Market Sector Update

• The U.S. stock market, as represented by the Wilshire 5000 Total Market Index, was up 14.11% for the first quarter of 2019. This marks the strongest quarter for U.S. equities since 2009, when the market was rebounding from the 2008 recession. Smaller capitalization stocks outperformed their large-cap counterparts during the quarter as growth stocks outpaced value stocks.
• Equity markets outside of the U.S. also had a strong start to 2019, although they generally underperformed the U.S. equity market. Trade talks between the U.S. and China continued with occasional signs of progress. Any completed agreement would help clarify a huge unknown and could have a positive effect on global markets and economies.
• U.S. bond markets rallied during the quarter, as credit spreads narrowed rapidly and the 10-year Treasury yield fell late in the quarter. The bellwether 10-year Treasury yield ended the quarter at 2.41%, down 28 basis points from December.
• The U.S. Federal Reserve (Fed) left the federal funds rate unchanged during the quarter after a 0.25-percentagepoint increase in December. However, the Fed did change its projection for 2019 from two rate increases to none.
• The U.S. Federal Reserve increased its benchmark overnight interest rate by 25 bps in December to a range of 2.25- 2.50%.
• Real gross domestic product growth slowed to 2.2% annualized during the fourth quarter of 2018. At 2.9%, real growth for that year was the strongest since 2015. Consumer spending was the main driver of growth for the first quarter.

Portfolio Strategy

• The Fund had a positive return for the quarter but lagged the return of its blended benchmark index. 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. As of quarter end, the Ivy International Core Equity Fund was the largest underlying fund allocation at about 14.4%, followed by Ivy Emerging Markets Equity Fund at 10.3%.
• Global equity markets rallied strongly during the quarter and buoyed most risk assets, including high yield fixed income and investment grade corporate credit. For the quarter, global equities, represented by the MSCI ACWI, gained 12.18%. The Fund’s exposure to global equities and credit was a material driver of returns during the quarter.
• The Fund ended the quarter with about 34.1% allocated to fixed income products, about 29.6% allocated to domestic equity products and about 35.9% allocated to foreign equity and global real estate products.
• The three largest contributors to performance in the quarter were the allocations to the Ivy Emerging Markets Equity Fund, Ivy International Core Equity Fund and Ivy Large Cap Growth Fund. The Ivy Mid Cap Growth Fund was the underlying allocation with the strongest absolute performance during the quarter.
• The Fund’s largest position, Ivy International Core Equity, was the largest contributor to performance. Overall, exposure to equity funds contributed to the majority of Fund performance for the quarter.

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.
• Following the sharp selloff in the fourth quarter, U.S. equities entered the first quarter priced attractively relative to projected earnings. The immediate rally was not unexpected and despite a slowdown in U.S. corporate earnings growth, we believe both U.S. and foreign equities remain priced fairly.
• While the risks of a recession are growing, signs do not point towards an imminent U.S. or global recession. We continue to believe that continued economic growth will allow most asset classes to avoid a steep and protracted drawdown.
• In the current investment environment, we still 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 remain underweight duration due to our belief that the front end of the domestic yield curve will continue to rise and the overall yield curve will continue to flatten or perhaps invert.

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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, 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.

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.

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.

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.