Waddell & Reed

Quarterly Fund Commentary

WRA Global Growth Fund (prospectus)
June 30, 2015

Sarah C. Ross, CFA

Market Sector Update

  • The Fund’s benchmark ended the quarter slightly positive, up less than one percent in local currency. Developed market performance was mixed during the quarter. Hong Kong, Japan and the U.K. performed well, with U.S. posting modest gains and Germany weak.
  • Telecommunication, financials and health care were some of the strongest performing sectors, while utilities, industrials and consumer staples lagged..
  • The U.S. remains in a slow growth environment despite modest positive progress on employment. The U.S. Federal Reserve remains committed to raising rates in the coming months although we expect the pace of increases to be very slow. Uncertainty surrounding Greece has not translated into a meaningful impact on the European economy.
  • China has experienced a more material slow down as fixed-asset investment remains weak along with consumption. A number of global multinationals have cited deteriorating growth in Chinese demand for consumer goods, and in some cases, pricing pressure as well.

Portfolio Strategy

  • The Fund underperformed the benchmark for the quarter, primarily driven by a negative currency impact. In addition, poor stock selection was a minor detractor to performance as well.
  • Stock selection in technology was weak for the period. Exposure to Micron Technology (0.8% of Fund net assets), who has been facing pressure from weaker PC demand, and Tokyo Electron Ltd. (2.1% of Fund net assets), whose stock price was hit after regulators denied Applied Materials’ proposed acquisition, were negative contributors in the period. Stock selection in financials and industrials was also weak.
  • Stock selection in consumer discretionary and health care was positive. Strong performance from Amazon and JD.com were meaningful positive contributors (3.0% and 1.1% of Fund net assets, respectively). In addition, sector weights had a positive impact on returns. However, these were not meaningful enough to offset the negative currency effect in the context of a low return market.


  • We expect continued slow economic global growth going forward, but also believe global uncertainty could result in pockets of increased volatility and, in some cases, opportunities to add to positions on dislocations in stock prices. Uncertainty surrounding Greece; slowing growth in China; and uncertainty in the Middle East and resulting energy prices all have the possible impact of increasing volatility in global equities.
  • We remain generally positive on the economic outlook for Europe despite issues in Greece, and continue to own companies with sustainable competitive advantage that we believe can benefit from a positive inflection in economic growth off the low base. We remain overweight the U.S. as we find a greater proportion of global growers with nimble management teams that we think can successfully navigate an uncertain environment. Our China exposure is contained to U.S. ADRs and Hong Kong-listed companies with open markets and stable regulatory environments
  • We continue to expect an environment of slow economic growth going forward. We believe companies with strong competitive advantages and sustainability of earnings growth are best positioned to outperform in this slow-growth environment.


In November of 2014, the WRA International Growth Fund expanded its investment strategy to include stocks of U.S. companies. Effective January 1, 2015, the Fund changed its name to the WRA Global Growth Fund to reflect its global focus. Performance prior to November 2014 ref ects the Fund’s former international strategy and may have differed if the Fund’s current strategy that includes investing globally had been in place.

Portfolio Manager Sarah Ross took over the management of the WRA International Growth Fund on August 4, 2014.

The opinions expressed in this commentary are those of the Fund’s manager and are current through June 30, 2015. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Past performance is no guarantee of future results.

Risk factors. As with any fund, the value of the Fund’s shares will change, and you can 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. 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 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.

Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. For a prospectus, or if available, a summary prospectus, containing this and other information for the mutual funds offered by Waddell & Reed, call your financial advisor or visit us online at www.waddell.com. Please read the prospectus or summary prospectus carefully before investing.

Financial Advisor Opportunities
Corporate Careers