Market Sector Update

• The U.S. stock market, as represented by the Wilshire 5000 Total Market Index, was up 3.99% for the second quarter. It was the strongest quarter for U.S. equities since 2009, the strongest first half of a year in 24 years and an 18.66% gain in that index for the year to date. The gains came in the face of volatile markets as trade concerns and a possible global economic slowdown continue to sway investor sentiment.
• Equity markets outside of the U.S. continued their strong 2019 performance, although they are generally underperforming the U.S. Trade negotiations between the U.S. and China, the world’s two largest economies, continued with both countries maintaining firm stances going into the G20 Summit in late June. There was some good news following the conference as the two countries agreed to delay new trade sanctions and continue negotiations.
• U.S. bond markets rallied during the quarter as interest rates fell and credit spreads modestly narrowed. The bellwether 10-year U.S. Treasury yield ended the quarter at 2.00%, down 41 basis points from March.
• The U.S. Federal Reserve (Fed) left the federal funds rate unchanged during the quarter and softened some of its messaging to indicate a willingness to ease should conditions deteriorate. The Fed’s current forecast, however, is for no rate changes this year and a minor downward adjustment in 2020.
• Growth in real gross domestic product accelerated 3.1% on an annualized basis during the first quarter. Business investment was the main driver of growth, while changes in net exports also contributed. Changes in consumer spending were positive, but slowed from fourth-quarter 2018.

Portfolio Strategy

• The Fund had a positive return for the quarter but lagged the return of its blended benchmark. Global equity markets continued to rally during the quarter while fixed income also largely recorded gains, including high yield and investment grade corporate credit. The Fund’s exposure to global equities and credit was a material driver of returns.
• The Fund uses a “fund-of-funds” structure that allocates assets among affiliated equity and fixed income mutual funds with both domestic and foreign investment strategies. The Fund ended the quarter with about 35.4% allocated to fixed income, about 28.7% allocated to domestic equity and about 33.2% allocated to foreign equity.
• As of quarter-end, Ivy International Core Equity Fund was the largest underlying fund allocation at about 15.7% and was a notable contributor to performance. It was followed by an allocation to Ivy Securian Core Bond Fund at 10.2%.
• The three largest contributors to performance in the quarter were the allocations to Ivy Large Cap Growth Fund, Ivy Securian Core Bond Fund and Ivy Value Fund. Ivy Large Cap Growth Fund was the underlying allocation with the strongest absolute performance followed by Ivy Core Equity Fund. Only two underlying allocations detracted from performance in the quarter: Ivy LaSalle Global Real Estate Fund and Ivy Emerging Markets Equity Fund.

Outlook

• The Fund’s allowable allocation ranges are wide, but we anticipate equity-oriented investments will range from 55- 75% and fixed income-oriented investments will range from 25-45% during most market environments. The Fund’s long-term strategic target is a 65% allocation to global equities and 35% to global fixed income.
• The strong year-to-date equity market rally, coupled with moderating economic growth, has increased investor concerns regarding continued corporate earnings growth. Those concerns have been tempered by the belief that the Fed is likely to ease monetary policy if economic growth continues to trend downwards, inflation remains muted and investor sentiment wanes.
• We believe that while the need for caution has increased, risk assets are unlikely to undergo a protracted sell-off in the coming months. We think economic and corporate earnings growth are likely to remain positive and there are few catalysts to drive investors away from risk assets.
• In the current investment environment, we continue to believe the most compelling equity investment opportunities include foreign equities. In our Fund allocations, we remain overweight foreign equities, with a large overweight to emerging markets equities, relative to developed market equities. Within fixed income, we have moved away from being underweight duration and credit to a neutral stance. We no longer anticipate material moves higher in interest rates and believe in the intermediate term that credit will continue to record positive results.

---

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 June 30, 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.

All information is based on Class I shares.

Waddell & Reed Advisors Wilshire Global Allocation Fund merged into Ivy Wilshire Global Allocation Fund on Feb. 26, 2018. The returns prior to this date reflect the performance of Waddell & Reed Advisors Wilshire Global Allocation Fund, which was incepted on March 9, 1995. Ivy Wilshire Global Allocation Fund adopted that performance as the result of a reorganization in which it acquired all assets and liabilities of WRA Wilshire Global Allocation Fund. Prior to the reorganization, the Ivy Wilshire Global Allocation Fund had no assets and had not commenced operations.

Wilshire Associates sub-advises a portion of the Fund consisting of the multi-asset segment, which invests in affiliated mutual funds, and shall have no responsibility over any other assets or segments of the Fund.

The Wilshire 5000 Total Market Index is an unmanaged index that represents the total U.S. equity market. The MSCI ACWI captures large- and mid-capitalization equities in 23 developed market countries and 24 emerging markets countries and covers approximately 85% of global equities. It is not possible to invest directly in an index.

Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. The performance of the Fund will depend on the success of the allocations among the chosen underlying funds. 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. Fixed-income securities are subject to interest-rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Investing in small-capitalization stocks may carry more risk than investing in stocks of larger more well-established companies. Although larger companies tend to be less volatile than companies with smaller market capitalizations, returns on investments in securities of large-capitalization companies could trail the returns on investments in securities of smaller companies. Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification. Investing in the energy sector can be riskier than other types of investment activities because of a range of factors, including price fluctuation caused by real and perceived inflationary trends and political developments, and the cost assumed by energy companies in complying with environmental safety regulations. Investing in commodities is generally considered speculative because of the significant potential for investment loss due to cyclical economic conditions, sudden political events, and adverse international monetary policies. Investment risks associated with investing in real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values. Investment risks associated with investing in science and technology securities, in addition to other risks, include: operating in rapidly changing fields, abrupt or erratic market movements, limited product lines, markets or financial resources, management that is dependent on a limited number of people, short product cycles, aggressive pricing of products and services, new market entrants and obsolescence of existing technology. 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.