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    Quarterly Fund Commentary


    Delaware Ivy LaSalle Global Real Estate Fund (prospectus)
    December 31, 2016


    Manager(s):
    Matthew Sgrizzi, CFA
    Lisa Kaufman
    Benjamin Lentz, CFA
    Paul Meierdierck, CFA

    Market Sector Update

    • Global property stocks declined during the quarter, underperforming the broader equity market. Global property stocks in general posted positive returns for the year but trailed the equity market.
    • Improving economic data led to a firming global economic outlook and an increase in interest rates, which had a negative impact on sectors thought to be more defensive, including real estate securities.
    • The enhanced economic outlook and the potential impact of U.S. President-elect Donald Trump’s pro-growth agenda drove a move into more economically sensitive equity sectors and market segments that may be affected by the potential for less regulation and increased fiscal stimulus.
    • Real estate operating fundamentals overall remained healthy across much of the globe and were supportive of the sector

    Portfolio Strategy

    • The Fund had a negative return for the quarter, as did its benchmark index. Real estate securities declined across all regions, contributing to the negative absolute return.
    • Relative to the benchmark, the Fund’s stock selection and regional allocations were positives, helped by outperformance in Japan and the U.S. Results in Japan were helped by an overweight to real estate operating companies (REOCs), which outperformed real estate investment trusts. The REOCs recovered much of their earlier underperformance and were helped by the yen's depreciation, reduced inflation expectations and healthy first-half 2016 operating results.
    • U.S. selection results can be attributed to underweight positions to the triple net lease and health care sectors, which are perceived to be more defensive and bond-like.
    • Positive regional allocation results were driven by underweight positions relative to the benchmark to Continental Europe and Singapore, two of the worstperforming regions during the quarter.
    • We moved our underweight position versus the benchmark to Continental Europe to a market weight, and significantly reduced our underweight to Australia. We shifted our overweight position to the U.S. to a market weight, and reduced our overweights to Hong Kong and Japan. We shifted our overweight to the U.K. to a market weight before later moving back to a modest overweight. We also modestly increased our underweight position to Canada and maintained our underweight to Singapore.

    Outlook

    • Early 2016 was marred by declining global growth expectations, but markets reacted positively late in the year to sustained improvement in global economic data and the potential for increased fiscal stimulus.
    • This reaction has been accompanied by an increase in interest rates and inflation expectations, yet these increases have stabilized more recently and rates remain below historical levels. Capital market conditions remain broadly supportive and markets generally now expect a moderate acceleration in economic growth in 2017.
    • We believe the current capital market environment, a moderate acceleration in growth and the general health of real estate fundamentals will continue to support property company earnings growth.
    • In our view, global property stocks are trading at modest discounts to their net asset values on average and below where they have historically traded. In general, we think the earnings of the companies in the Fund have the potential to grow in the near term at a slightly faster rate than those in the benchmark, although there can be no certainty of such growth.

    The opinions expressed in this commentary are those of the Fund's managers and are current through Dec. 31, 2016. The managers' views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.. Past performance is not a guarantee of future results.

    Keith Pauley was a portfolio manager on the Fund until Sept. 1, 2016. Lisa Kaufman was named a portfolio manager as of that date.

    The Ivy Global Real Estate Fund was renamed Ivy LaSalle Global Real Estate Fund on Feb. 1, 2016.

    Risk factors. The value of the Fund's shares will change and you could lose money on your investment. 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. Because the Fund invests more than 25% of its total assets in the real estate industry, it may be more susceptible to a single economic, regulatory, or technical occurrence than a fund that does not concentrate its investments in this industry. 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 is non-diversified, meaning that it may invest a significant portion of its total assets in a limited number of issuers, and a decline in value of those investments would cause the Fund's overall value to decline greater than that of a more diversified portfolio. 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.

    IVY INVESTMENTS? refers to the investment management and investment advisory services offered by Ivy Investment Management Company, the financial services offered by Ivy Distributors, Inc., a FINRA member broker dealer and the distributor of IVY FUNDS® mutual funds and IVY VARIABLE INSURANCE PORTFOLIOS?, and the financial services offered by their affiliates.

    Before investing, investors should consider carefully the investment objectives, risks, charges and expenses of a mutual fund. This and other important information is contained in the prospectus and summary prospectus, which can be obtained from a financial advisor or at www.ivyinvestments.com. Read it carefully before investing.

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