarked on additional monetary stimulus during the quarter. In both cases the stimulus was met with skepticism, as equity markets in Europe and Japan underperformed, while government bonds yields in these sectors rallied to unprecedented levels.
    • In general, stocks and bonds of financial companies underperformed as people began to question the effects of negative interest rates and monetary policies on banks’ profitability.
    • The long standing rally in the U.S. dollar paused during the quarter, as both developed and emerging market currencies appreciated.
    • Credit markets finally stabilized after the Federal Reserve Board’s (Fed) first rate hike in nearly 10 years, as higher absolute yield levels and a bottoming of oil prices attracted capital into the market.>

    Portfolio Strategy

    • The Fund underperformed its blended benchmark during the quarter. Both the equity and fixed income portions of the portfolio underperformed their respective benchmarks. Asset allocation was largely neutral for performance as we are close to our benchmark weightings.
    • We continued to reduce risk in the portfolio during the quarter. While our asset allocation remained largely unchanged, both the beta of the equity portfolio was taken down and credit quality was raised within the fixed income portfolio.
    • Within the equity portfolio we further reduced the weighting toward international markets and added to more defensive sectors, such as healthcare.
    • Similarly in the fixed income portfolio, we continued to increase credit quality. During the quarter we mainly focused on participating in new issue securities from companies in the BBB sector of the market or in long duration issuance from highly-rated names, which were forced to issue at historically high spread levels due to heightened volatility in the market.


    • In the near term, we believe volatility will continue as choppy economic data continues globally creating large amounts of uncertainty for markets. It is important investors realize that we believe prudent managers diversify across states and sectors and always limit the amount of exposure to those variables as well as any individual bond.
    • This has resulted in us taking a more conservative approach going forward, and running an asset allocation similar to the benchmark, with lower levels of risk in both the fixed income and equity portfolios.
    • We also believe there is an increasing risk that global central banks will continue to conduct increasingly aggressive monetary policies to skeptical market reactions.


    The opinions expressed in this commentary are those of the Fund’s manager and are current through March 31, 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 no guarantee of future results. Past performance is not a guarantee of future results.

    Beta reflects the sensitivity of the fund's return to fluctuations in the market index.

    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 fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Fixed-income securities are subject to interest-rate risks 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 not to pay a dividend, or dividends may be less than was anticipated. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Not all funds or fund classes may be offered at all broker/dealers. These and other risks are more fully described in the Fund’s prospectus.

    IVY INVESTMENTS? 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.

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