Market Sector Update
- International markets underperformed
during the quarter and returns were
dampened by U.S. dollar appreciation
relative to most currencies. In particular,
the U.S. dollar impacted performance of
the Fund’s global fixed-income
benchmark, which was down more than
300 basis points during the quarter
despite a global rally in interest rates.
- Markets have become more volatile as
the certainty of U.S. monetary policy
comes to an end as the Federal Reserve
(Fed) ends asset purchases and
eventually contemplates when to hike
- The Fund slightly outperformed (before
the effects of sales charges) its blended
benchmark during the quarter, driven by
outperformance of the Fund’s fixedincome
portfolio. Both of the Fund’s
global benchmarks materially
underperformed common broad-based
- We view the pullback in international
markets as an opportunity, and
therefore, have incrementally been
increasing our international equity
exposure. We recognize growth in many
international markets to likely be
challenging, but we believe valuations
are currently at a significant discount
and global central banks (outside the
U.S.) are likely to become the
incremental drivers of liquidity.
- Recently, the Fund has been holding
higher levels of cash in an effort to take
advantage of dislocations presented by
volatility in credit markets, both in the
U.S. and within the European high yield
- The Fund has become more focused on
individual security selection, which is
likely to become more important in a
slow growth, low-inflation environment.
- We expect both growth and inflation to
stay low for the remainder of 2014 and
into 2015. Because of this outlook, we
believe central banks globally will
remain accommodative. As a result, we
remain confident to position the Fund
to be near fully invested, though we
admit the return profile going forward
is likely lower.
- Fixed-income markets are likely to
experience heightened volatility, given
uncertainty regarding Fed policy.
While interest rate hikes are on the
way, in our view it is unlikely the Fed
increases rates before the middle of
2015. When the Fed does begin to
normalize policy, we expect it to do so
gradually. We expect longer-term
interest rates to remain at fairly low
levels, given subdued inflation levels
and low growth.
The opinions expressed in this commentary are those of the Fund’s manager and are current through Sept. 30, 2014. 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.
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. Fixed-income securities are subject to interestrate
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.
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.