Market Sector Update

• The return of volatility in the equity markets was one of the main events of first quarter. To put this in context, the S&P 500, the Fund’s benchmark, saw 23 daily moves of greater than +/-1% during the quarter, compared to just eight for all of 2017.
• The increase in volatility was due largely to a tug of war in the market: strong corporate earnings growth driven by tax reform and deregulation on one side, and fears around rising interest rates, elevated equity market valuations, and potential protectionist trade policies on the other.
• An additional drag this quarter has been evolving U.S. trade policy, primarily focused on the North American Free Trade Agreement (NAFTA) and China. While there is good reason to modernize NAFTA and address trade fairness with China, especially around intellectual property protection, the recent headlines regarding the burgeoning trade tensions with China have not been well received by equity markets.
• In addition, we believe the recently enacted tax reform and continued moves on deregulation will aid the economy. As the paradigm of low interest rates, high regulation and low economic growth comes to a close, company management teams are less able to grow earnings through stock buybacks and welcome policy changes that incentivize them to increase capital spending. We are consistently hearing from companies across many sectors that significant portions of tax cut savings are being reinvested in their businesses, primarily technology initiatives.

Portfolio Strategy

• The Fund outperformed the benchmark (before the effect of sales changes) for the quarter.
• The top performing sectors were information technology, consumer discretionary, financials and industrials. Conversely, energy, consumer staples and materials were among our largest sector detractors. The Fund did not hold positions in telecommunications, utilities or real estate.
• Strong performing individual holdings for the quarter included Adobe Systems, Airbus, Zoetis, ASML Holdings and CME Group. The Fund’s largest detractors for individual holdings were Cimarex Energy, Cigna, DowDuPont, Monster Beverage and Netflix.

Outlook

• We believe the U.S. economic outlook provides a positive backdrop for our portfolio. Global growth remains favorable as the U.S. economy generates solid growth, while overseas economies show continued signs of expansion.
• The Fund has continued to benefit from having a tilt towards companies with stronger than average revenue growth combined with being on the right side of key secular trends.
• While no major positioning changes are planned in the near term, we are looking to take advantage of the increased volatility we have seen in recent months. This includes not only taking some profits in areas that have outperformed, but trying to find opportunities with companies that have seen recent underperformance.
• While most of these moves are “around the edges”, we are looking to bring more balance into the Fund’s portfolio. This will always be done in the context of owning companies where we feel that the multi-year earnings power is underappreciated.

The opinions expressed are those of the Fund’s managers and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through March 31, 2018, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor’s specific objectives, financial needs, risk tolerance and time horizon. Past performance is not a guarantee of future results.

Top 10 holdings (%) as of 03/31/2018: Microsoft Corp. 5.2, Morgan Stanley 3.3, Apple, Inc. 3.2, JPMorgan Chase & Co. 3.1, Paypal, Inc. 3.1, UnitedHealth Group, Inc. 3.0, Alphabet, Inc. 2.9, Airbus Se 2.8, Adobe Systems, Inc. 2.7, Blackstone Group Lp 2.6.

Class R6 shares were Class N on March 31, 2017.

The S&P 500 Index is an unmanaged index of common stocks. It is not possible to invest directly in an index.

The Waddell & Reed Core Investment Fund merged into the Ivy Core Equity Fund on Oct. 16, 2017.

Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. Because the Fund is generally invested in a small number of stocks, the performance of any one security held by the Fund will have a greater impact than if the Fund were invested in a larger number of securities. Although larger companies tend to be less volatile than companies with smaller market capitalizations, returns on investments in securities of large capitalization companies could trail the returns on investments in securities of smaller companies. 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. 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.