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wraf4:C000073781Member 2012-02-01 2013-01-31 0001072962 wraf4:S000024803Member rr:AfterTaxesOnDistributionsAndSalesMember wraf4:C000073781Member 2012-02-01 2013-01-31 0001072962 wraf4:S000024803Member wraf4:CitigroupTreasuryGovernmentSponsoredMortgageBondIndexMember 2012-02-01 2013-01-31 0001072962 wraf4:S000024803Member wraf4:BarclaysUsGovernementMortgageBackedSecuritiesIndexMember 2012-02-01 2013-01-31 0001072962 wraf4:S000024803Member wraf4:LipperGeneralUsGovernmentFundsUniverseAverageMember 2012-02-01 2013-01-31 0001072962 wraf4:S000024803Member 2012-02-01 2013-01-31 pure iso4217:USD 485BPOS 2012-09-30 false 2013-01-31 2013-01-31 2013-01-28 0001072962 WADDELL & REED ADVISORS FUNDS <b>Objective </b> Waddell & Reed Advisors High Income Fund To seek to provide current income consistent with preservation of capital. <b>Fees and Expenses </b> <b>Objective </b> To seek to provide total return through a combination of high current income and capital appreciation. <b>Fees and Expenses </b> This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. More information about these and other discounts is available from your financial professional and in the &#8220;Sales Charge Reductions&#8221; section on page 46 of the Fund&#8217;s prospectus and in the &#8220;Purchase, Redemption and Pricing of Shares&#8221; section on page 85 of the Fund&#8217;s statement of additional information (SAI). <b>Example </b> <b>Portfolio Turnover </b> The Fund bears transaction costs, such as spreads between bid and asked prices, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 81% of the average value of its portfolio. <b>Principal Investment Strategies</b> Waddell &amp; Reed Advisors High Income Fund seeks to achieve its objective by investing primarily in a diversified portfolio of high-yield, high-risk, fixed-income securities, including secured and unsecured loan assignments, loan participations and other loan instruments (bank loans), of U.S. and foreign issuers, the risks of which are, in the judgment of Waddell &amp; Reed Investment Management Company (WRIMCO), the Fund&#8217;s investment manager, consistent with the Fund&#8217;s objective. The Fund may invest in fixed-income securities of any maturity and in companies of any size. The Fund invests primarily in lower-quality debt securities, which include debt securities rated BBB+ or lower by Standard and Poor&#8217;s, a division of The McGraw-Hill Companies, Inc. (S&amp;P), or comparably rated by another nationally recognized statistical rating organization (NRSRO) or, if unrated, determined by WRIMCO to be of comparable quality. The Fund may invest an unlimited amount of its total assets in non-investment grade debt securities, commonly called junk bonds, which include debt securities rated BB+ or lower by S&amp;P or comparably rated by another NRSRO or, if unrated, determined by WRIMCO to be of comparable quality.<br /><br />Many U.S. companies have diverse operations, with products or services in foreign markets. Therefore, the Fund will have an indirect exposure to foreign markets through investments in these companies. <br /><br />The Fund may invest significantly in restricted securities that have not been registered for sale under the Securities Act of 1933 that are determined to be liquid in accordance with procedures adopted by the Fund's Board of Trustees. The Fund may also invest in private placement securities. <br /><br />WRIMCO may look at a number of factors in selecting securities for the Fund, including the economic environment, interest rate trends and industry fundamentals as well as analysis of the company's fundamentals, including: financial strength, growth of operating cash flows, strength of management, borrowing requirements, improving debt to cash ratios, potential to improve credit standing, and a strong, defensible market position. <br /><br />After its preliminary determination to invest in securities issued by a company, WRIMCO attempts to optimize the Fund's risk/reward by investing in the debt portion of the company's capital structure that WRIMCO believes to be most attractive, which may include secured and unsecured bank loans or floating rate notes, unsecured high-yield bonds, and/or convertible securities trading well below their conversion values. <br /><br />Generally, in determining whether to sell a debt security, WRIMCO uses the same type of analysis that it uses in buying debt securities. For example, WRIMCO may sell a holding if, in WRIMCO's opinion, the issuer's financial strength declines, or is anticipated to decline, to an unacceptable level, or if management of the company weakens. WRIMCO may sell a security if the competitive conditions of a particular industry have increased, and it believes the Fund should, therefore, reduce its exposure to such industry. WRIMCO also may sell a security if, in WRIMCO's opinion, the price of the security has risen to reflect the company's improved creditworthiness and other investments with greater potential exist. WRIMCO may sell a security to reduce the Fund's holding in that security, to take advantage of more attractive investment opportunities or to raise cash. <b>Principal Investment Risks </b> As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. The Fund is not intended as a complete investment program. A variety of factors can affect the investment performance of the Fund and prevent it from achieving its objective. These include:<ul type="square"><li style="margin-left:-20px">Bank Loan Risk. In addition to the risks typically associated with fixed-income securities, bank loans carry other risks, including the risk of insolvency of the lending bank or other intermediary. Bank loans may be unsecured or not fully collateralized, may be subject to restrictions on resale and sometimes trade infrequently on the secondary market.</li><li style="margin-left:-20px">Company Risk. A company may perform worse than the overall market due to specific factors, such as adverse changes to its business or investor perceptions about the company.</li><li style="margin-left:-20px">Credit Risk. An issuer of a fixed-income obligation may not make payments on the obligation when due or may default on its obligation.</li><li style="margin-left:-20px">Foreign Exposure Risk. The securities of many companies may have significant exposure to foreign markets as a result of the company's products or services in those foreign markets. As a result, a company's domicile and/or the markets in which the company's securities trade may not be fully reflective of its sources of revenue. Such securities would be subject to some of the same risks as an investment in foreign securities, including the risk that political and economic events unique to a country or region will adversely affect those markets in which the company's products or services are sold.</li><li style="margin-left:-20px">Foreign Securities Risk. Investing in foreign securities involves a number of economic, financial, legal and political considerations that may not be associated with the U.S. markets and that could affect the Fund's performance unfavorably, depending upon the prevailing conditions at any given time. Among these potential risks are: greater price volatility; comparatively weak supervision and regulation of securities exchanges, brokers and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversion costs; adverse foreign tax consequences; different and/or less stringent financial reporting standards; custody; and settlement delays. In addition, key information about the issuer, the markets or the local government or economy may be unavailable, incomplete or inaccurate.</li><li style="margin-left:-20px">Interest Rate Risk. A rise in interest rates may cause a decline in the value of the Fund's securities, especially securities with longer maturities. A decline in interest rates may cause the Fund to experience a decline in its income. </li><li style="margin-left:-20px">Liquidity Risk. Generally, a security is liquid if the Fund is able to sell the security at a fair price within a reasonable time. Liquidity is generally related to the market trading volume for a particular security. Illiquid securities may trade at a discount from comparable, more liquid investments and may be subject to wider fluctuations in market value. Less liquid securities are more difficult to dispose of at their recorded values and are subject to increased spreads and volatility. Also, the Fund may not be able to dispose of illiquid securities at a favorable time or price.</li><li style="margin-left:-20px">Low-Rated Securities Risk. In general, low-rated debt securities (commonly referred to as "high yield" or "junk" bonds) offer higher yields due to the increased risk that the issuer will be unable to meet its obligations on interest or principal payments at the time called for by the debt instrument. For this reason, these securities are considered speculative and could significantly weaken the Fund's returns. In adverse economic or other circumstances, issuers of these low-rated securities and obligations are more likely to have difficulty making principal and interest payments than issuers of higher-rated securities and obligations.</li><li style="margin-left:-20px">Management Risk. Fund performance is primarily dependent on WRIMCO's skill in evaluating and managing the Fund's portfolio and the Fund may not perform as well as other similar mutual funds.</li><li style="margin-left:-20px">Market Risk. Adverse market conditions, sometimes in response to general economic or industry news, may cause the prices of the Fund's holdings to fall as part of a broad market decline. The financial crisis in the U.S. and foreign economies over the past several years, including the European sovereign debt crisis, has resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both U.S. and foreign, and in the NAVs of many mutual funds, including to some extent the Fund. Global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region may adversely affect issuers in another country or region, which in turn may adversely affect securities held by the Fund. These circumstances have also decreased liquidity in some markets and may continue to do so. In addition, certain unanticipated events, such as natural disasters, terrorist attacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund.</li><li style="margin-left:-20px">Private Placements and Other Restricted Securities Risk. Restricted securities, which include private placements, are securities that are subject to legal or contractual restrictions on resale, and there can be no assurance of a ready market for resale. A Fund could find it difficult to sell privately placed securities and other restricted securities when WRIMCO believes it is desirable to do so, especially under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, and the prices realized could be less than those originally paid or less than the fair market value. At times, it also may be difficult to determine the fair value of such securities for purposes of computing the NAV of a Fund.