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Waddell & Reed Advisors Continental Income Fund

  • $9.68 NAV as of 10/17/2017
  • ($0.00) / 0.00% Daily NAV Change
  • 6.99% YTD (NAV)

Summary

Balancing potential risk and reward in a complex world

Straightforward approach
A traditional balanced fund with predictable guardrails that generally invests two-thirds of its assets in U.S. equities and one-third of its assets in fixed-income securities.
Management discipline
Uses fundamental analysis and rigorous screening of stocks and bonds to determine portfolio composition.
Competitive track record
Seeks balanced, consistent growth and current income while managing risk. Manager utilizes a disciplined investment process that is designed to deliver consistent results.

Morningstar Style Box

Blend
Large
LTD
Low
Source: Morningstar

Portfolio Management

Matthew A. Hekman

  • Waddell & Reed Investment Management Company
  • 3 Years with Fund
  • 19 Years in Industry
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Matthew Hekman is co-portfolio manager of Ivy Balanced Fund, Ivy VIP Balanced and Waddell & Reed Advisors Continental Income Fund. He was named portfolio manager of the funds in 2014 and assumed co-portfolio manager responsibilities in 2017. Mr. Hekman joined Waddell & Reed in 2003 as a performance analyst. He joined the firm's Investment Management Division as an equity investment analyst in 2005. He was a member of the Large Cap Growth team from 2009 to 2011, named assistant portfolio manager in 2010. He was assistant portfolio manager on the Large Cap Value team from 2011 to 2014. He was appointed assistant vice president in 2010 and vice president in 2014. Prior to joining Waddell & Reed, Mr. Hekman was a manager of custody administration and investment accounting with State Street Corporation. He was responsible for five client relationships as well as eight staff members. He oversaw and approved all custody and accounting activities for 26 mutual funds culminating in the submission of a NAV to NASDAQ. In that role, Mr. Hekman acted as a liaison between custody administration, accounting, and investment management personnel. Mr. Hekman graduated from Dordt College in 1998 with a BA in Business Administration. He earned an MBA with an emphasis in Finance from the University of Kansas in 2003. Mr. Hekman is a member of the CFA Society of Kansas City.

Rick Perry, CFA , CPA

  • Waddell & Reed Investment Management Company
  • <1 Year with Fund
  • 24 Years in Industry
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Rick Perry is portfolio manager of Ivy VIP Bond, Ivy Bond Fund and Ivy Government Securities Fund, managing the funds since 2015. He is portfolio manager of Ivy Crossover Credit Fund since its inception in 2017. He was named co-portfolio manager in 2017 of Ivy Balanced Fund, Ivy VIP Balanced and Waddell & Reed Advisors Continental Income Fund. Mr. Perry joined Waddell & Reed in 2015 as senior vice president and portfolio manager. Prior to joining Waddell & Reed, Mr. Perry was a portfolio manager with Aegon USA Investment Management, where he was head of investment grade credit since 2006. He joined Aegon in 2001 as a high-yield portfolio manager and added the title of director of credit research in 2002. Prior to joining Aegon, Mr. Perry was a high-yield portfolio manager with ING Investment Management and an associate portfolio manager with Equitable Investment Services. He began his career as a Certified Public Accountant with McGladrey & Pullen CPA's. Mr. Perry graduated magna cum laude in 1989 with a BA in Accounting and Business Management from Central College in Pella, Iowa. He earned an MBA with a concentration in Investments, graduating magna cum laude from the University of Iowa in 1992. He earned the Chartered Financial Analyst (CFA) designation in 1998; and the Certified Public Accountant (CPA) designation in 1991. Mr. Perry is a CFA charterholder. He is a member of the CFA Institute.

Growth of a $10,000 Investment
through 9/30/2017

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.

Documents

Perspectives

Quarterly Fund Commentary

Daily Prices as of 10/17/2017

Net Asset Value (NAV) $9.68
Daily NAV Change ($) ($0.00) 0.00%
Weekly NAV Change ($) $0.00 0.00%
Public Offering Price (POP) $9.68

Fund Facts

Ticker Symbol WACBX
CUSIP 930057740
Fund Code 127
Fund Type Specialty Funds
Fund Inception 6/9/1970
Class Inception 10/4/1999
Fiscal Year End June
Dividends Paid March, June, September, December
Fund Assets (as of 9/30/2017) $1.4 bil
Total Equity Holdings (as of 9/30/2017) 62
Total Holdings (as of 9/30/2017) 215
Portfolio Turnover Rate (as of 6/30/2017) 52%
Lipper Category Mixed-Asset Target Alloc Growth Funds
Morningstar Category Allocation--50% to 70% Equity
Benchmark Bloomberg Barclays US Govt/Credit TR USD
Benchmark S&P 500 TR USD

Performance

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.

