Waddell & Reed

Fund Detail

WRA High Income Fund
Class Y Shares

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Fund Facts
Ticker Symbol WYHIX
CUSIP 930057674
Fund Code 746
Fund Type Fixed Income Funds
Fund Inception 7/9/1979
Class Inception 1/4/1996
Fiscal Year End September
Dividends Paid Monthly
Fund Assets (as of 8/31/2014) $2.4 bil
Total Holdings (as of 8/31/2014) 370
Lipper Category High Current Yield Funds
Morningstar Category High Yield Bond
Benchmarks BofAML US HY Master II TR USD
Daily Prices
as of 9/22/2014
Net Asset Value (NAV) $7.61
NAV Change ($) ($0.01)
NAV Change (%) -0.13%
Weekly NAV Change ($) ($0.01)
Weekly NAV Change (%) -0.13%
Public Offering Price (POP) $7.61
Historical Prices & Distributions
Please select a date
Fund Description
Fund Objective
To seek to provide total return through a combination of high current income and capital appreciation.

Investment Approach
The Fund invests primarily in a diversified portfolio of high-yield, high-risk, fixed-income securities of U.S. and foreign issuers. The manager looks at a number of factors in selecting securities for the Fund, beginning with the economic environment, interest rate trends and industry fundamentals, progressing to analysis of a company's fundamentals, including financial strength, growth of operating cash flows, strength of management, borrowing requirements and potential to improve credit standing, responsiveness to changes in interest rates and business conditions, strength of business model, and capital structure and future capital needs.
Morningstar Style Box
Source: Morningstar
Returns and Expenses

Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

Class Y shares are not subject to sales charges.

Monthly Rates of Return Average Annual Total Returns
as of 8/31/2014
  YTD 1yr 3yr 5yr 10yr Life
Fund at NAV 5.78% 10.72% 13.10% 13.03% 8.70% 7.55%
BofAML US HY Master II TR USD 5.83% 10.62% 10.38% 12.17% 8.58% 7.62%
Quarterly Rates of Return Average Annual Total Returns
as of 6/30/2014
  YTD 1yr 3yr 5yr 10yr Life
Fund at NAV 5.33% 12.34% 11.78% 14.38% 8.94% 7.59%
BofAML US HY Master II TR USD 5.64% 11.80% 9.27% 13.94% 8.91% 7.68%
Lipper High Current Yield Funds 4.78% 10.60% 8.26% 12.61% 7.63% N/A
Expense Ratios
as of 1/31/2014
Net 0.76%
Gross 0.76%
12-Month Trailing Distribution Yield
as of 8/31/2014
NAV 6.88%
With sales charge 6.88%
Annualized 30-Day SEC Yield
as of 8/31/2014
Subsidized 5.75%
Unsubsidized 5.74%
Growth of a $10,000 Investment
through 8/31/2014
 High Income Y
 BofAML US HY Master II TR USD

Assumes an investment over 10 years or life of the share class, reinvestment of dividends and capital gains, and does not include the effect of sales charges or taxes.

Ratings and Rankings
Lipper Rankings
as of 8/31/2014
Category: High Current Yield Funds
  Rank Percentile
1 Year 103 / 597 18
3 Year 6 / 475 2
5 Year 24 / 413 6
10 Year 21 / 278 8

Rankings are based on average annual total returns, but do not consider sales charges.

Morningstar Ratings
as of 8/31/2014
Category: High Yield Bond
Overall (out of 567 High Yield Bond)
3 Year (out of 567 High Yield Bond)
5 Year (out of 497 High Yield Bond)
10 Year (out of 345 High Yield Bond)

Ratings are based on risk-adjusted returns.

Holdings
Portfolio Composition
(as a % of net assets as of 8/31/2014)
Corporate Bonds 66.84%
Senior Loans 23.69%
Cash and Cash Equivalents 7.83%
Domestic Common Stock 1.29%
Preferred Stock 0.35%
Quality
(as a % of bond holdings as of 8/31/2014)
A 0.0 %
BBB 0.9 %
BB 18.4 %
B 41.8 %
CCC 38.6 %
Non-Rated 0.2 %

Quality: Our preference is to always use ratings obtained from Standard & Poor's. For securities not rated by Standard & Poor's, ratings are obtained from Moody's. We do not evaluate these ratings, but simply assign them to the appropriate credit quality category as determined by the rating agency.

Maturity
(as a % of bond holdings as of 8/31/2014)
<1 Year 6.5 %
1-5 Years 31.5 %
5-10 Years 61.0 %
10-20 Years 1.1 %
>20 Years 0.0 %
Average Maturity 4.35 years
Effective Duration 3.23 years

Average maturity and effective duration include bonds, cash and cash equivalents.

