Planned reorganization of Waddell Reed Advisors Funds into Ivy Funds


Ivy Investment Management Company and Waddell & Reed Investment Management Company received approval from the WADDELL & REED ADVISORS FUNDS℠ (WRA Funds) and the IVY FUNDS® (Ivy Funds) Board of Trustees to merge the WRA Funds family into funds with substantially similar objectives and strategies in the affiliated Ivy Funds mutual funds family. The first phase encompassed nine funds that merged effective October 16, 2017. The second phase includes the remaining 11 WRA Funds, expected to be completed February 26, 2018.

Which WRA Funds are included in the second phase of mergers into Ivy Funds?

There are 11 WRA Funds that will merge in this second and final phase. Each is merging into an Ivy Fund that follows a substantially similar strategy, as shown in this chart.

WRA Fund Ivy Fund Morningstar Category Estimated AUM of Ivy Fund post merge
(9/30/2017 data)

WRA Accumulative Fund

Ivy Accumulative Fund

Large Growth

  $1.4 billion

WRA Cash Management

Ivy Cash Management

Money Market

 $1.4 billion

WRA Continental Income Fund

Ivy Balanced Fund

Allocation (50%-70% equity)

  $3.4 billion

WRA Global Growth Fund

Ivy Global Growth Fund

World Large Stock

 $994 million

WRA High Income Fund

Ivy High Income Fund

High Yield Bond

  $6.4 billion

WRA Municipal High Income Fund

Ivy Municipal High Income Fund

High Yield Muni

$1.6 billion

WRA New Concepts Fund

Ivy Mid Cap Growth Fund

Mid-Cap Growth

 $4.0 billion

WRA Science and Technology Fund

Ivy Science and Technology Fund


 $7.9 billion

WRA Small Cap Fund

Ivy Small Cap Growth Fund

Small Growth

$2.0 billion

WRA Vanguard Fund

Ivy Large Cap Growth Fund

Large Growth

$3.6 billion

WRA Wilshire Global Allocation Fund

Ivy Wilshire Global Allocation Fund

World Allocation

$1.7 billion

Why are the WRA Funds being merged into Ivy Funds, and why now?

The fund reorganization aligns with steps we took in 2016 to specifically delineate Ivy Investments as our asset management brand encompassing mutual funds, exchange-traded managed funds and institutional asset management. The Waddell & Reed, Inc. (Waddell & Reed financial advisors) brand is the public face of our retail broker/dealer and represents a network of independent financial advisors around the country. The WRA Funds have a long and strong history, including mutual funds established in 1940 that were some of the first in the industry. We believe it is in the best interest of shareholders, and makes operational, financial and branding sense to consolidate asset management under Ivy Investments. It allows for the consolidation of similar funds from two affiliated fund families into one family that offers a comprehensive range of funds, allowing WRA Fund shareholders to maintain continuity in their investment portfolios going forward.

Why not retain the WRA Fund history on the more tenured funds?

Some of the WRA Funds have a long history and, while the “age” of the WRA Fund will not carry forward, the strategy, portfolio management team and investment process remain intact within the surviving Ivy Fund. Plus, each tenured WRA Fund merges into a recipient Ivy Fund that carries a meaningful track record, in most cased more than 20-years. The Ivy Funds are broadly available at other broker/dealer platforms. We felt it important to keep the Ivy name and history as any disruption to existing funds on these platforms (including from ticker changes or CUSIP changes) could have negative impacts to Ivy’s ongoing availability.

Will shareholders see a tax impact as a result of the merger of a WRA Fund into an Ivy Fund?

No, the mergers are not a taxable event. Fund shareholders will not recognize a gain or loss for federal income tax purposes.

Is there a capital gains impact from the mergers?

There may be small amount of capital gains income distributed to the funds impacted by the merger, just prior to the effective date in late February.

Prior to the completion of the mergers, which are anticipated to close February 26, 2018, the merging WRA Funds and recipient Ivy Funds will distribute any capital gains to shareholders of record. In order to ensure the equitable distribution of capital gains to the shareholders in the associated funds, the funds will distribute the appropriate amount of accrued 2018 capital gains through February 15, 2018 (payable on February 20, 2018). For these funds, additional capital gains may of course be realized for the remainder of the year following the merge. If so, these would be communicated within the overall 2018 capital gains in October 2018.

Is there a different portfolio manager on the Ivy Fund than the WRA fund?

No; in each case, the surviving Ivy Fund has the same portfolio manager or management team as the WRA Fund that will merge into it.

What is the background of each fund family and what is the relationship between Waddell & Reed and Ivy?

The WRA Funds are managed by Waddell & Reed Investment Management Company (WRIMCO) and today include 11 funds, following the merging of nine WRA Funds into similar Ivy Funds on Oct. 16, 2017.

The Ivy Funds are managed by Ivy Investment Management Company (IICO) and include 48 funds across all major asset classes with approximately $40 billion in assets under management at Sept. 30, 2017.

WRIMCO and IICO are affiliates and, along with Waddell & Reed, Inc., are subsidiaries of Waddell & Reed Financial, Inc. (NYSE: WDR).

How does this impact the Ivy Funds that receive the merged fund?

There will be no impact or changes to the management or strategy of the surviving Ivy Funds. The asset base will increase, which may over time help lead to a lower expense ratio in a specific fund.

Will this create a capacity issue for any Ivy Fund that is gaining assets through the merger?

We do not believe there will be any capacity issues associated with the mergers.

Will share classes or expenses change?

All share classes will carry forward under the respective Ivy Funds share class tickers. The only exceptions are the Class Y shares for the WRA Funds, which will merge into the existing Class I shares of each Ivy fund.

At the time of the merger, we expect the expense ratio of the surviving fund to be equal to or less than the pre-merger lowest expense ratio of the individual funds.

Will the share price or net asset value (NAV) change?

WRA Fund assets will be exchanged dollar-for-dollar into the surviving Ivy Fund. The shareholder’s cost basis will therefore not change. The NAV will remain that of the surviving Ivy Fund upon the effective date of the merger.

Past performance is not a guarantee of future results.  Investment return and principal value will fluctuate, and it is possible to lose money by investing. Please refer to each Fund’s prospectus for more risk information.

WADDELL & REED ADVISORS FUNDS℠ mutual funds are distributed by Waddell & Reed, Inc., and IVY FUNDS® mutual funds are distributed by Ivy Distributors, Inc., an affiliate of Waddell & Reed, Inc. Ivy Distributors, Inc. and Waddell & Reed, Inc. are subsidiaries of Waddell & Reed Financial, Inc.

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.