Performance at NAV does not include the effect of sales charges, if it had, performance shown would be lower. Class B shares, including sales charge, reflects the applicable contingent deferred sales charge (CDSC), which declines from 5% at the time of purchase to zero at the beginning of the seventh year.

Monthly Rates of Return

Average Annual Total Returns as of 9/30/2017
(Returns for periods of less than 1-yr are not annualized)
 
Fund with maximum 5.00% CDSC 1.22% 1.42% 1.92% 6.20% 5.10% 5.57%
Bloomberg Barclays US Govt/Credit TR USD 3.49% -0.01% 2.83% 2.10% 4.34% 5.19%
Fund at NAV 6.22% 5.42% 2.81% 6.36% 5.10% 5.57%
Lipper Mixed-Asset Target Alloc Growth Funds 11.18% 12.35% 6.17% 8.62% 4.88% 5.22%
S&P 500 TR USD 14.24% 18.61% 10.81% 14.22% 7.44% 5.84%

Quarterly Rates of Return

Average Annual Total Returns as of 9/30/2017
(Returns for periods of less than 1-yr are not annualized)
 
Fund with maximum 5.00% CDSC 1.22% 1.42% 1.92% 6.20% 5.10% 5.57%
Bloomberg Barclays US Govt/Credit TR USD 3.49% -0.01% 2.83% 2.10% 4.34% 5.19%
Fund at NAV 6.22% 5.42% 2.81% 6.36% 5.10% 5.57%
Lipper Mixed-Asset Target Alloc Growth Funds 11.18% 12.35% 6.17% 8.62% 4.88% 5.22%
S&P 500 TR USD 14.24% 18.61% 10.81% 14.22% 7.44% 5.84%

Calendar Year Return

  2012
Bloomberg Barclays US Govt/Credit TR USD 4.82 -2.35 6.01 0.15 3.05
Class B 10.52 22.03 6.17 -1.59 0.97
S&P 500 TR USD 16.00 32.39 13.69 1.38 11.96

Morningstar Ratings as of 9/30/2017 Morningstar Logo

Category: Allocation--50% to 70% Equity
Ratings are based on risk-adjusted returns
Overall out of 725
3 Year out of 725
5 Year out of 664
10 Year out of 458

Lipper Ranking through 9/30/2017 Lipper Logo

Category: Mixed-Asset Target Alloc Growth Funds
 
Rankings are based on average annual total returns, but do not consider sales charges.
1 Year 496/503 99
3 Year 435/450 97
5 Year 400/420 96
10 Year 178/313 57

Expense Ratios as of 10/31/2016

Net 2.27%
Gross 2.27%

5-Year Standard Deviation as of 9/30/2017

S&P 500 TR USD 9.55
Bloomberg Barclays US Govt/Credit TR USD N/A

5-Year MPT* Statistics as of 9/30/2017

*Modern Portfolio Theory
Alpha -4.12
Beta 0.76
R-Squared 88.17
Sharpe Ratio 0.79
Capture Ratio Upside: 64.31%
Downside: 97.61%

Distributions

Historical Prices Inception 10/4/1999

10/2/2017 $9.65 NO NO
10/3/2017 $9.67 NO NO
10/4/2017 $9.66 NO NO
10/5/2017 $9.70 NO NO
10/6/2017 $9.67 NO NO
10/9/2017 $9.66 NO NO
10/10/2017 $9.68 NO NO
10/11/2017 $9.69 NO NO
10/12/2017 $9.67 NO NO
10/13/2017 $9.68 NO NO
10/16/2017 $9.68 NO NO
10/17/2017 $9.68 NO NO

Historical Distributions Inception 10/4/1999

9/14/2017 $0.045 Long: $0.000 Short: $0.000 $9.55 9/14/2017
12/8/2016 $0.025 Long: $0.199 Short: $0.027 $9.14 12/8/2016
12/10/2015 $0.0179 Long: $0.708 Short: $0.038 $9.32 12/10/2015
12/11/2014 $0 Long: $0.409 Short: $0.000 $10.02 12/11/2014
12/12/2013 $0 Long: $0.473 Short: $0.000 $9.66 12/12/2013

*Special Dividend
The table includes the daily prices at NAV (net asset value) for the history of this fund's selected share class. NAV is the amount per share you would receive if you sold shares that day.