</li><li style="margin-left:-20px">Reinvestment Risk. A decline in interest rates may cause issuers to prepay higher-yielding debt securities held by the Fund, resulting in the Fund reinvesting in securities with lower yields, which may cause a decline in its income.</li></ul> <b>Performance </b> <b>Objectives </b> <b>Fees and Expenses </b> This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. More information about these and other discounts is available from your financial professional and in the &#8220;Sales Charge Reductions&#8221; section on page 46 of the Fund&#8217;s prospectus and in the &#8220;Purchase, Redemption and Pricing of Shares&#8221; section on page 85 of the Fund&#8217;s statement of additional information (SAI). <b>Example </b> This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. <br /><br />The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund&#8217;s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: <br /><br /> You would pay the following expenses if you did not redeem your shares: <b>Portfolio Turnover </b> <b>Principal Investment Risks </b> <b>Performance </b> The Fund bears transaction costs, such as spreads between bid and asked prices, when it buys and sells securities (or &#8220;turns over&#8221; its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund&#8217;s performance. During the most recent fiscal year, the Fund&#8217;s portfolio turnover rate was 27% of the average value of its portfolio. <b>Principal Investment Strategies </b> This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. More information about these and other discounts is available from your financial professional and in the &#8220;Sales Charge Reductions&#8221; section on page 46 of the Fund&#8217;s prospectus and in the &#8220;Purchase, Redemption and Pricing of Shares&#8221; section on page 85 of the Fund&#8217;s statement of additional information (SAI). Shareholder Fees <br/><br/>(fees paid directly from your investment) Annual Fund Operating Expenses<br/><br/>(expenses that you pay each year as a % of the value of your investment) <b>Example </b> This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. <br/><br/>The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund&#8217;s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: You would pay the following expenses if you did not redeem your shares: <b>Portfolio Turnover </b> The Fund bears transaction costs, such as spreads between bid and asked prices, when it buys and sells securities (or &#8220;turns over&#8221; its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund&#8217;s performance. During the most recent fiscal year, the Fund&#8217;s portfolio turnover rate was 24% of the average value of its portfolio. <b>Principal Investment Strategies </b> Waddell &amp; Reed Advisors Bond Fund seeks to achieve its objective by investing primarily in investment grade debt securities. The Fund considers debt securities to be investment grade if they are rated BBB- or higher by Standard &amp; Poor&#8217;s, a division of The McGraw-Hill Companies, Inc. (S&amp;P), or comparably rated by another nationally recognized statistical rating organization (NRSRO) or, if unrated, determined by Waddell &amp; Reed Investment Management Company (WRIMCO), the Fund&#8217;s investment manager, to be of comparable quality. During normal circumstances, the Fund invests at least 80% of its net assets in bonds, including corporate bonds, mortgage-backed securities, securities issued or guaranteed by the U.S. government or its agencies or instrumentalities (U.S. government securities), and other asset-backed securities. Certain of the mortgage-backed securities in which the Fund may invest are not backed by the full faith and credit of the U.S. government and, like other asset-backed securities in which the Fund may invest, may be backed only by the pool of assets pledged as security for the transaction. The Fund has no limitations regarding the maturity, duration or dollar-weighted average of its holdings, may invest in debt securities with varying maturities and can invest in securities of companies of any size. <br/><br/>In selecting debt securities for the Fund, WRIMCO initially utilizes a top-down viewpoint by looking at broad economic and financial trends in an effort to anticipate their impact on the bond market and then considers yield and relative safety of a security. WRIMCO also may look at many other factors, including the issuer&#8217;s past, present and estimated future: financial strength; cash flow; management; borrowing requirements; and responsiveness to changes in interest rates and business conditions. As well, WRIMCO may consider the maturity of the obligation and the size or nature of the bond issue. <br/><br/>Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities. For example, WRIMCO may sell a holding if, in WRIMCO&#8217;s opinion, the issuer&#8217;s financial strength weakens and/or the yield and relative safety of the security decline. WRIMCO also may sell a security to reduce the Fund&#8217;s holding in that security, to take advantage of more attractive investment opportunities or to raise cash. <b>Principal Investment Risks </b> Waddell & Reed Advisors Municipal Bond Fund As with any mutual fund, the value of the Fund&#8217;s shares will change, and you could lose money on your investment. The Fund is not intended as a complete investment program. A variety of factors can affect the investment performance of the Fund and prevent it from achieving its objective. These include: <ul type="square"><li style="margin-left:-20px">Company Risk. A company may perform worse than the overall market due to specific factors, such as adverse changes to its business or investor perceptions about the company.</li><li style="margin-left:-20px">Credit Risk. An issuer of a fixed-income obligation may not make payments on the obligation when due or may default on its obligation.</li><li style="margin-left:-20px">Extension Risk. A rise in interest rates could cause property owners to pay their mortgages more slowly than expected, resulting in slower payments of mortgage-backed securities and lengthening the average life of such security. This could cause their value to decline more than other fixed-income securities.</li><li style="margin-left:-20px">Interest Rate Risk. A rise in interest rates may cause a decline in the value of the Fund&#8217;s securities, especially securities with longer maturities. A decline in interest rates may cause the Fund to experience a decline in its income.</li><li style="margin-left:-20px">Management Risk. Fund performance is primarily dependent on WRIMCO&#8217;s skill in evaluating and managing the Fund&#8217;s portfolio and the Fund may not perform as well as other similar mutual funds.</li><li style="margin-left:-20px">Market Risk. Adverse market conditions, sometimes in response to general economic or industry news, may cause the prices of the Fund&#8217;s holdings to fall as part of a broad market decline. The financial crisis in the U.S. and foreign economies over the past several years, including the European sovereign debt crisis, has resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both U.S. and foreign, and in the NAVs of many mutual funds, including to some extent the Fund. Global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region may adversely affect issuers in another country or region, which in turn may adversely affect securities held by the Fund. These circumstances have also decreased liquidity in some markets and may continue to do so. In addition, certain unanticipated events, such as natural disasters, terrorist attacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund.</li><li style="margin-left:-20px"> Mortgage-Backed and Asset-Backed Securities Risk. Mortgage-backed and asset-backed securities are subject to prepayment risk. When interest rates decline, unscheduled prepayments can be expected to accelerate, and the Fund may be required to reinvest the proceeds of the prepayments at the lower interest rates then available. Unscheduled prepayments would also limit the potential for capital appreciation on mortgage-backed and asset-backed securities.</li><li style="margin-left:-20px">Reinvestment Risk. A decline in interest rates may cause issuers to prepay higher-yielding debt securities held by the Fund, resulting in the Fund reinvesting in securities with lower yields, which may cause a decline in its income.</li><li style="margin-left:-20px">U.S. Government Securities Risk. Certain U.S. government securities, such as U.S. Treasury (Treasury) securities and securities issued by the Government National Mortgage Association (Ginnie Mae), are backed by the full faith and credit of the U.S. government. Other U.S. government securities, such as securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB), are not backed by the full faith and credit of the U.S. government and, instead, may be supported only by the credit of the issuer or by the right of the issuer to borrow from the Treasury.</li></ul> <b>Performance </b> 0.0425 0 0 The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of broad-based securities market indices and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. <br/><br/>After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. Return After Taxes on Distributions and Sale of Fund Shares may be better than Return Before Taxes due to an assumed tax benefit from losses on a sale of the Fund&#8217;s shares at the end of the period. <br/><br/>Performance results include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower. <br/><br/>The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Current performance may be lower or higher. Please visit www.waddell.com or call 888.WADDELL for the Fund&#8217;s updated performance. Chart of Year-by-Year Returns <br/>as of December 31 each year 0.01 The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of broad-based securities market indices and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. <br /><br />After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. <br /><br />Performance results include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower. <br /><br />The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Current performance may be lower or higher. Please visit www.waddell.com or call 888.WADDELL for the Fund's updated performance. 