Ivy Proshares MSCI ACWI Index Fund

12.31.19

Market Sector Update

  • Global equities advanced in the fourth quarter, as measured by the MSCI ACWI Index, the Fund’s broad market target.
  • The quarter was marked by relief from several of the overhanging threats surrounding the global economy. While this relief may be temporary, markets cheered the significant progress made toward a “phase one” U.S. and China trade deal and increased clarity surrounding Brexit.
  • In addition, there was supportive monetary policy across the globe as well as signs the world’s industrial and manufacturing slowdown may be bottoming.
  • Despite several steps in the right direction, the year closed with many geopolitical issues unresolved and an escalating conflict in the Middle East.

Portfolio Strategy

  • A passively managed index fund, the Fund delivered a positive return and performed in line its benchmark for the quarter.
  • At the sector level, the largest contributors to relative performance were information technology, health care, materials and industrials.
  • The Fund’s largest country allocations for the quarter were to the U.S., Japan and the U.K. The combined weight of these three allocations comprised nearly 66% of the Fund’s total weight.

Outlook

  • The outset of 2020 has several conflicting circumstances to consider. Global growth is still fragile. Manufacturing and industrial production has been weak and the lasting impacts of trade disputes on capital investment and business confidence is still unknown. The consumer has rescued and supported economic growth across much of the world, a source of growth that may not be sustainable.
  • Tensions in the Middle East are boiling, which could continue to drive oil prices to levels that hurt consumers and major oil importing nations around the world. It may also carry with it a risk premium that discounts current market valuations.
  • On the positive side, there are signs of cyclical bottoming across Europe and Asia. If these economies can sustain improvements in key economic growth drivers, this would be positive for the global economy. We believe the U.S.- China trade deal could bring confidence to industries that had previously experienced significant trade-related slowdown.
  • Lastly, Brexit is several steps closer toward an orderly conclusion. There are still variables that could derail this soft exit, but the situation has improved, which should support improvements in the U.K. and Europe.

The opinions expressed are those of the Fund’s manager and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through Dec. 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.

Diversification is an investment strategy that attempts to manage risk within your portfolio but it does not guarantee profits or protect against loss in declining markets.

The Fund is a passively managed index fund designed to track the performance of its stated benchmark index. It does not invest in securities based on the managers' view of the investment merit of a particular security or company, nor does it conduct conventional investment research or analysis or forecast market movement or trends, in managing the assets of the Fund. The Fund seeks to remain fully invested at all times in securities that, in combination, provide exposure to its respective benchmark Index without regard to market conditions, trends or direction.

The MSCI ACWI Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 46 country indexes, comprising 23 developed and 23 emerging market country indexes. The developed market country indexes included are: Australia,Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging market country indexes included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary,India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. It is not possible to invest directly in an index.

Alexander Ilyasov served as a portfolio manager on the Fund until April 2019.

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 Fund entails other risks, including imperfect benchmark correlation and market price variance that may decrease performance. While the Fund attempts to track the performance of its stated index, there is no guarantee or assurance that the methodology used to create the Index will result in the Fund achieving high, or even positive, returns. The Index may underperform, and the Fund could lose value, while other indices or measures of market performance increase in value. A number of factors may affect the Fund's ability to achieve a high degree of correlation with the Index, and there is no guarantee that the Fund will achieve a high degree of correlation. Failure to achieve a high degree of correlation may prevent the Fund from achieving its investment objective. The Fund's use of derivatives presents several risks, including the risk that these instruments may change in value in a manner that adversely affects the Fund's net asset value and the risk that fluctuations in the value of the derivatives may not correlate with the reference instrument underlying the derivative. 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. 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.