12-Month Trailing Dist. Yield as of 9/30/2017

NAV 0.71%
With Sales Charge 0.71%

Annualized 30-Day SEC Yield as of 9/30/2017

Subsidized - NAV -0.45%
Unsubsidized - NAV -0.49%

Portfolio

Top 10 Equity Holdings as a % of net assets 9/30/2017

Apple, Inc. Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players, as well as sells various related software, services, peripherals, and networking solutions worldwide. 2.69%
JPMorgan Chase & Co. JPMorgan Chase & Co. (JPMorgan Chase) is a financial holding company. 2.56%
Carnival Corp. Carnival Corporation operates as a cruise and vacation company. 2.36%
Autodesk, Inc. Autodesk, Inc. supplies PC software and multimedia tools. The company's two-dimensional and three-dimensional products are used across industries and in the home for architectural design, mechanical design, geographic information systems and mapping, and visualization applications. Autodesk's software products are sold worldwide through a network of dealers and distributors. 2.33%
Microsoft Corp. Microsoft Corporation is a multinational computer technology corporation that develops, manufactures, licenses and supports a wide range of software products for computing devices. 2.02%
PNC Financial Services Group, Inc. (The) The Company has businesses engaged in retail banking, corporate and institutional banking, asset management, and residential mortgage banking, providing its products and services nationally and others in its markets located in Pennsylvania, Virginia, Missouri, Wisconsin and Georgia. It also provides products and services internationally. 1.90%
Union Pacific Corp. Union Pacific Corporation owns the largest railroad in the U.S. It's diversified business mix includes agricultural products, automotive, chemicals, energy, industrial products and intermodal. 1.83%
Intercontinental Exchange, Inc. Intercontinental Exchange, Inc. operates regulated exchanges, clearing houses, and listings venues for financial and commodity markets in the U.S., U.K., Continental Europe, Asia, Israel and Canada 1.81%
PPG Industries, Inc. An American global supplier of paints, coatings, optical products, specialty materials, chemicals, glass and fiberglass. 1.64%
Las Vegas Sands, Inc. Las Vegas Sands Corp. (LVSC), a global developer of destination properties (integrated resorts), features accommodations, gaming, entertainment, retail, convention and exhibition facilities, celebrity chef restaurant, etc. The company operates in 3 geographic areas: Macao, Singapore, United States. 1.64%

Total Portfolio Holdings

Updated quarterly, upon availability.

Market Capitalization
as a % of equity assets as of 9/30/2017

Large 93.0%
Medium 7.0%
Small 0.0%
Median Market Cap (as of 9/30/2017) $48.4 bil

Top 10 Industry Allocation
as a % of Equity Holdings as of 9/30/2017

Pharmaceuticals 7.3%
Other Diversified Financial Services 4.3%
Managed Health Care 4.2%
Technology Hardware, Storage & Peripherals 4.0%
Biotechnology 3.8%
Semiconductors 3.7%
Integrated Oil & Gas 3.5%
Hotels, Resorts & Cruise Lines 3.5%
Application Software 3.4%
Diversified Banks 3.3%

Maturity
as a % of fixed income assets as of 9/30/2017

<1 Year 17.7%
1-5 Years 35.2%
5-10 Years 36.6%
10-20 Years 3.0%
>20 Years 7.5%
Average Maturity 6.10 years
Effective Duration 4.69 years

Fixed Income Country Allocation
as a % of bond holdings as of 9/30/2017

United States 80.6%
United Kingdom 6.7%
Australia 2.2%
Ireland 2.0%
France 2.0%
Japan 1.9%
Canada 1.4%
Singapore 1.0%
Netherlands 0.7%
Guernsey 0.6%
Sweden 0.5%
Hong Kong 0.4%

Sector Allocation
as a % of equity assets as of 9/30/2017

Information Technology 19.50%
Financials 18.22%
Health Care 17.39%
Consumer Discretionary 15.50%
Industrials 11.83%
Energy 8.16%
Materials 4.92%
Consumer Staples 3.68%
Real Estate 0.63%
Telecommunication Services 0.17%

Quality
as a % of fixed income assets as of 9/30/2017

Quality: 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.
Government Bonds 18.20%
AA 4.70%
A 11.90%
BBB 48.80%
BB 10.10%
B 4.20%
CCC 2.10%

Portfolio Composition
as a % of net assets as of 9/30/2017

Domestic Common Stock 59.70%
Corporate Bonds 22.99%
Preferred Stock 6.08%
Government Bonds 5.25%
Cash and Cash Equivalents 3.33%
Foreign Common Stock 2.03%
Senior Loans 0.32%
Asset-Backed Securities 0.30%

Equity Country Allocation
as a % of equity assets as of 9/30/2017

United States 96.0%
Belgium 1.6%
Israel 1.5%
Ireland 0.9%

Total Portfolio Holdings

Updated quarterly, upon availability.