0.05 0.01 In the period shown in the chart, the highest quarterly return was 4.05% (the<br/> third quarter of 2009) and the lowest quarterly return was -2.58% (the second<br/> quarter of 2004). Chart of Year-by-Year Returns<br/><br/>as of December 31 each year Average Annual Total Returns <br/><br/>as of December 31, 2012 In the period shown in the chart, the highest quarterly return was 14.59% (the<br/> second quarter of 2009) and the lowest quarterly return was -15.81% (the fourth<br/> quarter of 2008). Average Annual Total Returns<br/><br/>as of December 31, 2012 Return After Taxes on Distributions and Sale of Fund Shares may be better than Return Before Taxes due to an assumed tax benefit from losses on a sale of the Fund&#8217;s shares at the end of the period. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. Shareholder Fees<br/><br/>(fees paid directly from your investment) After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Annual Fund Operating Expenses<br/><br/>(expenses that you pay each year as a % of the value of your investment) The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 0.0052 0.0052 0.0575 0.0052 0 www.waddell.com 0 0 888.WADDELL The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of broad-based securities market indices and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). 0.0025 0.01 0.01 As with any mutual fund, the value of the Fund&#8217;s shares will change, and you could lose money on your investment. 0.0013 0.0035 0.0023 0.009 0.0187 100000 0.0175 You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. 0.01 0.05 0.01 0 0.24 0.0575 0 0 0 0.0425 0 0 513 0.0052 590 178 0.0052 0.0052 0.01 0.0025 0.05 0.01 700 0.01 551 0.01 888 0.0059 0.0059 0.0059 0.0059 0.0015 902 0.0035 1111 0.0023 949 0.0025 0.0092 0.01 0.0187 0.01 0.0175 0 515 1486 0.0025 1937 590 0.0047 0.0062 2062 178 0.0047 0.003 0.0047 515 190 178 0.0047 0.002 706 588 551 0.0025 706 0.01 0.01 888 551 0 913 0.0109 1011 949 0.0221 0.0189 0.0079 0.0025 0.0071 513 0.0038 190 1508 178 1942 2062 700 588 0.0019 551 913 1111 949 902 0.0097 1011 949 0.0218 0.0185 0.0066 1486 1937 2062 1508 1942 2062 0.0647 0.0644 0.0588 0.0614 0.1028 0.1814 0.1413 0.0307 0.0307 0.0319 0.0273 0.0673 0.0741 0.0884 0.0541 0.0539 0.0535 <b>Objective </b> 0.0521 0.0542 0.0615 0.0479 0.0575 0 0 0 0.0543 0.0543 0.0521 0.0519 0.0543 0.0578 0.0529 680 624 192 81 0.0442 0.0441 0.0432 0.0391 0.0392 0.0519 0.0441 902 0.01 To seek to provide a high level of current income that is not subject to Federal income tax. 0.05 <b>Fees and Expenses </b> 0.01 991 0 594 252 This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. More information about these and other discounts is available from your financial professional and in the &#8220;Sales Charge Reductions&#8221; section on page 46 of the Fund&#8217;s prospectus and in the &#8220;Purchase, Redemption and Pricing of Shares&#8221; section on page 85 of the Fund&#8217;s statement of additional information (SAI). 0.0425 <b>Example </b> 0 0 0 You would pay the following expenses if you did not redeem your shares: 668 <b>Portfolio Turnover </b> 188 67 1141 1285 1021 439 621 1827 2260 2212 866 978 982 582 211 0 0.01 0.05 0.01 1080 1269 1001 368 1696 2206 2169 822 The Fund bears transaction costs, such as spreads between bid and asked prices, when it buys and sells securities (or &#8220;turns over&#8221; its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund&#8217;s performance. During the most recent fiscal year, the Fund&#8217;s portfolio turnover rate was 6% of the average value of its portfolio. <b>Principal Investment Strategies</b> 0.005 0.005 0.005 0.0025 0.01 0.01 0.0062 0.0062 0.003 0.0067 0.0062 0.0035 0.0062 0.0022 0.005 <a name="tx442603_7"></a>Waddell &amp; Reed Advisors Cash Management 668 You would pay the following expenses if you did not redeem your shares: 188 67 0 0.0105 221 0.0217 <b>Objective </b> 0.0185 0.0072 0.0025 0.01 0.01 0 To seek to provide current income consistent with maintaining liquidity and preservation of capital. <b>Fees and Expenses </b> 680 224 192 81 902 691 This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 594 252 866 682 1141 582 1185 0.0036 211 1021 439 0.0077 0.0043 0.0021 1080 1169 1001 368 Shareholder Fees <br/><br/>(fees paid directly from your investment) Waddell &amp; Reed Advisors Municipal High Income Fund seeks to achieve its objective by investing, during normal circumstances, at least 80% of its net assets in a diversified portfolio of tax-exempt municipal bonds. Municipal bonds are obligations the interest on which is not includable in gross income for Federal income tax purposes, although a significant portion of such interest may be a tax preference item for purposes of the Federal alternative minimum tax (AMT) (Tax Preference Item). <br /><br />The Fund typically invests in medium- and lower-quality bonds that include bonds rated BBB+ or lower by Standard &amp; Poor&#8217;s, a division of The McGraw-Hill Companies, Inc. (S&amp;P), or comparably rated by another nationally recognized statistical rating organization (NRSRO) or, if unrated, determined by Waddell &amp; Reed Investment Management Company (WRIMCO), the Fund&#8217;s investment manager, to be of comparable quality, including non-investment grade bonds, commonly called junk bonds, typically rated BB+ or lower by S&amp;P or comparably rated by another NRSRO or, if unrated, determined by WRIMCO to be of comparable quality. WRIMCO&#8217;s view on interest rates largely determines the desired duration of the Fund&#8217;s holdings and how to structure the portfolio to achieve a duration target. In current market conditions, the Fund invests substantially in municipal bonds with remaining maturities of 10 to 30 years. <br /><br />The Fund may invest in higher-quality municipal bonds at times when yield spreads are narrow and WRIMCO believes that the higher yields do not justify the increased risk, and/or when, in the opinion of WRIMCO, there is a lack of medium- and lower-quality bonds in which to invest. <br /><br />WRIMCO typically conducts a macro-economic analysis in conjunction with its security selection, and it may look at a number of factors in selecting individual securities for the Fund&#8217;s portfolio. These include the security&#8217;s current coupon, the maturity, relative value and market yield of the security, the creditworthiness of the particular issuer or of the private company involved, the sector in which the security is identified, the structure of the security, including whether it has a call feature, and the state in which the security is issued. <br /><br />The Fund primarily invests in revenue bonds: revenue bonds are payable only from specific sources, such as the revenue from a particular project, a special tax, lease payments and/or appropriated funds. Revenue bonds include certain private activity bonds (PABs), which finance privately operated facilities. Revenue bonds also include housing bonds that finance pools of single-family home mortgages and student loan bonds that finance pools of student loans as well as bonds that finance charter schools. Revenue bonds also include tobacco bonds that are issued by state-created special purpose entities as a means to securitize a state&#8217;s share of annual tobacco settlement revenues. <br /><br />The Fund may invest significantly in PABs in general, in revenue bonds payable from revenues derived from similar projects, such as those in the health care, life care, education and special tax sectors, and in municipal bonds of issuers located in the same geographic area. <br /><br />Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses when buying securities to determine whether the security continues to be a desired investment for the Fund, including consideration of the security&#8217;s current credit quality. As well, WRIMCO may sell a security to reduce the Fund&#8217;s holding in that security, to take advantage of more attractive investment opportunities or to raise cash. 1827 2260 2212 978 0.0123 1696 2206 0.0239 2169 822 0.0205 0.0083 <b>Principal Investment Risks </b> -0.007 -0.0166 -0.0013 -0.001 0.0442 0.0567 0.0423 0.0422 0.0711 0 0 0 0.0384 0.0258 0.0272 0.0376 528 0.0419 0.0541 620 0.0608 188 0.0595 0.0631 74 745 0.0533 0.0518 979 0.0531 0.0489 582 0.0363 230 0.035 0.0393 0.0246 0.0268 980 1264 1001 401 1653 2218 2169 894 0.01 0.05 0.1686 0.01 0.0856 As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. The Fund is not intended as a complete investment program. A variety of factors can affect the investment performance of the Fund and prevent it from achieving its objective. These include:<ul type="square"><li style="margin-left:-20px">Alternative Minimum Tax Risk. The Fund may invest in municipal bonds the interest on which (and, therefore, Fund dividends attributable to such interest) is a Tax Preference Item. If a Fund shareholder&#8217;s AMT liability increased as a result of such dividends, that would reduce the Fund&#8217;s after-tax return to the shareholder.</li><li style="margin-left:-20px">Credit Risk. An issuer of a fixed-income obligation may not make payments on the obligation when due or may default on its obligation.</li><li style="margin-left:-20px">Interest Rate Risk. A rise in interest rates may cause a decline in the value of the Fund&#8217;s securities, especially securities with longer maturities. A decline in interest rates may cause the Fund to experience a decline in its income.</li><li style="margin-left:-20px">Liquidity Risk. Generally, a security is liquid if the Fund is able to sell the security at a fair price within a reasonable time. Liquidity is generally related to the market trading volume for a particular security. Illiquid securities may trade at a discount from comparable, more liquid investments and may be subject to wider fluctuations in market value. Less liquid securities are more difficult to dispose of at their recorded values and are subject to increased spreads and volatility. Also, the Fund may not be able to dispose of illiquid securities at a favorable time or price.</li><li style="margin-left:-20px">Low-Rated Securities Risk. In general, low-rated debt securities (commonly referred to as &#8220;high yield&#8221; or &#8220;junk&#8221; bonds) offer higher yields due to the increased risk that the issuer will be unable to meet its obligations on interest or principal payments at the time called for by the debt instrument. For this reason, these securities are considered speculative and could significantly weaken the Fund&#8217;s returns. In adverse economic or other circumstances, issuers of these low-rated securities and obligations are more likely to have difficulty making principal and interest payments than issuers of higher-rated securities and obligations.</li><li style="margin-left:-20px">Management Risk. Fund performance is primarily dependent on WRIMCO&#8217;s skill in evaluating and managing the Fund&#8217;s portfolio and the Fund may not perform as well as other similar mutual funds.