News Column

Waddell & Reed Discontinues Pursuit of Consultancy Agreement with Former Portfolio Manager

June 20, 2014

OVERLAND PARK, Kan.--(BUSINESS WIRE)-- Waddell & Reed Financial, Inc. (NYSE: WDR) today announced that the previously disclosed consulting agreement with former portfolio manager Ryan Caldwell has not come to fruition and is not being pursued.

Caldwell, formerly co-portfolio manager of the company’s Asset Strategy portfolios—including mutual funds and institutional accounts—resigned from the firm effective June 15, 2014. At that time, the firm indicated that Waddell & Reed and Caldwell would enter a two-year consultancy agreement. After further discussion and consideration, it was determined that the consulting agreement was not essential to the ongoing investment process.

Michael Avery, who has managed the Asset Strategy portfolios for 17 years, continues as portfolio manager and leads the five-member Asset Strategy team.

“The fund remains in very good hands; we have a process that is strong, seamless and repeatable,” said Avery. “As we actively seek to add to our experienced team from inside our organization, we are looking to people who currently have portfolio management experience with solid performance in their own right.”

At March 31, 2014, the Asset Strategy portfolios had approximately $44.7 billion in assets under management, including: $35.6 billion in Ivy Asset Strategy Fund; $3.7 billion in Waddell & Reed Advisors Asset Strategy Fund; $1.7 billion in Ivy Asset Strategy Fund Variable Insurance Portfolio; and $3.7 billion in institutional accounts, including subadvised accounts.

Through its subsidiaries, Waddell & Reed Financial, Inc. provides investment management and financial planning services to clients throughout the U.S. The firm had approximately $131 billion in total assets under management at March 31, 2014. Waddell & Reed Investment Management Company serves as investment advisor to the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds Variable Insurance Portfolios and InvestEd Portfolios, while Ivy Investment Management Company serves as investment advisor to the Ivy Funds. Waddell & Reed, Inc. serves as principal underwriter and distributor to the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds Variable Insurance Portfolios, and InvestEd Portfolios, while Ivy Funds Distributor, Inc. serves as principal underwriter and distributor to the Ivy Funds.

Investors should consider the investment objectives, risks, charges and expenses of a fund or of a portfolio and the variable insurance product carefully before investing. For a prospectus, or if available, a summary prospectus, containing this and other information for the Waddell & Reed Advisors or Ivy Funds or for the variable insurance products, call your financial advisor or visit read the prospectus or summary prospectus carefully before investing.

Investment return and principal value will fluctuate, and it is possible to lose money by investing. Past performance is not a guarantee of future results.

Risk factors. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment. The Fund may allocate from 0 to 100% of its assets among stocks, bonds and short-term instruments of issuers around the globe, as well as investments in precious metals and investments with exposure to various foreign securities. 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 risks are magnified in emerging markets. 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. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. The Fund may seek to hedge market risk on various securities, increase exposure to various markets, manage exposure to various foreign currencies, precious metals and various markets, and seek to hedge certain event risks on positions held by the Fund. Such hedging involves additional risks, as the fluctuations in the values of the derivatives may not correlate perfectly with the overall securities markets or with the underlying asset from which the derivative’s value is derived. Investing in commodities is generally considered speculative because of the significant potential for investment loss due to cyclical economic conditions, sudden political events, and adverse international monetary policies. Markets for commodities are likely to be volatile and the Fund may pay more to store and accurately value its commodity holdings than it does with the Fund’s other holdings. 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.

The Ivy Funds VIP Portfolios, distributed by Waddell & Reed, Inc., are only available as investment options in variable life insurance policies and variable annuity contracts issued by participating insurance companies. Annuity and life insurance guarantees are based on the financial strength and claims-paying ability of the issuing insurance company. The guarantees have no bearing on the performance of a variable investment option. Variable investment options are subject to market risk, including loss of principal. There are charges and expenses associated with annuities and variable life insurance products, including mortality and expense risk charges, management fees, administrative fees, expenses for optional riders and deferred sales charges for early withdrawals. Withdrawals before age 59 1/2 may be subject to a 10% IRS tax penalty and surrender charges may apply.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the current views and assumptions of management with respect to future events regarding our business and industry in general. These forward-looking statements include all statements, other than statements of historical fact, regarding our financial position, business strategy and other plans and objectives for future operations, including statements with respect to revenues and earnings, the amount and composition of assets under management, distribution sources, expense levels, redemption rates and the financial markets and other conditions. These statements are generally identified by the use of such words as "may," "could," "should," "would," "believe," "anticipate," "forecast," "estimate," "expect," "intend," "plan," "project," "outlook," "will," "potential" and similar statements of a future or forward-looking nature. Readers are cautioned that any forward-looking information provided by or on behalf of the Company is not a guarantee of future performance. Actual results may differ materially from those contained in these forward-looking statements as a result of various factors, including but not limited to those discussed below. If one or more events related to these or other risks, contingencies or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from those forecasted or expected. Certain important factors that could cause actual results to differ materially from our expectations are disclosed in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2013, which include, without limitation:

  • The loss of existing distribution channels or inability to access new distribution channels;
  • A reduction in assets under our management on short notice, through increased redemptions in our distribution channels or our Funds, particularly those Funds with a high concentration of assets, or investors terminating their relationship with us or shifting their funds to other types of accounts with different rate structures;
  • The adverse ruling or resolution of any litigation, regulatory investigations and proceedings, or securities arbitrations by a federal or state court or regulatory body;
  • The introduction of legislative or regulatory proposals or judicial rulings that change the independent contractor classification of our financial advisors at the federal or state level for employment tax or other employee benefit purposes;
  • Our inability to provide sufficient capital to support new investment products;
  • The ability of mutual fund and other investors to redeem their investments without prior notice or on short notice;
  • Our inability to implement new information technology and systems, or inability to complete such implementation in a timely or cost effective manner;
  • Non-compliance with applicable laws or regulations and changes in current legal, regulatory, accounting, tax or compliance requirements or governmental policies;
  • A decline in the securities markets or in the relative investment performance of our Funds and other investment portfolios and products as compared to competing funds; and
  • Our inability to attract and retain senior executive management and other key personnel to conduct our broker/dealer, fund management and investment advisory business.

    The foregoing factors should not be construed as exhaustive and should be read together with other cautionary statements included in this and other reports and filings we make with the Securities and Exchange Commission, including the information in Item 1 "Business" and Item 1A "Risk Factors" of Part I and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part II to our Annual Report on Form 10-K for the year ended December 31, 2013 and as updated in our quarterly reports on Form 10-Q for the year ending December 31, 2014. All forward-looking statements speak only as the date on which they are made and we undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

    Waddell & Reed Financial, Inc.

    Media Contact:

    Roger Hoadley, (913) 236-1993

    VP, Director of Communications


    Investor Contact:

    Nicole Russell, (913) 236-1880

    VP, Investor Relations

    Source: Waddell & Reed Financial, Inc.

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    Source: Business Wire

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