Market Sector Update

• Global equity markets rebounded sharply in the first quarter of 2019, precipitated by a pivot in monetary policy by the U.S. Federal Reserve (Fed) in late December, which announced a sudden pause in its plan to increase policy rates given weakening economic data and tightening financial conditions.
• Additional optimism fueled a strong equity market rally throughout the first quarter of 2019 driven by a positive turn in rhetoric around the U.S.-China trade dispute, Chinese economic stimulus measures, a re-opening of the U.S. government and relief that corporate earnings reports did not materially lower forward-looking earnings guidance.

Portfolio Strategy

• The Fund benefitted from the robust equity returns in the first quarter and posted a double-digit return, in line with its benchmark index. The performance reflects the mix of returns in the underlying funds and their allocation weightings. The most significant contributions were from the Ivy Emerging Markets Equity Fund and the Ivy Global Growth Fund. Both funds significantly outperformed their respective benchmarks, and the U.S. equity and growth-style exposures were tailwinds for the Fund. The Ivy Pzena International Value Fund and the Ivy International Small Cap Fund were the most significant detractors to performance as the value style underperformed in the period and both funds underperformed their respective benchmarks.
• The Fund ended the quarter with the following target asset allocation: Ivy International Core Equity Fund 35%, Ivy Pzena International Value Fund 20%, Ivy Emerging Markets Equity Fund 15%, and a 10% allocation each to Ivy Global Growth Fund, Ivy International Small Cap Fund and Ivy Global Equity Income Fund.
• At quarter end, about 87% of the Fund was invested in foreign equities, 10% in domestic equities and 3% in cash and cash equivalents.

Outlook

• Our outlook remains balanced. Global growth remains tepid, but signs of improvement are emerging in economic data. In our view, many risk factors that precipitated the sell-off in the fourth quarter of 2018 have abated. First and foremost, the Fed has halted its hiking cycle, has signaled its willingness to be flexible in its balance sheet normalization process and has signaled the possibility of a change in monetary policy framework that may lead them to a more dovish policy stance.
• Following a deleveraging phase in China, policy makers there have implemented measures to stimulate growth, including looser monetary policy, tax cuts and fee reductions as well as increased lending to the private sector, including new infrastructure investments through local government special purpose bonds. These measures operate with a lag and our economists anticipate these factors will be a tailwind to growth in the coming quarters.
• We believe the rhetoric around the U.S.-China trade dispute has improved and the market expects a deal to be reached in the coming months. As many of the bearish dynamics that hindered returns in 2018 are alleviated in 2019 we anticipate global growth to improve modestly from a relatively low base.

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, 2019, 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.

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.