</li><li style="margin-left:-20px"> Market Risk. Adverse market conditions, sometimes in response to general economic or industry news, may cause the prices of the Fund&#8217;s holdings to fall as part of a broad market decline. The financial crisis in the U.S. and foreign economies over the past several years, including the European sovereign debt crisis, has resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both U.S. and foreign, and in the NAVs of many mutual funds, including to some extent the Fund. Global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region may adversely affect issuers in another country or region, which in turn may adversely affect securities held by the Fund. These circumstances have also decreased liquidity in some markets, including the municipal bond market, and may continue to do so. In addition, certain unanticipated events, such as natural disasters, terrorist attacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund.</li><li style="margin-left:-20px">Political, Legislative or Regulatory Risk. The municipal securities market generally or certain municipal securities in particular may be significantly affected by adverse political, legislative or regulatory changes or litigation at the Federal or state level.</li><li style="margin-left:-20px">Reinvestment Risk. A decline in interest rates may cause issuers to prepay higher-yielding debt securities held by the Fund, resulting in the Fund reinvesting in securities with lower yields, which may cause a decline in its income.</li><li style="margin-left:-20px">Sector Risk. At times, the Fund may have a significant portion of its assets invested in securities of companies conducting business in a broadly related group of industries within an economic sector. Companies in the same economic sector may be similarly affected by economic or market events, making the Fund more vulnerable to unfavorable developments in that economic sector than funds that invest more broadly.</li><li style="margin-left:-20px">Taxability Risk. The Fund relies on the opinion of the issuer&#8217;s bond counsel that the interest paid on the issuer&#8217;s securities will not be subject to Federal income tax. However, after the Fund buys a security issued as tax-exempt, the Internal Revenue Service (IRS) may determine that interest on the security should, in fact, be taxable, in which event the dividends the Fund pays with respect to that interest would be subject to Federal income tax.</li></ul> 0.0215 0.0846 0.0311 -0.2068 <b>Performance </b> 0.407 Shareholder Fees<br/><br/>(fees paid directly from your investment) Annual Fund Operating Expenses<br/><br/>(expenses that you pay each year as a % of the value of your investment) 0.1451 0.0489 0.1908 The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of a broad-based securities market index and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. <br /><br />After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. <br /><br />Performance results include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower. <br /><br />The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Current performance may be lower or higher. Please visit www.waddell.com or call 888.WADDELL for the Fund&#8217;s updated performance. 528 220 188 74 In the period shown in the chart, the highest quarterly return was 12.21% (the<br/> third quarter of 2009) and the lowest quarterly return was -14.07% (the fourth<br/> quarter of 2008). 745 679 582 230 Chart of Year-by-Year Returns<br/>as of December 31 each year 0.004 0.004 0.004 0.1223 0.0918 0.0881 0.1376 0.1813 0.1944 0.1517 0.1558 0.0513 0.0664 0 0.0712 0.01 0.01 0.0496 0.0686 -0.0014 0.0425 0.085 0.0551 0.0586 0.0141 0.0849 0.0888 0.1016 0.0982 0.1001 0.0396 0.0801 0.0556 -0.1797 -0.0012 980 0.2938 1164 1001 401 0.0708 0.1466 0.0043 0.0058 0.0025 0.0535 0.0598 0.0934 0.0729 As with any mutual fund, the value of the Fund&#8217;s shares will change, and you could lose money on your investment. The Fund is not intended as a complete investment program. A variety of factors can affect the investment performance of the Fund and prevent it from achieving its objectives. These include: <ul type="square"><li style="margin-left:-20px">Bank Loan Risk. In addition to the risks typically associated with fixed-income securities, bank loans carry other risks, including the risk of insolvency of the lending bank or other intermediary. Bank loans may be unsecured or not fully collateralized, may be subject to restrictions on resale and sometimes trade infrequently on the secondary market.</li> <li style="margin-left:-20px">Company Risk. A company may perform worse than the overall market due to specific factors, such as adverse changes to its business or investor perceptions about the company.</li> <li style="margin-left:-20px">Credit Risk. An issuer of a fixed-income obligation may not make payments on the obligation when due or may default on its obligation.</li> <li style="margin-left:-20px">Emerging Market Risk. Investments in countries with emerging economies or securities markets may carry greater risk than investments in more developed countries. Political and economic structures in many such countries may be undergoing significant evolution and rapid development, and such countries may lack the social, political and economic stability characteristic of more developed countries. Investments in securities issued in these countries may be more volatile and less liquid than securities issued in more developed countries.</li> <li style="margin-left:-20px">Foreign Currency Risk. Foreign securities may be denominated in foreign currencies. The value of the Fund&#8217;s investments, as measured in U.S. dollars, may be unfavorably affected by changes in foreign currency exchange rates and exchange control regulations.</li> <li style="margin-left:-20px">Foreign Exposure Risk. The securities of many companies may have significant exposure to foreign markets as a result of the company&#8217;s products or services in those foreign markets. As a result, a company&#8217;s domicile and/or the markets in which the company&#8217;s securities trade may not be fully reflective of its sources of revenue. Such securities would be subject to some of the same risks as an investment in foreign securities, including the risk that political and economic events unique to a country or region will adversely affect those markets in which the company&#8217;s products or services are sold.</li> <li style="margin-left:-20px">Foreign Securities Risk. Investing in foreign securities involves a number of economic, financial, legal and political considerations that may not be associated with the U.S. markets and that could affect the Fund&#8217;s performance unfavorably, depending upon the prevailing conditions at any given time. Among these potential risks are: greater price volatility; comparatively weak supervision and regulation of securities exchanges, brokers and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversion costs; adverse foreign tax consequences; different and/or less stringent financial reporting standards; custody; and settlement delays. In addition, key information about the issuer, the markets or the local government or economy may be unavailable, incomplete or inaccurate. Sovereign debt instruments are also subject to the risk that a government or agency issuing the debt may be unable to pay interest and/or repay principal due to cash flow problems, insufficient foreign currency reserves or political concerns. In such instance, the Fund may have limited recourse against the issuing government or agency.</li> <li style="margin-left:-20px"> Interest Rate Risk. A rise in interest rates may cause a decline in the value of the Fund&#8217;s securities, especially securities with longer maturities. A decline in interest rates may cause the Fund to experience a decline in its income. </li> <li style="margin-left:-20px"> Low-Rated Securities Risk. In general, low-rated debt securities (commonly referred to as &#8220;high yield&#8221; or &#8220;junk&#8221; bonds) offer higher yields due to the increased risk that the issuer will be unable to meet its obligations on interest or principal payments at the time called for by the debt instrument. For this reason, these securities are considered speculative and could significantly weaken the Fund&#8217;s returns. In adverse economic or other circumstances, issuers of these low-rated securities and obligations are more likely to have difficulty making principal and interest payments than issuers of higher-rated securities and obligations.</li> <li style="margin-left:-20px">Management Risk. Fund performance is primarily dependent on WRIMCO&#8217;s skill in evaluating and managing the Fund&#8217;s portfolio and the Fund may not perform as well as other similar mutual funds.</li> <li style="margin-left:-20px">Market Risk. Adverse market conditions, sometimes in response to general economic or industry news, may cause the prices of the Fund&#8217;s holdings to fall as part of a broad market decline. The financial crisis in the U.S. and foreign economies over the past several years, including the European sovereign debt crisis, has resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both U.S. and foreign, and in the NAVs of many mutual funds, including to some extent the Fund. Global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region may adversely affect issuers in another country or region, which in turn may adversely affect securities held by the Fund. These circumstances have also decreased liquidity in some markets and may continue to do so. In addition, certain unanticipated events, such as natural disasters, terrorist attacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund.</li> <li style="margin-left:-20px">Reinvestment Risk. A decline in interest rates may cause issuers to prepay higher-yielding debt securities held by the Fund, resulting in the Fund reinvesting in securities with lower yields, which may cause a decline in its income.</li> <li style="margin-left:-20px">Small Company Risk. Securities of small capitalization companies are subject to greater price volatility, lower trading volume and less liquidity due to, among other things, such companies&#8217; small size, limited product lines, limited access to financing sources and limited management depth. In addition, the frequency and volume of trading of such securities may be less than is typical of larger companies, making them subject to wider price fluctuations and such securities may be more affected than other types of securities by the underperformance of a sector or during market downturns. In some cases, there could be difficulties in selling securities of small capitalization companies at the desired time.