Top 10 Holdings
(as a % of net assets as of 8/31/2014)
Misys plc and Magic Newco LLC, 12.0%, 6/12/2019 1.9%
Laureate Education, Inc., 9.3%, 9/1/2019 1.6%
New Cotai LLC and New Cotai Capital Corp., 10.6%, 5/1/2019 1.2%
Jo-Ann Stores Holdings, Inc., 9.8%, 10/15/2019 1.0%
TMX Finance LLC and TitleMax Finance Corp., 8.5%, 9/15/2018 0.9%
Eagle Midco, Inc., 9.0%, 6/15/2018 0.9%
Offshore Drilling Holding S.A., 8.4%, 9/20/2020 0.8%
Tenet Healthcare Corp., 8.1%, 4/1/2022 0.8%
FMG Resources Pty Ltd., 6.9%, 4/1/2022 0.8%
CNL Lifestyles Properties, Inc., 7.3%, 4/15/2019 0.8%
Total Portfolio Holdings
(updated quarterly, upon availability)

View | Download (as of 6/30/2014)

Risk Factors: As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. 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.

Pricing: All prices and year-to-date returns are based on closing quotes unless noted, as supplied to the NASDAQ by 6:00 p.m. Eastern time.

Stylebox: The Morningstar Fixed Income style box reveals a fund’s investment style. The vertical axis shows the credit quality of the bonds owned and the horizontal axis shows interest rate sensitivity as measured by a bond’s effective duration. Morningstar seeks credit rating information from fund companies on a periodic basis (e.g., quarterly). In compiling credit rating information, Morningstar instructs fund companies to only use ratings that have been assigned by a Nationally Recognized Statistical Rating Organization (NRSRO). If two NRSROs have rated a security, fund companies are to report the lowest rating; if three or more NRSROs have rated the same security differently, fund companies are to report the rating that is in the middle. Credit quality breakdowns are shown for corporate-bond holdings and depict the quality of bonds in the underlying portfolio. The report shows the percentage of fixed-income securities that fall within each credit quality rating as assigned by an NRSRO. Bonds not rated by an NRSRO are included in the not rated (NR) category. Please note: Morningstar, Inc. is not itself an NRSRO nor does it issue a credit rating on the fund. An NRSRO rating on a fixed-income security can change from time-to-time. For credit quality, Morningstar combines the credit rating information provided by fund companies with an average default rate calculation to come up with a weighted-average credit quality. The weighted-average credit quality is currently a letter that roughly corresponds to the scale used by a leading NRSRO. Bond funds are assigned a style box placement of “low,” “medium,” or “high” based on their average credit quality. Funds with a low credit quality are those whose weighted-average credit quality is determined to be less than “BBB-;” medium are those less than “AA-,” but greater or equal to “BBB-;” and high are those with a with a weighted-average credit quality of “AA-” or higher. When classifying a bond portfolio, Morningstar first maps the NRSRO credit ratings of the underlying holdings to their respective default rates (as determined by Morningstar’s analysis of actual historical default rates). Morningstar then averages these default rates to determine the average default rate for the entire bond fund. Finally, Morningstar maps this average default rate to its corresponding credit rating along a convex curve. For interest-rate sensitivity, Morningstar obtains from fund companies the average effective duration. Generally, Morningstar classifies a fixed-income fund’s interest-rate sensitivity based on the effective duration of the Morningstar Core Bond Index (MCBI), which is currently three years. The classification of Limited will be assigned to those funds whose average effective duration is between 25% to 75% of MCBI’s average effective duration; funds whose average effective duration is between 75% to 125% of the MCBI will be classified as Moderate; and those that are at 125% or greater of the average effective duration of the MCBI will be classified as Extensive.

Index Description: The BofAML U.S. HY Master II TR USD tracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. It is not possible to invest directly in an index

Performance results for some funds may include the effect of expense reduction arrangements. If those arrangements had not been in place, the performance results would have been lower.

Unsubsidized yields reflect what the yield would have been without the effect of reimbursements and waivers. The adviser and its affiliates have or may voluntarily waive a portion of their fees (including, but not limited to, distribution and service (12b-1) fees) and reimburse certain expenses. There is no guarantee that the fund will avoid a negative yield. Such undertaking may be amended or withdrawn at any time.

30-Day SEC Yield: is calculated based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income, as a percentage of its assets. A security's income, for the purposes of this calculation, is based on the current market yield to maturity (in the case of bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30 day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.

12-Month Trailing Distribution Yield: at NAV refers to the 12-month historical cash flow paid over the past 12 months in dividends, divided by the past months ending NAV.

Morningstar Ratings: For each fund with at least a 3-year history, Morningstar calculates a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of all sales charges), placing emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund and rated separately.) A fund's overall rating is derived from a weighted average of the 3-, 5- and 10-year (if applicable) rating metrics. Morningstar Rating is for the share classes specified; other classes may have different performance characteristics.

Information is subject to change and is not intended to represent any past or future investment recommendations.

Quality: Our preference is to always use ratings obtained from Standard & Poor's. For securities not rated by Standard & Poor's, ratings are obtained from Moody's. We do not evaluate these ratings, but simply assign them to the appropriate credit quality category as determined by the rating agency.

Chad A. Gunther of Ivy Investment Management Company was named portfolio manager of the Fund on July 9, 2014. Prior to that, the Fund was managed by William M. Nelson.

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