Ivy ProShares Russell 2000 Dividend Growers Index Fund


Market Sector Update

  • The small-cap stocks of the Russell 2000 Index delivered another strong quarter of performance by returning 12.7%. Small-cap stocks significantly outperformed larger cap for the quarter, continuing the trend that developed in the latter part of 2020.
  • The market was supported by optimism over the accelerated vaccine distribution and economic data trending in a positive direction. Additional stimulus delivery further bolstered markets, but concerns over the potential for higher inflation pushed the 10-year Treasury yield higher by 80 basis points and contributed to volatility during the period.
  • A notable change in style leadership emerged during the quarter as previously lagging value stocks significantly outperformed richly valued technology shares. All 11 sectors in the Russell 2000 Index posted strong gains for the quarter. Best performing were the cyclical energy (41.9%) and consumer discretionary (26.6%) sectors. The weakest performers on a sector basis were health care and utilities which delivered returns of under 4% for the quarter.

Portfolio Strategy

  • The Fund delivered a positive return and outperformed its benchmark for the quarter. Relative outperformance was driven mostly by favorable stock screening impacts, with favorable allocation effects also contributing.
  • The largest relative contributor at the sector level was the health care sector. The Fund is underweight health care stocks (by approximately 16%), which helped relative performance as it was the broader market’s weakest performer. Additionally, the Fund’s names outperformed the broader market health care names.
  • Strong stock performance from the Fund’s financials stocks was another leading contributor to outperformance. Partially offsetting these contributions was an underweight to the consumer discretionary names which outperformed the market, and an overweight to utilities shares, which underperformed.


  • The Fund remains focused exclusively on companies within the Russell 2000® Index that have grown their dividends for at least 10 consecutive years. While not necessarily providing the highest dividend yield, a strategy based on highquality companies with a consistent track record of dividend growth provides the potential for attractive long-term outperformance.

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.Past performance is not a guarantee of future results.

The Russell 2000® Dividend Growth Index measures the performance of members of the Russell 2000® Index that have increased dividend payments each year for at least 10 years. The index contains a minimum of 40 stocks, which are equally weighted. No single sector is allowed to comprise more than 30% of the index's weight. If there are fewer than 40 stocks with at least 10 consecutive years of dividend growth, the index will include companies with shorter dividend growth histories. The index is rebalanced each March, June, September and December, with an annual reconstitution during the June rebalance. It is not possible to invest directly in an index.

The Russell 2000® Index is an index measuring the performance approximately 2,000 small-cap companies in the Russell 3000® Index, which is made up of 3,000 of the biggest U.S. companies. It is not possible to invest directly in an index.

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 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. 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. Small- and mid-capitalization companies in which the index and, by extension the Fund, are exposed may carry more risk than investing in stocks of larger, more established companies. The Fund's emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform non-dividend paying stocks and the market as a whole over any period of time. In addition, there is no guarantee that the companies in which the Fund invests will declare dividends in the future or that dividends, if declared, will remain at current levels or Increase over time. The amount of any dividend the company may pay may fluctuate significantly. In addition, the value of dividend-paying common stocks can decline when Interest rates rise as fixed-income investments become more attractive to investors. This risk may be greater due to the current period of historically low Interest rates. As of November 30, 2018, the index was concentrated in the utilities industry group; therefore, the Fund is subject to the same risks faced by companies in the utilities industry to the same extent as the index is so concentrated. Such risks include review and limitation of rates by governmental regulatory commissions, and the fact that the value of regulated utility instruments tends to have an inverse relationship to the movement of interest rates. The Fund typically will hold a limited number of stocks (generally around 60). As a result, the appreciation or depreciation of any one security held by the Fund may have a greater impact on the Fund's net asset value than it would if the Fund invested in a larger number of securities. 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. 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.