</li></ul> 0.0537 0.0083 0.112 1653 0.0198 2218 0.081 894 0.0529 0.0165 2169 0.0557 0.0764 0.078 0.0908 0.1039 0.1039 0.0889 Average Annual Total Returns<br/><br/>as of December 31, 2012 Chart of Year-by-Year Returns <br/>as of December 31 each year In the period shown in the chart, the highest quarterly return was 6.18% (the<br/>second quarter of 2009) and the lowest quarterly return was -5.14% (the third <br/> quarter of 2008). Average Annual Total Returns <br/><br/>as of December 31, 2012 693 642 208 85 0.0525 0.0522 0.052 0.0478 0.0479 0.0708 0.0483 0.0129 0.0334 0.0209 0.0333 0.0595 0.083 943 1045 643 0.0047 265 0.0439 0.0715 0.0165 <b>Example </b> This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds.<br/><br/> The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund&#8217;s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: You would pay the following expenses if you did not redeem your shares: 601 168 265 921 520 460 1168 897 1955 2008 1025 0.047 0.0347 0.02 To seek to provide a high level of current income. 0.0365 0.0326 -0.0118 0.1315 <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualTotalReturnsWaddellReedAdvisorsBondFundBarChart column period compact * ~</div> 0.0292 0.27 0.0984 0.0765 100000 85 201 168 You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. 265 520 621 The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of broad-based securities market indices and a Lipper peer group (a universe of mutual funds with investment objectives similar to those of the Fund). 460 1068 897 888.WADDELL www.waddell.com The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. <div style="display:none">~ http://www.waddell.com/role/ScheduleAverageAnnualTotalReturnsTransposedWaddellReedAdvisorsBondFund column period compact * ~</div> After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. 1025 2008 Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. Return After Taxes on Distributions and Sale of Fund Shares may be better than Return Before Taxes due to an assumed tax benefit from losses on a sale of the Fund&#8217;s shares at the end of the period. <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleNoRedemptionTransposedWaddellReedAdvisorsBondFund column period compact * ~</div> 1212 <b>Principal Investment Strategies </b> 1375 1103 460 693 242 208 85 1978 2437 2379 1025 943 745 <b>Performance </b> 643 265 1212 1275 1103 460 0.0002 -0.0398 0.0002 0.0002 1978 2437 2379 1025 0.0064 0.0013 0.0034 0.0047 <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleTransposedWaddellReedAdvisorsBondFund column period compact * ~</div> 0.0153 0.0096 0.0098 0.0145 <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualFundOperatingExpensesWaddellReedAdvisorsBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleShareholderFeesWaddellReedAdvisorsBondFund column period compact * ~</div> 0.0065 -0.0099 0.0099 0.0153 0.0589 0.0722 0.0484 0.0846 -0.0267 -0.0337 -0.014 -0.0345 0.0083 0.0198 0.023 0.0227 0.0239 0.0357 0.0206 0.0241 0.0345 0.0357 0.0238 0.0395 0.0253 0.0521 0.0312 0.056 0.035 0.0545 0.0468 0.055 0.0546 0.0493 0.1162 0.0533 0.0527 0.0379 0.0387 0.0483 0.0335 0.0497 0.0209 Annual Fund Operating Expenses <br/><br/>(expenses that you pay each year as a % of the value of your investment) 0.0231 0.0631 0.0281 0.0618 0.0294 0.0598 0.0417 0.0491 0.0309 0.0487 0.0407 Waddell & Reed Advisors Bond Fund 0.0522 0.0996 <b>Principal Investment Risks</b> -0.0517 0.1647 0.0637 0.0079 0.0679 <b>Objective </b> 0.0044 To seek to provide the level of current income consistent with preservation of capital and that is not subject to Federal income tax. 0.0052 0.0237 <b>Fees and Expenses </b> 0.0425 highest quarterly return This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. More information about these and other discounts is available from your financial professional and in the &#8220;Sales Charge Reductions&#8221; section on page 46 of the Fund&#8217;s prospectus and in the &#8220;Purchase, Redemption and Pricing of Shares&#8221; section on page 85 of the Fund&#8217;s statement of additional information (SAI). 0.0462 2009-09-30 0.0226 0.0405 0.0085 lowest quarterly return 0.0003 Shareholder Fees <br/><br/>(fees paid directly from your investment) 2004-06-30 -0.0258 0.0002 0.0002 <b>Example </b> This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds. <br /><br />The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund&#8217;s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: <br /><br /> <b>Portfolio Turnover </b> Shareholder Fees<br/><br/>(fees paid directly from your investment) Annual Fund Operating Expenses <br/><br/>(expenses that you pay each year as a % of the value of your investment) The Fund bears transaction costs, such as spreads between bid and asked prices, when it buys and sells securities (or &#8220;turns over&#8221; its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund&#8217;s performance. During the most recent fiscal year, the Fund&#8217;s portfolio turnover rate was 7% of the average value of its portfolio. Waddell &amp; Reed Advisors Government Securities Fund <b>Objective </b> To seek to provide current income consistent with preservation of capital. <b>Fees and Expenses </b> This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. More information about these and other discounts is available from your financial professional and in the &#8220;Sales Charge Reductions&#8221; section on page 46 of the Fund&#8217;s prospectus and in the &#8220;Purchase, Redemption and Pricing of Shares&#8221; section on page 85 of the Fund&#8217;s statement of additional information (SAI). Shareholder Fees <br/><br/>(fees paid directly from your investment) Annual Fund Operating Expenses <br/><br/>(expenses that you pay each year as a % of the value of your investment) <b>Portfolio Turnover </b> The Fund bears transaction costs, such as spreads between bid and asked prices, when it buys and sells securities (or &#8220;turns over&#8221; its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund&#8217;s performance. During the most recent fiscal year, the Fund&#8217;s portfolio turnover rate was 37% of the average value of its portfolio. <b>Example </b> This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds.<br/><br/>The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund&#8217;s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: You would pay the following expenses if you did not redeem your shares: <b>Principal Investment Strategies</b> Waddell &amp; Reed Advisors Government Securities Fund seeks to achieve its objective by investing exclusively in a diversified portfolio of U.S. government securities. U.S. government securities include: U.S. Treasury (Treasury) obligations, such as bills, bonds and notes; obligations issued or guaranteed as to principal and interest by the Treasury, and certain U.S. government agencies or instrumentalities, such as Government National Mortgage Association (Ginnie Mae); obligations of issuers that are supported by the ability of the issuer to borrow from the U.S. Treasury; and obligations of U.S. government-sponsored entities that are neither issued nor guaranteed by the U.S. government, such as the Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae). The Fund may invest in mortgage-backed securities issued by U.S. government-sponsored entities or agencies or instrumentalities of U.S. government agencies. The Fund has no limitations on the range of maturities of the debt securities in which it may invest.<br/><br/>Waddell &amp; Reed Investment Management Company (WRIMCO), the Fund&#8217;s investment manager, may look at a number of factors in selecting securities for the Fund&#8217;s portfolio. These include utilizing economic research and analyzing interest rate trends to determine which types of securities to emphasize at a given time.<br/><br/>Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses when buying securities to determine whether the security continues to be a desired investment for the Fund. WRIMCO also may sell a security to reduce the Fund&#8217;s holding in that security, to take advantage of more attractive investment opportunities or to raise cash. <b>Principal Investment Risks </b> As with any mutual fund, the value of the Fund&#8217;s shares will change, and you could lose money on your investment. The Fund is not intended as a complete investment program. A variety of factors can affect the investment performance of the Fund and prevent it from achieving its objective. These include: <ul type="square"><li style="margin-left:-20px">Credit Risk. An issuer of a fixed-income obligation may not make payments on the obligation when due or may default on its obligation.</li><li style="margin-left:-20px">Extension Risk. A rise in interest rates could cause property owners to pay their mortgages more slowly than expected, resulting in slower payments of mortgage-backed securities and lengthening the average life of such security. This could cause their value to decline more than other fixed-income securities.</li><li style="margin-left:-20px">Interest Rate Risk. A rise in interest rates may cause a decline in the value of the Fund&#8217;s securities, especially securities with longer maturities. A decline in interest rates may cause the Fund to experience a decline in its income.</li><li style="margin-left:-20px">Management Risk. Fund performance is primarily dependent on WRIMCO&#8217;s skill in evaluating and managing the Fund&#8217;s portfolio and the Fund may not perform as well as other similar mutual funds.</li><li style="margin-left:-20px">Market Risk. Adverse market conditions, sometimes in response to general economic or industry news, may cause the prices of the Fund&#8217;s holdings to fall as part of a broad market decline. The financial crisis in the U.S. and foreign economies over the past several years, including the European sovereign debt crisis, has resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both U.S. and foreign, and in the NAVs of many mutual funds, including to some extent the Fund. Global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region may adversely affect issuers in another country or region, which in turn may adversely affect securities held by the Fund. These circumstances have also decreased liquidity in some markets and may continue to do so. In addition, certain unanticipated events, such as natural disasters, terrorist attacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund.</li><li style="margin-left:-20px"> Mortgage-Backed and Asset-Backed Securities Risk. Mortgage-backed and asset-backed securities are subject to prepayment risk. When interest rates decline, unscheduled prepayments can be expected to accelerate, and the Fund may be required to reinvest the proceeds of the payments at the lower interest rates then available. Unscheduled prepayments would also limit the potential for capital appreciation on mortgage-backed and asset-backed securities.