Market Sector Update

• The low volatility, upward trajectory of global equity markets suddenly reversed in late February and markets declined precipitously in response to two exogenous shocks: the COVID-19 pandemic and the collapse in energy markets, which was initially supply-driven.
• Social-distancing containment efforts to combat the spread of COVID-19 have created a sudden stop in economic activity. High frequency economic indicators have collapsed as activity was throttled back into recessionary levels. Unemployment is surging by record magnitudes and declines in economic growth will very likely be astounding in the second quarter.
• However, it is becoming increasingly evident that social distancing is effectively lowering infection rates and mitigating the worst possible outcomes of the pandemic. Governments and central banks have taken unprecedented steps to mitigate the economic blow of social distancing. The U.S. Federal Reserve (Fed) has already made two emergency cuts to its policy rate, launched yet another quantitative easing program and implemented several tools that took over a year to deploy during the financial crisis. In a matter of two weeks, the Fed’s balance sheet has expanded by $2 trillion, matching the increase from the entire five-year span of 2008-2013. In addition to the monetary easing, Congress passed a $2.2 trillion rescue package, the CARES act that should provide meaningful support for the recovery.

Portfolio Strategy

• The Fund experienced significant losses in the quarter and underperformed its benchmark index during the period. Fund performance reflected the mix of returns in the underlying funds and their allocation weightings. The most significant detractors were the Ivy Pzena International Value Fund, the Ivy International Core Equity Fund and the Ivy International Small Cap Fund. The Ivy Global Growth Fund positively contributed to relative performance as growth styles outperformed value during the quarter.
• The Fund ended the period 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 to provide a well-diversified portfolio of international stocks.

Outlook

• Global markets and economies face unprecedented challenges from both the direct impact of the virus and the secondary effects of social distancing efforts. The economic losses in the first half of 2020 will likely exceed those experienced in 2008. However, growth in cases, hospitalizations and deaths are already falling in several European nations and China has been gradually relaxing its distancing restrictions since early March. There are tentative signs of stabilization in the health data in the U.S. If distancing measures prove to have been effective – and barring a resurgence in new cases in geographies having already slowed the spread – then the prospects are good for a significant rebound in economic activity in the second half of 2020 and beyond. While recovery will take time, human ingenuity in pursuit of treatment and immunizations combined with unprecedented levels of monetary and fiscal stimulus make the case for a much more rapid rebound than prior recessions.

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, 2020, 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.

All information is based on Class I shares.

The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.

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.