Market Sector Update

• Major index returns were lackluster across regions in the quarter as equity markets surrendered the early gains that mounted in January. Emerging markets faired best, while European equities were the most significant laggard. Commodities fared well and benefited commodity linked economies such as Brazil, Russia and Malaysia. The information technology and consumer discretionary sectors had a particularly strong quarter, while consumer staples, materials and telecommunications were the most notable underperformers. The financial sector significantly underperformed in March. Large cap underperformed in developed markets, and growth significantly outperformed value, which was a tailwind for the Fund.
• Lackluster economic data in Europe resulted in a sharp downturn, which was in contrast to positive economic surprises emanating from China in February. Earnings revisions were most positive in the U.S. but lagged in Europe. Valuations are most onerous in the U.S. where investors are paying a premium for the superior revenue and earnings growth, while emerging markets continue to look cheap on a relative basis.
• Interest rates rose, especially in the U.S. where monetary policy is tightening in response to firming inflation data. Financial conditions remain supportive but are incrementally tightening as yields rise and credit spreads marginally widen, but the market remains very receptive to corporate bond issuance across the quality spectrum.

Portfolio Strategy

• The Fund posted a slightly negative return, but outperformed its benchmark (before the effects of sales charges) for the quarter. Fund performance reflects the mix of returns in the five underlying funds during the quarter and their allocation weightings. The Fund’s total contribution to return was most positively driven by the Ivy Emerging Markets Equity Fund, Ivy Global Growth Fund and the Ivy European Opportunities Fund, respectively.
• The Fund’s strategic allocation remains unchanged from the previous quarter: 42.5% Ivy International Core Equity Fund, 18% Ivy Emerging Market Equity Fund, 15% Ivy European Opportunities Fund, 14.5% Ivy Global Income Allocation Fund and 10% Ivy Global Growth Fund.
• At quarter end, about 83% of the portfolio was invested in foreign equities and 10% was invested in domestic equities. The Fund held 5% in fixed income as well as 2% in cash and equivalents.

Outlook

• Despite recent market volatility, the fundamental outlook remains positive. Our economists are above consensus, globally, on growth and inflation with wages, capital expenditures and in some cases, exports being the main drivers of the upside bias. Labor markets continued to improve in the first quarter as jobs growth gained momentum and participation increased, which should lead to higher wages and inflation.
• With growth and inflation accelerating globally, central bank policy decisions will continue to be a major focus of markets in the second half of 2018. Therefore, we have a balanced outlook for currencies as relative rates of positive growth and inflation data will be weighed against changes in deficits, fiscal and trade policies, globally.
• On balance, all of these factors suggest global economic growth will remain solid in 2018, which should be supportive of equities. While the path may be more volatile, and returns are not likely to be as robust as markets enjoyed in 2017, the fundamental backdrop remains positive and will continue to be monitored in relation to monetary policy, credit conditions and valuations as the year progresses.

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.

Risk factors: The value of the Fund’s shares 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 fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in a single region involves greater risk and potential reward than investing in a more diversified fund. Fixedincome securities are subject to interest rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. Dividend-paying investments may not experience the same price appreciation as nondividend paying instruments. Dividend-paying companies may choose to not pay a dividend or the dividend may be less than expected. The performance of the Fund will depend on the success of the allocations among the chosen underlying funds. 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.