</li><li style="margin-left:-20px">Reinvestment Risk. A decline in interest rates may cause issuers to prepay higher-yielding debt securities held by the Fund, resulting in the Fund reinvesting in securities with lower yields, which may cause a decline in its income.</li><li style="margin-left:-20px">U.S. Government Securities Risk. Certain U.S. government securities such as Treasury securities and securities issued by Ginnie Mae, are backed by the full faith and credit of the U.S. government. Other U.S. government securities, such as securities issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks, are not backed by the full faith and credit of the U.S. government and, instead, may be supported only by the credit of the issuer or by the right of the issuer to borrow from the Treasury.</li></ul> <b>Performance</b> The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of broad-based securities market indices and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown.<br/><br/>After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. Return After Taxes on Distributions and Sale of Fund Shares may be better than Return Before Taxes due to an assumed tax benefit from losses on a sale of the Fund&#8217;s shares at the end of the period.<br/><br/>Performance results include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.<br/><br/>The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Current performance may be lower or higher. Please visit www.waddell.com or call 888.WADDELL for the Fund&#8217;s updated performance. Chart of Year-by-Year Returns<br/>as of December 31 each year In the period shown in the chart, the highest quarterly return was 5.35% (the<br/> third quarter of 2011) and the lowest quarterly return was -2.67% (the fourth<br/> quarter of 2010). Average Annual Total Returns<br/><br/>as of December 31, 2012 0.37 You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. 100000 As with any mutual fund, the value of the Fund&#8217;s shares will change, and you could lose money on your investment. The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of broad-based securities market indices and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). 888.WADDELL <b>Principal Investment Strategies</b> Waddell &amp; Reed Advisors Municipal Bond Fund seeks to achieve its objective by investing, during normal circumstances, at least 80% of its net assets in tax-exempt municipal bonds, mainly of investment grade and of any maturity. Municipal bonds are obligations the interest on which is not includable in gross income for Federal income tax purposes, although a portion of such interest may be a tax preference item for purposes of the Federal alternative minimum tax (AMT) (Tax Preference Item). Investment grade debt securities include debt securities rated BBB- or higher by Standard &amp; Poor&#8217;s, a division of The McGraw-Hill Companies, Inc. (S&amp;P), or comparably rated by another nationally recognized statistical rating organization (NRSRO) or, if unrated, determined by Waddell &amp; Reed Investment Management Company (WRIMCO), the Fund&#8217;s investment manager, to be of comparable quality.<br/><br/>The Fund diversifies its holdings between two main types of municipal bonds:<ul type="square"><li style="margin-left:-20px">general obligation bonds, which are backed by the full faith, credit and taxing power of the governmental authority</li></ul><ul type="square"><li style="margin-left:-20px">revenue bonds, which are payable only from specific sources, such as the revenue from a particular project, a special tax, lease payments and/or appropriated funds. Revenue bonds include certain private activity bonds (PABs), which finance privately operated facilities. Revenue bonds also include housing bonds that finance pools of single-family home mortgages and student loan bonds that finance pools of student loans as well as bonds that finance charter schools. Revenue bonds also include tobacco bonds that are issued by state-created special purpose entities as a means to securitize a state&#8217;s share of annual tobacco settlement revenues.</li></ul>WRIMCO primarily utilizes a cautious top-down management style that de-emphasizes aggressive interest rate strategies. WRIMCO attempts to enhance Fund performance by utilizing opportunities presented by the shape and slope of the yield curve, while typically striving to keep the overall Fund duration within a plus or minus twenty percent (20%) range relative to the Fund&#8217;s stated benchmark. As an overlay to this core strategy, WRIMCO attempts to identify and capitalize on relative value opportunities that exist between sectors, states (including U.S. possessions), security structures and ratings categories. WRIMCO monitors relative attractiveness to other taxable fixed-income asset classes, as well as municipal market supply/demand patterns and other technical factors, in seeking to identify opportunities for the Fund.<br/><br/>WRIMCO may look at a number of factors in selecting securities for the Fund&#8217;s portfolio. These include the security&#8217;s current coupon, the maturity, relative value and market yield of the security, the creditworthiness of the particular issuer or of the private company involved, the sector in which the security is identified, the structure of the security, including whether it has a call feature, and the state in which the security is issued.<br/><br/>WRIMCO seeks to emphasize prudent diversification among sectors, states, security structures, position sizes and ratings categories, in an attempt to reduce overall portfolio risk and performance volatility as well as to emphasize capital preservation. However, the Fund may invest significantly in municipal bonds payable from revenues derived from similar projects, such as those in the health care sector.<br/><br/>Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses when buying securities to determine whether the security continues to be a desired investment for the Fund. WRIMCO also may sell a security to reduce the Fund&#8217;s holding in that security, to take advantage of more attractive investment opportunities or to raise cash. www.waddell.com <b>Principal Investment Risks </b> The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. highest quarterly return 2011-09-30 0.0535 lowest quarterly return 2010-12-31 -0.0267 As with any mutual fund, the value of the Fund&#8217;s shares will change, and you could lose money on your investment. The Fund is not intended as a complete investment program. A variety of factors can affect the investment performance of the Fund and prevent it from achieving its objective. These include:<ul type="square"><li style="margin-left:-20px">Alternative Minimum Tax Risk. The Fund may invest in municipal bonds the interest on which (and, therefore, Fund dividends attributable to such interest) is a Tax Preference Item. If a Fund shareholder&#8217;s AMT liability increased as a result of such dividends, that would reduce the Fund&#8217;s after-tax return to the shareholder.</li> <li style="margin-left:-20px">Credit Risk. An issuer of a fixed-income obligation may not make payments on the obligation when due or may default on its obligation.</li> <li style="margin-left:-20px">Interest Rate Risk. A rise in interest rates may cause a decline in the value of the Fund&#8217;s securities, especially securities with longer maturities. A decline in interest rates may cause the Fund to experience a decline in its income.</li> <li style="margin-left:-20px">Management Risk. Fund performance is primarily dependent on WRIMCO&#8217;s skill in evaluating and managing the Fund&#8217;s portfolio and the Fund may not perform as well as other similar mutual funds.</li> <li style="margin-left:-20px">Market Risk. Adverse market conditions, sometimes in response to general economic or industry news, may cause the prices of the Fund&#8217;s holdings to fall as part of a broad market decline. The financial crisis in the U.S. and foreign economies over the past several years, including the European sovereign debt crisis, has resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both U.S. and foreign, and in the NAVs of many mutual funds, including to some extent the Fund. Global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region may adversely affect issuers in another country or region, which in turn may adversely affect securities held by the Fund. These circumstances have also decreased liquidity in some markets, including the municipal bond market, and may continue to do so. In addition, certain unanticipated events, such as natural disasters, terrorist attacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund. </li><li style="margin-left:-20px"> Political, Legislative or Regulatory Risk. The municipal securities market generally or certain municipal securities in particular may be significantly affected by adverse political, legislative or regulatory changes or litigation at the Federal or state level.</li> <li style="margin-left:-20px">Reinvestment Risk. A decline in interest rates may cause issuers to prepay higher-yielding debt securities held by the Fund, resulting in the Fund reinvesting in securities with lower yields, which may cause a decline in its income.</li> <li style="margin-left:-20px">Sector Risk. At times, the Fund may have a significant portion of its assets invested in securities of companies conducting business in a broadly related group of industries within an economic sector. Companies in the same economic sector may be similarly affected by economic or market events, making the Fund more vulnerable to unfavorable developments in that economic sector than funds that invest more broadly.</li> <li style="margin-left:-20px">Taxability Risk. The Fund relies on the opinion of the issuer&#8217;s bond counsel that the interest paid on the issuer&#8217;s securities will not be subject to Federal income tax. However, after the Fund buys a security issued as tax-exempt, the Internal Revenue Service (IRS) may determine that interest on the security should, in fact, be taxable, in which event the dividends the Fund pays with respect to that interest would be subject to Federal income tax.</li></ul> Annual Fund Operating Expenses<br/><br/>(expenses that you pay each year as a % of the value of your investment) <a name="tx442603_6"></a>Waddell &amp; Reed Advisors Municipal High Income Fund The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of a broad-based securities market index and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown.<br/><br/>After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. Return After Taxes on Distributions and Sale of Fund Shares may be better than Return Before Taxes due to an assumed tax benefit from losses on a sale of the Fund&#8217;s shares at the end of the period.