Market Sector Update

• It was another positive quarter for global equity markets as economic activity and employment trends continued their rebound. As highly effective vaccines increasingly inoculate populations, pent-up demand is released and more normal economic activity is resumed. Positive market action reflected this continued economic normalization and procyclical impulse.
• Governments and central banks, globally, continue to provide unprecedented policy support to offset the negative economic effects of responses to the pandemic including monetary easing, fiscal stimulus and direct asset purchases. The U.S. Federal Reserve (Fed) continues its dovish tone with a very high bar for raising rates, which suggests monetary policy is less likely to hamper any improvements in growth. An additional stimulus bill was also passed in the U.S. in the first quarter, which included $1,400 checks and additional supplemental unemployment benefits. The Biden administration is endorsing additional fiscal spending programs.

Portfolio Strategy

• The Fund experienced a positive return in the quarter and outperformed its benchmark index. Fund performance reflected the mix of returns in the underlying funds and their allocation weightings. The Ivy International Core Equity Fund and Ivy Pzena International Value Fund were the biggest contributors to positive relative performance followed, to a lesser extent, by the Ivy Global Equity Income Fund and Ivy International Small Cap Fund. After very, very strong relative performance in recent periods, this quarter’s only detractor to relative performance was the Ivy Emerging Markets Equity Fund, which performed in-line with emerging-market equities.
• The Fund ended the period with the following target asset allocation: Ivy International Core Equity Fund 31%, Ivy Emerging Markets Equity Fund 29%, and a 10% allocation each to Ivy Pzena International Value Fund, Ivy Global Growth Fund, Ivy International Small Cap Fund and Ivy Global Equity Income Fund to provide a well-diversified portfolio of international stocks.

Outlook

• Although the U.S. is making rapid progress, some global markets and economies continue to face significant challenges with the virus and distribution of vaccines as the pandemic continues. And despite the historical rebound in consumption and expenditures, previous levels of economic activity and employment have not been recovered. As populations are increasingly inoculated and low interest rates as well as trillions of dollars of stimulus continue working their way through the economy, activity is expected to continue its upward trajectory toward more normal levels.
• Although securities valuations are demanding, fiscal stimulus is expected to continue, which adds to the pro-cyclical impulse. The Fed’s willingness to maintain accommodative monetary policy alleviates some upward pressure for interest rates, especially in shorter-dated markets. However, myriad risk factors remain, as always. Among these risks include the risk of inflation, higher interest rates, and valuation compression in equity securities that have already priced in much good news.

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, 2021, 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. All information is based on Class I shares. Diversification cannot ensure a profit or prevent against a loss in a declining market. Past performance is not a guarantee of future results.

Risk factors: The value of the Fund's shares will change, and you could lose money on your investment. 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. The performance of the Fund will depend on the success of the allocations among the chosen underlying funds. Investing in a single region involves greater risk and potential reward than investing in a more diversified fund. 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.