Waddell & Reed

Quarterly Fund Commentary

Ivy Global Equity Income Fund (prospectus)
March 31, 2015

Robert Nightingale

Market Sector Update

  • International markets outperformed during the quarter despite U.S. dollar appreciation relative to most currencies. Market volatility decreased, with the European market experiencing gains throughout the period. The European market was up approximately 11% (in local terms), but approximately 3% higher in U.S. dollars.
  • Asian markets outperformed the U.S. in local currency. Australia benefited by higher yielding stocks. In addition, Japan rallied on further evidence of better corporate governance aided by Abenomics and a stronger economy. The Chinese market rallied partly due to money flowing to stocks from property as well as increased confidence in the Chinese government.
  • The U.S. economy stumbled in the first quarter as inclement weather and strikes negatively influenced economic data. The strong dollar is dampening reported earnings for large-cap U.S. multinationals, hurting stock performance.
  • Confidence in a steady European recovery began to take shape during the quarter. Business and consumer confidence was boosted by lower fuel prices, ECB action, a lower euro and government reforms. The market now anticipates quantitative easing to drive the markets higher as it did in the U.S.

Portfolio Strategy

  • The Fund posted positive performance and outperformed the benchmark (before the effects of sales charges) for the quarter. Strong stock selection – particularly in financials, industrials, and consumer discretionary – aided performance. In addition, sector allocation benefitted performance for the period. The Fund’s overweight allocations to the strong-performing industrials and consumer discretionary sectors as well as an underweight position to the poor-performing energy sector benefitted performance.
  • From a country allocation standpoint, the Fund’s underweight position to the relatively poor-performing U.S. aided performance. Solid stock selection in the U.S. and Australia more than offset poor stock selection in France and Norway. U.S. dollar currency hedges to select currencies were the greatest contributor to performance for the period.
  • Over the quarter, the Fund increased its allocation to industrials (exporters), and reduced exposure to energy and telecommunications services.
  • The Fund’s largest sector overweights include consumer discretionary and industrials, where we continue to find companies we believe provide good dividend yield and growth prospects. In our view, our underweight allocations to energy and health care tend to have high relative valuations.


  • We think global economic growth is steady and monetary policy is likely to remain aggressive for the foreseeable future, but to a lesser extent in the U.S. and the U.K. We think the Fed will begin to slowly raise interest rates by fall 2015, which will keep the markets on edge.
  • We continue to follow policies stemming from Europe, including stimulation, reforms and regulation measures from foreign governments and the ECB. It is our belief that the May U.K. election likely will continue to create uncertainty until new government policies are stated.
  • We believe China’s multi-year rebalancing to a more consumerbased economy as well as its anticorruption efforts need to be monitored. In our view, these changes will have lasting impacts throughout the global marketplace in shaping gross domestic product (GDP) growth, commodity prices and multinational profits based in Europe.
  • We will continue to target economic recovery sectors and stocks that we believe best capture our economic outlook. We remain cautious on commodity sensitive areas until we see emerging markets reaccelerate. In our view, the strongest long-term GDP growth will still occur in emerging markets and the U.S. due to better demographics and a better business climate.


Effective August 4, 2014, Robert Nightingale became the sole portfolio manager of the Ivy Global Equity Income Fund.

The opinions expressed in this commentary are those of the Fund's managers and are current through March 31, 2015. The managers' 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. Dividend-paying investments may not experience the same price appreciation as non-dividend-paying instruments. Dividend-paying companies may choose to not pay dividends, or dividends may be less than was anticipated.

Risk factors. As with any mutual fund, the value of the Fund’s share 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, l political or economical conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Dividend-paying investments may not experience the same price appreciation as non-dividend paying instruments. Dividendpaying companies may choose to not pay a dividend or the dividend may be less than expected. 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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