<br/><br/>Performance results include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower. <br/><br/>The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Current performance may be lower or higher. Please visit www.waddell.com or call 888.WADDELL for the Fund&#8217;s updated performance. <b>Performance </b> You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. Chart of Year-by-Year Returns<br/>as of December 31 each year 100000 0.06 As with any mutual fund, the value of the Fund&#8217;s shares will change, and you could lose money on your investment. highest quarterly return The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of a broad-based securities market index and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). 2009-06-30 The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 888.WADDELL www.waddell.com 0.0618 The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. lowest quarterly return 2008-09-30 -0.0514 After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. 0.81 You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. 100000 As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of broad-based securities market indices and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). 888.WADDELL www.waddell.com The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. 0.07 You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in funds within Waddell &amp; Reed Advisors Funds, InvestEd Portfolios and/or Ivy Funds. 100000 As with any mutual fund, the value of the Fund&#8217;s shares will change, and you could lose money on your investment. The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of a broad-based securities market index and a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). 888.WADDELL www.waddell.com The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. highest quarterly return 2009-06-30 The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. 0.1459 In the period shown in the chart, the highest quarterly return was 6.81% (the <br/>third quarter of 2009) and the lowest quarterly return was -3.99% (the fourth <br/>quarter of 2010). lowest quarterly return 2008-12-31 -0.1581 After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. highest quarterly return highest quarterly return 2009-09-30 0.1221 0.0681 lowest quarterly return 2010-12-31 lowest quarterly return 2008-12-31 -0.1407 -0.0399 2009-09-30 <div style="display:none">~ http://www.waddell.com/role/ScheduleShareholderFeesWaddellReedAdvisorsGovernmentSecuritiesFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleShareholderFeesWaddellReedAdvisorsHighIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualFundOperatingExpensesWaddellReedAdvisorsGovernmentSecuritiesFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleShareholderFeesWaddellReedAdvisorsGlobalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleTransposedWaddellReedAdvisorsGovernmentSecuritiesFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualFundOperatingExpensesWaddellReedAdvisorsHighIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleNoRedemptionTransposedWaddellReedAdvisorsGovernmentSecuritiesFund column period compact * ~</div> highest quarterly return <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleTransposedWaddellReedAdvisorsHighIncomeFund column period compact * ~</div> 2006-12-31 0.0121 lowest quarterly return 2012-12-31 0 <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualTotalReturnsWaddellReedAdvisorsGovernmentSecuritiesFundBarChart column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleNoRedemptionTransposedWaddellReedAdvisorsHighIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAverageAnnualTotalReturnsTransposedWaddellReedAdvisorsGovernmentSecuritiesFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualTotalReturnsWaddellReedAdvisorsHighIncomeFundBarChart column period compact * ~</div> Chart of Year-by-Year Returns <br/>as of December 31 each year <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualTotalReturnsWaddellReedAdvisorsGlobalBondFundBarChart column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleShareholderFeesWaddellReedAdvisorsMunicipalHighIncomeFund column period compact * ~</div> Waddell & Reed Advisors Global Bond Fund <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualFundOperatingExpensesWaddellReedAdvisorsMunicipalHighIncomeFund column period compact * ~</div> In the period shown in the chart, the highest quarterly return was 1.21% (the<br/> fourth quarter of 2006) and the lowest quarterly return was 0.00% (the second,<br/> third and fourth quarters of 2010, the first, second, third and fourth quarters of<br/> 2011 and the first, second, third and fourth quarters of 2012). As of<br/> December 31, 2012, the 7-day yield was 0.02%. Yields are compiled by<br/> annualizing the average daily dividend per share during the time period for<br/> which the yield is presented. <div style="display:none">~ http://www.waddell.com/role/ScheduleAverageAnnualTotalReturnsTransposedWaddellReedAdvisorsHighIncomeFund column period compact * ~</div> Average Annual Total Returns<br/><br/>as of December 31, 2012 <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleTransposedWaddellReedAdvisorsMunicipalHighIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAverageAnnualTotalReturnsTransposedWaddellReedAdvisorsMunicipalHighIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleNoRedemptionTransposedWaddellReedAdvisorsMunicipalHighIncomeFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualTotalReturnsWaddellReedAdvisorsMunicipalHighIncomeFundBarChart column period compact * ~</div> This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds.<br/><br/>The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund&#8217;s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: Return After Taxes on Distributions and Sale of Fund Shares may be better than Return Before Taxes due to an assumed tax benefit from losses on a sale of the Fund&#8217;s shares at the end of the period. Waddell &amp; Reed Advisors Cash Management seeks to achieve its objective by investing in U.S. dollar-denominated, high-quality money market obligations and instruments. High quality indicates that the securities are rated in one of the two highest categories by a nationally recognized statistical rating organization (NRSRO) or, if unrated, determined by Waddell &amp; Reed Investment Management Company (WRIMCO), the Fund&#8217;s investment manager, to be of comparable quality. The Fund seeks, as well, to maintain a net asset value (NAV) of $1.00 per share. The Fund maintains a dollar-weighted average maturity of 60 calendar days or less, and the Fund invests only in securities with a remaining maturity of not more than 397 calendar days or, for securities rated in the second highest rating category by the requisite NRSROs (or, if unrated, determined by WRIMCO to be of comparable quality to such securities), not more than 45 calendar days.<br/><br/>WRIMCO may look at a number of factors in selecting securities for the Fund&#8217;s portfolio. These may include the credit quality of the particular issuer or guarantor of the security, along with the liquidity and yield, and as well the industry sector of the issuer of the security.<br/><br/>Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses when buying securities to determine whether the security no longer offers adequate return or complies with Rule 2a-7 under the Investment Company Act of 1940, as amended (Rule 2a-7). WRIMCO also may sell a security to reduce the Fund&#8217;s holding in that security, to take advantage of more attractive investment opportunities or to raise cash. The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund).<br/><br/> Performance results include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.<br/><br/> The Fund&#8217;s past performance does not necessarily indicate how it will perform in the future. Current performance may be lower or higher. Please visit www.waddell.com or call 888.WADDELL for the Fund&#8217;s most recent 7-day yield. 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. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. The Fund is not intended as a complete investment program.<br/><br/>A variety of factors can affect the investment performance of the Fund and prevent it from achieving its objective. These include:<ul type="square"><li style="margin-left:-20px">Amortized Cost Risk. In the event that the Board determines that the extent of the deviation between the Fund&#8217;s amortized cost per share and its market-based NAV per share could result in material dilution or other unfair results to shareholders, the Board will cause the Fund to take such action as it deems appropriate to eliminate, or reduce to the extent practicable, such dilution or unfair results, including but not limited to, suspending redemption of Fund shares or liquidating the Fund.</li><li style="margin-left:-20px">Company Risk. A company may perform worse than the overall market due to specific factors, such as adverse changes to its business or investor perceptions about the company.</li><li style="margin-left:-20px">Credit Risk. An issuer of a fixed-income obligation may not make payments on the obligation when due or may default on its obligation.</li><li style="margin-left:-20px">Interest Rate Risk. A rise in interest rates may cause a decline in the value of the Fund&#8217;s securities, especially securities with longer maturities. A decline in interest rates may cause the Fund to experience a decline in its income.</li><li style="margin-left:-20px">Management Risk. Fund performance is primarily dependent on WRIMCO&#8217;s skill in evaluating and managing the Fund&#8217;s portfolio and the Fund may not perform as well as other similar mutual funds.</li><li style="margin-left:-20px">Market Risk. Adverse market conditions, sometimes in response to general economic or industry news, may cause the prices of the Fund&#8217;s holdings to fall as part of a broad market decline. The financial crisis in the U.S. and foreign economies over the past several years, including the European sovereign debt crisis, has resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both U.S. and foreign, and in the NAVs of many mutual funds. Global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region may adversely affect issuers in another country or region, which in turn may adversely affect securities held by the Fund. These circumstances have also decreased liquidity in some markets and may continue to do so. In addition, certain unanticipated events, such as natural disasters, terrorist attacks, war, and other geopolitical events, can have a dramatic adverse effect on securities held by the Fund.