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.

Risk factors. 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. 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. The lower-rated securities in which the Fund may invest may carry greater risk of nonpayment of interest or principal then higher-rated bonds. In addition to the risks typically associated with fixed-income securities, loan participations in which the Fund may invest carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loan participations may be unsecured or not fully collateralized may be subject to restrictions on resale and sometimes trade infrequently on the secondary market. The Fund’s emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform non-dividend paying stocks and the market as a whole over any period of time. In addition, there is no guarantee that the companies in which the Fund invests will declare dividends in the future or that dividends, if declared, will remain at current levels or increase over time. The amount of any dividend the company may pay may fluctuate significantly. In addition, the value of dividend-paying common stocks can decline when interest rates rise as fixed-income investments become more attractive to investors. This risk may be greater due to the current period of historically low interest rates. The Fund typically holds a limited number of stocks (generally 50 to 65). As a result, the appreciation or depreciation of any one security held by the Fund will have a greater impact on the Fund’s net asset value than it would if the Fund invested in a large number of securities. The value of a security believed by the Fund’s manager to be undervalued may never reach what the manager believes to be its full value, or such security’s value may decrease. 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.

Index Description: S&P 500 - An unmanaged index of common stocks. It is not possible to invest directly in an index.

Index Description: Bloomberg Barclays US Govt/Credit TR USD - The Barclays U.S. Government/Credit Index measures the performance of U.S. dollar-denominated United States Treasuries, government-related, and investment-grade U.S. corporate securities that have a remaining maturity of greater than or equal to one year. In addition, the securities have $250 million or more of outstanding face value and are fixed-rate and non-convertible securities. 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.

Fee Waiver and/or Expense Reimbursement: Through October 31, 2017, Waddell & Reed Investment Management Company (WRIMCO), the Fund’s investment manager, Waddell & Reed, Inc. (Waddell & Reed), the Fund’s distributor, and / or Waddell & Reed Services Company, doing business as WI Services Company (WISC), the Fund’s transfer agent, have contractually agreed to reimburse sufficient management fees, 12b-1 fees and / or shareholder servicing fees to cap the total annual ordinary fund operating expenses as follows: Class A shares at 1.12%, Class B shares at 2.29%, Class C shares at 2.01%, Class Y at 0.88%. Prior to that date, the expense limitation may not be terminated by WRIMCO, Waddell & Reed, WISC or the Board of Trustees.

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. YTD Prices can be updated 3 to 4 hours after the Daily Pricing information which can result in mismatching data.

Style Analysis: The Morningstar Style Box reveals a fund's investment style. For equity funds the vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend, or growth). For fixed-income funds, 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 the following Nationally Recognized Statistical Rating Organizations (NRSROs): Moody's, Standard & Poor's, Fitch, and Egan-Jones. 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. For example, if NRSRO X rates a security AA-, NRSRO Y rates the same security an A and NRSRO Z rates it a BBB+, the fund company should use the credit rating of 'A' in its reporting to Morningstar. 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 the 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 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. For municipal bond funds, Morningstar also obtains from fund companies the average effective duration. In these cases static breakpoints are utilized. These breakpoints are as follows: (i) Limited: 4.5 years or less; (ii) Moderate: more than 4.5 years but less than 7 years; and (iii) Extensive: more than 7 years. In addition, for non-US taxable and non-US domiciled fixed income funds static duration breakpoints are used: (i) Limited: less than or equal to 3.5 years; (ii) Moderate: greater than 3.5 and less than equal to 6 years; (iii) Extensive: greater than 6 years.

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.

Alpha, Beta, R-Squared, Standard Deviation, Sharpe Ratio and Capture Ratio are 5 year statistics. Alpha is a measure of a fund's actual returns and expected performance, given its level of risk (as measured by beta). Beta reflects the sensitivity of the fund's return to fluctuations in the market index. R-squared indicates how much of a fund's fluctuations were attributable to movements in the fund's benchmark. Standard deviation is a measure of how volatile a fund's returns are. Sharpe ratio is a measure of a fund's risk-adjusted performance. Capture ratio reflects the annualized product of fund vs. index returns for all months in which the index had a positive return (upside capture) or negative return (downside capture).

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance, and does not include the effects of sales charges. The top 10% of products in each product 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. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

© 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Quality: 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.

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

YTD Prices can be updated 3 to 4 hours after the Daily Pricing information which can result in mismatching data.

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