Planned reorganization of Waddell Reed Advisors Funds into Ivy Funds


Waddell & Reed Financial, Inc., parent firm to Waddell & Reed, Inc. and Ivy Distributors, Inc., has received board approval to merge the funds in its WADDELL & REED ADVISORS FUNDS℠ (WRA Funds) family into funds with substantially similar objectives and strategies in the affiliated IVY FUNDS® mutual funds family (Ivy Funds). The first phase encompassed nine funds that merged effective Oct. 16, 2017.

Which WRA Funds are in the first phase?

The initial phase includes nine Waddell & Reed Advisors Funds. Each merged into an Ivy Fund that follows a substantially similar strategy, as shown in this chart.

WRA Fund Ivy Fund Morningstar Category New AUM of Ivy Fund (as of 8/31/2017)

W&R Advisors Core Investment Fund

Ivy Core Equity Fund

Large Growth

 $4.79 billion

W&R Advisors Dividend Opportunities Fund

Ivy Dividend Opportunities Fund

Large Blend

 $906.8 million

W&R Advisors Energy Fund

Ivy Energy Fund

Equity Energy

 $602 million

W&R Advisors Global Bond Fund

Ivy Global Bond Fund

World Bond

 $663.2 million

W&R Advisors Municipal Bond Fund

Ivy Municipal Bond Fund

Muni National Intermediate

 $933.2 million

W&R Advisors Tax-Managed Equity Fund

Ivy Tax-Managed Equity Fund

Large Growth

 $540.9 million

W&R Advisors Value Fund

Ivy Value Fund

Large Value

 $1.19 billion

W&R Advisors Bond Fund

Ivy Bond Fund

Corporate Bond

 $1.2 billion

W&R Advisors Government Securities Fund

Ivy Government Securities Fund

Intermediate Government

 $376.9 million

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.

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 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.

Why start with these nine funds?

It is expected, subject to regulatory approval and approval by the Funds' Board of Trustees, that all WRA Funds will eventually merge into an Ivy Fund. We intend to seek approval of the Board of Trustees, as well as regulatory approval, in the coming months. While the timing of subsequent mergers has not yet been determined, we anticipate completion in the first quarter of 2018. The first nine offer the most efficiency in operational and technical activities now as we plan the overall project timing and completion.

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 include 20 funds with approximately $26 billion in assets under management at June 30, 2017.

The Ivy Funds are managed by Ivy Investment Management Company (IICO) and include 46 funds across all major asset classes with $38 billion in assets under management at June 30, 2017.

Each WRA Fund has substantially similarly managed Ivy Fund counterpart with a substantially similar strategy and portfolio manager(s).

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

Will there be other mergers in the future?

Following the completion of the first nine fund mergers, we intend to seek the approval of the Funds' Board of Trustees, as well as regulatory approval, to merge the remaining WRA Funds into Ivy Funds over the next several months, likely completed in the first quarter of 2018.

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.

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