</li><li style="margin-left:-20px">Money Market Fund Regulatory Risk. As a money market fund, the Fund is subject to the specific rules governing money market funds and is subject to regulation by the Securities and Exchange Commission (SEC). Government agencies, including the SEC in particular, continue to evaluate the rules governing money market funds. It is possible that changes to the rules governing money market funds could significantly affect the money market fund industry generally and, therefore, the operation or performance of the Fund.</li><li style="margin-left:-20px">Reinvestment Risk. A decline in interest rates may cause issuers to prepay higher-yielding debt securities held by the Fund, resulting in the Fund reinvesting in securities with lower yields, which may cause a decline in its income. </li></ul> Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 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. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 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. The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of a Lipper peer group (a universe of mutual funds with investment objectives similar to that of the Fund). www.waddell.com The Fund&#8217;s past performance does not necessarily indicate how it will perform in the future. <div style="display:none">~ http://www.waddell.com/role/ScheduleShareholderFeesWaddellReedAdvisorsMunicipalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualFundOperatingExpensesWaddellReedAdvisorsMunicipalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualFundOperatingExpensesWaddellReedAdvisorsGlobalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleTransposedWaddellReedAdvisorsGlobalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleTransposedWaddellReedAdvisorsMunicipalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleNoRedemptionTransposedWaddellReedAdvisorsGlobalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAverageAnnualTotalReturnsTransposedWaddellReedAdvisorsGlobalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleNoRedemptionTransposedWaddellReedAdvisorsMunicipalBondFund column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualTotalReturnsWaddellReedAdvisorsMunicipalBondFundBarChart column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAverageAnnualTotalReturnsTransposedWaddellReedAdvisorsMunicipalBondFund column period compact * ~</div> Waddell &amp; Reed Advisors Global Bond Fund seeks to achieve its objectives by investing during normal circumstances, at least 80% of its net assets in a diversified portfolio of bonds of foreign and U.S. issuers. The Fund may invest in securities issued by foreign or U.S. governments and in securities, including secured and unsecured loan assignments, loan participations and other loan instruments (bank loans), issued by foreign or U.S. companies of any size, including those in emerging markets. The Fund may invest up to 100% of its total assets in securities denominated in currencies other than the U.S. dollar. The Fund may invest in securities of any maturity.<br/><br/> Although the Fund invests, primarily, in investment grade securities, it may invest up to 100% of its total assets in non-investment grade bonds, commonly called junk bonds, primarily of foreign issuers, that include securities rated BB+ or lower by Standard &amp; Poor&#8217;s, a division of The McGraw-Hill Companies, Inc. (S&amp;P), or comparably rated by another nationally recognized statistical rating organization (NRSRO) or, if unrated, determined by Waddell &amp; Reed Investment Management Company (WRIMCO), the Fund&#8217;s investment manager, to be of comparable quality. The Fund will only invest in non-investment grade securities if WRIMCO deems the risks to be consistent with the Fund&#8217;s objectives. The Fund also may invest in equity securities of foreign and U.S. issuers to achieve income and/or its secondary objective of capital appreciation.<br/><br/> Many companies have diverse operations, with products or services in foreign markets. Therefore, the Fund will have an indirect exposure to foreign markets through investments in these companies.<br/><br/> WRIMCO may look at a number of factors in selecting securities for the Fund&#8217;s portfolio, including: identifying fundamental global themes; country analysis (economic, legislative/judicial and demographic trends); credit analysis of the issuer (financial strength, cash flow, balance sheet, management, strategy and accounting); the maturity, quality, and denomination (U.S. dollar, euro, yen) of the issue; domicile and market share of the issuer; and analysis of the issuer&#8217;s profit history through various economic cycles.<br/><br/> Generally, in determining whether to sell a debt security, WRIMCO continues to analyze the factors considered for buying the security. WRIMCO also considers its assumptions regarding a company, an industry, the markets, an individual economy and/or the global economy. WRIMCO may sell a security to reduce the Fund&#8217;s holding in that security, to take advantage of more attractive investment opportunities or to raise cash. The chart and table below provide some indication of the risks of investing in the Fund. The chart shows how performance has varied from year to year for Class A shares. The table shows the average annual total returns for each Class of the Fund and also compares the performance with those of broad-based securities market indices and a Lipper peer group (a universe of mutual funds with investment objectives similar to those of the Fund). The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. <br/><br/> After-tax returns are calculated using the historical highest individual Federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor&#8217;s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (IRAs), or to shares held by non-taxable entities. After-tax returns are shown only for Class A shares. After-tax returns for other Classes may vary. Return After Taxes on Distributions and Sale of Fund Shares may be better than Return Before Taxes due to an assumed tax benefit from losses on a sale of the Fund&#8217;s shares at the end of the period. <br/><br/> Performance results include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower. <br/><br/> The Fund&#8217;s past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Current performance may be lower or higher. Please visit www.waddell.com or call 888.WADDELL for the Fund&#8217;s updated performance. Capital appreciation is a secondary objective. This example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other mutual funds.<br/><br/>The example assumes that you invest $10,000 in the particular class of shares of the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund&#8217;s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: The chart does not reflect any sales charges and, if those sales charges were included, returns would be less than those shown. Average Annual Total Returns<br/><br/>as of December 31, 2012 You would pay the following expenses if you did not redeem your shares: <div style="display:none">~ http://www.waddell.com/role/ScheduleShareholderFeesWaddellReedAdvisorsCashManagement column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualFundOperatingExpensesWaddellReedAdvisorsCashManagement column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleNoRedemptionTransposedWaddellReedAdvisorsCashManagement column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleAnnualTotalReturnsWaddellReedAdvisorsCashManagementBarChart column period compact * ~</div> 2012-06-30 2012-03-31 2011-06-30 2011-03-31 2010-12-31 2010-09-30 2010-06-30 0 0 0 0 0 0 <div style="display:none">~ http://www.waddell.com/role/ScheduleAverageAnnualTotalReturnsTransposedWaddellReedAdvisorsCashManagement column period compact * ~</div> <div style="display:none">~ http://www.waddell.com/role/ScheduleExpenseExampleTransposedWaddellReedAdvisorsCashManagement column period compact * ~</div> 2011-12-31 0 2012-12-31 0.0002 0.01 0.05 0.01 0 The Fund&#8217;s benchmark changed from Citigroup Broad Investment-Grade Index, effective March 2012. WRIMCO believes that the Barclays U.S. Aggregate Bond Index provides a better benchmark for the Fund in light of the types of securities in which the Fund invests. For Class A shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months of purchase. For Class A Shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months of purchase. For Class A Shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months of purchase. For Class A Shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months of purchase. For Class A Shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months of purchase. The Fund&#8217;s benchmark changed from Citigroup High Yield Market Index, effective March 2012. WRIMCO believes that the BofA Merrill Lynch US High Yield Index provides a better benchmark for the Fund in light of the types of securities in which the Fund invests. The Fund&#8217;s benchmark changed from Citigroup Treasury/Government Sponsored/Mortgage Bond Index, effective March 2012. WRIMCO believes that the Barclays U.S. Government/Mortgage-Backed Securities Index provides a better benchmark for the Fund in light of the types of securities in which the Fund invests. For Class A Shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months of purchase. For Class A Shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares if they were exchanged from Class A shares of another Waddell &amp; Reed Advisors Fund (or, in certain circumstances, lvy Funds) that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months of purchase. 888.WADDELL 0 0 0 2011-09-30 2012-09-30 85 1955 Return After Taxes on Distributions and Sale of Fund Shares may be better than Return Before Taxes due to an assumed tax benefit from losses on a sale of the Fund&#8217;s shares at the end of the period. For Class A shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within 12 months of purchase. For Class A Shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class A shares, a 1% contingent deferred sales charge (CDSC) is only imposed on Class A shares if they were exchanged from Class A shares of another Waddell & Reed Advisors Fund (or, in certain circumstances, lvy Funds) that were purchased at net asset value (NAV) for $1 million or more that are subsequently redeemed within 12 months of purchase. For Class B shares, the CDSC declines from 5% for redemptions within the first year of purchase, to 4% for redemptions within the second year, to 3% for redemptions within the third and fourth years, to 2% for redemptions within the fifth year, to 1% for redemptions within the sixth year and to 0% for redemptions after the sixth year. For Class C shares, a 1% CDSC applies to redemptions within twelve months of purchase.